IB 
Union Calendar No. 363 
114TH CONGRESS 
2D SESSION 
H. R. 2947 
[Report No. 114–477] 
To amend title 11 of the United States Code in order to facilitate the 
resolution of an insolvent financial institution in bankruptcy. 
IN THE HOUSE OF REPRESENTATIVES 
JULY 7, 2015 
Mr. TROTT (for himself, Mr. GOODLATTE, Mr. CONYERS, and Mr. MARINO) 
introduced the following bill; which was referred to the Committee on the 
Judiciary 
MARCH 23, 2016 
Additional sponsor: Mr. ROSS 
MARCH 23, 2016 
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 July 7, 2015] 
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A BILL 
To amend title 11 of the United States Code in order to 
facilitate the resolution of an insolvent financial institu-
tion in bankruptcy. 
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Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled, 
SECTION 1. SHORT TITLE. 
This Act may be cited as the ‘‘Financial Institution 
Bankruptcy Act of 2016’’. 
SEC. 2. GENERAL PROVISIONS RELATING TO COVERED FI-
NANCIAL CORPORATIONS. 
(a) DEFINITION.—Section 101 of title 11, United 
States Code, is amended by inserting the following after 
paragraph (9): 
‘‘(9A) The term ‘covered financial corporation’ 
means any corporation incorporated or organized 
under any Federal or State law, other than a stock-
broker, a commodity broker, or an entity of the kind 
specified in paragraph (2) or (3) of section 109(b), 
that is— 
‘‘(A) a bank holding company, as defined in 
section 2(a) of the Bank Holding Company Act 
of 1956; or 
‘‘(B) a corporation that exists for the pri-
mary purpose of owning, controlling and financ-
ing its subsidiaries, that has total consolidated 
assets of $50,000,000,000 or greater, and for 
which, in its most recently completed fiscal 
year— 
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‘‘(i) annual gross revenues derived by 
the corporation and all of its subsidiaries 
from activities that are financial in nature 
(as defined in section 4(k) of the Bank 
Holding Company Act of 1956) and, if ap-
plicable, from the ownership or control of 
one or more insured depository institutions, 
represents 85 percent or more of the consoli-
dated annual gross revenues of the corpora-
tion; or 
‘‘(ii) the consolidated assets of the cor-
poration and all of its subsidiaries related 
to activities that are financial in nature (as 
defined in section 4(k) of the Bank Holding 
Company Act of 1956) and, if applicable, 
related to the ownership or control of one or 
more insured depository institutions, rep-
resents 85 percent or more of the consoli-
dated assets of the corporation.’’. 
(b) APPLICABILITY
OF CHAPTERS.—Section 103 of 
title 11, United States Code, is amended by adding at the 
end the following: 
‘‘(l) Subchapter V of chapter 11 of this title applies 
only in a case under chapter 11 concerning a covered finan-
cial corporation.’’. 
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(c) WHO MAY BE A DEBTOR.—Section 109 of title 11, 
United States Code, is amended— 
(1) in subsection (b)— 
(A) in paragraph (2), by striking ‘‘or’’ at 
the end; 
(B) in paragraph (3)(B), by striking the pe-
riod at the end and inserting ‘‘; or’’; and 
(C) by adding at the end the following: 
‘‘(4) a covered financial corporation.’’; and 
(2) in subsection (d)— 
(A) by striking ‘‘and’’ before ‘‘an uninsured 
State member bank’’; 
(B) by striking ‘‘or’’ before ‘‘a corporation’’; 
and 
(C) by inserting ‘‘, or a covered financial 
corporation’’ after ‘‘Federal Deposit Insurance 
Corporation Improvement Act of 1991’’. 
(d) CONVERSION TO CHAPTER 7.—Section 1112 of title 
11, United States Code, is amended by adding at the end 
the following: 
‘‘(g) Notwithstanding section 109(b), the court may 
convert a case under subchapter V to a case under chapter 
7 if— 
‘‘(1) a transfer approved under section 1185 has 
been consummated; 
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‘‘(2) the court has ordered the appointment of a 
special trustee under section 1186; and 
‘‘(3) the court finds, after notice and a hearing, 
that conversion is in the best interest of the creditors 
and the estate.’’. 
(e)(1) Section 726(a)(1) of title 11, United States 
Code, is amended by inserting after ‘‘first,’’ the following: 
‘‘in payment of any unpaid fees, costs, and expenses of a 
special trustee appointed under section 1186, and then’’. 
(2) Section 1129(a) of title 11, United States Code, 
is amended by inserting after paragraph (16) the following: 
‘‘(17) In a case under subchapter V, all payable 
fees, costs, and expenses of the special trustee have 
been paid or the plan provides for the payment of all 
such fees, costs, and expenses on the effective date of 
the plan. 
‘‘(18) In a case under subchapter V, confirma-
tion of the plan is not likely to cause serious adverse 
effects on financial stability in the United States.’’. 
(f) Section 322(b)(2) of title 11, United States Code, 
is amended by striking ‘‘The’’ and inserting ‘‘In cases under 
subchapter V, the United States trustee shall recommend to 
the court, and in all other cases, the’’. 
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SEC. 3. LIQUIDATION, REORGANIZATION, OR RECAPITAL-
IZATION OF A COVERED FINANCIAL COR-
PORATION. 
Chapter 11 of title 11, United States Code, is amended 
by adding at the end the following: 
‘‘SUBCHAPTER V—LIQUIDATION, REORGANIZA-
TION, OR RECAPITALIZATION OF A COVERED 
FINANCIAL CORPORATION 
‘‘§ 1181. Inapplicability of other sections 
‘‘Sections 303 and 321(c) do not apply in a case under 
this subchapter concerning a covered financial corporation. 
Section 365 does not apply to a transfer under section 1185, 
1187, or 1188. 
‘‘§ 1182. Definitions for this subchapter 
‘‘In this subchapter, the following definitions shall 
apply: 
‘‘(1) The term ‘Board’ means the Board of Gov-
ernors of the Federal Reserve System. 
‘‘(2) The term ‘bridge company’ means a newly 
formed corporation to which property of the estate 
may be transferred under section 1185(a) and the eq-
uity securities of which may be transferred to a spe-
cial trustee under section 1186(a). 
‘‘(3) The term ‘capital structure debt’ means all 
unsecured debt of the debtor for borrowed money for 
which the debtor is the primary obligor, other than a 
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qualified financial contract and other than debt se-
cured by a lien on property of the estate that is to 
be transferred to a bridge company pursuant to an 
order of the court under section 1185(a). 
‘‘(4) The term ‘contractual right’ means a con-
tractual right of a kind defined in section 555, 556, 
559, 560, or 561. 
‘‘(5) The term ‘qualified financial contract’ 
means any contract of a kind defined in paragraph 
(25), (38A), (47), or (53B) of section 101, section 
741(7), or paragraph (4), (5), (11), or (13) of section 
761. 
‘‘(6) The term ‘special trustee’ means the trustee 
of a trust formed under section 1186(a)(1). 
‘‘§ 1183. Commencement of a case concerning a cov-
ered financial corporation 
‘‘(a) A case under this subchapter concerning a covered 
financial corporation may be commenced by the filing of 
a petition with the court by the debtor under section 301 
only if the debtor states to the best of its knowledge under 
penalty of perjury in the petition that it is a covered finan-
cial corporation. 
‘‘(b) The commencement of a case under subsection (a) 
constitutes an order for relief under this subchapter. 
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‘‘(c) The members of the board of directors (or body 
performing similar functions) of a covered financial com-
pany shall have no liability to shareholders, creditors, or 
other parties in interest for a good faith filing of a petition 
to commence a case under this subchapter, or for any rea-
sonable action taken in good faith in contemplation of or 
in connection with such a petition or a transfer under sec-
tion 1185 or section 1186, whether prior to or after com-
mencement of the case. 
‘‘(d) Counsel to the debtor shall provide, to the greatest 
extent practicable without disclosing the identity of the po-
tential debtor, sufficient confidential notice to the chief 
judge of the court of appeals for the circuit embracing the 
district in which such counsel intends to file a petition to 
commence a case under this subchapter regarding the poten-
tial commencement of such case. The chief judge of such 
court shall randomly assign to preside over such case a 
bankruptcy judge selected from among the bankruptcy 
judges designated by the Chief Justice of the United States 
under section 298 of title 28. 
‘‘§ 1184. Regulators 
‘‘The Board, the Securities Exchange Commission, the 
Office of the Comptroller of the Currency of the Department 
of the Treasury, the Commodity Futures Trading Commis-
sion, and the Federal Deposit Insurance Corporation may 
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raise and may appear and be heard on any issue in any 
case or proceeding under this subchapter. 
‘‘§ 1185. Special transfer of property of the estate 
‘‘(a) On request of the trustee, and after notice and 
a hearing that shall occur not less than 24 hours after the 
order for relief, the court may order a transfer under this 
section of property of the estate, and the assignment of exec-
utory contracts, unexpired leases, and qualified financial 
contracts of the debtor, to a bridge company. Upon the entry 
of an order approving such transfer, any property trans-
ferred, and any executory contracts, unexpired leases, and 
qualified financial contracts assigned under such order 
shall no longer be property of the estate. Except as provided 
under this section, the provisions of section 363 shall apply 
to a transfer and assignment under this section. 
‘‘(b) Unless the court orders otherwise, notice of a re-
quest for an order under subsection (a) shall consist of elec-
tronic or telephonic notice of not less than 24 hours to— 
‘‘(1) the debtor; 
‘‘(2) the holders of the 20 largest secured claims 
against the debtor; 
‘‘(3) the holders of the 20 largest unsecured 
claims against the debtor; 
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‘‘(4) counterparties to any debt, executory con-
tract, unexpired lease, and qualified financial con-
tract requested to be transferred under this section; 
‘‘(5) the Board; 
‘‘(6) the Federal Deposit Insurance Corporation; 
‘‘(7) the Secretary of the Treasury and the Office 
of the Comptroller of the Currency of the Treasury; 
‘‘(8) the Commodity Futures Trading Commis-
sion; 
‘‘(9) the Securities and Exchange Commission; 
‘‘(10) the United States trustee or bankruptcy 
administrator; and 
‘‘(11) each primary financial regulatory agency, 
as defined in section 2(12) of the Dodd-Frank Wall 
Street Reform and Consumer Protection Act, with re-
spect to any affiliate the equity securities of which are 
proposed to be transferred under this section. 
‘‘(c) The court may not order a transfer under this 
section unless the court determines, based upon a prepon-
derance of the evidence, that— 
‘‘(1) the transfer under this section is necessary 
to prevent serious adverse effects on financial stability 
in the United States; 
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‘‘(2) the transfer does not provide for the as-
sumption of any capital structure debt by the bridge 
company; 
‘‘(3) the transfer does not provide for the transfer 
to the bridge company of any property of the estate 
that is subject to a lien securing a debt, executory 
contract, unexpired lease or agreement (including a 
qualified financial contract) of the debtor unless— 
‘‘(A)(i) the bridge company assumes such 
debt, executory contract, unexpired lease or 
agreement (including a qualified financial con-
tract), including any claims arising in respect 
thereof that would not be allowed secured claims 
under section 506(a)(1) and after giving effect to 
such transfer, such property remains subject to 
the lien securing such debt, executory contract, 
unexpired lease or agreement (including a quali-
fied financial contract); and 
‘‘(ii) the court has determined that assump-
tion of such debt, executory contract, unexpired 
lease or agreement (including a qualified finan-
cial contract) by the bridge company is in the 
best interests of the estate; or 
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‘‘(B) such property is being transferred to 
the bridge company in accordance with the pro-
visions of section 363; 
‘‘(4) the transfer does not provide for the as-
sumption by the bridge company of any debt, execu-
tory contract, unexpired lease or agreement (includ-
ing a qualified financial contract) of the debtor se-
cured by a lien on property of the estate unless the 
transfer provides for such property to be transferred 
to the bridge company in accordance with paragraph 
(3)(A) of this subsection; 
‘‘(5) the transfer does not provide for the transfer 
of the equity of the debtor; 
‘‘(6) the trustee has demonstrated that the bridge 
company is not likely to fail to meet the obligations 
of any debt, executory contract, qualified financial 
contract, or unexpired lease assumed and assigned to 
the bridge company; 
‘‘(7) the transfer provides for the transfer to a 
special trustee all of the equity securities in the bridge 
company and appointment of a special trustee in ac-
cordance with section 1186; 
‘‘(8) after giving effect to the transfer, adequate 
provision has been made for the fees, costs, and ex-
penses of the estate and special trustee; and 
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‘‘(9) the bridge company will have governing 
documents, and initial directors and senior officers, 
that are in the best interest of creditors and the estate. 
‘‘(d) Immediately before a transfer under this section, 
the bridge company that is the recipient of the transfer 
shall— 
‘‘(1) not have any property, executory contracts, 
unexpired leases, qualified financial contracts, or 
debts, other than any property acquired or executory 
contracts, unexpired leases, or debts assumed when 
acting as a transferee of a transfer under this section; 
and 
‘‘(2) have equity securities that are property of 
the estate, which may be sold or distributed in accord-
ance with this title. 
‘‘§ 1186. Special trustee 
‘‘(a)(1) An order approving a transfer under section 
1185 shall require the trustee to transfer to a qualified and 
independent special trustee, who is appointed by the court, 
all of the equity securities in the bridge company that is 
the recipient of a transfer under section 1185 to hold in 
trust for the sole benefit of the estate, subject to satisfaction 
of the special trustee’s fees, costs, and expenses. The trust 
of which the special trustee is the trustee shall be a newly 
formed trust governed by a trust agreement approved by 
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the court as in the best interests of the estate, and shall 
exist for the sole purpose of holding and administering, and 
shall be permitted to dispose of, the equity securities of the 
bridge company in accordance with the trust agreement. 
‘‘(2) In connection with the hearing to approve a 
transfer under section 1185, the trustee shall confirm to the 
court that the Board has been consulted regarding the iden-
tity of the proposed special trustee and advise the court of 
the results of such consultation. 
‘‘(b) The trust agreement governing the trust shall pro-
vide— 
‘‘(1) for the payment of the fees, costs, expenses, 
and indemnities of the special trustee from the assets 
of the debtor’s estate; 
‘‘(2) that the special trustee provide— 
‘‘(A) quarterly reporting to the estate, which 
shall be filed with the court; and 
‘‘(B) information about the bridge company 
reasonably requested by a party in interest to 
prepare a disclosure statement for a plan pro-
viding for distribution of any securities of the 
bridge company if such information is necessary 
to prepare such disclosure statement; 
‘‘(3) that for as long as the equity securities of 
the bridge company are held by the trust, the special 
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