IIB 

113TH CONGRESS 

2D SESSION H. R. 5421 

IN THE SENATE OF THE UNITED STATES 

DECEMBER 2, 2014 

Received; read twice and referred to the Committee on the Judiciary 

AN ACT 

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

facilitate the resolution of an insolvent financial institution in bankruptcy. 

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


ebenthall on DSK5SPTVN1PROD with BILLS
2 

HR 5421 RFS 

1 SECTION 1. SHORT TITLE. 

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

3 Bankruptcy Act of 2014’’. 

4 SEC. 2. GENERAL PROVISIONS RELATING TO COVERED FI5 NANCIAL CORPORATIONS. 

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

7 States Code, is amended by inserting the following after 

8 paragraph (9): 

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

10 means any corporation incorporated or organized 

11 under any Federal or State law, other than a stock12 broker, a commodity broker, or an entity of the kind 

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

14 that is— 

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

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

17 Act of 1956; or 

18 ‘‘(B) a corporation that exists for the pri19 mary purpose of owning, controlling and financ20 ing its subsidiaries, that has total consolidated 

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

22 which, in its most recently completed fiscal 

23 year— 

24 ‘‘(i) annual gross revenues derived by 

25 the corporation and all of its subsidiaries 

26 from activities that are financial in nature 


ebenthall on DSK5SPTVN1PROD with BILLS
3 

HR 5421 RFS 

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

2 Holding Company Act of 1956) and, if ap3 plicable, from the ownership or control of 

4 one or more insured depository institu5 tions, represents 85 percent or more of the 

6 consolidated annual gross revenues of the 

7 corporation; or 

8 ‘‘(ii) the consolidated assets of the 

9 corporation and all of its subsidiaries re10 lated to activities that are financial in na11 ture (as defined in section 4(k) of the 

12 Bank Holding Company Act of 1956) and, 

13 if applicable, related to the ownership or 

14 control of one or more insured depository 

15 institutions, represents 85 percent or more 

16 of the consolidated assets of the corpora17 tion.’’. 

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

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

20 end the following: 

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

22 only in a case under chapter 11 concerning a covered fi23 nancial corporation.’’. 

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

25 11, United States Code, is amended— 


ebenthall on DSK5SPTVN1PROD with BILLS
4 

HR 5421 RFS 

1 (1) in subsection (b)— 

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

3 the end; 

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

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

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

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

8 (2) in subsection (d)— 

9 (A) by striking ‘‘and’’ before ‘‘an unin10 sured State member bank’’; 

11 (B) by striking ‘‘or’’ before ‘‘a corpora12 tion’’; and 

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

14 corporation’’ after ‘‘Federal Deposit Insurance 

15 Corporation Improvement Act of 1991’’. 

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

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

18 end the following: 

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

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

21 7 if— 

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

23 has been consummated; 

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

25 a special trustee under section 1186; and 


ebenthall on DSK5SPTVN1PROD with BILLS
5 

HR 5421 RFS 

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

2 that conversion is in the best interest of the credi3 tors and the estate.’’. 

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

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

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

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

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

9 is amended by inserting after paragraph (16) the fol10 lowing: 

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

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

13 been paid or the plan provides for the payment of 

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

15 date of the plan. 

16 ‘‘(18) In a case under subchapter V, confirma17 tion of the plan is not likely to cause serious adverse 

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

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

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

21 under subchapter V, the United States trustee shall rec22 ommend to the court, and in all other cases, the’’. 


ebenthall on DSK5SPTVN1PROD with BILLS
6 

HR 5421 RFS 

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

4 Chapter 11 of title 11, United States Code, is amend5 ed by adding at the end the following: 

6 ‘‘SUBCHAPTER V—LIQUIDATION, REORGANIZA7 TION, OR RECAPITALIZATION OF A COV8 ERED FINANCIAL CORPORATION 

9 ‘‘§ 1181. Inapplicability of other sections 

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

11 under this subchapter concerning a covered financial cor12 poration. 

13 ‘‘§ 1182. Definitions for this subchapter 

14 ‘‘In this subchapter, the following definitions shall 

15 apply: 

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

17 Governors of the Federal Reserve System. 

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

19 formed corporation to which property of the estate 

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

21 equity securities of which may be transferred to a 

22 special trustee under section 1186(a). 

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

24 unsecured debt of the debtor for borrowed money for 

25 which the debtor is the primary obligor, other than 

26 a qualified financial contract and other than debt seVerDate Sep 11 2014 23:00 Dec 02, 2014 Jkt 049200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.RFS H5421

ebenthall on DSK5SPTVN1PROD with BILLS
7 

HR 5421 RFS 

1 cured by a lien on property of the estate that is to 

2 be transferred to a bridge company pursuant to an 

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

4 ‘‘(4) The term ‘contractual right’ means a con5 tractual right of a kind defined in section 555, 556, 

6 559, 560, or 561. 

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

8 means any contract of a kind defined in paragraph 

9 (25), (38A), (47), or (53B) of section 101, section 

10 741(7), or paragraph (4), (5), (11), or (13) of sec11 tion 761. 

12 ‘‘(6) The term ‘special trustee’ means the trust13 ee of a trust formed under section 1186(a)(1). 

14 ‘‘§ 1183. Commencement of a case concerning a cov15 ered financial corporation 

16 ‘‘(a) A case under this subchapter concerning a cov17 ered financial corporation may be commenced by the filing 

18 of a petition with the court— 

19 ‘‘(1) by the debtor under section 301 only if the 

20 debtor states to the best of its knowledge under pen21 alty of perjury in the petition that it is a covered fi22 nancial corporation; or 

23 ‘‘(2) by the Board only if the Board states to 

24 the best of its knowledge under penalty of perjury 

25 in the petition that— 


ebenthall on DSK5SPTVN1PROD with BILLS
8 

HR 5421 RFS 

1 ‘‘(A) the debtor is a covered financial cor2 poration that— 

3 ‘‘(i) has incurred losses that will de4 plete all or substantially all of the capital 

5 of the covered financial corporation, and 

6 there is no reasonable prospect for the cov7 ered financial corporation to avoid such de8 pletion; 

9 ‘‘(ii) is insolvent; 

10 ‘‘(iii) is not paying, or is unable to 

11 pay, the debts of the covered financial cor12 poration (other than debts subject to a 

13 bona fide dispute as to liability or amount) 

14 as they become due; or 

15 ‘‘(iv) is likely to be in a financial con16 dition specified in clause (i), (ii), or (iii) 

17 sufficiently soon such that the immediate 

18 commencement of a case under this sub19 chapter is necessary to prevent serious ad20 verse effects on financial stability in the 

21 United States; and 

22 ‘‘(B) the commencement of a case under 

23 this title and effecting a transfer under section 

24 1185 is necessary to prevent serious adverse ef25 fects on financial stability in the United States. 


ebenthall on DSK5SPTVN1PROD with BILLS
9 

HR 5421 RFS 

1 ‘‘(b)(1) Unless the debtor consents to an order for 

2 relief, the court shall hold a hearing on the Board’s peti3 tion under subsection (a)(2) as soon as practicable but not 

4 later than 16 hours after the Board files such a petition, 

5 with notice only to— 

6 ‘‘(A) the covered financial corporation; 

7 ‘‘(B) the Federal Deposit Insurance Corpora8 tion; 

9 ‘‘(C) the Office of the Comptroller of the Cur10 rency of the Department of the Treasury; and 

11 ‘‘(D) the Secretary of the Treasury. 

12 ‘‘(2) Only the Board and the entities specified in 

13 paragraph (1) and their counsel may participate in a hear14 ing described in this subsection. The Board or the trustee 

15 may request that pleadings, hearings, transcripts, and or16 ders in connection with a hearing described in this sub17 section be sealed if their disclosure could create financial 

18 instability in the United States. 

19 ‘‘(3) All pleadings, hearings, transcripts, and orders 

20 sealed under paragraph (2) shall be available to only the 

21 court, the appellate panel, the covered financial corpora22 tion, the Federal Deposit Insurance Corporation, the Of23 fice of the Comptroller of the Currency of the Department 

24 of the Treasury, the Secretary of the Treasury, and the 

25 Board. Notwithstanding paragraph (2), if the case is disVerDate Sep 11 2014 23:00 Dec 02, 2014 Jkt 049200 PO 00000 Frm 00009 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.RFS H5421

ebenthall on DSK5SPTVN1PROD with BILLS
10 

HR 5421 RFS 

1 missed, all court documents, including pleadings, hearings, 

2 transcripts, and orders, shall be permanently sealed. 

3 ‘‘(c)(1) The commencement of a case under sub4 section (a)(1) constitutes an order for relief under this 

5 subchapter. 

6 ‘‘(2) In a case commenced under subsection (a)(2), 

7 after notice and hearing required under subsection (b) and 

8 not later than 18 hours after the filing of the Board’s peti9 tion, the court shall enter— 

10 ‘‘(A) an order for relief— 

11 ‘‘(i) if the Board has shown at the hearing 

12 under this subsection that the requirements 

13 under subsection (a)(2) are supported by a pre14 ponderance of the evidence; or 

15 ‘‘(ii) if the debtor consents to the Board’s 

16 petition under subsection (a)(2); or 

17 ‘‘(B) an order dismissing the case. 

18 ‘‘(d)(1) The covered financial corporation or the 

19 Board may appeal to the court of appeals from an order 

20 entered by the court under subsection (c)(2) not later than 

21 1 hour after the court enters such order, with notice only 

22 to the entities specified in subsection (b)(1) and the 

23 Board. Such order shall be stayed pending such appeal. 

24 ‘‘(2) The appellate panel specified under section 

25 298(c)(1) of title 28 for the judicial circuit in which the 


ebenthall on DSK5SPTVN1PROD with BILLS
11 

HR 5421 RFS 

1 case is pending shall hear the appeal under paragraph (1) 

2 within 12 hours of the filing of the notice of appeal under 

3 this subsection. The standard of review shall be abuse of 

4 discretion. The appellate panel shall enter an order deter5 mining the matter that is the subject of the appeal not 

6 later than 14 hours after the notice of appeal is filed. 

7 ‘‘(3) The court may not, on account of an appeal 

8 from an order for relief under section 1183(d)(1), delay 

9 any proceeding under section 1185, except that the court 

10 shall not authorize a transfer under section 1185 before 

11 the determination of the appeal. 

12 ‘‘(e) The members of the board of directors (or body 

13 performing similar functions) of a covered financial com14 pany shall have no liability to shareholders, creditors or 

15 other parties in interest for a good faith filing or con16 senting in good faith to a petition with respect to a case 

17 under this subchapter, or for any reasonable action taken 

18 in good faith in contemplation of or in connection with 

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

20 1186, whether prior to or after commencement of the case. 

21 ‘‘(f) Counsel to the debtor or the Board shall provide, 

22 to the greatest extent practicable, sufficient confidential 

23 notice to the Office of Court Services of the Administrative 

24 Office of the United States Courts regarding the potential 

25 commencement of a subchapter V case without disclosing 


ebenthall on DSK5SPTVN1PROD with BILLS
12 

HR 5421 RFS 

1 the identity of the potential debtor in order to allow such 

2 office to randomly designate and ensure the ready avail3 ability of one of the bankruptcy judges designated under 

4 section 298(b)(1) of title 28 to be available to preside over 

5 such subchapter V case. 

6 ‘‘§ 1184. Regulators 

7 ‘‘The Board, the Securities Exchange Commission, 

8 the Office of the Comptroller of the Currency of the De9 partment of the Treasury, and the Federal Deposit Insur10 ance Corporation may raise and may appear and be heard 

11 on any issue in any case or proceeding under this sub12 chapter. 

13 ‘‘§ 1185. Special transfer of property of the estate 

14 ‘‘(a) On request of the trustee or the Board, and after 

15 notice and a hearing that shall occur not less than 24 

16 hours after the order for relief, the court may order a 

17 transfer under this section of property of the estate, and 

18 the assignment of executory contracts, unexpired leases, 

19 and qualified financial contracts of the debtor, to a bridge 

20 company. Upon the entry of an order approving such 

21 transfer, any property transferred, and any executory con22 tracts, unexpired leases, and qualified financial contracts 

23 assigned under such order shall no longer be property of 

24 the estate. Except as provided under this section, the proVerDate Sep 11 2014 23:00 Dec 02, 2014 Jkt 049200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.RFS H5421

ebenthall on DSK5SPTVN1PROD with BILLS
13 

HR 5421 RFS 

1 visions of sections 363 and 365 shall apply to a transfer 

2 and assignment under this section. 

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

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

5 electronic or telephonic notice of not less than 24 hours 

6 to— 

7 ‘‘(1) the debtor; 

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

9 claims against the debtor; 

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

11 claims against the debtor; 

12 ‘‘(4) counterparties to any debt, executory con13 tract, unexpired lease, and qualified financial con14 tract requested to be transferred under this section; 

15 ‘‘(5) the Board; 

16 ‘‘(6) the Federal Deposit Insurance Corpora17 tion; 

18 ‘‘(7) the Secretary of the Treasury and the Of19 fice of the Comptroller of the Currency of the Treas20 ury; 

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

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

23 administrator; and 

24 ‘‘(10) each primary financial regulatory agency, 

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


ebenthall on DSK5SPTVN1PROD with BILLS
14 

HR 5421 RFS 

1 Street Reform and Consumer Protection Act, with 

2 respect to any affiliate the equity securities of which 

3 are proposed to be transferred under this section. 

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

5 section unless the court determines, based upon a prepon6 derance of the evidence, that— 

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

8 to prevent serious adverse effects on financial sta9 bility in the United States; 

10 ‘‘(2) the transfer does not provide for the as11 sumption of any capital structure debt by the bridge 

12 company; 

13 ‘‘(3) the transfer does not provide for the trans14 fer to the bridge company of any property of the es15 tate that is subject to a lien securing a debt, execu16 tory contract, unexpired lease or agreement of the 

17 debtor unless— 

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

19 debt, executory contract, unexpired lease or 

20 agreement, including any claims arising in re21 spect thereof that would not be allowed secured 

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

23 effect to such transfer, such property remains 

24 subject to the lien securing such debt, executory 

25 contract, unexpired lease or agreement; and 


ebenthall on DSK5SPTVN1PROD with BILLS
15 

HR 5421 RFS 

1 ‘‘(ii) the court has determined that as2 sumption of such debt, executory contract, un3 expired lease or agreement by the bridge com4 pany is in the best interests of the estate; or 

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

6 the bridge company in accordance with the pro7 visions of section 363; 

8 ‘‘(4) the transfer does not provide for the as9 sumption by the bridge company of any debt, execu10 tory contract, unexpired lease or agreement of the 

11 debtor secured by a lien on property in which the es12 tate has an interest unless the transfer provides for 

13 such property to be transferred to the bridge com14 pany in accordance with paragraph (3)(A) of this 

15 subsection; 

16 ‘‘(5) the transfer does not provide for the trans17 fer of the equity of the debtor; 

18 ‘‘(6) the party requesting the transfer under 

19 this subsection has demonstrated that the bridge 

20 company is not likely to fail to meet the obligations 

21 of any debt, executory contract, qualified financial 

22 contract, or unexpired lease assumed and assigned 

23 to the bridge company; 

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

25 special trustee all of the equity securities in the 


ebenthall on DSK5SPTVN1PROD with BILLS
16 

HR 5421 RFS 

1 bridge company and appointment of a special trustee 

2 in accordance with section 1186; 

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

5 and expenses of the estate and special trustee; and 

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

7 documents, and initial directors and senior officers, 

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

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

11 the bridge company that is the recipient of the transfer 

12 shall— 

13 ‘‘(1) not have any property, executory con14 tracts, unexpired leases, or debts, other than any 

15 property acquired or executory contracts, unexpired 

16 leases, or debts assumed when acting as a transferee 

17 of a transfer under this section; and 

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

19 the estate, which may be sold or distributed in ac20 cordance with this title. 

21 ‘‘§ 1186. Special trustee 

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

23 1185 shall require the trustee to transfer to a qualified 

24 and independent special trustee, who is appointed by the 

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


ebenthall on DSK5SPTVN1PROD with BILLS
17 

HR 5421 RFS 

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

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

3 satisfaction of the special trustee’s fees, costs, and ex4 penses. The trust of which the special trustee is the trust5 ee shall be a newly formed trust governed by a trust agree6 ment approved by the court as in the best interests of the 

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

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

9 equity securities of the bridge company in accordance with 

10 the trust agreement. 

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

12 transfer under section 1185, the trustee shall confirm to 

13 the court that the Board has been consulted regarding the 

14 identity of the proposed special trustee and advise the 

15 court of the results of such consultation. 

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

17 provide— 

18 ‘‘(1) for the payment of the fees, costs, ex19 penses, and indemnities of the special trustee from 

20 the assets of the debtor’s estate; 

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

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

23 which shall be filed with the court; and 

24 ‘‘(B) information about the bridge com25 pany reasonably requested by a party in interVerDate Sep 11 2014 23:00 Dec 02, 2014 Jkt 049200 PO 00000 Frm 00017 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.RFS H5421

ebenthall on DSK5SPTVN1PROD with BILLS
18 

HR 5421 RFS 

1 est to prepare a disclosure statement for a plan 

2 providing for distribution of any securities of 

3 the bridge company if such information is nec4 essary to prepare such disclosure statement; 

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

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

7 trustee shall file a notice with the court in connec8 tion with— 

9 ‘‘(A) any change in a director or senior of10 ficer of the bridge company; 

11 ‘‘(B) any modification to the governing 

12 documents of the bridge company; and 

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

14 bridge company, including— 

15 ‘‘(i) recapitalization; 

16 ‘‘(ii) a material borrowing; 

17 ‘‘(iii) termination of an intercompany 

18 debt or guarantee; 

19 ‘‘(iv) a transfer of a substantial por20 tion of the assets of the bridge company; 

21 or 

22 ‘‘(v) the issuance or sale of any secu23 rities of the bridge company; 

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

25 the bridge company shall not be consummated until 


ebenthall on DSK5SPTVN1PROD with BILLS
19 

HR 5421 RFS 

1 the special trustee consults with the Federal Deposit 

2 Insurance Corporation and the Board regarding 

3 such sale and discloses the results of such consulta4 tion with the court; 

5 ‘‘(5) that, subject to reserves for payments per6 mitted under paragraph (1) provided for in the trust 

7 agreement, the proceeds of the sale of any equity se8 curities of the bridge company by the special trustee 

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

10 the estate; 

11 ‘‘(6) the process and guidelines for the replace12 ment of the special trustee; and 

13 ‘‘(7) that the property held in trust by the spe14 cial trustee is subject to distribution in accordance 

15 with subsection (c). 

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

17 held in trust— 

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

19 in accordance with the plan on the effective date of 

20 the plan; or 

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

22 chapter 7, as ordered by the court. 

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

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


ebenthall on DSK5SPTVN1PROD with BILLS
20 

HR 5421 RFS 

1 terminate, except as may be necessary to wind up and con2 clude the business and financial affairs of the trust. 

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

4 section, the special trustee shall be subject only to applica5 ble nonbankruptcy law, and the actions and conduct of 

6 the special trustee shall no longer be subject to approval 

7 by the court in the case under this subchapter. 

8 ‘‘§ 1187. Temporary and supplemental automatic stay; 

9 assumed debt 

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

11 as a stay, applicable to all entities, of the termination, ac12 celeration, or modification of any debt, contract, lease, or 

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

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

15 lease, or agreement, solely because of— 

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

17 debt, contract, lease, or agreement; or 

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

19 or agreement, or in applicable nonbankruptcy law, 

20 that is conditioned on— 

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

22 the debtor at any time before the closing of the 

23 case; 

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

25 this title concerning the debtor; 


ebenthall on DSK5SPTVN1PROD with BILLS
21 

HR 5421 RFS 

1 ‘‘(iii) the appointment of or taking posses2 sion by a trustee in a case under this title con3 cerning the debtor or by a custodian before the 

4 commencement of the case; or 

5 ‘‘(iv) a credit rating agency rating, or ab6 sence or withdrawal of a credit rating agency 

7 rating— 

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

9 the commencement of the case; 

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

11 from the commencement of the case until 

12 48 hours after such order is entered; 

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

14 trustee or the special trustee is a direct or 

15 indirect beneficial holder of more than 50 

16 percent of the equity securities of— 

17 ‘‘(aa) the bridge company; or 

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

21 are transferred under section 1185; or 

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

23 or the special trustee is a direct or indirect 

24 beneficial holder of more than 50 percent 

25 of the equity securities of— 


ebenthall on DSK5SPTVN1PROD with BILLS
22 

HR 5421 RFS 

1 ‘‘(aa) the bridge company; or 

2 ‘‘(bb) the affiliate, if all of the di3 rect or indirect interests in the affil4 iate that are property of the estate 

5 are transferred under section 1185. 

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

7 in this paragraph is— 

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

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

10 debtor (other than a qualified financial contract); 

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

12 issued or is obligated for debt (other than capital 

13 structure debt); 

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

15 lease of an affiliate (other than a qualified financial 

16 contract); or 

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

18 issued or is obligated for debt. 

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

20 ‘‘(A) for the benefit of the debtor, upon the ear21 liest of— 

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

23 the case; 

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

25 lease, or agreement by the bridge company 


ebenthall on DSK5SPTVN1PROD with BILLS
23 

HR 5421 RFS 

1 under an order authorizing a transfer under 

2 section 1185; 

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

4 request for a transfer under section 1185; or 

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

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

7 earliest of— 

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

9 transfer under section 1185 in which the direct 

10 or indirect interests in the affiliate that are 

11 property of the estate are not transferred under 

12 section 1185; 

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

14 request for a transfer under section 1185; 

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

16 the case if the court has not ordered a transfer 

17 under section 1185; or 

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

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

20 apply to a stay under this subsection. 

21 ‘‘(b) A debt, executory contract (other than a quali22 fied financial contract), or unexpired lease of the debtor, 

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

24 obligated for any debt, may be assumed by a bridge com25 pany in a transfer under section 1185 notwithstanding 


ebenthall on DSK5SPTVN1PROD with BILLS
24 

HR 5421 RFS 

1 any provision in an agreement or in applicable nonbank2 ruptcy law that— 

3 ‘‘(1) prohibits, restricts, or conditions the as4 signment of the debt, contract, lease, or agreement; 

5 or 

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

7 permits a party other than the debtor to terminate 

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

9 account of— 

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

11 lease, or agreement; or 

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

13 the debt, contract, lease, or agreement. 

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

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

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

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

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

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

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

21 in applicable nonbankruptcy law— 

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

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


ebenthall on DSK5SPTVN1PROD with BILLS
25 

HR 5421 RFS 

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

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

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

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

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

9 lease, or agreement; or 

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

11 the debt, contract, lease, or agreement. 

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

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

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

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

17 or agreement only if the bridge company— 

18 ‘‘(A) shall cure the default; 

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

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

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

25 and 


ebenthall on DSK5SPTVN1PROD with BILLS
26 

HR 5421 RFS 

1 ‘‘(C) provides adequate assurance in connection 

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

5 1185(c)(4). 

6 ‘‘§ 1188. Treatment of qualified financial contracts 

7 and affiliate contracts 

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

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

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

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

13 right— 

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

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

18 payment amount, or other transfer obligation arising 

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

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

23 or related to a qualified financial contract of the 

24 debtor or an affiliate. 


ebenthall on DSK5SPTVN1PROD with BILLS
27 

HR 5421 RFS 

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

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

3 all payment and delivery obligations under such qualified 

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

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

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

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

8 affiliate immediately upon the failure of the trustee or the 

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

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

12 financial contract of the debtor or any affiliate to perform 

13 any payment or delivery obligation under such qualified 

14 financial contract, including during the pendency of the 

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

16 breach of such qualified financial contract by the 

17 counterparty. 

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

21 under section 1185 if and only if— 

22 ‘‘(1) all qualified financial contracts between 

23 the entity and the debtor are assigned to and as24 sumed by the bridge company in the transfer under 

25 section 1185; 


ebenthall on DSK5SPTVN1PROD with BILLS
28 

HR 5421 RFS 

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

2 under any qualified financial contract between the 

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

4 under the terms of the qualified financial contract, 

5 is subordinated to the claims of general unsecured 

6 creditors) are assigned to and assumed by the bridge 

7 company; 

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

9 under any qualified financial contract between the 

10 entity and the debtor are assigned to and assumed 

11 by the bridge company; and 

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

13 enhancement furnished by the debtor for any quali14 fied financial contract described in paragraph (1) or 

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

16 any qualified financial contract between the entity 

17 and the debtor is assigned to and assumed by the 

18 bridge company. 

19 ‘‘(d) Notwithstanding any provision of a qualified fi20 nancial contract or of applicable nonbankruptcy law, a 

21 qualified financial contract of the debtor that is assumed 

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

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

24 order approving a transfer under section 1185, and any 

25 right or obligation under the qualified financial contract 


ebenthall on DSK5SPTVN1PROD with BILLS
29 

HR 5421 RFS 

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

2 entry of the order approving a transfer under section 1185 

3 solely because of a condition described in section 

4 1187(c)(1), other than a condition of the kind specified 

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

6 no longer includes a direct beneficial interest or an indi7 rect beneficial interest through the special trustee, in more 

8 than 50 percent of the equity securities of the bridge com9 pany. 

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

11 or in applicable nonbankruptcy law, an agreement of an 

12 affiliate (including an executory contract, an unexpired 

13 lease, qualified financial contract, or an agreement under 

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

15 right or obligation under such agreement may not be ac16 celerated, terminated, or modified, solely because of a con17 dition described in section 1187(c)(1), other than a condi18 tion of the kind specified in section 1187(b) that occurs 

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

20 beneficial holder of more than 50 percent of the equity 

21 securities of the affiliate, at any time after the commence22 ment of the case if— 

23 ‘‘(1) all direct or indirect interests in the affil24 iate that are property of the estate are transferred 


ebenthall on DSK5SPTVN1PROD with BILLS
30 

HR 5421 RFS 

1 under section 1185 to the bridge company within the 

2 period specified in subsection (a); 

3 ‘‘(2) the bridge company assumes— 

4 ‘‘(A) any guarantee or other credit en5 hancement issued by the debtor relating to the 

6 agreement of the affiliate; and 

7 ‘‘(B) any right of setoff, netting arrange8 ment, or debt of the debtor that directly arises 

9 out of or directly relates to the guarantee or 

10 credit enhancement; and 

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

12 serves as collateral for the guarantee or credit en13 hancement is transferred to the bridge company. 

14 ‘‘§ 1189. Licenses, permits, and registrations 

15 ‘‘(a) Notwithstanding any otherwise applicable non16 bankruptcy law, if a request is made under section 1185 

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

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

19 an affiliate had immediately before the commencement of 

20 the case and that is proposed to be transferred under sec21 tion 1185 may not be accelerated, terminated, or modified 

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

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

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


ebenthall on DSK5SPTVN1PROD with BILLS
31 

HR 5421 RFS 

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

2 title concerning the debtor; 

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

4 a trustee in a case under this title concerning the 

5 debtor or by a custodian before the commencement 

6 of the case; or 

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

8 ‘‘(b) Notwithstanding any otherwise applicable non9 bankruptcy law, any Federal, State, or local license, per10 mit, or registration that the debtor had immediately before 

11 the commencement of the case that is included in a trans12 fer under section 1185 shall be valid and all rights and 

13 obligations thereunder shall vest in the bridge company. 

14 ‘‘§ 1190. Exemption from securities laws 

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

16 bridge company shall be deemed to be a security of a suc17 cessor to the debtor under a plan if the court approves 

18 the disclosure statement for the plan as providing ade19 quate information (as defined in section 1125(a)) about 

20 the bridge company and the security. 

21 ‘‘§ 1191. Inapplicability of certain avoiding powers 

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

23 debtor to an affiliate prior to or after the commencement 

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

25 or the estate to or for the benefit of an affiliate, in conVerDate Sep 11 2014 23:00 Dec 02, 2014 Jkt 049200 PO 00000 Frm 00031 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.RFS H5421

ebenthall on DSK5SPTVN1PROD with BILLS
32 

HR 5421 RFS 

1 templation of or in connection with a transfer under sec2 tion 1185 is not avoidable under section 544, 547, 

3 548(a)(1)(B), or 549, or under any similar nonbankruptcy 

4 law. 

5 ‘‘§ 1192. Consideration of financial stability 

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

7 in connection with this subchapter may have on financial 

8 stability in the United States.’’. 

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

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

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

12 end the following: 

13 ‘‘§ 298. Judge for a case under subchapter V of chap14 ter 11 of title 11 

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

16 of the United States shall designate not fewer than 3 

17 judges of the courts of appeals in not fewer than 4 circuits 

18 to serve on an appellate panel to be available to hear an 

19 appeal under section 1183 of title 11 in a case under such 

20 title concerning a covered financial corporation. Appellate 

21 judges may request to be considered by the Chief Justice 

22 of the United States for such designation. 

23 ‘‘(b)(1) Notwithstanding section 295, the Chief Jus24 tice of the United States shall designate not fewer than 

25 10 bankruptcy judges to be available to hear a case under 


ebenthall on DSK5SPTVN1PROD with BILLS
33 

HR 5421 RFS 

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

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

3 United States for such designation. 

4 ‘‘(2) Notwithstanding section 155, a case under sub5 chapter V of chapter 11 of title 11 shall be heard under 

6 section 157 by a bankruptcy judge designated under para7 graph (1), who shall be assigned to hear such case by the 

8 chief judge of the court of appeals for the circuit embrac9 ing the district in which the case is pending. To the great10 est extent practicable, the approvals required under sec11 tion 155 should be obtained. 

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

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

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

15 temporarily assigned to the district. 

16 ‘‘(c)(1) The court of appeals shall have jurisdiction 

17 of appeals from all orders for relief and orders of dismissal 

18 under section 1183 of title 11. 

19 ‘‘(2) Notwithstanding section 295, in an appeal under 

20 paragraph (1) in a case under title 11 concerning a cov21 ered financial corporation shall be heard by— 

22 ‘‘(A) 3 judges selected from the appellate panel 

23 designated under subsection (a); or 

24 ‘‘(B) if the 3 judges of such panel are not im25 mediately available to hear the case, 3 judges desVerDate Sep 11 2014 23:00 Dec 02, 2014 Jkt 049200 PO 00000 Frm 00033 Fmt 6652 Sfmt 6201 E:\BILLS\H5421.RFS H5421

ebenthall on DSK5SPTVN1PROD with BILLS
34 

HR 5421 RFS 

1 ignated under subsection (a) from another circuit 

2 and assigned by the Chief Justice of the United 

3 States to hear the case. 

4 ‘‘(3) If any of the judges of the appellate panel speci5 fied in paragraph (2) is not assigned to the circuit in 

6 which the appeal is pending, the judges shall be tempo7 rarily assigned to the circuit. 

8 ‘‘(4) A case under subchapter V of chapter 11 of title 

9 11, and all proceedings in the case, shall take place in 

10 the district in which the case is pending. 

11 ‘‘(d) In this section, the term ‘covered financial cor12 poration’ has the meaning given that term in section 

13 101(9A) of title 11.’’. 

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

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

16 the end the following: 

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

18 district court after a transfer pursuant to an order under 

19 section 1185 of title 11 of any proceeding related to a spe20 cial trustee appointed, or to a bridge company formed, in 

21 connection with a case under subchapter V of chapter 11 

22 of title 11.’’. 

23 (c) TECHNICAL AND CONFORMING AMENDMENT.— 

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


ebenthall on DSK5SPTVN1PROD with BILLS
35 

HR 5421 RFS 

1 States Code, is amended by adding at the end the fol2 lowing: 

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

Passed the House of Representatives December 1, 

2014. 

Attest: KAREN L. HAAS, 

Clerk. 


ebenthall on DSK5SPTVN1PROD with BILLS