IB
Union Calendar No. 464
103D CONGRESS
1ST SESSION
H. R. 5116
[Report No. 103–835]
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
OCTOBER 4, 1994
Reported with an amendment, committed to the Committee of the Whole
House on the State of the Union, and ordered to be printed
[Strike out all after the enacting clause and insert the part printed in italic]
[For text of introduced bill, see copy of bill as introduced on September 28, 1994]
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 Amendments 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 cer-
tain 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; 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.
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 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. Impairment of claims and interests.
Sec. 215. Protection of security interest in post-petition rents.
Sec. 216. Amendment to definition of swap agreement.
Sec. 217. Limitation on avoiding powers.
Sec. 218. Small businesses.
Sec. 219. Single asset real estate.
Sec. 220. Leases of personal property.
Sec. 221. Exemption for small business investment companies.
Sec. 222. Payment of taxes with borrowed funds.
Sec. 223. Return of goods.
Sec. 224. Proceeds of money order agreements.
Sec. 225. Airport leases.
Sec. 226. Trustee duties.
Sec. 227. 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 ‘‘con-
cluded’’, 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 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 follow-
ing:
‘‘(1) from final judgments, orders, and decrees;
‘‘(2) from interlocutory orders and decrees issued
under section 1121(d) of title 11 increasing reducing
the time periods referred to in section 1121 of such
title; and
‘‘(3) with leave of the court, from other interlocu-
tory orders and decrees;’’.
SEC. 103. EXPEDITED PROCEDURE FOR REAFFIRMATION OF
DEBTS.
(a) REAFFIRMATION.—Section 524(c) of title 11, Unit-
ed 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,
‘‘(2) unless inconsistent with another provision
of this title or with applicable Federal Rules of Bank-
ruptcy Procedure, issue an order at any such con-
ference prescribing such limitations and conditions as
the court deems appropriate to ensure that the case is
handled expeditiously and economically, including 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 statement and plan;
‘‘(ii) sets a date by which the debtor, or
trustee if one has been appointed, shall so-
licit 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 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 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 sub-
section (c)(2))’’ after ‘‘subsection’’, and
(B) by striking ‘‘Any’’ and inserting the fol-
lowing:
‘‘(d) Any’’.
(c) ESTABLISHMENT, OPERATION, AND TERMINATION
OF BANKRUPTCY 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 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 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 judi-
cial 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 established under paragraph (1), made after the expira-
tion of the 1-year period beginning on the date such service
is established, the judicial council of the circuit shall deter-
mine whether a circumstance 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 judi-
cial council of the circuit may determine whether a cir-
cumstance specified in subparagraph (A) or (B) of such
paragraph 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 serv-
ice 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 redes-
ignated, the following:
‘‘(5) An appeal to be heard under this subsection shall
be heard by a panel of 3 members of the bankruptcy appel-
late 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 APPEL-
LATE 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 bank-
ruptcy 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
PRESCRIBING.—Section 2073 of title 28, United States
Code, is amended—
(1) in subsection (a)(2) by striking ‘‘section
2072’’ and inserting ‘‘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.—Sec-
tion 2075 of title 28, United States Code, is amended by
striking ‘‘ninety days’’ and inserting ‘‘180 days’’.
SEC. 
105. 
PARTICIPATION 
BY 
BANKRUPTCY 
ADMINIS-
TRATOR AT MEETINGS OF CREDITORS AND
EQUITY SECURITY HOLDERS.
(a) PRESIDING OFFICER.—A bankruptcy adminis-
trator appointed under section 302(d)(3)(I) of the Bank-
ruptcy 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 Implementation Act
of 1990 (Public Law 101–650; 104 Stat. 5115), or the bank-
ruptcy administrator’s designee may preside at the meeting
of creditors convened under section 341(a) of title 11, Unit-
ed States Code. The bankruptcy administrator or the bank-
ruptcy administrator’s designee may preside at any meet-
ing of equity security holders convened under section 341(b)
of title 11, United States Code.
(b) EXAMINATION OF THE DEBTOR.—The bankruptcy
administrator 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 CHAPTER 11 COMMITTEES.
Section 101(41) of title 11, United States Code, is
amended to read as follows:
‘‘(41) ‘person’ includes individual, partnership,
and corporation, 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 affili-
ate 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 In-
ternal 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 follow-
ing:
‘‘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 inserting ‘‘$250,000’’, and
(2) by striking ‘‘$350,000’’ each place it appears
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 (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 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:
‘‘(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 ad-
justed—
‘‘(A) to reflect the change in the Consumer Price
Index for All Urban Consumers, published by the De-
partment 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 Con-
ference 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.
‘‘(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 sub-
section 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 Commission and the Assistant At-
torney General in charge of the Antitrust Divi-
sion of the Department of Justice, of the notifica-
tion 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 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 expenses
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 enters
an order confirming a plan of reorganization under chapter
11 may issue an injunction to supplement the injunctive
effect of a discharge under this section.
‘‘(B) An injunction may be issued under subparagraph
(A) to enjoin persons and governmental units from taking
legal action for the purpose of directly or indirectly collect-
ing, 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 ac-
tions as are expressly allowed by the injunction, the con-
firmation 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 injunc-
tion was entered, and such court shall have exclusive juris-
diction 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 actions
seeking recovery for damages allegedly caused by
the presence of, or exposure to, asbestos or asbes-
tos-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 obligation 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 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) 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 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 injunc-
tion;
‘‘(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 state-
ment 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 estab-
lished and votes, by at least 75 percent 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 val-
ues of present claims and future demands or
other comparable alternates, that provide reason-
able 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 Amendments
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 jurisdiction
over the reorganization case, then after the time for appeal
of the order that issues or affirms the plan of reorganiza-
tion—
‘‘(i) the injunction shall be valid and enforceable
and may not be revoked or modified by any court ex-
cept through appeal in accordance with paragraph
(6);
‘‘(ii) no entity that pursuant to the plan of reor-
ganization 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 lia-
ble 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 re-
spect 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 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 author-
ity under sections 1141 and 1142 to compel the debtor
to do so.
‘‘(4)(A)(i) Subject to subparagraph (B), an injunction
under paragraph (1) shall be valid and enforceable against
all persons and governmental units 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 the in-
junction (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 interest
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 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 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
‘‘(A) was not a claim during the proceedings
leading to the confirmation of a plan of reorganiza-
tion;
‘‘(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 applies to any injunction of the
nature described in paragraph (1)(B) in effect, and any
trust of the nature described in paragraph (2)(B) in exist-
ence, on or after the date of enactment of this subsection.
‘‘(8) 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 enactment of this
subsection.
‘‘(h) Nothing in subsection (g) shall affect the court’s
authority to issue an injunction (including an injunction
that requires claims and demands to be presented for pay-
ment solely to a trust or any other type of court approved
settlement vehicle) which is entered pursuant to an order
approving a plan of reorganization.’’.
(b) SETTLEMENT OF CLAIMS AND DEMANDS FOR PAY-
MENT.—Section 105 of title 11, United States Code, as
amended by section 104, is amended by adding at the end
the following:
‘‘(e)(1) A court may issue an injunction that requires
claims and demands to be presented for payment solely to
a trust or other vehicle that is established for the purpose
of settling such claims and demands and is approved by
the court and entered into pursuant to an order approving
a plan of reorganization.
‘‘(2) This subsection applies to any injunction of
the nature described in paragraph (1) in effect, and
any trust of the nature described in such paragraph
in existence, on or after the date of the enactment of
the Bankruptcy Amendments of 1994.’’.
SEC. 112. AUTHORITY OF BANKRUPTCY JUDGES TO CON-
DUCT JURY TRIALS IN CIVIL PROCEEDINGS.
Section 157(c) of title 28, United States Code, is
amended by adding at the end the following:
‘‘(3) If the right to a jury trial applies in a proceeding
that may be heard under paragraph (1) or (2) of this sub-
section by a bankruptcy judge, the bankruptcy judge may
conduct the jury trial if specially designated to exercise such
jurisdiction by the district and with the consent of all the
parties.’’.
SEC. 113. SOVEREIGN IMMUNITY.
Section 106 of title 11, United States Code, is amended
to read as follows:
‘‘§ 106. Waiver of sovereign immunity
‘‘(a) Notwithstanding an assertion of sovereign immu-
nity, except as provided in subsection (d)—
‘‘(1) all provisions of this title shall apply to
governmental units;
‘‘(2) the court may hear and determine any issue
arising with respect to the application of such provi-
sions to governmental units; and
‘‘(3) the court may issue and enforce any order,
process, or judgment against a governmental unit, in-
cluding an order or judgment awarding a money re-
covery, to the same extent as against any other entity.
‘‘(b) A governmental unit is deemed to have waived
sovereign immunity with respect to a claim against such
governmental unit that is property of the estate and that
arose out of the same transaction or occurrence out of which
the claim of such governmental unit arose.
‘‘(c) Notwithstanding any assertion of sovereign im-
munity by a governmental unit, there shall be offset against
a claim or interest of a governmental unit any claim
against such governmental unit that is property of the es-
tate.
‘‘(d) Except as provided in subsections (b) and (c) or
in applicable nonbankruptcy law, 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 gov-
ernmental unit that arose before the commencement 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.’’.
SEC. 114. SERVICE OF PROCESS IN BANKRUPTCY PROCEED-
INGS ON AN INSURED DEPOSITORY INSTITU-
TION.
Rule 7004 of the Federal Rules of Bankruptcy Proce-
dure is amended—
(1) in subsection (b) by striking ‘‘In addition’’
and inserting ‘‘Except as provided in subdivision (h),
in addition’’; and
(2) by adding at the end the following:
‘‘(h) SERVICE OF PROCESS ON AN INSURED DEPOSI-
TORY INSTITUTION.—Service on an insured depository in-
stitution (as defined in section 3 of the Federal Deposit In-
surance Act (12 U.S.C. 1813)) in a contested matter or ad-
versary proceeding shall be made by certified mail ad-
dressed to an officer of the institution unless—
‘‘(1) the institution has appeared by its attorney,
in which case the attorney shall be served by first
class mail;
‘‘(2) the court orders otherwise after service upon
the institution by certified mail of notice of an appli-
cation to permit service on the institution by first
class mail sent to an officer of the institution des-
ignated by the institution; or
‘‘(3) the institution has waived in writing its en-
titlement to service by certified mail by designating
an officer to receive service.’’.
SEC. 115. MEETINGS OF CREDITORS AND EQUITY SECURITY
HOLDERS.
Section 341 of title 11, United States Code, is amended
by adding at the end the following:
‘‘(d) Prior to the conclusion of the meeting of creditors
or equity security holders, the United States trustee shall
orally examine the debtor to ensure that the debtor is aware
of—
‘‘(1) the potential consequences of seeking a dis-
charge in bankruptcy, including the effects on credit
history;
‘‘(2) the debtor’s ability to file a petition under
a different chapter of this title;
‘‘(3) the effect of receiving a discharge of debts
under this title; and
‘‘(4) the effect of reaffirming a debt, including
the debtor’s knowledge of the provisions of section
524(d).’’.
SEC. 116. TAX ASSESSMENT.
Section 362(b)(9) of title 11, United States Code, is
amended to read as follows:
‘‘(9) under subsection (a), of—
‘‘(A) an audit by a governmental unit to
determine tax liability;
‘‘(B) the issuance to the debtor by a govern-
mental unit of a notice of tax deficiency;
‘‘(C) a demand for tax returns; or
‘‘(D) the making of an assessment for any
tax and issuance of a notice and demand for
payment of such an assessment (but any tax lien
that would otherwise attach to property of the es-
tate by reason of such an assessment shall not
take effect unless such tax is a debt of the debtor
that will not be discharged in the case and such
property or its proceeds are transferred out of
the estate to, or otherwise revested in, the debt-
or).’’.
SEC. 117. ADDITIONAL TRUSTEE COMPENSATION.
Section 330(b) of title 11, United States Code, is
amended—
(1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and
(2) by adding at the end thereof the following:
‘‘(2) The Judicial Conference of the United States shall
prescribe additional fees of the same kind as prescribed
under section 1914(b) of title 28, to pay $15 to the trustee
serving in such case after such trustee’s services are ren-
dered. Such $15 shall be paid in addition to the amount
paid under paragraph (1).’’.
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 affected
by section 362, 363, or 1129 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 per-
form all obligations of the debtor that become due on
or after the date of the order under such security
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 pe-
riod; 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 pe-
riod.
‘‘(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 debtor 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 capable of carrying
10 or more individuals or 6,000 pounds or more of
cargo; 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 condi-
tional vendor whose right to take possession is protected
under subsection (a) may agree, subject to the court’s ap-
proval, 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 debtor,
as lessee, have expressed in the agreement or in a sub-
stantially contemporaneous writing that the agree-
ment is to be treated as a lease for Federal income
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 equipment
described in paragraph (2) to take possession of such equip-
ment in compliance with an equipment security agreement,
lease, or conditional sale contract is not affected by section
362, 363, or 1129 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 conditional
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 default
therewith is cured before the expiration of such
60-day period; and
‘‘(ii) that occurs or becomes an event of de-
fault 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 pe-
riod.
‘‘(2) Equipment is described in this paragraph if it
is rolling stock equipment or accessories used on such equip-
ment, including superstructures and racks, that is subject
to a security interest granted by, leased to, or conditionally
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 condi-
tional vendor whose right to take possession is protected
under subsection (a) may agree, subject to the court’s ap-
proval, 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 debtor,
as lessee, have expressed in the agreement or in a sub-
stantially contemporaneous writing that the agree-
ment is to be treated as a lease for Federal income
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 purposes
of this section, the term ‘rolling stock equipment’ includes
rolling stock equipment that is substantially rebuilt and ac-
cessories 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 amend-
ed—
(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 90 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 of title 11, United States Code, is amend-
ed—
(1) in subsection (c)(3)(B) by striking ‘‘10’’ and
inserting ‘‘20’’, and
(2) in subsection (e)(2)(A) by inserting ‘‘, except
as provided in subsection (c)(3)(B)’’ before the semi-
colon at the end.
SEC. 204. CONTINUED PERFECTION.
(a) AUTOMATIC STAY.—Section 362(b)(3) of title 11,
United States Code, is amended by inserting ‘‘, or to main-
tain or continue the perfection of,’’ after ‘‘to perfect’’.