200
attributable to any period of time occurring
after commencement of the case under this
title, as a result of a violation of Federal or
State law by the debtor, without regard to the
time of the occurrence of unlawful conduct on
which such award is based or to whether any
services were rendered, if the court determines
that payment of wages and benefits by reason
of the operation of this clause will not substan-
tially increase the probability of layoff or termi-
nation of current employees, or of nonpayment
of domestic support obligations, during the case
under this title;’’.
SEC. 330. DELAY OF DISCHARGE DURING PENDENCY OF
CERTAIN PROCEEDINGS.
(a) CHAPTER 7.—Section 727(a) of title 11, United
States Code, as amended by section 106, is amended—
(1) in paragraph (10), by striking ‘‘or’’ at the
end;
(2) in paragraph (11) by striking the period at
the end and inserting ‘‘; or’’; and
(3) by inserting after paragraph (11) the fol-
lowing:
‘‘(12) the court after notice and a hearing held
not more than 10 days before the date of the entry
201
of the order granting the discharge finds that there
is reasonable cause to believe that—
‘‘(A) section 522(q)(1) may be applicable
to the debtor; and
‘‘(B) there is pending any proceeding in
which the debtor may be found guilty of a fel-
ony 
of 
the 
kind 
described 
in 
section
522(q)(1)(A) or liable for a debt of the kind de-
scribed in section 522(q)(1)(B).’’.
(b) CHAPTER 11.—Section 1141(d) of title 11,
United States Code, as amended by section 321, is amend-
ed by adding at the end the following:
‘‘(C) unless after notice and a hearing held not
more than 10 days before the date of the entry of
the order granting the discharge, the court finds
that there is no reasonable cause to believe that—
‘‘(i) section 522(q)(1) may be applicable to
the debtor; and
‘‘(ii) there is pending any proceeding in
which the debtor may be found guilty of a fel-
ony 
of 
the 
kind 
described 
in 
section
522(q)(1)(A) or liable for a debt of the kind de-
scribed in section 522(q)(1)(B).’’.
(c) CHAPTER 12.—Section 1228 of title 11, United
States Code, is amended—
202
(1) in subsection (a) by striking ‘‘As’’ and in-
serting ‘‘Subject to subsection (d), as’’,
(2) in subsection (b) by striking ‘‘At’’ and in-
serting ‘‘Subject to subsection (d), at’’, and
(3) by adding at the end the following:
‘‘(f) The court may not grant a discharge under this
chapter unless the court after notice and a hearing held
not more than 10 days before the date of the entry of
the order granting the discharge finds that there is no rea-
sonable cause to believe that—
‘‘(1) section 522(q)(1) may be applicable to the
debtor; and
‘‘(2) there is pending any proceeding in which
the debtor may be found guilty of a felony of the
kind described in section 522(q)(1)(A) or liable for
a 
debt 
of 
the 
kind 
described 
in 
section
522(q)(1)(B).’’.
(d) CHAPTER 13.—Section 1328 of title 11, United
States Code, as amended by section 106, is amended—
(1) in subsection (a) by striking ‘‘As’’ and in-
serting ‘‘Subject to subsection (d), as’’,
(2) in subsection (b) by striking ‘‘At’’ and in-
serting ‘‘Subject to subsection (d), at’’, and
(3) by adding at the end the following:
203
‘‘(h) The court may not grant a discharge under this
chapter unless the court after notice and a hearing held
not more than 10 days before the date of the entry of
the order granting the discharge finds that there is no rea-
sonable cause to believe that—
‘‘(1) section 522(q)(1) may be applicable to the
debtor; and
‘‘(2) there is pending any proceeding in which
the debtor may be found guilty of a felony of the
kind described in section 522(q)(1)(A) or liable for
a 
debt 
of 
the 
kind 
described 
in 
section
522(q)(1)(B).’’.
TITLE IV—GENERAL AND SMALL
BUSINESS BANKRUPTCY PRO-
VISIONS
Subtitle A—General Business
Bankruptcy Provisions
SEC. 401. ADEQUATE PROTECTION FOR INVESTORS.
(a) DEFINITION.—Section 101 of title 11, United
States Code, is amended by inserting after paragraph (48)
the following:
‘‘(48A) ‘securities self regulatory organization’
means either a securities association registered with
the Securities and Exchange Commission under sec-
tion 15A of the Securities Exchange Act of 1934 or
204
a national securities exchange registered with the
Securities and Exchange Commission under section
6 of the Securities Exchange Act of 1934;’’.
(b) AUTOMATIC STAY.—Section 362(b) of title 11,
United States Code, as amended by sections 224, 303, and
311, is amended by inserting after paragraph (24) the fol-
lowing:
‘‘(25) under subsection (a), of—
‘‘(A) the commencement or continuation of
an investigation or action by a securities self
regulatory organization to enforce such organi-
zation’s regulatory power;
‘‘(B) the enforcement of an order or deci-
sion, other than for monetary sanctions, ob-
tained in an action by such securities self regu-
latory organization to enforce such organiza-
tion’s regulatory power; or
‘‘(C) any act taken by such securities self
regulatory organization to delist, delete, or
refuse to permit quotation of any stock that
does not meet applicable regulatory require-
ments;’’.
205
SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY
HOLDERS.
Section 341 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(e) Notwithstanding subsections (a) and (b), the
court, on the request of a party in interest and after notice
and a hearing, for cause may order that the United States
trustee not convene a meeting of creditors or equity secu-
rity holders if the debtor has filed a plan as to which the
debtor solicited acceptances prior to the commencement
of the case.’’.
SEC. 403. PROTECTION OF REFINANCE OF SECURITY IN-
TEREST.
Subparagraphs (A), (B), and (C) of section 547(e)(2)
of title 11, United States Code, are each amended by strik-
ing ‘‘10’’ each place it appears and inserting ‘‘30’’.
SEC. 
404. 
EXECUTORY 
CONTRACTS 
AND 
UNEXPIRED
LEASES.
(a) IN GENERAL.—Section 365(d)(4) of title 11,
United States Code, is amended to read as follows:
‘‘(4)(A) Subject to subparagraph (B), an unexpired
lease of nonresidential real property under which the debt-
or is the lessee shall be deemed rejected, and the trustee
shall immediately surrender that nonresidential real prop-
erty to the lessor, if the trustee does not assume or reject
the unexpired lease by the earlier of—
206
‘‘(i) the date that is 120 days after the date of
the order for relief; or
‘‘(ii) the date of the entry of an order con-
firming a plan.
‘‘(B)(i) The court may extend the period determined
under subparagraph (A), prior to the expiration of the
120-day period, for 90 days on the motion of the trustee
or lessor for cause.
‘‘(ii) If the court grants an extension under clause
(i), the court may grant a subsequent extension only upon
prior written consent of the lessor in each instance.’’.
(b) EXCEPTION.—Section 365(f)(1) of title 11,
United States Code, is amended by striking ‘‘subsection’’
the first place it appears and inserting ‘‘subsections (b)
and’’.
SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS
COMMITTEES.
(a) APPOINTMENT.—Section 1102(a) of title 11,
United States Code, is amended by adding at the end the
following:
‘‘(4) On request of a party in interest and after notice
and a hearing, the court may order the United States
trustee to change the membership of a committee ap-
pointed under this subsection, if the court determines that
the change is necessary to ensure adequate representation
207
of creditors or equity security holders. The court may
order the United States trustee to increase the number
of members of a committee to include a creditor that is
a small business concern (as described in section 3(a)(1)
of the Small Business Act), if the court determines that
the creditor holds claims (of the kind represented by the
committee) the aggregate amount of which, in comparison
to the annual gross revenue of that creditor, is dispropor-
tionately large.’’.
(b) INFORMATION.—Section 1102(b) of title 11,
United States Code, is amended by adding at the end the
following:
‘‘(3) A committee appointed under subsection (a)
shall—
‘‘(A) provide access to information for creditors
who—
‘‘(i) hold claims of the kind represented by
that committee; and
‘‘(ii) are not appointed to the committee;
‘‘(B) solicit and receive comments from the
creditors described in subparagraph (A); and
‘‘(C) be subject to a court order that compels
any additional report or disclosure to be made to the
creditors described in subparagraph (A).’’.
208
SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11,
UNITED STATES CODE.
Section 546 of title 11, United States Code, is
amended—
(1) by redesignating the second subsection (g)
(as added by section 222(a) of Public Law 103–394)
as subsection (h);
(2) in subsection (h), as so redesignated, by in-
serting ‘‘and subject to the prior rights of holders of
security interests in such goods or the proceeds of
such goods’’ after ‘‘consent of a creditor’’; and
(3) by adding at the end the following:
‘‘(i)(1) Notwithstanding paragraphs (2) and (3) of
section 545, the trustee may not avoid a warehouseman’s
lien for storage, transportation, or other costs incidental
to the storage and handling of goods.
‘‘(2) The prohibition under paragraph (1) shall be ap-
plied in a manner consistent with any State statute appli-
cable to such lien that is similar to section 7–209 of the
Uniform Commercial Code, as in effect on the date of en-
actment of the Bankruptcy Abuse Prevention and Con-
sumer Protection Act of 2003, or any successor to such
section 7–209.’’.
209
SEC. 407. AMENDMENTS TO SECTION 330(a) OF TITLE 11,
UNITED STATES CODE.
Section 330(a) of title 11, United States Code, is
amended—
(1) in paragraph (3)—
(A) by striking ‘‘(A) In’’ and inserting
‘‘In’’; and
(B) by inserting ‘‘to an examiner, trustee
under chapter 11, or professional person’’ after
‘‘awarded’’; and
(2) by adding at the end the following:
‘‘(7) In determining the amount of reasonable com-
pensation to be awarded to a trustee, the court shall treat
such compensation as a commission, based on section
326.’’.
SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION.
Section 1125 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(g) Notwithstanding subsection (b), an acceptance
or rejection of the plan may be solicited from a holder
of a claim or interest if such solicitation complies with ap-
plicable nonbankruptcy law and if such holder was solic-
ited before the commencement of the case in a manner
complying with applicable nonbankruptcy law.’’.
210
SEC. 409. PREFERENCES.
Section 547(c) of title 11, United States Code, is
amended—
(1) by striking paragraph (2) and inserting the
following:
‘‘(2) to the extent that such transfer was in
payment of a debt incurred by the debtor in the or-
dinary course of business or financial affairs of the
debtor and the transferee, and such transfer was—
‘‘(A) made in the ordinary course of busi-
ness or financial affairs of the debtor and the
transferee; or
‘‘(B) made according to ordinary business
terms;’’;
(2) in paragraph (8), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(9) if, in a case filed by a debtor whose debts
are not primarily consumer debts, the aggregate
value of all property that constitutes or is affected
by such transfer is less than $5,000.’’.
SEC. 410. VENUE OF CERTAIN PROCEEDINGS.
Section 1409(b) of title 28, United States Code, is
amended by inserting ‘‘, or a debt (excluding a consumer
debt) against a noninsider of less than $10,000,’’ after
‘‘$5,000’’.
211
SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11.
Section 1121(d) of title 11, United States Code, is
amended—
(1) by striking ‘‘On’’ and inserting ‘‘(1) Subject
to paragraph (2), on’’; and
(2) by adding at the end the following:
‘‘(2)(A) The 120-day period specified in paragraph
(1) may not be extended beyond a date that is 18 months
after the date of the order for relief under this chapter.
‘‘(B) The 180-day period specified in paragraph (1)
may not be extended beyond a date that is 20 months after
the date of the order for relief under this chapter.’’.
SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP IN-
TERESTS.
Section 523(a)(16) of title 11, United States Code,
is amended—
(1) by striking ‘‘dwelling’’ the first place it ap-
pears;
(2) by striking ‘‘ownership or’’ and inserting
‘‘ownership,’’;
(3) by striking ‘‘housing’’ the first place it ap-
pears; and
(4) by striking ‘‘but only’’ and all that follows
through ‘‘such period,’’ and inserting ‘‘or a lot in a
homeowners association, for as long as the debtor or
the trustee has a legal, equitable, or possessory own-
212
ership interest in such unit, such corporation, or
such lot,’’.
SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING
OF CREDITORS.
Section 341(c) of title 11, United States Code, is
amended by inserting at the end the following: ‘‘Notwith-
standing any local court rule, provision of a State constitu-
tion, any other Federal or State law that is not a bank-
ruptcy law, or other requirement that representation at
the meeting of creditors under subsection (a) be by an at-
torney, a creditor holding a consumer debt or any rep-
resentative of the creditor (which may include an entity
or an employee of an entity and may be a representative
for more than 1 creditor) shall be permitted to appear at
and participate in the meeting of creditors in a case under
chapter 7 or 13, either alone or in conjunction with an
attorney for the creditor. Nothing in this subsection shall
be construed to require any creditor to be represented by
an attorney at any meeting of creditors.’’.
SEC. 414. DEFINITION OF DISINTERESTED PERSON.
Section 101(14) of title 11, United States Code, is
amended to read as follows:
‘‘(14) ‘disinterested person’ means a person
that—
213
‘‘(A) is not a creditor, an equity security
holder, or an insider;
‘‘(B) is not and was not, within 2 years be-
fore the date of the filing of the petition, a di-
rector, officer, or employee of the debtor; and
‘‘(C) does not have an interest materially
adverse to the interest of the estate or of any
class of creditors or equity security holders, by
reason of any direct or indirect relationship to,
connection with, or interest in, the debtor, or
for any other reason;’’.
SEC. 415. FACTORS FOR COMPENSATION OF PROFES-
SIONAL PERSONS.
Section 330(a)(3) of title 11, United States Code, is
amended—
(1) in subparagraph (D), by striking ‘‘and’’ at
the end;
(2) by redesignating subparagraph (E) as sub-
paragraph (F); and
(3) by inserting after subparagraph (D) the fol-
lowing:
‘‘(E) with respect to a professional person,
whether the person is board certified or otherwise
has demonstrated skill and experience in the bank-
ruptcy field; and’’.
214
SEC. 416. APPOINTMENT OF ELECTED TRUSTEE.
Section 1104(b) of title 11, United States Code, is
amended—
(1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and
(2) by adding at the end the following:
‘‘(2)(A) If an eligible, disinterested trustee is elected
at a meeting of creditors under paragraph (1), the United
States trustee shall file a report certifying that election.
‘‘(B) Upon the filing of a report under subparagraph
(A)—
‘‘(i) the trustee elected under paragraph (1)
shall be considered to have been selected and ap-
pointed for purposes of this section; and
‘‘(ii) the service of any trustee appointed under
subsection (d) shall terminate.
‘‘(C) The court shall resolve any dispute arising out
of an election described in subparagraph (A).’’.
SEC. 417. UTILITY SERVICE.
Section 366 of title 11, United States Code, is
amended—
(1) in subsection (a), by striking ‘‘subsection
(b)’’ and inserting ‘‘subsections (b) and (c)’’; and
(2) by adding at the end the following:
‘‘(c)(1)(A) For purposes of this subsection, the term
‘assurance of payment’ means—
‘‘(i) a cash deposit;
215
‘‘(ii) a letter of credit;
‘‘(iii) a certificate of deposit;
‘‘(iv) a surety bond;
‘‘(v) a prepayment of utility consumption; or
‘‘(vi) another form of security that is mutually
agreed on between the utility and the debtor or the
trustee.
‘‘(B) For purposes of this subsection an administra-
tive expense priority shall not constitute an assurance of
payment.
‘‘(2) Subject to paragraphs (3) and (4), with respect
to a case filed under chapter 11, a utility referred to in
subsection (a) may alter, refuse, or discontinue utility
service, if during the 30-day period beginning on the date
of the filing of the petition, the utility does not receive
from the debtor or the trustee adequate assurance of pay-
ment for utility service that is satisfactory to the utility.
‘‘(3)(A) On request of a party in interest and after
notice and a hearing, the court may order modification
of the amount of an assurance of payment under para-
graph (2).
‘‘(B) In making a determination under this para-
graph whether an assurance of payment is adequate, the
court may not consider—
216
‘‘(i) the absence of security before the date of
the filing of the petition;
‘‘(ii) the payment by the debtor of charges for
utility service in a timely manner before the date of
the filing of the petition; or
‘‘(iii) the availability of an administrative ex-
pense priority.
‘‘(4) Notwithstanding any other provision of law, with
respect to a case subject to this subsection, a utility may
recover or set off against a security deposit provided to
the utility by the debtor before the date of the filing of
the petition without notice or order of the court.’’.
SEC. 418. BANKRUPTCY FEES.
Section 1930 of title 28, United States Code, is
amended—
(1) in subsection (a), by striking ‘‘Notwith-
standing section 1915 of this title, the’’ and insert-
ing ‘‘The’’; and
(2) by adding at the end the following:
‘‘(f)(1) Under the procedures prescribed by the Judi-
cial Conference of the United States, the district court or
the bankruptcy court may waive the filing fee in a case
under chapter 7 of title 11 for an individual if the court
determines that such individual has income less than 150
percent of the income official poverty line (as defined by
217
the Office of Management and Budget, and revised annu-
ally in accordance with section 673(2) of the Omnibus
Budget Reconciliation Act of 1981) applicable to a family
of the size involved and is unable to pay that fee in install-
ments. For purposes of this paragraph, the term ‘filing
fee’ means the filing required by subsection (a), or any
other fee prescribed by the Judicial Conference under sub-
sections (b) and (c) that is payable to the clerk upon the
commencement of a case under chapter 7.
‘‘(2) The district court or the bankruptcy court may
waive for such debtors other fees prescribed under sub-
sections (b) and (c).
‘‘(3) This subsection does not restrict the district
court or the bankruptcy court from waiving, in accordance
with Judicial Conference policy, fees prescribed under this
section for other debtors and creditors.’’.
SEC. 419. MORE COMPLETE INFORMATION REGARDING AS-
SETS OF THE ESTATE.
(a) IN GENERAL.—
(1) DISCLOSURE.—The Judicial Conference of
the United States, in accordance with section 2075
of title 28 of the United States Code and after con-
sideration of the views of the Director of the Execu-
tive Office for United States Trustees, shall propose
amended Federal Rules of Bankruptcy Procedure
218
and in accordance with rule 9009 of the Federal
Rules of Bankruptcy Procedure shall prescribe offi-
cial bankruptcy forms directing debtors under chap-
ter 11 of title 11 of United States Code, to disclose
the information described in paragraph (2) by filing
and serving periodic financial and other reports de-
signed to provide such information.
(2) INFORMATION.—The information referred
to in paragraph (1) is the value, operations, and
profitability of any closely held corporation, partner-
ship, or of any other entity in which the debtor holds
a substantial or controlling interest.
(b) PURPOSE.—The purpose of the rules and reports
under subsection (a) shall be to assist parties in interest
taking steps to ensure that the debtor’s interest in any
entity referred to in subsection (a)(2) is used for the pay-
ment of allowed claims against debtor.
Subtitle B—Small Business
Bankruptcy Provisions
SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT
AND PLAN.
Section 1125 of title 11, United States Code, is
amended—
(1) in subsection (a)(1), by inserting before the
semicolon ‘‘and in determining whether a disclosure
219
statement provides adequate information, the court
shall consider the complexity of the case, the benefit
of additional information to creditors and other par-
ties in interest, and the cost of providing additional
information’’; and
(2) by striking subsection (f), and inserting the
following:
‘‘(f) Notwithstanding subsection (b), in a small busi-
ness case—
‘‘(1) the court may determine that the plan
itself provides adequate information and that a sepa-
rate disclosure statement is not necessary;
‘‘(2) the court may approve a disclosure state-
ment submitted on standard forms approved by the
court or adopted under section 2075 of title 28; and
‘‘(3)(A) the court may conditionally approve a
disclosure statement subject to final approval after
notice and a hearing;
‘‘(B) acceptances and rejections of a plan may
be solicited based on a conditionally approved disclo-
sure statement if the debtor provides adequate infor-
mation to each holder of a claim or interest that is
solicited, but a conditionally approved disclosure
statement shall be mailed not later than 25 days be-
220
fore the date of the hearing on confirmation of the
plan; and
‘‘(C) the hearing on the disclosure statement
may be combined with the hearing on confirmation
of a plan.’’.
SEC. 432. DEFINITIONS.
(a) DEFINITIONS.—Section 101 of title 11, United
States Code, is amended by striking paragraph (51C) and
inserting the following:
‘‘(51C) ‘small business case’ means a case filed
under chapter 11 of this title in which the debtor is
a small business debtor;
‘‘(51D) ‘small business debtor’—
‘‘(A) subject to subparagraph (B), means a
person engaged in commercial or business ac-
tivities (including any affiliate of such person
that is also a debtor under this title and exclud-
ing a person whose primary activity is the busi-
ness of owning or operating real property or ac-
tivities incidental thereto) that has aggregate
noncontingent liquidated secured and unsecured
debts as of the date of the petition or the date
of the order for relief in an amount not more
than $2,000,000 (excluding debts owed to 1 or
more affiliates or insiders) for a case in which
221
the United States trustee has not appointed
under section 1102(a)(1) a committee of unse-
cured creditors or where the court has deter-
mined that the committee of unsecured credi-
tors is not sufficiently active and representative
to provide effective oversight of the debtor; and
‘‘(B) does not include any member of a
group of affiliated debtors that has aggregate
noncontingent liquidated secured and unsecured
debts in an amount greater than $2,000,000
(excluding debt owed to 1 or more affiliates or
insiders);’’.
(b) CONFORMING AMENDMENT.—Section 1102(a)(3)
of title 11, United States Code, is amended by inserting
‘‘debtor’’ after ‘‘small business’’.
(c) ADJUSTMENT OF DOLLAR AMOUNTS.—Section
104(b) of title 11, United States Code, as amended by
section 226, is amended by inserting ‘‘101(51D),’’ after
‘‘101(3),’’ each place it appears.
SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND
PLAN.
Within a reasonable period of time after the date of
enactment of this Act, the Judicial Conference of the
United States shall prescribe in accordance with rule 9009
of the Federal Rules of Bankruptcy Procedure official
222
standard form disclosure statements and plans of reorga-
nization for small business debtors (as defined in section
101 of title 11, United States Code, as amended by this
Act), designed to achieve a practical balance between—
(1) the reasonable needs of the courts, the
United States trustee, creditors, and other parties in
interest for reasonably complete information; and
(2) economy and simplicity for debtors.
SEC. 434. UNIFORM NATIONAL REPORTING REQUIRE-
MENTS.
(a) REPORTING REQUIRED.—
(1) IN GENERAL.—Chapter 3 of title 11, United
States Code, is amended by inserting after section
307 the following:
‘‘§ 308. Debtor reporting requirements
‘‘(a) For purposes of this section, the term ‘profit-
ability’ means, with respect to a debtor, the amount of
money that the debtor has earned or lost during current
and recent fiscal periods.
‘‘(b) A small business debtor shall file periodic finan-
cial and other reports containing information including—
‘‘(1) the debtor’s profitability;
‘‘(2) reasonable approximations of the debtor’s
projected cash receipts and cash disbursements over
a reasonable period;
223
‘‘(3) comparisons of actual cash receipts and
disbursements with projections in prior reports;
‘‘(4)(A) whether the debtor is—
‘‘(i) in compliance in all material respects
with postpetition requirements imposed by this
title and the Federal Rules of Bankruptcy Pro-
cedure; and
‘‘(ii) timely filing tax returns and other re-
quired government filings and paying taxes and
other administrative expenses when due;
‘‘(B) if the debtor is not in compliance with the
requirements referred to in subparagraph (A)(i) or
filing tax returns and other required government fil-
ings and making the payments referred to in sub-
paragraph (A)(ii), what the failures are and how, at
what cost, and when the debtor intends to remedy
such failures; and
‘‘(C) such other matters as are in the best in-
terests of the debtor and creditors, and in the public
interest in fair and efficient procedures under chap-
ter 11 of this title.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 3 of title 11, United States Code,
is amended by inserting after the item relating to
section 307 the following:
‘‘308. Debtor reporting requirements.’’.
224
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect 60 days after the date on
which rules are prescribed under section 2075 of title 28,
United States Code, to establish forms to be used to com-
ply with section 308 of title 11, United States Code, as
added by subsection (a).
SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR
SMALL BUSINESS CASES.
(a) PROPOSAL OF RULES AND FORMS.—The Judicial
Conference of the United States shall propose in accord-
ance with section 2073 of title 28 of the United States
Code amended Federal Rules of Bankruptcy Procedure,
and shall prescribe in accordance with rule 9009 of the
Federal Rules of Bankruptcy Procedure official bank-
ruptcy forms, directing small business debtors to file peri-
odic financial and other reports containing information,
including information relating to—
(1) the debtor’s profitability;
(2) the debtor’s cash receipts and disburse-
ments; and
(3) whether the debtor is timely filing tax re-
turns and paying taxes and other administrative ex-
penses when due.
225
(b) PURPOSE.—The rules and forms proposed under
subsection (a) shall be designed to achieve a practical
balance among—
(1) the reasonable needs of the bankruptcy
court, the United States trustee, creditors, and other
parties in interest for reasonably complete informa-
tion;
(2) a small business debtor’s interest that re-
quired reports be easy and inexpensive to complete;
and
(3) the interest of all parties that the required
reports help such debtor to understand such debtor’s
financial condition and plan the such debtor’s fu-
ture.
SEC. 436. DUTIES IN SMALL BUSINESS CASES.
(a) DUTIES IN CHAPTER 11 CASES.—Subchapter I
of chapter 11 of title 11, United States Code, as amended
by section 321, is amended by adding at the end the fol-
lowing:
‘‘§ 1116. Duties of trustee or debtor in possession in
small business cases
‘‘In a small business case, a trustee or the debtor in
possession, in addition to the duties provided in this title
and as otherwise required by law, shall—
226
‘‘(1) append to the voluntary petition or, in an
involuntary case, file not later than 7 days after the
date of the order for relief—
‘‘(A) its most recent balance sheet, state-
ment of operations, cash-flow statement, Fed-
eral income tax return; or
‘‘(B) a statement made under penalty of
perjury that no balance sheet, statement of op-
erations, or cash-flow statement has been pre-
pared and no Federal tax return has been filed;
‘‘(2) attend, through its senior management
personnel and counsel, meetings scheduled by the
court or the United States trustee, including initial
debtor interviews, scheduling conferences, and meet-
ings of creditors convened under section 341 unless
the court, after notice and a hearing, waives that re-
quirement upon a finding of extraordinary and com-
pelling circumstances;
‘‘(3) timely file all schedules and statements of
financial affairs, unless the court, after notice and a
hearing, grants an extension, which shall not extend
such time period to a date later than 30 days after
the date of the order for relief, absent extraordinary
and compelling circumstances;
227
‘‘(4) file all postpetition financial and other re-
ports required by the Federal Rules of Bankruptcy
Procedure or by local rule of the district court;
‘‘(5) subject to section 363(c)(2), maintain in-
surance customary and appropriate to the industry;
‘‘(6)(A) timely file tax returns and other re-
quired government filings; and
‘‘(B) subject to section 363(c)(2), timely pay all
taxes entitled to administrative expense priority ex-
cept those being contested by appropriate pro-
ceedings being diligently prosecuted; and
‘‘(7) allow the United States trustee, or a des-
ignated representative of the United States trustee,
to inspect the debtor’s business premises, books, and
records at reasonable times, after reasonable prior
written notice, unless notice is waived by the debt-
or.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 11 of title 11, United States Code, as amended
by section 321, is amended by inserting after the item re-
lating to section 1115 the following:
‘‘1116. Duties of trustee or debtor in possession in small business cases.’’.
SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES.
Section 1121 of title 11, United States Code, is
amended by striking subsection (e) and inserting the fol-
lowing:
228
‘‘(e) In a small business case—
‘‘(1) only the debtor may file a plan until after
180 days after the date of the order for relief, unless
that period is—
‘‘(A) extended as provided by this sub-
section, after notice and a hearing; or
‘‘(B) the court, for cause, orders otherwise;
‘‘(2) the plan and a disclosure statement (if
any) shall be filed not later than 300 days after the
date of the order for relief; and
‘‘(3) the time periods specified in paragraphs
(1) and (2), and the time fixed in section 1129(e)
within which the plan shall be confirmed, may be ex-
tended only if—
‘‘(A) the debtor, after providing notice to
parties in interest (including the United States
trustee), demonstrates by a preponderance of
the evidence that it is more likely than not that
the court will confirm a plan within a reason-
able period of time;
‘‘(B) a new deadline is imposed at the time
the extension is granted; and
‘‘(C) the order extending time is signed be-
fore the existing deadline has expired.’’.
229
SEC. 438. PLAN CONFIRMATION DEADLINE.
Section 1129 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(e) In a small business case, the court shall confirm
a plan that complies with the applicable provisions of this
title and that is filed in accordance with section 1121(e)
not later than 45 days after the plan is filed unless the
time for confirmation is extended in accordance with sec-
tion 1121(e)(3).’’.
SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE.
Section 586(a) of title 28, United States Code, is
amended—
(1) in paragraph (3)—
(A) in subparagraph (G), by striking
‘‘and’’ at the end;
(B) by redesignating subparagraph (H) as
subparagraph (I); and
(C) by inserting after subparagraph (G)
the following:
‘‘(H) in small business cases (as defined in
section 101 of title 11), performing the addi-
tional duties specified in title 11 pertaining to
such cases; and’’;
(2) in paragraph (5), by striking ‘‘and’’ at the
end;
230
(3) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(4) by adding at the end the following:
‘‘(7) in each of such small business cases—
‘‘(A) conduct an initial debtor interview as
soon as practicable after the date of the order
for relief but before the first meeting scheduled
under section 341(a) of title 11, at which time
the United States trustee shall—
‘‘(i) begin to investigate the debtor’s
viability;
‘‘(ii) inquire about the debtor’s busi-
ness plan;
‘‘(iii) explain the debtor’s obligations
to file monthly operating reports and other
required reports;
‘‘(iv) attempt to develop an agreed
scheduling order; and
‘‘(v) inform the debtor of other obliga-
tions;
‘‘(B) if determined to be appropriate and
advisable, visit the appropriate business prem-
ises of the debtor, ascertain the state of the
debtor’s books and records, and verify that the
debtor has filed its tax returns; and
231
‘‘(C) review and monitor diligently the
debtor’s activities, to identify as promptly as
possible whether the debtor will be unable to
confirm a plan; and
‘‘(8) in any case in which the United States
trustee finds material grounds for any relief under
section 1112 of title 11, the United States trustee
shall apply promptly after making that finding to
the court for relief.’’.
SEC. 440. SCHEDULING CONFERENCES.
Section 105(d) of title 11, United States Code, is
amended—
(1) in the matter preceding paragraph (1), by
striking ‘‘, may’’; and
(2) by striking paragraph (1) and inserting the
following:
‘‘(1) shall hold such status conferences as are
necessary to further the expeditious and economical
resolution of the case; and’’.
SEC. 441. SERIAL FILER PROVISIONS.
Section 362 of title 11, United States Code, as
amended by sections 106, 305, and 311, is amended—
(1) in subsection (k), as so redesignated by sec-
tion 305—
232
(A) by striking ‘‘An’’ and inserting ‘‘(1)
Except as provided in paragraph (2), an’’; and
(B) by adding at the end the following:
‘‘(2) If such violation is based on an action taken by
an entity in the good faith belief that subsection (h) ap-
plies to the debtor, the recovery under paragraph (1) of
this subsection against such entity shall be limited to ac-
tual damages.’’; and
(2) by adding at the end the following:
‘‘(n)(1) Except as provided in paragraph (2), sub-
section (a) does not apply in a case in which the debtor—
‘‘(A) is a debtor in a small business case pend-
ing at the time the petition is filed;
‘‘(B) was a debtor in a small business case that
was dismissed for any reason by an order that be-
came final in the 2-year period ending on the date
of the order for relief entered with respect to the pe-
tition;
‘‘(C) was a debtor in a small business case in
which a plan was confirmed in the 2-year period
ending on the date of the order for relief entered
with respect to the petition; or
‘‘(D) is an entity that has acquired substan-
tially all of the assets or business of a small business
debtor described in subparagraph (A), (B), or (C),
233
unless such entity establishes by a preponderance of
the evidence that such entity acquired substantially
all of the assets or business of such small business
debtor in good faith and not for the purpose of evad-
ing this paragraph.
‘‘(2) Paragraph (1) does not apply—
‘‘(A) to an involuntary case involving no collu-
sion by the debtor with creditors; or
‘‘(B) to the filing of a petition if—
‘‘(i) the debtor proves by a preponderance
of the evidence that the filing of the petition re-
sulted from circumstances beyond the control of
the debtor not foreseeable at the time the case
then pending was filed; and
‘‘(ii) it is more likely than not that the
court will confirm a feasible plan, but not a liq-
uidating plan, within a reasonable period of
time.’’.
SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CON-
VERSION AND APPOINTMENT OF TRUSTEE.
(a) EXPANDED GROUNDS FOR DISMISSAL OR CON-
VERSION.—Section 1112 of title 11, United States Code,
is amended by striking subsection (b) and inserting the
following:
234
‘‘(b)(1) Except as provided in paragraph (2) of this
subsection, subsection (c) of this section, and section
1104(a)(3), on request of a party in interest, and after
notice and a hearing, absent unusual circumstances spe-
cifically identified by the court that establish that the re-
quested conversion or dismissal is not in the best interests
of creditors and the estate, the court shall convert a case
under this chapter to a case under chapter 7 or dismiss
a case under this chapter, whichever is in the best inter-
ests of creditors and the estate, if the movant establishes
cause.
‘‘(2) The relief provided in paragraph (1) shall not
be granted absent unusual circumstances specifically iden-
tified by the court that establish that such relief is not
in the best interests of creditors and the estate, if the
debtor or another party in interest objects and establishes
that—
‘‘(A) there is a reasonable likelihood that a plan
will be confirmed within the timeframes established
in sections 1121(e) and 1129(e) of this title, or if
such sections do not apply, within a reasonable pe-
riod of time; and
‘‘(B) the grounds for granting such relief in-
clude an act or omission of the debtor other than
under paragraph (4)(A)—
235
‘‘(i) for which there exists a reasonable
justification for the act or omission; and
‘‘(ii) that will be cured within a reasonable
period of time fixed by the court.
‘‘(3) The court shall commence the hearing on a mo-
tion under this subsection not later than 30 days after
filing of the motion, and shall decide the motion not later
than 15 days after commencement of such hearing, unless
the movant expressly consents to a continuance for a spe-
cific period of time or compelling circumstances prevent
the court from meeting the time limits established by this
paragraph.
‘‘(4) For purposes of this subsection, the term ‘cause’
includes—
‘‘(A) substantial or continuing loss to or dimi-
nution of the estate and the absence of a reasonable
likelihood of rehabilitation;
‘‘(B) gross mismanagement of the estate;
‘‘(C) failure to maintain appropriate insurance
that poses a risk to the estate or to the public;
‘‘(D) unauthorized use of cash collateral sub-
stantially harmful to 1 or more creditors;
‘‘(E) failure to comply with an order of the
court;
236
‘‘(F) unexcused failure to satisfy timely any fil-
ing or reporting requirement established by this title
or by any rule applicable to a case under this chap-
ter;
‘‘(G) failure to attend the meeting of creditors
convened under section 341(a) or an examination or-
dered under rule 2004 of the Federal Rules of
Bankruptcy Procedure without good cause shown by
the debtor;
‘‘(H) failure timely to provide information or
attend meetings reasonably requested by the United
States trustee (or the bankruptcy administrator, if
any);
‘‘(I) failure timely to pay taxes owed after the
date of the order for relief or to file tax returns due
after the date of the order for relief;
‘‘(J) failure to file a disclosure statement, or to
file or confirm a plan, within the time fixed by this
title or by order of the court;
‘‘(K) failure to pay any fees or charges required
under chapter 123 of title 28;
‘‘(L) revocation of an order of confirmation
under section 1144;
‘‘(M) inability to effectuate substantial con-
summation of a confirmed plan;
237
‘‘(N) material default by the debtor with re-
spect to a confirmed plan;
‘‘(O) termination of a confirmed plan by reason
of the occurrence of a condition specified in the plan;
and
‘‘(P) failure of the debtor to pay any domestic
support obligation that first becomes payable after
the date of the filing of the petition.
‘‘(5) The court shall commence the hearing on a mo-
tion under this subsection not later than 30 days after
filing of the motion, and shall decide the motion not later
than 15 days after commencement of such hearing, unless
the movant expressly consents to a continuance for a spe-
cific period of time or compelling circumstances prevent
the court from meeting the time limits established by this
paragraph.’’.
(b) ADDITIONAL GROUNDS FOR APPOINTMENT OF
TRUSTEE.—Section 1104(a) of title 11, United States
Code, is amended—
(1) in paragraph (1), by striking ‘‘or’’ at the
end;
(2) in paragraph (2), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
238
‘‘(3) if grounds exist to convert or dismiss the
case under section 1112, but the court determines
that the appointment of a trustee or an examiner is
in the best interests of creditors and the estate.’’.
SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED
STATES CODE, WITH RESPECT TO SMALL
BUSINESSES.
Not later than 2 years after the date of enactment
of this Act, the Administrator of the Small Business Ad-
ministration, in consultation with the Attorney General,
the Director of the Executive Office for United States
Trustees, and the Director of the Administrative Office
of the United States Courts, shall—
(1) conduct a study to determine—
(A) the internal and external factors that
cause small businesses, especially sole propri-
etorships, to become debtors in cases under title
11, United States Code, and that cause certain
small businesses to successfully complete cases
under chapter 11 of such title; and
(B) how Federal laws relating to bank-
ruptcy may be made more effective and efficient
in assisting small businesses to remain viable;
and
239
(2) submit to the President pro tempore of the
Senate and the Speaker of the House of Representa-
tives a report summarizing that study.
SEC. 444. PAYMENT OF INTEREST.
Section 362(d)(3) of title 11, United States Code, is
amended—
(1) by inserting ‘‘or 30 days after the court de-
termines that the debtor is subject to this para-
graph, whichever is later’’ after ‘‘90-day period)’’;
and
(2) by striking subparagraph (B) and inserting
the following:
‘‘(B) the debtor has commenced monthly
payments that—
‘‘(i) may, in the debtor’s sole discre-
tion, notwithstanding section 363(c)(2), be
made from rents or other income generated
before or after the commencement of the
case by or from the property to each cred-
itor whose claim is secured by such real es-
tate (other than a claim secured by a judg-
ment lien or by an unmatured statutory
lien); and
‘‘(ii) are in an amount equal to inter-
est at the then applicable nondefault con-
240
tract rate of interest on the value of the
creditor’s interest in the real estate; or’’.
SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES.
Section 503(b) of title 11, United States Code, is
amended—
(1) in paragraph (5), by striking ‘‘and’’ at the
end;
(2) in paragraph (6), by striking the period at
the end and inserting a semicolon; and
(3) by adding at the end the following:
‘‘(7) with respect to a nonresidential real prop-
erty lease previously assumed under section 365,
and subsequently rejected, a sum equal to all mone-
tary obligations due, excluding those arising from or
relating to a failure to operate or a penalty provi-
sion, for the period of 2 years following the later of
the rejection date or the date of actual turnover of
the premises, without reduction or setoff for any
reason whatsoever except for sums actually received
or to be received from an entity other than the debt-
or, and the claim for remaining sums due for the
balance of the term of the lease shall be a claim
under section 502(b)(6);’’.
241
SEC. 446. DUTIES WITH RESPECT TO A DEBTOR WHO IS A
PLAN ADMINISTRATOR OF AN EMPLOYEE
BENEFIT PLAN.
(a) IN GENERAL.—Section 521(a) of title 11, United
States Code, as amended by sections 106 and 304, is
amended—
(1) in paragraph (5), by striking ‘‘and’’ at the
end;
(2) in paragraph (6), by striking the period at
the end and inserting ‘‘; and’’; and
(3) by adding after paragraph (6) the following:
‘‘(7) unless a trustee is serving in the case, con-
tinue to perform the obligations required of the ad-
ministrator (as defined in section 3 of the Employee
Retirement Income Security Act of 1974) of an em-
ployee benefit plan if at the time of the commence-
ment of the case the debtor (or any entity des-
ignated by the debtor) served as such adminis-
trator.’’.
(b) DUTIES OF TRUSTEES.—Section 704(a) of title
11, United States Code, as amended by sections 102 and
219, is amended—
(1) in paragraph (10), by striking ‘‘and’’ at the
end; and
(2) by adding at the end the following:
271
(1) IN GENERAL.—Subchapter I of chapter 13
of title 11, United States Code, is amended by add-
ing at the end the following:
‘‘§ 1308. Filing of prepetition tax returns
‘‘(a) Not later than the day before the date on which
the meeting of the creditors is first scheduled to be held
under section 341(a), if the debtor was required to file
a tax return under applicable nonbankruptcy law, the
debtor shall file with appropriate tax authorities all tax
returns for all taxable periods ending during the 4-year
period ending on the date of the filing of the petition.
‘‘(b)(1) Subject to paragraph (2), if the tax returns
required by subsection (a) have not been filed by the date
on which the meeting of creditors is first scheduled to be
held under section 341(a), the trustee may hold open that
meeting for a reasonable period of time to allow the debtor
an additional period of time to file any unfiled returns,
but such additional period of time shall not extend
beyond—
‘‘(A) for any return that is past due as of the
date of the filing of the petition, the date that is 120
days after the date of that meeting; or
‘‘(B) for any return that is not past due as of
the date of the filing of the petition, the later of—
404
(2) in the first sentence, by striking ‘‘liquida-
tion’’ and inserting ‘‘liquidation, termination, or ac-
celeration’’.
(h) TERMINATION OR ACCELERATION OF COMMOD-
ITIES OR FORWARD CONTRACTS.—Section 556 of title 11,
United States Code, is amended—
(1) by amending the section heading to read as
follows:
‘‘§ 556. Contractual right to liquidate, terminate, or
accelerate a commodities contract or for-
ward contract’’;
(2) in the first sentence, by striking ‘‘liquida-
tion’’ and inserting ‘‘liquidation, termination, or ac-
celeration’’; and
(3) in the second sentence, by striking ‘‘As
used’’ and all that follows through ‘‘right,’’ and in-
serting ‘‘As used in this section, the term ‘contrac-
tual right’ includes a right set forth in a rule or
bylaw of a derivatives clearing organization (as de-
fined in the Commodity Exchange Act), a multilat-
eral clearing organization (as defined in the Federal
Deposit Insurance Corporation Improvement Act of
1991), a national securities exchange, a national se-
curities association, a securities clearing agency, a
contract market designated under the Commodity