H. R. 5116
One Hundred Third Congress
of the
United States of America
AT THE SECOND SESSION
Begun and held at the City of Washington on Tuesday,
the twenty-fifth day of January, one thousand nine hundred and ninety-four
An Act
To amend title 11 of the United States Code.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) SHORT TITLE.—This Act may be cited as the ‘‘Bankruptcy
Reform Act of 1994’’.
(b) TABLE OF CONTENTS.—The table of contents is as follows:
Sec. 1. Short title.
TITLE I—IMPROVED BANKRUPTCY ADMINISTRATION
Sec. 101. Expedited hearing on automatic stay.
Sec. 102. Jurisdiction to review interlocutory orders increasing or reducing certain
time periods for filing plan.
Sec. 103. Expedited procedure for reaffirmation of debts.
Sec. 104. Powers of bankruptcy courts.
Sec. 105. Participation by bankruptcy administrator at meetings of creditors and
equity security holders.
Sec. 106. Definition relating to eligibility to serve on chapter 11 committees.
Sec. 107. Increased incentive compensation for trustees.
Sec. 108. Dollar adjustments.
Sec. 109. Premerger notification.
Sec. 110. Allowance of creditor committee expenses.
Sec. 111. Supplemental injunctions.
Sec. 112. Authority of bankruptcy judges to conduct jury trials in civil proceedings.
Sec. 113. Sovereign immunity.
Sec. 114. Service of process in bankruptcy proceedings on an insured depository
institution.
Sec. 115. Meetings of creditors and equity security holders.
Sec. 116. Tax assessment.
Sec. 117. Additional trustee compensation.
TITLE II—COMMERCIAL BANKRUPTCY ISSUES
Sec. 201. Aircraft equipment and vessels; rolling stock equipment.
Sec. 202. Limitation on liability of non-insider transferee for avoided transfer.
Sec. 203. Perfection of purchase-money security interest.
Sec. 204. Continued perfection.
Sec. 205. Rejection of unexpired leases of real property or timeshare interests.
Sec. 206. Contents of plan.
Sec. 207. Priority for independent sales representatives.
Sec. 208. Exclusion from the estate of interests in liquid and gaseous hydrocarbons
transferred by the debtor pursuant to production payment agreements.
Sec. 209. Seller’s right to reclaim goods.
Sec. 210. Investment of money of the estate.
Sec. 211. Election of trustee under chapter 11.
Sec. 212. Rights of partnership trustee against general partners.
Sec. 213. Impairment of claims and interests.
Sec. 214. Protection of security interest in post-petition rents and lodging pay-
ments.
Sec. 215. Amendment to definition of swap agreement.
Sec. 216. Limitation on avoiding powers.
Sec. 217. Small businesses.
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Sec. 218. Single asset real estate.
Sec. 219. Leases of personal property.
Sec. 220. Exemption for small business investment companies.
Sec. 221. Payment of taxes with borrowed funds.
Sec. 222. Return of goods.
Sec. 223. Proceeds of money order agreements.
Sec. 224. Trustee duties; professional fees.
Sec. 225. Notices to creditors.
TITLE III—CONSUMER BANKRUPTCY ISSUES
Sec. 301. Period for curing default relating to principal residence.
Sec. 302. Nondischargeability of fine under chapter 13.
Sec. 303. Impairment of exemptions.
Sec. 304. Protection of child support and alimony.
Sec. 305. Interest on interest.
Sec. 306. Exception to discharge.
Sec. 307. Payments under chapter 13.
Sec. 308. Bankruptcy petition preparers.
Sec. 309. Fairness to condominium and cooperative owners.
Sec. 310. Nonavoidability of fixing of lien on tools and implements of trade, ani-
mals, and crops.
Sec. 311. Conversion of case under chapter 13.
Sec. 312. Bankruptcy fraud.
Sec. 313. Protection against discriminatory treatment of applications for student
loans.
TITLE IV—GOVERNMENTAL BANKRUPTCY ISSUES
Sec. 401. Exception from automatic stay for post-petition property taxes.
Sec. 402. Municipal bankruptcy.
TITLE V—TECHNICAL CORRECTIONS
Sec. 501. Amendments to bankruptcy definitions, necessitated by enactment of
Public Law 101–647.
Sec. 502. Title 28 of the United States Code.
TITLE VI—BANKRUPTCY REVIEW COMMISSION
Sec. 601. Short title.
Sec. 602. Establishment.
Sec. 603. Duties of the Commission.
Sec. 604. Membership.
Sec. 605. Compensation of the Commission.
Sec. 606. Staff of Commission; experts and consultants.
Sec. 607. Powers of the Commission.
Sec. 608. Report.
Sec. 609. Termination.
Sec. 610. Authorization of appropriations.
TITLE VII—SEVERABILITY; EFFECTIVE DATE; APPLICATION OF
AMENDMENTS.
Sec. 701. Severability.
Sec. 702. Effective date; application of amendments.
TITLE I—IMPROVED BANKRUPTCY
ADMINISTRATION
SEC. 101. EXPEDITED HEARING ON AUTOMATIC STAY.
The last sentence of section 362(e) of title 11, United States
Code, is amended—
(1) by striking ‘‘commenced’’ and inserting ‘‘concluded’’, and
(2) by inserting before the period at the end the following:
‘‘, unless the 30-day period is extended with the consent of the
parties in interest or for a specific time which the court finds
is required by compelling circumstances’’.
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SEC. 102. JURISDICTION 
TO 
REVIEW 
INTERLOCUTORY 
ORDERS
INCREASING OR REDUCING CERTAIN TIME PERIODS FOR
FILING PLAN.
Section 158(a) of title 28, United States Code, is amended
by striking ‘‘from’’ the first place it appears and all that follows
through ‘‘decrees,’’, and inserting the following:
‘‘(1) from final judgments, orders, and decrees;
‘‘(2) from interlocutory orders and decrees issued under
section 1121(d) of title 11 increasing or reducing the time
periods referred to in section 1121 of such title; and
‘‘(3) with leave of the court, from other interlocutory orders
and decrees;’’.
SEC. 103. EXPEDITED PROCEDURE FOR REAFFIRMATION OF DEBTS.
(a) REAFFIRMATION.—Section 524(c) of title 11, United States
Code, is amended—
(1) in paragraph (2)—
(A) by inserting ‘‘(A)’’ after ‘‘(2)’’,
(B) by adding ‘‘and’’ at the end, and
(C) by inserting after subparagraph (A), as so des-
ignated, the following:
‘‘(B) such agreement contains a clear and conspicuous
statement which advises the debtor that such agreement
is not required under this title, under nonbankruptcy law,
or under any agreement not in accordance with the provi-
sions of this subsection;’’, and
(2) in paragraph (3)—
(A) in the matter preceding subparagraph (A) by strik-
ing ‘‘such agreement’’ the last place it appears,
(B) in subparagraph (A)—
(i) by inserting ‘‘such agreement’’ after ‘‘(A)’’, and
(ii) by striking ‘‘and’’ at the end,
(C) in subparagraph (B)—
(i) by inserting ‘‘such agreement’’ after ‘‘(B)’’, and
(ii) by adding ‘‘and’’ at the end, and
(3) by adding at the end the following:
‘‘(C) the attorney fully advised the debtor of the legal
effect and consequences of—
‘‘(i) an agreement of the kind specified in this
subsection; and
‘‘(ii) any default under such an agreement;’’.
(b) EFFECT OF DISCHARGE.—The third sentence of section 524(d)
of title 11, United States Code, is amended in the matter preceding
paragraph (1) by inserting ‘‘and was not represented by an attorney
during the course of negotiating such agreement’’ after ‘‘this
section’’.
SEC. 104. POWERS OF BANKRUPTCY COURTS.
(a) STATUS CONFERENCES.—Section 105 of title 11, United
States Code, is amended by adding at the end the following:
‘‘(d) The court, on its own motion or on the request of a party
in interest, may—
‘‘(1) hold a status conference regarding any case or proceed-
ing under this title after notice to the parties in interest;
and
‘‘(2) unless inconsistent with another provision of this title
or with applicable Federal Rules of Bankruptcy Procedure,
H. R. 5116—4
issue an order at any such conference prescribing such limita-
tions and conditions as the court deems appropriate to ensure
that the case is handled expeditiously and economically, includ-
ing an order that—
‘‘(A) sets the date by which the trustee must assume
or reject an executory contract or unexpired lease; or
‘‘(B) in a case under chapter 11 of this title—
‘‘(i) sets a date by which the debtor, or trustee
if one has been appointed, shall file a disclosure state-
ment and plan;
‘‘(ii) sets a date by which the debtor, or trustee
if one has been appointed, shall solicit acceptances
of a plan;
‘‘(iii) sets the date by which a party in interest
other than a debtor may file a plan;
‘‘(iv) sets a date by which a proponent of a plan,
other than the debtor, shall solicit acceptances of such
plan;
‘‘(v) fixes the scope and format of the notice to
be provided regarding the hearing on approval of the
disclosure statement; or
‘‘(vi) provides that the hearing on approval of the
disclosure statement may be combined with the hear-
ing on confirmation of the plan.’’.
(b) ABSTENTION.—Section 1334 of title 28, United States Code,
is amended—
(1) by redesignating subsection (d) as subsection (e), and
(2) in the second sentence of subsection (c)(2)—
(A) by inserting ‘‘(other than a decision not to abstain
in a proceeding described in subsection (c)(2))’’ after ‘‘sub-
section’’, and
(B) by striking ‘‘Any’’ and inserting the following:
‘‘(d) Any’’.
(c) ESTABLISHMENT, OPERATION, AND TERMINATION OF BANK-
RUPTCY APPELLATE PANEL SERVICE.—Section 158(b) of title 28,
United States Code, is amended—
(1) by striking paragraphs (3) and (4),
(2) by redesignating paragraph (2) as paragraph (4),
(3) by striking paragraph (1) and inserting the following:
‘‘(1) The judicial council of a circuit shall establish a bankruptcy
appellate panel service composed of bankruptcy judges of the dis-
tricts in the circuit who are appointed by the judicial council in
accordance with paragraph (3), to hear and determine, with the
consent of all the parties, appeals under subsection (a) unless
the judicial council finds that—
‘‘(A) there are insufficient judicial resources available in
the circuit; or
‘‘(B) establishment of such service would result in undue
delay or increased cost to parties in cases under title 11.
Not later than 90 days after making the finding, the judicial council
shall submit to the Judicial Conference of the United States a
report containing the factual basis of such finding.
‘‘(2)(A) A judicial council may reconsider, at any time, the
finding described in paragraph (1).
‘‘(B) On the request of a majority of the district judges in
a circuit for which a bankruptcy appellate panel service is estab-
lished under paragraph (1), made after the expiration of the
H. R. 5116—5
1-year period beginning on the date such service is established,
the judicial council of the circuit shall determine whether a cir-
cumstance specified in subparagraph (A) or (B) of such paragraph
exists.
‘‘(C) On its own motion, after the expiration of the 3-year
period beginning on the date a bankruptcy appellate panel service
is established under paragraph (1), the judicial council of the circuit
may determine whether a circumstance specified in subparagraph
(A) or (B) of such paragraph exists.
‘‘(D) If the judicial council finds that either of such cir-
cumstances exists, the judicial council may provide for the comple-
tion of the appeals then pending before such service and the orderly
termination of such service.
‘‘(3) Bankruptcy judges appointed under paragraph (1) shall
be appointed and may be reappointed under such paragraph.’’,
and
(4) by inserting after paragraph (4), as so redesignated,
the following:
‘‘(5) An appeal to be heard under this subsection shall be
heard by a panel of 3 members of the bankruptcy appellate panel
service, except that a member of such service may not hear an
appeal originating in the district for which such member is
appointed or designated under section 152 of this title.
‘‘(6) Appeals may not be heard under this subsection by a
panel of the bankruptcy appellate panel service unless the district
judges for the district in which the appeals occur, by majority
vote, have authorized such service to hear and determine appeals
originating in such district.’’.
(d) APPEALS TO BE HEARD BY BANKRUPTCY APPELLATE PANEL
SERVICE.—Section 158 of title 28, United States Code, is amended—
(1) in subsection (c) by striking ‘‘(c)’’ and inserting ‘‘(2)’’,
and
(2) by inserting after subsection (b) the following:
‘‘(c)(1) Subject to subsection (b), each appeal under subsection
(a) shall be heard by a 3-judge panel of the bankruptcy appellate
panel service established under subsection (b)(1) unless—
‘‘(A) the appellant elects at the time of filing the appeal;
or
‘‘(B) any other party elects, not later than 30 days after
service of notice of the appeal;
to have such appeal heard by the district court.’’.
(e) RULES OF PROCEDURE AND EVIDENCE; METHOD OF PRESCRIB-
ING.—Section 2073 of title 28, United States Code, is amended—
(1) in subsection (a)(2) by striking ‘‘section 2072’’ and insert-
ing ‘‘sections 2072 and 2075’’, and
(2) in subsections (d) and (e) by inserting ‘‘or 2075’’ after
‘‘2072’’ each place it appears.
(f) EFFECTIVE
DATE
OF
BANKRUPTCY
RULES.—The third
undesignated paragraph of section 2075 of title 28, United States
Code, is amended to read as follows:
‘‘The Supreme Court shall transmit to Congress not later than
May 1 of the year in which a rule prescribed under this section
is to become effective a copy of the proposed rule. The rule shall
take effect no earlier than December 1 of the year in which it
is transmitted to Congress unless otherwise provided by law.’’.
H. R. 5116—6
SEC. 105. PARTICIPATION 
BY 
BANKRUPTCY 
ADMINISTRATOR 
AT
MEETINGS OF CREDITORS AND EQUITY SECURITY HOLD-
ERS.
(a) PRESIDING OFFICER.—A bankruptcy administrator appointed
under section 302(d)(3)(I) of the Bankruptcy Judges, United States
Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C.
581 note; Public Law 99–554; 100 Stat. 3123), as amended by
section 317(a) of the Federal Courts Study Committee Implementa-
tion Act of 1990 (Public Law 101–650; 104 Stat. 5115), or the
bankruptcy administrator’s designee may preside at the meeting
of creditors convened under section 341(a) of title 11, United States
Code. The bankruptcy administrator or the bankruptcy administra-
tor’s designee may preside at any meeting of equity security holders
convened under section 341(b) of title 11, United States Code.
(b) EXAMINATION OF THE DEBTOR.—The bankruptcy adminis-
trator or the bankruptcy administrator’s designee may examine
the debtor at the meeting of creditors and may administer the
oath required under section 343 of title 11, United States Code.
SEC. 106. DEFINITION RELATING TO ELIGIBILITY TO SERVE ON CHAP-
TER 11 COMMITTEES.
Section 101(41) of title 11, United States Code, is amended
to read as follows:
‘‘(41) ‘person’ includes individual, partnership, and corpora-
tion, but does not include governmental unit, except that a
governmental unit that—
‘‘(A) acquires an asset from a person—
‘‘(i) as a result of the operation of a loan guarantee
agreement; or
‘‘(ii) as receiver or liquidating agent of a person;
‘‘(B) is a guarantor of a pension benefit payable by
or on behalf of the debtor or an affiliate of the debtor;
or
‘‘(C) is the legal or beneficial owner of an asset of—
‘‘(i) an employee pension benefit plan that is a
governmental plan, as defined in section 414(d) of the
Internal Revenue Code of 1986; or
‘‘(ii) an eligible deferred compensation plan, as
defined in section 457(b) of the Internal Revenue Code
of 1986;
shall be considered, for purposes of section 1102 of this title,
to be a person with respect to such asset or such benefit;’’.
SEC. 107. INCREASED INCENTIVE COMPENSATION FOR TRUSTEES.
Section 326(a) of title 11, United States Code, is amended
by striking ‘‘fifteen’’ and all that follows through ‘‘$3,000’’ the last
place it appears, and inserting the following:
‘‘25 percent on the first $5,000 or less, 10 percent on any amount
in excess of $5,000 but not in excess of $50,000, 5 percent on
any amount in excess of $50,000 but not in excess of $1,000,000,
and reasonable compensation not to exceed 3 percent of such moneys
in excess of $1,000,000’’.
SEC. 108. DOLLAR ADJUSTMENTS.
(a) WHO MAY BE A DEBTOR UNDER CHAPTER 13.—Section 109(e)
of title 11, United States Code, is amended—
(1) by striking ‘‘$100,000’’ each place it appears and insert-
ing ‘‘$250,000’’, and
H. R. 5116—7
(2) by striking ‘‘$350,000’’ each place it appears and insert-
ing ‘‘$750,000’’.
(b) INVOLUNTARY CASES.—Section 303(b) of title 11, United
States Code, is amended—
(1) in paragraph (1) by striking ‘‘$5,000’’ and inserting
‘‘$10,000’’, and
(2) in paragraph (2) by striking ‘‘$5,000’’ and inserting
‘‘$10,000’’.
(c) PRIORITIES.—Section 507(a) of title 11, United States Code,
is amended—
(1) in paragraph (4)(B)(i) by striking ‘‘$2,000’’ and inserting
‘‘$4,000’’,
(2) in paragraph (5) by striking ‘‘$2,000’’ and inserting
‘‘$4,000’’, and
(3) in paragraph (6) by striking ‘‘$900’’ and inserting
‘‘$1,800’’.
(d) EXEMPTIONS.—Section 522(d) of title 11, United States Code,
is amended—
(1) in paragraph (1) by striking ‘‘$7,500’’ and inserting
‘‘$15,000’’,
(2) in paragraph (2) by striking ‘‘$1,200’’ and inserting
‘‘$2,400’’,
(3) in paragraph (3)—
(A) by striking ‘‘$200’’ and inserting ‘‘$400’’, and
(B) by striking ‘‘$4,000’’ and inserting ‘‘$8,000’’,
(4) in paragraph (4) by striking ‘‘$500’’ and inserting
‘‘$1,000’’,
(5) in paragraph (5)—
(A) by striking ‘‘$400’’ and inserting ‘‘$800’’, and
(B) by striking ‘‘$3,750’’ and inserting ‘‘$7,500’’,
(6) in paragraph (6) by striking ‘‘$750’’ and inserting
‘‘$1,500’’,
(7) in paragraph (8) by striking ‘‘$4,000’’ and inserting
‘‘$8,000’’, and
(8) in paragraph (11)(D) by striking ‘‘$7,500’’ and inserting
‘‘$15,000’’.
(e) FUTURE ADJUSTMENTS.—Section 104 of title 11, United
States Code, is amended—
(1) by inserting ‘‘(a)’’ before ‘‘The’’, and
(2) by adding at the end the following:
‘‘(b)(1) On April 1, 1998, and at each 3-year interval ending
on April 1 thereafter, each dollar amount in effect under sections
109(e), 303(b), 507(a), 522(d), and 523(a)(2)(C) immediately before
such April 1 shall be adjusted—
‘‘(A) to reflect the change in the Consumer Price Index
for All Urban Consumers, published by the Department of
Labor, for the most recent 3-year period ending immediately
before January 1 preceding such April 1, and
‘‘(B) to round to the nearest $25 the dollar amount that
represents such change.
‘‘(2) Not later than March 1, 1998, and at each 3-year interval
ending on March 1 thereafter, the Judicial Conference of the United
States shall publish in the Federal Register the dollar amounts
that will become effective on such April 1 under sections 109(e),
303(b), 507(a), 522(d), and 523(a)(2)(C) of this title.
H. R. 5116—8
‘‘(3) Adjustments made in accordance with paragraph (1) shall
not apply with respect to cases commenced before the date of
such adjustments.’’.
SEC. 109. PREMERGER NOTIFICATION.
Subparagraphs (A) and (B) of section 363(b)(2) of title 11,
United States Code, are amended to read as follows:
‘‘(A) notwithstanding subsection (a) of such section,
the notification required by such subsection to be given
by the debtor shall be given by the trustee; and
‘‘(B) notwithstanding subsection (b) of such section,
the required waiting period shall end on the 15th day
after the date of the receipt, by the Federal Trade Commis-
sion and the Assistant Attorney General in charge of the
Antitrust Division of the Department of Justice, of the
notification required under such subsection (a), unless such
waiting period is extended—
‘‘(i) pursuant to subsection (e)(2) of such section,
in the same manner as such subsection (e)(2) applies
to a cash tender offer;
‘‘(ii) pursuant to subsection (g)(2) of such section;
or
‘‘(iii) by the court after notice and a hearing.’’.
SEC. 110. ALLOWANCE OF CREDITOR COMMITTEE EXPENSES.
Section 503(b)(3) of title 11, United States Code, is amended—
(1) in subparagraph (D) by striking ‘‘or’’ at the end,
(2) in subparagraph (E) by inserting ‘‘or’’ at the end, and
(3) by adding at the end the following:
‘‘(F) a member of a committee appointed under section
1102 of this title, if such expenses are incurred in the
performance of the duties of such committee;’’.
SEC. 111. SUPPLEMENTAL INJUNCTIONS.
(a) SUPPLEMENTAL
INJUNCTIONS.—Section 524 of title 11,
United States Code, is amended by adding at the end the following:
‘‘(g)(1)(A) After notice and hearing, a court that enters an
order confirming a plan of reorganization under chapter 11 may
issue, in connection with such order, an injunction in accordance
with this subsection to supplement the injunctive effect of a dis-
charge under this section.
‘‘(B) An injunction may be issued under subparagraph (A) to
enjoin entities from taking legal action for the purpose of directly
or indirectly collecting, recovering, or receiving payment or recovery
with respect to any claim or demand that, under a plan of reorga-
nization, is to be paid in whole or in part by a trust described
in paragraph (2)(B)(i), except such legal actions as are expressly
allowed by the injunction, the confirmation order, or the plan of
reorganization.
‘‘(2)(A) Subject to subsection (h), if the requirements of subpara-
graph (B) are met at the time an injunction described in paragraph
(1) is entered, then after entry of such injunction, any proceeding
that involves the validity, application, construction, or modification
of such injunction, or of this subsection with respect to such injunc-
tion, may be commenced only in the district court in which such
injunction was entered, and such court shall have exclusive jurisdic-
tion over any such proceeding without regard to the amount in
controversy.
H. R. 5116—9
‘‘(B) The requirements of this subparagraph are that—
‘‘(i) the injunction is to be implemented in connection with
a trust that, pursuant to the plan of reorganization—
‘‘(I) is to assume the liabilities of a debtor which at
the time of entry of the order for relief has been named
as a defendant in personal injury, wrongful death, or prop-
erty-damage actions seeking recovery for damages allegedly
caused by the presence of, or exposure to, asbestos or
asbestos-containing products;
‘‘(II) is to be funded in whole or in part by the securities
of 1 or more debtors involved in such plan and by the
obligation of such debtor or debtors to make future pay-
ments, including dividends;
‘‘(III) is to own, or by the exercise of rights granted
under such plan would be entitled to own if specified contin-
gencies occur, a majority of the voting shares of—
‘‘(aa) each such debtor;
‘‘(bb) the parent corporation of each such debtor;
or
‘‘(cc) a subsidiary of each such debtor that is also
a debtor; and
‘‘(IV) is to use its assets or income to pay claims and
demands; and
‘‘(ii) subject to subsection (h), the court determines that—
‘‘(I) the debtor is likely to be subject to substantial
future demands for payment arising out of the same or
similar conduct or events that gave rise to the claims
that are addressed by the injunction;
‘‘(II) the actual amounts, numbers, and timing of such
future demands cannot be determined;
‘‘(III) pursuit of such demands outside the procedures
prescribed by such plan is likely to threaten the plan’s
purpose to deal equitably with claims and future demands;
‘‘(IV) as part of the process of seeking confirmation
of such plan—
‘‘(aa) the terms of the injunction proposed to be
issued under paragraph (1)(A), including any provi-
sions barring actions against third parties pursuant
to paragraph (4)(A), are set out in such plan and in
any disclosure statement supporting the plan; and
‘‘(bb) a separate class or classes of the claimants
whose claims are to be addressed by a trust described
in clause (i) is established and votes, by at least 75
percent of those voting, in favor of the plan; and
‘‘(V) subject to subsection (h), pursuant to court orders
or otherwise, the trust will operate through mechanisms
such as structured, periodic, or supplemental payments,
pro rata distributions, matrices, or periodic review of esti-
mates of the numbers and values of present claims and
future demands, or other comparable mechanisms, that
provide reasonable assurance that the trust will value,
and be in a financial position to pay, present claims and
future demands that involve similar claims in substantially
the same manner.
‘‘(3)(A) If the requirements of paragraph (2)(B) are met and
the order confirming the plan of reorganization was issued or
affirmed by the district court that has jurisdiction over the reorga-
H. R. 5116—10
nization case, then after the time for appeal of the order that
issues or affirms the plan—
‘‘(i) the injunction shall be valid and enforceable and may
not be revoked or modified by any court except through appeal
in accordance with paragraph (6);
‘‘(ii) no entity that pursuant to such plan or thereafter
becomes a direct or indirect transferee of, or successor to any
assets of, a debtor or trust that is the subject of the injunction
shall be liable with respect to any claim or demand made
against such entity by reason of its becoming such a transferee
or successor; and
‘‘(iii) no entity that pursuant to such plan or thereafter
makes a loan to such a debtor or trust or to such a successor
or transferee shall, by reason of making the loan, be liable
with respect to any claim or demand made against such entity,
nor shall any pledge of assets made in connection with such
a loan be upset or impaired for that reason;
‘‘(B) Subparagraph (A) shall not be construed to—
‘‘(i) imply that an entity described in subparagraph (A)
(ii) or (iii) would, if this paragraph were not applicable, nec-
essarily be liable to any entity by reason of any of the acts
described in subparagraph (A);
‘‘(ii) relieve any such entity of the duty to comply with,
or of liability under, any Federal or State law regarding the
making of a fraudulent conveyance in a transaction described
in subparagraph (A) (ii) or (iii); or
‘‘(iii) relieve a debtor of the debtor’s obligation to comply
with the terms of the plan of reorganization, or affect the
power of the court to exercise its authority under sections
1141 and 1142 to compel the debtor to do so.
‘‘(4)(A)(i) Subject to subparagraph (B), an injunction described
in paragraph (1) shall be valid and enforceable against all entities
that it addresses.
‘‘(ii) Notwithstanding the provisions of section 524(e), such an
injunction may bar any action directed against a third party who
is identifiable from the terms of such injunction (by name or as
part of an identifiable group) and is alleged to be directly or
indirectly liable for the conduct of, claims against, or demands
on the debtor to the extent such alleged liability of such third
party arises by reason of—
‘‘(I) the third party’s ownership of a financial interest in
the debtor, a past or present affiliate of the debtor, or a prede-
cessor in interest of the debtor;
‘‘(II) the third party’s involvement in the management of
the debtor or a predecessor in interest of the debtor, or service
as an officer, director or employee of the debtor or a related
party;
‘‘(III) the third party’s provision of insurance to the debtor
or a related party; or
‘‘(IV) the third party’s involvement in a transaction chang-
ing the corporate structure, or in a loan or other financial
transaction affecting the financial condition, of the debtor or
a related party, including but not limited to—
‘‘(aa) involvement in providing financing (debt or
equity), or advice to an entity involved in such a trans-
action; or
H. R. 5116—11
‘‘(bb) acquiring or selling a financial interest in an
entity as part of such a transaction.
‘‘(iii) As used in this subparagraph, the term ‘related party’
means—
‘‘(I) a past or present affiliate of the debtor;
‘‘(II) a predecessor in interest of the debtor; or
‘‘(III) any entity that owned a financial interest in—
‘‘(aa) the debtor;
‘‘(bb) a past or present affiliate of the debtor; or
‘‘(cc) a predecessor in interest of the debtor.
‘‘(B) Subject to subsection (h), if, under a plan of reorganization,
a kind of demand described in such plan is to be paid in whole
or in part by a trust described in paragraph (2)(B)(i) in connection
with which an injunction described in paragraph (1) is to be imple-
mented, then such injunction shall be valid and enforceable with
respect to a demand of such kind made, after such plan is confirmed,
against the debtor or debtors involved, or against a third party
described in subparagraph (A)(ii), if—
‘‘(i) as part of the proceedings leading to issuance of such
injunction, the court appoints a legal representative for the
purpose of protecting the rights of persons that might subse-
quently assert demands of such kind, and
‘‘(ii) the court determines, before entering the order
confirming such plan, that identifying such debtor or debtors,
or such third party (by name or as part of an identifiable
group), in such injunction with respect to such demands for
purposes of this subparagraph is fair and equitable with respect
to the persons that might subsequently assert such demands,
in light of the benefits provided, or to be provided, to such
trust on behalf of such debtor or debtors or such third party.
‘‘(5) In this subsection, the term ‘demand’ means a demand
for payment, present or future, that—
‘‘(A) was not a claim during the proceedings leading to
the confirmation of a plan of reorganization;
‘‘(B) arises out of the same or similar conduct or events
that gave rise to the claims addressed by the injunction issued
under paragraph (1); and
‘‘(C) pursuant to the plan, is to be paid by a trust described
in paragraph (2)(B)(i).
‘‘(6) Paragraph (3)(A)(i) does not bar an action taken by or
at the direction of an appellate court on appeal of an injunction
issued under paragraph (1) or of the order of confirmation that
relates to the injunction.
‘‘(7) This subsection does not affect the operation of section
1144 or the power of the district court to refer a proceeding under
section 157 of title 28 or any reference of a proceeding made
prior to the date of the enactment of this subsection.
‘‘(h) APPLICATION TO EXISTING INJUNCTIONS.—For purposes of
subsection (g)—
‘‘(1) subject to paragraph (2), if an injunction of the kind
described in subsection (g)(1)(B) was issued before the date
of the enactment of this Act, as part of a plan of reorganization
confirmed by an order entered before such date, then the injunc-
tion shall be considered to meet the requirements of subsection
(g)(2)(B) for purposes of subsection (g)(2)(A), and to satisfy
subsection (g)(4)(A)(ii), if—