H.L.C.
SUSPEND THE RULES AND PASS THE BILL (H.R. 5116),
WITH AN AMENDMENT
[Note: The amendment inserts an entirely new text.]
103D CONGRESS
2D SESSION
H. R. 5116
IN THE HOUSE OF REPRESENTATIVES
Mr. BROOKS (for himself, Mr. FISH, and Mr. SYNAR) introduced the following
bill; 
which 
was 
referred 
to 
the 
Committee 
on
lllllllllllllll
A BILL
To amend title 11 of the United States Code.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Bankruptcy Reform Act of 1994’’.
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(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.
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. Impairment of claims and interests.
Sec. 214. Protection of security interest in post-petition rents and lodging pay-
ments.
Sec. 215. Amendment to definition of swap agreement.
Sec. 216. Limitation on avoiding powers.
Sec. 217. Small businesses.
Sec. 218. Single asset real estate.
Sec. 219. Leases of personal property.
Sec. 220. Exemption for small business investment companies.
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Sec. 221. Payment of taxes with borrowed funds.
Sec. 222. Return of goods.
Sec. 223. Proceeds of money order agreements.
Sec. 224. Trustee duties; professional fees.
Sec. 225. Notices to creditors.
TITLE III—CONSUMER BANKRUPTCY ISSUES
Sec. 301. Period for curing default relating to principal residence.
Sec. 302. Nondischargeability of fine under chapter 13.
Sec. 303. Impairment of exemptions.
Sec. 304. Protection of child support and alimony.
Sec. 305. Interest on interest.
Sec. 306. Exception to discharge.
Sec. 307. Payments under chapter 13.
Sec. 308. Bankruptcy petition preparers.
Sec. 309. Fairness to condominium and cooperative owners.
Sec. 310. Nonavoidability of fixing of lien on tools and implements of trade, ani-
mals, and crops.
Sec. 311. Conversion of case under chapter 13.
Sec. 312. Bankruptcy fraud.
Sec. 313. Protection against discriminatory treatment of applications for student
loans.
TITLE IV—GOVERNMENTAL BANKRUPTCY ISSUES
Sec. 401. Exception from automatic stay for post-petition property taxes.
Sec. 402. Municipal bankruptcy.
TITLE V—TECHNICAL CORRECTIONS
Sec. 501. Amendments to bankruptcy definitions, necessitated by enactment of
Public Law 101–647.
Sec. 502. Title 28 of the United States Code.
TITLE VI—BANKRUPTCY REVIEW COMMISSION
Sec. 601. Short title.
Sec. 602. Establishment.
Sec. 603. Duties of the commission.
Sec. 604. Membership.
Sec. 605. Compensation of the commission.
Sec. 606. Staff of commission; experts and consultants.
Sec. 607. Powers of the commission.
Sec. 608. Report.
Sec. 609. Termination.
Sec. 610. Authorization of appropriations.
TITLE VII—SEVERABILITY; EFFECTIVE DATE; APPLICATION OF
AMENDMENTS.
Sec. 701. Severability.
Sec. 702. Effective date; application of amendments.
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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 or reduc-
ing the time periods referred to in section 1121 of
such title; and
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‘‘(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,
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(C) in subparagraph (B)—
(i) by inserting ‘‘such agreement’’ after
‘‘(B)’’, and
(ii) by adding ‘‘and’’ at the end, and
(3) by adding at the end the following:
‘‘(C) the attorney fully advised the debtor of
the legal effect and consequences of—
‘‘(i) an agreement of the kind specified
in this subsection; and
‘‘(ii) any default under such an agree-
ment;’’.
(b) EFFECT OF DISCHARGE.—The third sentence of
section 524(d) of title 11, United States Code, is amended
in the matter preceding paragraph (1) by inserting ‘‘and
was not represented by an attorney during the course of
negotiating such agreement’’ after ‘‘this section’’.
SEC. 104. POWERS OF BANKRUPTCY COURTS.
(a) STATUS CONFERENCES.—Section 105 of title 11,
United States Code, is amended by adding at the end the
following:
‘‘(d) The court, on its own motion or on the request
of a party in interest, may—
‘‘(1) hold a status conference regarding any case
or proceeding under this title after notice to the par-
ties in interest; and
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‘‘(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;
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‘‘(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),
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(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-
H.L.C.
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
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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
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(2) in subsections (d) and (e) by inserting ‘‘or
2075’’ after ‘‘2072’’ each place it appears.
(f) EFFECTIVE DATE OF BANKRUPTCY RULES.—The
third undesignated paragraph of section 2075 of title 28,
United States Code, is amended to read as follows:
‘‘The Supreme Court shall transmit to Congress not
later than May 1 of the year in which a rule prescribed
under this section is to become effective a copy of the pro-
posed rule. The rule shall take effect no earlier than Decem-
ber 1 of the year in which it is transmitted to Congress
unless otherwise provided by law.’’.
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-
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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—
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‘‘(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—
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(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)—
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(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
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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
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‘‘(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:
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‘‘(F) a member of a committee appointed
under section 1102 of this title, if such expenses
are incurred in the performance of the duties of
such committee;’’.
SEC. 111. SUPPLEMENTAL INJUNCTIONS.
(a) SUPPLEMENTAL INJUNCTIONS.—Section 524 of
title 11, United States Code, is amended by adding at the
end the following:
‘‘(g)(1)(A) After notice and hearing, a court that enters
an order confirming a plan of reorganization under chapter
11 may issue, in connection with such order, an injunction
in accordance with this subsection to supplement the in-
junctive effect of a discharge under this section.
‘‘(B) An injunction may be issued under subparagraph
(A) to enjoin entities from taking legal action for the pur-
pose of directly or indirectly collecting, recovering, or re-
ceiving payment or recovery with respect to any claim or
demand that, under a plan of reorganization, is to be paid
in whole or in part by a trust described in paragraph
(2)(B)(i), except such legal actions as are expressly allowed
by the injunction, the confirmation order, or the plan of
reorganization.
‘‘(2)(A) Subject to subsection (h), if the requirements
of subparagraph (B) are met at the time an injunction de-
scribed in paragraph (1) is entered, then after entry of such
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injunction, any proceeding that involves the validity, appli-
cation, construction, or modification of such injunction, or
of this subsection with respect to such injunction, may be
commenced only in the district court in which such 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
such plan and by the obligation of such debtor
or debtors to make future payments, including
dividends;
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‘‘(III) is to own, or by the exercise of rights
granted under such plan would be entitled to
own if specified contingencies occur, a majority
of the voting shares of—
‘‘(aa) each such debtor;
‘‘(bb) the parent corporation of each
such debtor; or
‘‘(cc) a subsidiary of each such debtor
that is also a debtor; and
‘‘(IV) is to use its assets or income to pay
claims and demands; and
‘‘(ii) subject to subsection (h), the court deter-
mines that—
‘‘(I) the debtor is likely to be subject to sub-
stantial future demands for payment arising out
of the same or similar conduct or events that
gave rise to the claims that are addressed by the
injunction;
‘‘(II) the actual amounts, numbers, and
timing of such future demands cannot be deter-
mined;
‘‘(III) pursuit of such demands outside the
procedures prescribed by such plan is likely to
threaten the plan’s purpose to deal equitably
with claims and future demands;
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‘‘(IV) as part of the process of seeking con-
firmation of such plan—
‘‘(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), are set out in such plan and
in any disclosure statement supporting the
plan; and
‘‘(bb) a separate class or classes of the
claimants whose claims are to be addressed
by a trust described in clause (i) is estab-
lished and votes, by at least 75 percent of
those voting, in favor of the plan; and
‘‘(V) subject to subsection (h), pursuant to
court orders or otherwise, the trust will operate
through mechanisms such as structured, periodic,
or supplemental payments, pro rata distribu-
tions, matrices, or periodic review of estimates of
the numbers and values of present claims and fu-
ture demands, or other comparable mechanisms,
that provide reasonable assurance that the trust
will value, and be in a financial position to pay,
present claims and future demands that involve
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similar claims in substantially the same man-
ner.
‘‘(3)(A) If the requirements of paragraph (2)(B) are
met and the order confirming the plan of reorganization
was issued or affirmed by the district court that has juris-
diction over the reorganization case, then after the time for
appeal of the order that issues or affirms the plan—
‘‘(i) the injunction shall be valid and enforceable
and may not be revoked or modified by any court ex-
cept through appeal in accordance with paragraph
(6);
‘‘(ii) no entity that pursuant to such plan or
thereafter becomes a direct or indirect transferee of, or
successor to any assets of, a debtor or trust that is the
subject of the injunction shall be liable with respect to
any claim or demand made against such entity by
reason of its becoming such a transferee or successor;
and
‘‘(iii) no entity that pursuant to such plan or
thereafter makes a loan to such a debtor or trust or
to such a successor or transferee shall, by reason of
making the loan, be liable with respect to any claim
or demand made against such entity, nor shall any
pledge of assets made in connection with such a loan
be upset or impaired for that reason;
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‘‘(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, necessarily be liable to any entity by
reason of any of the acts described in subparagraph
(A);
‘‘(ii) relieve any such entity of the duty to 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
described in paragraph (1) shall be valid and enforceable
against all entities that it addresses.
‘‘(ii) Notwithstanding the provisions of section 524(e),
such an injunction may bar any action directed against
a third party who is identifiable from the terms of such
injunction (by name or as part of an identifiable group)
and is alleged to be directly or indirectly liable for the con-
duct of, claims against, or demands on the debtor to the
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extent such alleged liability of such third party arises by
reason of—
‘‘(I) the third party’s ownership of a financial
interest in the debtor, a past or present affiliate of the
debtor, or a predecessor in interest of the debtor;
‘‘(II) the third party’s involvement in the man-
agement of the debtor or a predecessor in interest of
the debtor, or service as an officer, director or em-
ployee of the debtor or a related party;
‘‘(III) the third party’s provision of insurance to
the debtor or a related party; or
‘‘(IV) the third party’s involvement in a trans-
action changing the corporate structure, or in a loan
or other financial transaction affecting the financial
condition, of the debtor or a related party, including
but not limited to—
‘‘(aa) involvement in providing financing
(debt or equity), or advice to an entity involved
in such a transaction; or
‘‘(bb) acquiring or selling a financial inter-
est in an entity as part of such a transaction.
‘‘(iii) As used in this subparagraph, the term ‘related
party’ means—
‘‘(I) a past or present affiliate of the debtor;
‘‘(II) a predecessor in interest of the debtor; or
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‘‘(III) any entity that owned a financial interest
in—
‘‘(aa) the debtor;
‘‘(bb) a past or present affiliate of the debt-
or; or
‘‘(cc) a predecessor in interest of the debtor.
‘‘(B) Subject to subsection (h), if, under a plan of reor-
ganization, a kind of demand described in such plan is to
be paid in whole or in part by a trust described in para-
graph (2)(B)(i) in connection with which an injunction de-
scribed in paragraph (1) is to be implemented, then such
injunction shall be valid and enforceable with respect to a
demand of such kind made, after such plan is confirmed,
against the debtor or debtors involved, or against a third
party described in subparagraph (A)(ii), if—
‘‘(i) as part of the proceedings leading to issu-
ance of such injunction, the court appoints a legal
representative for the purpose of protecting the rights
of persons that might subsequently assert demands of
such kind, and
‘‘(ii) the court determines, before entering the
order confirming such plan, that identifying such
debtor or debtors, or such third party (by name or as
part of an identifiable group), in such injunction
with respect to such demands for purposes of this sub-