I
103D CONGRESS
2D SESSION
H. R. 5116
To amend title 11 of the United States Code.
IN THE HOUSE OF REPRESENTATIVES
SEPTEMBER 28, 1994
Mr. BROOKS (for himself, Mr. FISH, and Mr. SYNAR) introduced the following
bill; which was referred to the Committee on the Judiciary
A BILL
To amend title 11 of the United States Code.
Be it enacted by the Senate and House of Representa-
tives 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 certain time pe-
riods 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; settlement of claims and demands for pay-
ment.
Sec. 112. Authority of bankruptcy judges to conduct jury trials in civil proceed-
ings.
Sec. 113. Sovereign immunity.
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 hydro-
carbons transferred by the debtor pursuant to production pay-
ment 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. Exclusion from the estate of certain accounts and chattel paper.
Sec. 214. Timely filing of claims, interests, and adminstrative expense requests.
Sec. 215. Protection of security interest in post-petition rents.
Sec. 216. Amendment to definition of swap agreement.
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. Preservation of home mortgage liens.
Sec. 306. Interest on interest.
Sec. 307. Exception to discharge.
Sec. 308. Payments.
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—SEVERABILITY; EFFECTIVE DATE; APPLICATION OF
AMENDMENTS.
Sec. 601. Severability.
Sec. 602. 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’’.
SEC. 102. JURISDICTION TO REVIEW INTERLOCUTORY OR-
DERS INCREASING CERTAIN TIME PERIODS
FOR FILING PLAN.
Section 158 of title 28, United States Code, is
amended—
(1) in subsection (a) 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 is-
sued under section 1121(d) of title 11 increasing the
time periods referred to in section 1121 of such title;
and
‘‘(3) with leave of the court, from other inter-
locutory 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 designated, 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 provisions
of this subsection;’’, and
(2) in paragraph (3)—
(A) in the matter preceding subparagraph
(A) by striking ‘‘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 speci-
fied in this subsection; and
‘‘(ii) any default under such an agree-
ment;’’.
(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 motion
of any party in interest, may—
‘‘(1) hold a status conference regarding any
case or proceeding under this title after notice to the
parties in interest; and
‘‘(2) unless inconsistent with another provision
of this title or with applicable Bankruptcy Rules,
issue an order at any such conference prescribing
such limitations and conditions as the court deems
appropriate to ensure that the case is handled expe-
ditiously and economically, including an order that—
‘‘(A) sets the date by which the debtor
must accept 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 statement 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) fixes the notice to be provided
regarding the hearing on approval of the
disclosure statement; or
‘‘(v) provides that the hearing on ap-
proval of the disclosure statement may be
combined with the hearing on confirmation
of the plan.’’.
(b) ABSTENTION.—Section 1334 of title 28, United
States Code, is amended—
(1) by redesignating subsection (d) as sub-
section (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 sub-
section (c)(2))’’ after ‘‘subsection’’, and
(B) by striking ‘‘Any’’ and inserting the
following:
‘‘(d) Any’’.
(c) ESTABLISHMENT, OPERATION, 
AND
TERMI-
NATION OF BANKRUPTCY APPELLATE PANEL SERVICE.—
Section 158(b) of title 28, United States Code, is amend-
ed—
(1) by striking paragraphs (3) and (4),
(2) by redesignating paragraph (2) as para-
graph (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 bank-
ruptcy judges of the districts in the circuit who are ap-
pointed by the judicial council in accordance with para-
graph (3), to hear and determine, with the consent of all
the parties, appeals under subsection (a) unless the judi-
cial 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 judi-
cial council shall submit to the Judicial Conference a re-
port 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 established under paragraph (1), made after the
expiration of the 1-year period beginning on the date such
service is established, the judicial council of the circuit
shall determine whether a circumstance specified in sub-
paragraph (A) or (B) of such paragraphs exists.
‘‘(C) On its own motion, after the expiration of the
3-year period beginning on the date an bankruptcy appel-
late panel service is established under paragraph (1), the
judicial council of the circuit may determine whether a cir-
cumstance specified in subparagraph (A) or (B) of such
paragraphs exists.
‘‘(D) If the judicial council finds that either of such
circumstances exists, the judicial council may provide for
the completion 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 re-
designated, 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 serv-
ice may not hear an appeal originating in the district for
which such member is appointed or designated under sec-
tion 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 AP-
PELLATE PANEL SERVICE.—Section 158 of title 28,
United States Code, is amended—
(1) in subsection (c) by striking ‘‘(c)’’ and in-
serting ‘‘(2)’’, and
(2) by inserting after subsection (b) the follow-
ing:
‘‘(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 sub-
section (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 PRESCRIBING.—Section 2073 of title 28, United
States Code, is amended—
‘‘(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 fol-
lowing:
‘‘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 amend-
ed—
(1) by striking ‘‘$100,000’’ each place it ap-
pears and inserting ‘‘$250,000’’, and
(2) by striking ‘‘$350,000’’ each place it ap-
pears and inserting ‘‘$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 (3)(B) by striking ‘‘$2,000’’
and inserting ‘‘$4,000’’,
(2) in paragraph (4)(B)(i) by striking ‘‘$2,000’’
and inserting ‘‘$4,000’’,
(3) in paragraph (5) by striking ‘‘$2,000’’ and
inserting ‘‘$4,000’’, and
(4) in paragraph (6) by striking ‘‘$900’’ and in-
serting ‘‘$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 in-
serting ‘‘$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 in-
serting ‘‘$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:
‘‘(h)(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 ad-
justed—
‘‘(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 preced-
ing 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 Fed-
eral Register the dollar amounts that will become effective
on such April 1 under sections 109(e), 303(b), 507(a), and
522(d) of this title.
‘‘(3) Adjustments made in accordance with para-
graph (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) 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, each waiting period applicable
under such subsection shall end on the 10th
day after the date of the receipt required by
subsection (b)(1)(A) of such section unless such
waiting period is extended—
‘‘(i) pursuant to subsection (g)(2) of
such section or, in the case of a tender
offer, pursuant to subsection (e)(2) of such
section; or
‘‘(ii) by the court after notice and a
hearing.’’.
SEC. 110. ALLOWANCE OF CREDITOR COMMITTEE EX-
PENSES.
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 ex-
penses are incurred in the performance of the
duties of such committee;’’.
SEC. 111. SUPPLEMENTAL INJUNCTIONS; SETTLEMENT OF
CLAIMS AND DEMANDS FOR PAYMENT.
(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 en-
ters an order confirming a plan of reorganization under
chapter 11 may issue an injunction to supplement the in-
junctive effect of a discharge under this section.
‘‘(B) An injunction may be issued under subpara-
graph (A) to enjoin persons and governmental units from
taking legal action for the purpose of directly or indirectly
collecting, recovering, or receiving payment or recovery of,
on, or with respect to any claim or demand that, under
a plan of reorganization, 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) If the requirements of subparagraph (B) are
met at any time, then, after entry of an injunction under
paragraph (1), any proceeding that involves the validity,
application, construction, or modification of the injunction
or of this subsection with respect to the injunction may
be commenced only in the district court in which the in-
junction was entered, and such court shall have exclusive
jurisdiction over any such proceeding without regard to
the amount in controversy.
‘‘(B) The requirements of this subparagraph are
that—
‘‘(i) the injunction is to be implemented in con-
nection with a trust that, pursuant to the plan of re-
organization—
‘‘(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 in-
jury, wrongful death, or property-damage ac-
tions seeking recovery for damages allegedly
caused by the presence of, or exposure to, as-
bestos or asbestos-containing products;
‘‘(II) is to be funded in whole or in part
by the securities of 1 or more debtors involved
in the plan of reorganization and by the obliga-
tion of such debtor or debtors to make future
payments, including dividends;
‘‘(III) is to own, or by the exercise of
rights granted under the plan could own, a ma-
jority 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) the court, at any time pursuant to its au-
thority under the plan, over the trust, or otherwise,
determines that—
‘‘(I) the debtor may be subject to substan-
tial 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 in-
junction;
‘‘(II) the actual amounts, numbers, and
timing of such future demands cannot be deter-
mined;
‘‘(III) pursuit of such demands outside the
procedures prescribed by the plan may threaten
the plan’s purpose to deal equitably with claims
and future demands;
‘‘(IV) as part of the process of seeking ap-
proval of the plan of reorganization—
‘‘(aa) the terms of the injunction pro-
posed to be issued under paragraph (1)(A),
including any provisions barring actions
against third parties pursuant to para-
graph (4)(A), shall be set out in the plan
of reorganization and in any disclosure
statement supporting the plan; and
‘‘(bb) a separate class or classes of
the claimants whose claims are to be ad-
dressed by a trust described in clause (i) is
established and votes, by at least 75 per-
cent of those voting, in favor of the plan;
and
‘‘(V) pursuant to court orders or otherwise,
the trust will operate through mechanisms such
as structured, periodic or supplemental pay-
ments, pro rata distributions, matrices, or peri-
odic review of estimates of the numbers and
values of present claims and future demands or
other comparable alternates, that provide rea-
sonable 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, except that
with respect to a trust in existence on the date
of the enactment of the Bankruptcy Amend-
ments of 1994 that is subject to a court order
staying it from settling or paying further
claims—
‘‘(aa) 
the 
requirements 
of 
this
subclause shall apply as of the date such
stay is lifted or otherwise dissolved; and
‘‘(bb) such a trust that meets the re-
quirements of the subclause as of the date
such stay is lifted or dissolved, shall be
treated for all legal purposes as being in
compliance with this subsection from the
date of the enactment of such Act.
‘‘(3)(A) If the requirements of paragraph (2)(B) are
met and the order approving the plan of reorganization
was issued or affirmed by the district court that has juris-
diction over the reorganization proceedings, then after the
time for appeal of the order that issues or affirms the plan
of reorganization—
‘‘(i) the injunction shall be valid and enforce-
able and may not be revoked or modified by any
court except through appeal in accordance with
paragraph (6);
‘‘(ii) no entity that pursuant to the plan of re-
organization or thereafter becomes a direct or indi-
rect 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 it by reason of its becoming such a
transferee or successor; and
‘‘(iii) no entity that pursuant to the plan of re-
organization 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 it, 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 subpara-
graph (A) (ii) or (iii) would, if this paragraph were
not applicable, have liability by reason of any of the
acts described in subparagraph (A);
‘‘(ii) relieve any such entity of the duty to com-
ply with, or of liability under, any Federal or State
law regarding the making of a fraudulent convey-
ance 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 reorganiza-
tion 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 injunc-
tion under paragraph (1) shall be valid and enforceable
against all persons and governmental units that it ad-
dresses.
‘‘(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 the 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
by reason of—
‘‘(I) the party’s ownership of a financial inter-
est in the debtor, a past or present affiliate of the
debtor, or a predecessor in interest of the debtor;
‘‘(II) the party’s involvement in the manage-
ment of the debtor or a predecessor in interest of
the debtor, or service as an officer, director or em-
ployee of the debtor or a related party;
‘‘(III) the party’s provision of insurance to the
debtor or a related party; or
‘‘(IV) the party’s involvement in a transaction
affecting the corporate structure or financial condi-
tion of the debtor or a related party, including, but
not limited to—
‘‘(aa) involvement in providing financing
(debt or equity), or advice to a person or entity
involved in such a transaction; or
‘‘(bb) acquiring or selling a financial inter-
est in an entity as part of such a transaction.
‘‘(iii) As used in subparagraph (A), 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 person or entity that owned a finan-
cial interest in—
‘‘(aa) the debtor;
‘‘(bb) a past or present affiliate of the
debtor; or
‘‘(cc) a predecessor interest in the debtor.
‘‘(B) With respect to a demand (including a demand
directed against a third party described in subparagraph
(a)(ii)) that is made subsequent to the confirmation of a
plan against any person or entity that is the subject of
an injunction issued under paragraph (1), the injunction
shall be valid and enforceable if, as part of the proceedings
leading to its issuance, the court appointed a legal rep-
resentative for the purpose of protecting the rights of per-
sons that might subsequently assert such a demand.
‘‘(d) Except as provided in subsections (b) and (c),
a governmental unit may assert sovereign immunity with
respect to a claim of the estate against such governmental
unit only if such claim—
‘‘(1) is not a tax claim or related to a tax claim
subject to determination under section 505; and
‘‘(2)(A) is a claim of the debtor against such
governmental unit that arose before the commence-
ment of the case and became property of the estate
only under paragraph (1) or (2) of section 541(a);
or
‘‘(B) arises under nonbankruptcy law after the
commencement of the case from the operation of the
business of the debtor.’’.
TITLE II—COMMERCIAL
BANKRUPTCY ISSUES
SEC. 201. AIRCRAFT EQUIPMENT AND VESSELS; ROLLING
STOCK EQUIPMENT.
(a) AMENDMENT OF SECTION 1110.—Section 1110
of title 11, United States Code, is amended to read as
follows:
‘‘§ 1110. Aircraft equipment and vessels
‘‘(a)(1) The right of a secured party with a security
interest in equipment described in paragraph (2) or of a
lessor or conditional vendor of such equipment to take pos-
session of such equipment in compliance with a security
agreement, lease, or conditional sale contract is not af-
fected by section 362 or 363 or by any power of the court
to enjoin the taking of possession unless—
‘‘(A) before the date that is 60 days after the
date of the order for relief under this chapter, the
trustee, subject to the court’s approval, agrees to
perform all obligations of the debtor that become
due on or after the date of the order under such se-
curity agreement, lease, or conditional sale contract;
and
‘‘(B) any default, other than a default of a kind
specified in section 365(b)(2), under such security
agreement, lease, or conditional sale contract—
‘‘(i) that occurs before the date of the
order is cured before the expiration of such 60-
day period; and
‘‘(ii) that occurs after the date of the order
is cured before the later of—
‘‘(I) the date that is 30 days after the
date of the default; or
‘‘(II) the expiration of such 60-day
period.
‘‘(2) Equipment is described in this paragraph if it
is—
‘‘(A) an aircraft, aircraft engine, propeller, ap-
pliance, or spare part (as defined in section 40102
of title 49) that is subject to a security interest
granted by, leased to, or conditionally sold to a debt-
or that is a citizen of the United States (as defined
in 40102 of title 49) holding an air carrier operating
certificate issued by the Secretary of Transportation
pursuant to chapter 447 of title 49 for aircraft capa-
ble of carrying 10 or more individuals; or
‘‘(B) a documented vessel (as defined in section
30101(1) of title 46) that is subject to a security in-
terest granted by, leased to, or conditionally sold to
a debtor that is a water carrier that holds a certifi-
cate of public convenience and necessity or permit is-
sued by the Interstate Commerce Commission.
‘‘(3) Paragraph (1) applies to a secured party, lessor,
or conditional vendor acting in its own behalf or acting
as trustee or otherwise in behalf of another party.
‘‘(b) The trustee and the secured party, lessor, or
conditional vendor whose right to take possession is pro-
tected under subsection (a) may agree, subject to the
court’s approval, to extend the 60-day period specified in
subsection (a)(1).
‘‘(c) With respect to equipment first placed in service
on or prior to the date of enactment of this subsection,
for purposes of this section—
‘‘(1) the term ‘lease’ includes any written agree-
ment with respect to which the lessor and the debt-
or, as lessee, have expressed in the agreement or in
a substantially contemporaneous writing that the
agreement is to be treated as a lease for Federal in-
come tax purposes; and
‘‘(2) the term ‘security interest’ means a pur-
chase-money equipment security interest.’’.
(b) AMENDMENT OF SECTION 1168.—Section 1168
of title 11, United States Code, is amended to read as
follows:
‘‘§ 1168. Rolling stock equipment
‘‘(a)(1) The right of a secured party with a security
interest in or of a lessor or conditional vendor of equip-
ment described in paragraph (2) to take possession of such
equipment in compliance with an equipment security
agreement, lease, or conditional sale contract is not af-
fected by section 362 or 363 or by any power of the court
to enjoin the taking of possession, unless—
‘‘(A) before the date that is 60 days after the
date of commencement of a case under this chapter,
the trustee, subject to the court’s approval, agrees to
perform all obligations of the debtor that become
due on or after the date of commencement of the
case under such security agreement, lease, or condi-
tional sale contract; and
‘‘(B) any default, other than a default of a kind
described in section 365(b)(2), under such security
agreement, lease, or conditional sale contract—
‘‘(i) that occurs before the date of com-
mencement of the case and is an event of de-
fault therewith is cured before the expiration of
such 60-day period; and
‘‘(ii) that occurs or becomes an event of
default after the date of commencement of the
case is cured before the later of—
‘‘(I) the date that is 30 days after the
date of the default or event of default; or
‘‘(II) the expiration of such 60-day
period.
‘‘(2) Equipment is described in this paragraph if it
is rolling stock equipment or accessories used on such
equipment, including superstructures and racks, that is
subject to a security interest granted by, leased to, or con-
ditionally sold to the debtor.
‘‘(3) Paragraph (1) applies to a secured party, lessor,
or conditional vendor acting in its own behalf or acting
as trustee or otherwise in behalf of another party.
‘‘(b) The trustee and the secured party, lessor, or
conditional vendor whose right to take possession is pro-
tected under subsection (a) may agree, subject to the
court’s approval, to extend the 60-day period specified in
subsection (a)(1).
‘‘(c) With respect to equipment first placed in service
on or prior to the date of enactment of this subsection,
for purposes of this section—
‘‘(1) the term ‘lease’ includes any written agree-
ment with respect to which the lessor and the debt-
or, as lessee, have expressed in the agreement or in
a substantially contemporaneous writing that the
agreement is to be treated as a lease for Federal in-
come tax purposes; and
‘‘(2) the term ‘security interest’ means a pur-
chase-money equipment security interest.
‘‘(d) With respect to equipment first placed in service
after the date of enactment of this subsection, for pur-
poses of this section, the term ‘rolling stock equipment’
includes rolling stock equipment that is substantially re-
built and accessories used on such equipment.’’.
SEC. 202. LIMITATION ON LIABILITY OF NON-INSIDER
TRANSFEREE FOR AVOIDED TRANSFER.
Section 550 of title 11, United States Code, is
amended—
(1) by redesignating subsections (c), (d), and
(e) as subsections (d), (e), and (f), respectively, and
(2) by inserting after subsection (b) the follow-
ing:
‘‘(c) If a transfer made between ninety days and one
year before the filing of the petition—
‘‘(1) is avoided under section 547(b) of this
title; and
‘‘(2) was made for the benefit of a creditor that
at the time of such transfer was an insider;
the trustee may not recover under subsection (a) from a
transferee that is not an insider.’’.
SEC. 203. PERFECTION OF PURCHASE-MONEY SECURITY IN-
TEREST.
Section 547(c)(3)(B) of title 11, United States Code,
is amended by striking ‘‘10’’ and inserting ‘‘20’’.
SEC. 204. CONTINUED PERFECTION.
(a) AUTOMATIC STAY.—Section 362(b)(3) of title 11,
United States Code, is amended by inserting ‘‘, or to
maintain or continue the perfection of,’’ after ‘‘to perfect’’.
(b) LIMITATIONS ON AVOIDING POWERS.—Section
546(b) of title 11, United States Code, is amended to read
as follows:
‘‘(b)(1) The rights and powers of a trustee under sec-
tions 544, 545, and 549 of this title are subject to any
generally applicable law that—
‘‘(A) permits perfection of an interest in prop-
erty to be effective against an entity that acquires
rights in such property before the date of perfection;
or
‘‘(B) provides for the maintenance or continu-
ation of perfection of an interest in property to be
effective against an entity that acquires rights in
such property before the date on which action is
taken to effect such maintenance or continuation.
‘‘(2) If—
‘‘(A) a law described in paragraph (1) requires
seizure of such property or commencement of an ac-
tion to accomplish such perfection, or maintenance
or continuation of perfection of an interest in prop-
erty; and
‘‘(B) such property has not been seized or an
action has not been commenced before the date of
the filing of the petition;
such interest in such property shall be perfected, or perfec-
tion of such interest shall be maintained or continued, by
notice within the time fixed by such law for such seizure
or such commencement.’’.
SEC. 205. REJECTION OF UNEXPIRED LEASES OF REAL
PROPERTY OR TIMESHARE INTERESTS.
(a) AMENDMENT TO SECTION 365.—Section 365(h)
of title 11, United States Code, is amended to read as
follows:
‘‘(h)(1)(A) If the trustee rejects an unexpired lease
of real property under which the debtor is the lessor and—
‘‘(i) if the rejection by the trustee amounts to
such a breach as would entitle the lessee to treat
such lease as terminated by virtue of its terms, ap-
plicable nonbankruptcy law, or any agreement made
by the lessee, then the lessee under such lease may
treat such lease as terminated by the rejection; or
‘‘(ii) if the term of such lease has commenced,
the lessee may retain its rights under such lease (in-
cluding rights such as those relating to the amount
and timing of payment of rent and other amounts
payable by the lessee and any right of use, posses-
sion, quiet enjoyment, subletting, assignment, or
hypothecation) that are in or appurtenant to the real
property for the balance of the term of such lease
and for any renewal or extension of such rights are
enforceable under applicable nonbankruptcy law.
‘‘(B) If the lessee retains its rights under subpara-
graph (A)(ii), the lessee may offset against the rent re-
served under such lease for the balance of the term after
the date of the rejection of such lease and for the term
of any renewal or extension of such lease, the value of any
damage caused by the nonperformance after the date of
such rejection, of any obligation of the debtor under such
lease, but the lessee shall not have any other right against
the estate or the debtor on account of any damage occur-
ring after such date caused by such nonperformance.
‘‘(C) The rejection of a lease of real property in a
shopping center with respect to which the lessee elects to
retain its rights under subparagraph (A)(ii) does not af-
fect the enforceability under applicable nonbankruptcy law
of any provision in the lease pertaining to radius, location,
use, exclusivity, or tenant mix or balance.
‘‘(D) In this paragraph, ‘lessee’ includes any succes-
sor, assign, or mortgagee permitted under the terms of
such lease.
‘‘(2)(A) If the trustee rejects a timeshare interest
under a timeshare plan under which the debtor is the
timeshare interest seller and—
‘‘(i) if the rejection amounts to such a breach
as would entitle the timeshare interest purchaser to
treat the timeshare plan as terminated under its
terms, applicable nonbankruptcy law, or any agree-
ment made by timeshare interest purchaser, the
timeshare interest purchaser under the timeshare
plan may treat the timeshare plan as terminated by
such rejection; or
‘‘(ii) if the term of such timeshare interest has
commenced, then the timeshare interest purchaser
may retain its rights in such timeshare interest for
the balance of such term and for any term of re-
newal or extension of such timeshare interest to the
extent that such rights are enforceable under appli-
cable nonbankruptcy law.
‘‘(B) If the timeshare interest purchaser retains its
rights under subparagraph (A), such timeshare interest
purchaser may offset against the moneys due for such
timeshare interest for the balance of the term after the
date of the rejection of such timeshare interest, and the
term of any renewal or extension of such timeshare inter-
est, the value of any damage caused by the nonperform-
ance after the date of such rejection, of any obligation of
the debtor under such timeshare plan, but the timeshare
interest purchaser shall not have any right against the es-
tate or the debtor on account of any damage occurring
after such date caused by such nonperformance.’’.
(b) TECHNICAL AMENDMENT.—Section 553(b)(1) of
title 11, United States Code, is amended by striking
‘‘365(h)(2)’’ and inserting ‘‘365(h)’’.
SEC. 206. CONTENTS OF PLAN.
Section 1123(b) of title 11, United States Code, is
amended—
(1) in paragraph (4) by striking ‘‘and’’ at the
end,
(2) by redesignating paragraph (5) as para-
graph (6), and
(3) by inserting after paragraph (4) the follow-
ing:
‘‘(5) in a case in which the debtor is a small
business, modify the rights of holders of secured
claims, except that—
‘‘(A) the rights of a holder of a claim se-
cured only by a security interest in real prop-
erty that is the debtor’s principal residence may
not be modified; and
‘‘(B) notwithstanding section 506(a), the
rights of the holder of the most senior security
interest in real property that is the debtor’s
principal residence may not be modified to re-
duce the secured claim to a value that is less
than the value of the allowed claim; and’’.
SEC. 207. PRIORITY FOR INDEPENDENT SALES REPRESENT-
ATIVES.
Section 507(a)(3) of title 11, United States Code, is
amended to read as follows:
‘‘(3) Third, allowed unsecured claims, but only
to the extent of $2,000 for each individual or cor-
poration, as the case may be, earned within 90 days
before the date of the filing of the petition or the
date of the cessation of the debtor’s business, which-
ever occurs first, for—
‘‘(A) wages, salaries, or commissions, in-
cluding vacation, severance, and sick leave pay
earned by an individual; or
‘‘(B) sales commissions earned by an indi-
vidual or by a corporation with only 1 employee,
acting as an independent contractor in the sale
of goods or services for the debtor in the ordi-
nary course of the debtor’s business if, and only
if, during the 12 months preceding that date, at
least 75 percent of the amount that the individ-
ual or corporation earned by acting as an inde-
pendent contractor in the sale of goods or serv-
ices was earned from the debtor;’’.
SEC. 208. EXCLUSION FROM THE ESTATE OF INTERESTS IN
LIQUID 
AND 
GASEOUS 
HYDROCARBONS
TRANSFERRED BY THE DEBTOR PURSUANT
TO PRODUCTION PAYMENT AGREEMENTS.
(a) DEFINITION.—Section 101 of title 11, United
States Code, is amended—
(1) by inserting after paragraph (42) the fol-
lowing:
‘‘(42A) ‘production payment’ means a payment
(in cash or in kind)—
‘‘(A) contingent on the production of a liq-
uid or gaseous hydrocarbon from particular real
property; and
‘‘(B) attributable to part of a specified vol-
ume, or part of a specified value, of the liquid
or gaseous hydrocarbon produced from such
property, and determined without regard to
production costs.’’.
(b) PROPERTY OF THE ESTATE.—Section 541(b)(4)
of title 11, United States Code, is amended—
(1) in subparagraph (A) by striking ‘‘(A)’’ and
inserting ‘‘(A)(i)’’,
(2) in subparagraph (B)—
(A) by striking ‘‘(B)’’ and inserting ‘‘(ii),’’
(B) by striking ‘‘such interest’’ and insert-
ing ‘‘the interest referred to in clause (i)’’, and
(C) by striking the period at the end and
inserting ‘‘; or’’, and
(3) by adding at the end the following:
‘‘(B)(i) the debtor has transferred or has
agreed to transfer such interest pursuant to a
written agreement to make production pay-
ments to a person who does not participate in
the production of the liquid or gaseous hydro-
carbon with respect to which such payments are
made; and
‘‘(ii) but for the operation of this para-
graph, the estate could include the interest re-
ferred to in clause (i) only by virtue of section
365 of this title.’’.
SEC. 209. SELLER’S RIGHT TO RECLAIM GOODS.
Section 546(c)(1) of title 11, United States Code, is
amended by striking ‘‘ten’’ and inserting ‘‘20’’.
SEC. 210. INVESTMENT OF MONEY OF THE ESTATE.
Section 345(b) of title 11, United States Code, is
amended—
(1) in paragraph (2) by striking the period at
the end and inserting a semicolon, and
(2) by adding ‘‘unless the court for cause orders
otherwise.’’ at the end of such subsection.
SEC. 211. ELECTION OF TRUSTEE UNDER CHAPTER 11.
(a) ELECTION AUTHORIZED.—Section 1104 of title
11 of the United States Code is amended—
(1) by redesignating subsections (b) and (c) as
subsections (c) and (d), respectively, and
(2) by inserting after subsection (a) the follow-
ing:
‘‘(b) Except as provided in section 1163 of this title,
on the request of a party in interest made not later than
30 days after the court orders the appointment of a trust-
ee under subsection (a), the United States trustee shall
convene a meeting of creditors for the purpose of electing
one disinterested person to serve as trustee in the case.
The election of a trustee shall be conducted in the manner
provided in subsections (a), (b), and (c) of section 702
of this title.’’.
(b) CONFORMING AMENDMENT.—Section 1106(b) of
title 11, United States Code, is amended by striking
‘‘1104(c)’’ and inserting ‘‘1104(d)’’.
SEC. 212. RIGHTS OF PARTNERSHIP TRUSTEE AGAINST
GENERAL PARTNERS.
Section 723(a) of title 11, United States Code, is
amended by striking ‘‘for the full amount of the defi-
ciency’’ and inserting ‘‘to the extent that under applicable
nonbankruptcy law such general partner is personally lia-
ble for the debts of the partnership’’.
SEC. 213. EXCLUSION FROM THE ESTATE OF CERTAIN AC-
COUNTS AND CHATTEL PAPER.
Section 541(b) of title 11, United States Code, is
amended—
(1) in subsection (b)—
(A) in paragraph (3) by striking ‘‘or’’ at
the end,
(B) in paragraph (4) by striking the period
at the end and inserting ‘‘; or’’, and
(C) by adding at the end the following:
‘‘(5) any interest of the debtor in any account
or chattel paper to the extent that—
‘‘(A) such interest was actually sold under
applicable nonbankruptcy law by the debtor be-
fore the date of commencement of the case, but
without taking into consideration whether the
purchaser filed a financing statement before
such date; and
‘‘(B) but for the operation, the estate
could include such interest only by virtue of sec-
tion 542 of this title.’’, and
(2) by adding at the end the following:
‘‘(e) For purposes of this section—
‘‘(1) ‘account’ means any right to payment for
goods sold or leased or for services rendered that is
not evidence by an instrument or chattel paper,
whether or not it has been earned by performance,
and includes all right to payment earned or un-
earned under a charter or other contract involving
the use or hire of a vessel and all rights incident to
such charter or such contract; and
‘‘(2) ‘chattel paper’ means—
‘‘(A) a writing or writings that evidence
both a monetary obligation and a security inter-
est in or lease of specific goods (excluding a
charter or other contract involving the use or
hire of a vessel); or
‘‘(B) if a transaction described in subpara-
graph (A) is evidenced both by such a security
agreement or a lease and by an instrument or
a series of instruments, the group of these
writings taken together.’’.
SEC. 214. TIMELY FILING OF CLAIMS, INTERESTS, AND
ADMINSTRATIVE EXPENSE REQUESTS.
(a) OBJECTION TO CLAIMS FILED UNTIMELY.—Sec-
tion 502(b) of title 11, United States Code, is amended—
(1) in paragraph (7) by striking ‘‘or’’ at the
end,
(2) in paragraph (8) by striking the period at
the end and inserting ‘‘; or’’, and
(3) by adding at the end the following:
‘‘(9) such claim is not timely filed, except to the
extent tardily filing permitted under paragraph (2)
or (3) of section 726(a).’’.
(b) FILING OF REQUEST FOR ADMINISTRATIVE EX-
PENSES.—Section 503(a) of title 11, United States Code,
is amended—
(1) by inserting ‘‘timely’’ after ‘‘may’’, and
(2) by inserting ‘‘, or may tardily file such re-
quest if permitted by the court for cause’’ before the
period at the end.
SEC. 215. PROTECTION OF SECURITY INTEREST IN POST-
PETITION RENTS.
Section 552(b) of title 11, United States Code, is
amended—
(1) by inserting ‘‘(1)’’ after ‘‘(b)’’,
(2) by striking ‘‘rents,’’ each place it appears,
and
(3) by adding at the end the following:
‘‘(2) Except as provided in sections 363, 506(c), 522,
544, 545, 547, and 548 of this title, if the debtor and
an entity entered into a security agreement before the
commencement of the case and if the security interest cre-
ated by such security agreement extends to property of
the debtor acquired before the commencement of the case
and to rents of such property, then such security interest
extends to such rents acquired by the estate after the com-
mencement of the case to the extent provided in such secu-
rity agreement, except to any extent that the court, after
notice and a hearing and based on the equities of the case,
orders otherwise.’’.
SEC. 216. AMENDMENT TO DEFINITION OF SWAP AGREE-
MENT.
Section 101(55)(A) of title 11, United States Code,
is amended by inserting ‘‘spot foreign exchange agree-
ment,’’ after ‘‘forward foreign exchange agreement’’.
TITLE III—CONSUMER
BANKRUPTCY ISSUES
SEC. 301. PERIOD FOR CURING DEFAULT RELATING TO
PRINCIPAL RESIDENCE.
Section 1322 of title 11, United States Code, is
amended—
(1) by redesignating subsection (c) as sub-
section (d), and
(2) by inserting after subsection (b) the follow-
ing:
‘‘(c) Notwithstanding subsection (b)(2) and applica-
ble nonbankruptcy law—
‘‘(1) a default with respect to, or that gave rise
to, a lien on the debtor’s principal residence may be
cured under paragraph (3) or (5) of subsection (b)
until such residence is sold under such lien and in
accordance with applicable nonbankruptcy law; and
‘‘(2) in a case in which the last payment on the
original payment schedule for a claim secured only
by a security interest in real property that is the
debtor’s principal residence is due before the date on
which the final payment under the plan is due, the
plan may provide for the payment of the claim as
modified pursuant to 1325(a)(5).’’.
SEC. 302. NONDISCHARGEABILITY OF FINE UNDER CHAP-
TER 13.
Section 1328(a)(3) of title 11, United States Code,
is amended by inserting ‘‘, or a fine (other than a fine
imposed under subchapter C of chapter 227 of title 18
of the United States Code) to the extent such fine exceeds
$500, ’’ after ‘‘restitution’’.
SEC. 303. IMPAIRMENT OF EXEMPTIONS.
Section 522(f) of title 11, United States Code, is
amended—
(1) by inserting ‘‘(1)’’ before ‘‘Notwithstand-
ing’’,
(2) by redesignating paragraph (1) as subpara-
graph (A),
(3) by redesignating paragraph (2) as subpara-
graph (B) and subparagraphs (A), (B), and (C) of
that paragraph as clauses (i), (ii), and (iii), and
(4) by adding at the end the following:
‘‘(2)(A) For the purposes of this subsection, a
lien shall be considered to impair an exemption to
the extent that the sum of—
‘‘(i) the lien,
‘‘(ii) all other liens on the property that
are equal or greater in seniority to the lien; and
‘‘(iii) the amount of the exemption that the
debtor could claim if there were no liens on the
property,
exceeds the value that the debtor’s interest in the
property would have in the absence of any liens.
‘‘(B) In the case of a property subject to more
than 1 lien, a lien that has been avoided shall not
be considered in making the calculation under sub-
paragraph (A) with respect to other liens.’’.
SEC. 304. PROTECTION OF CHILD SUPPORT AND ALIMONY.
(a) RELIEF
FROM
AUTOMATIC
STAY.—Section
362(b)(2) of title 11, United States Code, is amended to
read as follows:
‘‘(2) under subsection (a) of this section—
‘‘(A) of the commencement or continuation
of an action or proceeding for—
‘‘(i) the establishment of paternity; or
‘‘(ii) the establishment or modification
of an order for alimony, maintenance, or
support; or
‘‘(B) of the collection of alimony, mainte-
nance, or support from property that is not
property of the estate;’’.
(b) PRIORITY OF CLAIMS.—Section 507(a) of title
11, United States Code, is amended—
(1) in paragraph (8) by striking ‘‘(8) Eighth’’
and inserting ‘‘(9) Ninth’’,
(2) in paragraph (7) by striking ‘‘(7) Seventh’’
and inserting ‘‘(8) Eighth’’, and
(3) by inserting after paragraph (6) the follow-
ing:
‘‘(7) Seventh, allowed claims for debts to a
spouse, former spouse, or child of the debtor, for ali-
mony to, maintenance for, or support of such spouse
or child, in connection with a separation agreement,
divorce decree or other order of a court of record,
determination made in accordance with State or ter-
ritorial law by a governmental unit, or property set-
‘‘(ii) includes a liability designated as
alimony, maintenance, or support, unless
such liability is actually in the nature of al-
imony, maintenance or support.’’.
(d) EXCEPTION
TO DISCHARGE.—Section 523 of
Title 11, United States Code, is amended—
(1) in subsection (a)—
(A) in paragraph (11) by striking ‘‘or’’ at
the end,
(B) in paragraph (12) by inserting ‘‘or’’
after the semicolon at the end, and
(C) by adding at the end the following:
‘‘(13) assumed or incurred by the debtor in the
course of a divorce or separation or in connection
with a separation agreement, divorce decree or other
order of a court of record, a determination made in
accordance with State or territorial law by a govern-
mental unit, or property settlement agreement, un-
less—
‘‘(A) the debtor does not have the ability
to pay such debt from income or property of the
debtor not reasonably necessary to be expended
for the maintenance or support of the debtor or
a dependent of the debtor and, if the debtor is
engaged in a business, for the payment of ex-
penditures necessary for the continuation, pres-
ervation, and operation of such business; or
‘‘(B) discharging such debt would result in
a benefit to the debtor that outweighs the det-
rimental consequences to a spouse, former
spouse, or child of the debtor.’’, and
(2) in subsection (c)(1) by striking ‘‘or (6)’’
each place it appears and inserting ‘‘(6), or (13)’’.
(e) PROTECTION AGAINST TRUSTEE AVOIDANCE.—
Section 547(c) of title 11, United States Code, is
amended—
(1) in paragraph (6) by striking ‘‘or’’ at the
end,
(2) by redesignating paragraph (7) as para-
graph (8), and
(3) by inserting after paragraph (6) the follow-
ing:
‘‘(7) to the extent such transfer was a bona fide
payment of a debt to a spouse, former spouse, or
child of the debtor, for alimony to, maintenance for,
or support of such spouse or child, in connection
with a separation agreement, divorce decree or other
order of a court of record, determination made in
accordance with State or territorial law by a govern-
mental unit, or property settlement agreement, but
not to the extent that such debt—
‘‘(A) is assigned to another entity, volun-
tarily, by operation of law, or otherwise; or
‘‘(B) includes a liability designated as ali-
mony, maintenance, or support, unless such li-
ability is actually in the nature of alimony,
maintenance or support.’’.
(f) APPEARANCE BEFORE COURT.—Child support
creditors or their representatives shall be permitted to ap-
pear and intervene without charge, and without meeting
any special local court rule requirement for attorney ap-
pearances, in any bankruptcy proceeding in any bank-
ruptcy court or district court of the United States if such
representatives file a form in such court that contains in-
formation detailing the child support debt, its status, and
other characteristics.
(g) CONFORMING AMENDMENTS—Title 11 of the
United States Code is amended—
(1) in section 502(i) by striking ‘‘507(a)(7)’’
and inserting ‘‘507(a)(8)’’,
(2) in section 503(b)(1)(B)(i) by striking
‘‘507(a)(7)’’ and inserting ‘‘507(a)(8)’’,
(3) 
in 
section 
523(a)(1)(A) 
by 
striking
‘‘507(a)(7)’’ and inserting ‘‘507(a)(8)’’,
(4) in section 724(b)(2) by striking ‘‘or
507(a)(6)’’ and inserting ‘‘507(a)(6), or 507(a)(7)’’,
(5) in section 726(b) by striking ‘‘or (7)’’ and
inserting ‘‘, (7), or (8)’’,
(6) 
in 
section 
1123(a)(1) 
by 
striking
‘‘507(a)(7)’’ and inserting ‘‘507(a)(8)’’,
(7) in section 1129(a)(9)—
(i) in subparagraph (B) by striking ‘‘or
507(a)(6)’’ and inserting ‘‘, 507(a)(6), or
507(a)(7)’’, and
(ii) in subparagraph (C) by striking
‘‘507(a)(7)’’ and inserting ‘‘507(a)(8)’’.
SEC. 305. PRESERVATION OF HOME MORTGAGE LIENS.
Section 1322(b)(2) of title 11, United States Code,
is amended—
(1) by striking ‘‘, other than a claim secured
only by a security interest in real property that is
the debtor’s principal residence,’’, and
(2) by striking the semicolon at the end and in-
serting the following:
‘‘, except that—
‘‘(A) the rights of a holder of a claim se-
cured only by a security interest in real prop-
erty that is the debtor’s principal residence may
not be modified; and
‘‘(B) notwithstanding section 506(a), the
rights of the holder of the most senior security
interest in real property that is the debtor’s
principal residence may not be modified to re-
duce the secured claim to a value that is less
than the value of the allowed claim;’’.
SEC. 306. INTEREST ON INTEREST.
(a) CHAPTER 11.—Section 1123 of title 11, United
States Code, is amended by adding at the end the follow-
ing:
‘‘(d) Notwithstanding subsection (a) of this section
and sections 506(b), 1129(a)(7), and 1129(b) of this title,
if it is proposed in a plan to cure a default, the amount
necessary to cure the default, shall be determined in ac-
cordance with the underlying agreement and applicable
nonbankruptcy law.’’.
(b) CHAPTER 12.—Section 1222 of title 11, United
States Code, is amended by adding at the end the follow-
ing:
‘‘(d) Notwithstanding subsection (b)(2) of this sec-
tion and sections 506(b) and 1225(a)(5) of this title, if
it is proposed in a plan to cure a default, the amount nec-
essary to cure the default, shall be determined in accord-
ance with the underlying agreement and applicable
nonbankruptcy law.’’.
(c) CHAPTER 13.—Section 1322 of title 11, United
States Code, is amended by adding at the end the follow-
ing:
‘‘(f) Notwithstanding subsection (b)(2) of this section
and sections 506(b) and 1325(a)(5) of this title, if it is
proposed in a plan to cure a default, the amount necessary
to cure the default, shall be determined in accordance with
the underlying agreement and applicable nonbankruptcy
law.’’.
SEC. 307. EXCEPTION TO DISCHARGE.
Section 523(a)(2) of title 11, United States Code, is
amended—
(1) by striking ‘‘$500’’ and inserting ‘‘$1,000’’,
(2) by striking ‘‘forty’’ and inserting ‘‘60’’, and
(3) by striking ‘‘twenty’’ and inserting ‘‘60’’.
SEC. 308. PAYMENTS.
Section 1326(a)(2) of title 11, United States Code,
is amended in the second sentence by striking the period
and inserting ‘‘as soon as practicable.’’.
TITLE IV—GOVERNMENTAL
BANKRUPTCY ISSUES
SEC. 401. EXCEPTION FROM AUTOMATIC STAY FOR POST-
PETITION PROPERTY TAXES.
Section 362(b) of title 11, United States Code, is
amended by inserting after paragraph (16) the following: