Bankruptcy Threshold Adjustment and Technical Corrections Act
Bill: H.R.7494 | Sponsor: Rep. Neguse, Joe (D-CO)
Policy area: Finance and Financial Sector

Summary:
Bankruptcy Threshold Adjustment and Technical Corrections Act
This bill modifies provisions related to small business reorganization bankruptcies and wage earner's bankruptcies.
Specifically, the bill extends for two years the increase of the amount of debt allowed to be carried by debtors to qualify for small business reorganization bankruptcy and provides that this debt limit is subject to adjustment for inflation. Additionally, it provides that a small business debtor includes a debtor that is an affiliate of certain publicly traded companies. Further, it authorizes the bankruptcy trustee to operate the business of the debtor if the debtor ceases to be a debtor in possession.
The bill also increases for two years the debt limit for individuals filing for bankruptcy under Chapter 13 (i.e., the wage earner's plan) and allows both secured and unsecured debt to count towards this single limit. (Currently, separate limits apply to secured and unsecured debt.)

To amend title 11, United States Code, to modify the eligibility 
  requirements for a debtor under chapter 13, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Bankruptcy Threshold Adjustment and 
Technical Corrections Act''.

SEC. 2. BANKRUPTCY AMENDMENTS.

    (a) Definition of Small Business Debtor.--Section 101(51D)(B) of 
title 11, United States Code, is amended--
            (1) in clause (i), by inserting ``under this title'' after 
        ``affiliated debtors''; and
            (2) in clause (iii), by striking ``an issuer'' and all that 
        follows and inserting ``a corporation described in clause 
        (ii).''.
    (b) Adjustments for Inflation.--Section 104 of title 11, United 
States Code, is amended--
            (1) in subsection (a), by inserting ``1182(1),'' after 
        ``707(b),''; and
            (2) in subsection (b), by inserting ``1182(1),'' after 
        ``707(b),''.
    (c) Who May Be a Debtor Under Chapter 13.--Section 109 of title 11, 
United States Code is amended by striking subsection (e) and inserting 
the following:
    ``(e) Only an individual with regular income that owes, on the date 
of the filing of the petition, noncontingent, liquidated debts of less 
than $2,750,000 or an individual with regular income and such 
individual's spouse, except a stockbroker or a commodity broker, that 
owe, on the date of the filing of the petition, noncontingent, 
liquidated debts that aggregate less than $2,750,000 may be a debtor 
under chapter 13 of this title.''.
    (d) Definition of Debtor.--Section 1182(1) of title 11, United 
States Code, is amended to read as follows:
            ``(1) Debtor.--The term `debtor'--
                    ``(A) subject to subparagraph (B), means a person 
                engaged in commercial or business activities (including 
                any affiliate of such person that is also a debtor 
                under this title and excluding a person whose primary 
                activity is the business of owning single asset real 
                estate) that has aggregate noncontingent liquidated 
                secured and unsecured debts as of the date of the 
                filing of the petition or the date of the order for 
                relief in an amount not more than $7,500,000 (excluding 
                debts owed to 1 or more affiliates or insiders) not 
                less than 50 percent of which arose from the commercial 
                or business activities of the debtor; and
                    ``(B) does not include--
                            ``(i) any member of a group of affiliated 
                        debtors under this title that has aggregate 
                        noncontingent liquidated secured and unsecured 
                        debts in an amount greater than $7,500,000 
                        (excluding debt owed to 1 or more affiliates or 
                        insiders);
                            ``(ii) any debtor that is a corporation 
                        subject to the reporting requirements under 
                        section 13 or 15(d) of the Securities Exchange 
                        Act of 1934 (15 U.S.C. 78m, 78o(d)); or
                            ``(iii) any debtor that is an affiliate of 
                        a corporation described in clause (ii).''.
    (e) Trustee.--Section 1183(b)(5) of title 11, United States Code, 
is amended--
            (1) by striking ``possession, perform'' and inserting 
        ``possession--
                    ``(A) perform'';
            (2) in subparagraph (A), as so designated--
                    (A) by striking ``, including operating the 
                business of the debtor''; and
                    (B) by adding ``and'' at the end; and
            (3) by adding at the end the following:
                    ``(B) be authorized to operate the business of the 
                debtor;''.
    (f) Confirmation of Plan.--Section 1191(c) of title 11, United 
States Code, is amended by striking paragraph (3) and inserting the 
following:
            ``(3)(A) The debtor will be able to make all payments under 
        the plan; or
            ``(B)(i) there is a reasonable likelihood that the debtor 
        will be able to make all payments under the plan; and
            ``(ii) the plan provides appropriate remedies, which may 
        include the liquidation of nonexempt assets, to protect the 
        holders of claims or interests in the event that the payments 
        are not made.''.
    (g) Technical Corrections to the Bankruptcy Administration 
Improvement Act.--Section 589a of title 28, United States Code is 
amended--
            (1) in subsection (c) by striking ``subsection (a)'' and 
        inserting ``subsections (a) and (f)''; and
            (2) in subsection (f)(1)--
                    (A) in the matter preceding subparagraph (A), by 
                striking ``subsections (b) and (c)'' and inserting 
                ``subsection (b)(5)''; and
                    (B) in subparagraph (A), by inserting ``needed to 
                offset the amount'' after ``amounts''.
    (h) Effective Date; Applicability.--
            (1) In general.--Subsections (b) and (c) and the amendments 
        made by subsections (b) and (c) shall take effect on the date 
        of enactment of this Act.
            (2) Retroactive application of certain amendments.--The 
        amendments made by subsections (a), (d), (e), and (f) shall 
        apply with respect to any case that--
                    (A) is commenced under title 11, United States 
                Code, on or after March 27, 2020; and
                    (B) with respect to a case that was commenced on or 
                after March 27, 2020, and before the date of enactment 
                of this Act, is pending on the date of enactment of 
                this Act.
            (3) Effective date of technical corrections to baia.--The 
        amendments made by subsection (g) shall take effect as if 
        enacted on October 1, 2021.
    (i) Sunsets.--
            (1) In general.--Effective on the date that is 2 years 
        after the date of enactment of this Act--
                    (A) subsection (e) of section 109 of title 11, 
                United States Code is amended to read as such 
                subsection read on the day before the date of enactment 
                of this Act; and
                    (B) section 1182(1) of title 11, United States 
                Code, is amended to read as follows:
            ``(1) Debtor.--The term `debtor' means a small business 
        debtor.''.
            (2) Amounts.--For purposes of applying subsection (e) of 
        section 109 of title 11, United States Code, as amended by 
        paragraph (1)(A), the amounts specified in such subsection 
        shall be the amounts that were in effect on the day before the 
        date of enactment of this Act.
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