(B) by striking paragraph (1) and insert-
ing:
‘‘(2) Property listed in this paragraph is property
that is specified under subsection (d), unless the State law
that is applicable to the debtor under paragraph (3)(A)
specifically does not so authorize.’’;
(C) by striking ‘‘(b) Notwithstanding’’ and
inserting ‘‘(b)(1) Notwithstanding’’;
(D) by striking ‘‘paragraph (2)’’ each place
it appears and inserting ‘‘paragraph (3)’’;
(E) by striking ‘‘paragraph (1)’’ each place
it appears and inserting ‘‘paragraph (2)’’;
(F) by striking ‘‘Such property is—’’; and
(G) by adding at the end the following:
‘‘(4) For purposes of paragraph (3)(C) and sub-
section (d)(12), the following shall apply:
‘‘(A) If the retirement funds are in a retirement
fund that has received a favorable determination
under section 7805 of the Internal Revenue Code of
1986, and that determination is in effect as of the
date of the commencement of the case under section
301, 302, or 303 of this title, those funds shall be
presumed to be exempt from the estate.
‘‘(B) If the retirement funds are in a retirement
fund that has not received a favorable determination
under such section 7805, those funds are exempt
from the estate if the debtor demonstrates that—
‘‘(i) no prior determination to the contrary
has been made by a court or the Internal Rev-
enue Service; and
‘‘(ii)(I) the retirement fund is in substan-
tial compliance with the applicable requirements
of the Internal Revenue Code of 1986; or
‘‘(II) the retirement fund fails to be in
substantial compliance with the applicable re-
quirements of the Internal Revenue Code of
1986 and the debtor is not materially respon-
sible for that failure.
‘‘(C) A direct transfer of retirement funds from
1 fund or account that is exempt from taxation
under section 401, 403, 408, 408A, 414, 457, or
501(a) of the Internal Revenue Code of 1986, under
section 401(a)(31) of the Internal Revenue Code of
1986, or otherwise, shall not cease to qualify for ex-
emption under paragraph (3)(C) or subsection
(d)(12) by reason of that direct transfer.
‘‘(D)(i) Any distribution that qualifies as an eli-
gible rollover distribution within the meaning of sec-
tion 402(c) of the Internal Revenue Code of 1986 or
that is described in clause (ii) shall not cease to
qualify for exemption under paragraph (3)(C) or
subsection (d)(12) by reason of that distribution.
‘‘(ii) A distribution described in this clause is
an amount that—
‘‘(I) has been distributed from a fund or
account that is exempt from taxation under sec-
tion 401, 403, 408, 408A, 414, 457, or 501(a)
of the Internal Revenue Code of 1986; and
‘‘(II) to the extent allowed by law, is de-
posited in such a fund or account not later than
60 days after the distribution of that amount.’’;
and
(2) in subsection (d)—
(A) in the matter preceding paragraph (1),
by striking ‘‘subsection (b)(1)’’ and inserting
‘‘subsection (b)(2)’’; and
(B) by adding at the end the following:
‘‘(12) Retirement funds to the extent that those
funds are in a fund or account that is exempt from tax-
ation under section 401, 403, 408, 408A, 414, 457, or
501(a) of the Internal Revenue Code of 1986.’’.
(b) AUTOMATIC STAY.—Section 362(b) of title 11,
United States Code, is amended—
(1) in paragraph (17), by striking ‘‘or’’ at the
end;
100
(2) in paragraph (18), by striking the period
and inserting a semicolon;
(3) by inserting after paragraph (18) the fol-
lowing:
‘‘(19) under subsection (a), of withholding of
income from a debtor’s wages and collection of
amounts withheld, under the debtor’s agreement au-
thorizing that withholding and collection for the ben-
efit of a pension, profit-sharing, stock bonus, or
other plan established under section 401, 403, 408,
408A, 414, 457, or 501(a) of the Internal Revenue
Code of 1986, that is sponsored by the employer of
the debtor, or an affiliate, successor, or predecessor
of such employer—
‘‘(A) to the extent that the amounts with-
held and collected are used solely for payments
relating to a loan from a plan that satisfies the
requirements of section 408(b)(1) of the Em-
ployee Retirement Income Security Act of 1974
or is subject to section 72(p) of the Internal
Revenue Code of 1986; or
‘‘(B) in the case of a loan from a thrift
savings plan described in subchapter III of
chapter 84 of title 5, that satisfies the require-
ments of section 8433(g) of such title;’’; and
101
(4) by adding at the end of the flush material
at the end of the subsection, the following: ‘‘Nothing
in paragraph (19) may be construed to provide that
any loan made under a governmental plan under
section 414(d), or a contract or account under sec-
tion 403(b) of the Internal Revenue Code of 1986
constitutes a claim or a debt under this title.’’.
(c) EXCEPTIONS TO DISCHARGE.—Section 523(a) of
title 11, United States Code, as amended by this Act, is
amended by adding at the end the following:
‘‘(18) owed to a pension, profit-sharing, stock
bonus, or other plan established under section 401,
403, 408, 408A, 414, 457, or 501(c) of the Internal
Revenue Code of 1986, under—
‘‘(A) a loan permitted under section
408(b)(1) of the Employee Retirement Income
Security Act of 1974, or subject to section
72(p) of the Internal Revenue Code of 1986; or
‘‘(B) a loan from the thrift savings plan
described in subchapter III of chapter 84 of
title 5, that satisfies the requirements of section
8433(g) of such title.
Nothing in paragraph (18) may be construed to pro-
vide that any loan made under a governmental plan
under section 414(d), or a contract or account under
103
that such amount may be increased if the interests of jus-
tice so require.’’.
SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANK-
RUPTCY.
(a) EXCLUSIONS.—Section 541 of title 11, United
States Code, is amended—
(1) in subsection (b)—
(A) in paragraph (4), by striking ‘‘or’’ at
the end;
(B) by redesignating paragraph (5) as
paragraph (10); and
(C) by inserting after paragraph (4) the
following:
‘‘(5) funds placed in an education individual re-
tirement account (as defined in section 530(b)(1) of
the Internal Revenue Code of 1986) not later than
365 days before the date of filing of the petition,
but—
‘‘(A) only if the designated beneficiary of
such account was a son, daughter, stepson,
stepdaughter, grandchild, or step-grandchild of
the debtor for the taxable year for which funds
were placed in such account;
‘‘(B) only to the extent that such funds—
104
‘‘(i) are not pledged or promised to
any entity in connection with any extension
of credit; and
‘‘(ii) are not excess contributions (as
described in section 4973(e) of the Internal
Revenue Code of 1986); and
‘‘(C) in the case of funds placed in all such
accounts having the same designated bene-
ficiary not earlier than 720 days nor later than
365 days before such date, only so much of
such funds as does not exceed $5,000;
‘‘(6) funds used to purchase a tuition credit or
certificate or contributed to an account in accord-
ance with section 529(b)(1)(A) of the Internal Rev-
enue Code of 1986 under a qualified State tuition
program (as defined in section 529(b)(1) of such
Code) not later than 365 days before the date of fil-
ing of the petition, but—
‘‘(A) only if the designated beneficiary of
the amounts paid or contributed to such tuition
program was a son, daughter, stepson, step-
daughter, grandchild, or step-grandchild of the
debtor for the taxable year for which funds
were paid or contributed;
105
‘‘(B) with respect to the aggregate amount
paid or contributed to such program having the
same designated beneficiary, only so much of
such amount as does not exceed the total con-
tributions permitted under section 529(b)(7) of
such Code with respect to such beneficiary, as
adjusted beginning on the date of the filing of
the petition by the annual increase or decrease
(rounded to the nearest tenth of 1 percent) in
the education expenditure category of the Con-
sumer Price Index prepared by the Department
of Labor; and
‘‘(C) in the case of funds paid or contrib-
uted to such program having the same des-
ignated beneficiary not earlier than 720 days
nor later than 365 days before such date, only
so much of such funds as does not exceed
$5,000;’’; and
(2) by adding at the end the following:
‘‘(e) In determining whether any of the relationships
specified in paragraph (5)(A) or (6)(A) of subsection (b)
exists, a legally adopted child of an individual (and a child
who is a member of an individual’s household, if placed
with such individual by an authorized placement agency
for legal adoption by such individual), or a foster child
106
of an individual (if such child has as the child’s principal
place of abode the home of the debtor and is a member
of the debtor’s household) shall be treated as a child of
such individual by blood.’’.
(b) DEBTOR’S DUTIES.—Section 521 of title 11,
United States Code, as amended by this Act, is amended
by adding at the end the following:
‘‘(c) In addition to meeting the requirements under
subsection (a), a debtor shall file with the court a record
of any interest that a debtor has in an education individual
retirement account (as defined in section 530(b)(1) of the
Internal Revenue Code of 1986) or under a qualified State
tuition program (as defined in section 529(b)(1) of such
Code).’’.
SEC. 226. DEFINITIONS.
(a) DEFINITIONS.—Section 101 of title 11, United
States Code, is amended—
(1) by inserting after paragraph (2) the fol-
lowing:
‘‘(3) ‘assisted person’ means any person whose
debts consist primarily of consumer debts and whose
non-exempt assets are less than $150,000;’’;
(2) by inserting after paragraph (4) the fol-
lowing:
107
‘‘(4A) ‘bankruptcy assistance’ means any goods
or services sold or otherwise provided to an assisted
person with the express or implied purpose of pro-
viding information, advice, counsel, document prepa-
ration, or filing, or attendance at a creditors’ meet-
ing or appearing in a proceeding on behalf of an-
other or providing legal representation with respect
to a case or proceeding under this title;’’; and
(3) by inserting after paragraph (12) the fol-
lowing:
‘‘(12A) ‘debt relief agency’ means any person
who provides any bankruptcy assistance to an as-
sisted person in return for the payment of money or
other valuable consideration, or who is a bankruptcy
petition preparer under section 110, but does not
include—
‘‘(A) any person that is an officer, director,
employee or agent of that person;
‘‘(B) a nonprofit organization which is ex-
empt from taxation under section 501(c)(3) of
the Internal Revenue Code of 1986;
‘‘(C) a creditor of the person, to the extent
that the creditor is assisting the person to re-
structure any debt owed by the person to the
creditor;
108
‘‘(D) a depository institution (as defined in
section 3 of the Federal Deposit Insurance Act)
or any Federal credit union or State credit
union (as those terms are defined in section
101 of the Federal Credit Union Act), or any
affiliate or subsidiary of such a depository insti-
tution or credit union; or
‘‘(E) an author, publisher, distributor, or
seller of works subject to copyright protection
under title 17, when acting in such capacity.’’.
(b) CONFORMING AMENDMENT.—Section 104(b)(1)
of title 11, United States Code, is amended by inserting
‘‘101(3),’’ after ‘‘sections’’.
SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES.
(a) ENFORCEMENT.—Subchapter II of chapter 5 of
title 11, United States Code, is amended by adding at the
end the following:
‘‘§ 526. Restrictions on debt relief agencies
‘‘(a) A debt relief agency shall not—
‘‘(1) fail to perform any service that such agen-
cy informed an assisted person or prospective as-
sisted person it would provide in connection with a
case or proceeding under this title;
‘‘(2) make any statement, or counsel or advise
any assisted person or prospective assisted person to
109
make a statement in a document filed in a case or
proceeding under this title, that is untrue and mis-
leading, or that upon the exercise of reasonable care,
should have been known by such agency to be untrue
or misleading;
‘‘(3) misrepresent to any assisted person or pro-
spective assisted person, directly or indirectly, af-
firmatively or by material omission, with respect
to—
‘‘(i) the services that such agency will pro-
vide to such person; or
‘‘(ii) the benefits and risks that may result
if such person becomes a debtor in a case under
this title; or
‘‘(4) advise an assisted person or prospective
assisted person to incur more debt in contemplation
of such person filing a case under this title or to pay
an attorney or bankruptcy petition preparer fee or
charge for services performed as part of preparing
for or representing a debtor in a case under this
title.
‘‘(b) Any waiver by any assisted person of any protec-
tion or right provided under this section shall not be en-
forceable against the debtor by any Federal or State court
110
or any other person, but may be enforced against a debt
relief agency.
‘‘(c)(1) Any contract for bankruptcy assistance be-
tween a debt relief agency and an assisted person that
does not comply with the material requirements of this
section, section 527, or section 528 shall be void and may
not be enforced by any Federal or State court or by any
other person, other than such assisted person.
‘‘(2) Any debt relief agency shall be liable to an as-
sisted person in the amount of any fees or charges in con-
nection with providing bankruptcy assistance to such per-
son that such debt relief agency has received, for actual
damages, and for reasonable attorneys’ fees and costs if
such agency is found, after notice and hearing, to have—
‘‘(A) intentionally or negligently failed to com-
ply with any provision of this section, section 527,
or section 528 with respect to a case or proceeding
under this title for such assisted person;
‘‘(B) provided bankruptcy assistance to an as-
sisted person in a case or proceeding under this title
that is dismissed or converted to a case under an-
other chapter of this title because of such agency’s
intentional or negligent failure to file any required
document including those specified in section 521; or
111
‘‘(C) intentionally or negligently disregarded the
material requirements of this title or the Federal
Rules of Bankruptcy Procedure applicable to such
agency.
‘‘(3) In addition to such other remedies as are pro-
vided under State law, whenever the chief law enforcement
officer of a State, or an official or agency designated by
a State, has reason to believe that any person has violated
or is violating this section, the State—
‘‘(A) may bring an action to enjoin such viola-
tion;
‘‘(B) may bring an action on behalf of its resi-
dents to recover the actual damages of assisted per-
sons arising from such violation, including any liabil-
ity under paragraph (2); and
‘‘(C) in the case of any successful action under
subparagraph (A) or (B), shall be awarded the costs
of the action and reasonable attorney fees as deter-
mined by the court.
‘‘(4) The United States District Court for any district
located in the State shall have concurrent jurisdiction of
any action under subparagraph (A) or (B) of paragraph
(3).
‘‘(5) Notwithstanding any other provision of Federal
law and in addition to any other remedy provided under
112
Federal or State law, if the court, on its own motion or
on motion of the United States trustee or the debtor, finds
that a person intentionally violated this section, or en-
gaged in a clear and consistent pattern or practice of vio-
lating this section, the court may—
‘‘(A) enjoin the violation of such section; or
‘‘(B) impose an appropriate civil penalty
against such person.’’.
‘‘(d) No provision of this section, section 527, or sec-
tion 528 shall—
‘‘(1) annul, alter, affect, or exempt any person
subject to such sections from complying with any
law of any State except to the extent that such law
is inconsistent with those sections, and then only to
the extent of the inconsistency; or
‘‘(2) be deemed to limit or curtail the authority
or ability—
‘‘(A) of a State or subdivision or instru-
mentality thereof, to determine and enforce
qualifications for the practice of law under the
laws of that State; or
‘‘(B) of a Federal court to determine and
enforce the qualifications for the practice of law
before that court.’’.
113
(b) CONFORMING AMENDMENT.—The table of sec-
tions for chapter 5 of title 11, United States Code, is
amended by inserting before the item relating to section
527, the following:
‘‘526. Debt relief enforcement.’’.
SEC. 228. DISCLOSURES.
(a) DISCLOSURES.—Subchapter II of chapter 5 of
title 11, United States Code, as amended by this Act, is
amended by adding at the end the following:
‘‘§ 527. Disclosures
‘‘(a) A debt relief agency providing bankruptcy assist-
ance to an assisted person shall provide—
‘‘(1) the written notice required under section
342(b)(1) of this title; and
‘‘(2) to the extent not covered in the written no-
tice described in paragraph (1), and not later than
3 business days after the first date on which a debt
relief agency first offers to provide any bankruptcy
assistance services to an assisted person, a clear and
conspicuous written notice advising assisted persons
that—
‘‘(A) all information that the assisted per-
son is required to provide with a petition and
thereafter during a case under this title is re-
quired to be complete, accurate, and truthful;
114
‘‘(B) all assets and all liabilities are re-
quired to be completely and accurately disclosed
in the documents filed to commence the case,
and the replacement value of each asset as de-
fined in section 506 of this title must be stated
in those documents where requested after rea-
sonable inquiry to establish such value;
‘‘(C) current monthly income, the amounts
specified in section 707(b)(2), and, in a case
under chapter 13, disposable income (deter-
mined in accordance with section 707(b)(2)),
are required to be stated after reasonable in-
quiry; and
‘‘(D) information that an assisted person
provides during their case may be audited pur-
suant to this title, and that failure to provide
such information may result in dismissal of the
proceeding under this title or other sanction in-
cluding, in some instances, criminal sanctions.
‘‘(b) A debt relief agency providing bankruptcy assist-
ance to an assisted person shall provide each assisted per-
son at the same time as the notices required under sub-
section (a)(1) with the following statement, to the extent
applicable, or one substantially similar. The statement
shall be clear and conspicuous and shall be in a single
115
document separate from other documents or notices pro-
vided to the assisted person:
‘‘ ‘IMPORTANT INFORMATION ABOUT BANK-
RUPTCY ASSISTANCE SERVICES FROM AN AT-
TORNEY 
OR 
BANKRUPTCY 
PETITION 
PRE-
PARER.
‘‘ ‘If you decide to seek bankruptcy relief, you can
represent yourself, you can hire an attorney to represent
you, or you can get help in some localities from a bank-
ruptcy petition preparer who is not an attorney. THE
LAW REQUIRES AN ATTORNEY OR BANKRUPTCY
PETITION PREPARER TO GIVE YOU A WRITTEN
CONTRACT SPECIFYING WHAT THE ATTORNEY
OR BANKRUPTCY PETITION PREPARER WILL DO
FOR YOU AND HOW MUCH IT WILL COST. Ask to
see the contract before you hire anyone.
‘‘ ‘The following information helps you understand
what must be done in a routine bankruptcy case to help
you evaluate how much service you need. Although bank-
ruptcy can be complex, many cases are routine.
‘‘ ‘Before filing a bankruptcy case, either you or your
attorney should analyze your eligibility for different forms
of debt relief made available by the Bankruptcy Code and
which form of relief is most likely to be beneficial for you.
Be sure you understand the relief you can obtain and its
116
limitations. To file a bankruptcy case, documents called
a Petition, Schedules and Statement of Financial Affairs,
as well as in some cases a Statement of Intention need
to be prepared correctly and filed with the bankruptcy
court. You will have to pay a filing fee to the bankruptcy
court. Once your case starts, you will have to attend the
required first meeting of creditors where you may be ques-
tioned by a court official called a ‘trustee’ and by credi-
tors.
‘‘ ‘If you choose to file a chapter 7 case, you may
be asked by a creditor to reaffirm a debt. You may want
help deciding whether to do so and a creditor is not per-
mitted to coerce you into reaffirming your debts.
‘‘ ‘If you choose to file a chapter 13 case in which
you repay your creditors what you can afford over 3 to
5 years, you may also want help with preparing your chap-
ter 13 plan and with the confirmation hearing on your
plan which will be before a bankruptcy judge.
‘‘ ‘If you select another type of relief under the Bank-
ruptcy Code other than chapter 7 or chapter 13, you will
want to find out what needs to be done from someone fa-
miliar with that type of relief.
‘‘ ‘Your bankruptcy case may also involve litigation.
You are generally permitted to represent yourself in litiga-
117
tion in bankruptcy court, but only attorneys, not bank-
ruptcy petition preparers, can give you legal advice.’.
‘‘(c) Except to the extent the debt relief agency pro-
vides the required information itself after reasonably dili-
gent inquiry of the assisted person or others so as to ob-
tain such information reasonably accurately for inclusion
on the petition, schedules or statement of financial affairs,
a debt relief agency providing bankruptcy assistance to an
assisted person, to the extent permitted by nonbankruptcy
law, shall provide each assisted person at the time re-
quired for the notice required under subsection (a)(1) rea-
sonably sufficient information (which shall be provided in
a clear and conspicuous writing) to the assisted person
on how to provide all the information the assisted person
is required to provide under this title pursuant to section
521, including—
‘‘(1) how to value assets at replacement value,
determine current monthly income, the amounts
specified in section 707(b)(2)) and, in a chapter 13
case, how to determine disposable income in accord-
ance with section 707(b)(2) and related calculations;
‘‘(2) how to complete the list of creditors, in-
cluding how to determine what amount is owed and
what address for the creditor should be shown; and
118
‘‘(3) how to determine what property is exempt
and how to value exempt property at replacement
value as defined in section 506 of this title.
‘‘(d) A debt relief agency shall maintain a copy of
the notices required under subsection (a) of this section
for 2 years after the date on which the notice is given
the assisted person.’’.
(b) CONFORMING AMENDMENT.—The table of sec-
tions for chapter 5 of title 11, United States Code, as
amended by this Act, is amended by inserting after the
item relating to section 526 the following:
‘‘527. Disclosures.’’.
SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES.
(a) ENFORCEMENT.—Subchapter II of chapter 5 of
title 11, United States Code, as amended by this Act, is
amended by adding at the end the following:
‘‘§ 528. Requirements for debt relief agencies
‘‘(a) A debt relief agency shall—
‘‘(1) not later than 5 business days after the
first date such agency provides any bankruptcy as-
sistance services to an assisted person, but prior to
such assisted person’s petition under this title being
filed, execute a written contract with such assisted
person that explains clearly and conspicuously—
‘‘(A) the services such agency will provide
to such assisted person; and
119
‘‘(B) the fees or charges for such services,
and the terms of payment;
‘‘(2) provide the assisted person with a copy of
the fully executed and completed contract;
‘‘(3) clearly and conspicuously disclose in any
advertisement of bankruptcy assistance services or of
the benefits of bankruptcy directed to the general
public (whether in general media, seminars or spe-
cific mailings, telephonic or electronic messages, or
otherwise) that the services or benefits are with re-
spect to bankruptcy relief under this title; and
‘‘(4) clearly and conspicuously using the fol-
lowing statement: ‘We are a debt relief agency. We
help people file for bankruptcy relief under the
Bankruptcy Code.’ or a substantially similar state-
ment.
‘‘(b)(1) An advertisement of bankruptcy assistance
services or of the benefits of bankruptcy directed to the
general public includes—
‘‘(A) descriptions of bankruptcy assistance in
connection with a chapter 13 plan whether or not
chapter 13 is specifically mentioned in such adver-
tisement; and
‘‘(B) statements such as ‘federally supervised
repayment plan’ or ‘Federal debt restructuring help’
120
or other similar statements that could lead a reason-
able consumer to believe that debt counseling was
being offered when in fact the services were directed
to providing bankruptcy assistance with a chapter
13 plan or other form of bankruptcy relief under
this title.
‘‘(2) An advertisement, directed to the general public,
indicating that the debt relief agency provides assistance
with respect to credit defaults, mortgage foreclosures, evic-
tion proceedings, excessive debt, debt collection pressure,
or inability to pay any consumer debt shall—
‘‘(A) disclose clearly and conspicuously in such
advertisement that the assistance may involve bank-
ruptcy relief under this title; and
‘‘(B) include the following statement: ‘We are a
debt relief agency. We help people file for bank-
ruptcy relief under the Bankruptcy Code,’ or a sub-
stantially similar statement.’’.
(b) CONFORMING AMENDMENT.—The table of sec-
tions for chapter 5 of title 11, United States Code, as
amended by this Act, is amended by inserting after the
item relating to section 527, the following:
‘‘528. Debtor’s bill of rights.’’.
SEC. 230. GAO STUDY.
(a) STUDY.—Not later than 270 days after the date
of enactment of this Act, the Comptroller General of the
121
United States shall conduct a study of the feasibility, ef-
fectiveness, and cost of requiring trustees appointed under
title 11, United States Code, or the bankruptcy courts,
to provide to the Office of Child Support Enforcement
promptly after the commencement of cases by individual
debtors under such title, the names and social security
numbers of such debtors for the purposes of allowing such
Office to determine whether such debtors have out-
standing obligations for child support (as determined on
the basis of information in the Federal Case Registry or
other national database).
(b) REPORT.—Not later than 300 days after the date
of enactment of this Act, the Comptroller General shall
submit to the President pro tempore of the Senate and
the Speaker of the House of Representatives a report con-
taining the results of the study required by subsection (a).
TITLE III—DISCOURAGING
BANKRUPTCY ABUSE
SEC. 301. REINFORCEMENT OF THE FRESH START.
Section 523(a)(17) of title 11, United States Code,
is amended—
(1) by striking ‘‘by a court’’ and inserting ‘‘on
a prisoner by any court’’,
122
(2) by striking ‘‘section 1915(b) or (f)’’ and in-
serting ‘‘subsection (b) or (f)(2) of section 1915’’,
and
(3) by inserting ‘‘(or a similar non-Federal
law)’’ after ‘‘title 28’’ each place it appears.
SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS.
Section 362(c) of title 11, United States Code, is
amended—
(1) in paragraph (1), by striking ‘‘and’’ at the
end;
(2) in paragraph (2), by striking the period at
the end and inserting a semicolon; and
(3) by adding at the end the following:
‘‘(3) if a single or joint case is filed by or
against an individual debtor under chapter 7, 11, or
13, and if a single or joint case of the debtor was
pending within the preceding 1-year period but was
dismissed, other than a case refiled under a chapter
other than chapter 7 after dismissal under section
707(b)—
‘‘(A) the stay under subsection (a) with re-
spect to any action taken with respect to a debt
or property securing such debt or with respect
to any lease shall terminate with respect to the
123
debtor on the 30th day after the filing of the
later case;
‘‘(B) upon motion by a party in interest
for continuation of the automatic stay and upon
notice and a hearing, the court may extend the
stay in particular cases as to any or all credi-
tors (subject to such conditions or limitations
as the court may then impose) after notice and
a hearing completed before the expiration of the
30-day period only if the party in interest dem-
onstrates that the filing of the later case is in
good faith as to the creditors to be stayed; and
‘‘(C) for purposes of subparagraph (B), a
case is presumptively filed not in good faith
(but such presumption may be rebutted by clear
and convincing evidence to the contrary)—
‘‘(i) as to all creditors, if—
‘‘(I) more than 1 previous case
under any of chapter 7, 11, or 13 in
which the individual was a debtor was
pending within the preceding 1-year
period;
‘‘(II) a previous case under any
of chapter 7, 11, or 13 in which the
individual was a debtor was dismissed
124
within such 1-year period, after the
debtor failed to—
‘‘(aa) file or amend the peti-
tion or other documents as re-
quired by this title or the court
without substantial excuse (but
mere inadvertence or negligence
shall not be a substantial excuse
unless the dismissal was caused
by the negligence of the debtor’s
attorney);
‘‘(bb) provide adequate pro-
tection as ordered by the court;
or
‘‘(cc) perform the terms of a
plan confirmed by the court; or
‘‘(III) there has not been a sub-
stantial change in the financial or per-
sonal affairs of the debtor since the
dismissal of the next most previous
case under chapter 7, 11, or 13 or
any other reason to conclude that the
later case will be concluded—
‘‘(aa) if a case under chap-
ter 7, with a discharge; or
125
‘‘(bb) if a case under chap-
ter 11 or 13, with a confirmed
plan which will be fully per-
formed; and
‘‘(ii) as to any creditor that com-
menced an action under subsection (d) in
a previous case in which the individual was
a debtor if, as of the date of dismissal of
such case, that action was still pending or
had been resolved by terminating, condi-
tioning, or limiting the stay as to actions
of such creditor; and
‘‘(4)(A)(i) if a single or joint case is filed by or
against an individual debtor under this title, and if
2 or more single or joint cases of the debtor were
pending within the previous year but were dismissed,
other than a case refiled under section 707(b), the
stay under subsection (a) shall not go into effect
upon the filing of the later case; and
‘‘(ii) on request of a party in interest, the court
shall promptly enter an order confirming that no
stay is in effect;
‘‘(B) if, within 30 days after the filing of the
later case, a party in interest requests the court may
order the stay to take effect in the case as to any
126
or all creditors (subject to such conditions or limita-
tions as the court may impose), after notice and
hearing, only if the party in interest demonstrates
that the filing of the later case is in good faith as
to the creditors to be stayed;
‘‘(C) a stay imposed under subparagraph (B)
shall be effective on the date of entry of the order
allowing the stay to go into effect; and
‘‘(D) for purposes of subparagraph (B), a case
is presumptively not filed in good faith (but such
presumption may be rebutted by clear and con-
vincing evidence to the contrary)—
‘‘(i) as to all creditors if—
‘‘(I) 2 or more previous cases under
this title in which the individual was a
debtor were pending within the 1-year pe-
riod;
‘‘(II) a previous case under this title
in which the individual was a debtor was
dismissed within the time period stated in
this paragraph after the debtor failed to
file or amend the petition or other docu-
ments as required by this title or the court
without substantial excuse (but mere inad-
vertence or negligence shall not be sub-
127
stantial excuse unless the dismissal was
caused by the negligence of the debtor’s at-
torney), failed to pay adequate protection
as ordered by the court, or failed to per-
form the terms of a plan confirmed by the
court; or
‘‘(III) there has not been a substan-
tial change in the financial or personal af-
fairs of the debtor since the dismissal of
the next most previous case under this
title, or any other reason to conclude that
the later case will not be concluded, if a
case under chapter 7, with a discharge,
and if a case under chapter 11 or 13, with
a confirmed plan that will be fully per-
formed; or
‘‘(ii) as to any creditor that commenced an
action under subsection (d) in a previous case
in which the individual was a debtor if, as of
the date of dismissal of such case, such action
was still pending or had been resolved by termi-
nating, conditioning, or limiting the stay as to
action of such creditor.’’.
128
SEC. 303. CURBING ABUSIVE FILINGS.
(a) IN GENERAL.—Section 362(d) of title 11, United
States Code, is amended—
(1) in paragraph (2), by striking ‘‘or’’ at the
end;
(2) in paragraph (3), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(4) with respect to a stay of an act against
real property under subsection (a), by a creditor
whose claim is secured by an interest in such real
estate, if the court finds that the filing of the bank-
ruptcy petition was part of a scheme to delay,
hinder, and defraud creditors that involved either—
‘‘(A) transfer of all or part ownership of,
or other interest in, the real property without
the consent of the secured creditor or court ap-
proval; or
‘‘(B) multiple bankruptcy filings affecting
the real property.
If recorded in compliance with applicable State laws gov-
erning notices of interests or liens in real property, an
order entered under this subsection shall be binding in any
other case under this title purporting to affect the real
property filed not later than 2 years after the date of entry
of such order by the court, except that a debtor in a subse-
129
quent case may move for relief from such order based
upon changed circumstances or for good cause shown,
after notice and a hearing. Any Federal, State, or local
governmental unit that accepts notices of interests or liens
in real property shall accept any certified copy of an order
described in this subsection for indexing and recording.’’.
(b) AUTOMATIC STAY.—Section 362(b) of title 11,
United States Code, is amended by inserting after para-
graph (19), as added by this Act, the following:
‘‘(20) under subsection (a), of any act to en-
force any lien against or security interest in real
property following the entry of an order under sec-
tion 362(d)(4) as to that property in any prior bank-
ruptcy case for a period of 2 years after entry of
such an order, except that the debtor, in a subse-
quent case, may move the court for relief from such
order based upon changed circumstances or for
other good cause shown, after notice and a hearing;
‘‘(21) under subsection (a), of any act to en-
force any lien against or security interest in real
property—
‘‘(A) if the debtor is ineligible under sec-
tion 109(g) to be a debtor in a bankruptcy case;
or
130
‘‘(B) if the bankruptcy case was filed in
violation of a bankruptcy court order in a prior
bankruptcy case prohibiting the debtor from
being a debtor in another bankruptcy case;’’.
SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY
SECURITY.
Title 11, United States Code, is amended—
(1) in section 521(a) (as so designated by this
Act)—
(A) in paragraph (4), by striking ‘‘, and’’
at the end and inserting a semicolon;
(B) in paragraph (5), by striking the pe-
riod at the end and inserting ‘‘; and’’; and
(C) by adding at the end the following:
‘‘(6) in an individual case under chapter 7 of
this title, not retain possession of personal property
as to which a creditor has an allowed claim for the
purchase price secured in whole or in part by an in-
terest in that personal property unless, in the case
of an individual debtor, the debtor, not later than 45
days after the first meeting of creditors under sec-
tion 341(a), either—
‘‘(A) enters into an agreement with the
creditor pursuant to section 524(c) of this title
131
with respect to the claim secured by such prop-
erty; or
‘‘(B) redeems such property from the secu-
rity interest pursuant to section 722 of this
title.
If the debtor fails to so act within the 45-day period re-
ferred to in paragraph (6), the stay under section 362(a)
of this title is terminated with respect to the personal
property of the estate or of the debtor which is affected,
such property shall no longer be property of the estate,
and the creditor may take whatever action as to such prop-
erty as is permitted by applicable nonbankruptcy law, un-
less the court determines on the motion of the trustee
brought before the expiration of such 45-day period, and
after notice and a hearing, that such property is of con-
sequential value or benefit to the estate, orders appro-
priate adequate protection of the creditor’s interest, and
orders the debtor to deliver any collateral in the debtor’s
possession to the trustee.’’; and
(2) in section 722, by inserting ‘‘in full at the
time of redemption’’ before the period at the end.
132
SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE
DEBTOR DOES NOT COMPLETE INTENDED
SURRENDER OF CONSUMER DEBT COLLAT-
ERAL.
Title 11, United States Code, is amended—
(1) in section 362—
(A) in subsection (c), by striking ‘‘(e), and
(f)’’ inserting ‘‘(e), (f), and (h)’’;
(B) by redesignating subsection (h) as sub-
section (k); and
(C) by inserting after subsection (g) the
following:
‘‘(h)(1) In an individual case under chapter 7, 11,
or 13, the stay provided by subsection (a) is terminated
with respect to personal property of the estate or of the
debtor securing in whole or in part a claim, or subject
to an unexpired lease, and such personal property shall
no longer be property of the estate if the debtor fails with-
in the applicable time set by section 521(a)(2) of this
title—
‘‘(A) to file timely any statement of intention
required under section 521(a)(2) of this title with
respect to that property or to indicate in that state-
ment that the debtor will either surrender the prop-
erty or retain it and, if retaining it, either redeem
the property pursuant to section 722 of this title, re-
133
affirm the debt it secures pursuant to section 524(c)
of this title, or assume the unexpired lease pursuant
to section 365(p) of this title if the trustee does not
do so, as applicable; and
‘‘(B) to take timely the action specified in that
statement of intention, as it may be amended before
expiration of the period for taking action, unless the
statement of intention specifies reaffirmation and
the creditor refuses to reaffirm on the original con-
tract terms.
‘‘(2) Paragraph (1) does not apply if the court deter-
mines, on the motion of the trustee filed before the expira-
tion of the applicable time set by section 521(a)(2), after
notice and a hearing, that such property is of consequen-
tial value or benefit to the estate, and orders appropriate
adequate protection of the creditor’s interest, and orders
the debtor to deliver any collateral in the debtor’s posses-
sion to the trustee. If the court does not so determine,
the stay provided by subsection (a) shall terminate upon
the conclusion of the proceeding on the motion.’’; and
(2) in section 521—
(A) in subsection (a)(2), as so designated
by this Act, by striking ‘‘consumer’’;
(B) in subsection (a)(2)(B), as so des-
ignated by this Act—
134
(i) by striking ‘‘forty-five days after
the filing of a notice of intent under this
section’’ and inserting ‘‘30 days after the
first date set for the meeting of creditors
under section 341(a) of this title’’; and
(ii) by striking ‘‘forty-five day’’ and
inserting ‘‘30-day’’;
(C) in subsection (a)(2)(C), as so des-
ignated by this Act, by inserting ‘‘, except as
provided in section 362(h) of this title’’ before
the semicolon; and
(D) by adding at the end the following:
‘‘(d) If the debtor fails timely to take the action speci-
fied in subsection (a)(6) of this section, or in paragraphs
(1) and (2) of section 362(h) of this title, with respect
to property which a lessor or bailor owns and has leased,
rented, or bailed to the debtor or as to which a creditor
holds a security interest not otherwise voidable under sec-
tion 522(f), 544, 545, 547, 548, or 549 of this title, noth-
ing in this title shall prevent or limit the operation of a
provision in the underlying lease or agreement which has
the effect of placing the debtor in default under such lease
or agreement by reason of the occurrence, pendency, or
existence of a proceeding under this title or the insolvency
of the debtor. Nothing in this subsection shall be deemed
135
to justify limiting such a provision in any other cir-
cumstance.’’.
SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT
IN CHAPTER 13.
(a) IN GENERAL.—Section 1325(a)(5)(B)(i) of title
11, United States Code, is amended to read as follows:
‘‘(i) the plan provides that—
‘‘(I) the holder of such claim retain
the lien securing such claim until the ear-
lier of—
‘‘(aa) the payment of the under-
lying debt determined under nonbank-
ruptcy law; or
‘‘(bb) discharge under section
1328; and
‘‘(II) if the case under this chapter is
dismissed or converted without completion
of the plan, such lien shall also be retained
by such holder to the extent recognized by
applicable nonbankruptcy law; and’’.
(b) RESTORING
THE FOUNDATION
FOR SECURED
CREDIT.—Section 1325(a) of title 11, United States Code,
is amended by adding at the end the following flush sen-
tence:
136
‘‘For purposes of paragraph (5), section 506 shall not
apply to a claim described in that paragraph if the creditor
has a purchase money security interest securing the debt
that is the subject of the claim, the debt was incurred
within the 5-year period preceding the filing of the peti-
tion, and the collateral for that debt consists of a motor
vehicle (as defined in section 30102 of title 49) acquired
for the personal use of the debtor, or if collateral for that
debt consists of any other thing of value, if the debt was
incurred during the 1-year period preceding that filing.’’.
(c) DEFINITIONS.—Section 101 of title 11, United
States Code, as amended by this Act, is amended—
(1) by inserting after paragraph (13) the fol-
lowing:
‘‘(13A) ‘debtor’s principal residence’—
‘‘(A) means a residential structure, includ-
ing incidental property, without regard to
whether that structure is attached to real prop-
erty; and
‘‘(B) includes an individual condominium
or cooperative unit, a mobile or manufactured
home, or trailer;’’; and
(2) by inserting after paragraph (27), the fol-
lowing:
137
‘‘(27A) ‘incidental property’ means, with re-
spect to a debtor’s principal residence—
‘‘(A) property commonly conveyed with a
principal residence in the area where the real
estate is located;
‘‘(B) all easements, rights, appurtenances,
fixtures, rents, royalties, mineral rights, oil or
gas rights or profits, water rights, escrow
funds, or insurance proceeds; and
‘‘(C) all replacements or additions;’’.
SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.
Section 522(b)(3)(A) of title 11, United States Code,
as so designated by this Act, is amended—
(1) by striking ‘‘180 days’’ and inserting ‘‘730
days’’; and
(2) by striking ‘‘, or for a longer portion of
such 180-day period than in any other place’’ and
inserting ‘‘or if the debtor’s domicile has not been
located at a single State for such 730-day period,
the place in which the debtor’s domicile was located
for 180 days immediately preceding the 730-day pe-
riod or for a longer portion of such 180-day period
than in any other place’’.
138
SEC. 308. RESIDENCY REQUIREMENT FOR HOMESTEAD EX-
EMPTION.
Section 522 of title 11, United States Code, is
amended—
(1) in subsection (b)(3)(A), as so designated by
this Act, by inserting ‘‘subject to subsections (o) and
(p),’’ before ‘‘any property’’; and
(2) by adding at the end the following:
‘‘(o) For purposes of subsection (b)(3)(A), and not-
withstanding subsection (a), the value of an interest in—
‘‘(1) real or personal property that the debtor
or a dependent of the debtor uses as a residence;
‘‘(2) a cooperative that owns property that the
debtor or a dependent of the debtor uses as a resi-
dence; or
‘‘(3) a burial plot for the debtor or a dependent
of the debtor;
shall be reduced to the extent that such value is attrib-
utable to any portion of any property that the debtor dis-
posed of in the 7-year period ending on the date of the
filing of the petition with the intent to hinder, delay, or
defraud a creditor and that the debtor could not exempt,
or that portion that the debtor could not exempt, under
subsection (b), if on such date the debtor had held the
property so disposed of.’’.
139
SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER
13 CASES.
(a) STOPPING ABUSIVE CONVERSIONS FROM CHAP-
TER 13.—Section 348(f)(1) of title 11, United States
Code, is amended—
(1) in subparagraph (A), by striking ‘‘and’’ at
the end;
(2) in subparagraph (B)—
(A) by striking ‘‘in the converted case,
with allowed secured claims’’ and inserting
‘‘only in a case converted to a case under chap-
ter 11 or 12, but not in a case converted to a
case under chapter 7, with allowed secured
claims in cases under chapters 11 and 12’’; and
(B) by striking the period and inserting ‘‘;
and’’; and
(3) by adding at the end the following:
‘‘(C) with respect to cases converted from chap-
ter 13—
‘‘(i) the claim of any creditor holding secu-
rity as of the date of the petition shall continue
to be secured by that security unless the full
amount of such claim determined under appli-
cable nonbankruptcy law has been paid in full
as of the date of conversion, notwithstanding
any valuation or determination of the amount
140
of an allowed secured claim made for the pur-
poses of the chapter 13 proceeding; and
‘‘(ii) unless a prebankruptcy default has
been fully cured under the plan at the time of
conversion, in any proceeding under this title or
otherwise, the default shall have the effect given
under applicable nonbankruptcy law.’’.
(b) GIVING
DEBTORS
THE
ABILITY
TO
KEEP
LEASED PERSONAL PROPERTY BY ASSUMPTION.—Section
365 of title 11, United States Code, is amended by adding
at the end the following:
‘‘(p)(1) If a lease of personal property is rejected or
not timely assumed by the trustee under subsection (d),
the leased property is no longer property of the estate and
the stay under section 362(a) is automatically terminated.
‘‘(2)(A) In the case of an individual under chapter
7, the debtor may notify the creditor in writing that the
debtor desires to assume the lease. Upon being so notified,
the creditor may, at its option, notify the debtor that it
is willing to have the lease assumed by the debtor and
may condition such assumption on cure of any outstanding
default on terms set by the contract.
‘‘(B) If, not later than 30 days after notice is pro-
vided under subparagraph (A), the debtor notifies the les-
sor in writing that the lease is assumed, the liability under
141
the lease will be assumed by the debtor and not by the
estate.
‘‘(C) The stay under section 362 and the injunction
under section 524(a)(2) shall not be violated by notifica-
tion of the debtor and negotiation of cure under this sub-
section.
‘‘(3) In a case under chapter 11 in which the debtor
is an individual and in a case under chapter 13, if the
debtor is the lessee with respect to personal property and
the lease is not assumed in the plan confirmed by the
court, the lease is deemed rejected as of the conclusion
of the hearing on confirmation. If the lease is rejected,
the stay under section 362 and any stay under section
1301 is automatically terminated with respect to the prop-
erty subject to the lease.’’.
(c) ADEQUATE PROTECTION OF LESSORS AND PUR-
CHASE MONEY SECURED CREDITORS.—
(1) 
CONFIRMATION
OF
PLAN.—Section
1325(a)(5)(B) of title 11, United States Code, is
amended—
(A) in clause (i), by striking ‘‘and’’ at the
end;
(B) in clause (ii), by striking ‘‘or’’ at the
end and inserting ‘‘and’’; and
(C) by adding at the end the following:
142
‘‘(iii) if—
‘‘(I) property to be distributed
pursuant to this subsection is in the
form of periodic payments, such pay-
ments shall be in equal monthly
amounts; and
‘‘(II) the holder of the claim is
secured by personal property, the
amount of such payments shall not be
less than an amount sufficient to pro-
vide to the holder of such claim ade-
quate protection during the period of
the plan; or’’.
(2) PAYMENTS.—Section 1326(a) of title 11,
United States Code, is amended to read as follows:
‘‘(a)(1) Unless the court orders otherwise, the debtor
shall commence making payments not later than 30 days
after the date of the filing of the plan or the order for
relief, whichever is earlier, in the amount—
‘‘(A) proposed by the plan to the trustee;
‘‘(B) scheduled in a lease of personal property
directly to the lessor for that portion of the obliga-
tion that becomes due after the order for relief, re-
ducing the payments under subparagraph (A) by the
amount so paid and providing the trustee with evi-
143
dence of such payment, including the amount and
date of payment; and
‘‘(C) that provides adequate protection directly
to a creditor holding an allowed claim secured by
personal property to the extent the claim is attrib-
utable to the purchase of such property by the debt-
or for that portion of the obligation that becomes
due after the order for relief, reducing the payments
under subparagraph (A) by the amount so paid and
providing the trustee with evidence of such payment,
including the amount and date of payment.
‘‘(2) A payment made under paragraph (1)(A) shall
be retained by the trustee until confirmation or denial of
confirmation. If a plan is confirmed, the trustee shall dis-
tribute any such payment in accordance with the plan as
soon as is practicable. If a plan is not confirmed, the trust-
ee shall return any such payments not previously paid and
not yet due and owing to creditors pursuant to paragraph
(3) to the debtor, after deducting any unpaid claim al-
lowed under section 503(b).
‘‘(3) Subject to section 363, the court may, upon no-
tice and a hearing, modify, increase, or reduce the pay-
ments required under this subsection pending confirma-
tion of a plan.
144
‘‘(4) Not later than 60 days after the date of filing
of a case under this chapter, a debtor retaining possession
of personal property subject to a lease or securing a claim
attributable in whole or in part to the purchase price of
such property shall provide the lessor or secured creditor
reasonable evidence of the maintenance of any required
insurance coverage with respect to the use or ownership
of such property and continue to do so for so long as the
debtor retains possession of such property.’’.
SEC. 310. LIMITATION ON LUXURY GOODS.
Section 523(a)(2)(C) of title 11, United States Code,
is amended to read as follows:
‘‘(C)(i) for purposes of subparagraph (A)—
‘‘(I) consumer debts owed to a single cred-
itor and aggregating more than $250 for luxury
goods or services incurred by an individual
debtor on or within 90 days before the order for
relief under this title are presumed to be non-
dischargeable; and
‘‘(II) cash advances aggregating more than
$750 that are extensions of consumer credit
under an open end credit plan obtained by an
individual debtor on or within 70 days before
the order for relief under this title, are pre-
sumed to be nondischargeable; and
145
‘‘(ii) for purposes of this subparagraph—
‘‘(I) the term ‘extension of credit under an
open end credit plan’ means an extension of
credit under an open end credit plan, within the
meaning of the Consumer Credit Protection Act
(15 U.S.C. 1601 et seq.);
‘‘(II) the term ‘open end credit plan’ has
the meaning given that term under section 103
of Consumer Credit Protection Act (15 U.S.C.
1602); and
‘‘(III) the term ‘luxury goods or services’
does not include goods or services reasonably
necessary for the support or maintenance of the
debtor or a dependent of the debtor.’’.
SEC. 311. AUTOMATIC STAY.
Section 362(b) of title 11, United States Code, is
amended by inserting after paragraph (21), as added by
this Act, the following:
‘‘(22) under subsection (a)(3), of the continu-
ation of any eviction, unlawful detainer action, or
similar proceeding by a lessor against a debtor in-
volving residential real property in which the debtor
resides as a tenant under a rental agreement;
‘‘(23) under subsection (a)(3), of the com-
mencement of any eviction, unlawful detainer action,
146
or similar proceeding by a lessor against a debtor in-
volving residential real property in which the debtor
resides as a tenant under a rental agreement that
has terminated under the lease agreement or appli-
cable State law;
‘‘(24) under subsection (a)(3), of eviction ac-
tions based on endangerment to property or person
or the use of illegal drugs;
‘‘(25) under subsection (a) of any transfer that
is not avoidable under section 544 and that is not
avoidable under section 549;’’.
SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY
DISCHARGES.
Title 11, United States Code, is amended—
(1) in section 727(a)(8), by striking ‘‘six’’ and
inserting ‘‘8’’; and
(2) in section 1328, by inserting after sub-
section (e) the following:
‘‘(f) Notwithstanding subsections (a) and (b), the
court shall not grant a discharge of all debts provided for
by the plan or disallowed under section 502 if the debtor
has received a discharge in any case filed under this title
within 5 years before the order for relief under this chap-
ter.’’.
147
SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND AN-
TIQUES.
(a) DEFINITION.—Section 522(f) of title 11, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘(4)(A) Subject to subparagraph (B), for purposes
of paragraph (1)(B), the term ‘household goods’ means—
‘‘(i) clothing;
‘‘(ii) furniture;
‘‘(iii) appliances;
‘‘(iv) 1 radio;
‘‘(v) 1 television;
‘‘(vi) 1 VCR;
‘‘(vii) linens;
‘‘(viii) china;
‘‘(ix) crockery;
‘‘(x) kitchenware;
‘‘(xi) educational materials and educational
equipment primarily for the use of minor dependent
children of the debtor, but only 1 personal computer
only if used primarily for the education or entertain-
ment of such minor children;
‘‘(xii) medical equipment and supplies;
‘‘(xiii) furniture exclusively for the use of minor
children, or elderly or disabled dependents of the
debtor; and
148
‘‘(xiv) personal effects (including the toys and
hobby equipment of minor dependent children and
wedding rings) of the debtor and the dependents of
the debtor.
‘‘(B) The term ‘household goods’ does not include—
‘‘(i) works of art (unless by or of the debtor or
the dependents of the debtor);
‘‘(ii) electronic entertainment equipment (except
1 television, 1 radio, and 1 VCR);
‘‘(iii) items acquired as antiques;
‘‘(iv) jewelry (except wedding rings); and
‘‘(v) a computer (except as otherwise provided
for in this section), motor vehicle (including a trac-
tor or lawn tractor), boat, or a motorized rec-
reational device, conveyance, vehicle, watercraft, or
aircraft.’’.
(b) STUDY.—Not later than 2 years after the date
of enactment of this Act, the Director of the Executive
Office for United States Trustees shall submit a report
to the Committee on the Judiciary of the Senate and the
Committee on the Judiciary of the House of Representa-
tives containing its findings regarding utilization of the
definition of household goods, as defined in section
522(f)(4) of title 11, United States Code, as added by this
section, with respect to the avoidance of nonpossessory,
149
nonpurchase money security interests in household goods
under section 522(f)(1)(B) of title 11, United States Code,
and the impact that section 522(f)(4) of that title, as
added by this section, has had on debtors and on the bank-
ruptcy courts. Such report may include recommendations
for amendments to section 522(f)(4) of title 11, United
States Code, consistent with the Director’s findings.
SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE
DEBTS.
(a) IN GENERAL.—Section 523(a) of title 11, United
States Code, is amended by inserting after paragraph (14)
the following:
‘‘(14A) incurred to pay a tax to a governmental
unit, other than the United States, that would be
nondischargeable under paragraph (1);’’.
(b) DISCHARGE
UNDER
CHAPTER
13.—Section
1328(a) of title 11, United States Code, is amended by
striking paragraphs (1) through (3) and inserting the fol-
lowing:
‘‘(1) provided for under section 1322(b)(5);
‘‘(2) of the kind specified in paragraph (2), (3),
(4), (5), (8), or (9) of section 523(a);
‘‘(3) for restitution, or a criminal fine, included
in a sentence on the debtor’s conviction of a crime;
or
150
‘‘(4) for restitution, or damages, awarded in a
civil action against the debtor as a result of willful
or malicious injury by the debtor that caused per-
sonal injury to an individual or the death of an indi-
vidual.’’.
SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7
AND 13 CASES.
(a) NOTICE.—Section 342 of title 11, United States
Code, as amended by this Act, is amended—
(1) in subsection (c)—
(A) by inserting ‘‘(1)’’ after ‘‘(c)’’;
(B) by striking ‘‘, but the failure of such
notice to contain such information shall not in-
validate the legal effect of such notice’’; and
(C) by adding at the end the following:
‘‘(2) If, within the 90 days prior to the date of
the filing of a petition in a voluntary case, the cred-
itor supplied the debtor in at least 2 communications
sent to the debtor with the current account number
of the debtor and the address at which the creditor
wishes to receive correspondence, then the debtor
shall send any notice required under this title to the
address provided by the creditor and such notice
shall include the account number. In the event the
creditor would be in violation of applicable nonbank-
151
ruptcy law by sending any such communication with-
in such 90-day period and if the creditor supplied
the debtor in the last 2 communications with the
current account number of the debtor and the ad-
dress at which the creditor wishes to receive cor-
respondence, then the debtor shall send any notice
required under this title to the address provided by
the creditor and such notice shall include the ac-
count number.’’; and
(2) by adding at the end the following:
‘‘(e) At any time, a creditor, in a case of an individual
debtor under chapter 7 or 13, may file with the court and
serve on the debtor a notice of the address to be used to
notify the creditor in that case. Five days after receipt
of such notice, if the court or the debtor is required to
give the creditor notice, such notice shall be given at that
address.
‘‘(f) An entity may file with the court a notice stating
its address for notice in cases under chapters 7 and 13.
After 30 days following the filing of such notice, any notice
in any case filed under chapter 7 or 13 given by the court
shall be to that address unless specific notice is given
under subsection (e) with respect to a particular case.
‘‘(g)(1) Notice given to a creditor other than as pro-
vided in this section shall not be effective notice until that
152
notice has been brought to the attention of the creditor.
If the creditor designates a person or department to be
responsible for receiving notices concerning bankruptcy
cases and establishes reasonable procedures so that bank-
ruptcy notices received by the creditor are to be delivered
to such department or person, notice shall not be consid-
ered to have been brought to the attention of the creditor
until received by such person or department.
‘‘(2) No sanction under section 362(k) or any other
sanction that a court may impose on account of violations
of the stay under section 362(a) or failure to comply with
section 542 or 543 may be imposed on any action of the
creditor unless the action takes place after the creditor
has received notice of the commencement of the case effec-
tive under this section.’’.
(b) DEBTOR’S DUTIES.—Section 521 of title 11,
United States Code, as amended by this Act, is
amended—
(1) in subsection (a), as so designated by this
Act, by striking paragraph (1) and inserting the fol-
lowing:
‘‘(1) file—
‘‘(A) a list of creditors; and
‘‘(B) unless the court orders otherwise—
153
‘‘(i) a schedule of assets and liabil-
ities;
‘‘(ii) a schedule of current income and
current expenditures;
‘‘(iii) a statement of the debtor’s fi-
nancial affairs and, if applicable, a
certificate—
‘‘(I) of an attorney whose name
is on the petition as the attorney for
the debtor or any bankruptcy petition
preparer signing the petition under
section 110(b)(1) indicating that such
attorney or bankruptcy petition pre-
parer delivered to the debtor any no-
tice required by section 342(b); or
‘‘(II) if no attorney for the debt-
or is indicated and no bankruptcy pe-
tition preparer signed the petition, of
the debtor that such notice was ob-
tained and read by the debtor;
‘‘(iv) copies of all payment advices or
other evidence of payment, if any, received
by the debtor from any employer of the
debtor in the period 60 days before the fil-
ing of the petition;
154
‘‘(v) a statement of the amount of
monthly net income, itemized to show how
the amount is calculated; and
‘‘(vi) a statement disclosing any rea-
sonably anticipated increase in income or
expenditures over the 12-month period fol-
lowing the date of filing;’’; and
(2) by adding at the end the following:
‘‘(e)(1) At any time, a creditor, in the case of an indi-
vidual under chapter 7 or 13, may file with the court no-
tice that the creditor requests the petition, schedules, and
a statement of affairs filed by the debtor in the case, and
the court shall make those documents available to the
creditor who requests those documents.
‘‘(2)(A) The debtor shall provide either a tax return
or transcript at the election of the debtor, for the latest
taxable period prior to filing for which a tax return has
been or should have been filed, to the trustee, not later
than 7 days before the date first set for the first meeting
of creditors, or the case shall be dismissed, unless the
debtor demonstrates that the failure to file a return as
required is due to circumstances beyond the control of the
debtor.
‘‘(B) If a creditor has requested a tax return or tran-
script referred to in subparagraph (A), the debtor shall
155
provide such tax return or transcript to the requesting
creditor at the time the debtor provides the tax return or
transcript to the trustee, or the case shall be dismissed,
unless the debtor demonstrates that the debtor is unable
to provide such information due to circumstances beyond
the control of the debtor.
‘‘(3)(A) At any time, a creditor in a case under chap-
ter 13 may file with the court notice that the creditor re-
quests the plan filed by the debtor in the case.
‘‘(B) The court shall make such plan available to the
creditor who request such plan—
‘‘(i) at a reasonable cost; and
‘‘(ii) not later than 5 days after such request.
‘‘(f) An individual debtor in a case under chapter 7,
11, or 13 shall file with the court at the request of any
party in interest—
‘‘(1) at the time filed with the taxing authority,
all tax returns required under applicable law, includ-
ing any schedules or attachments, with respect to
the period from the commencement of the case until
such time as the case is closed;
‘‘(2) at the time filed with the taxing authority,
all tax returns required under applicable law, includ-
ing any schedules or attachments, that were not
filed with the taxing authority when the schedules
156
under subsection (a)(1) were filed with respect to
the period that is 3 years before the order of relief;
‘‘(3) any amendments to any of the tax returns,
including schedules or attachments, described in
paragraph (1) or (2); and
‘‘(4) in a case under chapter 13, a statement
subject to the penalties of perjury by the debtor of
the debtor’s income and expenditures in the pre-
ceding tax year and monthly income, that shows how
the amounts are calculated—
‘‘(A) beginning on the date that is the
later of 90 days after the close of the debtor’s
tax year or 1 year after the order for relief, un-
less a plan has been confirmed; and
‘‘(B) thereafter, on or before the date that
is 45 days before each anniversary of the con-
firmation of the plan until the case is closed.
‘‘(g)(1) A statement referred to in subsection (f)(4)
shall disclose—
‘‘(A) the amount and sources of income of the
debtor;
‘‘(B) the identity of any person responsible with
the debtor for the support of any dependent of the
debtor; and
157
‘‘(C) the identity of any person who contrib-
uted, and the amount contributed, to the household
in which the debtor resides.
‘‘(2) The tax returns, amendments, and statement of
income and expenditures described in subsection (e)(2)(A)
and subsection (f) shall be available to the United States
trustee, any bankruptcy administrator, any trustee, and
any party in interest for inspection and copying, subject
to the requirements of subsection (h).
‘‘(h)(1) Not later than 180 days after the date of en-
actment of the Bankruptcy Abuse Prevention and Con-
sumer Protection Act of 2001, the Director of the Admin-
istrative Office of the United States Courts shall establish
procedures for safeguarding the confidentiality of any tax
information required to be provided under this section.
‘‘(2) The procedures under paragraph (1) shall in-
clude restrictions on creditor access to tax information
that is required to be provided under this section.
‘‘(3) Not later than 1 year and 180 days after the
date of enactment of the Bankruptcy Abuse Prevention
and Consumer Protection Act of 2001, the Director of the
Administrative Office of the United States Courts shall
prepare and submit to Congress a report that—
‘‘(A) assesses the effectiveness of the proce-
dures under paragraph (1); and
158
‘‘(B) if appropriate, includes proposed legisla-
tion to—
‘‘(i) further protect the confidentiality of
tax information; and
‘‘(ii) provide penalties for the improper use
by any person of the tax information required
to be provided under this section.
‘‘(i) If requested by the United States trustee or a
trustee serving in the case, the debtor shall provide—
‘‘(1) a document that establishes the identity of
the debtor, including a driver’s license, passport, or
other document that contains a photograph of the
debtor; and
‘‘(2) such other personal identifying information
relating to the debtor that establishes the identity of
the debtor.’’.
SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED-
ULES OR PROVIDE REQUIRED INFORMATION.
Section 521 of title 11, United States Code, as
amended by this Act, is amended by adding at the end
the following:
‘‘(j)(1) Notwithstanding section 707(a), and subject
to paragraph (2), if an individual debtor in a voluntary
case under chapter 7 or 13 fails to file all of the informa-
tion required under subsection (a)(1) within 45 days after
159
the filing of the petition commencing the case, the case
shall be automatically dismissed effective on the 46th day
after the filing of the petition.
‘‘(2) With respect to a case described in paragraph
(1), any party in interest may request the court to enter
an order dismissing the case. If requested, the court shall
enter an order of dismissal not later than 5 days after
such request.
‘‘(3) Upon request of the debtor made within 45 days
after the filing of the petition commencing a case de-
scribed in paragraph (1), the court may allow the debtor
an additional period of not to exceed 45 days to file the
information required under subsection (a)(1) if the court
finds justification for extending the period for the filing.’’.
SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON
CONFIRMATION OF THE PLAN.
Section 1324 of title 11, United States Code, is
amended—
(1) by striking ‘‘After’’ and inserting the fol-
lowing:
‘‘(a) Except as provided in subsection (b) and after’’;
and
(2) by adding at the end the following:
‘‘(b) The hearing on confirmation of the plan may
be held not earlier than 20 days and not later than 45
160
days after the date of the meeting of creditors under sec-
tion 341(a).’’.
SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION
IN CERTAIN CASES.
Title 11, United States Code, is amended—
(1) by amending section 1322(d) to read as fol-
lows:
‘‘(d)(1) If the current monthly income of the debtor
and the debtor’s spouse combined, when multiplied by 12,
is not less than—
‘‘(A) in the case of a debtor in a household of
1 person, the median family income of the applicable
State for 1 earner last reported by the Bureau of
the Census;
‘‘(B) in the case of a debtor in a household of
2, 3, or 4 individuals, the highest median family in-
come of the applicable State for a family of the same
number or fewer individuals last reported by the Bu-
reau of the Census; or
‘‘(C) in the case of a debtor in a household ex-
ceeding 4 individuals, the highest median family in-
come of the applicable State for a family of 4 or
fewer individuals last reported by the Bureau of the
Census, plus $525 per month for each individual in
excess of 4,
161
the plan may not provide for payments over a period that
is longer than 5 years.
‘‘(2) If the current monthly income of the debtor and
the debtor’s spouse combined, when multiplied by 12, is
less than—
‘‘(A) in the case of a debtor in a household of
1 person, the median family income of the applicable
State for 1 earner last reported by the Bureau of
the Census;
‘‘(B) in the case of a debtor in a household of
2, 3, or 4 individuals, the highest median family in-
come of the applicable State for a family of the same
number or fewer individuals last reported by the Bu-
reau of the Census; or
‘‘(C) in the case of a debtor in a household ex-
ceeding 4 individuals, the highest median family in-
come of the applicable State for a family of 4 or
fewer individuals last reported by the Bureau of the
Census, plus $525 per month for each individual in
excess of 4,
the plan may not provide for payments over a period that
is longer than 3 years, unless the court, for cause, ap-
proves a longer period, but the court may not approve a
period that is longer than 5 years.’’;
162
(2) in section 1325(b)(1)(B), by striking
‘‘three-year period’’ and inserting ‘‘applicable com-
mitment period’’; and
(3) in section 1325(b), as amended by this Act,
by adding at the end the following:
‘‘(4) For purposes of this subsection, the ‘applicable
commitment period’—
‘‘(A) subject to subparagraph (B), shall be—
‘‘(i) 3 years; or
‘‘(ii) not less than 5 years, if the current
monthly income of the debtor and the debtor’s
spouse combined, when multiplied by 12, is not
less than—
‘‘(I) in the case of a debtor in a
household of 1 person, the median family
income of the applicable State for 1 earner
last reported by the Bureau of the Census;
‘‘(II) in the case of a debtor in a
household of 2, 3, or 4 individuals, the
highest median family income of the appli-
cable State for a family of the same num-
ber or fewer individuals last reported by
the Bureau of the Census; or
‘‘(III) in the case of a debtor in a
household exceeding 4 individuals, the
163
highest median family income of the appli-
cable State for a family of 4 or fewer indi-
viduals last reported by the Bureau of the
Census, plus $525 per month for each in-
dividual in excess of 4; and
‘‘(B) may be less than 3 or 5 years, whichever
is applicable under subparagraph (A), but only if the
plan provides for payment in full of all allowed unse-
cured claims over a shorter period.’’; and
(4) in section 1329(c), by striking ‘‘three
years’’ and inserting ‘‘the applicable commitment pe-
riod under section 1325(b)(1)(B)’’.
SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF
RULE 9011 OF THE FEDERAL RULES OF BANK-
RUPTCY PROCEDURE.
It is the sense of Congress that rule 9011 of the Fed-
eral Rules of Bankruptcy Procedure (11 U.S.C. App.)
should be modified to include a requirement that all docu-
ments (including schedules), signed and unsigned, sub-
mitted to the court or to a trustee by debtors who rep-
resent themselves and debtors who are represented by an
attorney be submitted only after the debtor or the debtor’s
attorney has made reasonable inquiry to verify that the
information contained in such documents is—
(1) well grounded in fact; and
164
(2) warranted by existing law or a good-faith
argument for the extension, modification, or reversal
of existing law.
SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL
CASES.
Section 362(e) of title 11, United States Code, is
amended—
(1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and
(2) by adding at the end the following:
‘‘(2) Notwithstanding paragraph (1), in the case of
an individual filing under chapter 7, 11, or 13, the stay
under subsection (a) shall terminate on the date that is
60 days after a request is made by a party in interest
under subsection (d), unless—
‘‘(A) a final decision is rendered by the court
during the 60-day period beginning on the date of
the request; or
‘‘(B) that 60-day period is extended—
‘‘(i) by agreement of all parties in interest;
or
‘‘(ii) by the court for such specific period
of time as the court finds is required for good
cause, as described in findings made by the
court.’’.
165
SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS.
(a) PROPERTY OF THE ESTATE.—
(1) IN GENERAL.—Subchapter I of chapter 11
of title 11, United States Code, is amended by add-
ing at the end the following:
‘‘§ 1115. Property of the estate
‘‘(a) In a case concerning an individual debtor, prop-
erty of the estate includes, in addition to the property
specified in section 541—
‘‘(1) all property of the kind specified in section
541 that the debtor acquires after the commence-
ment of the case but before the case is closed, dis-
missed, or converted to a case under chapter 7, 12,
or 13, whichever occurs first; and
‘‘(2) earnings from services performed by the
debtor after the commencement of the case but be-
fore the case is closed, dismissed, or converted to a
case under chapter 7, 12, or 13, whichever occurs
first.’’.
‘‘(b) Except as provided in section 1104 or a con-
firmed plan or order confirming a plan, the debtor shall
remain in possession of all property of the estate.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 11 of title 11, United States Code,
166
is amended by adding at the end of the matter relat-
ing to subchapter I the following:
‘‘1115. Property of the estate.’’.
(b) CONTENTS OF PLAN.—Section 1123(a) of title
11, United States Code, is amended—
(1) in paragraph (6), by striking ‘‘and’’ at the
end;
(2) in paragraph (7), by striking the period and
inserting ‘‘; and’’; and
(3) by adding at the end the following:
‘‘(8) in a case concerning an individual, provide
for the payment to creditors through the plan of all
or such portion of earnings from personal services
performed by the debtor after the commencement of
the case or other future income of the debtor as is
necessary for the execution of the plan.’’.
(c) CONFIRMATION OF PLAN.—
(1) REQUIREMENTS RELATING TO VALUE OF
PROPERTY.—Section 1129(a) of title 11, United
States Code, is amended by adding at the end the
following:
‘‘(15) In a case concerning an individual in
which the holder of an allowed unsecured claim ob-
jects to the confirmation of the plan—
‘‘(A) the value of the property to be dis-
tributed under the plan on account of such
167
claim is, as of the effective date of the plan, not
less than the amount of such claim; or
‘‘(B) the value of the property to be dis-
tributed under the plan is not less than the
debtor’s projected disposable income (as that
term is defined in section 1325(b)(2)) to be re-
ceived during the 5-year period beginning on
the date that the first payment is due under the
plan, or during the term of the plan, whichever
is longer.’’.
(2) REQUIREMENT RELATING TO INTERESTS IN
PROPERTY.—Section 1129(b)(2)(B)(ii) of title 11,
United States Code, is amended by inserting before
the period at the end the following: ‘‘, except that
in a case concerning an individual, the debtor may
retain property included in the estate under section
1115, subject to the requirements of subsection
(a)(14)’’.
(d) EFFECT OF CONFIRMATION—Section 1141(d) of
title 11, United States Code, is amended—
(1) in paragraph (2), by striking ‘‘The con-
firmation of a plan does not discharge an individual
debtor’’ and inserting ‘‘A discharge under this chap-
ter does not discharge a debtor’’; and
(2) by adding at the end the following:
168
‘‘(5) In a case concerning an individual—
‘‘(A) except as otherwise ordered for cause
shown, the discharge is not effective until completion
of all payments under the plan; and
‘‘(B) at any time after the confirmation of the
plan and after notice and a hearing, the court may
grant a discharge to a debtor that has not completed
payments under the plan only if—
‘‘(i) for each allowed unsecured claim, the
value, as of the effective date of the plan, of
property actually distributed under the plan on
account of that claim is not less than the
amount that would have been paid on such
claim if the estate of the debtor had been liq-
uidated under chapter 7 of this title on such
date; and
‘‘(ii) modification of the plan under 1127
of this title is not practicable.’’.
(e) MODIFICATION OF PLAN.—Section 1127 of title
11, United States Code, is amended by adding at the end
the following:
‘‘(e) In a case concerning an individual, the plan may
be modified at any time after confirmation of the plan but
before the completion of payments under the plan, whether
or not the plan has been substantially consummated, upon
169
request of the debtor, the trustee, the United States trust-
ee, or the holder of an allowed unsecured claim, to—
‘‘(1) increase or reduce the amount of payments
on claims of a particular class provided for by the
plan;
‘‘(2) extend or reduce the time period for such
payments; or
‘‘(3) alter the amount of the distribution to a
creditor whose claim is provided for by the plan to
the extent necessary to take account of any payment
of such claim made other than under the plan.
‘‘(f)(1) Sections 1121 through 1128 of this title and
the requirements of section 1129 of this title apply to any
modification under subsection (a).
‘‘(2) The plan, as modified, shall become the plan
only after there has been disclosure under section 1125,
as the court may direct, notice and a hearing, and such
modification is approved.’’.
SEC. 322. LIMITATION.
(a) EXEMPTIONS.—Section 522 of title 11, United
States Code, as amended by this Act, is amended by add-
ing at the end the following:
‘‘(p)(1) Except as provided in paragraph (2) of this
subsection and sections 544 and 548 of this title, as a
result of electing under subsection (b)(3)(A) to exempt
170
property under State or local law, a debtor may not ex-
empt any amount of interest that was acquired by the
debtor during the 2-year period preceding the filing of the
petition which exceeds in the aggregate $100,000 in value
in—
‘‘(A) real or personal property that the debtor
or a dependent of the debtor uses as a residence;
‘‘(B) a cooperative that owns property that the
debtor or a dependent of the debtor uses as a resi-
dence; or
‘‘(C) a burial plot for the debtor or a dependent
of the debtor.
‘‘(2)(A) The limitation under paragraph (1) shall not
apply to an exemption claimed under subsection (b)(3)(A)
by a family farmer for the principal residence of that
farmer.
‘‘(B) For purposes of paragraph (1), any amount of
such interest does not include any interest transferred
from a debtor’s previous principal residence (which was
acquired prior to the beginning of the 2-year period) into
the debtor’s current principal residence, where the debt-
or’s previous and current residences are located in the
same State.’’.
(b) ADJUSTMENT OF DOLLAR AMOUNTS.—Section
104(b) of title 11, United States Code, is amended—
171
(1) in paragraph (1), by striking ‘‘522(d),’’ and
inserting ‘‘522(d), 522(n), 522(p),’’; and
(2) in paragraph (3), by striking ‘‘522(d),’’ and
inserting ‘‘522(d), 522(n), 522(p),’’.
SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICI-
PANT CONTRIBUTIONS AND OTHER PROP-
ERTY FROM THE ESTATE.
(a) IN GENERAL.—Section 541(b) of title 11, United
States Code, is amended by inserting after paragraph (6),
as added by this Act, the following:
‘‘(7) any amount—
‘‘(A) withheld by an employer from the
wages of employees for payment as contribu-
tions to—
‘‘(i) an employee benefit plan subject
to title I of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C.
1001 et seq.) or under an employee benefit
plan which is a governmental plan under
section 414(d) of the Internal Revenue
Code of 1986, a deferred compensation
plan under section 457 of the Internal
Revenue Code of 1986, or a tax-deferred
annuity under section 403(b) of the Inter-
nal Revenue Code of 1986, except that
172
amount shall not constitute disposable in-
come, as defined in section 1325(b)(2) of
this title; or
‘‘(ii) a health insurance plan regulated
by State law whether or not subject to
such title; or
‘‘(B) received by the employer from em-
ployees for payment as contributions to—
‘‘(i) an employee benefit plan subject
to title I of the Employee Retirement In-
come Security Act of 1974 (29 U.S.C.
1001 et seq.) or under an employee benefit
plan which is a governmental plan under
section 414(d) of the Internal Revenue
Code of 1986, a deferred compensation
plan under section 457 of the Internal
Revenue Code of 1986, or a tax-deferred
annuity under section 403(b) of the Inter-
nal Revenue Code of 1986, except that
amount shall not constitute disposable in-
come, as defined in section 1325(b)(2) of
this title; or
‘‘(ii) a health insurance plan regulated
by State law whether or not subject to
such title;’’.
173
(b) APPLICATION
OF AMENDMENT.—The amend-
ments made by this section shall not apply to cases com-
menced under title 11, United States Code, before the ex-
piration of the 180-day period beginning on the date of
enactment of this Act.
SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLV-
ING BANKRUPTCY PROFESSIONALS.
(a) IN GENERAL.—Section 1334 of title 28, United
States Code, is amended—
(1) in subsection (b), by striking ‘‘Notwith-
standing’’ and inserting ‘‘Except as provided in sub-
section (e)(2), and notwithstanding’’; and
(2) by striking subsection (e) and inserting the
following:
‘‘(e) The district court in which a case under title
11 is commenced or is pending shall have exclusive
jurisdiction—
‘‘(1) of all the property, wherever located, of the
debtor as of the date of commencement of such case,
and of property of the estate; and
‘‘(2) over all claims or causes of action that in-
volve construction of section 327 of title 11, United
States Code, or rules relating to disclosure require-
ments under section 327.’’.
174
(b) APPLICABILITY.—This section shall only apply to
cases filed after the date of enactment of this Act.
SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE
INCREASE.
(a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE
11, UNITED STATES CODE.—Section 1930(a) of title 28,
United States Code, is amended by striking paragraph (1)
and inserting the following:
‘‘(1) For a case commenced—
‘‘(A) under chapter 7 of title 11, $160; or
‘‘(B) under chapter 13 of title 11, $150.’’.
(b) UNITED STATES TRUSTEE SYSTEM FUND.—Sec-
tion 589a(b) of title 28, United States Code, is amended—
(1) by striking paragraph (1) and inserting the
following:
‘‘(1)(A) 40.63 percent of the fees collected
under section 1930(a)(1)(A) of this title in cases
commenced under chapter 7 of title 11; and
‘‘(B) 70.00 percent of the fees collected under
section 1930(a)(1)(B) of this title in cases com-
menced under chapter 13 of title 11;’’;
(2) in paragraph (2), by striking ‘‘one-half’’
and inserting ‘‘three-fourths’’; and
(3) in paragraph (4), by striking ‘‘one-half’’
and inserting ‘‘100 percent’’.
175
(c) COLLECTION AND DEPOSIT OF MISCELLANEOUS
BANKRUPTCY FEES.—Section 406(b) of the Judiciary Ap-
propriations Act, 1990 (28 U.S.C. 1931 note) is amended
by striking ‘‘pursuant to 28 U.S.C. section 1930(b) and
30.76 33.87 per centum of the fees hereafter collected
under 28 U.S.C. section 1930(a)(1) and 25 percent of the
fees hereafter collected under 28 U.S.C. section
1930(a)(3) shall be deposited as offsetting receipts to the
fund established under 28 U.S.C. section 1931’’ and in-
serting ‘‘under section 1930(b) of title 28, United States
Code, and 31.25 percent of the fees collected under section
1930(a)(1)(A) of that title, 30.00 percent of the fees col-
lected under section 1930(a)(1)(B) of that title, and 25
percent of the fees collected under section 1930(a)(3) of
that title shall be deposited as offsetting receipts to the
fund established under section 1931 of that title’’.
SEC. 326. SHARING OF COMPENSATION.
Section 504 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(c) This section shall not apply with respect to shar-
ing, or agreeing to share, compensation with a bona fide
public service attorney referral program that operates in
accordance with non-Federal law regulating attorney re-
ferral services and with rules of professional responsibility
applicable to attorney acceptance of referrals.’’.
176
SEC. 327. FAIR VALUATION OF COLLATERAL.
Section 506(a) of title 11, United States Code, is
amended by—
(1) inserting ‘‘(1)’’ after ‘‘(a)’’; and
(2) by adding at the end the following:
‘‘(2) In the case of an individual debtor under chap-
ters 7 and 13, such value with respect to personal property
securing an allowed claim shall be determined based on
the replacement value of such property as of the date of
filing the petition without deduction for costs of sale or
marketing. With respect to property acquired for personal,
family, or household purpose, replacement value shall
mean the price a retail merchant would charge for prop-
erty of that kind considering the age and condition of the
property at the time value is determined.’’.
SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGA-
TIONS.
(a) EXECUTORY
CONTRACTS
AND
UNEXPIRED
LEASES.—Section 365 of title 11, United States Code, is
amended—
(1) in subsection (b)—
(A) in paragraph (1)(A), by striking the
semicolon at the end and inserting the fol-
lowing: ‘‘other than a default that is a breach
of a provision relating to the satisfaction of any
provision (other than a penalty rate or penalty
177
provision) relating to a default arising from any
failure to perform nonmonetary obligations
under an unexpired lease of real property, if it
is impossible for the trustee to cure such de-
fault by performing nonmonetary acts at and
after the time of assumption, except that if
such default arises from a failure to operate in
accordance with a nonresidential real property
lease, then such default shall be cured by per-
formance at and after the time of assumption
in accordance with such lease, and pecuniary
losses resulting from such default shall be com-
pensated in accordance with the provisions of
paragraph (b)(l);’’; and
(B) in paragraph (2)(D), by striking ‘‘pen-
alty rate or provision’’ and inserting ‘‘penalty
rate or penalty provision’’;
(2) in subsection (c)—
(A) in paragraph (2), by inserting ‘‘or’’ at
the end;
(B) in paragraph (3), by striking ‘‘; or’’ at
the end and inserting a period; and
(C) by striking paragraph (4);
(3) in subsection (d)—
178
(A) by striking paragraphs (5) through
(9); and
(B) by redesignating paragraph (10) as
paragraph (5); and
(4) in subsection (f)(1) by striking ‘‘; except
that’’ and all that follows through the end of the
paragraph and inserting a period.
(b) IMPAIRMENT OF CLAIMS OR INTERESTS.—Sec-
tion 1124(2) of title 11, United States Code, is
amended—
(1) in subparagraph (A), by inserting ‘‘or of a
kind that section 365(b)(2) of this title expressly
does not require to be cured’’ before the semicolon
at the end;
(2) in subparagraph (C), by striking ‘‘and’’ at
the end;
(3) by redesignating subparagraph (D) as sub-
paragraph (E); and
(4) by inserting after subparagraph (C) the fol-
lowing:
‘‘(D) if such claim or such interest arises
from any failure to perform a nonmonetary ob-
ligation, other than a default arising from fail-
ure to operate a non-residential real property
lease subject to section 365(b)(1)(A), com-
179
pensates the holder of such claim or such inter-
est (other than the debtor or an insider) for any
actual pecuniary loss incurred by such holder as
a result of such failure; and’’.
TITLE IV—GENERAL AND SMALL
BUSINESS BANKRUPTCY PRO-
VISIONS
Subtitle A—General Business
Bankruptcy Provisions
SEC. 401. ADEQUATE PROTECTION FOR INVESTORS.
(a) DEFINITION.—Section 101 of title 11, United
States Code, as amended by this Act, is amended by in-
serting after paragraph (48) the following:
‘‘(48A) ‘securities self regulatory organization’
means either a securities association registered with
the Securities and Exchange Commission under sec-
tion 15A of the Securities Exchange Act of 1934 (15
U.S.C. 78o–3) or a national securities exchange reg-
istered with the Securities and Exchange Commis-
sion under section 6 of the Securities Exchange Act
of 1934 (15 U.S.C. 78f);’’.
(b) AUTOMATIC STAY.—Section 362(b) of title 11,
United States Code, is amended by inserting after para-
graph (25), as added by this Act, the following:
‘‘(26) under subsection (a), of—
180
‘‘(A) the commencement or continuation of
an investigation or action by a securities self
regulatory organization to enforce such organi-
zation’s regulatory power;
‘‘(B) the enforcement of an order or deci-
sion, other than for monetary sanctions, ob-
tained in an action by the securities self regu-
latory organization to enforce such organiza-
tion’s regulatory power; or
‘‘(C) any act taken by the securities self
regulatory organization to delist, delete, or
refuse to permit quotation of any stock that
does not meet applicable regulatory require-
ments;’’.
SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY
HOLDERS.
Section 341 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(e) Notwithstanding subsections (a) and (b), the
court, on the request of a party in interest and after notice
and a hearing, for cause may order that the United States
trustee not convene a meeting of creditors or equity secu-
rity holders if the debtor has filed a plan as to which the
debtor solicited acceptances prior to the commencement
of the case.’’.
181
SEC. 403. PROTECTION OF REFINANCE OF SECURITY IN-
TEREST.
Subparagraphs (A), (B), and (C) of section 547(e)(2)
of title 11, United States Code, are each amended by strik-
ing ‘‘10’’ each place it appears and inserting ‘‘30’’.
SEC. 
404. 
EXECUTORY 
CONTRACTS 
AND 
UNEXPIRED
LEASES.
(a) IN GENERAL.—Section 365(d)(4) of title 11,
United States Code, is amended to read as follows:
‘‘(4)(A) Subject to subparagraph (B), in any case
under any chapter of this title, an unexpired lease of non-
residential real property under which the debtor is the les-
see shall be deemed rejected, and the trustee shall imme-
diately surrender that nonresidential real property to the
lessor, if the trustee does not assume or reject the unex-
pired lease by the earlier of—
‘‘(i) the date that is 120 days after the date of
the order for relief; or
‘‘(ii) the date of the entry of an order con-
firming a plan.
‘‘(B)(i) The court may extend the period determined
under subparagraph (A), prior to the expiration of the
120-day period, for 90 days upon motion of the trustee
or lessor for cause.
182
‘‘(ii) If the court grants an extension under clause
(i), the court may grant a subsequent extension only upon
prior written consent of the lessor in each instance.’’.
(b) EXCEPTION.—Section 365(f)(1) of title 11,
United States Code, is amended by striking ‘‘subsection’’
the first place it appears and inserting ‘‘subsections (b)
and’’.
SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS
COMMITTEES.
(a) APPOINTMENT.—Section 1102(a) of title 11,
United States Code, is amended by adding at the end the
following:
‘‘(4) On request of a party in interest and after notice
and a hearing, the court may order the United States
trustee to change the membership of a committee ap-
pointed under this subsection, if the court determines that
the change is necessary to ensure adequate representation
of creditors or equity security holders. The court may
order the United States trustee to increase the number
of members of a committee to include a creditor that is
a small business concern (as described in section 3(a)(1)
of the Small Business Act (15 U.S.C. 632(a)(1))), if the
court determines that the creditor holds claims (of the
kind represented by the committee) the aggregate amount
183
of which, in comparison to the annual gross revenue of
that creditor, is disproportionately large.’’.
(b) INFORMATION.—Section 1102(b) of title 11,
United States Code, is amended by adding at the end the
following:
‘‘(3) A committee appointed under subsection (a)
shall—
‘‘(A) provide access to information for creditors
who—
‘‘(i) hold claims of the kind represented by
that committee; and
‘‘(ii) are not appointed to the committee;
‘‘(B) solicit and receive comments from the
creditors described in subparagraph (A); and
‘‘(C) be subject to a court order that compels
any additional report or disclosure to be made to the
creditors described in subparagraph (A).’’.
SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11,
UNITED STATES CODE.
Section 546 of title 11, United States Code, is
amended—
(1) by redesignating the second subsection des-
ignated as subsection (g) (as added by section
222(a) of Public Law 103–394) as subsection (i);
and
184
(2) by adding at the end the following:
‘‘(j)(1) Notwithstanding paragraphs (2) and (3) of
section 545, the trustee may not avoid a warehouseman’s
lien for storage, transportation, or other costs incidental
to the storage and handling of goods.
‘‘(2) The prohibition under paragraph (1) shall be ap-
plied in a manner consistent with any applicable State
statute that is similar to section 7–209 of the Uniform
Commercial Code, as in effect on the date of enactment
of the Bankruptcy Abuse Prevention and Consumer Pro-
tection Act of 2001, or any successor thereto.’’.
SEC. 407. AMENDMENTS TO SECTION 330(a) OF TITLE 11,
UNITED STATES CODE.
Section 330(a) of title 11, United States Code, is
amended—
(1) in paragraph (3)—
(A) by striking ‘‘(A) In’’ and inserting
‘‘In’’; and
(B) by inserting ‘‘to an examiner, trustee
under chapter 11, or professional person’’ after
‘‘awarded’’; and
(2) by adding at the end the following:
‘‘(7) In determining the amount of reasonable
compensation to be awarded to a trustee, the court
185
shall treat such compensation as a commission,
based on section 326 of this title.’’.
SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION.
Section 1125 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(g) Notwithstanding subsection (b), an acceptance
or rejection of the plan may be solicited from a holder
of a claim or interest if such solicitation complies with ap-
plicable nonbankruptcy law and if such holder was solic-
ited before the commencement of the case in a manner
complying with applicable nonbankruptcy law.’’.
SEC. 409. PREFERENCES.
Section 547(c) of title 11, United States Code, is
amended—
(1) by striking paragraph (2) and inserting the
following:
‘‘(2) to the extent that such transfer was in
payment of a debt incurred by the debtor in the or-
dinary course of business or financial affairs of the
debtor and the transferee, and such transfer was—
‘‘(A) made in the ordinary course of busi-
ness or financial affairs of the debtor and the
transferee; or
‘‘(B) made according to ordinary business
terms;’’;
186
(2) in paragraph (8), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(9) if, in a case filed by a debtor whose debts
are not primarily consumer debts, the aggregate
value of all property that constitutes or is affected
by such transfer is less than $5,000.’’.
SEC. 410. VENUE OF CERTAIN PROCEEDINGS.
Section 1409(b) of title 28, United States Code, is
amended by inserting ‘‘, or a nonconsumer debt against
a noninsider of less than $10,000,’’ after ‘‘$5,000’’.
SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11.
Section 1121(d) of title 11, United States Code, is
amended—
(1) by striking ‘‘On’’ and inserting ‘‘(1) Subject
to paragraph (2), on’’; and
(2) by adding at the end the following:
‘‘(2)(A) The 120-day period specified in paragraph
(1) may not be extended beyond a date that is 18 months
after the date of the order for relief under this chapter.
‘‘(B) The 180-day period specified in paragraph (1)
may not be extended beyond a date that is 20 months after
the date of the order for relief under this chapter.’’.
187
SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP IN-
TERESTS.
Section 523(a)(16) of title 11, United States Code,
is amended—
(1) by striking ‘‘dwelling’’ the first place it ap-
pears;
(2) by striking ‘‘ownership or’’ and inserting
‘‘ownership,’’;
(3) by striking ‘‘housing’’ the first place it ap-
pears; and
(4) by striking ‘‘but only’’ and all that follows
through ‘‘such period’’ and inserting ‘‘or a lot in a
homeowners association, for as long as the debtor or
the trustee has a legal, equitable, or possessory own-
ership interest in such unit, such corporation, or
such lot,’’.
SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING
OF CREDITORS.
Section 341(c) of title 11, United States Code, is
amended by inserting at the end the following: ‘‘Notwith-
standing any local court rule, provision of a State constitu-
tion, any other Federal or State law that is not a bank-
ruptcy law, or other requirement that representation at
the meeting of creditors under subsection (a) be by an at-
torney, a creditor holding a consumer debt or any rep-
resentative of the creditor (which may include an entity
188
or an employee of an entity and may be a representative
for more than 1 creditor) shall be permitted to appear at
and participate in the meeting of creditors in a case under
chapter 7 or 13, either alone or in conjunction with an
attorney for the creditor. Nothing in this subsection shall
be construed to require any creditor to be represented by
an attorney at any meeting of creditors.’’.
SEC. 414. DEFINITION OF DISINTERESTED PERSON.
Section 101(14) of title 11, United States Code, is
amended to read as follows:
‘‘(14) ‘disinterested person’ means a person
that—
‘‘(A) is not a creditor, an equity security
holder, or an insider;
‘‘(B) is not and was not, within 2 years be-
fore the date of the filing of the petition, a di-
rector, officer, or employee of the debtor; and
‘‘(C) does not have an interest materially
adverse to the interest of the estate or of any
class of creditors or equity security holders, by
reason of any direct or indirect relationship to,
connection with, or interest in, the debtor, or
for any other reason;’’.
189
SEC. 415. FACTORS FOR COMPENSATION OF PROFES-
SIONAL PERSONS.
Section 330(a)(3) of title 11, United States Code, as
amended by this Act, is amended—
(1) in subparagraph (D), by striking ‘‘and’’ at
the end;
(2) by redesignating subparagraph (E) as sub-
paragraph (F); and
(3) by inserting after subparagraph (D) the fol-
lowing:
‘‘(E) with respect to a professional person,
whether the person is board certified or other-
wise has demonstrated skill and experience in
the bankruptcy field; and’’.
SEC. 416. APPOINTMENT OF ELECTED TRUSTEE.
Section 1104(b) of title 11, United States Code, is
amended—
(1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and
(2) by adding at the end the following:
‘‘(2)(A) If an eligible, disinterested trustee is elected
at a meeting of creditors under paragraph (1), the United
States trustee shall file a report certifying that election.
‘‘(B) Upon the filing of a report under subparagraph
(A)—
190
‘‘(i) the trustee elected under paragraph (1)
shall be considered to have been selected and ap-
pointed for purposes of this section; and
‘‘(ii) the service of any trustee appointed under
subsection (d) shall terminate.
‘‘(C) In the case of any dispute arising out of an elec-
tion described in subparagraph (A), the court shall resolve
the dispute.’’.
SEC. 417. UTILITY SERVICE.
Section 366 of title 11, United States Code, is
amended—
(1) in subsection (a), by striking ‘‘subsection
(b)’’ and inserting ‘‘subsections (b) and (c)’’; and
(2) by adding at the end the following:
‘‘(c)(1)(A) For purposes of this subsection, the term
‘assurance of payment’ means—
‘‘(i) a cash deposit;
‘‘(ii) a letter of credit;
‘‘(iii) a certificate of deposit;
‘‘(iv) a surety bond;
‘‘(v) a prepayment of utility consumption; or
‘‘(vi) another form of security that is mutually
agreed on between the utility and the debtor or the
trustee.
191
‘‘(B) For purposes of this subsection an administra-
tive expense priority shall not constitute an assurance of
payment.
‘‘(2) Subject to paragraphs (3) through (5), with re-
spect to a case filed under chapter 11, a utility referred
to in subsection (a) may alter, refuse, or discontinue util-
ity service, if during the 30-day period beginning on the
date of filing of the petition, the utility does not receive
from the debtor or the trustee adequate assurance of pay-
ment for utility service that is satisfactory to the utility.
‘‘(3)(A) On request of a party in interest and after
notice and a hearing, the court may order modification
of the amount of an assurance of payment under para-
graph (2).
‘‘(B) In making a determination under this para-
graph whether an assurance of payment is adequate, the
court may not consider—
‘‘(i) the absence of security before the date of
filing of the petition;
‘‘(ii) the payment by the debtor of charges for
utility service in a timely manner before the date of
filing of the petition; or
‘‘(iii) the availability of an administrative ex-
pense priority.
192
‘‘(4) Notwithstanding any other provision of law, with
respect to a case subject to this subsection, a utility may
recover or set off against a security deposit provided to
the utility by the debtor before the date of filing of the
petition without notice or order of the court.’’.
SEC. 418. BANKRUPTCY FEES.
Section 1930 of title 28, United States Code, is
amended—
(1) in subsection (a), by striking ‘‘Notwith-
standing section 1915 of this title, the’’ and insert-
ing ‘‘The’’; and
(2) by adding at the end the following:
‘‘(f)(1) Under the procedures prescribed by the Judi-
cial Conference of the United States, the district court or
the bankruptcy court may waive the filing fee in a case
under chapter 7 of title 11 for an individual if the court
determines that such debtor has income less than 150 per-
cent of the income official poverty line (as defined by the
Office of Management and Budget, and revised annually
in accordance with section 673(2) of the Omnibus Budget
Reconciliation Act of 1981) applicable to a family of the
size involved and is unable to pay that fee in installments.
For purposes of this paragraph, the term ‘‘filing fee’’
means the filing required by subsection (a), or any other
fee prescribed by the Judicial Conference under sub-
193
sections (b) and (c) that is payable to the clerk upon the
commencement of a case under chapter 7.
‘‘(2) The district court or the bankruptcy court may
waive for such debtors other fees prescribed under sub-
sections (b) and (c).
‘‘(3) This subsection does not restrict the district
court or the bankruptcy court from waiving, in accordance
with Judicial Conference policy, fees prescribed under this
section for other debtors and creditors.’’.
SEC. 419. MORE COMPLETE INFORMATION REGARDING AS-
SETS OF THE ESTATE.
(a) IN GENERAL.—
(1) DISCLOSURE.—The Advisory Committee on
Bankruptcy Rules of the Judicial Conference of the
United States, after consideration of the views of the
Director of the Executive Office for United States
Trustees, shall propose for adoption amended Fed-
eral Rules of Bankruptcy Procedure and Official
Bankruptcy Forms directing debtors under chapter
11 of title 11, United States Code, to disclose the
information described in paragraph (2) by filing and
serving periodic financial and other reports designed
to provide such information.
(2) INFORMATION.—The information referred
to in paragraph (1) is the value, operations, and
194
profitability of any closely held corporation, partner-
ship, or of any other entity in which the debtor holds
a substantial or controlling interest.
(b) PURPOSE.—The purpose of the rules and reports
under subsection (a) shall be to assist parties in interest
taking steps to ensure that the debtor’s interest in any
entity referred to in subsection (a)(2) is used for the pay-
ment of allowed claims against debtor.
Subtitle B—Small Business
Bankruptcy Provisions
SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT
AND PLAN.
Section 1125 of title 11, United States Code, is
amended—
(1) in subsection (a)(1), by inserting before the
semicolon ‘‘and in determining whether a disclosure
statement provides adequate information, the court
shall consider the complexity of the case, the benefit
of additional information to creditors and other par-
ties in interest, and the cost of providing additional
information’’; and
(2) by striking subsection (f), and inserting the
following:
‘‘(f) Notwithstanding subsection (b), in a small busi-
ness case—
195
‘‘(1) the court may determine that the plan
itself provides adequate information and that a sepa-
rate disclosure statement is not necessary;
‘‘(2) the court may approve a disclosure state-
ment submitted on standard forms approved by the
court or adopted under section 2075 of title 28; and
‘‘(3)(A) the court may conditionally approve a
disclosure statement subject to final approval after
notice and a hearing;
‘‘(B) acceptances and rejections of a plan may
be solicited based on a conditionally approved disclo-
sure statement if the debtor provides adequate infor-
mation to each holder of a claim or interest that is
solicited, but a conditionally approved disclosure
statement shall be mailed not later than 20 days be-
fore the date of the hearing on confirmation of the
plan; and
‘‘(C) the hearing on the disclosure statement
may be combined with the hearing on confirmation
of a plan.’’.
SEC. 432. DEFINITIONS.
(a) DEFINITIONS.—Section 101 of title 11, United
States Code, as amended by this Act, is amended by strik-
ing paragraph (51C) and inserting the following:
196
‘‘(51C) ‘small business case’ means a case filed
under chapter 11 of this title in which the debtor is
a small business debtor;
‘‘(51D) ‘small business debtor’—
‘‘(A) subject to subparagraph (B), means a
person engaged in commercial or business ac-
tivities (including any affiliate of such person
that is also a debtor under this title and exclud-
ing a person whose primary activity is the busi-
ness of owning or operating real property or ac-
tivities incidental thereto) that has aggregate
noncontingent, liquidated secured and unse-
cured debts as of the date of the petition or the
order for relief in an amount not more than
$3,000,000 (excluding debts owed to 1 or more
affiliates or insiders) for a case in which the
United States trustee has not appointed under
section 1102(a)(1) a committee of unsecured
creditors or where the court has determined
that the committee of unsecured creditors is not
sufficiently active and representative to provide
effective oversight of the debtor; and
‘‘(B) does not include any member of a
group of affiliated debtors that has aggregate
noncontingent liquidated secured and unsecured
197
debts in an amount greater than $3,000,000
(excluding debt owed to 1 or more affiliates or
insiders);’’.
(b) CONFORMING AMENDMENT.—Section 1102(a)(3)
of title 11, United States Code, is amended by inserting
‘‘debtor’’ after ‘‘small business’’.
SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND
PLAN.
Within a reasonable period of time after the date of
enactment of this Act, the Advisory Committee on Bank-
ruptcy Rules of the Judicial Conference of the United
States shall propose for adoption standard form disclosure
statements and plans of reorganization for small business
debtors (as defined in section 101 of title 11, United
States Code, as amended by this Act), designed to achieve
a practical balance between—
(1) the reasonable needs of the courts, the
United States trustee, creditors, and other parties in
interest for reasonably complete information; and
(2) economy and simplicity for debtors.
SEC. 434. UNIFORM NATIONAL REPORTING REQUIRE-
MENTS.
(a) REPORTING REQUIRED.—
198
(1) IN GENERAL.—Chapter 3 of title 11, United
States Code, is amended by inserting after section
307 the following:
‘‘§ 308. Debtor reporting requirements
‘‘(a) For purposes of this section, the term ‘profit-
ability’ means, with respect to a debtor, the amount of
money that the debtor has earned or lost during current
and recent fiscal periods.
‘‘(b) A small business debtor shall file periodic finan-
cial and other reports containing information including—
‘‘(1) the debtor’s profitability;
‘‘(2) reasonable approximations of the debtor’s
projected cash receipts and cash disbursements over
a reasonable period;
‘‘(3) comparisons of actual cash receipts and
disbursements with projections in prior reports;
‘‘(4)(A) whether the debtor is—
‘‘(i) in compliance in all material respects
with postpetition requirements imposed by this
title and the Federal Rules of Bankruptcy Pro-
cedure; and
‘‘(ii) timely filing tax returns and other re-
quired government filings and paying taxes and
other administrative claims when due;
199
‘‘(B) if the debtor is not in compliance with the
requirements referred to in subparagraph (A)(i) or
filing tax returns and other required government fil-
ings and making the payments referred to in sub-
paragraph (A)(ii), what the failures are and how, at
what cost, and when the debtor intends to remedy
such failures; and
‘‘(C) such other matters as are in the best in-
terests of the debtor and creditors, and in the public
interest in fair and efficient procedures under chap-
ter 11 of this title.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 3 of title 11, United States Code,
is amended by inserting after the item relating to
section 307 the following:
‘‘308. Debtor reporting requirements.’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect 60 days after the date on
which rules are prescribed under section 2075 of title 28,
United States Code, to establish forms to be used to com-
ply with section 308 of title 11, United States Code, as
added by subsection (a).
SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR
SMALL BUSINESS CASES.
(a) PROPOSAL OF RULES AND FORMS.—The Advi-
sory Committee on Bankruptcy Rules of the Judicial Con-
200
ference of the United States shall propose for adoption
amended Federal Rules of Bankruptcy Procedure and Of-
ficial Bankruptcy Forms to be used by small business
debtors to file periodic financial and other reports con-
taining information, including information relating to—
(1) the debtor’s profitability;
(2) the debtor’s cash receipts and disburse-
ments; and
(3) whether the debtor is timely filing tax re-
turns and paying taxes and other administrative
claims when due.
(b) PURPOSE.—The rules and forms proposed under
subsection (a) shall be designed to achieve a practical bal-
ance among—
(1) the reasonable needs of the bankruptcy
court, the United States trustee, creditors, and other
parties in interest for reasonably complete informa-
tion;
(2) the small business debtor’s interest that re-
quired reports be easy and inexpensive to complete;
and
(3) the interest of all parties that the required
reports help the small business debtor to understand
the small business debtor’s financial condition and
plan the small business debtor’s future.
201
SEC. 436. DUTIES IN SMALL BUSINESS CASES.
(a) DUTIES IN CHAPTER 11 CASES.—Subchapter I
of title 11, United States Code, as amended by this Act,
is amended by adding at the end the following:
‘‘§ 1116. Duties of trustee or debtor in possession in
small business cases
‘‘In a small business case, a trustee or the debtor in
possession, in addition to the duties provided in this title
and as otherwise required by law, shall—
‘‘(1) append to the voluntary petition or, in an
involuntary case, file not later than 7 days after the
date of the order for relief—
‘‘(A) its most recent balance sheet, state-
ment of operations, cash-flow statement, Fed-
eral income tax return; or
‘‘(B) a statement made under penalty of
perjury that no balance sheet, statement of op-
erations, or cash-flow statement has been pre-
pared and no Federal tax return has been filed;
‘‘(2) attend, through its senior management
personnel and counsel, meetings scheduled by the
court or the United States trustee, including initial
debtor interviews, scheduling conferences, and meet-
ings of creditors convened under section 341 unless
the court waives that requirement after notice and
202
hearing, upon a finding of extraordinary and com-
pelling circumstances;
‘‘(3) timely file all schedules and statements of
financial affairs, unless the court, after notice and a
hearing, grants an extension, which shall not extend
such time period to a date later than 30 days after
the date of the order for relief, absent extraordinary
and compelling circumstances;
‘‘(4) file all postpetition financial and other re-
ports required by the Federal Rules of Bankruptcy
Procedure or by local rule of the district court;
‘‘(5) subject to section 363(c)(2), maintain in-
surance customary and appropriate to the industry;
‘‘(6)(A) timely file tax returns and other re-
quired government filings; and
‘‘(B) subject to section 363(c)(2), timely pay all
administrative expense tax claims, except those
being contested by appropriate proceedings being
diligently prosecuted; and
‘‘(7) allow the United States trustee, or a des-
ignated representative of the United States trustee,
to inspect the debtor’s business premises, books, and
records at reasonable times, after reasonable prior
written notice, unless notice is waived by the debt-
or.’’.
203
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 11 of title 11, United States Code, is amended
by adding at the end of the matter relating to subchapter
I the following:
‘‘1116. Duties of trustee or debtor in possession in small business cases.’’.
SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES.
Section 1121 of title 11, United States Code, is
amended by striking subsection (e) and inserting the fol-
lowing:
‘‘(e) In a small business case—
‘‘(1) only the debtor may file a plan until after
180 days after the date of the order for relief, unless
that period is—
‘‘(A) extended as provided by this sub-
section, after notice and hearing; or
‘‘(B) the court, for cause, orders otherwise;
‘‘(2) the plan, and any necessary disclosure
statement, shall be filed not later than 300 days
after the date of the order for relief; and
‘‘(3) the time periods specified in paragraphs
(1) and (2), and the time fixed in section 1129(e),
within which the plan shall be confirmed, may be ex-
tended only if—
‘‘(A) the debtor, after providing notice to
parties in interest (including the United States
trustee), demonstrates by a preponderance of
204
the evidence that it is more likely than not that
the court will confirm a plan within a reason-
able period of time;
‘‘(B) a new deadline is imposed at the time
the extension is granted; and
‘‘(C) the order extending time is signed be-
fore the existing deadline has expired.’’.
SEC. 438. PLAN CONFIRMATION DEADLINE.
Section 1129 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(e) In a small business case, the plan shall be con-
firmed not later than 175 days after the date of the order
for relief, unless such 175-day period is extended as pro-
vided in section 1121(e)(3).’’.
SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE.
Section 586(a) of title 28, United States Code, is
amended—
(1) in paragraph (3)—
(A) in subparagraph (G), by striking
‘‘and’’ at the end;
(B) by redesignating subparagraph (H) as
subparagraph (I); and
(C) by inserting after subparagraph (G)
the following:
205
‘‘(H) in small business cases (as defined in
section 101 of title 11), performing the addi-
tional duties specified in title 11 pertaining to
such cases; and’’;
(2) in paragraph (5), by striking ‘‘and’’ at the
end;
(3) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(4) by adding at the end the following:
‘‘(7) in each of such small business cases—
‘‘(A) conduct an initial debtor interview as
soon as practicable after the entry of order for
relief but before the first meeting scheduled
under section 341(a) of title 11, at which time
the United States trustee shall—
‘‘(i) begin to investigate the debtor’s
viability;
‘‘(ii) inquire about the debtor’s busi-
ness plan;
‘‘(iii) explain the debtor’s obligations
to file monthly operating reports and other
required reports;
‘‘(iv) attempt to develop an agreed
scheduling order; and
206
‘‘(v) inform the debtor of other obliga-
tions;
‘‘(B) if determined to be appropriate and
advisable, visit the appropriate business prem-
ises of the debtor and ascertain the state of the
debtor’s books and records and verify that the
debtor has filed its tax returns; and
‘‘(C) review and monitor diligently the
debtor’s activities, to identify as promptly as
possible whether the debtor will be unable to
confirm a plan; and
‘‘(8) in any case in which the United States
trustee finds material grounds for any relief under
section 1112 of title 11, the United States trustee
shall apply promptly after making that finding to
the court for relief.’’.
SEC. 440. SCHEDULING CONFERENCES.
Section 105(d) of title 11, United States Code, is
amended—
(1) in the matter preceding paragraph (1), by
striking ‘‘, may’’; and
(2) by striking paragraph (1) and inserting the
following:
207
‘‘(1) shall hold such status conferences as are
necessary to further the expeditious and economical
resolution of the case; and’’.
SEC. 441. SERIAL FILER PROVISIONS.
Section 362 of title 11, United States Code, as
amended by this Act is amended—
(1) in subsection (k), as redesignated by this
Act—
(A) by striking ‘‘An’’ and inserting ‘‘(1)
Except as provided in paragraph (2), an’’; and
(B) by adding at the end the following:
‘‘(2) If such violation is based on an action taken by
an entity in the good faith belief that subsection (h) ap-
plies to the debtor, the recovery under paragraph (1) of
this subsection against such entity shall be limited to ac-
tual damages.’’; and
(2) by adding at the end the following:
‘‘(l)(1) Except as provided in paragraph (2) of this
subsection, the provisions of subsection (a) do not apply
in a case in which the debtor—
‘‘(A) is a debtor in a small business case pend-
ing at the time the petition is filed;
‘‘(B) was a debtor in a small business case that
was dismissed for any reason by an order that be-
came final in the 2-year period ending on the date
208
of the order for relief entered with respect to the pe-
tition;
‘‘(C) was a debtor in a small business case in
which a plan was confirmed in the 2-year period
ending on the date of the order for relief entered
with respect to the petition; or
‘‘(D) is an entity that has succeeded to sub-
stantially all of the assets or business of a small
business debtor described in subparagraph (A), (B),
or (C).
‘‘(2) This subsection does not apply—
‘‘(A) to an involuntary case involving no collu-
sion by the debtor with creditors; or
‘‘(B) to the filing of a petition if—
‘‘(i) the debtor proves by a preponderance
of the evidence that the filing of that petition
resulted from circumstances beyond the control
of the debtor not foreseeable at the time the
case then pending was filed; and
‘‘(ii) it is more likely than not that the
court will confirm a feasible plan, but not a liq-
uidating plan, within a reasonable period of
time.’’.
209
SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CON-
VERSION AND APPOINTMENT OF TRUSTEE.
(a) EXPANDED GROUNDS FOR DISMISSAL OR CON-
VERSION.—Section 1112 of title 11, United States Code,
is amended by striking subsection (b) and inserting the
following:
‘‘(b)(1) Except as provided in paragraph (2) of this
subsection, subsection (c) of this section, and section
1104(a)(3), on request of a party in interest, and after
notice and a hearing, the court shall convert a case under
this chapter to a case under chapter 7 or dismiss a case
under this chapter, whichever is in the best interest of
creditors and the estate, if the movant establishes cause.
‘‘(2) The relief provided in paragraph (1) shall not
be granted if the debtor or another party in interest ob-
jects and establishes by a preponderance of the evidence
that—
‘‘(A) a plan with a reasonable possibility of
being confirmed will be filed within a reasonable pe-
riod of time; and
‘‘(B) the grounds include an act or omission of
the debtor—
‘‘(i) for which there exists a reasonable
justification for the act or omission; and
‘‘(ii) that will be cured within a reasonable
period of time fixed by the court.
210
‘‘(3) The court shall commence the hearing on any
motion under this subsection not later than 30 days after
filing of the motion, and shall decide the motion not later
than 15 days after commencement of the hearing, unless
the movant expressly consents to a continuance for a spe-
cific period of time or compelling circumstances prevent
the court from meeting the time limits established by this
paragraph.
‘‘(4) For purposes of this subsection, the term ‘cause’
includes—
‘‘(A) substantial or continuing loss to or dimi-
nution of the estate;
‘‘(B) gross mismanagement of the estate;
‘‘(C) failure to maintain appropriate insurance
that poses a risk to the estate or to the public;
‘‘(D) unauthorized use of cash collateral harm-
ful to 1 or more creditors;
‘‘(E) failure to comply with an order of the
court;
‘‘(F) repeated failure timely to satisfy any filing
or reporting requirement established by this title or
by any rule applicable to a case under this chapter;
‘‘(G) failure to attend the meeting of creditors
convened under section 341(a) or an examination or-
211
dered under rule 2004 of the Federal Rules of
Bankruptcy Procedure;
‘‘(H) failure timely to provide information or
attend meetings reasonably requested by the United
States trustee or the bankruptcy administrator;
‘‘(I) failure timely to pay taxes due after the
date of the order for relief or to file tax returns due
after the order for relief;
‘‘(J) failure to file a disclosure statement, or to
file or confirm a plan, within the time fixed by this
title or by order of the court;
‘‘(K) failure to pay any fees or charges required
under chapter 123 of title 28;
‘‘(L) revocation of an order of confirmation
under section 1144;
‘‘(M) inability to effectuate substantial con-
summation of a confirmed plan;
‘‘(N) material default by the debtor with re-
spect to a confirmed plan;
‘‘(O) termination of a confirmed plan by reason
of the occurrence of a condition specified in the plan;
and
‘‘(P) failure of the debtor to pay any domestic
support obligation that first becomes payable after
the date on which the petition is filed.
212
‘‘(5) The court shall commence the hearing on any
motion under this subsection not later than 30 days after
filing of the motion, and shall decide the motion not later
than 15 days after commencement of the hearing, unless
the movant expressly consents to a continuance for a spe-
cific period of time or compelling circumstances prevent
the court from meeting the time limits established by this
paragraph.’’.
(b) ADDITIONAL GROUNDS FOR APPOINTMENT OF
TRUSTEE.—Section 1104(a) of title 11, United States
Code, is amended—
(1) in paragraph (1), by striking ‘‘or’’ at the
end;
(2) in paragraph (2), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(3) if grounds exist to convert or dismiss the
case under section 1112, but the court determines
that the appointment of a trustee or an examiner is
in the best interests of creditors and the estate.’’.
SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED
STATES CODE, WITH RESPECT TO SMALL
BUSINESSES.
Not later than 2 years after the date of enactment
of this Act, the Administrator of the Small Business Ad-
213
ministration, in consultation with the Attorney General,
the Director of the Administrative Office of United States
Trustees, and the Director of the Administrative Office
of the United States Courts, shall—
(1) conduct a study to determine—
(A) the internal and external factors that
cause small businesses, especially sole propri-
etorships, to become debtors in cases under title
11, United States Code, and that cause certain
small businesses to successfully complete cases
under chapter 11 of such title; and
(B) how Federal laws relating to bank-
ruptcy may be made more effective and efficient
in assisting small businesses to remain viable;
and
(2) submit to the President pro tempore of the
Senate and the Speaker of the House of Representa-
tives a report summarizing that study.
SEC. 444. PAYMENT OF INTEREST.
Section 362(d)(3) of title 11, United States Code, is
amended—
(1) by inserting ‘‘or 30 days after the court de-
termines that the debtor is subject to this para-
graph, whichever is later’’ after ‘‘90-day period)’’;
and
214
(2) by striking subparagraph (B) and inserting
the following:
‘‘(B) the debtor has commenced monthly
payments that—
‘‘(i) may, in the debtor’s sole discre-
tion, notwithstanding section 363(c)(2), be
made from rents or other income generated
before or after the commencement of the
case by or from the property to each cred-
itor whose claim is secured by such real es-
tate (other than a claim secured by a judg-
ment lien or by an unmatured statutory
lien); and
‘‘(ii) are in an amount equal to inter-
est at the then applicable nondefault con-
tract rate of interest on the value of the
creditor’s interest in the real estate; or’’.
SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES.
Section 503(b) of title 11, United States Code, is
amended—
(1) in paragraph (5), by striking ‘‘and’’ at the
end;
(2) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(3) by adding at the end the following:
215
‘‘(7) with respect to a nonresidential real prop-
erty lease previously assumed under section 365,
and subsequently rejected, a sum equal to all mone-
tary obligations due, excluding those arising from or
relating to a failure to operate or penalty provisions,
for the period of 2 years following the later of the
rejection date or the date of actual turnover of the
premises, without reduction or setoff for any reason
whatsoever except for sums actually received or to be
received from a nondebtor, and the claim for remain-
ing sums due for the balance of the term of the lease
shall be a claim under section 502(b)(6);’’.
TITLE V—MUNICIPAL
BANKRUPTCY PROVISIONS
SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI-
TION.
(a) TECHNICAL AMENDMENT RELATING TO MUNICI-
PALITIES.—Section 921(d) of title 11, United States
Code, is amended by inserting ‘‘notwithstanding section
301(b)’’ before the period at the end.
(b) CONFORMING AMENDMENT.—Section 301 of title
11, United States Code, is amended—
(1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’;
and
216
(2) by striking the last sentence and inserting
the following:
‘‘(b) The commencement of a voluntary case under
a chapter of this title constitutes an order for relief under
such chapter.’’.
SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAP-
TER 9.
Section 901(a) of title 11, United States Code, is
amended—
(1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and
(2) by inserting ‘‘559, 560, 561, 562’’ after
‘‘557,’’.
TITLE VI—BANKRUPTCY DATA
SEC. 601. IMPROVED BANKRUPTCY STATISTICS.
(a) IN GENERAL.—Chapter 6 of title 28, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 159. Bankruptcy statistics
‘‘(a) The clerk of each district shall collect statistics
regarding individual debtors with primarily consumer
debts seeking relief under chapters 7, 11, and 13 of title
11. Those statistics shall be on a standardized form pre-
scribed by the Director of the Administrative Office of the
United States Courts (referred to in this section as the
‘Director’).
217
‘‘(b) The Director shall—
‘‘(1) compile the statistics referred to in sub-
section (a);
‘‘(2) make the statistics available to the public;
and
‘‘(3) not later than October 31, 2002, and an-
nually thereafter, prepare, and submit to Congress a
report concerning the information collected under
subsection (a) that contains an analysis of the infor-
mation.
‘‘(c) The compilation required under subsection (b)
shall—
‘‘(1) be itemized, by chapter, with respect to
title 11;
‘‘(2) be presented in the aggregate and for each
district; and
‘‘(3) include information concerning—
‘‘(A) the total assets and total liabilities of
the debtors described in subsection (a), and in
each category of assets and liabilities, as re-
ported in the schedules prescribed pursuant to
section 2075 of this title and filed by those
debtors;
‘‘(B) the current monthly income, average
income, and average expenses of those debtors
218
as reported on the schedules and statements
that each such debtor files under sections 521
and 1322 of title 11;
‘‘(C) the aggregate amount of debt dis-
charged in the reporting period, determined as
the difference between the total amount of debt
and obligations of a debtor reported on the
schedules and the amount of such debt reported
in categories which are predominantly non-
dischargeable;
‘‘(D) the average period of time between
the filing of the petition and the closing of the
case;
‘‘(E) for the reporting period—
‘‘(i) the number of cases in which a
reaffirmation was filed; and
‘‘(ii)(I) the total number of reaffirma-
tions filed;
‘‘(II) of those cases in which a reaffir-
mation was filed, the number of cases in
which the debtor was not represented by
an attorney; and
‘‘(III) of those cases in which a reaf-
firmation was filed, the number of cases in
219
which the reaffirmation was approved by
the court;
‘‘(F) with respect to cases filed under
chapter 13 of title 11, for the reporting
period—
‘‘(i)(I) the number of cases in which a
final order was entered determining the
value of property securing a claim in an
amount less than the amount of the claim;
and
‘‘(II) the number of final orders deter-
mining the value of property securing a
claim issued;
‘‘(ii) the number of cases dismissed,
the number of cases dismissed for failure
to make payments under the plan, the
number of cases refiled after dismissal,
and the number of cases in which the plan
was completed, separately itemized with re-
spect to the number of modifications made
before completion of the plan, if any; and
‘‘(iii) the number of cases in which
the debtor filed another case during the 6-
year period preceding the filing;
220
‘‘(G) the number of cases in which credi-
tors were fined for misconduct and any amount
of punitive damages awarded by the court for
creditor misconduct; and
‘‘(H) the number of cases in which sanc-
tions under rule 9011 of the Federal Rules of
Bankruptcy Procedure were imposed against
debtor’s counsel or damages awarded under
such Rule.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 6 of title 28, United States Code, is amended
by adding at the end the following:
‘‘159. Bankruptcy statistics.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect 18 months after the date of
enactment of this Act.
SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANK-
RUPTCY DATA.
(a) AMENDMENT.—Chapter 39 of title 28, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 589b. Bankruptcy data
‘‘(a) RULES.—The Attorney General shall, within a
reasonable time after the effective date of this section,
issue rules requiring uniform forms for (and from time
to time thereafter to appropriately modify and approve)—
221
‘‘(1) final reports by trustees in cases under
chapters 7, 12, and 13 of title 11; and
‘‘(2) periodic reports by debtors in possession or
trustees, as the case may be, in cases under chapter
11 of title 11.
‘‘(b) REPORTS.—Each report referred to in sub-
section (a) shall be designed (and the requirements as to
place and manner of filing shall be established) so as to
facilitate compilation of data and maximum possible ac-
cess of the public, both by physical inspection at one or
more central filing locations, and by electronic access
through the Internet or other appropriate media.
‘‘(c) REQUIRED INFORMATION.—The information re-
quired to be filed in the reports referred to in subsection
(b) shall be that which is in the best interests of debtors
and creditors, and in the public interest in reasonable and
adequate information to evaluate the efficiency and practi-
cality of the Federal bankruptcy system. In issuing rules
proposing the forms referred to in subsection (a), the At-
torney General shall strike the best achievable practical
balance between—
‘‘(1) the reasonable needs of the public for in-
formation about the operational results of the Fed-
eral bankruptcy system;
222
‘‘(2) economy, simplicity, and lack of undue
burden on persons with a duty to file reports; and
‘‘(3) appropriate privacy concerns and safe-
guards.
‘‘(d) FINAL REPORTS.—Final reports proposed for
adoption by trustees under chapters 7, 12, and 13 of title
11 shall, in addition to such other matters as are required
by law or as the Attorney General in the discretion of the
Attorney General, shall propose, include with respect to
a case under such title—
‘‘(1) information about the length of time the
case was pending;
‘‘(2) assets abandoned;
‘‘(3) assets exempted;
‘‘(4) receipts and disbursements of the estate;
‘‘(5) expenses of administration, including for
use under section 707(b), actual costs of admin-
istering cases under chapter 13 of title 11;
‘‘(6) claims asserted;
‘‘(7) claims allowed; and
‘‘(8) distributions to claimants and claims dis-
charged without payment,
in each case by appropriate category and, in cases under
chapters 12 and 13 of title 11, date of confirmation of
223
the plan, each modification thereto, and defaults by the
debtor in performance under the plan.
‘‘(e) PERIODIC REPORTS.—Periodic reports proposed
for adoption by trustees or debtors in possession under
chapter 11 of title 11 shall, in addition to such other mat-
ters as are required by law or as the Attorney General,
in the discretion of the Attorney General, shall propose,
include—
‘‘(1) information about the standard industry
classification, published by the Department of Com-
merce, for the businesses conducted by the debtor;
‘‘(2) length of time the case has been pending;
‘‘(3) number of full-time employees as of the
date of the order for relief and at the end of each
reporting period since the case was filed;
‘‘(4) cash receipts, cash disbursements and
profitability of the debtor for the most recent period
and cumulatively since the date of the order for re-
lief;
‘‘(5) compliance with title 11, whether or not
tax returns and tax payments since the date of the
order for relief have been timely filed and made;
‘‘(6) all professional fees approved by the court
in the case for the most recent period and cumula-
tively since the date of the order for relief (sepa-
224
rately reported, for the professional fees incurred by
or on behalf of the debtor, between those that would
have been incurred absent a bankruptcy case and
those not); and
‘‘(7) plans of reorganization filed and confirmed
and, with respect thereto, by class, the recoveries of
the holders, expressed in aggregate dollar values
and, in the case of claims, as a percentage of total
claims of the class allowed.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 39 of title 28, United States
Code, is amended by adding at the end the following:
‘‘589b. Bankruptcy data.’’.
SEC. 603. AUDIT PROCEDURES.
(a) IN GENERAL.—
(1) ESTABLISHMENT
OF
PROCEDURES.—The
Attorney General (in judicial districts served by
United States trustees) and the Judicial Conference
of the United States (in judicial districts served by
bankruptcy administrators) shall establish proce-
dures to determine the accuracy, veracity, and com-
pleteness of petitions, schedules, and other informa-
tion which the debtor is required to provide under
sections 521 and 1322 of title 11, and, if applicable,
section 111 of title 11, in individual cases filed
under chapter 7 or 13 of such title. Such audits
225
shall be in accordance with generally accepted audit-
ing standards and performed by independent cer-
tified public accountants or independent licensed
public accountants, provided that the Attorney Gen-
eral and the Judicial Conference, as appropriate,
may develop alternative auditing standards not later
than 2 years after the date of enactment of this Act.
(2) PROCEDURES.—Those procedures required
by paragraph (1) shall—
(A) establish a method of selecting appro-
priate qualified persons to contract to perform
those audits;
(B) establish a method of randomly select-
ing cases to be audited, except that not less
than 1 out of every 250 cases in each Federal
judicial district shall be selected for audit;
(C) require audits for schedules of income
and expenses which reflect greater than average
variances from the statistical norm of the dis-
trict in which the schedules were filed if those
variances occur by reason of higher income or
higher expenses than the statistical norm of the
district in which the schedules were filed; and
(D) establish procedures for providing, not
less frequently than annually, public informa-
226
tion concerning the aggregate results of such
audits including the percentage of cases, by dis-
trict, in which a material misstatement of in-
come or expenditures is reported.
(b) AMENDMENTS.—Section 586 of title 28, United
States Code, is amended—
(1) in subsection (a), by striking paragraph (6)
and inserting the following:
‘‘(6) make such reports as the Attorney General
directs, including the results of audits performed
under section 603(a) of the Bankruptcy Abuse Pre-
vention and Consumer Protection Act of 2001; and’’;
and
(2) by adding at the end the following:
‘‘(f)(1) The United States trustee for each district is
authorized to contract with auditors to perform audits in
cases designated by the United States trustee, in accord-
ance with the procedures established under section 603(a)
of the Bankruptcy Abuse Prevention and Consumer Pro-
tection Act of 2001.
‘‘(2)(A) The report of each audit referred to in para-
graph (1) shall be filed with the court and transmitted
to the United States trustee. Each report shall clearly and
conspicuously specify any material misstatement of income
or expenditures or of assets identified by the person per-
227
forming the audit. In any case in which a material
misstatement of income or expenditures or of assets has
been reported, the clerk of the bankruptcy court shall give
notice of the misstatement to the creditors in the case.
‘‘(B) If a material misstatement of income or expend-
itures or of assets is reported, the United States trustee
shall—
‘‘(i) report the material misstatement, if appro-
priate, to the United States Attorney pursuant to
section 3057 of title 18; and
‘‘(ii) if advisable, take appropriate action, in-
cluding but not limited to commencing an adversary
proceeding to revoke the debtor’s discharge pursuant
to section 727(d) of title 11.’’.
(c) AMENDMENTS TO SECTION 521 OF TITLE 11,
U.S.C.—Section 521(a) of title 11, United States Code,
as so designated by this Act, is amended in each of para-
graphs (3) and (4) by inserting ‘‘or an auditor appointed
under section 586(f) of title 28’’ after ‘‘serving in the
case’’.
(d) AMENDMENTS TO SECTION 727 OF TITLE 11,
U.S.C.—Section 727(d) of title 11, United States Code,
is amended—
(1) in paragraph (2), by striking ‘‘or’’ at the
end;
228
(2) in paragraph (3), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(4) 
the 
debtor 
has 
failed 
to 
explain
satisfactorily—
‘‘(A) a material misstatement in an audit
referred to in section 586(f) of title 28; or
‘‘(B) a failure to make available for inspec-
tion all necessary accounts, papers, documents,
financial records, files, and all other papers,
things, or property belonging to the debtor that
are requested for an audit referred to in section
586(f) of title 28.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect 18 months after the date of
enactment of this Act.
SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY
OF BANKRUPTCY DATA.
It is the sense of Congress that—
(1) the national policy of the United States
should be that all data held by bankruptcy clerks in
electronic form, to the extent such data reflects only
public records (as defined in section 107 of title 11,
United States Code), should be released in a usable
electronic form in bulk to the public, subject to such
229
appropriate privacy concerns and safeguards as Con-
gress and the Judicial Conference of the United
States may determine; and
(2) there should be established a bankruptcy
data system in which—
(A) a single set of data definitions and
forms are used to collect data nationwide; and
(B) data for any particular bankruptcy
case are aggregated in the same electronic
record.
TITLE VII—BANKRUPTCY TAX
PROVISIONS
SEC. 701. TREATMENT OF CERTAIN LIENS.
(a) TREATMENT OF CERTAIN LIENS.—Section 724
of title 11, United States Code, is amended—
(1) in subsection (b), in the matter preceding
paragraph (1), by inserting ‘‘(other than to the ex-
tent that there is a properly perfected unavoidable
tax lien arising in connection with an ad valorem tax
on real or personal property of the estate)’’ after
‘‘under this title’’;
(2) in subsection (b)(2), by inserting ‘‘(except
that such expenses, other than claims for wages, sal-
aries, or commissions which arise after the filing of
a petition, shall be limited to expenses incurred
230
under chapter 7 of this title and shall not include ex-
penses incurred under chapter 11 of this title)’’ after
‘‘507(a)(1)’’; and
(3) by adding at the end the following:
‘‘(e) Before subordinating a tax lien on real or per-
sonal property of the estate, the trustee shall—
‘‘(1) exhaust the unencumbered assets of the
estate; and
‘‘(2) in a manner consistent with section
506(c), recover from property securing an allowed
secured claim the reasonable, necessary costs and
expenses of preserving or disposing of that property.
‘‘(f) Notwithstanding the exclusion of ad valorem tax
liens under this section and subject to the requirements
of subsection (e), the following may be paid from property
of the estate which secures a tax lien, or the proceeds of
such property:
‘‘(1) Claims for wages, salaries, and commis-
sions that are entitled to priority under section
507(a)(4).
‘‘(2) Claims for contributions to an employee
benefit plan entitled to priority under section
507(a)(5).’’.
(b) DETERMINATION OF TAX LIABILITY.—Section
505(a)(2) of title 11, United States Code, is amended—
231
(1) in subparagraph (A), by striking ‘‘or’’ at
the end;
(2) in subparagraph (B), by striking the period
at the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(C) the amount or legality of any amount aris-
ing in connection with an ad valorem tax on real or
personal property of the estate, if the applicable pe-
riod for contesting or redetermining that amount
under any law (other than a bankruptcy law) has ex-
pired.’’.
SEC. 702. TREATMENT OF FUEL TAX CLAIMS.
Section 501 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(e) A claim arising from the liability of a debtor for
fuel use tax assessed consistent with the requirements of
section 31705 of title 49 may be filed by the base jurisdic-
tion designated pursuant to the International Fuel Tax
Agreement and, if so filed, shall be allowed as a single
claim.’’.
SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF
TAXES.
Section 505(b) of title 11, United States Code, is
amended—
232
(1) in the first sentence, by inserting ‘‘at the
address and in the manner designated in paragraph
(1)’’ after ‘‘determination of such tax’’;
(2) by striking ‘‘(1) upon payment’’ and insert-
ing ‘‘(A) upon payment’’;
(3) by striking ‘‘(A) such governmental unit’’
and inserting ‘‘(i) such governmental unit’’;
(4) by striking ‘‘(B) such governmental unit’’
and inserting ‘‘(ii) such governmental unit’’;
(5) by striking ‘‘(2) upon payment’’ and insert-
ing ‘‘(B) upon payment’’;
(6) by striking ‘‘(3) upon payment’’ and insert-
ing ‘‘(C) upon payment’’;
(7) by striking ‘‘(b)’’ and inserting ‘‘(2)’’; and
(8) by inserting before paragraph (2), as so
designated, the following:
‘‘(b)(1)(A) The clerk of each district shall maintain
a listing under which a Federal, State, or local govern-
mental unit responsible for the collection of taxes within
the district may—
‘‘(i) designate an address for service of requests
under this subsection; and
‘‘(ii) describe where further information con-
cerning additional requirements for filing such re-
quests may be found.
233
‘‘(B) If a governmental unit referred to in subpara-
graph (A) does not designate an address and provide that
address to the clerk under that subparagraph, any request
made under this subsection may be served at the address
for the filing of a tax return or protest with the appro-
priate taxing authority of that governmental unit.’’.
SEC. 704. RATE OF INTEREST ON TAX CLAIMS.
(a) IN GENERAL.—Subchapter I of chapter 5 of title
11, United States Code, is amended by adding at the end
the following:
‘‘§ 511. Rate of interest on tax claims
‘‘(a) If any provision of this title requires the pay-
ment of interest on a tax claim or on an administrative
expense tax, or the payment of interest to enable a creditor
to receive the present value of the allowed amount of a
tax claim, the rate of interest shall be the rate determined
under applicable nonbankruptcy law.
‘‘(b) In the case of taxes paid under a confirmed plan
under this title, the rate of interest shall be determined
as of the calendar month in which the plan is confirmed.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 5 of title 11, United States Code, is amended
by inserting after the item relating to section 510 the fol-
lowing:
‘‘511. Rate of interest on tax claims.’’.
234
SEC. 705. PRIORITY OF TAX CLAIMS.
Section 507(a)(8) of title 11, United States Code, is
amended—
(1) in subparagraph (A)—
(A) in the matter preceding clause (i), by
inserting ‘‘for a taxable year ending on or be-
fore the date of filing of the petition’’ after
‘‘gross receipts’’;
(B) in clause (i), by striking ‘‘for a taxable
year ending on or before the date of filing of
the petition’’; and
(C) by striking clause (ii) and inserting the
following:
‘‘(ii) assessed within 240 days before
the date of the filing of the petition, exclu-
sive of—
‘‘(I) any time during which an
offer in compromise with respect to
that tax was pending or in effect dur-
ing that 240-day period, plus 30 days;
and
‘‘(II) any time during which a
stay of proceedings against collections
was in effect in a prior case under
this title during that 240-day period;
plus 90 days.’’; and
235
(2) by adding at the end the following:
‘‘An otherwise applicable time period specified in
this paragraph shall be suspended for (i) any period
during which a governmental unit is prohibited
under applicable nonbankruptcy law from collecting
a tax as a result of a request by the debtor for a
hearing and an appeal of any collection action taken
or proposed against the debtor, plus 90 days; plus
(ii) any time during which the stay of proceedings
was in effect in a prior case under this title or dur-
ing which collection was precluded by the existence
of 1 or more confirmed plans under this title, plus
90 days.’’.
SEC. 706. PRIORITY PROPERTY TAXES INCURRED.
Section 507(a)(8)(B) of title 11, United States Code,
is amended by striking ‘‘assessed’’ and inserting ‘‘in-
curred’’.
SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP-
TER 13.
Section 1328(a)(2) of title 11, United States Code,
as amended by section 314 of this Act, is amended by
striking ‘‘paragraph’’ and inserting ‘‘section 507(a)(8)(C)
or in paragraph (1)(B), (1)(C),’’.
236
SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP-
TER 11.
Section 1141(d) of title 11, United States Code, as
amended by this Act, is amended by adding at the end
the following:
‘‘(6) Notwithstanding paragraph (1), the confirma-
tion of a plan does not discharge a debtor that is a cor-
poration from any debt described in section 523(a)(2) or
for a tax or customs duty with respect to which the
debtor—
‘‘(A) made a fraudulent return; or
‘‘(B) willfully attempted in any manner to
evade or defeat that tax or duty.’’.
SEC. 
709. 
STAY 
OF 
TAX 
PROCEEDINGS 
LIMITED 
TO
PREPETITION TAXES.
Section 362(a)(8) of title 11, United States Code, is
amended by striking ‘‘the debtor’’ and inserting ‘‘a cor-
porate debtor’s tax liability for a taxable period the bank-
ruptcy court may determine or concerning an individual
debtor’s tax liability for a taxable period ending before the
order for relief under this title’’.
SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11
CASES.
Section 1129(a)(9) of title 11, United States Code,
is amended—
237
(1) in subparagraph (B), by striking ‘‘and’’ at
the end;
(2) in subparagraph (C), by striking ‘‘deferred
cash payments,’’ and all that follows through the
end of the subparagraph, and inserting ‘‘regular in-
stallment payments in cash—
‘‘(i) of a total value, as of the effective
date of the plan, equal to the allowed
amount of such claim;
‘‘(ii) over a period ending not later
than 5 years after the date of the entry of
the order for relief under section 301, 302,
or 303; and
‘‘(iii) in a manner not less favorable
than the most favored nonpriority unse-
cured claim provided for in the plan (other
than cash payments made to a class of
creditors under section 1122(b)); and’’;
and
(3) by adding at the end the following:
‘‘(D) with respect to a secured claim which
would otherwise meet the description of an un-
secured claim of a governmental unit under sec-
tion 507(a)(8), but for the secured status of
that claim, the holder of that claim will receive
238
on account of that claim, cash payments, in the
same manner and over the same period, as pre-
scribed in subparagraph (C).’’.
SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB-
ITED.
Section 545(2) of title 11, United States Code, is
amended by inserting before the semicolon at the end the
following: ‘‘, except in any case in which a purchaser is
a purchaser described in section 6323 of the Internal Rev-
enue Code of 1986, or in any other similar provision of
State or local law’’.
SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI-
NESS.
(a) PAYMENT OF TAXES REQUIRED.—Section 960 of
title 28, United States Code, is amended—
(1) by inserting ‘‘(a)’’ before ‘‘Any’’; and
(2) by adding at the end the following:
‘‘(b) A tax under subsection (a) shall be paid on or
before the due date of the tax under applicable nonbank-
ruptcy law, unless—
‘‘(1) the tax is a property tax secured by a lien
against property that is abandoned within a reason-
able period of time after the lien attaches by the
trustee of a bankruptcy estate under section 554 of
title 11; or
239
‘‘(2) payment of the tax is excused under a spe-
cific provision of title 11.
‘‘(c) In a case pending under chapter 7 of title 11,
payment of a tax may be deferred until final distribution
is made under section 726 of title 11, if—
‘‘(1) the tax was not incurred by a trustee duly
appointed under chapter 7 of title 11; or
‘‘(2) before the due date of the tax, an order of
the court makes a finding of probable insufficiency
of funds of the estate to pay in full the administra-
tive expenses allowed under section 503(b) of title
11 that have the same priority in distribution under
section 726(b) of title 11 as the priority of that
tax.’’.
(b) PAYMENT OF AD VALOREM TAXES REQUIRED.—
Section 503(b)(1)(B)(i) of title 11, United States Code,
is amended by inserting ‘‘whether secured or unsecured,
including property taxes for which liability is in rem, in
personam, or both,’’ before ‘‘except’’.
(c) REQUEST FOR PAYMENT OF ADMINISTRATIVE
EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of
title 11, United States Code, is amended—
(1) in subparagraph (B), by striking ‘‘and’’ at
the end;
240
(2) in subparagraph (C), by adding ‘‘and’’ at
the end; and
(3) by adding at the end the following:
‘‘(D) notwithstanding the requirements of sub-
section (a), a governmental unit shall not be re-
quired to file a request for the payment of an ex-
pense described in subparagraph (B) or (C), as a
condition of its being an allowed administrative ex-
pense;’’.
(d) PAYMENT OF TAXES AND FEES AS SECURED
CLAIMS.—Section 506 of title 11, United States Code, is
amended—
(1) in subsection (b), by inserting ‘‘or State
statute’’ after ‘‘agreement’’; and
(2) in subsection (c), by inserting ‘‘, including
the payment of all ad valorem property taxes with
respect to the property’’ before the period at the
end.
SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.
Section 726(a)(1) of title 11, United States Code, is
amended by striking ‘‘before the date on which the trustee
commences distribution under this section;’’ and inserting
the following: ‘‘on or before the earlier of—
241
‘‘(A) the date that is 10 days after the
mailing to creditors of the summary of the
trustee’s final report; or
‘‘(B) the date on which the trustee com-
mences final distribution under this section;’’.
SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU-
THORITIES.
Section 523(a) of title 11, United States Code, as
amended by this Act, is amended—
(1) in paragraph (1)(B)—
(A) in the matter preceding clause (i), by
inserting ‘‘or equivalent report or notice,’’ after
‘‘a return,’’;
(B) in clause (i), by inserting ‘‘or given’’
after ‘‘filed’’; and
(C) in clause (ii)—
(i) by inserting ‘‘or given’’ after
‘‘filed’’; and
(ii) by inserting ‘‘, report, or notice’’
after ‘‘return’’; and
(2) by adding at the end the following:
‘‘For purposes of this subsection, the term ‘return’ means
a return that satisfies the requirements of applicable non-
bankruptcy law (including applicable filing requirements).
Such term includes a return prepared pursuant to section
242
6020(a) of the Internal Revenue Code of 1986, or similar
State or local law, or a written stipulation to a judgment
or a final order entered by a nonbankruptcy tribunal, but
does not include a return made pursuant to section
6020(b) of the Internal Revenue Code of 1986, or a simi-
lar State or local law.’’.
SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN-
PAID TAXES.
Section 505(b)(2) of title 11, United States Code, as
amended by this Act, is amended by inserting ‘‘the es-
tate,’’ after ‘‘misrepresentation,’’.
SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON-
FIRM CHAPTER 13 PLANS.
(a) FILING
OF PREPETITION TAX RETURNS RE-
QUIRED FOR PLAN CONFIRMATION.—Section 1325(a) of
title 11, United States Code, as amended by this Act, is
amended by adding at the end the following:
‘‘(9) the debtor has filed all applicable Federal,
State, and local tax returns as required by section
1308.’’.
(b) ADDITIONAL TIME PERMITTED FOR FILING TAX
RETURNS.—
(1) IN GENERAL.—Subchapter I of chapter 13
of title 11, United States Code, is amended by add-
ing at the end the following:
243
‘‘§ 1308. Filing of prepetition tax returns
‘‘(a) Not later than the day before the date on which
the meeting of the creditors is first scheduled to be held
under section 341(a), if the debtor was required to file
a tax return under applicable nonbankruptcy law, the
debtor shall file with appropriate tax authorities all tax
returns for all taxable periods ending during the 4-year
period ending on the date of the filing of the petition.
‘‘(b)(1) Subject to paragraph (2), if the tax returns
required by subsection (a) have not been filed by the date
on which the meeting of creditors is first scheduled to be
held under section 341(a), the trustee may hold open that
meeting for a reasonable period of time to allow the debtor
an additional period of time to file any unfiled returns,
but such additional period of time shall not extend
beyond—
‘‘(A) for any return that is past due as of the
date of the filing of the petition, the date that is 120
days after the date of that meeting; or
‘‘(B) for any return that is not past due as of
the date of the filing of the petition, the later of—
‘‘(i) the date that is 120 days after the
date of that meeting; or
‘‘(ii) the date on which the return is due
under the last automatic extension of time for
filing that return to which the debtor is enti-
244
tled, and for which request is timely made, in
accordance with applicable nonbankruptcy law.
‘‘(2) Upon notice and hearing, and order entered be-
fore the tolling of any applicable filing period determined
under this subsection, if the debtor demonstrates by a pre-
ponderance of the evidence that the failure to file a return
as required under this subsection is attributable to cir-
cumstances beyond the control of the debtor, the court
may extend the filing period established by the trustee
under this subsection for—
‘‘(A) a period of not more than 30 days for re-
turns described in paragraph (1); and
‘‘(B) a period not to extend after the applicable
extended due date for a return described in para-
graph (2).
‘‘(c) For purposes of this section, the term ‘return’
includes a return prepared pursuant to subsection (a) or
(b) of section 6020 of the Internal Revenue Code of 1986,
or a similar State or local law, or a written stipulation
to a judgment or a final order entered by a nonbankruptcy
tribunal.’’.
(2) CONFORMING AMENDMENT.—The table of
sections at the beginning of chapter 13 of title 11,
United States Code, is amended by inserting after
the item relating to section 1307 the following:
‘‘1308. Filing of prepetition tax returns.’’.
245
(c) DISMISSAL
OR CONVERSION
ON FAILURE TO
COMPLY.—Section 1307 of title 11, United States Code,
is amended—
(1) by redesignating subsections (e) and (f) as
subsections (f) and (g), respectively; and
(2) by inserting after subsection (d) the fol-
lowing:
‘‘(e) Upon the failure of the debtor to file a tax return
under section 1308, on request of a party in interest or
the United States trustee and after notice and a hearing,
the court shall dismiss a case or convert a case under this
chapter to a case under chapter 7 of this title, whichever
is in the best interest of the creditors and the estate.’’.
(d) TIMELY FILED CLAIMS.—Section 502(b)(9) of
title 11, United States Code, is amended by inserting be-
fore the period at the end the following ‘‘, and except that
in a case under chapter 13, a claim of a governmental
unit for a tax with respect to a return filed under section
1308 shall be timely if the claim is filed on or before the
date that is 60 days after the date on which such return
was filed as required’’.
(e) RULES FOR OBJECTIONS TO CLAIMS AND TO
CONFIRMATION.—It is the sense of Congress that the Ad-
visory Committee on Bankruptcy Rules of the Judicial
Conference of the United States should, as soon as prac-
246
ticable after the date of enactment of this Act, propose
for adoption amended Federal Rules of Bankruptcy Proce-
dure which provide that—
(1) notwithstanding the provisions of Rule
3015(f), in cases under chapter 13 of title 11,
United States Code, an objection to the confirmation
of a plan filed by a governmental unit on or before
the date that is 60 days after the date on which the
debtor files all tax returns required under sections
1308 and 1325(a)(7) of title 11, United States
Code, shall be treated for all purposes as if such ob-
jection had been timely filed before such confirma-
tion; and
(2) in addition to the provisions of Rule 3007,
in a case under chapter 13 of title 11, United States
Code, no objection to a tax with respect to which a
return is required to be filed under section 1308 of
title 11, United States Code, shall be filed until such
return has been filed as required.
SEC. 717. STANDARDS FOR TAX DISCLOSURE.
Section 1125(a)(1) of title 11, United States Code,
is amended—
(1) by inserting ‘‘including a discussion of the
potential material Federal tax consequences of the
plan to the debtor, any successor to the debtor, and
247
a hypothetical investor typical of the holders of
claims or interests in the case,’’ after ‘‘records’’; and
(2) by striking ‘‘a hypothetical reasonable inves-
tor typical of holders of claims or interests’’ and in-
serting ‘‘such a hypothetical investor’’.
SEC. 718. SETOFF OF TAX REFUNDS.
Section 362(b) of title 11, United States Code, is
amended by inserting after paragraph (26), as added by
this Act, the following:
‘‘(27) under subsection (a), of the setoff under
applicable nonbankruptcy law of an income tax re-
fund, by a governmental unit, with respect to a tax-
able period that ended before the order for relief
against an income tax liability for a taxable period
that also ended before the order for relief, except
that in any case in which the setoff of an income tax
refund is not permitted under applicable nonbank-
ruptcy law because of a pending action to determine
the amount or legality of a tax liability, the govern-
mental unit may hold the refund pending the resolu-
tion of the action, unless the court, upon motion of
the trustee and after notice and hearing, grants the
taxing authority adequate protection (within the
meaning of section 361) for the secured claim of
that authority in the setoff under section 506(a);’’.
248
SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREAT-
MENT OF STATE AND LOCAL TAXES.
(a) IN GENERAL.—Section 346 of title 11, United
States Code, is amended to read as follows:
‘‘§ 346. Special provisions related to the treatment of
state and local taxes
‘‘(a) Whenever the Internal Revenue Code of 1986
provides that a separate taxable estate or entity is created
in a case concerning a debtor under this title, and the in-
come, gain, loss, deductions, and credits of such estate
shall be taxed to or claimed by the estate, a separate tax-
able estate is also created for purposes of any State and
local law imposing a tax on or measured by income and
such income, gain, loss, deductions, and credits shall be
taxed to or claimed by the estate and may not be taxed
to or claimed by the debtor. The preceding sentence shall
not apply if the case is dismissed. The trustee shall make
tax returns of income required under any such State or
local law.
‘‘(b) Whenever the Internal Revenue Code of 1986
provides that no separate taxable estate shall be created
in a case concerning a debtor under this title, and the in-
come, gain, loss, deductions, and credits of an estate shall
be taxed to or claimed by the debtor, such income, gain,
loss, deductions, and credits shall be taxed to or claimed
by the debtor under a State or local law imposing a tax
249
on or measured by income and may not be taxed to or
claimed by the estate. The trustee shall make such tax
returns of income of corporations and of partnerships as
are required under any State or local law, but with respect
to partnerships, shall make said returns only to the extent
such returns are also required to be made under such
Code. The estate shall be liable for any tax imposed on
such corporation or partnership, but not for any tax im-
posed on partners or members.
‘‘(c) With respect to a partnership or any entity treat-
ed as a partnership under a State or local law imposing
a tax on or measured by income that is a debtor in a case
under this title, any gain or loss resulting from a distribu-
tion of property from such partnership, or any distributive
share of any income, gain, loss, deduction, or credit of a
partner or member that is distributed, or considered dis-
tributed, from such partnership, after the commencement
of the case, is gain, loss, income, deduction, or credit, as
the case may be, of the partner or member, and if such
partner or member is a debtor in a case under this title,
shall be subject to tax in accordance with subsection (a)
or (b).
‘‘(d) For purposes of any State or local law imposing
a tax on or measured by income, the taxable period of
a debtor in a case under this title shall terminate only
250
if and to the extent that the taxable period of such debtor
terminates under the Internal Revenue Code of 1986.
‘‘(e) The estate in any case described in subsection
(a) shall use the same accounting method as the debtor
used immediately before the commencement of the case,
if such method of accounting complies with applicable non-
bankruptcy tax law.
‘‘(f) For purposes of any State or local law imposing
a tax on or measured by income, a transfer of property
from the debtor to the estate or from the estate to the
debtor shall not be treated as a disposition for purposes
of any provision assigning tax consequences to a disposi-
tion, except to the extent that such transfer is treated as
a disposition under the Internal Revenue Code of 1986.
‘‘(g) Whenever a tax is imposed pursuant to a State
or local law imposing a tax on or measured by income pur-
suant to subsection (a) or (b), such tax shall be imposed
at rates generally applicable to the same types of entities
under such State or local law.
‘‘(h) The trustee shall withhold from any payment of
claims for wages, salaries, commissions, dividends, inter-
est, or other payments, or collect, any amount required
to be withheld or collected under applicable State or local
tax law, and shall pay such withheld or collected amount
to the appropriate governmental unit at the time and in
251
the manner required by such tax law, and with the same
priority as the claim from which such amount was with-
held or collected was paid.
‘‘(i)(1) To the extent that any State or local law im-
posing a tax on or measured by income provides for the
carryover of any tax attribute from one taxable period to
a subsequent taxable period, the estate shall succeed to
such tax attribute in any case in which such estate is sub-
ject to tax under subsection (a).
‘‘(2) After such a case is closed or dismissed, the
debtor shall succeed to any tax attribute to which the es-
tate succeeded under paragraph (1) to the extent con-
sistent with the Internal Revenue Code of 1986.
‘‘(3) The estate may carry back any loss or tax at-
tribute to a taxable period of the debtor that ended before
the order for relief under this title to the extent that—
‘‘(A) applicable State or local tax law provides
for a carryback in the case of the debtor; and
‘‘(B) the same or a similar tax attribute may be
carried back by the estate to such a taxable period
of the debtor under the Internal Revenue Code of
1986.
‘‘(j)(1) For purposes of any State or local law impos-
ing a tax on or measured by income, income is not realized
by the estate, the debtor, or a successor to the debtor by
252
reason of discharge of indebtedness in a case under this
title, except to the extent, if any, that such income is sub-
ject to tax under the Internal Revenue Code of 1986.
‘‘(2) Whenever the Internal Revenue Code of 1986
provides that the amount excluded from gross income in
respect of the discharge of indebtedness in a case under
this title shall be applied to reduce the tax attributes of
the debtor or the estate, a similar reduction shall be made
under any State or local law imposing a tax on or meas-
ured by income to the extent such State or local law recog-
nizes such attributes. Such State or local law may also
provide for the reduction of other attributes to the extent
that the full amount of income from the discharge of in-
debtedness has not been applied.
‘‘(k)(1) Except as provided in this section and section
505, the time and manner of filing tax returns and the
items of income, gain, loss, deduction, and credit of any
taxpayer shall be determined under applicable nonbank-
ruptcy law.
‘‘(2) For Federal tax purposes, the provisions of this
section are subject to the Internal Revenue Code of 1986
and other applicable Federal nonbankruptcy law.’’.
(b) CONFORMING AMENDMENTS.—
(1) Section 728 of title 11, United States Code,
is repealed.
253
(2) Section 1146 of title 11, United States
Code, is amended—
(A) by striking subsections (a) and (b);
and
(B) by redesignating subsections (c) and
(d) as subsections (a) and (b), respectively.
(3) Section 1231 of title 11, United States
Code, is amended—
(A) by striking subsections (a) and (b);
and
(B) by redesignating subsections (c) and
(d) as subsections (a) and (b), respectively.
SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX
RETURNS.
Section 521 of title 11, United States Code, as
amended by this Act, is amended by adding at the end
the following:
‘‘(k)(1) Notwithstanding any other provision of this
title, if the debtor fails to file a tax return that becomes
due after the commencement of the case or to properly
obtain an extension of the due date for filing such return,
the taxing authority may request that the court enter an
order converting or dismissing the case.
‘‘(2) If the debtor does not file the required return
or obtain the extension referred to in paragraph (1) within
254
90 days after a request is filed by the taxing authority
under that paragraph, the court shall convert or dismiss
the case, whichever is in the best interests of creditors and
the estate.’’.
TITLE VIII—ANCILLARY AND
OTHER CROSS-BORDER CASES
SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11,
UNITED STATES CODE.
(a) IN GENERAL.—Title 11, United States Code, is
amended by inserting after chapter 13 the following:
‘‘CHAPTER 15—ANCILLARY AND OTHER
CROSS-BORDER CASES
‘‘Sec.
‘‘1501. Purpose and scope of application.
‘‘SUBCHAPTER I—GENERAL PROVISIONS
‘‘1502. Definitions.
‘‘1503. International obligations of the United States.
‘‘1504. Commencement of ancillary case.
‘‘1505. Authorization to act in a foreign country.
‘‘1506. Public policy exception.
‘‘1507. Additional assistance.
‘‘1508. Interpretation.
‘‘SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND
CREDITORS TO THE COURT
‘‘1509. Right of direct access.
‘‘1510. Limited jurisdiction.
‘‘1511. Commencement of case under section 301 or 303.
‘‘1512. Participation of a foreign representative in a case under this title.
‘‘1513. Access of foreign creditors to a case under this title.
‘‘1514. Notification to foreign creditors concerning a case under this title.
‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING
AND RELIEF
‘‘1515. Application for recognition.
‘‘1516. Presumptions concerning recognition.
‘‘1517. Order granting recognition.
‘‘1518. Subsequent information.
255
‘‘1519. Relief that may be granted upon filing petition for recognition.
‘‘1520. Effects of recognition of a foreign main proceeding.
‘‘1521. Relief that may be granted upon recognition.
‘‘1522. Protection of creditors and other interested persons.
‘‘1523. Actions to avoid acts detrimental to creditors.
‘‘1524. Intervention by a foreign representative.
‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND
FOREIGN REPRESENTATIVES
‘‘1525. Cooperation and direct communication between the court and foreign
courts or foreign representatives.
‘‘1526. Cooperation and direct communication between the trustee and foreign
courts or foreign representatives.
‘‘1527. Forms of cooperation.
‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS
‘‘1528. Commencement of a case under this title after recognition of a foreign
main proceeding.
‘‘1529. Coordination of a case under this title and a foreign proceeding.
‘‘1530. Coordination of more than 1 foreign proceeding.
‘‘1531. Presumption of insolvency based on recognition of a foreign main pro-
ceeding.
‘‘1532. Rule of payment in concurrent proceedings.
‘‘§ 1501. Purpose and scope of application
‘‘(a) The purpose of this chapter is to incorporate the
Model Law on Cross-Border Insolvency so as to provide
effective mechanisms for dealing with cases of cross-bor-
der insolvency with the objectives of—
‘‘(1) cooperation between—
‘‘(A) United States courts, United States
trustees, trustees, examiners, debtors, and debt-
ors in possession; and
‘‘(B) the courts and other competent au-
thorities of foreign countries involved in cross-
border insolvency cases;
‘‘(2) greater legal certainty for trade and in-
vestment;
256
‘‘(3) fair and efficient administration of cross-
border insolvencies that protects the interests of all
creditors, and other interested entities, including the
debtor;
‘‘(4) protection and maximization of the value
of the debtor’s assets; and
‘‘(5) facilitation of the rescue of financially
troubled businesses, thereby protecting investment
and preserving employment.
‘‘(b) This chapter applies where—
‘‘(1) assistance is sought in the United States
by a foreign court or a foreign representative in con-
nection with a foreign proceeding;
‘‘(2) assistance is sought in a foreign country in
connection with a case under this title;
‘‘(3) a foreign proceeding and a case under this
title with respect to the same debtor are taking place
concurrently; or
‘‘(4) creditors or other interested persons in a
foreign country have an interest in requesting the
commencement of, or participating in, a case or pro-
ceeding under this title.
‘‘(c) This chapter does not apply to—
257
‘‘(1) a proceeding concerning an entity, other
than a foreign insurance company, identified by ex-
clusion in section 109(b);
‘‘(2) an individual, or to an individual and such
individual’s spouse, who have debts within the limits
specified in section 109(e) and who are citizens of
the United States or aliens lawfully admitted for
permanent residence in the United States; or
‘‘(3) an entity subject to a proceeding under the
Securities Investor Protection Act of 1970, a stock-
broker subject to subchapter III of chapter 7 of this
title, or a commodity broker subject to subchapter
IV of chapter 7 of this title.
‘‘(d) The court may not grant relief under this chap-
ter with respect to any deposit, escrow, trust fund, or
other security required or permitted under any applicable
State insurance law or regulation for the benefit of claim
holders in the United States.
‘‘SUBCHAPTER I—GENERAL PROVISIONS
‘‘§ 1502. Definitions
‘‘For the purposes of this chapter, the term—
‘‘(1) ‘debtor’ means an entity that is the subject
of a foreign proceeding;
258
‘‘(2) ‘establishment’ means any place of oper-
ations where the debtor carries out a nontransitory
economic activity;
‘‘(3) ‘foreign court’ means a judicial or other
authority competent to control or supervise a foreign
proceeding;
‘‘(4) ‘foreign main proceeding’ means a foreign
proceeding taking place in the country where the
debtor has the center of its main interests;
‘‘(5) ‘foreign nonmain proceeding’ means a for-
eign proceeding, other than a foreign main pro-
ceeding, taking place in a country where the debtor
has an establishment;
‘‘(6) ‘trustee’ includes a trustee, a debtor in
possession in a case under any chapter of this title,
or a debtor under chapter 9 of this title;
‘‘(7) ‘recognition’ means the entry of an order
granting recognition of a foreign main proceeding or
foreign nonmain proceeding under this chapter; and
‘‘(8) ‘within the territorial jurisdiction of the
United States’, when used with reference to property
of a debtor, refers to tangible property located with-
in the territory of the United States and intangible
property deemed under applicable nonbankruptcy
law to be located within that territory, including any
259
property subject to attachment or garnishment that
may properly be seized or garnished by an action in
a Federal or State court in the United States.
‘‘§ 1503. International obligations of the United States
‘‘To the extent that this chapter conflicts with an ob-
ligation of the United States arising out of any treaty or
other form of agreement to which it is a party with one
or more other countries, the requirements of the treaty
or agreement prevail.
‘‘§ 1504. Commencement of ancillary case
‘‘A case under this chapter is commenced by the filing
of a petition for recognition of a foreign proceeding under
section 1515.
‘‘§ 1505. Authorization to act in a foreign country
‘‘A trustee or another entity (including an examiner)
may be authorized by the court to act in a foreign country
on behalf of an estate created under section 541. An entity
authorized to act under this section may act in any way
permitted by the applicable foreign law.
‘‘§ 1506. Public policy exception
‘‘Nothing in this chapter prevents the court from re-
fusing to take an action governed by this chapter if the
action would be manifestly contrary to the public policy
of the United States.
260
‘‘§ 1507. Additional assistance
‘‘(a) Subject to the specific limitations stated else-
where in this chapter the court, if recognition is granted,
may provide additional assistance to a foreign representa-
tive under this title or under other laws of the United
States.
‘‘(b) In determining whether to provide additional as-
sistance under this title or under other laws of the United
States, the court shall consider whether such additional
assistance, consistent with the principles of comity, will
reasonably assure—
‘‘(1) just treatment of all holders of claims
against or interests in the debtor’s property;
‘‘(2) protection of claim holders in the United
States against prejudice and inconvenience in the
processing of claims in such foreign proceeding;
‘‘(3) prevention of preferential or fraudulent
dispositions of property of the debtor;
‘‘(4) distribution of proceeds of the debtor’s
property substantially in accordance with the order
prescribed by this title; and
‘‘(5) if appropriate, the provision of an oppor-
tunity for a fresh start for the individual that such
foreign proceeding concerns.
261
‘‘§ 1508. Interpretation
‘‘In interpreting this chapter, the court shall consider
its international origin, and the need to promote an appli-
cation of this chapter that is consistent with the applica-
tion of similar statutes adopted by foreign jurisdictions.
‘‘SUBCHAPTER II—ACCESS OF FOREIGN REP-
RESENTATIVES AND CREDITORS TO THE
COURT
‘‘§ 1509. Right of direct access
‘‘(a) A foreign representative may commence a case
under section 1504 by filing directly with the court a peti-
tion for recognition of a foreign proceeding under section
1515.
‘‘(b) If the court grants recognition under section
1515, and subject to any limitations that the court may
impose consistent with the policy of this chapter—
‘‘(1) the foreign representative has the capacity
to sue and be sued in a court in the United States;
‘‘(2) the foreign representative may apply di-
rectly to a court in the United States for appropriate
relief in that court; and
‘‘(3) a court in the United States shall grant
comity or cooperation to the foreign representative.
‘‘(c) A request for comity or cooperation by a foreign
representative in a court in the United States other than
the court which granted recognition shall be accompanied
262
by a certified copy of an order granting recognition under
section 1517.
‘‘(d) If the court denies recognition under this chap-
ter, the court may issue any appropriate order necessary
to prevent the foreign representative from obtaining com-
ity or cooperation from courts in the United States.
‘‘(e) Whether or not the court grants recognition, and
subject to sections 306 and 1510, a foreign representative
is subject to applicable nonbankruptcy law.
‘‘(f) Notwithstanding any other provision of this sec-
tion, the failure of a foreign representative to commence
a case or to obtain recognition under this chapter does
not affect any right the foreign representative may have
to sue in a court in the United States to collect or recover
a claim which is the property of the debtor.
‘‘§ 1510. Limited jurisdiction
‘‘The sole fact that a foreign representative files a
petition under section 1515 does not subject the foreign
representative to the jurisdiction of any court in the
United States for any other purpose.
‘‘§ 1511. Commencement of case under section 301 or
303
‘‘(a) Upon recognition, a foreign representative may
commence—
‘‘(1) an involuntary case under section 303; or
263
‘‘(2) a voluntary case under section 301 or 302,
if the foreign proceeding is a foreign main pro-
ceeding.
‘‘(b) The petition commencing a case under sub-
section (a) must be accompanied by a certified copy of
an order granting recognition. The court where the peti-
tion for recognition has been filed must be advised of the
foreign representative’s intent to commence a case under
subsection (a) prior to such commencement.
‘‘§ 1512. Participation of a foreign representative in a
case under this title
‘‘Upon recognition of a foreign proceeding, the for-
eign representative in the recognized proceeding is entitled
to participate as a party in interest in a case regarding
the debtor under this title.
‘‘§ 1513. Access of foreign creditors to a case under
this title
‘‘(a) Foreign creditors have the same rights regarding
the commencement of, and participation in, a case under
this title as domestic creditors.
‘‘(b)(1) Subsection (a) does not change or codify
present law as to the priority of claims under section 507
or 726 of this title, except that the claim of a foreign cred-
itor under those sections shall not be given a lower priority
than that of general unsecured claims without priority
264
solely because the holder of such claim is a foreign cred-
itor.
‘‘(2)(A) Subsection (a) and paragraph (1) do not
change or codify present law as to the allowability of for-
eign revenue claims or other foreign public law claims in
a proceeding under this title.
‘‘(B) Allowance and priority as to a foreign tax claim
or other foreign public law claim shall be governed by any
applicable tax treaty of the United States, under the con-
ditions and circumstances specified therein.
‘‘§ 1514. Notification to foreign creditors concerning a
case under this title
‘‘(a) Whenever in a case under this title notice is to
be given to creditors generally or to any class or category
of creditors, such notice shall also be given to the known
creditors generally, or to creditors in the notified class or
category, that do not have addresses in the United States.
The court may order that appropriate steps be taken with
a view to notifying any creditor whose address is not yet
known.
‘‘(b) Such notification to creditors with foreign ad-
dresses described in subsection (a) shall be given individ-
ually, unless the court considers that, under the cir-
cumstances, some other form of notification would be
more appropriate. No letter or other formality is required.
265
‘‘(c) When a notification of commencement of a case
is to be given to foreign creditors, the notification shall—
‘‘(1) indicate the time period for filing proofs of
claim and specify the place for their filing;
‘‘(2) indicate whether secured creditors need to
file their proofs of claim; and
‘‘(3) contain any other information required to
be included in such a notification to creditors under
this title and the orders of the court.
‘‘(d) Any rule of procedure or order of the court as
to notice or the filing of a claim shall provide such addi-
tional time to creditors with foreign addresses as is rea-
sonable under the circumstances.
‘‘SUBCHAPTER III—RECOGNITION OF A
FOREIGN PROCEEDING AND RELIEF
‘‘§ 1515. Application for recognition
‘‘(a) A foreign representative applies to the court for
recognition of the foreign proceeding in which the foreign
representative has been appointed by filing a petition for
recognition.
‘‘(b) A petition for recognition shall be accompanied
by—
‘‘(1) a certified copy of the decision com-
mencing the foreign proceeding and appointing the
foreign representative;
266
‘‘(2) a certificate from the foreign court affirm-
ing the existence of the foreign proceeding and of
the appointment of the foreign representative; or
‘‘(3) in the absence of evidence referred to in
paragraphs (1) and (2), any other evidence accept-
able to the court of the existence of the foreign pro-
ceeding and of the appointment of the foreign rep-
resentative.
‘‘(c) A petition for recognition shall also be accom-
panied by a statement identifying all foreign proceedings
with respect to the debtor that are known to the foreign
representative.
‘‘(d) The documents referred to in paragraphs (1)
and (2) of subsection (b) shall be translated into English.
The court may require a translation into English of addi-
tional documents.
‘‘§ 1516. Presumptions concerning recognition
‘‘(a) If the decision or certificate referred to in section
1515(b) indicates that the foreign proceeding is a foreign
proceeding (as defined in section 101) and that the person
or body is a foreign representative (as defined in section
101), the court is entitled to so presume.
‘‘(b) The court is entitled to presume that documents
submitted in support of the petition for recognition are
authentic, whether or not they have been legalized.
267
‘‘(c) In the absence of evidence to the contrary, the
debtor’s registered office, or habitual residence in the case
of an individual, is presumed to be the center of the debt-
or’s main interests.
‘‘§ 1517. Order granting recognition
‘‘(a) Subject to section 1506, after notice and a hear-
ing, an order recognizing a foreign proceeding shall be en-
tered if—
‘‘(1) the foreign proceeding for which recogni-
tion is sought is a foreign main proceeding or for-
eign nonmain proceeding within the meaning of sec-
tion 1502;
‘‘(2) the foreign representative applying for rec-
ognition is a person or body as defined in section
101; and
‘‘(3) the petition meets the requirements of sec-
tion 1515.
‘‘(b) The foreign proceeding shall be recognized—
‘‘(1) as a foreign main proceeding if it is taking
place in the country where the debtor has the center
of its main interests; or
‘‘(2) as a foreign nonmain proceeding if the
debtor has an establishment within the meaning of
section 1502 in the foreign country where the pro-
ceeding is pending.
268
‘‘(c) A petition for recognition of a foreign proceeding
shall be decided upon at the earliest possible time. Entry
of an order recognizing a foreign proceeding constitutes
recognition under this chapter.
‘‘(d) The provisions of this subchapter do not prevent
modification or termination of recognition if it is shown
that the grounds for granting it were fully or partially
lacking or have ceased to exist, but in considering such
action the court shall give due weight to possible prejudice
to parties that have relied upon the order granting rec-
ognition. The case under this chapter may be closed in
the manner prescribed under section 350.
‘‘§ 1518. Subsequent information
‘‘From the time of filing the petition for recognition
of the foreign proceeding, the foreign representative shall
file with the court promptly a notice of change of status
concerning—
‘‘(1) any substantial change in the status of the
foreign proceeding or the status of the foreign rep-
resentative’s appointment; and
‘‘(2) any other foreign proceeding regarding the
debtor that becomes known to the foreign represent-
ative.
269
‘‘§ 1519. Relief that may be granted upon filing peti-
tion for recognition
‘‘(a) From the time of filing a petition for recognition
until the court rules on the petition, the court may, at
the request of the foreign representative, where relief is
urgently needed to protect the assets of the debtor or the
interests of the creditors, grant relief of a provisional na-
ture, including—
‘‘(1) staying execution against the debtor’s as-
sets;
‘‘(2) entrusting the administration or realiza-
tion of all or part of the debtor’s assets located in
the United States to the foreign representative or
another person authorized by the court, including an
examiner, in order to protect and preserve the value
of assets that, by their nature or because of other
circumstances, are perishable, susceptible to devalu-
ation or otherwise in jeopardy; and
‘‘(3) any relief referred to in paragraph (3),
(4), or (7) of section 1521(a).
‘‘(b) Unless extended under section 1521(a)(6), the
relief granted under this section terminates when the peti-
tion for recognition is granted.
‘‘(c) It is a ground for denial of relief under this sec-
tion that such relief would interfere with the administra-
tion of a foreign main proceeding.
270
‘‘(d) The court may not enjoin a police or regulatory
act of a governmental unit, including a criminal action or
proceeding, under this section.
‘‘(e) The standards, procedures, and limitations ap-
plicable to an injunction shall apply to relief under this
section.
‘‘(f) The exercise of rights not subject to the stay
arising under section 362(a) pursuant to paragraph (6),
(7), (17), or (28) of section 362(b) or pursuant to section
362(l) shall not be stayed by any order of a court or ad-
ministrative agency in any proceeding under this chapter.
‘‘§ 1520. Effects of recognition of a foreign main pro-
ceeding
‘‘(a) Upon recognition of a foreign proceeding that
is a foreign main proceeding—
‘‘(1) sections 361 and 362 apply with respect to
the debtor and that property of the debtor that is
within the territorial jurisdiction of the United
States;
‘‘(2) sections 363, 549, and 552 of this title
apply to a transfer of an interest of the debtor in
property that is within the territorial jurisdiction of
the United States to the same extent that the sec-
tions would apply to property of an estate;
271
‘‘(3) unless the court orders otherwise, the for-
eign representative may operate the debtor’s busi-
ness and may exercise the rights and powers of a
trustee under and to the extent provided by sections
363 and 552; and
‘‘(4) section 552 applies to property of the debt-
or that is within the territorial jurisdiction of the
United States.
‘‘(b) Subsection (a) does not affect the right to com-
mence an individual action or proceeding in a foreign
country to the extent necessary to preserve a claim against
the debtor.
‘‘(c) Subsection (a) does not affect the right of a for-
eign representative or an entity to file a petition com-
mencing a case under this title or the right of any party
to file claims or take other proper actions in such a case.
‘‘§ 1521. Relief that may be granted upon recognition
‘‘(a) Upon recognition of a foreign proceeding, wheth-
er main or nonmain, where necessary to effectuate the
purpose of this chapter and to protect the assets of the
debtor or the interests of the creditors, the court may, at
the request of the foreign representative, grant any appro-
priate relief, including—
‘‘(1) staying the commencement or continuation
of an individual action or proceeding concerning the
272
debtor’s assets, rights, obligations or liabilities to the
extent they have not been stayed under section
1520(a);
‘‘(2) staying execution against the debtor’s as-
sets to the extent it has not been stayed under sec-
tion 1520(a);
‘‘(3) suspending the right to transfer, encumber
or otherwise dispose of any assets of the debtor to
the extent this right has not been suspended under
section 1520(a);
‘‘(4) providing for the examination of witnesses,
the taking of evidence or the delivery of information
concerning the debtor’s assets, affairs, rights, obliga-
tions or liabilities;
‘‘(5) entrusting the administration or realiza-
tion of all or part of the debtor’s assets within the
territorial jurisdiction of the United States to the
foreign representative or another person, including
an examiner, authorized by the court;
‘‘(6) extending relief granted under section
1519(a); and
‘‘(7) granting any additional relief that may be
available to a trustee, except for relief available
under sections 522, 544, 545, 547, 548, 550, and
724(a).
273
‘‘(b) Upon recognition of a foreign proceeding, wheth-
er main or nonmain, the court may, at the request of the
foreign representative, entrust the distribution of all or
part of the debtor’s assets located in the United States
to the foreign representative or another person, including
an examiner, authorized by the court, provided that the
court is satisfied that the interests of creditors in the
United States are sufficiently protected.
‘‘(c) In granting relief under this section to a rep-
resentative of a foreign nonmain proceeding, the court
must be satisfied that the relief relates to assets that,
under the law of the United States, should be adminis-
tered in the foreign nonmain proceeding or concerns infor-
mation required in that proceeding.
‘‘(d) The court may not enjoin a police or regulatory
act of a governmental unit, including a criminal action or
proceeding, under this section.
‘‘(e) The standards, procedures, and limitations ap-
plicable to an injunction shall apply to relief under para-
graphs (1), (2), (3), and (6) of subsection (a).
‘‘(f) The exercise of rights not subject to the stay
arising under section 362(a) pursuant to paragraph (6),
(7), (17), or (28) of section 362(b) or pursuant to section
362(l) shall not be stayed by any order of a court or ad-
ministrative agency in any proceeding under this chapter.
274
‘‘§ 1522. Protection of creditors and other interested
persons
‘‘(a) The court may grant relief under section 1519
or 1521, or may modify or terminate relief under sub-
section (c), only if the interests of the creditors and other
interested entities, including the debtor, are sufficiently
protected.
‘‘(b) The court may subject relief granted under sec-
tion 1519 or 1521, or the operation of the debtor’s busi-
ness under section 1520(a)(3) of this title, to conditions
it considers appropriate, including the giving of security
or the filing of a bond.
‘‘(c) The court may, at the request of the foreign rep-
resentative or an entity affected by relief granted under
section 1519 or 1521, or at its own motion, modify or
terminate such relief.
‘‘(d) Section 1104(d) shall apply to the appointment
of an examiner under this chapter. Any examiner shall
comply with the qualification requirements imposed on a
trustee by section 322.
‘‘§ 1523. Actions to avoid acts detrimental to creditors
‘‘(a) Upon recognition of a foreign proceeding, the
foreign representative has standing in a case concerning
the debtor pending under another chapter of this title to
initiate actions under sections 522, 544, 545, 547, 548,
550, 553, and 724(a).
275
‘‘(b) When the foreign proceeding is a foreign
nonmain proceeding, the court must be satisfied that an
action under subsection (a) relates to assets that, under
United States law, should be administered in the foreign
nonmain proceeding.
‘‘§ 1524. Intervention by a foreign representative
‘‘Upon recognition of a foreign proceeding, the for-
eign representative may intervene in any proceedings in
a State or Federal court in the United States in which
the debtor is a party.
‘‘SUBCHAPTER IV—COOPERATION WITH FOR-
EIGN COURTS AND FOREIGN REPRESENTA-
TIVES
‘‘§ 1525. Cooperation and direct communication be-
tween the court and foreign courts or for-
eign representatives
‘‘(a) Consistent with section 1501, the court shall co-
operate to the maximum extent possible with foreign
courts or foreign representatives, either directly or
through the trustee.
‘‘(b) The court is entitled to communicate directly
with, or to request information or assistance directly from,
foreign courts or foreign representatives, subject to the
rights of parties in interest to notice and participation.
276
‘‘§ 1526. Cooperation and direct communication be-
tween the trustee and foreign courts or
foreign representatives
‘‘(a) Consistent with section 1501, the trustee or
other person, including an examiner, authorized by the
court, shall, subject to the supervision of the court, cooper-
ate to the maximum extent possible with foreign courts
or foreign representatives.
‘‘(b) The trustee or other person, including an exam-
iner, authorized by the court is entitled, subject to the su-
pervision of the court, to communicate directly with for-
eign courts or foreign representatives.
‘‘§ 1527. Forms of cooperation
‘‘Cooperation referred to in sections 1525 and 1526
may be implemented by any appropriate means,
including—
‘‘(1) appointment of a person or body, including
an examiner, to act at the direction of the court;
‘‘(2) communication of information by any
means considered appropriate by the court;
‘‘(3) coordination of the administration and su-
pervision of the debtor’s assets and affairs;
‘‘(4) approval or implementation of agreements
concerning the coordination of proceedings; and
‘‘(5) coordination of concurrent proceedings re-
garding the same debtor.
277
‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS
‘‘§ 1528. Commencement of a case under this title
after recognition of a foreign main pro-
ceeding
‘‘After recognition of a foreign main proceeding, a
case under another chapter of this title may be commenced
only if the debtor has assets in the United States. The
effects of such case shall be restricted to the assets of the
debtor that are within the territorial jurisdiction of the
United States and, to the extent necessary to implement
cooperation and coordination under sections 1525, 1526,
and 1527, to other assets of the debtor that are within
the jurisdiction of the court under sections 541(a) of this
title, and 1334(e) of title 28, to the extent that such other
assets are not subject to the jurisdiction and control of
a foreign proceeding that has been recognized under this
chapter.
‘‘§ 1529. Coordination of a case under this title and a
foreign proceeding
‘‘If a foreign proceeding and a case under another
chapter of this title are taking place concurrently regard-
ing the same debtor, the court shall seek cooperation and
coordination under sections 1525, 1526, and 1527, and
the following shall apply:
278
‘‘(1) If the case in the United States is taking
place at the time the petition for recognition of the
foreign proceeding is filed—
‘‘(A) any relief granted under sections
1519 or 1521 must be consistent with the relief
granted in the case in the United States; and
‘‘(B) even if the foreign proceeding is rec-
ognized as a foreign main proceeding, section
1520 does not apply.
‘‘(2) If a case in the United States under this
title commences after recognition, or after the filing
of the petition for recognition, of the foreign
proceeding—
‘‘(A) any relief in effect under sections
1519 or 1521 shall be reviewed by the court
and shall be modified or terminated if incon-
sistent with the case in the United States; and
‘‘(B) if the foreign proceeding is a foreign
main proceeding, the stay and suspension re-
ferred to in section 1520(a) shall be modified or
terminated if inconsistent with the relief grant-
ed in the case in the United States.
‘‘(3) In granting, extending, or modifying relief
granted to a representative of a foreign nonmain
proceeding, the court must be satisfied that the re-