158
other document that contains a photograph of the
debtor; and
‘‘(2) such other personal identifying information
relating to the debtor that establishes the identity of
the debtor.’’.
SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED-
ULES OR PROVIDE REQUIRED INFORMATION.
Section 521 of title 11, United States Code, as
amended by this Act, is amended by adding at the end
the following:
‘‘(j)(1) Notwithstanding section 707(a), and subject
to paragraph (2), if an individual debtor in a voluntary
case under chapter 7 or 13 fails to file all of the informa-
tion required under subsection (a)(1) within 45 days after
the filing of the petition commencing the case, the case
shall be automatically dismissed effective on the 46th day
after the filing of the petition.
‘‘(2) With respect to a case described in paragraph
(1), any party in interest may request the court to enter
an order dismissing the case. If requested, the court shall
enter an order of dismissal not later than 5 days after
such request.
‘‘(3) Upon request of the debtor made within 45 days
after the filing of the petition commencing a case de-
scribed in paragraph (1), the court may allow the debtor
159
an additional period of not to exceed 45 days to file the
information required under subsection (a)(1) if the court
finds justification for extending the period for the filing.’’.
SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON
CONFIRMATION OF THE PLAN.
Section 1324 of title 11, United States Code, is
amended—
(1) by striking ‘‘After’’ and inserting the fol-
lowing:
‘‘(a) Except as provided in subsection (b) and after’’;
and
(2) by adding at the end the following:
‘‘(b) The hearing on confirmation of the plan may
be held not earlier than 20 days and not later than 45
days after the date of the meeting of creditors under sec-
tion 341(a).’’.
SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION
IN CERTAIN CASES.
Title 11, United States Code, is amended—
(1) by amending section 1322(d) to read as fol-
lows:
‘‘(d)(1) If the current monthly income of the debtor
and the debtor’s spouse combined, when multiplied by 12,
is not less than—
160
‘‘(A) in the case of a debtor in a household of
1 person, the median family income of the applicable
State for 1 earner last reported by the Bureau of
the Census;
‘‘(B) in the case of a debtor in a household of
2, 3, or 4 individuals, the highest median family in-
come of the applicable State for a family of the same
number or fewer individuals last reported by the Bu-
reau of the Census; or
‘‘(C) in the case of a debtor in a household ex-
ceeding 4 individuals, the highest median family in-
come of the applicable State for a family of 4 or
fewer individuals last reported by the Bureau of the
Census, plus $525 per month for each individual in
excess of 4,
the plan may not provide for payments over a period that
is longer than 5 years.
‘‘(2) If the current monthly income of the debtor and
the debtor’s spouse combined, when multiplied by 12, is
less than—
‘‘(A) in the case of a debtor in a household of
1 person, the median family income of the applicable
State for 1 earner last reported by the Bureau of
the Census;
161
‘‘(B) in the case of a debtor in a household of
2, 3, or 4 individuals, the highest median family in-
come of the applicable State for a family of the same
number or fewer individuals last reported by the Bu-
reau of the Census; or
‘‘(C) in the case of a debtor in a household ex-
ceeding 4 individuals, the highest median family in-
come of the applicable State for a family of 4 or
fewer individuals last reported by the Bureau of the
Census, plus $525 per month for each individual in
excess of 4,
the plan may not provide for payments over a period that
is longer than 3 years, unless the court, for cause, ap-
proves a longer period, but the court may not approve a
period that is longer than 5 years.’’;
(2) in section 1325(b)(1)(B), by striking
‘‘three-year period’’ and inserting ‘‘applicable com-
mitment period’’; and
(3) in section 1325(b), as amended by this Act,
by adding at the end the following:
‘‘(4) For purposes of this subsection, the ‘applicable
commitment period’—
‘‘(A) subject to subparagraph (B), shall be—
‘‘(i) 3 years; or
162
‘‘(ii) not less than 5 years, if the current
monthly income of the debtor and the debtor’s
spouse combined, when multiplied by 12, is not
less than—
‘‘(I) in the case of a debtor in a
household of 1 person, the median family
income of the applicable State for 1 earner
last reported by the Bureau of the Census;
‘‘(II) in the case of a debtor in a
household of 2, 3, or 4 individuals, the
highest median family income of the appli-
cable State for a family of the same num-
ber or fewer individuals last reported by
the Bureau of the Census; or
‘‘(III) in the case of a debtor in a
household exceeding 4 individuals, the
highest median family income of the appli-
cable State for a family of 4 or fewer indi-
viduals last reported by the Bureau of the
Census, plus $525 per month for each in-
dividual in excess of 4; and
‘‘(B) may be less than 3 or 5 years, whichever
is applicable under subparagraph (A), but only if the
plan provides for payment in full of all allowed unse-
cured claims over a shorter period.’’; and
163
(4) in section 1329(c), by striking ‘‘three
years’’ and inserting ‘‘the applicable commitment pe-
riod under section 1325(b)(1)(B)’’.
SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF
RULE 9011 OF THE FEDERAL RULES OF BANK-
RUPTCY PROCEDURE.
It is the sense of Congress that rule 9011 of the Fed-
eral Rules of Bankruptcy Procedure (11 U.S.C. App.)
should be modified to include a requirement that all docu-
ments (including schedules), signed and unsigned, sub-
mitted to the court or to a trustee by debtors who rep-
resent themselves and debtors who are represented by an
attorney be submitted only after the debtor or the debtor’s
attorney has made reasonable inquiry to verify that the
information contained in such documents is—
(1) well grounded in fact; and
(2) warranted by existing law or a good-faith
argument for the extension, modification, or reversal
of existing law.
SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL
CASES.
Section 362(e) of title 11, United States Code, is
amended—
(1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and
(2) by adding at the end the following:
164
‘‘(2) Notwithstanding paragraph (1), in a case under
chapter 7, 11, or 13 in which the debtor is an individual,
the stay under subsection (a) shall terminate on the date
that is 60 days after a request is made by a party in inter-
est under subsection (d), unless—
‘‘(A) a final decision is rendered by the court
during the 60-day period beginning on the date of
the request; or
‘‘(B) that 60-day period is extended—
‘‘(i) by agreement of all parties in interest;
or
‘‘(ii) by the court for such specific period
of time as the court finds is required for good
cause, as described in findings made by the
court.’’.
SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS.
(a) PROPERTY OF THE ESTATE.—
(1) IN GENERAL.—Subchapter I of chapter 11
of title 11, United States Code, is amended by add-
ing at the end the following:
‘‘§ 1115. Property of the estate
‘‘(a) In a case in which the debtor is an individual,
property of the estate includes, in addition to the property
specified in section 541—
165
‘‘(1) all property of the kind specified in section
541 that the debtor acquires after the commence-
ment of the case but before the case is closed, dis-
missed, or converted to a case under chapter 7, 12,
or 13, whichever occurs first; and
‘‘(2) earnings from services performed by the
debtor after the commencement of the case but be-
fore the case is closed, dismissed, or converted to a
case under chapter 7, 12, or 13, whichever occurs
first.’’.
‘‘(b) Except as provided in section 1104 or a con-
firmed plan or order confirming a plan, the debtor shall
remain in possession of all property of the estate.’’.
(2) CLERICAL AMENDMENT.—The table of sec-
tions for chapter 11 of title 11, United States Code,
is amended by adding at the end of the matter relat-
ing to subchapter I the following:
‘‘1115. Property of the estate.’’.
(b) CONTENTS OF PLAN.—Section 1123(a) of title
11, United States Code, is amended—
(1) in paragraph (6), by striking ‘‘and’’ at the
end;
(2) in paragraph (7), by striking the period and
inserting ‘‘; and’’; and
(3) by adding at the end the following:
166
‘‘(8) in a case concerning an individual, provide
for the payment to creditors through the plan of all
or such portion of earnings from personal services
performed by the debtor after the commencement of
the case or other future income of the debtor as is
necessary for the execution of the plan.’’.
(c) CONFIRMATION OF PLAN.—
(1) REQUIREMENTS RELATING TO VALUE OF
PROPERTY.—Section 1129(a) of title 11, United
States Code, is amended by adding at the end the
following:
‘‘(15) In a case concerning an individual in
which the holder of an allowed unsecured claim ob-
jects to the confirmation of the plan—
‘‘(A) the value of the property to be dis-
tributed under the plan on account of such
claim is, as of the effective date of the plan, not
less than the amount of such claim; or
‘‘(B) the value of the property to be dis-
tributed under the plan is not less than the
debtor’s projected disposable income (as that
term is defined in section 1325(b)(2)) to be re-
ceived during the 5-year period beginning on
the date that the first payment is due under the
167
plan, or during the term of the plan, whichever
is longer.’’.
(2) REQUIREMENT RELATING TO INTERESTS IN
PROPERTY.—Section 1129(b)(2)(B)(ii) of title 11,
United States Code, is amended by inserting before
the period at the end the following: ‘‘, except that
in a case concerning an individual, the debtor may
retain property included in the estate under section
1115, subject to the requirements of subsection
(a)(14)’’.
(d) EFFECT OF CONFIRMATION—Section 1141(d) of
title 11, United States Code, is amended—
(1) in paragraph (2), by striking ‘‘The con-
firmation of a plan does not discharge an individual
debtor’’ and inserting ‘‘A discharge under this chap-
ter does not discharge a debtor’’; and
(2) by adding at the end the following:
‘‘(5) In a case concerning an individual—
‘‘(A) except as otherwise ordered for cause
shown, the discharge is not effective until completion
of all payments under the plan; and
‘‘(B) at any time after the confirmation of the
plan and after notice and a hearing, the court may
grant a discharge to a debtor that has not completed
payments under the plan only if—
168
‘‘(i) for each allowed unsecured claim, the
value, as of the effective date of the plan, of
property actually distributed under the plan on
account of that claim is not less than the
amount that would have been paid on such
claim if the estate of the debtor had been liq-
uidated under chapter 7 of this title on such
date; and
‘‘(ii) modification of the plan under 1127
of this title is not practicable.’’.
(e) MODIFICATION OF PLAN.—Section 1127 of title
11, United States Code, is amended by adding at the end
the following:
‘‘(e) In a case concerning an individual, the plan may
be modified at any time after confirmation of the plan but
before the completion of payments under the plan, whether
or not the plan has been substantially consummated, upon
request of the debtor, the trustee, the United States trust-
ee, or the holder of an allowed unsecured claim, to—
‘‘(1) increase or reduce the amount of payments
on claims of a particular class provided for by the
plan;
‘‘(2) extend or reduce the time period for such
payments; or
169
‘‘(3) alter the amount of the distribution to a
creditor whose claim is provided for by the plan to
the extent necessary to take account of any payment
of such claim made other than under the plan.
‘‘(f)(1) Sections 1121 through 1128 of this title and
the requirements of section 1129 of this title apply to any
modification under subsection (a).
‘‘(2) The plan, as modified, shall become the plan
only after there has been disclosure under section 1125,
as the court may direct, notice and a hearing, and such
modification is approved.’’.
SEC. 322. LIMITATION.
(a) EXEMPTIONS.—Section 522 of title 11, United
States Code, as amended by this Act, is amended by add-
ing at the end the following:
‘‘(p)(1) Except as provided in paragraph (2) of this
subsection and sections 544 and 548 of this title, as a
result of electing under subsection (b)(3)(A) to exempt
property under State or local law, a debtor may not ex-
empt any amount of interest that was acquired by the
debtor during the 2-year period preceding the filing of the
petition which exceeds in the aggregate $100,000 in value
in—
‘‘(A) real or personal property that the debtor
or a dependent of the debtor uses as a residence;
170
‘‘(B) a cooperative that owns property that the
debtor or a dependent of the debtor uses as a resi-
dence; or
‘‘(C) a burial plot for the debtor or a dependent
of the debtor.
‘‘(2)(A) The limitation under paragraph (1) shall not
apply to an exemption claimed under subsection (b)(3)(A)
by a family farmer for the principal residence of that
farmer.
‘‘(B) For purposes of paragraph (1), any amount of
such interest does not include any interest transferred
from a debtor’s previous principal residence (which was
acquired prior to the beginning of the 2-year period) into
the debtor’s current principal residence, where the debt-
or’s previous and current residences are located in the
same State.’’.
(b) ADJUSTMENT OF DOLLAR AMOUNTS.—Section
104(b) of title 11, United States Code, is amended—
(1) in paragraph (1), by striking ‘‘522(d),’’ and
inserting ‘‘522(d), 522(n), 522(p),’’; and
(2) in paragraph (2), by striking ‘‘522(d),’’ and
inserting ‘‘522(d), 522(n), 522(p),’’.
171
SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICI-
PANT CONTRIBUTIONS AND OTHER PROP-
ERTY FROM THE ESTATE.
(a) IN GENERAL.—Section 541(b) of title 11, United
States Code, is amended by inserting after paragraph (6),
as added by this Act, the following:
‘‘(7) any amount—
‘‘(A) withheld by an employer from the
wages of employees for payment as contribu-
tions to—
‘‘(i) an employee benefit plan subject
to title I of the Employee Retirement In-
come Security Act of 1974 or under an
employee benefit plan which is a govern-
mental plan under section 414(d) of the
Internal Revenue Code of 1986, a deferred
compensation plan under section 457 of
the Internal Revenue Code of 1986, or a
tax-deferred annuity under section 403(b)
of the Internal Revenue Code of 1986, ex-
cept that such amount under this clause
shall not constitute disposable income, as
defined in section 1325(b)(2) of this title;
or
172
‘‘(ii) a health insurance plan regulated
by State law whether or not subject to
such title; or
‘‘(B) received by the employer from em-
ployees for payment as contributions to—
‘‘(i) an employee benefit plan subject
to title I of the Employee Retirement In-
come Security Act of 1974 or under an
employee benefit plan which is a govern-
mental plan under section 414(d) of the
Internal Revenue Code of 1986, a deferred
compensation plan under section 457 of
the Internal Revenue Code of 1986, or a
tax-deferred annuity under section 403(b)
of the Internal Revenue Code of 1986, ex-
cept that such amount under this clause
shall not constitute disposable income, as
defined in section 1325(b)(2) of this title;
or
‘‘(ii) a health insurance plan regulated
by State law whether or not subject to
such title;’’.
(b) APPLICATION
OF AMENDMENT.—The amend-
ments made by this section shall not apply to cases com-
menced under title 11, United States Code, before the ex-
173
piration of the 180-day period beginning on the date of
enactment of this Act.
SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLV-
ING BANKRUPTCY PROFESSIONALS.
(a) IN GENERAL.—Section 1334 of title 28, United
States Code, is amended—
(1) in subsection (b), by striking ‘‘Notwith-
standing’’ and inserting ‘‘Except as provided in sub-
section (e)(2), and notwithstanding’’; and
(2) by striking subsection (e) and inserting the
following:
‘‘(e) The district court in which a case under title
11 is commenced or is pending shall have exclusive
jurisdiction—
‘‘(1) of all the property, wherever located, of the
debtor as of the date of commencement of such case,
and of property of the estate; and
‘‘(2) over all claims or causes of action that in-
volve construction of section 327 of title 11, United
States Code, or rules relating to disclosure require-
ments under section 327.’’.
(b) APPLICABILITY.—This section shall only apply to
cases filed after the date of enactment of this Act.
174
SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE
INCREASE.
(a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE
11, UNITED STATES CODE.—Section 1930(a) of title 28,
United States Code, is amended by striking paragraph (1)
and inserting the following:
‘‘(1) For a case commenced—
‘‘(A) under chapter 7 of title 11, $160; or
‘‘(B) under chapter 13 of title 11, $150.’’.
(b) UNITED STATES TRUSTEE SYSTEM FUND.—Sec-
tion 589a(b) of title 28, United States Code, is amended—
(1) by striking paragraph (1) and inserting the
following:
‘‘(1)(A) 40.63 percent of the fees collected
under section 1930(a)(1)(A) of this title in cases
commenced under chapter 7 of title 11; and
‘‘(B) 70.00 percent of the fees collected under
section 1930(a)(1)(B) of this title in cases com-
menced under chapter 13 of title 11;’’;
(2) in paragraph (2), by striking ‘‘one-half’’
and inserting ‘‘three-fourths’’; and
(3) in paragraph (4), by striking ‘‘one-half’’
and inserting ‘‘100 percent’’.
(c) COLLECTION AND DEPOSIT OF MISCELLANEOUS
BANKRUPTCY FEES.—Section 406(b) of the Judiciary Ap-
propriations Act, 1990 (28 U.S.C. 1931 note) is amended
175
by striking ‘‘pursuant to 28 U.S.C. section 1930(b) and
33.87 per centum of the fees hereafter collected under 28
U.S.C. section 1930(a)(1) and 25 percent of the fees here-
after collected under 28 U.S.C. section 1930(a)(3) shall
be deposited as offsetting receipts to the fund established
under 28 U.S.C. section 1931’’ and inserting ‘‘under sec-
tion 1930(b) of title 28, United States Code, and 31.25
percent of the fees collected under section 1930(a)(1)(A)
of that title, 30.00 percent of the fees collected under sec-
tion 1930(a)(1)(B) of that title, and 25 percent of the fees
collected under section 1930(a)(3) of that title shall be
deposited as offsetting receipts to the fund established
under section 1931 of that title’’.
SEC. 326. SHARING OF COMPENSATION.
Section 504 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(c) This section shall not apply with respect to shar-
ing, or agreeing to share, compensation with a bona fide
public service attorney referral program that operates in
accordance with non-Federal law regulating attorney re-
ferral services and with rules of professional responsibility
applicable to attorney acceptance of referrals.’’.
SEC. 327. FAIR VALUATION OF COLLATERAL.
Section 506(a) of title 11, United States Code, is
amended by—
176
(1) inserting ‘‘(1)’’ after ‘‘(a)’’; and
(2) by adding at the end the following:
‘‘(2) In the case of an individual debtor under chap-
ters 7 and 13, such value with respect to personal property
securing an allowed claim shall be determined based on
the replacement value of such property as of the date of
filing the petition without deduction for costs of sale or
marketing. With respect to property acquired for personal,
family, or household purpose, replacement value shall
mean the price a retail merchant would charge for prop-
erty of that kind considering the age and condition of the
property at the time value is determined.’’.
SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGA-
TIONS.
(a) EXECUTORY
CONTRACTS
AND
UNEXPIRED
LEASES.—Section 365 of title 11, United States Code, is
amended—
(1) in subsection (b)—
(A) in paragraph (1)(A), by striking the
semicolon at the end and inserting the fol-
lowing: ‘‘other than a default that is a breach
of a provision relating to the satisfaction of any
provision (other than a penalty rate or penalty
provision) relating to a default arising from any
failure to perform nonmonetary obligations
177
under an unexpired lease of real property, if it
is impossible for the trustee to cure such de-
fault by performing nonmonetary acts at and
after the time of assumption, except that if
such default arises from a failure to operate in
accordance with a nonresidential real property
lease, then such default shall be cured by per-
formance at and after the time of assumption
in accordance with such lease, and pecuniary
losses resulting from such default shall be com-
pensated in accordance with the provisions of
paragraph (b)(1);’’; and
(B) in paragraph (2)(D), by striking ‘‘pen-
alty rate or provision’’ and inserting ‘‘penalty
rate or penalty provision’’;
(2) in subsection (c)—
(A) in paragraph (2), by inserting ‘‘or’’ at
the end;
(B) in paragraph (3), by striking ‘‘; or’’ at
the end and inserting a period; and
(C) by striking paragraph (4);
(3) in subsection (d)—
(A) by striking paragraphs (5) through
(9); and
178
(B) by redesignating paragraph (10) as
paragraph (5); and
(4) in subsection (f)(1) by striking ‘‘; except
that’’ and all that follows through the end of the
paragraph and inserting a period.
(b) IMPAIRMENT OF CLAIMS OR INTERESTS.—Sec-
tion 1124(2) of title 11, United States Code, is
amended—
(1) in subparagraph (A), by inserting ‘‘or of a
kind that section 365(b)(2) of this title expressly
does not require to be cured’’ before the semicolon
at the end;
(2) in subparagraph (C), by striking ‘‘and’’ at
the end;
(3) by redesignating subparagraph (D) as sub-
paragraph (E); and
(4) by inserting after subparagraph (C) the fol-
lowing:
‘‘(D) if such claim or such interest arises
from any failure to perform a nonmonetary ob-
ligation, other than a default arising from fail-
ure to operate a non-residential real property
lease subject to section 365(b)(1)(A), com-
pensates the holder of such claim or such inter-
est (other than the debtor or an insider) for any
179
actual pecuniary loss incurred by such holder as
a result of such failure; and’’.
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, as amended by this Act, is amended by in-
serting 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
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, is amended by inserting after para-
graph (25), as added by this Act, the following:
‘‘(26) under subsection (a), of—
‘‘(A) the commencement or continuation of
an investigation or action by a securities self
180
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 the securities self regu-
latory organization to enforce such organiza-
tion’s regulatory power; or
‘‘(C) any act taken by the securities self
regulatory organization to delist, delete, or
refuse to permit quotation of any stock that
does not meet applicable regulatory require-
ments;’’.
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.’’.
181
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), in any case
under any chapter of this title, an unexpired lease of non-
residential real property under which the debtor is the les-
see shall be deemed rejected, and the trustee shall imme-
diately surrender that nonresidential real property to the
lessor, if the trustee does not assume or reject the unex-
pired lease by the earlier of—
‘‘(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 upon motion of the trustee
or lessor for cause.
182
‘‘(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
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 (15 U.S.C. 632(a)(1))), if the
court determines that the creditor holds claims (of the
kind represented by the committee) the aggregate amount
183
of which, in comparison to the annual gross revenue of
that creditor, is disproportionately 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).’’.
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 des-
ignated as subsection (g) (as added by section
222(a) of Public Law 103–394) as subsection (h);
and
184
(2) 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 applicable State
statute that is similar to section 7–209 of the Uniform
Commercial Code, as in effect on the date of enactment
of the Bankruptcy Abuse Prevention and Consumer Pro-
tection Act of 2001, or any successor thereto.’’.
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
185
such compensation as a commission, based on section 326
of this title.’’.
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.’’.
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;’’;
186
(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 nonconsumer debt against
a noninsider of less than $10,000,’’ after ‘‘$5,000’’.
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.’’.
187
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-
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
188
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—
‘‘(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;’’.
189
SEC. 415. FACTORS FOR COMPENSATION OF PROFES-
SIONAL PERSONS.
Section 330(a)(3) of title 11, United States Code, as
amended by this Act, 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’’.
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)—
190
‘‘(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) In the case of any dispute arising out of an elec-
tion described in subparagraph (A), the court shall resolve
the dispute.’’.
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;
‘‘(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.
191
‘‘(B) For purposes of this subsection an administra-
tive expense priority shall not constitute an assurance of
payment.
‘‘(2) Subject to paragraphs (3) through (5), with re-
spect to a case filed under chapter 11, a utility referred
to in subsection (a) may alter, refuse, or discontinue util-
ity service, if during the 30-day period beginning on the
date of 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—
‘‘(i) the absence of security before the date of
filing of the petition;
‘‘(ii) the payment by the debtor of charges for
utility service in a timely manner before the date of
filing of the petition; or
‘‘(iii) the availability of an administrative ex-
pense priority.
192
‘‘(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 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 debtor has income less than 150 per-
cent of the income official poverty line (as defined by the
Office of Management and Budget, and revised annually
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 installments.
For purposes of this paragraph, the term ‘filing fee’ means
the filing required by subsection (a), or any other fee pre-
scribed by the Judicial Conference under subsections (b)
193
and (c) that is payable to the clerk upon the commence-
ment 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 Advisory Committee on
Bankruptcy Rules of the Judicial Conference of the
United States, after consideration of the views of the
Director of the Executive Office for United States
Trustees, shall propose for adoption amended Fed-
eral Rules of Bankruptcy Procedure and Official
Bankruptcy Forms directing debtors under chapter
11 of title 11, United States Code, to disclose the
information described in paragraph (2) by filing and
serving periodic financial and other reports designed
to provide such information.
(2) INFORMATION.—The information referred
to in paragraph (1) is the value, operations, and
194
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
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—
195
‘‘(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 20 days be-
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, as amended by this Act, is amended by strik-
ing paragraph (51C) and inserting the following:
196
‘‘(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 unse-
cured debts as of the date of the petition or the
order for relief in an amount not more than
$3,000,000 (excluding debts owed to 1 or more
affiliates or insiders) for a case in which the
United States trustee has not appointed under
section 1102(a)(1) a committee of unsecured
creditors or where the court has determined
that the committee of unsecured creditors 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
197
debts in an amount greater than $3,000,000
(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’’.
SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND
PLAN.
Within a reasonable period of time after the date of
enactment of this Act, the Advisory Committee on Bank-
ruptcy Rules of the Judicial Conference of the United
States shall propose for adoption standard form disclosure
statements and plans of reorganization 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.—
198
(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;
‘‘(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;
199
‘‘(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.’’.
(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 Advi-
sory Committee on Bankruptcy Rules of the Judicial Con-
200
ference of the United States shall propose for adoption
amended Federal Rules of Bankruptcy Procedure and Of-
ficial Bankruptcy Forms to be used by small business
debtors to file periodic financial and other reports con-
taining 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.
(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) the 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 the small business debtor to understand
the small business debtor’s financial condition and
plan the small business debtor’s future.
201
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 this Act, is amended by adding at the end the following:
‘‘§ 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—
‘‘(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 waives that requirement after notice and
202
hearing, 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;
‘‘(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
administrative expense tax claims, except those
being contested by appropriate proceedings 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.’’.
203
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 11 of title 11, United States Code, is amended
by adding at the end of the matter relating to subchapter
I 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:
‘‘(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 hearing; or
‘‘(B) the court, for cause, orders otherwise;
‘‘(2) the plan, and any necessary disclosure
statement, 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
204
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.’’.
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 plan shall be con-
firmed not later than 175 days after the date of the order
for relief, unless such 175-day period is extended as pro-
vided in section 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:
205
‘‘(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;
(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 entry of 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
206
‘‘(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 and ascertain the state of the
debtor’s books and records and verify that the
debtor has filed its tax returns; and
‘‘(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:
207
‘‘(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 this Act is amended—
(1) in subsection (k), as redesignated by this
Act—
(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:
‘‘(l)(1) Except as provided in paragraph (2) of this
subsection, the provisions of subsection (a) do 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
208
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 succeeded to sub-
stantially all of the assets or business of a small
business debtor described in subparagraph (A), (B),
or (C).
‘‘(2) This subsection 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 that petition
resulted 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.’’.
209
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:
‘‘(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, 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 interest of
creditors and the estate, if the movant establishes cause.
‘‘(2) The relief provided in paragraph (1) shall not
be granted if the debtor or another party in interest ob-
jects and establishes by a preponderance of the evidence
that—
‘‘(A) a plan with a reasonable possibility of
being confirmed will be filed within a reasonable pe-
riod of time; and
‘‘(B) the grounds include an act or omission of
the debtor—
‘‘(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.
210
‘‘(3) The court shall commence the hearing on any
motion 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 the 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;
‘‘(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 harm-
ful to 1 or more creditors;
‘‘(E) failure to comply with an order of the
court;
‘‘(F) repeated failure timely to satisfy any filing
or reporting requirement established by this title or
by any rule applicable to a case under this chapter;
‘‘(G) failure to attend the meeting of creditors
convened under section 341(a) or an examination or-
211
dered under rule 2004 of the Federal Rules of
Bankruptcy Procedure;
‘‘(H) failure timely to provide information or
attend meetings reasonably requested by the United
States trustee or the bankruptcy administrator;
‘‘(I) failure timely to pay taxes due after the
date of the order for relief or to file tax returns due
after 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;
‘‘(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 on which the petition is filed.
212
‘‘(5) The court shall commence the hearing on any
motion 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 the 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:
‘‘(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-
213
ministration, in consultation with the Attorney General,
the Director of the Administrative Office of 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
(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
214
(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-
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:
215
‘‘(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 penalty provisions,
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 a nondebtor, and the claim for remain-
ing sums due for the balance of the term of the lease
shall be a claim under section 502(b)(6);’’.
TITLE V—MUNICIPAL
BANKRUPTCY PROVISIONS
SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI-
TION.
(a) TECHNICAL AMENDMENT RELATING TO MUNICI-
PALITIES.—Section 921(d) of title 11, United States
Code, is amended by inserting ‘‘notwithstanding section
301(b)’’ before the period at the end.
(b) CONFORMING AMENDMENT.—Section 301 of title
11, United States Code, is amended—
(1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’;
and
216
(2) by striking the last sentence and inserting
the following:
‘‘(b) The commencement of a voluntary case under
a chapter of this title constitutes an order for relief under
such chapter.’’.
SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAP-
TER 9.
Section 901(a) of title 11, United States Code, is
amended—
(1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and
(2) by inserting ‘‘559, 560, 561, 562’’ after
‘‘557,’’.
TITLE VI—BANKRUPTCY DATA
SEC. 601. IMPROVED BANKRUPTCY STATISTICS.
(a) IN GENERAL.—Chapter 6 of title 28, United
States Code, is amended by adding at the end the fol-
lowing:
‘‘§ 159. Bankruptcy statistics
‘‘(a) The clerk of the district court, or the clerk of
the bankruptcy court if one has been certified pursuant
to section 156(b) of this title, shall collect statistics re-
garding individual debtors with primarily consumer debts
seeking relief under chapters 7, 11, and 13 of title 11.
Those statistics shall be in a standardized format pre-
scribed by the Director of the Administrative Office of the
217
United States Courts (referred to in this section as the
‘Director’).
‘‘(b) The Director shall—
‘‘(1) compile the statistics referred to in sub-
section (a);
‘‘(2) make the statistics available to the public;
and
‘‘(3) not later than October 31, 2002, and an-
nually thereafter, prepare, and submit to Congress a
report concerning the information collected under
subsection (a) that contains an analysis of the infor-
mation.
‘‘(c) The compilation required under subsection (b)
shall—
‘‘(1) be itemized, by chapter, with respect to
title 11;
‘‘(2) be presented in the aggregate and for each
district; and
‘‘(3) include information concerning—
‘‘(A) the total assets and total liabilities of
the debtors described in subsection (a), and in
each category of assets and liabilities, as re-
ported in the schedules prescribed pursuant to
section 2075 of this title and filed by those
debtors;
218
‘‘(B) the current monthly income, average
income, and average expenses of those debtors
as reported on the schedules and statements
that each such debtor files under sections 521
and 1322 of title 11;
‘‘(C) the aggregate amount of debt dis-
charged in cases filed during the reporting pe-
riod, determined as the difference between the
total amount of debt and obligations of a debtor
reported on the schedules and the amount of
such debt reported in categories which are pre-
dominantly nondischargeable;
‘‘(D) the average period of time between
the filing of the petition and the closing of the
case for cases closed during the reporting pe-
riod;
‘‘(E) for cases closed during the reporting
period—
‘‘(i) the number of cases in which a
reaffirmation was filed; and
‘‘(ii)(I) the total number of reaffirma-
tions filed;
‘‘(II) of those cases in which a reaffir-
mation was filed, the number of cases in
219
which the debtor was not represented by
an attorney; and
‘‘(III) of those cases in which a reaf-
firmation was filed, the number of cases in
which the reaffirmation was approved by
the court;
‘‘(F) with respect to cases filed under
chapter 13 of title 11, for the reporting
period—
‘‘(i)(I) the number of cases in which a
final order was entered determining the
value of property securing a claim in an
amount less than the amount of the claim;
and
‘‘(II) the number of final orders en-
tered determining the value of property se-
curing a claim;
‘‘(ii) the number of cases dismissed,
the number of cases dismissed for failure
to make payments under the plan, the
number of cases refiled after dismissal,
and the number of cases in which the plan
was completed, separately itemized with re-
spect to the number of modifications made
before completion of the plan, if any; and
220
‘‘(iii) the number of cases in which
the debtor filed another case during the 6-
year period preceding the filing;
‘‘(G) the number of cases in which credi-
tors were fined for misconduct and any amount
of punitive damages awarded by the court for
creditor misconduct; and
‘‘(H) the number of cases in which sanc-
tions under rule 9011 of the Federal Rules of
Bankruptcy Procedure were imposed against
debtor’s counsel or damages awarded under
such Rule.’’.
(b) CLERICAL AMENDMENT.—The table of sections
for chapter 6 of title 28, United States Code, is amended
by adding at the end the following:
‘‘159. Bankruptcy statistics.’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect 18 months after the date of
enactment of this Act.
SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANK-
RUPTCY DATA.
(a) AMENDMENT.—Chapter 39 of title 28, United
States Code, is amended by adding at the end the fol-
lowing:
221
‘‘§ 589b. Bankruptcy data
‘‘(a) RULES.—The Attorney General shall, within a
reasonable time after the effective date of this section,
issue rules requiring uniform forms for (and from time
to time thereafter to appropriately modify and approve)—
‘‘(1) final reports by trustees in cases under
chapters 7, 12, and 13 of title 11; and
‘‘(2) periodic reports by debtors in possession or
trustees, as the case may be, in cases under chapter
11 of title 11.
‘‘(b) REPORTS.—Each report referred to in sub-
section (a) shall be designed (and the requirements as to
place and manner of filing shall be established) so as to
facilitate compilation of data and maximum possible ac-
cess of the public, both by physical inspection at one or
more central filing locations, and by electronic access
through the Internet or other appropriate media.
‘‘(c) REQUIRED INFORMATION.—The information re-
quired to be filed in the reports referred to in subsection
(b) shall be that which is in the best interests of debtors
and creditors, and in the public interest in reasonable and
adequate information to evaluate the efficiency and practi-
cality of the Federal bankruptcy system. In issuing rules
proposing the forms referred to in subsection (a), the At-
torney General shall strike the best achievable practical
balance between—
222
‘‘(1) the reasonable needs of the public for in-
formation about the operational results of the Fed-
eral bankruptcy system;
‘‘(2) economy, simplicity, and lack of undue
burden on persons with a duty to file reports; and
‘‘(3) appropriate privacy concerns and safe-
guards.
‘‘(d) FINAL REPORTS.—Final reports proposed for
adoption by trustees under chapters 7, 12, and 13 of title
11 shall, in addition to such other matters as are required
by law or as the Attorney General in the discretion of the
Attorney General, shall propose, include with respect to
a case under such title—
‘‘(1) information about the length of time the
case was pending;
‘‘(2) assets abandoned;
‘‘(3) assets exempted;
‘‘(4) receipts and disbursements of the estate;
‘‘(5) expenses of administration, including for
use under section 707(b), actual costs of admin-
istering cases under chapter 13 of title 11;
‘‘(6) claims asserted;
‘‘(7) claims allowed; and
‘‘(8) distributions to claimants and claims dis-
charged without payment,
223
in each case by appropriate category and, in cases under
chapters 12 and 13 of title 11, date of confirmation of
the plan, each modification thereto, and defaults by the
debtor in performance under the plan.
‘‘(e) PERIODIC REPORTS.—Periodic reports proposed
for adoption by trustees or debtors in possession under
chapter 11 of title 11 shall, in addition to such other mat-
ters as are required by law or as the Attorney General,
in the discretion of the Attorney General, shall propose,
include—
‘‘(1) information about the standard industry
classification, published by the Department of Com-
merce, for the businesses conducted by the debtor;
‘‘(2) length of time the case has been pending;
‘‘(3) number of full-time employees as of the
date of the order for relief and at the end of each
reporting period since the case was filed;
‘‘(4) cash receipts, cash disbursements and
profitability of the debtor for the most recent period
and cumulatively since the date of the order for re-
lief;
‘‘(5) compliance with title 11, whether or not
tax returns and tax payments since the date of the
order for relief have been timely filed and made;
224
‘‘(6) all professional fees approved by the court
in the case for the most recent period and cumula-
tively since the date of the order for relief (sepa-
rately reported, for the professional fees incurred by
or on behalf of the debtor, between those that would
have been incurred absent a bankruptcy case and
those not); and
‘‘(7) plans of reorganization filed and confirmed
and, with respect thereto, by class, the recoveries of
the holders, expressed in aggregate dollar values
and, in the case of claims, as a percentage of total
claims of the class allowed.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of chapter 39 of title 28, United States
Code, is amended by adding at the end the following:
‘‘589b. Bankruptcy data.’’.
SEC. 603. AUDIT PROCEDURES.
(a) IN GENERAL.—
(1) ESTABLISHMENT
OF
PROCEDURES.—The
Attorney General (in judicial districts served by
United States trustees) and the Judicial Conference
of the United States (in judicial districts served by
bankruptcy administrators) shall establish proce-
dures to determine the accuracy, veracity, and com-
pleteness of petitions, schedules, and other informa-
tion which the debtor is required to provide under
225
sections 521 and 1322 of title 11, and, if applicable,
section 111 of title 11, in cases filed under chapter
7 or 13 in which the debtor is an individual. Such
audits shall be in accordance with generally accepted
auditing standards and performed by independent
certified public accountants or independent licensed
public accountants, provided that the Attorney Gen-
eral and the Judicial Conference, as appropriate,
may develop alternative auditing standards not later
than 2 years after the date of enactment of this Act.
(2) PROCEDURES.—Those procedures required
by paragraph (1) shall—
(A) establish a method of selecting appro-
priate qualified persons to contract to perform
those audits;
(B) establish a method of randomly select-
ing cases to be audited, except that not less
than 1 out of every 250 cases in each Federal
judicial district shall be selected for audit;
(C) require audits for schedules of income
and expenses which reflect greater than average
variances from the statistical norm of the dis-
trict in which the schedules were filed if those
variances occur by reason of higher income or
226
higher expenses than the statistical norm of the
district in which the schedules were filed; and
(D) establish procedures for providing, not
less frequently than annually, public informa-
tion concerning the aggregate results of such
audits including the percentage of cases, by dis-
trict, in which a material misstatement of in-
come or expenditures is reported.
(b) AMENDMENTS.—Section 586 of title 28, United
States Code, is amended—
(1) in subsection (a), by striking paragraph (6)
and inserting the following:
‘‘(6) make such reports as the Attorney General
directs, including the results of audits performed
under section 603(a) of the Bankruptcy Abuse Pre-
vention and Consumer Protection Act of 2001; and’’;
and
(2) by adding at the end the following:
‘‘(f)(1) The United States trustee for each district is
authorized to contract with auditors to perform audits in
cases designated by the United States trustee, in accord-
ance with the procedures established under section 603(a)
of the Bankruptcy Abuse Prevention and Consumer Pro-
tection Act of 2001.
227
‘‘(2)(A) The report of each audit referred to in para-
graph (1) shall be filed with the court and transmitted
to the United States trustee. Each report shall clearly and
conspicuously specify any material misstatement of income
or expenditures or of assets identified by the person per-
forming the audit. In any case in which a material
misstatement of income or expenditures or of assets has
been reported, the clerk of the bankruptcy court shall give
notice of the misstatement to the creditors in the case.
‘‘(B) If a material misstatement of income or expend-
itures or of assets is reported, the United States trustee
shall—
‘‘(i) report the material misstatement, if appro-
priate, to the United States Attorney pursuant to
section 3057 of title 18; and
‘‘(ii) if advisable, take appropriate action, in-
cluding but not limited to commencing an adversary
proceeding to revoke the debtor’s discharge pursuant
to section 727(d) of title 11.’’.
(c) AMENDMENTS TO SECTION 521 OF TITLE 11,
U.S.C.—Section 521(a) of title 11, United States Code,
as so designated by this Act, is amended in each of para-
graphs (3) and (4) by inserting ‘‘or an auditor appointed
under section 586(f) of title 28’’ after ‘‘serving in the
case’’.
228
(d) AMENDMENTS TO SECTION 727 OF TITLE 11,
U.S.C.—Section 727(d) of title 11, United States Code,
is amended—
(1) in paragraph (2), by striking ‘‘or’’ at the
end;
(2) in paragraph (3), by striking the period at
the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(4) 
the 
debtor 
has 
failed 
to 
explain
satisfactorily—
‘‘(A) a material misstatement in an audit
referred to in section 586(f) of title 28; or
‘‘(B) a failure to make available for inspec-
tion all necessary accounts, papers, documents,
financial records, files, and all other papers,
things, or property belonging to the debtor that
are requested for an audit referred to in section
586(f) of title 28.’’.
(e) EFFECTIVE DATE.—The amendments made by
this section shall take effect 18 months after the date of
enactment of this Act.
SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY
OF BANKRUPTCY DATA.
It is the sense of Congress that—
229
(1) the national policy of the United States
should be that all data held by bankruptcy clerks in
electronic form, to the extent such data reflects only
public records (as defined in section 107 of title 11,
United States Code), should be released in a usable
electronic form in bulk to the public, subject to such
appropriate privacy concerns and safeguards as Con-
gress and the Judicial Conference of the United
States may determine; and
(2) there should be established a bankruptcy
data system in which—
(A) a single set of data definitions and
forms are used to collect data nationwide; and
(B) data for any particular bankruptcy
case are aggregated in the same electronic
record.
TITLE VII—BANKRUPTCY TAX
PROVISIONS
SEC. 701. TREATMENT OF CERTAIN LIENS.
(a) TREATMENT OF CERTAIN LIENS.—Section 724
of title 11, United States Code, is amended—
(1) in subsection (b), in the matter preceding
paragraph (1), by inserting ‘‘(other than to the ex-
tent that there is a properly perfected unavoidable
tax lien arising in connection with an ad valorem tax
230
on real or personal property of the estate)’’ after
‘‘under this title’’;
(2) in subsection (b)(2), by inserting ‘‘(except
that such expenses, other than claims for wages, sal-
aries, or commissions which arise after the filing of
a petition, shall be limited to expenses incurred
under chapter 7 of this title and shall not include ex-
penses incurred under chapter 11 of this title)’’ after
‘‘507(a)(1)’’; and
(3) by adding at the end the following:
‘‘(e) Before subordinating a tax lien on real or per-
sonal property of the estate, the trustee shall—
‘‘(1) exhaust the unencumbered assets of the
estate; and
‘‘(2) in a manner consistent with section
506(c), recover from property securing an allowed
secured claim the reasonable, necessary costs and
expenses of preserving or disposing of that property.
‘‘(f) Notwithstanding the exclusion of ad valorem tax
liens under this section and subject to the requirements
of subsection (e), the following may be paid from property
of the estate which secures a tax lien, or the proceeds of
such property:
231
‘‘(1) Claims for wages, salaries, and commis-
sions that are entitled to priority under section
507(a)(4).
‘‘(2) Claims for contributions to an employee
benefit plan entitled to priority under section
507(a)(5).’’.
(b) DETERMINATION OF TAX LIABILITY.—Section
505(a)(2) of title 11, United States Code, is amended—
(1) in subparagraph (A), by striking ‘‘or’’ at
the end;
(2) in subparagraph (B), by striking the period
at the end and inserting ‘‘; or’’; and
(3) by adding at the end the following:
‘‘(C) the amount or legality of any amount aris-
ing in connection with an ad valorem tax on real or
personal property of the estate, if the applicable pe-
riod for contesting or redetermining that amount
under any law (other than a bankruptcy law) has ex-
pired.’’.
SEC. 702. TREATMENT OF FUEL TAX CLAIMS.
Section 501 of title 11, United States Code, is
amended by adding at the end the following:
‘‘(e) A claim arising from the liability of a debtor for
fuel use tax assessed consistent with the requirements of
section 31705 of title 49 may be filed by the base jurisdic-
232
tion designated pursuant to the International Fuel Tax
Agreement and, if so filed, shall be allowed as a single
claim.’’.
SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF
TAXES.
Section 505(b) of title 11, United States Code, is
amended—
(1) in the first sentence, by inserting ‘‘at the
address and in the manner designated in paragraph
(1)’’ after ‘‘determination of such tax’’;
(2) by striking ‘‘(1) upon payment’’ and insert-
ing ‘‘(A) upon payment’’;
(3) by striking ‘‘(A) such governmental unit’’
and inserting ‘‘(i) such governmental unit’’;
(4) by striking ‘‘(B) such governmental unit’’
and inserting ‘‘(ii) such governmental unit’’;
(5) by striking ‘‘(2) upon payment’’ and insert-
ing ‘‘(B) upon payment’’;
(6) by striking ‘‘(3) upon payment’’ and insert-
ing ‘‘(C) upon payment’’;
(7) by striking ‘‘(b)’’ and inserting ‘‘(2)’’; and
(8) by inserting before paragraph (2), as so
designated, the following:
‘‘(b)(1)(A) The clerk of each district shall maintain
a listing under which a Federal, State, or local govern-
233
mental unit responsible for the collection of taxes within
the district may—
‘‘(i) designate an address for service of requests
under this subsection; and
‘‘(ii) describe where further information con-
cerning additional requirements for filing such re-
quests may be found.
‘‘(B) If a governmental unit referred to in subpara-
graph (A) does not designate an address and provide that
address to the clerk under that subparagraph, any request
made under this subsection may be served at the address
for the filing of a tax return or protest with the appro-
priate taxing authority of that governmental unit.’’.
SEC. 704. RATE OF INTEREST ON TAX CLAIMS.
(a) IN GENERAL.—Subchapter I of chapter 5 of title
11, United States Code, is amended by adding at the end
the following:
‘‘§ 511. Rate of interest on tax claims
‘‘(a) If any provision of this title requires the pay-
ment of interest on a tax claim or on an administrative
expense tax, or the payment of interest to enable a creditor
to receive the present value of the allowed amount of a
tax claim, the rate of interest shall be the rate determined
under applicable nonbankruptcy law.
235
that tax was pending or in effect dur-
ing that 240-day period, plus 30 days;
and
‘‘(II) any time during which a
stay of proceedings against collections
was in effect in a prior case under
this title during that 240-day period;
plus 90 days.’’; and
(2) by adding at the end the following:
‘‘An otherwise applicable time period specified in
this paragraph shall be suspended for any period
during which a governmental unit is prohibited
under applicable nonbankruptcy law from collecting
a tax as a result of a request by the debtor for a
hearing and an appeal of any collection action taken
or proposed against the debtor, plus 90 days; plus
any time during which the stay of proceedings was
in effect in a prior case under this title or during
which collection was precluded by the existence of 1
or more confirmed plans under this title, plus 90
days.’’.
SEC. 706. PRIORITY PROPERTY TAXES INCURRED.
Section 507(a)(8)(B) of title 11, United States Code,
is amended by striking ‘‘assessed’’ and inserting ‘‘in-
curred’’.
236
SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP-
TER 13.
Section 1328(a)(2) of title 11, United States Code,
as amended by section 314 of this Act, is amended by
striking ‘‘paragraph’’ and inserting ‘‘section 507(a)(8)(C)
or in paragraph (1)(B), (1)(C),’’.
SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAP-
TER 11.
Section 1141(d) of title 11, United States Code, as
amended by this Act, is amended by adding at the end
the following:
‘‘(6) Notwithstanding paragraph (1), the confirma-
tion of a plan does not discharge a debtor that is a cor-
poration from any debt described in section 523(a)(2) or
for a tax or customs duty with respect to which the
debtor—
‘‘(A) made a fraudulent return; or
‘‘(B) willfully attempted in any manner to
evade or defeat that tax or duty.’’.
SEC. 
709. 
STAY 
OF 
TAX 
PROCEEDINGS 
LIMITED 
TO
PREPETITION TAXES.
Section 362(a)(8) of title 11, United States Code, is
amended by striking ‘‘the debtor’’ and inserting ‘‘a cor-
porate debtor’s tax liability for a taxable period the bank-
ruptcy court may determine or concerning an individual
237
debtor’s tax liability for a taxable period ending before the
order for relief under this title’’.
SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11
CASES.
Section 1129(a)(9) of title 11, United States Code,
is amended—
(1) in subparagraph (B), by striking ‘‘and’’ at
the end;
(2) in subparagraph (C), by striking ‘‘deferred
cash payments,’’ and all that follows through the
end of the subparagraph, and inserting ‘‘regular in-
stallment payments in cash—
‘‘(i) of a total value, as of the effective
date of the plan, equal to the allowed
amount of such claim;
‘‘(ii) over a period ending not later
than 5 years after the date of the entry of
the order for relief under section 301, 302,
or 303; and
‘‘(iii) in a manner not less favorable
than the most favored nonpriority unse-
cured claim provided for in the plan (other
than cash payments made to a class of
creditors under section 1122(b)); and’’;
and
238
(3) by adding at the end the following:
‘‘(D) with respect to a secured claim which
would otherwise meet the description of an un-
secured claim of a governmental unit under sec-
tion 507(a)(8), but for the secured status of
that claim, the holder of that claim will receive
on account of that claim, cash payments, in the
same manner and over the same period, as pre-
scribed in subparagraph (C).’’.
SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB-
ITED.
Section 545(2) of title 11, United States Code, is
amended by inserting before the semicolon at the end the
following: ‘‘, except in any case in which a purchaser is
a purchaser described in section 6323 of the Internal Rev-
enue Code of 1986, or in any other similar provision of
State or local law’’.
SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI-
NESS.
(a) PAYMENT OF TAXES REQUIRED.—Section 960 of
title 28, United States Code, is amended—
(1) by inserting ‘‘(a)’’ before ‘‘Any’’; and
(2) by adding at the end the following:
239
‘‘(b) A tax under subsection (a) shall be paid on or
before the due date of the tax under applicable nonbank-
ruptcy law, unless—
‘‘(1) the tax is a property tax secured by a lien
against property that is abandoned within a reason-
able period of time after the lien attaches by the
trustee of a bankruptcy estate under section 554 of
title 11; or
‘‘(2) payment of the tax is excused under a spe-
cific provision of title 11.
‘‘(c) In a case pending under chapter 7 of title 11,
payment of a tax may be deferred until final distribution
is made under section 726 of title 11, if—
‘‘(1) the tax was not incurred by a trustee duly
appointed under chapter 7 of title 11; or
‘‘(2) before the due date of the tax, an order of
the court makes a finding of probable insufficiency
of funds of the estate to pay in full the administra-
tive expenses allowed under section 503(b) of title
11 that have the same priority in distribution under
section 726(b) of title 11 as the priority of that
tax.’’.
(b) PAYMENT OF AD VALOREM TAXES REQUIRED.—
Section 503(b)(1)(B)(i) of title 11, United States Code,
is amended by inserting ‘‘whether secured or unsecured,
240
including property taxes for which liability is in rem, in
personam, or both,’’ before ‘‘except’’.
(c) REQUEST FOR PAYMENT OF ADMINISTRATIVE
EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of
title 11, United States Code, is amended—
(1) in subparagraph (B), by striking ‘‘and’’ at
the end;
(2) in subparagraph (C), by adding ‘‘and’’ at
the end; and
(3) by adding at the end the following:
‘‘(D) notwithstanding the requirements of sub-
section (a), a governmental unit shall not be re-
quired to file a request for the payment of an ex-
pense described in subparagraph (B) or (C), as a
condition of its being an allowed administrative ex-
pense;’’.
(d) PAYMENT OF TAXES AND FEES AS SECURED
CLAIMS.—Section 506 of title 11, United States Code, is
amended—
(1) in subsection (b), by inserting ‘‘or State
statute’’ after ‘‘agreement’’; and
(2) in subsection (c), by inserting ‘‘, including
the payment of all ad valorem property taxes with
respect to the property’’ before the period at the
end.
241
SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.
Section 726(a)(1) of title 11, United States Code, is
amended by striking ‘‘before the date on which the trustee
commences distribution under this section;’’ and inserting
the following: ‘‘on or before the earlier of—
‘‘(A) the date that is 10 days after the
mailing to creditors of the summary of the
trustee’s final report; or
‘‘(B) the date on which the trustee com-
mences final distribution under this section;’’.
SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU-
THORITIES.
Section 523(a) of title 11, United States Code, as
amended by this Act, is amended—
(1) in paragraph (1)(B)—
(A) in the matter preceding clause (i), by
inserting ‘‘or equivalent report or notice,’’ after
‘‘a return,’’;
(B) in clause (i), by inserting ‘‘or given’’
after ‘‘filed’’; and
(C) in clause (ii)—
(i) by inserting ‘‘or given’’ after
‘‘filed’’; and
(ii) by inserting ‘‘, report, or notice’’
after ‘‘return’’; and
(2) by adding at the end the following:
242
‘‘For purposes of this subsection, the term ‘return’ means
a return that satisfies the requirements of applicable non-
bankruptcy law (including applicable filing requirements).
Such term includes a return prepared pursuant to section
6020(a) of the Internal Revenue Code of 1986, or similar
State or local law, or a written stipulation to a judgment
or a final order entered by a nonbankruptcy tribunal, but
does not include a return made pursuant to section
6020(b) of the Internal Revenue Code of 1986, or a simi-
lar State or local law.’’.
SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN-
PAID TAXES.
Section 505(b)(2) of title 11, United States Code, as
amended by this Act, is amended by inserting ‘‘the es-
tate,’’ after ‘‘misrepresentation,’’.
SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON-
FIRM CHAPTER 13 PLANS.
(a) FILING
OF PREPETITION TAX RETURNS RE-
QUIRED FOR PLAN CONFIRMATION.—Section 1325(a) of
title 11, United States Code, as amended by this Act, is
amended by adding at the end the following:
‘‘(9) the debtor has filed all applicable Federal,
State, and local tax returns as required by section
1308.’’.
243
(b) ADDITIONAL TIME PERMITTED FOR FILING TAX
RETURNS.—
(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
244
‘‘(B) for any return that is not past due as of
the date of the filing of the petition, the later of—
‘‘(i) the date that is 120 days after the
date of that meeting; or
‘‘(ii) the date on which the return is due
under the last automatic extension of time for
filing that return to which the debtor is enti-
tled, and for which request is timely made, in
accordance with applicable nonbankruptcy law.
‘‘(2) Upon notice and hearing, and order entered be-
fore the tolling of any applicable filing period determined
under this subsection, if the debtor demonstrates by a pre-
ponderance of the evidence that the failure to file a return
as required under this subsection is attributable to cir-
cumstances beyond the control of the debtor, the court
may extend the filing period established by the trustee
under this subsection for—
‘‘(A) a period of not more than 30 days for re-
turns described in paragraph (1); and
‘‘(B) a period not to extend after the applicable
extended due date for a return described in para-
graph (2).
‘‘(c) For purposes of this section, the term ‘return’
includes a return prepared pursuant to subsection (a) or
(b) of section 6020 of the Internal Revenue Code of 1986,
245
or a similar State or local law, or a written stipulation
to a judgment or a final order entered by a nonbankruptcy
tribunal.’’.
(2) CONFORMING AMENDMENT.—The table of
sections at the beginning of chapter 13 of title 11,
United States Code, is amended by inserting after
the item relating to section 1307 the following:
‘‘1308. Filing of prepetition tax returns.’’.
(c) DISMISSAL
OR CONVERSION
ON FAILURE TO
COMPLY.—Section 1307 of title 11, United States Code,
is amended—
(1) by redesignating subsections (e) and (f) as
subsections (f) and (g), respectively; and
(2) by inserting after subsection (d) the fol-
lowing:
‘‘(e) Upon the failure of the debtor to file a tax return
under section 1308, on request of a party in interest or
the United States trustee and after notice and a hearing,
the court shall dismiss a case or convert a case under this
chapter to a case under chapter 7 of this title, whichever
is in the best interest of the creditors and the estate.’’.
(d) TIMELY FILED CLAIMS.—Section 502(b)(9) of
title 11, United States Code, is amended by inserting be-
fore the period at the end the following ‘‘, and except that
in a case under chapter 13, a claim of a governmental
unit for a tax with respect to a return filed under section
246
1308 shall be timely if the claim is filed on or before the
date that is 60 days after the date on which such return
was filed as required’’.
(e) RULES FOR OBJECTIONS TO CLAIMS AND TO
CONFIRMATION.—It is the sense of Congress that the Ad-
visory Committee on Bankruptcy Rules of the Judicial
Conference of the United States should, as soon as prac-
ticable after the date of enactment of this Act, propose
for adoption amended Federal Rules of Bankruptcy Proce-
dure which provide that—
(1) notwithstanding the provisions of Rule
3015(f), in cases under chapter 13 of title 11,
United States Code, an objection to the confirmation
of a plan filed by a governmental unit on or before
the date that is 60 days after the date on which the
debtor files all tax returns required under sections
1308 and 1325(a)(7) of title 11, United States
Code, shall be treated for all purposes as if such ob-
jection had been timely filed before such confirma-
tion; and
(2) in addition to the provisions of Rule 3007,
in a case under chapter 13 of title 11, United States
Code, no objection to a claim for a tax with respect
to which a return is required to be filed under sec-
247
tion 1308 of title 11, United States Code, shall be
filed until such return has been filed as required.
SEC. 717. STANDARDS FOR TAX DISCLOSURE.
Section 1125(a)(1) of title 11, United States Code,
is amended—
(1) by inserting ‘‘including a discussion of the
potential material Federal tax consequences of the
plan to the debtor, any successor to the debtor, and
a hypothetical investor typical of the holders of
claims or interests in the case,’’ after ‘‘records’’; and
(2) by striking ‘‘a hypothetical reasonable inves-
tor typical of holders of claims or interests’’ and in-
serting ‘‘such a hypothetical investor’’.
SEC. 718. SETOFF OF TAX REFUNDS.
Section 362(b) of title 11, United States Code, is
amended by inserting after paragraph (26), as added by
this Act, the following:
‘‘(27) under subsection (a), of the setoff under
applicable nonbankruptcy law of an income tax re-
fund, by a governmental unit, with respect to a tax-
able period that ended before the order for relief
against an income tax liability for a taxable period
that also ended before the order for relief, except
that in any case in which the setoff of an income tax
refund is not permitted under applicable nonbank-
248
ruptcy law because of a pending action to determine
the amount or legality of a tax liability, the govern-
mental unit may hold the refund pending the resolu-
tion of the action, unless the court, upon motion of
the trustee and after notice and hearing, grants the
taxing authority adequate protection (within the
meaning of section 361) for the secured claim of
that authority in the setoff under section 506(a);’’.
SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREAT-
MENT OF STATE AND LOCAL TAXES.
(a) IN GENERAL.—(1) Section 346 of title 11, United
States Code, is amended to read as follows:
‘‘§ 346. Special provisions related to the treatment of
state and local taxes
‘‘(a) Whenever the Internal Revenue Code of 1986
provides that a separate taxable estate or entity is created
in a case concerning a debtor under this title, and the in-
come, gain, loss, deductions, and credits of such estate
shall be taxed to or claimed by the estate, a separate tax-
able estate is also created for purposes of any State and
local law imposing a tax on or measured by income and
such income, gain, loss, deductions, and credits shall be
taxed to or claimed by the estate and may not be taxed
to or claimed by the debtor. The preceding sentence shall
not apply if the case is dismissed. The trustee shall make
249
tax returns of income required under any such State or
local law.
‘‘(b) Whenever the Internal Revenue Code of 1986
provides that no separate taxable estate shall be created
in a case concerning a debtor under this title, and the in-
come, gain, loss, deductions, and credits of an estate shall
be taxed to or claimed by the debtor, such income, gain,
loss, deductions, and credits shall be taxed to or claimed
by the debtor under a State or local law imposing a tax
on or measured by income and may not be taxed to or
claimed by the estate. The trustee shall make such tax
returns of income of corporations and of partnerships as
are required under any State or local law, but with respect
to partnerships, shall make said returns only to the extent
such returns are also required to be made under such
Code. The estate shall be liable for any tax imposed on
such corporation or partnership, but not for any tax im-
posed on partners or members.
‘‘(c) With respect to a partnership or any entity treat-
ed as a partnership under a State or local law imposing
a tax on or measured by income that is a debtor in a case
under this title, any gain or loss resulting from a distribu-
tion of property from such partnership, or any distributive
share of any income, gain, loss, deduction, or credit of a
partner or member that is distributed, or considered dis-
250
tributed, from such partnership, after the commencement
of the case, is gain, loss, income, deduction, or credit, as
the case may be, of the partner or member, and if such
partner or member is a debtor in a case under this title,
shall be subject to tax in accordance with subsection (a)
or (b).
‘‘(d) For purposes of any State or local law imposing
a tax on or measured by income, the taxable period of
a debtor in a case under this title shall terminate only
if and to the extent that the taxable period of such debtor
terminates under the Internal Revenue Code of 1986.
‘‘(e) The estate in any case described in subsection
(a) shall use the same accounting method as the debtor
used immediately before the commencement of the case,
if such method of accounting complies with applicable non-
bankruptcy tax law.
‘‘(f) For purposes of any State or local law imposing
a tax on or measured by income, a transfer of property
from the debtor to the estate or from the estate to the
debtor shall not be treated as a disposition for purposes
of any provision assigning tax consequences to a disposi-
tion, except to the extent that such transfer is treated as
a disposition under the Internal Revenue Code of 1986.
‘‘(g) Whenever a tax is imposed pursuant to a State
or local law imposing a tax on or measured by income pur-
251
suant to subsection (a) or (b), such tax shall be imposed
at rates generally applicable to the same types of entities
under such State or local law.
‘‘(h) The trustee shall withhold from any payment of
claims for wages, salaries, commissions, dividends, inter-
est, or other payments, or collect, any amount required
to be withheld or collected under applicable State or local
tax law, and shall pay such withheld or collected amount
to the appropriate governmental unit at the time and in
the manner required by such tax law, and with the same
priority as the claim from which such amount was with-
held or collected was paid.
‘‘(i)(1) To the extent that any State or local law im-
posing a tax on or measured by income provides for the
carryover of any tax attribute from one taxable period to
a subsequent taxable period, the estate shall succeed to
such tax attribute in any case in which such estate is sub-
ject to tax under subsection (a).
‘‘(2) After such a case is closed or dismissed, the
debtor shall succeed to any tax attribute to which the es-
tate succeeded under paragraph (1) to the extent con-
sistent with the Internal Revenue Code of 1986.
‘‘(3) The estate may carry back any loss or tax at-
tribute to a taxable period of the debtor that ended before
the order for relief under this title to the extent that—
252
‘‘(A) applicable State or local tax law provides
for a carryback in the case of the debtor; and
‘‘(B) the same or a similar tax attribute may be
carried back by the estate to such a taxable period
of the debtor under the Internal Revenue Code of
1986.
‘‘(j)(1) For purposes of any State or local law impos-
ing a tax on or measured by income, income is not realized
by the estate, the debtor, or a successor to the debtor by
reason of discharge of indebtedness in a case under this
title, except to the extent, if any, that such income is sub-
ject to tax under the Internal Revenue Code of 1986.
‘‘(2) Whenever the Internal Revenue Code of 1986
provides that the amount excluded from gross income in
respect of the discharge of indebtedness in a case under
this title shall be applied to reduce the tax attributes of
the debtor or the estate, a similar reduction shall be made
under any State or local law imposing a tax on or meas-
ured by income to the extent such State or local law recog-
nizes such attributes. Such State or local law may also
provide for the reduction of other attributes to the extent
that the full amount of income from the discharge of in-
debtedness has not been applied.
‘‘(k)(1) Except as provided in this section and section
505, the time and manner of filing tax returns and the
253
items of income, gain, loss, deduction, and credit of any
taxpayer shall be determined under applicable nonbank-
ruptcy law.
‘‘(2) For Federal tax purposes, the provisions of this
section are subject to the Internal Revenue Code of 1986
and other applicable Federal nonbankruptcy law.’’.
(2) CLERICAL AMENDMENT.—The table of sections
for chapter 3 of title 11, United States Code, is amended
by striking the item relating to section 346 and inserting
the following:
‘‘346. Special provisions related to the treatment of State and local taxes.’’.
(b) CONFORMING AMENDMENTS.—
(1)(A) Section 728 of title 11, United States
Code, is repealed.
(B) The table of sections for chapter 7 of title
11, United States Code, is amended by striking the
item relating to section 728.
(2) Section 1146 of title 11, United States
Code, is amended—
(A) by striking subsections (a) and (b);
and
(B) by redesignating subsections (c) and
(d) as subsections (a) and (b), respectively.
(3) Section 1231 of title 11, United States
Code, is amended—
254
(A) by striking subsections (a) and (b);
and
(B) by redesignating subsections (c) and
(d) as subsections (a) and (b), respectively.
SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX
RETURNS.
Section 521 of title 11, United States Code, as
amended by this Act, is amended by adding at the end
the following:
‘‘(k)(1) Notwithstanding any other provision of this
title, if the debtor fails to file a tax return that becomes
due after the commencement of the case or to properly
obtain an extension of the due date for filing such return,
the taxing authority may request that the court enter an
order converting or dismissing the case.
‘‘(2) If the debtor does not file the required return
or obtain the extension referred to in paragraph (1) within
90 days after a request is filed by the taxing authority
under that paragraph, the court shall convert or dismiss
the case, whichever is in the best interests of creditors and
the estate.’’.
255
TITLE VIII—ANCILLARY AND
OTHER CROSS-BORDER CASES
SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11,
UNITED STATES CODE.
(a) IN GENERAL.—Title 11, United States Code, is
amended by inserting after chapter 13 the following:
‘‘CHAPTER 15—ANCILLARY AND OTHER
CROSS-BORDER CASES
‘‘Sec.
‘‘1501. Purpose and scope of application.
‘‘SUBCHAPTER I—GENERAL PROVISIONS
‘‘1502. Definitions.
‘‘1503. International obligations of the United States.
‘‘1504. Commencement of ancillary case.
‘‘1505. Authorization to act in a foreign country.
‘‘1506. Public policy exception.
‘‘1507. Additional assistance.
‘‘1508. Interpretation.
‘‘SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND
CREDITORS TO THE COURT
‘‘1509. Right of direct access.
‘‘1510. Limited jurisdiction.
‘‘1511. Commencement of case under section 301 or 303.
‘‘1512. Participation of a foreign representative in a case under this title.
‘‘1513. Access of foreign creditors to a case under this title.
‘‘1514. Notification to foreign creditors concerning a case under this title.
‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING
AND RELIEF
‘‘1515. Application for recognition.
‘‘1516. Presumptions concerning recognition.
‘‘1517. Order granting recognition.
‘‘1518. Subsequent information.
‘‘1519. Relief that may be granted upon filing petition for recognition.
‘‘1520. Effects of recognition of a foreign main proceeding.
‘‘1521. Relief that may be granted upon recognition.
‘‘1522. Protection of creditors and other interested persons.
‘‘1523. Actions to avoid acts detrimental to creditors.
‘‘1524. Intervention by a foreign representative.
‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND
FOREIGN REPRESENTATIVES
256
‘‘1525. Cooperation and direct communication between the court and foreign
courts or foreign representatives.
‘‘1526. Cooperation and direct communication between the trustee and foreign
courts or foreign representatives.
‘‘1527. Forms of cooperation.
‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS
‘‘1528. Commencement of a case under this title after recognition of a foreign
main proceeding.
‘‘1529. Coordination of a case under this title and a foreign proceeding.
‘‘1530. Coordination of more than 1 foreign proceeding.
‘‘1531. Presumption of insolvency based on recognition of a foreign main pro-
ceeding.
‘‘1532. Rule of payment in concurrent proceedings.
‘‘§ 1501. Purpose and scope of application
‘‘(a) The purpose of this chapter is to incorporate the
Model Law on Cross-Border Insolvency so as to provide
effective mechanisms for dealing with cases of cross-bor-
der insolvency with the objectives of—
‘‘(1) cooperation between—
‘‘(A) United States courts, United States
trustees, trustees, examiners, debtors, and debt-
ors in possession; and
‘‘(B) the courts and other competent au-
thorities of foreign countries involved in cross-
border insolvency cases;
‘‘(2) greater legal certainty for trade and in-
vestment;
‘‘(3) fair and efficient administration of cross-
border insolvencies that protects the interests of all
creditors, and other interested entities, including the
debtor;
257
‘‘(4) protection and maximization of the value
of the debtor’s assets; and
‘‘(5) facilitation of the rescue of financially
troubled businesses, thereby protecting investment
and preserving employment.
‘‘(b) This chapter applies where—
‘‘(1) assistance is sought in the United States
by a foreign court or a foreign representative in con-
nection with a foreign proceeding;
‘‘(2) assistance is sought in a foreign country in
connection with a case under this title;
‘‘(3) a foreign proceeding and a case under this
title with respect to the same debtor are taking place
concurrently; or
‘‘(4) creditors or other interested persons in a
foreign country have an interest in requesting the
commencement of, or participating in, a case or pro-
ceeding under this title.
‘‘(c) This chapter does not apply to—
‘‘(1) a proceeding concerning an entity, other
than a foreign insurance company, identified by ex-
clusion in section 109(b);
‘‘(2) an individual, or to an individual and such
individual’s spouse, who have debts within the limits
specified in section 109(e) and who are citizens of
258
the United States or aliens lawfully admitted for
permanent residence in the United States; or
‘‘(3) an entity subject to a proceeding under the
Securities Investor Protection Act of 1970, a stock-
broker subject to subchapter III of chapter 7 of this
title, or a commodity broker subject to subchapter
IV of chapter 7 of this title.
‘‘(d) The court may not grant relief under this chap-
ter with respect to any deposit, escrow, trust fund, or
other security required or permitted under any applicable
State insurance law or regulation for the benefit of claim
holders in the United States.
‘‘SUBCHAPTER I—GENERAL PROVISIONS
‘‘§ 1502. Definitions
‘‘For the purposes of this chapter, the term—
‘‘(1) ‘debtor’ means an entity that is the subject
of a foreign proceeding;
‘‘(2) ‘establishment’ means any place of oper-
ations where the debtor carries out a nontransitory
economic activity;
‘‘(3) ‘foreign court’ means a judicial or other
authority competent to control or supervise a foreign
proceeding;
259
‘‘(4) ‘foreign main proceeding’ means a foreign
proceeding taking place in the country where the
debtor has the center of its main interests;
‘‘(5) ‘foreign nonmain proceeding’ means a for-
eign proceeding, other than a foreign main pro-
ceeding, taking place in a country where the debtor
has an establishment;
‘‘(6) ‘trustee’ includes a trustee, a debtor in
possession in a case under any chapter of this title,
or a debtor under chapter 9 of this title;
‘‘(7) ‘recognition’ means the entry of an order
granting recognition of a foreign main proceeding or
foreign nonmain proceeding under this chapter; and
‘‘(8) ‘within the territorial jurisdiction of the
United States’, when used with reference to property
of a debtor, refers to tangible property located with-
in the territory of the United States and intangible
property deemed under applicable nonbankruptcy
law to be located within that territory, including any
property subject to attachment or garnishment that
may properly be seized or garnished by an action in
a Federal or State court in the United States.
‘‘§ 1503. International obligations of the United States
‘‘To the extent that this chapter conflicts with an ob-
ligation of the United States arising out of any treaty or
260
other form of agreement to which it is a party with one
or more other countries, the requirements of the treaty
or agreement prevail.
‘‘§ 1504. Commencement of ancillary case
‘‘A case under this chapter is commenced by the filing
of a petition for recognition of a foreign proceeding under
section 1515.
‘‘§ 1505. Authorization to act in a foreign country
‘‘A trustee or another entity (including an examiner)
may be authorized by the court to act in a foreign country
on behalf of an estate created under section 541. An entity
authorized to act under this section may act in any way
permitted by the applicable foreign law.
‘‘§ 1506. Public policy exception
‘‘Nothing in this chapter prevents the court from re-
fusing to take an action governed by this chapter if the
action would be manifestly contrary to the public policy
of the United States.
‘‘§ 1507. Additional assistance
‘‘(a) Subject to the specific limitations stated else-
where in this chapter the court, if recognition is granted,
may provide additional assistance to a foreign representa-
tive under this title or under other laws of the United
States.
261
‘‘(b) In determining whether to provide additional as-
sistance under this title or under other laws of the United
States, the court shall consider whether such additional
assistance, consistent with the principles of comity, will
reasonably assure—
‘‘(1) just treatment of all holders of claims
against or interests in the debtor’s property;
‘‘(2) protection of claim holders in the United
States against prejudice and inconvenience in the
processing of claims in such foreign proceeding;
‘‘(3) prevention of preferential or fraudulent
dispositions of property of the debtor;
‘‘(4) distribution of proceeds of the debtor’s
property substantially in accordance with the order
prescribed by this title; and
‘‘(5) if appropriate, the provision of an oppor-
tunity for a fresh start for the individual that such
foreign proceeding concerns.
‘‘§ 1508. Interpretation
‘‘In interpreting this chapter, the court shall consider
its international origin, and the need to promote an appli-
cation of this chapter that is consistent with the applica-
tion of similar statutes adopted by foreign jurisdictions.
264
‘‘(b) The petition commencing a case under sub-
section (a) must be accompanied by a certified copy of
an order granting recognition. The court where the peti-
tion for recognition has been filed must be advised of the
foreign representative’s intent to commence a case under
subsection (a) prior to such commencement.
‘‘§ 1512. Participation of a foreign representative in a
case under this title
‘‘Upon recognition of a foreign proceeding, the for-
eign representative in the recognized proceeding is entitled
to participate as a party in interest in a case regarding
the debtor under this title.
‘‘§ 1513. Access of foreign creditors to a case under
this title
‘‘(a) Foreign creditors have the same rights regarding
the commencement of, and participation in, a case under
this title as domestic creditors.
‘‘(b)(1) Subsection (a) does not change or codify
present law as to the priority of claims under section 507
or 726 of this title, except that the claim of a foreign cred-
itor under those sections shall not be given a lower priority
than that of general unsecured claims without priority
solely because the holder of such claim is a foreign cred-
itor.
265
‘‘(2)(A) Subsection (a) and paragraph (1) do not
change or codify present law as to the allowability of for-
eign revenue claims or other foreign public law claims in
a proceeding under this title.
‘‘(B) Allowance and priority as to a foreign tax claim
or other foreign public law claim shall be governed by any
applicable tax treaty of the United States, under the con-
ditions and circumstances specified therein.
‘‘§ 1514. Notification to foreign creditors concerning a
case under this title
‘‘(a) Whenever in a case under this title notice is to
be given to creditors generally or to any class or category
of creditors, such notice shall also be given to the known
creditors generally, or to creditors in the notified class or
category, that do not have addresses in the United States.
The court may order that appropriate steps be taken with
a view to notifying any creditor whose address is not yet
known.
‘‘(b) Such notification to creditors with foreign ad-
dresses described in subsection (a) shall be given individ-
ually, unless the court considers that, under the cir-
cumstances, some other form of notification would be
more appropriate. No letter or other formality is required.
‘‘(c) When a notification of commencement of a case
is to be given to foreign creditors, the notification shall—
266
‘‘(1) indicate the time period for filing proofs of
claim and specify the place for their filing;
‘‘(2) indicate whether secured creditors need to
file their proofs of claim; and
‘‘(3) contain any other information required to
be included in such a notification to creditors under
this title and the orders of the court.
‘‘(d) Any rule of procedure or order of the court as
to notice or the filing of a claim shall provide such addi-
tional time to creditors with foreign addresses as is rea-
sonable under the circumstances.
‘‘SUBCHAPTER III—RECOGNITION OF A
FOREIGN PROCEEDING AND RELIEF
‘‘§ 1515. Application for recognition
‘‘(a) A foreign representative applies to the court for
recognition of the foreign proceeding in which the foreign
representative has been appointed by filing a petition for
recognition.
‘‘(b) A petition for recognition shall be accompanied
by—
‘‘(1) a certified copy of the decision com-
mencing the foreign proceeding and appointing the
foreign representative;
267
‘‘(2) a certificate from the foreign court affirm-
ing the existence of the foreign proceeding and of
the appointment of the foreign representative; or
‘‘(3) in the absence of evidence referred to in
paragraphs (1) and (2), any other evidence accept-
able to the court of the existence of the foreign pro-
ceeding and of the appointment of the foreign rep-
resentative.
‘‘(c) A petition for recognition shall also be accom-
panied by a statement identifying all foreign proceedings
with respect to the debtor that are known to the foreign
representative.
‘‘(d) The documents referred to in paragraphs (1)
and (2) of subsection (b) shall be translated into English.
The court may require a translation into English of addi-
tional documents.
‘‘§ 1516. Presumptions concerning recognition
‘‘(a) If the decision or certificate referred to in section
1515(b) indicates that the foreign proceeding is a foreign
proceeding (as defined in section 101) and that the person
or body is a foreign representative (as defined in section
101), the court is entitled to so presume.
‘‘(b) The court is entitled to presume that documents
submitted in support of the petition for recognition are
authentic, whether or not they have been legalized.
268
‘‘(c) In the absence of evidence to the contrary, the
debtor’s registered office, or habitual residence in the case
of an individual, is presumed to be the center of the debt-
or’s main interests.
‘‘§ 1517. Order granting recognition
‘‘(a) Subject to section 1506, after notice and a hear-
ing, an order recognizing a foreign proceeding shall be en-
tered if—
‘‘(1) the foreign proceeding for which recogni-
tion is sought is a foreign main proceeding or for-
eign nonmain proceeding within the meaning of sec-
tion 1502;
‘‘(2) the foreign representative applying for rec-
ognition is a person or body as defined in section
101; and
‘‘(3) the petition meets the requirements of sec-
tion 1515.
‘‘(b) The foreign proceeding shall be recognized—
‘‘(1) as a foreign main proceeding if it is taking
place in the country where the debtor has the center
of its main interests; or
‘‘(2) as a foreign nonmain proceeding if the
debtor has an establishment within the meaning of
section 1502 in the foreign country where the pro-
ceeding is pending.
269
‘‘(c) A petition for recognition of a foreign proceeding
shall be decided upon at the earliest possible time. Entry
of an order recognizing a foreign proceeding constitutes
recognition under this chapter.
‘‘(d) The provisions of this subchapter do not prevent
modification or termination of recognition if it is shown
that the grounds for granting it were fully or partially
lacking or have ceased to exist, but in considering such
action the court shall give due weight to possible prejudice
to parties that have relied upon the order granting rec-
ognition. The case under this chapter may be closed in
the manner prescribed under section 350.
‘‘§ 1518. Subsequent information
‘‘From the time of filing the petition for recognition
of the foreign proceeding, the foreign representative shall
file with the court promptly a notice of change of status
concerning—
‘‘(1) any substantial change in the status of the
foreign proceeding or the status of the foreign rep-
resentative’s appointment; and
‘‘(2) any other foreign proceeding regarding the
debtor that becomes known to the foreign represent-
ative.
270
‘‘§ 1519. Relief that may be granted upon filing peti-
tion for recognition
‘‘(a) From the time of filing a petition for recognition
until the court rules on the petition, the court may, at
the request of the foreign representative, where relief is
urgently needed to protect the assets of the debtor or the
interests of the creditors, grant relief of a provisional na-
ture, including—
‘‘(1) staying execution against the debtor’s as-
sets;
‘‘(2) entrusting the administration or realiza-
tion of all or part of the debtor’s assets located in
the United States to the foreign representative or
another person authorized by the court, including an
examiner, in order to protect and preserve the value
of assets that, by their nature or because of other
circumstances, are perishable, susceptible to devalu-
ation or otherwise in jeopardy; and
‘‘(3) any relief referred to in paragraph (3),
(4), or (7) of section 1521(a).
‘‘(b) Unless extended under section 1521(a)(6), the
relief granted under this section terminates when the peti-
tion for recognition is granted.
‘‘(c) It is a ground for denial of relief under this sec-
tion that such relief would interfere with the administra-
tion of a foreign main proceeding.
271
‘‘(d) The court may not enjoin a police or regulatory
act of a governmental unit, including a criminal action or
proceeding, under this section.
‘‘(e) The standards, procedures, and limitations ap-
plicable to an injunction shall apply to relief under this
section.
‘‘(f) The exercise of rights not subject to the stay
arising under section 362(a) pursuant to paragraph (6),
(7), (17), or (28) of section 362(b) or pursuant to section
362(l) shall not be stayed by any order of a court or ad-
ministrative agency in any proceeding under this chapter.
‘‘§ 1520. Effects of recognition of a foreign main pro-
ceeding
‘‘(a) Upon recognition of a foreign proceeding that
is a foreign main proceeding—
‘‘(1) sections 361 and 362 apply with respect to
the debtor and that property of the debtor that is
within the territorial jurisdiction of the United
States;
‘‘(2) sections 363, 549, and 552 of this title
apply to a transfer of an interest of the debtor in
property that is within the territorial jurisdiction of
the United States to the same extent that the sec-
tions would apply to property of an estate;
272
‘‘(3) unless the court orders otherwise, the for-
eign representative may operate the debtor’s busi-
ness and may exercise the rights and powers of a
trustee under and to the extent provided by sections
363 and 552; and
‘‘(4) section 552 applies to property of the debt-
or that is within the territorial jurisdiction of the
United States.
‘‘(b) Subsection (a) does not affect the right to com-
mence an individual action or proceeding in a foreign
country to the extent necessary to preserve a claim against
the debtor.
‘‘(c) Subsection (a) does not affect the right of a for-
eign representative or an entity to file a petition com-
mencing a case under this title or the right of any party
to file claims or take other proper actions in such a case.
‘‘§ 1521. Relief that may be granted upon recognition
‘‘(a) Upon recognition of a foreign proceeding, wheth-
er main or nonmain, where necessary to effectuate the
purpose of this chapter and to protect the assets of the
debtor or the interests of the creditors, the court may, at
the request of the foreign representative, grant any appro-
priate relief, including—
‘‘(1) staying the commencement or continuation
of an individual action or proceeding concerning the
273
debtor’s assets, rights, obligations or liabilities to the
extent they have not been stayed under section
1520(a);
‘‘(2) staying execution against the debtor’s as-
sets to the extent it has not been stayed under sec-
tion 1520(a);
‘‘(3) suspending the right to transfer, encumber
or otherwise dispose of any assets of the debtor to
the extent this right has not been suspended under
section 1520(a);
‘‘(4) providing for the examination of witnesses,
the taking of evidence or the delivery of information
concerning the debtor’s assets, affairs, rights, obliga-
tions or liabilities;
‘‘(5) entrusting the administration or realiza-
tion of all or part of the debtor’s assets within the
territorial jurisdiction of the United States to the
foreign representative or another person, including
an examiner, authorized by the court;
‘‘(6) extending relief granted under section
1519(a); and
‘‘(7) granting any additional relief that may be
available to a trustee, except for relief available
under sections 522, 544, 545, 547, 548, 550, and
724(a).
274
‘‘(b) Upon recognition of a foreign proceeding, wheth-
er main or nonmain, the court may, at the request of the
foreign representative, entrust the distribution of all or
part of the debtor’s assets located in the United States
to the foreign representative or another person, including
an examiner, authorized by the court, provided that the
court is satisfied that the interests of creditors in the
United States are sufficiently protected.
‘‘(c) In granting relief under this section to a rep-
resentative of a foreign nonmain proceeding, the court
must be satisfied that the relief relates to assets that,
under the law of the United States, should be adminis-
tered in the foreign nonmain proceeding or concerns infor-
mation required in that proceeding.
‘‘(d) The court may not enjoin a police or regulatory
act of a governmental unit, including a criminal action or
proceeding, under this section.
‘‘(e) The standards, procedures, and limitations ap-
plicable to an injunction shall apply to relief under para-
graphs (1), (2), (3), and (6) of subsection (a).
‘‘(f) The exercise of rights not subject to the stay
arising under section 362(a) pursuant to paragraph (6),
(7), (17), or (28) of section 362(b) or pursuant to section
362(l) shall not be stayed by any order of a court or ad-
ministrative agency in any proceeding under this chapter.
275
‘‘§ 1522. Protection of creditors and other interested
persons
‘‘(a) The court may grant relief under section 1519
or 1521, or may modify or terminate relief under sub-
section (c), only if the interests of the creditors and other
interested entities, including the debtor, are sufficiently
protected.
‘‘(b) The court may subject relief granted under sec-
tion 1519 or 1521, or the operation of the debtor’s busi-
ness under section 1520(a)(3) of this title, to conditions
it considers appropriate, including the giving of security
or the filing of a bond.
‘‘(c) The court may, at the request of the foreign rep-
resentative or an entity affected by relief granted under
section 1519 or 1521, or at its own motion, modify or
terminate such relief.
‘‘(d) Section 1104(d) shall apply to the appointment
of an examiner under this chapter. Any examiner shall
comply with the qualification requirements imposed on a
trustee by section 322.
‘‘§ 1523. Actions to avoid acts detrimental to creditors
‘‘(a) Upon recognition of a foreign proceeding, the
foreign representative has standing in a case concerning
the debtor pending under another chapter of this title to
initiate actions under sections 522, 544, 545, 547, 548,
550, 553, and 724(a).
276
‘‘(b) When the foreign proceeding is a foreign
nonmain proceeding, the court must be satisfied that an
action under subsection (a) relates to assets that, under
United States law, should be administered in the foreign
nonmain proceeding.
‘‘§ 1524. Intervention by a foreign representative
‘‘Upon recognition of a foreign proceeding, the for-
eign representative may intervene in any proceedings in
a State or Federal court in the United States in which
the debtor is a party.
‘‘SUBCHAPTER IV—COOPERATION WITH FOR-
EIGN COURTS AND FOREIGN REPRESENTA-
TIVES
‘‘§ 1525. Cooperation and direct communication be-
tween the court and foreign courts or for-
eign representatives
‘‘(a) Consistent with section 1501, the court shall co-
operate to the maximum extent possible with foreign
courts or foreign representatives, either directly or
through the trustee.
‘‘(b) The court is entitled to communicate directly
with, or to request information or assistance directly from,
foreign courts or foreign representatives, subject to the
rights of parties in interest to notice and participation.
277
‘‘§ 1526. Cooperation and direct communication be-
tween the trustee and foreign courts or
foreign representatives
‘‘(a) Consistent with section 1501, the trustee or
other person, including an examiner, authorized by the
court, shall, subject to the supervision of the court, cooper-
ate to the maximum extent possible with foreign courts
or foreign representatives.
‘‘(b) The trustee or other person, including an exam-
iner, authorized by the court is entitled, subject to the su-
pervision of the court, to communicate directly with for-
eign courts or foreign representatives.
‘‘§ 1527. Forms of cooperation
‘‘Cooperation referred to in sections 1525 and 1526
may be implemented by any appropriate means,
including—
‘‘(1) appointment of a person or body, including
an examiner, to act at the direction of the court;
‘‘(2) communication of information by any
means considered appropriate by the court;
‘‘(3) coordination of the administration and su-
pervision of the debtor’s assets and affairs;
‘‘(4) approval or implementation of agreements
concerning the coordination of proceedings; and
‘‘(5) coordination of concurrent proceedings re-
garding the same debtor.
278
‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS
‘‘§ 1528. Commencement of a case under this title
after recognition of a foreign main pro-
ceeding
‘‘After recognition of a foreign main proceeding, a
case under another chapter of this title may be commenced
only if the debtor has assets in the United States. The
effects of such case shall be restricted to the assets of the
debtor that are within the territorial jurisdiction of the
United States and, to the extent necessary to implement
cooperation and coordination under sections 1525, 1526,
and 1527, to other assets of the debtor that are within
the jurisdiction of the court under sections 541(a) of this
title, and 1334(e) of title 28, to the extent that such other
assets are not subject to the jurisdiction and control of
a foreign proceeding that has been recognized under this
chapter.
‘‘§ 1529. Coordination of a case under this title and a
foreign proceeding
‘‘If a foreign proceeding and a case under another
chapter of this title are taking place concurrently regard-
ing the same debtor, the court shall seek cooperation and
coordination under sections 1525, 1526, and 1527, and
the following shall apply:
279
‘‘(1) If the case in the United States is taking
place at the time the petition for recognition of the
foreign proceeding is filed—
‘‘(A) any relief granted under sections
1519 or 1521 must be consistent with the relief
granted in the case in the United States; and
‘‘(B) even if the foreign proceeding is rec-
ognized as a foreign main proceeding, section
1520 does not apply.
‘‘(2) If a case in the United States under this
title commences after recognition, or after the filing
of the petition for recognition, of the foreign
proceeding—
‘‘(A) any relief in effect under sections
1519 or 1521 shall be reviewed by the court
and shall be modified or terminated if incon-
sistent with the case in the United States; and
‘‘(B) if the foreign proceeding is a foreign
main proceeding, the stay and suspension re-
ferred to in section 1520(a) shall be modified or
terminated if inconsistent with the relief grant-
ed in the case in the United States.
‘‘(3) In granting, extending, or modifying relief
granted to a representative of a foreign nonmain
proceeding, the court must be satisfied that the re-
280
lief relates to assets that, under the laws of the
United States, should be administered in the foreign
nonmain proceeding or concerns information re-
quired in that proceeding.
‘‘(4) In achieving cooperation and coordination
under sections 1528 and 1529, the court may grant
any of the relief authorized under section 305.
‘‘§ 1530. Coordination of more than 1 foreign pro-
ceeding
‘‘In matters referred to in section 1501, with respect
to more than 1 foreign proceeding regarding the debtor,
the court shall seek cooperation and coordination under
sections 1525, 1526, and 1527, and the following shall
apply:
‘‘(1) Any relief granted under section 1519 or
1521 to a representative of a foreign nonmain pro-
ceeding after recognition of a foreign main pro-
ceeding must be consistent with the foreign main
proceeding.
‘‘(2) If a foreign main proceeding is recognized
after recognition, or after the filing of a petition for
recognition, of a foreign nonmain proceeding, any
relief in effect under section 1519 or 1521 shall be
reviewed by the court and shall be modified or termi-
281
nated if inconsistent with the foreign main pro-
ceeding.
‘‘(3) If, after recognition of a foreign nonmain
proceeding, another foreign nonmain proceeding is
recognized, the court shall grant, modify, or termi-
nate relief for the purpose of facilitating coordina-
tion of the proceedings.
‘‘§ 1531. Presumption of insolvency based on recogni-
tion of a foreign main proceeding
‘‘In the absence of evidence to the contrary, recogni-
tion of a foreign main proceeding is, for the purpose of
commencing a proceeding under section 303, proof that
the debtor is generally not paying its debts as such debts
become due.
‘‘§ 1532. Rule of payment in concurrent proceedings
‘‘Without prejudice to secured claims or rights in
rem, a creditor who has received payment with respect to
its claim in a foreign proceeding pursuant to a law relating
to insolvency may not receive a payment for the same
claim in a case under any other chapter of this title re-
garding the debtor, so long as the payment to other credi-
tors of the same class is proportionately less than the pay-
ment the creditor has already received.’’.
282
(b) CLERICAL AMENDMENT.—The table of chapters
for title 11, United States Code, is amended by inserting
after the item relating to chapter 13 the following:
‘‘15. Ancillary and Other Cross-Border Cases ........................ 1501’’.
SEC. 802. OTHER AMENDMENTS TO TITLES 11 AND 28,
UNITED STATES CODE.
(a) APPLICABILITY OF CHAPTERS.—Section 103 of
title 11, United States Code, is amended—
(1) in subsection (a), by inserting before the pe-
riod the following: ‘‘, and this chapter, sections 307,
362(l), 555 through 557, and 559 through 562
apply in a case under chapter 15’’; and
(2) by adding at the end the following:
‘‘(k) Chapter 15 applies only in a case under such
chapter, except that—
‘‘(1) sections 1505, 1513, and 1514 apply in all
cases under this title; and
‘‘(2) section 1509 applies whether or not a case
under this title is pending.’’.
(b) DEFINITIONS.—Section 101 of title 11, United
States Code, is amended by striking paragraphs (23) and
(24) and inserting the following:
‘‘(23) ‘foreign proceeding’ means a collective ju-
dicial or administrative proceeding in a foreign coun-
try, including an interim proceeding, under a law re-
lating to insolvency or adjustment of debt in which
283
proceeding the assets and affairs of the debtor are
subject to control or supervision by a foreign court,
for the purpose of reorganization or liquidation;
‘‘(24) ‘foreign representative’ means a person
or body, including a person or body appointed on an
interim basis, authorized in a foreign proceeding to
administer the reorganization or the liquidation of
the debtor’s assets or affairs or to act as a rep-
resentative of the foreign proceeding;’’.
(c) AMENDMENTS TO TITLE 28, UNITED STATES
CODE.—
(1) PROCEDURES.—Section 157(b)(2) of title
28, United States Code, is amended—
(A) in subparagraph (N), by striking
‘‘and’’ at the end;
(B) in subparagraph (O), by striking the
period at the end and inserting ‘‘; and’’; and
(C) by adding at the end the following:
‘‘(P) recognition of foreign proceedings and
other matters under chapter 15 of title 11.’’.
(2) BANKRUPTCY CASES AND PROCEEDINGS.—
Section 1334(c) of title 28, United States Code, is
amended by striking ‘‘Nothing in’’ and inserting
‘‘Except with respect to a case under chapter 15 of
title 11, nothing in’’.
284
(3) DUTIES OF TRUSTEES.—Section 586(a)(3)
of title 28, United States Code, is amended by strik-
ing ‘‘or 13’’ and inserting ‘‘13, or 15’’.
(4) VENUE OF CASES ANCILLARY TO FOREIGN
PROCEEDINGS.—Section 1410 of title 28, United
States Code, is amended to read as follows:
‘‘§ 1410. Venue of cases ancillary to foreign pro-
ceedings
‘‘A case under chapter 15 of title 11 may be com-
menced in the district court for the district—
‘‘(1) in which the debtor has its principal place
of business or principal assets in the United States;
‘‘(2) if the debtor does not have a place of busi-
ness or assets in the United States, in which there
is pending against the debtor an action or pro-
ceeding in a Federal or State court; or
‘‘(3) in a case other than those specified in
paragraph (1) or (2), in which venue will be con-
sistent with the interests of justice and the conven-
ience of the parties, having regard to the relief
sought by the foreign representative.’’.
(d) OTHER SECTIONS OF TITLE 11.—
(1) Section 109(b)(3) of title 11, United States
Code, is amended to read as follows:
285
‘‘(3)(A) a foreign insurance company, engaged
in such business in the United States; or
‘‘(B) a foreign bank, savings bank, cooperative
bank, savings and loan association, building and
loan association, or credit union, that has a branch
or agency (as defined in section 1(b) of the Inter-
national Banking Act of 1978 (12 U.S.C. 3101) in
the United States.’’.
(2) Section 303(k) of title 11, United States
Code, is repealed.
(3)(A) Section 304 of title 11, United States
Code, is repealed.
(B) The table of sections at the beginning of
chapter 3 of title 11, United States Code, is amend-
ed by striking the item relating to section 304.
(C) Section 306 of title 11, United States Code,
is amended by striking ‘‘, 304,’’ each place it ap-
pears.
(4) Section 305(a)(2) of title 11, United States
Code, is amended to read as follows:
‘‘(2)(A) a petition under section 1515 of this
title for recognition of a foreign proceeding has been
granted; and
286
‘‘(B) the purposes of chapter 15 of this title
would be best served by such dismissal or suspen-
sion.’’.
(5) Section 508 of title 11, United States Code,
is amended—
(A) by striking subsection (a); and
(B) in subsection (b), by striking ‘‘(b)’’.
TITLE IX—FINANCIAL
CONTRACT PROVISIONS
SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CON-
SERVATORS OR RECEIVERS OF INSURED DE-
POSITORY INSTITUTIONS.
(a) DEFINITION
OF QUALIFIED FINANCIAL CON-
TRACT.—Section 11(e)(8)(D)(i) of the Federal Deposit In-
surance Act (12 U.S.C. 1821(e)(8)(D)(i)) is amended by
inserting ‘‘, resolution, or order’’ after ‘‘any similar agree-
ment that the Corporation determines by regulation’’.
(b) DEFINITION OF SECURITIES CONTRACT.—Sec-
tion 11(e)(8)(D)(ii) of the Federal Deposit Insurance Act
(12 U.S.C. 1821(e)(8)(D)(ii)) is amended to read as fol-
lows:
‘‘(ii) SECURITIES
CONTRACT.—The
term ‘securities contract’—
‘‘(I) means a contract for the
purchase, sale, or loan of a security, a
287
certificate of deposit, a mortgage loan,
or any interest in a mortgage loan, a
group or index of securities, certifi-
cates of deposit, or mortgage loans or
interests therein (including any inter-
est therein or based on the value
thereof) or any option on any of the
foregoing, including any option to
purchase or sell any such security,
certificate of deposit, mortgage loan,
interest, group or index, or option,
and including any repurchase or re-
verse repurchase transaction on any
such security, certificate of deposit,
loan, interest, group or index, or op-
tion;
‘‘(II) does not include any pur-
chase, sale, or repurchase obligation
under a participation in a commercial
mortgage loan unless the Corporation
determines by regulation, resolution,
or order to include any such agree-
ment within the meaning of such
term;
288
‘‘(III) means any option entered
into on a national securities exchange
relating to foreign currencies;
‘‘(IV) means the guarantee by or
to any securities clearing agency of
any settlement of cash, securities, cer-
tificates of deposit, mortgage loans or
interests therein, group or index of se-
curities, certificates of deposit, or
mortgage loans or interests therein
(including any interest therein or
based on the value thereof) or option
on any of the foregoing, including any
option to purchase or sell any such se-
curity, certificate of deposit, loan, in-
terest, group or index, or option;
‘‘(V) means any margin loan;
‘‘(VI) means any other agree-
ment or transaction that is similar to
any agreement or transaction referred
to in this clause;
‘‘(VII) means any combination of
the agreements or transactions re-
ferred to in this clause;
289
‘‘(VIII) means any option to
enter into any agreement or trans-
action referred to in this clause;
‘‘(IX) means a master agreement
that provides for an agreement or
transaction referred to in subclause
(I), (III), (IV), (V), (VI), (VII), or
(VIII), together with all supplements
to any such master agreement, with-
out regard to whether the master
agreement provides for an agreement
or transaction that is not a securities
contract under this clause, except that
the master agreement shall be consid-
ered to be a securities contract under
this clause only with respect to each
agreement or transaction under the
master agreement that is referred to
in subclause (I), (III), (IV), (V), (VI),
(VII), or (VIII); and
‘‘(X) means any security agree-
ment or arrangement or other credit
enhancement related to any agree-
ment or transaction referred to in this
clause or any guarantee or reimburse-
290
ment obligation in connection with
any agreement or transaction referred
to in this clause.’’.
(c) DEFINITION OF COMMODITY CONTRACT.—Sec-
tion 11(e)(8)(D)(iii) of the Federal Deposit Insurance Act
(12 U.S.C. 1821(e)(8)(D)(iii)) is amended to read as fol-
lows:
‘‘(iii) COMMODITY
CONTRACT.—The
term ‘commodity contract’ means—
‘‘(I) with respect to a futures
commission merchant, a contract for
the purchase or sale of a commodity
for future delivery on, or subject to
the rules of, a contract market or
board of trade;
‘‘(II) with respect to a foreign fu-
tures commission merchant, a foreign
future;
‘‘(III) with respect to a leverage
transaction 
merchant, 
a 
leverage
transaction;
‘‘(IV) with respect to a clearing
organization, a contract for the pur-
chase or sale of a commodity for fu-
ture delivery on, or subject to the
291
rules of, a contract market or board
of trade that is cleared by such clear-
ing organization, or commodity option
traded on, or subject to the rules of,
a contract market or board of trade
that is cleared by such clearing orga-
nization;
‘‘(V) with respect to a commodity
options dealer, a commodity option;
‘‘(VI) any other agreement or
transaction that is similar to any
agreement or transaction referred to
in this clause;
‘‘(VII) any combination of the
agreements or transactions referred to
in this clause;
‘‘(VIII) any option to enter into
any agreement or transaction referred
to in this clause;
‘‘(IX) a master agreement that
provides for an agreement or trans-
action referred to in subclause (I),
(II), (III), (IV), (V), (VI), (VII), or
(VIII), together with all supplements
to any such master agreement, with-
292
out regard to whether the master
agreement provides for an agreement
or transaction that is not a com-
modity contract under this clause, ex-
cept that the master agreement shall
be considered to be a commodity con-
tract under this clause only with re-
spect to each agreement or trans-
action under the master agreement
that is referred to in subclause (I),
(II), (III), (IV), (V), (VI), (VII), or
(VIII); or
‘‘(X) any security agreement or
arrangement or other credit enhance-
ment related to any agreement or
transaction referred to in this clause
or any guarantee or reimbursement
obligation in connection with any
agreement or transaction referred to
in this clause.’’.
(d) DEFINITION OF FORWARD CONTRACT.—Section
11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(iv)) is amended to read as follows:
‘‘(iv) 
FORWARD
CONTRACT.—The
term ‘forward contract’ means—
293
‘‘(I) a contract (other than a
commodity contract) for the purchase,
sale, or transfer of a commodity or
any similar good, article, service,
right, or interest which is presently or
in the future becomes the subject of
dealing in the forward contract trade,
or product or byproduct thereof, with
a maturity date more than 2 days
after the date the contract is entered
into, including, a repurchase trans-
action, reverse repurchase transaction,
consignment, 
lease, 
swap, 
hedge
transaction, deposit, loan, option, allo-
cated transaction, unallocated trans-
action, or any other similar agree-
ment;
‘‘(II) any combination of agree-
ments or transactions referred to in
subclauses (I) and (III);
‘‘(III) any option to enter into
any agreement or transaction referred
to in subclause (I) or (II);
‘‘(IV) a master agreement that
provides for an agreement or trans-
294
action referred to in subclauses (I),
(II), or (III), together with all supple-
ments to any such master agreement,
without regard to whether the master
agreement provides for an agreement
or transaction that is not a forward
contract under this clause, except that
the master agreement shall be consid-
ered to be a forward contract under
this clause only with respect to each
agreement or transaction under the
master agreement that is referred to
in subclause (I), (II), or (III); or
‘‘(V) any security agreement or
arrangement or other credit enhance-
ment related to any agreement or
transaction referred to in subclause
(I), (II), (III), or (IV) or any guar-
antee or reimbursement obligation in
connection with any agreement or
transaction referred to in any such
subclause.’’.
(e) DEFINITION
OF REPURCHASE AGREEMENT.—
Section 11(e)(8)(D)(v) of the Federal Deposit Insurance
295
Act (12 U.S.C. 1821(e)(8)(D)(v)) is amended to read as
follows:
‘‘(v) REPURCHASE AGREEMENT.—The
term ‘repurchase agreement’ (which defini-
tion also applies to a reverse repurchase
agreement)—
‘‘(I) means an agreement, includ-
ing related terms, which provides for
the transfer of one or more certifi-
cates of deposit, mortgage-related se-
curities (as such term is defined in
the Securities Exchange Act of 1934),
mortgage loans, interests in mortgage-
related securities or mortgage loans,
eligible bankers’ acceptances, qualified
foreign government securities or secu-
rities that are direct obligations of, or
that are fully guaranteed by, the
United States or any agency of the
United States against the transfer of
funds by the transferee of such certifi-
cates of deposit, eligible bankers’ ac-
ceptances, securities, loans, or inter-
ests with a simultaneous agreement
by such transferee to transfer to the
296
transferor thereof certificates of de-
posit, eligible bankers’ acceptances,
securities, loans, or interests as de-
scribed above, at a date certain not
later than 1 year after such transfers
or on demand, against the transfer of
funds, or any other similar agreement;
‘‘(II) does not include any repur-
chase obligation under a participation
in a commercial mortgage loan unless
the Corporation determines by regula-
tion, resolution, or order to include
any such participation within the
meaning of such term;
‘‘(III) means any combination of
agreements or transactions referred to
in subclauses (I) and (IV);
‘‘(IV) means any option to enter
into any agreement or transaction re-
ferred to in subclause (I) or (III);
‘‘(V) means a master agreement
that provides for an agreement or
transaction referred to in subclause
(I), (III), or (IV), together with all
supplements to any such master
297
agreement, without regard to whether
the master agreement provides for an
agreement or transaction that is not a
repurchase 
agreement 
under 
this
clause, except that the master agree-
ment shall be considered to be a re-
purchase agreement under this sub-
clause only with respect to each agree-
ment or transaction under the master
agreement that is referred to in sub-
clause (I), (III), or (IV); and
‘‘(VI) means any security agree-
ment or arrangement or other credit
enhancement related to any agree-
ment or transaction referred to in
subclause (I), (III), (IV), or (V) or
any guarantee or reimbursement obli-
gation in connection with any agree-
ment or transaction referred to in any
such subclause.
For purposes of this clause, the term
‘qualified foreign government security’
means a security that is a direct obligation
of, or that is fully guaranteed by, the cen-
tral government of a member of the Orga-
298
nization for Economic Cooperation and
Development (as determined by regulation
or order adopted by the appropriate Fed-
eral banking authority).’’.
(f) DEFINITION
OF SWAP AGREEMENT.—Section
11(e)(8)(D)(vi) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(vi)) is amended to read as follows:
‘‘(vi) SWAP AGREEMENT.—The term
‘swap agreement’ means—
‘‘(I) any agreement, including the
terms and conditions incorporated by
reference in any such agreement,
which is an interest rate swap, option,
future, or forward agreement, includ-
ing a rate floor, rate cap, rate collar,
cross-currency rate swap, and basis
swap; a spot, same day-tomorrow, to-
morrow-next, forward, or other for-
eign exchange or precious metals
agreement; a currency swap, option,
future, or forward agreement; an eq-
uity index or equity swap, option, fu-
ture, or forward agreement; a debt
index or debt swap, option, future, or
forward agreement; a total return,
299
credit spread or credit swap, option,
future, or forward agreement; a com-
modity index or commodity swap, op-
tion, future, or forward agreement; or
a weather swap, weather derivative, or
weather option;
‘‘(II) any agreement or trans-
action that is similar to any other
agreement or transaction referred to
in this clause and that has been, is
presently, or in the future becomes,
the subject of recurrent dealings in
the swap markets (including terms
and conditions incorporated by ref-
erence in such agreement) and that is
a forward, swap, future, or option on
one or more rates, currencies, com-
modities, equity securities or other eq-
uity instruments, debt securities or
other debt instruments, quantitative
measures associated with an occur-
rence, extent of an occurrence or con-
tingency associated with a financial,
commercial or economic consequence,
or economic or financial indices or
300
measures of economic or financial risk
or value;
‘‘(III) any combination of agree-
ments or transactions referred to in
this clause;
‘‘(IV) any option to enter into
any agreement or transaction referred
to in this clause;
‘‘(V) a master agreement that
provides for an agreement or trans-
action referred to in subclause (I),
(II), (III), or (IV), together with all
supplements to any such master
agreement, without regard to whether
the master agreement contains an
agreement or transaction that is not a
swap agreement under this clause, ex-
cept that the master agreement shall
be considered to be a swap agreement
under this clause only with respect to
each agreement or transaction under
the master agreement that is referred
to in subclause (I), (II), (III), or (IV);
and
301
‘‘(VI) any security agreement or
arrangement or other credit enhance-
ment related to any agreements or
transactions referred to in subclause
(I), (II), (III), (IV), or (V) or any
guarantee or reimbursement obliga-
tion in connection with any agreement
or transaction referred to in any such
subclause.
Such term is applicable for purposes of
this title only and shall not be construed or
applied so as to challenge or affect the
characterization, definition, or treatment of
any swap agreement under any other stat-
ute, regulation, or rule, including the Secu-
rities Act of 1933, the Securities Exchange
Act of 1934, the Public Utility Holding
Company Act of 1935, the Trust Indenture
Act of 1939, the Investment Company Act
of 1940, the Investment Advisers Act of
1940, the Securities Investor Protection
Act of 1970, the Commodity Exchange
Act, the Gramm-Leach-Bliley Act, the
Legal Certainty for Bank Products Act of
2000, and the regulations promulgated by
302
the Securities and Exchange Commission
or the Commodity Futures Trading Com-
mission.’’.
(g) 
DEFINITION
OF
TRANSFER.—Section
11(e)(8)(D)(viii) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(D)(viii)) is amended to read as follows:
‘‘(viii) TRANSFER.—The term ‘trans-
fer’ means every mode, direct or indirect,
absolute or conditional, voluntary or invol-
untary, of disposing of or parting with
property or with an interest in property,
including retention of title as a security in-
terest and foreclosure of the depository
institutions’s equity of redemption.’’.
(h) TREATMENT
OF QUALIFIED FINANCIAL CON-
TRACTS.—Section 11(e)(8) of the Federal Deposit Insur-
ance Act (12 U.S.C. 1821(e)(8)) is amended—
(1) in subparagraph (A)—
(A) by striking ‘‘paragraph (10)’’ and in-
serting ‘‘paragraphs (9) and (10)’’;
(B) in clause (i), by striking ‘‘to cause the
termination or liquidation’’ and inserting ‘‘such
person has to cause the termination, liquida-
tion, or acceleration’’; and
303
(C) by striking clause (ii) and inserting the
following:
‘‘(ii) any right under any security
agreement or arrangement or other credit
enhancement related to one or more quali-
fied financial contracts described in clause
(i);’’; and
(2) in subparagraph (E), by striking clause (ii)
and inserting the following:
‘‘(ii) any right under any security
agreement or arrangement or other credit
enhancement related to one or more quali-
fied financial contracts described in clause
(i);’’.
(i) 
AVOIDANCE
OF
TRANSFERS.—Section
11(e)(8)(C)(i) of the Federal Deposit Insurance Act (12
U.S.C. 1821(e)(8)(C)(i)) is amended by inserting ‘‘section
5242 of the Revised Statutes of the United States (12
U.S.C. 91) or any other Federal or State law relating to
the avoidance of preferential or fraudulent transfers,’’ be-
fore ‘‘the Corporation’’.
304
SEC. 902. AUTHORITY OF THE CORPORATION WITH RE-
SPECT TO FAILED AND FAILING INSTITU-
TIONS.
(a) IN GENERAL.—Section 11(e)(8) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is
amended—
(1) in subparagraph (E), by striking ‘‘other
than paragraph (12) of this subsection, subsection
(d)(9)’’ and inserting ‘‘other than subsections (d)(9)
and (e)(10)’’; and
(2) by adding at the end the following new sub-
paragraphs:
‘‘(F) CLARIFICATION.—No provision of law
shall be construed as limiting the right or
power of the Corporation, or authorizing any
court or agency to limit or delay, in any man-
ner, the right or power of the Corporation to
transfer any qualified financial contract in ac-
cordance with paragraphs (9) and (10) of this
subsection or to disaffirm or repudiate any such
contract in accordance with subsection (e)(1) of
this section.
‘‘(G) WALKAWAY
CLAUSES
NOT
EFFEC-
TIVE.—
‘‘(i) IN
GENERAL.—Notwithstanding
the provisions of subparagraphs (A) and
305
(E), and sections 403 and 404 of the Fed-
eral Deposit Insurance Corporation Im-
provement Act of 1991, no walkaway
clause shall be enforceable in a qualified fi-
nancial contract of an insured depository
institution in default.
‘‘(ii) WALKAWAY CLAUSE DEFINED.—
For purposes of this subparagraph, the
term ‘walkaway clause’ means a provision
in a qualified financial contract that, after
calculation of a value of a party’s position
or an amount due to or from 1 of the par-
ties in accordance with its terms upon ter-
mination, liquidation, or acceleration of the
qualified financial contract, either does not
create a payment obligation of a party or
extinguishes a payment obligation of a
party in whole or in part solely because of
such party’s status as a nondefaulting
party.’’.
(b) TECHNICAL AND CONFORMING AMENDMENT.—
Section 11(e)(12)(A) of the Federal Deposit Insurance
Act (12 U.S.C. 1821(e)(12)(A)) is amended by inserting
‘‘or the exercise of rights or powers by’’ after ‘‘the ap-
pointment of’’.
306
SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF
QUALIFIED FINANCIAL CONTRACTS.
(a) TRANSFERS
OF QUALIFIED FINANCIAL CON-
TRACTS TO FINANCIAL INSTITUTIONS.—Section 11(e)(9)
of the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(9)) is amended to read as follows:
‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON-
TRACTS.—
‘‘(A) IN GENERAL.—In making any trans-
fer of assets or liabilities of a depository institu-
tion in default which includes any qualified fi-
nancial contract, the conservator or receiver for
such depository institution shall either—
‘‘(i) transfer to one financial institu-
tion, other than a financial institution for
which a conservator, receiver, trustee in
bankruptcy, or other legal custodian has
been appointed or which is otherwise the
subject of a bankruptcy or insolvency
proceeding—
‘‘(I) all qualified financial con-
tracts between any person or any af-
filiate of such person and the deposi-
tory institution in default;
‘‘(II) all claims of such person or
any affiliate of such person against
307
such depository institution under any
such contract (other than any claim
which, under the terms of any such
contract, is subordinated to the claims
of general unsecured creditors of such
institution);
‘‘(III) all claims of such deposi-
tory institution against such person or
any affiliate of such person under any
such contract; and
‘‘(IV) all property securing or
any other credit enhancement for any
contract described in subclause (I) or
any claim described in subclause (II)
or (III) under any such contract; or
‘‘(ii) transfer none of the qualified fi-
nancial contracts, claims, property or other
credit enhancement referred to in clause (i)
(with respect to such person and any affil-
iate of such person).
‘‘(B) TRANSFER TO FOREIGN BANK, FOR-
EIGN FINANCIAL INSTITUTION, OR BRANCH OR
AGENCY OF A FOREIGN BANK OR FINANCIAL IN-
STITUTION.—In transferring any qualified fi-
nancial contracts and related claims and prop-
308
erty under subparagraph (A)(i), the conservator
or receiver for the depository institution shall
not make such transfer to a foreign bank, fi-
nancial institution organized under the laws of
a foreign country, or a branch or agency of a
foreign bank or financial institution unless,
under the law applicable to such bank, financial
institution, branch or agency, to the qualified
financial contracts, and to any netting contract,
any security agreement or arrangement or other
credit enhancement related to one or more
qualified financial contracts, the contractual
rights of the parties to such qualified financial
contracts, netting contracts, security agree-
ments or arrangements, or other credit en-
hancements are enforceable substantially to the
same extent as permitted under this section.
‘‘(C) TRANSFER OF CONTRACTS SUBJECT
TO
THE
RULES
OF
A
CLEARING
ORGANIZA-
TION.—In the event that a conservator or re-
ceiver transfers any qualified financial contract
and related claims, property, and credit en-
hancements pursuant to subparagraph (A)(i)
and such contract is cleared by or subject to the
rules of a clearing organization, the clearing or-
309
ganization shall not be required to accept the
transferee as a member by virtue of the trans-
fer.
‘‘(D) DEFINITION.—For purposes of this
paragraph, the term ‘financial institution’
means a broker or dealer, a depository institu-
tion, a futures commission merchant, or any
other institution, as determined by the Corpora-
tion by regulation to be a financial institution
and the term ‘clearing organization’ means a
‘clearing organization’ as defined in section 402
of the Federal Deposit Insurance Corporation
Improvement Act of 1991.’’.
(b) NOTICE TO QUALIFIED FINANCIAL CONTRACT
COUNTERPARTIES.—Section 11(e)(10)(A) of the Federal
Deposit Insurance Act (12 U.S.C. 1821(e)(10)(A)) is
amended in the material immediately following clause (ii)
by striking ‘‘the conservator’’ and all that follows through
the period and inserting the following: ‘‘the conservator
or receiver shall notify any person who is a party to any
such contract of such transfer by 5:00 p.m. (eastern time)
on the business day following the date of the appointment
of the receiver in the case of a receivership, or the business
day following such transfer in the case of a conservator-
ship.’’.
310
(c) RIGHTS AGAINST RECEIVER AND TREATMENT OF
BRIDGE BANKS.—Section 11(e)(10) of the Federal De-
posit 
Insurance 
Act 
(12 
U.S.C. 
1821(e)(10)) 
is
amended—
(1) by redesignating subparagraph (B) as sub-
paragraph (D); and
(2) by inserting after subparagraph (A) the fol-
lowing new subparagraphs:
‘‘(B) CERTAIN
RIGHTS
NOT
ENFORCE-
ABLE.—
‘‘(i) RECEIVERSHIP.—A person who is
a party to a qualified financial contract
with an insured depository institution may
not exercise any right that such person has
to terminate, liquidate, or net such con-
tract under paragraph (8)(A) of this sub-
section or section 403 or 404 of the Fed-
eral Deposit Insurance Corporation Im-
provement Act of 1991, solely by reason of
or incidental to the appointment of a re-
ceiver for the depository institution (or the
insolvency or financial condition of the de-
pository institution for which the receiver
has been appointed)—
311
‘‘(I) until 5:00 p.m. (eastern
time) on the business day following
the date of the appointment of the re-
ceiver; or
‘‘(II) after the person has re-
ceived notice that the contract has
been transferred pursuant to para-
graph (9)(A).
‘‘(ii) CONSERVATORSHIP.—A person
who is a party to a qualified financial con-
tract with an insured depository institution
may not exercise any right that such per-
son has to terminate, liquidate, or net such
contract under paragraph (8)(E) of this
subsection or sections 403 or 404 of the
Federal Deposit Insurance Corporation
Improvement Act of 1991, solely by reason
of or incidental to the appointment of a
conservator for the depository institution
(or the insolvency or financial condition of
the depository institution for which the
conservator has been appointed).
‘‘(iii) NOTICE.—For purposes of this
paragraph, the Corporation as receiver or
conservator of an insured depository insti-
312
tution shall be deemed to have notified a
person who is a party to a qualified finan-
cial contract with such depository institu-
tion if the Corporation has taken steps
reasonably calculated to provide notice to
such person by the time specified in sub-
paragraph (A).
‘‘(C) TREATMENT
OF
BRIDGE
BANKS.—
The following institutions shall not be consid-
ered to be a financial institution for which a
conservator, receiver, trustee in bankruptcy, or
other legal custodian has been appointed or
which is otherwise the subject of a bankruptcy
or insolvency proceeding for purposes of para-
graph (9):
‘‘(i) A bridge bank.
‘‘(ii) A depository institution orga-
nized by the Corporation, for which a con-
servator is appointed either—
‘‘(I) immediately upon the orga-
nization of the institution; or
‘‘(II) at the time of a purchase
and assumption transaction between
the depository institution and the Cor-
313
poration as receiver for a depository
institution in default.’’.
SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR
REPUDIATION 
OF 
QUALIFIED 
FINANCIAL
CONTRACTS.
Section 11(e) of the Federal Deposit Insurance Act
(12 U.S.C. 1821(e)) is amended—
(1) by redesignating paragraphs (11) through
(15) as paragraphs (12) through (16), respectively;
and
(2) by inserting after paragraph (10) the fol-
lowing new paragraph:
‘‘(11) DISAFFIRMANCE
OR
REPUDIATION
OF
QUALIFIED
FINANCIAL
CONTRACTS.—In exercising
the rights of disaffirmance or repudiation of a con-
servator or receiver with respect to any qualified fi-
nancial contract to which an insured depository in-
stitution is a party, the conservator or receiver for
such institution shall either—
‘‘(A) disaffirm or repudiate all qualified fi-
nancial contracts between—
‘‘(i) any person or any affiliate of
such person; and
‘‘(ii) the depository institution in de-
fault; or
314
‘‘(B) disaffirm or repudiate none of the
qualified financial contracts referred to in sub-
paragraph (A) (with respect to such person or
any affiliate of such person).’’.
SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER
AGREEMENTS.
Section 11(e)(8)(D)(vii) of the Federal Deposit In-
surance Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to
read as follows:
‘‘(vii) 
TREATMENT
OF
MASTER
AGREEMENT
AS
ONE
AGREEMENT.—Any
master agreement for any contract or
agreement described in any preceding
clause of this subparagraph (or any master
agreement for such master agreement or
agreements), together with all supplements
to such master agreement, shall be treated
as a single agreement and a single quali-
fied financial contract. If a master agree-
ment contains provisions relating to agree-
ments or transactions that are not them-
selves qualified financial contracts, the
master agreement shall be deemed to be a
qualified financial contract only with re-
315
spect to those transactions that are them-
selves qualified financial contracts.’’.
SEC. 906. FEDERAL DEPOSIT INSURANCE CORPORATION
IMPROVEMENT ACT OF 1991.
(a) DEFINITIONS.—Section 402 of the Federal De-
posit Insurance Corporation Improvement Act of 1991 (12
U.S.C. 4402) is amended—
(1) in paragraph (2)—
(A) in subparagraph (A)(ii), by inserting
before the semicolon ‘‘, or is exempt from such
registration by order of the Securities and Ex-
change Commission’’; and
(B) in subparagraph (B), by inserting be-
fore the period ‘‘, that has been granted an ex-
emption under section 4(c)(1) of the Com-
modity Exchange Act or that is a multilateral
clearing organization (as defined in section 408
of this Act)’’;
(2) in paragraph (6)—
(A) by redesignating subparagraphs (B)
through (D) as subparagraphs (C) through (E),
respectively;
(B) by inserting after subparagraph (A)
the following new subparagraph:
316
‘‘(B) an uninsured national bank or an un-
insured State bank that is a member of the
Federal Reserve System, if the national bank or
State member bank is not eligible to make ap-
plication to become an insured bank under sec-
tion 5 of the Federal Deposit Insurance Act;’’;
and
(C) by amending subparagraph (C) (as re-
designated) to read as follows:
‘‘(C) a branch or agency of a foreign bank,
a foreign bank and any branch or agency of the
foreign bank, or the foreign bank that estab-
lished the branch or agency, as those terms are
defined in section 1(b) of the International
Banking Act of 1978;’’;
(3) in paragraph (11), by inserting before the
period ‘‘and any other clearing organization with
which such clearing organization has a netting con-
tract’’;
(4) by amending paragraph (14)(A)(i) to read
as follows:
‘‘(i) means a contract or agreement
between 2 or more financial institutions,
clearing organizations, or members that
provides for netting present or future pay-
317
ment obligations or payment entitlements
(including liquidation or closeout values re-
lating to such obligations or entitlements)
among the parties to the agreement; and’’;
and
(5) by adding at the end the following new
paragraph:
‘‘(15) PAYMENT.—The term ‘payment’ means a
payment of United States dollars, another currency,
or a composite currency, and a noncash delivery, in-
cluding a payment or delivery to liquidate an
unmatured obligation.’’.
(b) ENFORCEABILITY OF BILATERAL NETTING CON-
TRACTS.—Section 403 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 (12 U.S.C. 4403)
is amended—
(1) by striking subsection (a) and inserting the
following:
‘‘(a) GENERAL RULE.—Notwithstanding any other
provision of State or Federal law (other than paragraphs
(8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal
Deposit Insurance Act or any order authorized under sec-
tion 5(b)(2) of the Securities Investor Protection Act of
1970), the covered contractual payment obligations and
the covered contractual payment entitlements between any
318
2 financial institutions shall be netted in accordance with,
and subject to the conditions of, the terms of any applica-
ble netting contract (except as provided in section
561(b)(2) of title 11, United States Code).’’; and
(2) by adding at the end the following new sub-
section:
‘‘(f) 
ENFORCEABILITY
OF
SECURITY
AGREE-
MENTS.—The provisions of any security agreement or ar-
rangement or other credit enhancement related to one or
more netting contracts between any 2 financial institu-
tions shall be enforceable in accordance with their terms
(except as provided in section 561(b)(2) of title 11, United
States Code), and shall not be stayed, avoided, or other-
wise limited by any State or Federal law (other than para-
graphs (8)(E), (8)(F), and (10)(B) of section 11(e) of the
Federal Deposit Insurance Act and section 5(b)(2) of the
Securities Investor Protection Act of 1970).’’.
(c) ENFORCEABILITY OF CLEARING ORGANIZATION
NETTING CONTRACTS.—Section 404 of the Federal De-
posit Insurance Corporation Improvement Act of 1991 (12
U.S.C. 4404) is amended—
(1) by striking subsection (a) and inserting the
following:
‘‘(a) GENERAL RULE.—Notwithstanding any other
provision of State or Federal law (other than paragraphs
319
(8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal
Deposit Insurance Act and any order authorized under
section 5(b)(2) of the Securities Investor Protection Act
of 1970), the covered contractual payment obligations and
the covered contractual payment entitlements of a member
of a clearing organization to and from all other members
of a clearing organization shall be netted in accordance
with and subject to the conditions of any applicable net-
ting contract (except as provided in section 561(b)(2) of
title 11, United States Code).’’; and
(2) by adding at the end the following new sub-
section:
‘‘(h) 
ENFORCEABILITY
OF
SECURITY
AGREE-
MENTS.—The provisions of any security agreement or ar-
rangement or other credit enhancement related to one or
more netting contracts between any 2 members of a clear-
ing organization shall be enforceable in accordance with
their terms (except as provided in section 561(b)(2) of
title 11, United States Code), and shall not be stayed,
avoided, or otherwise limited by any State or Federal law
(other than paragraphs (8)(E), (8)(F), and (10)(B) of sec-
tion 11(e) of the Federal Deposit Insurance Act and sec-
tion 5(b)(2) of the Securities Investor Protection Act of
1970).’’.
320
(d) ENFORCEABILITY OF CONTRACTS WITH UNIN-
SURED
NATIONAL
BANKS, 
UNINSURED
FEDERAL
BRANCHES AND AGENCIES, CERTAIN UNINSURED STATE
MEMBER BANKS, AND EDGE ACT CORPORATIONS.—The
Federal Deposit Insurance Corporation Improvement Act
of 1991 (12 U.S.C. 4401 et seq.) is amended—
(1) by redesignating section 407 as 407A; and
(2) by inserting after section 406 the following
new section:
‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED
NATIONAL 
BANKS, 
UNINSURED 
FEDERAL
BRANCHES AND AGENCIES, CERTAIN UNIN-
SURED STATE MEMBER BANKS, AND EDGE
ACT CORPORATIONS.
‘‘(a) IN GENERAL.—Notwithstanding any other pro-
vision of law, paragraphs (8), (9), (10), and (11) of section
11(e) of the Federal Deposit Insurance Act shall apply
to an uninsured national bank or uninsured Federal
branch or Federal agency, or a corporation chartered
under section 25A of the Federal Reserve Act or an unin-
sured State member bank which operates, or operates as,
a multilateral clearing organization pursuant to section
409 of this Act, except that for such purpose—
‘‘(1) any reference to the ‘Corporation as re-
ceiver’ or ‘the receiver or the Corporation’ shall refer
321
to the receiver of an uninsured national bank or un-
insured Federal branch or Federal agency appointed
by the Comptroller of the Currency in the case of an
uninsured national bank or uninsured Federal
branch or agency, or to the receiver of a corporation
chartered under section 25A of the Federal Reserve
Act or an uninsured State member bank appointed
by the Board of Governors of the Federal Reserve
System in the case of a corporation chartered under
section 25A of the Federal Reserve Act or an unin-
sured State member bank;
‘‘(2) any reference to the ‘Corporation’ (other
than in section 11(e)(8)(D) of such Act), the ‘Cor-
poration, whether acting as such or as conservator
or receiver’, a ‘receiver’, or a ‘conservator’ shall refer
to the receiver or conservator of an uninsured na-
tional bank or uninsured Federal branch or Federal
agency appointed by the Comptroller of the Cur-
rency in the case of an uninsured national bank or
uninsured Federal branch or agency, or to the re-
ceiver or conservator of a corporation chartered
under section 25A of the Federal Reserve Act or an
uninsured State member bank appointed by the
Board of Governors of the Federal Reserve System
in the case of a corporation chartered under section
322
25A of the Federal Reserve Act or an uninsured
State member bank; and
‘‘(3) any reference to an ‘insured depository in-
stitution’ or ‘depository institution’ shall refer to an
uninsured national bank, an uninsured Federal
branch or Federal agency a corporation chartered
under section 25A of the Federal Reserve Act or an
uninsured State member bank which operates, or op-
erates as, a multilateral clearing organization pursu-
ant to section 409 of this Act.
‘‘(b) LIABILITY.—The liability of a receiver or conser-
vator of an uninsured national bank, uninsured Federal
branch or agency a corporation chartered under section
25A of the Federal Reserve Act or an uninsured State
member bank which operates, or operates as, a multilat-
eral clearing organization pursuant to section 409 of this
Act, shall be determined in the same manner and subject
to the same limitations that apply to receivers and con-
servators of insured depository institutions under section
11(e) of the Federal Deposit Insurance Act.
‘‘(c) REGULATORY AUTHORITY.—
‘‘(1) IN
GENERAL.—The Comptroller of the
Currency and the Board of Governors of the Federal
Reserve System, in consultation with the Federal
323
Deposit Insurance Corporation, may each promul-
gate regulations to implement this section.
‘‘(2) SPECIFIC
REQUIREMENT.—In promul-
gating regulations to implement this section, the
Comptroller of the Currency and the Board of Gov-
ernors of the Federal Reserve System shall each en-
sure that the regulations generally are consistent
with the regulations and policies of the Federal De-
posit Insurance Corporation adopted pursuant to the
Federal Deposit Insurance Act.
‘‘(d) DEFINITIONS.—For purposes of this section, the
terms ‘Federal branch’, ‘Federal agency’, and ‘foreign
bank’ have the same meanings as in section 1(b) of the
International Banking Act of 1978.’’.
SEC. 907. BANKRUPTCY CODE AMENDMENTS.
(a) DEFINITIONS OF FORWARD CONTRACT, REPUR-
CHASE AGREEMENT, SECURITIES CLEARING AGENCY,
SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU-
RITIES CONTRACT.—Title 11, United States Code, is
amended—
(1) in section 101—
(A) in paragraph (25)—
(i) by striking ‘‘means a contract’’
and inserting ‘‘means—
‘‘(A) a contract’’;
324
(ii) by striking ‘‘, or any combination
thereof or option thereon;’’ and inserting
‘‘, or any other similar agreement;’’; and
(iii) by adding at the end the fol-
lowing:
‘‘(B) any combination of agreements or
transactions referred to in subparagraphs (A)
and (C);
‘‘(C) any option to enter into an agreement
or transaction referred to in subparagraph (A)
or (B);
‘‘(D) a master agreement that provides for
an agreement or transaction referred to in sub-
paragraph (A), (B), or (C), together with all
supplements to any such master agreement,
without regard to whether such master agree-
ment provides for an agreement or transaction
that is not a forward contract under this para-
graph, except that such master agreement shall
be considered to be a forward contract under
this paragraph only with respect to each agree-
ment or transaction under such master agree-
ment that is referred to in subparagraph (A),
(B), or (C); or
325
‘‘(E) any security agreement or arrange-
ment, or other credit enhancement related to
any agreement or transaction referred to in
subparagraph (A), (B), (C), or (D), or any
guarantee or reimbursement obligation by or to
a forward contract merchant or financial partic-
ipant in connection with any agreement or
transaction referred to in any such subpara-
graph, but not to exceed the damages in con-
nection with any such agreement or transaction
measured in accordance with section 562 of this
title;’’;
(B) in paragraph (46), by striking ‘‘on any
day during the period beginning 90 days before
the date of’’ and inserting ‘‘at any time before’’;
(C) by amending paragraph (47) to read
as follows:
‘‘(47) ‘repurchase agreement’ (which definition
also applies to a reverse repurchase agreement)—
‘‘(A) means—
‘‘(i) an agreement, including related
terms, which provides for the transfer of
one or more certificates of deposit, mort-
gage related securities (as defined in sec-
tion 3 of the Securities Exchange Act of
326
1934), mortgage loans, interests in mort-
gage related securities or mortgage loans,
eligible bankers’ acceptances, qualified for-
eign government securities (defined as a
security that is a direct obligation of, or
that is fully guaranteed by, the central
government of a member of the Organiza-
tion for Economic Cooperation and Devel-
opment), or securities that are direct obli-
gations of, or that are fully guaranteed by,
the United States or any agency of the
United States against the transfer of funds
by the transferee of such certificates of de-
posit, eligible bankers’ acceptances, securi-
ties, loans, or interests, with a simulta-
neous agreement by such transferee to
transfer to the transferor thereof certifi-
cates of deposit, eligible bankers’ accept-
ance, securities, loans, or interests of the
kind described in this clause, at a date cer-
tain not later than 1 year after such trans-
fer or on demand, against the transfer of
funds;
327
‘‘(ii) any combination of agreements
or transactions referred to in clauses (i)
and (iii);
‘‘(iii) an option to enter into an agree-
ment or transaction referred to in clause
(i) or (ii);
‘‘(iv) a master agreement that pro-
vides for an agreement or transaction re-
ferred to in clause (i), (ii), or (iii), together
with all supplements to any such master
agreement, without regard to whether such
master agreement provides for an agree-
ment or transaction that is not a repur-
chase agreement under this paragraph, ex-
cept that such master agreement shall be
considered to be a repurchase agreement
under this paragraph only with respect to
each agreement or transaction under the
master agreement that is referred to in
clause (i), (ii), or (iii); or
‘‘(v) any security agreement or ar-
rangement or other credit enhancement re-
lated to any agreement or transaction re-
ferred to in clause (i), (ii), (iii), or (iv) or
any guarantee or reimbursement obligation
328
by or to a repo participant or financial
participant in connection with any agree-
ment or transaction referred to in any such
clause, but not to exceed the damages in
connection with any such agreement or
transaction measured in accordance with
section 562 of this title; and
‘‘(B) does not include a repurchase obliga-
tion under a participation in a commercial
mortgage loan;’’;
(D) in paragraph (48), by inserting ‘‘, or
exempt from such registration under such sec-
tion pursuant to an order of the Securities and
Exchange Commission,’’ after ‘‘1934’’; and
(E) by amending paragraph (53B) to read
as follows:
‘‘(53B) ‘swap agreement’—
‘‘(A) means—
‘‘(i) any agreement, including the
terms and conditions incorporated by ref-
erence in such agreement, which is—
‘‘(I) an interest rate swap, op-
tion, future, or forward agreement, in-
cluding a rate floor, rate cap, rate col-
329
lar, cross-currency rate swap, and
basis swap;
‘‘(II) a spot, same day-tomorrow,
tomorrow-next, forward, or other for-
eign exchange or precious metals
agreement;
‘‘(III) a currency swap, option,
future, or forward agreement;
‘‘(IV) an equity index or an eq-
uity swap, option, future, or forward
agreement;
‘‘(V) a debt index or a debt swap,
option, future, or forward agreement;
‘‘(VI) a total return, credit
spread or a credit swap, option, fu-
ture, or forward agreement;
‘‘(VII) a commodity index or a
commodity swap, option, future, or
forward agreement; or
‘‘(VIII) a weather swap, weather
derivative, or weather option;
‘‘(ii) any agreement or transaction
that is similar to any other agreement or
transaction referred to in this paragraph
and that—
330
‘‘(I) has been, is presently, or in
the future becomes, the subject of re-
current dealings in the swap markets
(including terms and conditions incor-
porated by reference therein); and
‘‘(II) is a forward, swap, future,
or option on one or more rates, cur-
rencies, commodities, equity securities,
or other equity instruments, debt se-
curities or other debt instruments,
quantitative measures associated with
an occurrence, extent of an occurrence
or contingency associated with a fi-
nancial, commercial or economic con-
sequence, or economic or financial in-
dices or measures of economic or fi-
nancial risk or value;
‘‘(iii) any combination of agreements
or transactions referred to in this subpara-
graph;
‘‘(iv) any option to enter into an
agreement or transaction referred to in
this subparagraph;
‘‘(v) a master agreement that provides
for an agreement or transaction referred to
331
in clause (i), (ii), (iii), or (iv), together
with all supplements to any such master
agreement, and without regard to whether
the master agreement contains an agree-
ment or transaction that is not a swap
agreement under this paragraph, except
that the master agreement shall be consid-
ered to be a swap agreement under this
paragraph only with respect to each agree-
ment or transaction under the master
agreement that is referred to in clause (i),
(ii), (iii), or (iv); or
‘‘(vi) any security agreement or ar-
rangement or other credit enhancement re-
lated to any agreements or transactions re-
ferred to in clause (i) through (v) or any
guarantee or reimbursement obligation by
or to a swap participant or financial par-
ticipant in connection with any agreement
or transaction referred to in any such
clause, but not to exceed the damages in
connection with any such agreement or
transaction measured in accordance with
section 562 of this title; and
332
‘‘(B) is applicable for purposes of this title
only, and shall not be construed or applied so
as to challenge or affect the characterization,
definition, or treatment of any swap agreement
under any other statute, regulation, or rule, in-
cluding the Securities Act of 1933, the Securi-
ties Exchange Act of 1934, the Public Utility
Holding Company Act of 1935, the Trust In-
denture Act of 1939, the Investment Company
Act of 1940, the Investment Advisers Act of
1940, the Securities Investor Protection Act of
1970, the Commodity Exchange Act, the
Gramm-Leach-Bliley Act, the Legal Certainty
for Bank Products Act of 2000, and the regula-
tions prescribed by the Securities and Exchange
Commission or the Commodity Futures Trading
Commission;’’;
(2) in section 741(7), by striking paragraph (7)
and inserting the following:
‘‘(7) ‘securities contract’—
‘‘(A) means—
‘‘(i) a contract for the purchase, sale,
or loan of a security, a certificate of de-
posit, a mortgage loan or any interest in a
mortgage loan, a group or index of securi-
333
ties, certificates of deposit, or mortgage
loans or interests therein (including an in-
terest therein or based on the value there-
of), or option on any of the foregoing, in-
cluding an option to purchase or sell any
such security, certificate of deposit, mort-
gage loan, interest, group or index, or op-
tion, and including any repurchase or re-
verse repurchase transaction on any such
security, certificate of deposit, loan, inter-
est, group or index, or option;
‘‘(ii) any option entered into on a na-
tional securities exchange relating to for-
eign currencies;
‘‘(iii) the guarantee by or to any secu-
rities clearing agency of a settlement of
cash, securities, certificates of deposit,
mortgage loans or interests therein, group
or index of securities, or mortgage loans or
interests therein (including any interest
therein or based on the value thereof), or
option on any of the foregoing, including
an option to purchase or sell any such se-
curity, certificate of deposit, loan, interest,
group or index, or option;
334
‘‘(iv) any margin loan;
‘‘(v) any other agreement or trans-
action that is similar to an agreement or
transaction referred to in this subpara-
graph;
‘‘(vi) any combination of the agree-
ments or transactions referred to in this
subparagraph;
‘‘(vii) any option to enter into any
agreement or transaction referred to in
this subparagraph;
‘‘(viii) a master agreement that pro-
vides for an agreement or transaction re-
ferred to in clause (i), (ii), (iii), (iv), (v),
(vi), or (vii), together with all supplements
to any such master agreement, without re-
gard to whether the master agreement pro-
vides for an agreement or transaction that
is not a securities contract under this sub-
paragraph, except that such master agree-
ment shall be considered to be a securities
contract under this subparagraph only with
respect to each agreement or transaction
under such master agreement that is re-
335
ferred to in clause (i), (ii), (iii), (iv), (v),
(vi), or (vii); or
‘‘(ix) any security agreement or ar-
rangement or other credit enhancement re-
lated to any agreement or transaction re-
ferred to in this subparagraph or any
guarantee or reimbursement obligation by
or to a stockbroker, securities clearing
agency, financial institution or financial
participant in connection with any agree-
ment or transaction referred to in this sub-
paragraph, but not to exceed the damages
in connection with any such agreement or
transaction measured in accordance with
section 562 of this title; and
‘‘(B) does not include any purchase, sale,
or repurchase obligation under a participation
in a commercial mortgage loan.’’; and
(3) in section 761(4)—
(A) by striking ‘‘or’’ at the end of subpara-
graph (D); and
(B) by adding at the end the following:
‘‘(F) any other agreement or transaction
that is similar to an agreement or transaction
referred to in this paragraph;
336
‘‘(G) any combination of the agreements or
transactions referred to in this paragraph;
‘‘(H) any option to enter into an agree-
ment or transaction referred to in this para-
graph;
‘‘(I) a master agreement that provides for
an agreement or transaction referred to in sub-
paragraph (A), (B), (C), (D), (E), (F), (G), or
(H), together with all supplements to such mas-
ter agreement, without regard to whether the
master agreement provides for an agreement or
transaction that is not a commodity contract
under this paragraph, except that the master
agreement shall be considered to be a com-
modity contract under this paragraph only with
respect to each agreement or transaction under
the master agreement that is referred to in sub-
paragraph (A), (B), (C), (D), (E), (F), (G), or
(H); or
‘‘(J) any security agreement or arrange-
ment or other credit enhancement related to
any agreement or transaction referred to in this
paragraph or any guarantee or reimbursement
obligation by or to a commodity broker or fi-
nancial participant in connection with any
337
agreement or transaction referred to in this
paragraph, but not to exceed the damages in
connection with any such agreement or trans-
action measured in accordance with section 562
of this title;’’.
(b) DEFINITIONS OF FINANCIAL PARTICIPANT AND
FORWARD CONTRACT MERCHANT.—Section 101 of title
11, United States Code, is amended—
(1) by striking paragraph (22) and inserting
the following:
‘‘(22) ‘financial institution’ means—
‘‘(A) a Federal reserve bank, or an entity
(domestic or foreign) that is a commercial or
savings bank, industrial savings bank, savings
and loan association, trust company, or receiver
or conservator for such entity and, when any
such Federal reserve bank, receiver, conservator
or entity is acting as agent or custodian for a
customer in connection with a securities con-
tract, as defined in section 741, such customer;
or
‘‘(B) in connection with a securities con-
tract, as defined in section 741, an investment
company registered under the Investment Com-
pany Act of 1940;’’;
338
(2) by inserting after paragraph (22) the fol-
lowing:
‘‘(22A) ‘financial participant’ means—
‘‘(A) an entity that, at the time it enters
into a securities contract, commodity contract,
swap agreement, repurchase agreement, or for-
ward contract, or at the time of the filing of the
petition, has one or more agreements or trans-
actions described in paragraph (1), (2), (3), (4),
(5), or (6) of section 561(a) with the debtor or
any other entity (other than an affiliate) of a
total gross dollar value of not less than
$1,000,000,000 in notional or actual principal
amount outstanding on any day during the pre-
vious 15-month period, or has gross mark-to-
market positions of not less than $100,000,000
(aggregated across counterparties) in one or
more such agreements or transactions with the
debtor or any other entity (other than an affil-
iate) on any day during the previous 15-month
period; and
‘‘(B) a ‘clearing organization’ (as such
term is defined in section 402 of the Federal
Deposit Insurance Corporation Improvement
Act of 1991);’’; and
339
(3) by striking paragraph (26) and inserting
the following:
‘‘(26) ‘forward contract merchant’ means a
Federal reserve bank, or an entity the business of
which consists in whole or in part of entering into
forward contracts as or with merchants in a com-
modity, as defined or in section 761 or any similar
good, article, service, right, or interest which is pres-
ently or in the future becomes the subject of dealing
in the forward contract trade;’’.
(c) DEFINITION OF MASTER NETTING AGREEMENT
AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec-
tion 101 of title 11, United States Code, is amended by
inserting after paragraph (38) the following new para-
graphs:
‘‘(38A) ‘master netting agreement’—
‘‘(A) means an agreement providing for
the exercise of rights, including rights of net-
ting, setoff, liquidation, termination, accelera-
tion, or closeout, under or in connection with
one or more contracts that are described in any
one or more of paragraphs (1) through (5) of
section 561(a), or any security agreement or ar-
rangement or other credit enhancement related
to one or more of the foregoing or any guar-
340
antee or reimbursement obligation related to 1
or more of the foregoing; and
‘‘(B) if the agreement contains provisions
relating to agreements or transactions that are
not contracts described in paragraphs (1)
through (5) of section 561(a), shall be deemed
to be a master netting agreement only with re-
spect to those agreements or transactions that
are described in any one or more of paragraphs
(1) through (5) of section 561(a);
‘‘(38B) ‘master netting agreement participant’
means an entity that, at any time before the filing
of the petition, is a party to an outstanding master
netting agreement with the debtor;’’.
(d) SWAP AGREEMENTS, SECURITIES CONTRACTS,
COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR-
CHASE AGREEMENTS, AND MASTER NETTING AGREE-
MENTS UNDER THE AUTOMATIC-STAY.—
(1) IN GENERAL.—Section 362(b) of title 11,
United States Code, as amended by this Act, is
amended—
(A) in paragraph (6), by inserting ‘‘,
pledged to, under the control of,’’ after ‘‘held
by’’;
341
(B) in paragraph (7), by inserting ‘‘,
pledged to, under the control of,’’ after ‘‘held
by’’;
(C) by striking paragraph (17) and insert-
ing the following:
‘‘(17) under subsection (a), of the setoff by a
swap participant or financial participant of a mutual
debt and claim under or in connection with one or
more swap agreements that constitutes the setoff of
a claim against the debtor for any payment or other
transfer of property due from the debtor under or in
connection with any swap agreement against any
payment due to the debtor from the swap partici-
pant or financial participant under or in connection
with any swap agreement or against cash, securities,
or other property held by, pledged to, under the con-
trol of, or due from such swap participant or finan-
cial participant to margin, guarantee, secure, or set-
tle any swap agreement;’’; and
(D) by inserting after paragraph (27), as
added by this Act, the following new paragraph:
‘‘(28) under subsection (a), of the setoff by a
master netting agreement participant of a mutual
debt and claim under or in connection with one or
more master netting agreements or any contract or
342
agreement subject to such agreements that con-
stitutes the setoff of a claim against the debtor for
any payment or other transfer of property due from
the debtor under or in connection with such agree-
ments or any contract or agreement subject to such
agreements against any payment due to the debtor
from such master netting agreement participant
under or in connection with such agreements or any
contract or agreement subject to such agreements or
against cash, securities, or other property held by,
pledged to, under the control of, or due from such
master netting agreement participant to margin,
guarantee, secure, or settle such agreements or any
contract or agreement subject to such agreements,
to the extent that such participant is eligible to exer-
cise such offset rights under paragraph (6), (7), or
(17) for each individual contract covered by the mas-
ter netting agreement in issue; or’’.
(2) LIMITATION.—Section 362 of title 11,
United States Code, as amended by this Act, is
amended by adding at the end the following:
‘‘(m) LIMITATION.—The exercise of rights not sub-
ject to the stay arising under subsection (a) pursuant to
paragraph (6), (7), (17), or (28) of subsection (b) shall
343
not be stayed by any order of a court or administrative
agency in any proceeding under this title.’’.
(e) LIMITATION
OF AVOIDANCE POWERS UNDER
MASTER NETTING AGREEMENT.—Section 546 of title 11,
United States Code, as amended by this Act, is
amended—
(1) in subsection (g) (as added by section 103
of Public Law 101–311)—
(A) by striking ‘‘under a swap agreement’’;
(B) by striking ‘‘in connection with a swap
agreement’’ and inserting ‘‘under or in connec-
tion with any swap agreement’’; and
(C) by inserting ‘‘or financial participant’’
after ‘‘swap participant’’ each time such term
appears; and
(2) by adding at the end the following:
‘‘(j) Notwithstanding sections 544, 545, 547,
548(a)(1)(B), and 548(b) the trustee may not avoid a
transfer made by or to a master netting agreement partici-
pant under or in connection with any master netting
agreement or any individual contract covered thereby that
is made before the commencement of the case, except
under section 548(a)(1)(A) and except to the extent that
the trustee could otherwise avoid such a transfer made
344
under an individual contract covered by such master net-
ting agreement.’’.
(f) FRAUDULENT TRANSFERS OF MASTER NETTING
AGREEMENTS.—Section 548(d)(2) of title 11, United
States Code, is amended—
(1) in subparagraph (C), by striking ‘‘and’’ at
the end;
(2) in subparagraph (D), by striking the period
and inserting ‘‘; and’’; and
(3) by adding at the end the following new sub-
paragraph:
‘‘(E) a master netting agreement participant
that receives a transfer in connection with a master
netting agreement or any individual contract covered
thereby takes for value to the extent of such trans-
fer, except that, with respect to a transfer under any
individual contract covered thereby, to the extent
that such master netting agreement participant oth-
erwise did not take (or is otherwise not deemed to
have taken) such transfer for value.’’.
(g) TERMINATION OR ACCELERATION OF SECURITIES
CONTRACTS.—Section 555 of title 11, United States Code,
is amended—
(1) by amending the section heading to read as
follows:
345
‘‘§ 555. Contractual right to liquidate, terminate, or
accelerate a securities contract’’;
and
(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) by striking so much of the text of the sec-
ond sentence as appears before ‘‘whether’’ 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-
346
curities association, a contract market designated
under the Commodity Exchange Act, a derivatives
transaction execution facility registered under the
Commodity Exchange Act, or a board of trade (as
defined in the Commodity Exchange Act) or in a
resolution of the governing board thereof and a
right,’’.
(i) TERMINATION
OR ACCELERATION
OF REPUR-
CHASE AGREEMENTS.—Section 559 of title 11, United
States Code, is amended—
(1) by amending the section heading to read as
follows:
‘‘§ 559. Contractual right to liquidate, terminate, or
accelerate a repurchase agreement’’;
(2) in the first sentence, by striking ‘‘liquida-
tion’’ and inserting ‘‘liquidation, termination, or ac-
celeration’’; and
(3) by striking so much of the text of the third
sentence as appears before ‘‘whether’’ and inserting
‘‘As used in this section, the term ‘‘contractual
right’’ includes a right set forth in a rule or bylaw
of a derivatives clearing organization (as defined in
the Commodity Exchange Act), a multilateral clear-
ing organization (as defined in the Federal Deposit
Insurance Corporation Improvement Act of 1991), a
347
national securities exchange, a national securities as-
sociation, a contract market designated under the
Commodity Exchange Act, a derivatives transaction
execution facility registered under the Commodity
Exchange Act, or a board of trade (as defined in the
Commodity Exchange Act) or in a resolution of the
governing board thereof and a right.
(j) LIQUIDATION, TERMINATION, OR ACCELERATION
OF SWAP AGREEMENTS.—Section 560 of title 11, United
States Code, is amended—
(1) by amending the section heading to read as
follows:
‘‘§ 560. Contractual right to liquidate, terminate, or
accelerate a swap agreement’’;
(2) in the first sentence, by striking ‘‘termi-
nation of a swap agreement’’ and inserting ‘‘liquida-
tion, termination, or acceleration of one or more
swap agreements’’;
(3) by striking ‘‘in connection with any swap
agreement’’ and inserting ‘‘in connection with the
termination, liquidation, or acceleration of one or
more swap agreements’’; and
(4) by striking so much of the text of the sec-
ond sentence as appears before ‘‘whether’’ and in-
serting ‘‘As used in this section, the term ‘contrac-
348
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 contract market designated
under the Commodity Exchange Act), a derivatives
transaction execution facility registered under the
Commodity Exchange Act, or a board of trade (as
defined in the Commodity Exchange Act) or in a
resolution of the governing board thereof and a
right,’’.
(k) LIQUIDATION, TERMINATION, ACCELERATION, OR
OFFSET UNDER A MASTER NETTING AGREEMENT AND
ACROSS CONTRACTS.—
(1) IN
GENERAL.—Title 11, United States
Code, is amended by inserting after section 560 the
following:
‘‘§ 561. Contractual right to terminate, liquidate, ac-
celerate, or offset under a master netting
agreement and across contracts; pro-
ceedings under chapter 15
‘‘(a) IN GENERAL.—Subject to subsection (b), the ex-
ercise of any contractual right, because of a condition of