A bill to amend the bankruptcy law to provide for special revenue bonds, and for other purposes.
PL 100-597 (S.1863), enacted 11/03/1988

102 STAT. 3028 
PUBLIC LAW 100-597—NOV. 3, 1988 
Public Law 100-597 
100th Congress 
An Act 
Nov. 3, 1988 
To amend the bankruptcy law to provide for special revenue bonds, and for other 
[8.1863] 
purposes. 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
SECTION 1. DEFINITION OF MUNICIPALITY. 
Section 101(31) of title 11, United States Code, is amended— 
(1) in subparagraph (A)— 
(A) by inserting "and a municipality" after "partner-
ship"; and 
(B) in clause (ii) by striking "and" at the end; 
(2) in subparagraph (BXii) by adding "and" at the end; and 
(3) by adding at the end the following: 
"(C) with reference to a municipality, financial condition 
such that the municipality is— 
"(i) generally not paying its debts as they become due 
unless such debts are the subject of a bona fide dispute; 
or 
"(ii) unable to pay its debts as they become due;". 
SEC. 2. WHO MAY BE A DEBTOR. 
Section 109(cX3) of title 11, United States Code, is amended by 
striking "or unable to meet such entity's debts as such debts 
mature". 
SEC. 3. APPLICABILITY OF SECTIONS. 
Section 901(a) of title 11, United States Code, is amended by 
inserting "1129(aX6)," after "1129(aX3),". 
SEC. 4. DEFINITION OF SPECIAL REVENUES. 
Section 902 of title 11, United States Code, is amended— 
(1) by redesignating paragraphs (2), (3), and (4) as paragraphs 
(3), (4), and (5), respectively; and 
(2) by inserting after paragraph (1) the following: 
"(2) 'special revenues means— 
"(A) receipts derived from the ownership, operation, or 
disposition of projects or systems of the debtor that are 
primarily used or intended to be used primarily to provide 
transportation, utility, or other services, including the pro-
ceeds of borrowings to finance the projects or systems; 
"(B) special excise taxes imposed on particular activities 
or transactions; 
"(C) incremental tax receipts from the benefited area in 
the case of tax-increment financing; 
"(D) other revenues or receipts derived from particular 
functions of the debtor, whether or not the debtor has other 
functions; or 
PUBLIC LAW 100-597—NOV. 3, 1988 
102 STAT. 3029 
"(E) taxes specifically levied to finance one or more 
projects or systems, excluding receipts from general prop-
erty, sales, or income taxes (other than tax-increment 
financing) levied to finance the general purposes of the 
debtor;". 
SEC. 5. AUTOMATIC STAY. 
Section 922 of title 11, United States Code, is amended by adding 
at the end the following: 
"(c) If the debtor provides, under section 362, 364, or 922 of this Claims, 
title, adequate protection of the interest of the holder of a claim 
secured by a lien on property of the debtor and if, notwithstanding 
such protection such creditor has a claim arising from the stay of 
action against such property under section 362 or 922 of this title or 
from the granting of a lien under section 364(d) of this title, then 
such claim shall be allowable as an administrative expense under 
section 503(b) of this title. 
"(d) Notwithstanding section 362 of this title and subsection (a) of 
this section, a petition filed under this chapter does not operate as a 
stay of application of pledged special revenues in a manner con-
sistent with section 927 of this title to payment of indebtedness 
secured by such revenues.". 
SEC. 6. AVOIDING POWERS, 
Section 926 of title 11, United States Code, is amended— 
(1) by inserting "(a)" before "If; and 
(2) by adding at the end the following: 
"(b) A transfer of property of the debtor to or for the benefit of any 
holder of a bond or note, on account of such bond or note, may not be 
avoided under section 547 of this title.". 
SEC. 7. CLAIMS PAYABLE SOLELY FROM SPECIAL REVENUES. 
Chapter 9 of title 11, United States Code, is amended— 
(1) by redesignating section 927 as section 930; and 
(2) by inserting after section 926 the following: 
"§ 927. Limitation on recourse 
"The holder of a claim payable solely from special revenues of the 
debtor under applicable nonbankruptcy law shall not be treated as 
having recourse against the debtor on account of such claim pursu-
ant to section 1111(b) of this title.". 
SEC. 8. POST PETITION EFFECT OF SECURITY INTEREST. 
Title 11 of the United States Code is amended by inserting after 
section 927, as added by section 7, the following: 
"§ 928. Post petition effect of security interest 
"(a) Notwithstanding section 552(a) of this title and subject to 
subsection (b) of this section, special revenues acquired by the debtor 
after the commencement of the case shall remain subject to any lien 
resulting from any security agreement entered into by the debtor 
before the commencement of the case. 
"(b) Any such lien on special revenues, other than municipal 
betterment assessments, derived from a project or system shall be 
subject to the necessary operating expenses of such project or 
system, as the case may be.". 
102 STAT. 3030 
PUBLIC LAW 100-597—NOV. 3, 1988 
SEC. 9. MUNICIPAL LEASES. 
Title 11 of the United States Code is amended by inserting after 
section 928, as added by section 8, the following: 
"§ 929. Municipal leases 
"A lease to a municipality shall not be treated as an executory 
contract or unexpired lease for the purposes of section 365 or 
502(b)(6) of this title solely by reason of its being subject to termi-
nation in the event the debtor fails to appropriate rent.". 
SEC. 10. CONFIRMATION. 
Section 943(b) of title 11, United States Code, is amended— 
(1) in paragraph (5) by striking "and" at the end; 
(2) by redesignating paragraph (6) as paragraph (7); and 
(3) by inserting after paragraph (5) the following: 
"(6) any regulatory or electoral approval necessary under 
applicable nonbankruptcy law in order to carry out any provi-
sion of the plan has been obtained, or such provision is ex-
pressly conditioned on such approval; and". 
SEC. 11. TECHNICAL AMENDMENT. 
The table of sections of chapter 9 of title 11, United States Code, is 
amended by striking the item relating to section 927 and inserting 
the following: 
"927. Limitation on recourse. 
"928. Post petition effect of security interest. 
"929. Municipal leases. 
"930. Dismissal.". 
11 u s e 101 note. 
SEC. 12. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 
(a) EFFECTIVE DATE.—Except as provided in subsection (b), this Act 
and the amendments made by this Act shall take effect on the date 
of the enactment of this Act. 
(b) APPLICATION OF AMENDMENTS.—The amendments made by this 
I 
Act shall not apply with respect to cases commenced under title 11 
of the United States Code before the date of the enactment of this 
Act. 
Approved November 3, 1988. 
LEGISLATIVE HISTORY—S. 1863 (H.R. 5347): 
HOUSE REPORTS: No. 100-1011 accompanying H.R. 5347 (Comm. on the Judiciary). 
SENATE REPORTS: No. 100-506 (Comm. on the Judiciary). 
CONGRESSIONAL RECORD, Vol. 134 (1988): 
Sept. 20, considered and passed Senate. 
Oct. 3, 4, H.R. 5347 considered and peissed House. 
Oct. 14, considered and passed Senate, amended. 
Oct. 19, S. 1863 considered and passed House, amended. 
Oct. 20, Senate concurred in House amendment.