A bill to establish a uniform law on the subject of bankruptcies.
PL 95-598 (H.R.8200), enacted 11/06/1978

PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2549 
Public Law 95-598 
95th Congress 
An Act 
To establish a uniform Law on the Subject of Bankruptcies. 
Nov. 6, 1978 
[H.R. 8200] 
Be it enacted hy the Senate and House of Representatwes of the 
United States of America in Congress assembled^ 
Title 11, USC. 
Bankruptcy. 
TITLE I—ENACTMENT OF TITLE 11 OF THE 
UNITED STATES CODE 
SEC. 101. The law relating to bankruptcy is codified and enacted llUSCprec.lOl 
as title 11 of the United States Code, entitled "Bankruptcy", and may note-
be cited as 11 U.S.C. § , as follows: 
TITLE 11—BANKRUPTCY 
CHAPTER 
Sec. 
I. GENERAL PBOVISIONS 
101 
3. CASE ADMINISTBATION 
301 
5. CREDITOES, THE DEBTOR, AND THE ESTATE 
501 
7. LIQUIDATION 
701 
9. ADJUSTMENT OF DEBTS OF A MUNICIPALITT 
901 
II. REOBGANIZATION 
1101 
13. ADJUSTMENT OF DEBTS OF AN INDIVIDUAL W I T H BEOULAB INCOME 
1301 
15. UNITED STATES TBUSTEES 
1501 
CHAPTER 1—GENERAL PROVISIONS 
Sec. 
101. Definitions. 
102. Rules of construction. 
103. Applicability of chapters. 
104. Adjustment of dollar amounts. 
105. Power of court. 
106. Waiver of sovereign immunity. 
107. Public access to papers. 
108. Extension of time. 
109. Who may be a debtor. 
§ lOL Definitions 
n USC lOi. 
In this title— 
(1) "accountant" means accountant authorized under applica-
able law to practice public accounting, and includes professional 
accounting association, corporation, or partnership, if so author-
ized; 
(2) "affiliate" means— 
(A) entity that directly or indirectly owns, controls, or 
holds with power to vote, 20 percent or more of the outstand-
ing voting securities of the debtor, other than an entity that 
holds such securities— 
(i) in a fiduciary or agency capacity without sole 
discretionary power to vote such securities; or 
(ii) solely to secure a debt, if such entity has not in 
fact exercised such power to vote; 
(B) corporation 20 percent or more of whose outstanding 
voting securities are directly or indirectly owned, controlled, 
or held with power to vote, by the debtor, or by an entity 
92 STAT. 2550 
PUBLIC LAW 95-598—NOV. 6, 1978 
that directly or indirectly owns, controls, or holds with power 
to vote, 20 percent or more of the outstanding voting securi-
ties of the debtor, other than an entity that holds such 
securities— 
(i) in a fiduciary or agency capacity without sole 
discretionary power to vote such securities; or 
(ii) solely to secure a debt, if such entity has not in 
fact exercised such power to vote; 
(C) person whose business is operated under a lease or 
operating agreement by a debtor, or person substantially all 
of whose property is operated under an operating agree-
ment with the debtor; or 
(D) entity that operates the business or all or substantially 
all of the property of the debtor under a lease or operating 
agreement; 
(3) "attorney" means attorney, professional law association, 
corporation, or partnership, authorized under applicable law to 
practice law; 
(4) "claim" means— 
(A) right to payment, whether or not such right is reduced 
to judgment, liquidated, unliquidated, fixed, contingent, 
matured, unmatured, disputed, undisputed, legal, equitable, 
secured, or unsecured; or 
(B) right to an equitable remedy for breach of performance 
if such breach gives rise to a right to payment, whether or 
not such right to an equitable remedy is reduced to judgment, 
fixed, contingent, matured, unmatured, disputed, undisputed, 
secured, or unsecured; 
(5) "commodity broker" means futures commission merchant, 
foreign futures commission merchant, clearing organization, lever-
age transaction merchant, or commodity options dealer, as defined 
Post, p. 2615. 
in section 761 of this title, with respect to which there is a cus-
tomer, as defined in section 761 (9) of this title; 
(6) "community claim" means claim that arose before the com-
mencement of the case concerning the debtor for which property 
Post, p. 2594. 
of the kind specified in section 541(a) (2) of this title is liable, 
whether or not there is any such property at the time of the 
commencement of the case; 
(7) "consumer debt" means debt incurred by an individual 
primarily for a personal, family, or household purpose; 
(8) "corporation"— 
(A) includes— 
(i) association having a power or privilege that a 
private corporation, but not an individual or a partner-
ship, possesses; 
(ii) partnership association organized under a law 
that makes only the capital subscribed responsible for 
the debts of such association; 
Hii) joint-stock company; 
(iv) unincorporated company or association; or 
(v) business trust; but 
(B) does not include limited partnership: 
(9) "creditor" means— 
(A) entity that has a claim against the debtor that arose 
at the time of or before the order for relief concerning the 
debtor; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2551 
(B) entity that has a claim against the estate of a kind 
specified in section 502(f), 502(g), 502(h) or 502(i) of this Post, p. 2579. 
title; or 
(C) entity that has a community claim; 
(10) "custodian" means— 
(A) receiver or trustee of any of the property of the debtor, 
appointed in a case or proceeding not under this title; 
(B) assignee under a general assignment for the benefit 
of the debtor's creditors; or 
(C) trustee, receiver, or agent under applicable laAv, or 
under a contract, that is appointed or authorized to take 
charge of property of the debtor for the purpose of enforcing 
a lien against such property, or for the purpose of general 
administration of such property for the benefit of the debtor's 
creditors; 
(11) "debt" means liability on a claim; 
(12) "debtor" means person or municipality concerning Avhich 
a case under this title has been commenced; 
(13) "disinterested person" means person that— 
(A) is not a creditor, an equity security holder, or an 
insider; 
(B) is not and was not an investment banker for any 
outstanding security of the debtor; 
(C) has not been, within three years before the date of 
the filing of the petition, an investment banker for a security 
of the debtor, or an attorney for such an investment banker 
in connection with the offer, sale, or issuance of a security of 
the debtor; 
(D) is not and was not, within two years before the date 
of the filing of the petition, a director, officer, or employee 
of the debtor or of an investment banker specified in sub-
paragraph (B) or (C) of this paragraph; and 
(E) 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 rela-
tionship to, connection with, or interest in, the debtor or an 
investment banker specified in subparagraph (B) or (C) of 
this paragraph, or for any other reason; 
(14) "entity" includes person, estate, trust, governmental unit; 
(15) "equity security" means— 
(A) share in a corporation, whether or not transferable 
or denominated "stock", or similar security; 
(B) interest of a limited partner in a limited partnership; 
or 
(C) warrant or right, other than a right to convert, to 
purchase, sell, or subscribe to a share, security, or interest 
of a kind specified in subparagraph (A) or (B) of this 
paragraph; 
(16) "equity security holder" means holder of an equity security 
of the debtor; 
(17) "farmer" means person that received more than 80 percent 
of such person's gross income during the taxable year of such per-
son immediately preceding the taxable year of such person during 
which the case under this title concerning such person was com-
menced from a farming operation owned or operated by such 
person; 
92 STAT. 2552 
PUBLIC LAW 95-598—NOV. 6, 1978 
(18) "farmino; operation" includes farming, tillafje of the soil, 
dairy farming, ranching, production or raising of crops, poultry, 
or livestock, and production of poultry or livestock products in an 
unmanufactured state; 
(19) "foreign proceeding" means proceeding, whether judicial 
or administrative and whether or not under bankruptcy law, in a 
foreign country in which the debtor's domicile, residence, principal 
place of business, or principal assets were located at the commence-
ment of such proceeding, for the purpose of liquidating an estate, 
adjusting debts by composition, extension, or discharge, or effect-
ing a reorganization; 
(20) "foreign representative" means duly selected trustee, 
administrator, or other representative of an estate in a foreign 
proceeding ; 
(21) "governmental unit" means United States; State; Com-
monwealth; District; Territory; municipality; foreign state; 
department, agency, or instrumentality of the United States, a 
State, a Commonwealth, a District, a Territory, a municipality, or 
a foreign state; or other foreign or domestic government; 
(22) "indenture" means mortgage, deed of trust, or indenture, 
under which there is outstanding a security, other than a voting-
trust certificate, constituting a claim against the debtor, a claim 
secured by a lien on any of the debtor's property, or an equity 
security of the debtor; 
(23) "indenture trustee" means trustee under an indenture; 
(24) "individual with regular income" means individual whose 
income is sufficiently stable and regular to enable such individual 
Post, p. 2645. 
to make payments under a plan under chapter 13 of this title, other 
than a stock broker or a commodity broker; 
(25) "insider" includes— 
(A) if the debtor is an individual— 
(i) relative of the debtor or of a general partner of the 
debtor; 
(ii) partnership in which the debtor is a general 
partner; 
(iii) general partner of the debtor; or 
(iv) corporation of which the debtor is a director, 
officer, or person in control; 
(B) if the debtor is a corporation— 
(i) director of the debtor; 
(ii) officer of the debtor; 
(iii) person in control of the debtor; 
(iv) partnership in which the debtor is a general 
partner; 
(v) general partner of the debtor; or 
(vi) relative of a general partner, director, officer, or 
person in control of the debtor; 
(C) if the debtor is a partnershi p— 
(i) general partner in the debtor; 
(ii) relative of a general partner in, general partner 
of, or person in control of the debtor; 
(iii) partnership in which the debtor is a general 
partner; 
(iv) general partner of the debtor; or 
(v) person in control of the debtor; 
(D) if the debtor is a municipality, elected official of the 
debtor or relative of an elected official of the debtor; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2553 
(E) affiliate, or insider of an affiliate as if such affiliate were 
the debtor; and 
(F) manag-ing agent of the debtor; 
(26) "insolvent" means— 
(A) with reference to an entity other than a partnership, 
financial condition such that the sum of such entity's debts is 
greater than all of such entity's property, at a fair valuation, 
exclusive of— 
(i) property transferred, concealed, or removed with 
intent to hinder, delay, or defraud such entity's creditors; 
and 
(ii) property that may be exempted from property of 
the estate under section 522 of this title; and 
Post, p. 2586. 
(B) with reference to a partnership, financial condition 
such that the sum of such partnership's debts is greater than 
the aggregate of, at a fair valuation— 
(i) all of such partnership's property, exclusive of 
property of the kind specified in subparagraph (A) (i) 
of this paragraph; and 
(ii) the sum of the excess of the value of each general 
partner's separate property, exclusive of property of the 
kind specified in subparagraph (A) (ii) of this para-
graph, over such partner's separate debts; 
(27) "judicial lien" means lien obtained by judgment, levy, 
sequestration, or other legal or equitable process or proceeding; 
(28) "lien" means charge against or interest in property to 
secure payment of a debt or performance of an obligation; 
(29) "municipality" means political subdivision or public 
agency or instrumentality of a State ; 
(30) "person" includes individual, partnership, and corpora-
tion, but does not include governmental unit; 
(31) "petition" means petition filed under section 301, 302, 303, 
or 304 of this title, as the case may be, commencing a case under 
this title; 
(32) "purchaser" means transferee of a voluntary transfer, and 
includes immediate or mediate transferee of such a transferee; 
(33) "railroad" means common carrier by railroad engaged 
in the transportation of individuals or property or owner of 
trackage facilities leased by such a common carrier ; 
(34) "relative" means individual related by affinity or consan-
guinity within the third degree as determined by the common 
law, or individual in a step or adoptive relationship within such 
third degree; 
(35) "security"— 
(A) includes— 
(i) note; 
(ii) stock; 
(iii) treasury stock; 
(iv) bond; 
(v) debenture; 
(vi) collateral trust certificate; 
(vii) pre-organization certificate or subscription; 
(viii) transferable share; 
(ix) voting-trust certificate; 
(x) certificate of deposit; 
(xi) certificate of deposit for security; 
(xii) investment contract or certificate of interest or 
92 STAT. 2554 
PUBLIC LAW 95-598—NOV. 6, 1978 
participation in a profit-sharing agreement or in an oil, 
gas, or mineral royalty or lease, if such contract or inter-
est is the subject of a registration statement filed with 
the Securities and Exchange Commission under tlie pro-
visions of the Securities Act of 1933 (15 U.S.C. 77a et 
seq.), or is exempt under section 3(b) of such A(;t (15 
U.S.C. 77c(b)) from the requirement to file such a 
sta.tement; 
(xiii) interest of a limited partner in a limited part-
nership; 
(xiv) other claim or interest commonly known as 
"security"; and 
(xv) certificate of interest or participation in, tem-
porary or interim certificate for, receipt for, or warrant 
or right to subscribe to or purchase or sell, a secuity; but 
(B) does not include— 
(i) currency, check, draft, bill of excha,nge, or bank 
letter of credit; 
Post, p. 2615. 
(ii) leverage transaction, as defined in section 761 (13) 
of this title; 
(iii) commodity futures contract or forward com-
modity contract; 
(iv) option, warrant, or right to subscribe to or pur-
chase or sell a commodity futures contract; 
(v) option to purchase or sell a commodity; 
(vi) contract or certificate specified in clause (xii) of 
subparagraph (A) of this paragraph that is not the sub-
ject of such a registration statement filed with the 
Securities and Exchange Commission and is not exempt 
under section 3(b) of the Securities Act of 1933 (15 
U.S.C. 77c(b)) from the requirement to file such a state-
ment ; or 
(vii) debt or evidence of indebtedness for goods 
sold and delivered or services rendered; 
(36) "security agreement" means agreement that creates or 
provides for a security interest; 
(37) "security interest" means lien created by an agreement; 
(38) "statutory lien" means lien arising solely by force of a 
statute on specified circumstances or conditions, or lien of dis-
tress for rent, whether or not statutory, but does not include 
security interest or judicial lien, whether or not such interest or 
lien is provided by or is dependent on a statute and whether or 
not such interest or lien is made fully effective by statute; 
(39) "stockbroker" means person with respect to which there 
Post, p. 2611. 
is a customer, as defined in section 741(2) of this title, engaged 
in the business of effecting transactions in securities— 
(A) for the accounts of others; or 
(B) with members of the general public, from or for such 
person's own account; and 
(40) "transfer" means every mode, direct or indirect, absolute 
or conditional, voluntary or involuntary, of disposing of or part-
ing with property or with an interest in property, including reten-
tion of title as a security interest. 
11 use 102. 
§ 102. Rules of construction 
After notice and a 
In this title— 
hearing. 
^^ "after notice and a hearing", or a similar phrase— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2555 
(A) means after such notice as is appropriate in the par-
ticular circumstances, and such opportunity for a hearing as 
is appropriate in the particular circumstances; but 
(B) authorizes an act without an actual hearing if such 
notice is given properly and if— 
(i) such a hearing is not requested timely by a party 
in interest; or 
(ii) there is insufficient time for a hearing to be com-
menced before such act must be done, and the court 
authorizes such act; 
(2) "claim against the debtor" includes claim against property 
of the debtor; 
(3) "includes" and "including" are not limiting; 
(4) "may not" is prohibitive, and not permissive; 
(5) "or" is not exclusive; 
(6) "order for relief" means entry of an order for relief; 
(7) the singular includes the plural; and 
(8) a definition, continued in a section of this title that refers 
to another section of this title, does not, for the purpose of such 
reference, affect the meaning of a term used in such other section, 
§ 103. Applicability of chapters 
(a) Except as provided in section 1161 of this title, chapters 1, 3, 
and 5 of this title apply in a case under chapter 7,11, or 13 of this title. 
(b) Subchapters I and I I of chapter 7 of this title apply only in a 
case under such chapter. 
(c) Subchapter I I I of chapter 7 of this title applies only in a case 
under such chapter concerning a stockholder. 
(d) Subchapter I V of chapter 7 of this title applies only in a case 
under such chapter concerning a commodity broker except with 
respect to section 746(c) which applies to margin payments made by 
any debtor to a commodity broker or forward contract merchant. 
(e) Except as provided in section 901 of this title, only chapters 1 
and 9 of this title apply in a case under such chapter 9. 
(f) Except as provided in section 901 of this title, subchapter I, 
II, and I I I of chapter 11 of this title apply only in a case under such 
chapter. 
(g) Subchapter I V of chapter 11 of this title applies only in a case 
under such chapter concerning a railroad. 
(h) Chapter 13 of this title applies only in a case under such chapter. 
§ 104. Adjustment of dollar amounts 
The Judicial Conference of the United States shall transmit to the 
Congress and to the President before May 1,1985, and before May 1 of 
every sixth year after May 1,1985, a recommendation for the uniform 
percentage adjustment of each dollar amount in this title and in sec-
tion 1930 of title 28. 
§ 105. Power of court 
(a) The bankruptcy court may issue any order, process, or judg-
ment that is necessarv or appropriate to carry out the provisions of 
this title. 
(b) Notwithstanding subsection (a) of this section, a bankruptcy 
court may not appoint a receiver in a case under this title. 
§ 106. Waiver of sovereign immunity 
(a) A governmental unit is deemed to have waived sovereign immu-
nity with respect to any claim against such governmental unit that 
11 use 103. 
Post, p. 2641. 
Post, pp. 2578, 
2604, 2626, 
2645. 
Post, p. 2613. 
Post, p. 2621. 
11 use 104. 
Recommendation 
to Congress and 
the President. 
11 use 105. 
11 use 106. 
92 STAT. 2556 
PUBLIC LAW 95-598—NOV. 6, 1978 
is property of the estate and that arose out of the same transaction or 
occurrence out of which such governmental unit's claim arose. 
(b) There shall be offset against an allowed claim or interest of a 
governmental unit any claim against such governmental unit that is 
property of the estate. 
(c) Except as provided in subsections (a) and (b) of this section 
and notwithstanding any assertion of sovereign immunity— 
(1) a provision of this title that contains "creditor", "entity", 
or "governmental unit" applies to governmental units; and 
(2) a determination by the court of an issue arising under such 
a provision binds governmental units. 
11 use 107. 
§ 107. Public access to papers 
(a) Except as provided in subsection (b) of this section, a paper 
filed in a case under this title and the dockets of a bankruptcy court 
are public records and open to examination by an entity at reasonable 
times without charge. 
(b) On request of a party in interest, the bankruptcy court shall, 
and on the bankruptcy court's own motion, the bankruptcy court 
may— 
(1) protect an entity with respect to a trade secret or confi-
dential research, development, or commercial information; or 
(2) protect a person with respect to scandalous or defamatory 
matter contained in a paper filed in a case under this title. 
11 use 108. 
§ 108. Extension of time 
(a) If applicable law, an order entered in a proceeding, or an agree-
ment fixes a period within which the debtor may commence an action, 
and such period has not expired before the date of the filing of the 
petition, the trustee may commence such action only before the later 
of— 
(1) the end of such period, including any suspension of such 
period occurring on or after the commencement of the case; and 
(2) two years after the order for relief. 
(b) Except as provided in subsection (a) of this section, if applicable 
law, an order entered in a proceeding, or an agreement fixes a period 
Post, p. 2645. 
within which the debtor or an individual protected under section 1301 
of this title may file any pleading, demand, notice, or proof of claim 
or loss, cure a default, or perform any other similar act, and such 
period has not expired before the date of the filing of the petition, the 
trustee may only file, cure, or perform, as the case may be, before the 
later of— 
(1) the end of such period, including any suspension of such 
period occurring on or after the commencement of the case; and 
(2) 60 days after the order for relief. 
Post, p. 2592. 
(c) Except as provided in section 524 of this title, if applicable law, 
an order entered in a proceeding, or an agreement fixes a period for 
commencing or continuing a civil action in a court other than a bank-
ruptcy court on a claim against the debtor, or against an individual 
with respect to which such individual is protected under section 1301 
of this title, and such period has not expired before the date of the 
filing of the petition, then such period does not expire until the later 
of— 
(1) the end of such period, including any suspension of such 
period occurring on or after the commencement of the case; and 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2557 
(2) 30 days after notice of the termination or expiration of the 
stay under section 362, 922, or 1301 of this title, as the case may Post, pp. 2623, 
be, with respect to such claim. 
2645. 
§ 109. Who may be a debtor 
H USC 109. 
(a) Notwithstanding any other provision of this section, only a per-
son that resides in the United States, or has a domicile, a place of 
business, or property in the United States, or a municipality, may be 
a debtor under this title. 
(b) A person may be a debtor under chapter 7 of this title only if Post, p. 2604. 
such person is not— 
(1) a railroad; 
(2) a domestic insurance company, bank, savings bank, coopera-
tive bank, savings and loan association, building and loan asso-
ciation, homestead association, or credit union; or 
(3) a foreign insurance company, bank, savings bank, 
cooperative bank, savings and loan association, building and loan 
association, homestead association, or credit union, engaged in 
such business in the United States. 
(c) An entity may be a debtor under chapter 9 of this title if and Post, p. 2621. 
only if such entity— 
(1) is a municipality; 
(2) is generally authorized to be a debtor under such chapter by 
State law, or by a governmental officer or organization empowered 
by State law to authorize such entity to be a debtor under such 
chapter; 
(3) is insolvent or unable to meet such entity's debts as such 
debts mature; 
(4) desires to effect a plan to adjust such debts; and 
(5) (A) has obtained the agreement of creditors holding at least 
a majoritjr in amount of the claims of each class that such entity 
intends to impair under a plan in a case under such chapter; 
(B) has negotiated in good faith with creditors and has failed 
to obtain the agreement of creditors holding at least a majority in 
amount of the claims of each class that such entity intends to 
impair under a plan in a case under such chapter; 
(C) is unable to negotiate with creditors because such negotia-
tion is impracticable; or 
(D) reasonably believes that a creditor may attempt to obtain a 
preference. 
(d) Only a person that may be a debtor under chapter 7 of this title, 
except a stockholder or a commodity broker, and a railroad may be 
a debtor under chapter 11 of this title. 
Post, p. 2626. 
(e) Only an individual with regular income that owes, on the date 
of the filing of the petition, noncontingent, liquidated, unsecured debts 
of less than $100,000 and noncontingent, liquidated, secured debts of 
less than $350,000, 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, unsecured debts that aggregate less than $100,000 and 
noncontingent, liquidated, secured debts of less than $350,000 may be 
a debtor under chapter 13 of this title. 
^o^^' P- 2645. 
92 STAT. 2558 
PUBLIC LAW 95-598—NOV. 6, 1978 
CHAPTER 3—CASE ADMINISTRATION 
SUBCHAPTER I—COMMENCEMENT OF A CASE 
Sec. 
301. Voluntary cases. 
302. Joint cases. 
303. Involuntary cases. 
304. Cases ancillary to foreign proceedings. 
305. Abstention. 
306. Limited appearance. 
SUBCHAPTER II—OFFICERS 
321. Eligibility to serve as trustee. 
322. Qualification of trustee. 
323. Role and capacity of trustee. 
324. Removal of trustee or examiner. 
325. Effect of vacancy. 
326. Limitation on compensation of trustee. 
327. Employment of professional persons. 
328. Limitation on compensation of professional persons. 
329. Debtor's transactions with attorneys. 
330. Compensation of officers. 
331. Interim compensation. 
SUBCHAPTER III—ADMINISTRATION 
341. Meetings of creditors and equity security holders. 
3^2. Notice. 
343. Examination of the debtor. 
344. Self-incrimination; immunity. 
345. Money of estates. 
346. Special tax provisions. 
347. Unclaimed property. 
348. Effect of conversion. 
349. Effect of dismissal. 
350. Closing and reopening cases. 
SUBCHAPTER IV—ADMINISTRATIVE POWERS 
361. Adequate protection. 
362. Automatic stay. 
363. Use, sale, or lease of property. 
364. Obtaining credit. 
365. Executory contracts and unexpired leases. 
366. Utility service. 
SUBCHAPTER I—COMMENCEMENT OF A CASE 
11 use 301. 
§ 301. Voluntary cases 
A voluntary case under a chapter of this title is commenced by the 
filing with the bankruptcy court of a petition under such chapter by 
an entity that may be a debtor under such chapter. The commencement 
of a voluntary case under a chapter of this title constitutes an order 
for relief under such chapter. 
11 use 302. 
§ 302. Joint cases 
(a) A joint case under a chapter of this title is commenced by the 
filing with the bankruptcy court of a single petition under such chapter 
by an individual that may be a debtor under such chapter and such 
individual's spouse. The commencement of a joint case under a chapter 
of this title constitutes an order for relief under such chapter. 
(b) After the commencement of a joint case, the court shall deter-
mine the extent, if any, to which the debtors' estates shall be 
consolidated. 
2607. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2559 
§ 303. Involuntary cases 
11 USC 303. 
(a) An involuntary case may be commenced only under chapter 7 
or 11 of this title, and only against a person, except a farmer or a J?*^'PP- ^^"^^ 
corporation that is not a moneyed, business, or commercial corpora- 2626. 
tion, that may be a debtor under the chapter under which such case 
is commenced. 
(b) An involuntary case is commenced by the filing with the bank-
ruptcy court of a petition under chapter 7 or 11 of this title— 
(1) by three or more entities, each of which is either a holder 
of a claim against such person that is not contingent as to liability 
or an indenture trustee representing such a holder, if such claims 
aggregate at least $5,000 more than the value of any lien on 
property of the debtor securing such claims held by the holders 
of such claims; 
(2) if there are fewer than 12 such holders, excluding any 
employee or insider of such person and any transferee of a trans-
fer that is voidable under section 544, 545, 547, 548, 549, or 724(a) 
Post, pp. 
of this title, by one or more of such holders that hold in the ^^^^^^^^' 
aggregate at least $5,000 of such claims; 
(3) if such person is a partnership— 
(A) by fewer than all of the general partners in such 
partnership; or 
(B) if relief has been ordered under this title with respect 
to all of the general partners in such partnership, by a gen-
eral partner in such partnership, the trustee of such a general 
partner, or a holder of a claim against such partnership; or 
(4) by a foreign representative of the estate in a foreign pro-
ceeding concerning such person. 
(c) After the filing of a petition under this section but before the 
case is dismissed or relief is ordered, a creditor holding an unsecured 
claim that is not contingent, other than a creditor filing under subsec-
tion (b) of this section, may join in the petition with the same effect 
as if such joining creditor were a petitioning creditor under subsection 
(b) of this section. 
(d) The debtor, or a general partner in a partnership debtor that 
did not join in the petition, may file an answer to a petition under 
this section. 
(e) After notice and a hearing, and for cause, the court may require 
the petitioners under this section to file a bond to indemnify the debtor 
for such amounts as the court may later allow under subsection (i) 
of this section. 
(f) Notwithstanding section 363 of this title, except to the extent 
that the court orders otherwise, and until an order for relief in the 
case, any business of the debtor may continue to operate, and the debtor 
may continue to use, acquire, or dispose of property as if an involun-
tary case concerning the debtor had not been commenced. 
(g) At any time after the commencement of an involuntary case 
under chapter 7 of this title but before an order for relief in the case, 
the court, on request of a party in interest, after notice to the debtor 
and a hearing, and if necessary to preserve the property of the estate 
or to prevent loss to the estate, may appoint an interim trustee under 
section 701 of this title to take possession of the property of the estate 
and to operate any business of the debtor. Before an order for relief, 
the debtor may regain possession of property in the possession of a 
trustee ordered appointed under this subsection if the debtor files such 
bond as the court requires, conditioned on the debtor's accounting for 
92 STAT. 2560 
PUBLIC LAW 95-598—NOV. 6, 1978 
and delivering to the ti'ustee, if there is an order for relief in the case, 
such property, or the value, as of the date the debtor regains possession. 
of such property. 
(h) If the petition is not timely controverted, the court shall order 
relief against the debtor in an inv^oluntaiy case under the chapter 
under whicli the petition was filed. Otherwise, after trial, the court 
shall order relief against the debtor in an involuntary case under the 
chapter under which the petition was filed, only if— 
(1) the debtor is generally not paying such debtor's debts as 
such debts become due; or 
(2) within 120 days before the date of the filing of the petition, 
a custodian, other than a trustee, receiver, or agent appointed or 
authorized to take charge of less than substantially all of the 
property of the debtor for the purpose of enforcing a lien aga/inst 
such property, was appointed or took possession. 
(i) If the court dismisses a petition under this section other than on 
consent of all petitioners and the debtor, and if the debtor does not 
waive the right to judgment under this subsection, the court may grant 
judgment— 
(1) against the petitioners and in favor of the debtor for— 
(A) costs; 
(B) a reasonable attorney's fee; or 
(C) any damages proximately caused by the taking of 
possession of the debtor's property by a trustee appointed 
Post, p. 2627. 
under subsection (g) of this section or section 1104 of this 
title; or 
(2) against any petitioner that filed the petition in bad faith. 
for— 
(A) any damages proximately caused by such filing; or 
(B) punitive damages. 
(j) Only after notice to all creditors and a hearing may the court 
dismiss a petition filed under this section— 
(1) on the motion of a petitioner; 
(2) on consent of all petitioners and the debtors; or 
(3) for want of prosecution. 
(k) N'otwithstanding subsection (a) of this section, an involuntary 
case may be commenced against a foreign bank that is not engaged in 
Post, p. 2604. 
such business in the ITnited States only imder chapter 7 of this title 
and only if a foreign proceeding concerning such bank is pending. 
11 use 304. 
§ 304. Cases ancillary to foreign proceedings 
(a) A case ancillary to a foreign proceeding is commenced by the 
filing with the bankruptcy court of a petition imder this section by a 
foreign representative. 
(b) Subject to the provisions of subsection (c) of this section, if a 
party in interest does not timely controvert the petition, or after trial, 
the court may— 
(1) enjoin the commencement or continuation of— 
(A) any action against— 
(i) a debtor with respect to property involved in such 
foreign proceeding; or 
(ii) such property; or 
(B) the enforcement of any judgment against the debtor 
with respect to such property, or any act or the commence-
ment or continuation of any judicial proceeding to create or 
enforce a lien against the property of such estate; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2561 
. 
(2) order turnover of the property of such estate, or the pro- 
-
ceeds of such property, to such foreign representative; or 
(3) order other appropriate relief, 
(c) In determining whether to grant relief under subsection (b) 
of this section, the court shall be guided by what will best assure an 
economical and expeditious administration of such estate, consistent 
with— 
(1) just treatment of all holders of claims against or interests 
in such estate; 
(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 such estate; 
(4) distribution of proceeds of such estate substantially in ac-
cordance with the order prescribed by this title; 
(5) comity; and 
(6) if appropriate, the provision of an opportunity for a fregh 
start for the individual that such foreign proceeding concerns. 
§ 305. Abstention 
11 USC 305. 
(a) The court, after notice and a hearing, may dismiss a case under Notice and 
this title, or may suspend all proceedings in a case under this title, at hearing, 
any time if— 
(1) the interests of creditors and the debtor would be better 
served by such dismissal or suspension; or 
-
(2) (A) there is pending a foreign proceeding: and 
(B) the factors specified in section 304(c) of this title warrant 
such dismissal or suspension. 
(b) A foreign representative may seek dismissal or suspension under 
subsection (a)(2) of this section. 
(c) An order under subsection (a) of this section dismissing a case 
or suspending all proceedings in a case, or a decision not so to dismiss 
or suspend, is not revieAvable by appeal or otherwise. 
§ 306. Limited appearance 
11 USC 306. 
An appearance in a bankruptcy court by a foreign representative 
in connection with a petition or request under section 303, 304, or 305 
of this title does not submit such foreign representative to the juris-
diction of any court in the United States for any other purpose, but 
the bankruptcy court may condition any order under section 303, 304, 
or 305 of this title on compliance by such foreign representative with 
the orders of such bankruptcy court. 
SUBCHAPTER II—OFFICERS 
§ 321. Eligibility to serve as trustee 
11 USC 321. 
(a) A pereon may serve as trustee in a case under this title only if 
such person is— 
(1) an individual that is competent to perform the duties of 
trustee and, in a case under chapter 7 or 13 of this title, resides or Post, pp. 2604, 
has an office in the judicial district within which the case is pend- 2645. 
ing, or in any judicial district adjacent to such district; or 
(2) a corporation authorized by such corporation's charter or 
bylaws to act as trustee, and, in a case under chapter 7 or 13 of 
this title, having an office in at least one of such districts. 
92 STAT. 2562 
PUBLIC LAW 95-598—NOV. 6, 1978 
(b) A person that has served as an examiner in a case may not serve 
as trustee in the case. 
11 use 322. 
§ 322. Qualification of trustee 
Post, pp. 2604, 
(a) A person selected under section 701,702, 703,1104,1163, or 1302 
2605, 2627, 
of this title to serve as trustee in a case under this title qualifies if 
2641, 2645. 
before five days after such selection, and before beginning official 
duties, such person has filed with the court a bond in favor of the 
United States conditioned on the faithful performance of such official 
duties. 
(b) The court shall determine— 
(1) the amount of a bond filed under subsection (a) of this 
;; section; and 
, 
< 
(2) the sufficiency of the surety on such bond. •' 
(c) A trustee is not liable personally or on such trustee's bond in 
favor of the United States for any penalty or forfeiture incurred by 
the debtor. 
(d) A proceeding on a trustee's bond may not be commenced after 
two years after the date on which such trustee was discharged. 
11 use 323. 
§ 323. Role and capacity of trustee 
(a) The trustee in a case under this title is the representative of 
the estate. 
(b) The trustee in a case under this title has capacity to sue and 
be sued. 
11 use 324. 
§ 324. Removal of trustee or examiner 
The court, after notice and a hearing, may remove a trustee or an 
examiner, for cause. 
11 use 325. 
§ 325. Effect of vacancy 
A vacancy in the office of trustee during a case does not abate any 
pending action or proceeding, and the successor trustee shall be sub-
stituted as a party in such action or proceeding. 
11 use 326. 
§ 326. Limitation on compensation of trustee 
Post, pp. 2604, 
(a) In a case under chapter 7 or 11, the court may allow reasonable 
2626. 
compensation under section 330 of this title of the trustee for the 
trustee's services, payable after the trustee renders such services, not 
to exceed fifteen percent on the first $1,000 or less, six percent on any 
amount in excess of $1,000 but not in excess of $3,000, three percent on 
any amount in excess of $3,000 but not in excess of $20,000, two percent 
on any amount in excess of $20,000 but not in excess of $50,000, and 
One percent on any amount in excess of $50,000, upon all moneys dis-
bursed or turned over in the case by the trustee to parties in interest, 
excluding the debtor, but including holders of secured claims. 
Post, p. 2645. 
(b) In a case under chapter 13 of this title, the court may not allow 
compensation for services or reimbursement of expenses of a standing 
trustee appointed under section 1302(d) of this title, but may allow 
reasonable compensation under section 330 of this title of a trustee 
appointed under section 1302(a) of this title for the trustee's services, 
payable after the trustee renders such services, not to exceed five per-
cent upon all payments under the plan. 
(c) If more than one person serves as trustee in the case, the aggre-
gate compensation of such persons for such service may not exceed the 
maximum compensation prescribed for a single trustee by subsection 
(a) or (b) of this section, as the case may be. 
(d) The court may deny allowance of compensation for services and 
reimbursement of expenses of the trustee if the trustee— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2563 
(1) failed to make diligent inquiry into facts that would permit 
denial of allowance under section 328(c) of this title; or 
(2) with knowledge of such facts, employed a professional 
person under section 327 of this title. 
§327. Employment of professional persons 
^ - 
11USC 327. 
(a) Except as otherwise provided in this section, the trustee, with 
the court's approval, may employ one or more attorneys, accountants, 
appraisers, auctioneers, or other professional persons, that do not hold 
or represent an interest adverse to the estate, and that are disinterested 
persons, to represent or assist the trustee in carrying out the trustee's 
duties under this title. 
(b) If the trustee is authorized to operate the business of the debtor 
under section 721 or 1108 of this title, and if the debtor has regularly Post, pp. 2606, 
employed attorneys, accountants, or other professional persons on 2629. 
salary, the trustee may retain or replace such professional persons if 
necessary in the operation of such business. 
(c) In a case under chapter 7 or 11 of this title, a person is not Post, pp. 2604, 
disqualified for employment under this section solely because of such 2626. 
person's employment by or representation of a creditor, but may not, 
while employed by the trustee, represent, in connection with the case, 
. ^ 
^ .^ 
a creditor. 
(d) The court may authorize the trustee to act as attorney or 
accountant for the estate if such authorization is in the best interest of 
the estate. 
(e) The trustee, with the court's approval, may employ, for a speci-
fied special purpose, other than to represent the trustee m conducting 
the case, an attorney that has represented the debtor, if in the best 
interest of the estate, and if such attorney does not represent or hold 
any interest adverse to the debtor or to the estate with respect to the 
matter on which such attorney is to be employed. 
(f) The trustee may not employ a person that has served as an 
examiner in the case. 
§ 328. Limitation on compensation of professional persons 
H USC 328. 
(a) The trustee, or a committee appointed under section 1102 of 
this title, with the court's approval, may employ or authorize the 
employment of a professional person under section 327 or 1103 of this Post, p. 2627. 
title, as the case may be, on any reasonable terms and conditions of 
employment, including on a retainer, on an hourly basis, or on a 
contingent fee basis, Notwithstanding such terms and conditions, the 
court may allow compensation different from the compensation pro-
vided under such terms and conditions after the conclusion of such 
employment, if such terms and conditions prove to have been improvi-
dent in light of developments unanticipatable at the time of the fixing 
of such terms and conditions. 
(b) If the court has authorized a trustee to serve as an attorney or 
accountant for the estate under section 327(d) of this title, the court 
may allow compensation for the trustee's services as such attorney or 
accountant only to the extent that the trustee performed services as 
attorney or accountant for the estate and not for performance of any 
of the trustee's duties that are generally performed by a trustee 
without the assistance of an attorney or accountant for the estate. 
(c) Except as provided in section 327(c), 327(e), or 1107(b) of this Post, p. 2628. 
title, the court may deny allowance of compensation for services and 
reimbursement of expenses of a professional person employed under 
section 327 or 1103 of this title if, at any time during such professional 
92 STAT. 2564 
PUBLIC LAW 95-598—NOV. 6, 1978 
Post, p. 2627. 
person's employment under section 327 or 1103 of this title, such pro-
fessional person is not a disinterested person, or represents or holds an 
interest adverse to the interest of the estate with respect to the matter 
on which such professional person is employed. 
11 use 329. 
§329. Debtor's transactions with attorneys 
(a) Any attorney representing a debtor in a case under this title, 
or in connection with such a case, whether or not such attorney applies 
for compensation under this title, shall file with the court a statement 
of the compensation paid or agreed to be paid, if such payment or 
agreement was made after one year before the date of the filing of the 
petition, for services rendered or to be rendered in contemplation of 
and in connection with the case by such attorney, and the source of 
' '
_ I 
such compensation. 
(b) If such compensation exceeds the reasonable value of any such 
services, the court may cancel any such agreement, or order the return 
of any such payment, to the extent excessive, to— 
' ' 
,. 
(1) the trustee, if the property transferred— 
(A) would have been property of the estate; or 
(B) was to be paid by or on behalf of the debtor under a 
Post, pp. 2626, 
plan under chapter 11 or 13 of this title; or 
2645. 
(2) the entity that made such payment. 
11 use 330. 
§ 330. Compensation of officers 
(a) After notice to any parties in interest and to the United States 
trustee and a hearing, and subject to sections 326, 328, and 329 of this 
title, the court may award to a trustee, to an examiner, to a professional 
person employed under section 327 or 1103 of this title, or to the 
debtor's attorney— 
(1) reasonable compensation for actual, necessary services 
rendered by such trustee, examiner, professional person, or 
V 5 attorney, as the case may be, and by any paraprofessional persons 
employed by such trustee, professional person, or attorney, as the 
case may be, based on the time, the nature, the extent, and the 
value of such sendees, and the cost of comparable services other 
than in a case under this title; and 
(2) reimbursement for actual, necessary expenses. 
(b) There shall be paid from the filing fee in a case under chapter 
Post, p. 2604. 
7 of this title $20 to the trustee serving in such case, after such trustee's 
services are rendered. 
11 use 331. 
§ 331. Interim compensation 
A trustee, an examiner, a debtor's attorney, or any professional per-
son employed under section 327 or 1103 of this title may apply to the 
court not more than once every 120 days after an order for relief in a 
case under this title, or more often if the court permits, for such com-
pensation for services rendered before the date of such an application 
or reimbursement for expenses incurred before such date as is pro-
vided under section 330 of this title. After notice and a hearing, the 
court may allow and disburse to such applicant such compensation or 
reimbursement. 
SUBCHAPTER III—ADMimSTRATION 
11 use 341. 
§ 341. Meetings of creditors and equity security holders 
(a) Within a reasonable time after the order for relief in a case 
under this title, there shall be a meeting of creditors. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2565 
(b) The court may order a meeting of any equity security holders. 
' • ^
-
(c) The court may not preside at, and may not attend, any meeting 
under this section. 
§ 342. Notice 
H USC 342. 
There shall be given such notice as is appropriate of an order for 
relief in a case under this title. 
§ 343. Examination of the debtor 
H USC 343. 
The debtor shall appear and submit to examination under oath at 
the meeting of creditors under section 341(a) of this title. Creditors, 
any indenture trustee, or any trustee or examiner in the case may 
examiner the debtor. 
§344. Self-incrimination; immunity 
11 USC 344. 
Immunity for persons required to submit to examination, to testify, 
or to provide information in a case under this title may be granted 
under part V of title 18. 
18 USC 6001. 
§ 345. Money of estates 
H USC 345. 
(a) A trustee in a case under this title may make such deposit or 
investment of the money of the estate for which such trustee serves as 
will yield the maximum reasonable net return on such money, taking 
into account the safety of such deposit or investment. 
(b) Except with respect to a deposit or investment that is insured or 
guaranteed by the United States or by a department, agency, or instru-
mentality of the United States or backed by the full faith and 
credit of the United States, the trustee shall require from an entity 
with which such money is deposited or invested— 
(1) a bond— 
(A) in favor of the United States; 
(B) secured by the undertaking of a corporate surety 
approved by the court for the district in which the case is 
pending; and 
(C) conditioned on— 
(i) a proper accounting for all money so deposited or 
invested and for any return on such money; 
(ii) prompt repayment of such money and return; and 
(iii) faithful performance of duties as a depository; 
• 
or 
(2) the deposit of securities of the kind specified in section 15 
of title 6. 
§ 346. Special tax provisions 
H USC 346. 
(a) Except to the extent otherwise provided in this section, subsec-
tions (b), (c), (d), (e), (g), (h), (i), and (j) of this section apply 
notwithstanding any State or local law imposing a tax, but subject to 
the Internal Eevenue Code of 1954 (26 U.S.C. 1 et seq.). 
(b) (1) In a case under chapter 7 or 11 of this title concerning an Post, pp. 2604, 
individual, any income of the estate may be taxed under a State or local 2626. 
law imposing a tax on or measured by income only to the estate, and 
may not be taxed to such individual. Except as provided in section 728 Post, p. 2611. 
of this title, if such individual is a partner in a partnership, any gain 
or loss resulting from a distribution of property from such partner-
ship, or any distributive share of income, gain, loss, deduction, or 
credit of such individual that is distributed, or considered distributed, 
from such partnership, after the commencement of the case is gain, 
loss, income, deduction, or credit, as the case may be, of the estate. 
92 STAT. 2566 
PUBLIC LAW 95-598—NOV. 6, 1978 
Post, p. 2611. 
(2) Except as otherwise provided in this section and in section 728 
of this title, any income of the estate in such a case, and any State or 
local tax on or measured by such income, shall be computed in the same 
.p-^i: manner as the income and the tax of an estate. 
(8) The estate in such a case shall use the same accounting method 
as the debtor used immediately before the commencement of the case. 
(c)(1) The commencement of a ease under this title concerning a 
• 
corporation or a partnership does not effect a change in the status of 
such corporation or partnership for the purposes of any State or local 
law imposing a tax on or measured by income. Except as otherwise 
provided in this section and in section 728 of this title, any income of 
the estate in such case may be taxed only as though such case had not 
,, 
^ 
, 
l)een commenced. 
(2) In such a case, except as provided in section 728 of this title, the 
trustee shall make any tax return otherwise required by State or local 
law to be filed by or on behalf of such operation or partnership in the 
'' 
' 
same manner and form as such corporation or partnership, as the case 
may be, is required to make such return. 
Post, p. 2645. 
(d) In a case under chapter 13 of this title, any income of the estate 
or the debtor may be taxed under a State or local law imposing a tax 
on or measured by income only to the debtor, and may not be taxed to 
the estate. 
(e) A claim allowed under section 502(f) or 503 of this title, other 
than a claim for a tax that is not otherwise deductible or a capital 
expenditure that is not otherwise deductible, is deductible by the entity 
to which income of the estate is taxed unless such claim was deducted 
by another entity, and a deduction for such a claim is deemed to be a 
deduction attributable to a business. 
(f) The trustee shall withhold from any payment of claims for 
wages, salaries, commissions, dividends, interest, or other payments, or 
collect, any amount required to be withheld or collected under appli-
cable 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 withheld was paid. 
(g) (1) Neither gain nor loss shall be recognized on a transfer— 
(A) by operation of law, of property to the estate; 
(B) other than a sale, of property from the estate to the debtor; 
or 
Post, p. 2626. 
(C) in a case under chapter 11 of this title concerning a corpo-
ration, of property from the estate to a corporation that is an 
affiliate participating in a joint plan with the debtor, or that is a 
J 
successor to the debtor under the plan, except that gain or loss 
;l 
may be recognized to the same extent that such transfer results 
in the recognition of gain or loss under section 371 of the Internal 
Revenue Code of 1954 (26 U.S.C. 371). 
• - ' 
(2) The transferee of a transfer of a kind specified in this subsection 
shall take the property transferred with the same character, and with 
the transferor's basis, as adjusted under subsection (j)(5) of this 
section, and holding period. 
Post, p. 2641. 
(h) Notwithstanding sections 728(a) and 1146(a) of this title, for 
the purpose of determining the number of taxable periods during 
which the debtor or the estate may use a loss carryover or a loss carry-
back, the taxable period of the debtor during which the case is com-
menced is deemed not to have been terminated by such commencement. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2567 
(i) (1) In a case under chapter 7 or 11 of this title concerning an Post, pp. 2604, 
individual, the estate shall succeed to the debtor's tax attributes, 2626. 
including— 
(A) any investment credit carryover; 
^B) any recovery exclusion; 
(C) any loss carryover; 
(D) any foreign tax credit carryover; 
(E) any capital loss carryover; and 
(F) any claim of right. 
(2) After such a case is closed or dismissed, the debtor shall succeed 
to any tax attribute to which the estate succeeded under paragraph (1) 
of this subsection but that was not utilized by the estate. The debtor 
may utilize such tax attributes as though any applicable time limita-
tions on such utilization by the debtor were suspended during the time 
during which the case was pending. 
(3) In such a case, the estate may carry back any loss of the estate 
to a taxable period of the debtor that ended before the order for relief 
under such chapter the same as the debtor could have carried back such 
loss had the debtor incurred such loss and the case under this title had 
not been commenced, but the debtor may not carry back any loss of 
the debtor from a taxable period that ends after such order to any 
taxable period of the debtor that ended before such order until after 
the case is closed. 
(j) (1) Except as otherwise provided in this subsection, income is 
not realized by the estate, the debtor, or a successor to the debtor by 
reason of forgiveness or discharge of indebtedness in a case under this 
title. 
(2) For the purposes of any State or local law imposing a tax on 
or measured by income, a deduction with respect to a liability may not 
be allowed for any taxable period during or after which such liability 
is forgiven or discharged under this title. In this paragraph, "a deduc-
tion with respect to a liability" includes a capital loss incurred on the 
, 
disposition of a capital asset with respect to a liability that was 
incurred in connection with the acquisition of such asset. 
(3) Except as provided in paragraph (4) of this subsection, for 
the purpose of any State or local law imposing a tax on or measured 
by income, any net operating loss of an individual or corporate debtor, 
including a net operating loss carryover to such debtor, shall be 
. ;
> 
reduced by the amount of indebtedness forgiven or discharged in a 
case under this title, except to the extent that such forgiveness or 
discharge resulted in a disallowance under paragraph (2) of this 
'' 
subsection. 
(4) A reduction of a net operating loss or a net operating loss carry-
over under paragraph (3) of this subsection or of basis under para-
graph (5) of this subsection is not required to the extent that the 
indebtedness of an individual or corporate debtor forgiven or dis-
charged— 
(A) consisted of items of a deductible nature that were not 
deducted by such debtor; or 
(B) resulted in an expired net operating loss carryover or 
other deduction that— 
(i) did not offset income for any taxable period; and 
(ii) did not contribute to a net operating loss in or a net 
operating loss carryover to the taxable period during or after 
which such indebtedness was discharged. 
92 STAT. 2568 
PUBLIC LAW 95-598—NOV. 6, 1978 
^ 
(5) For the purposes of a State or local law imposing a tax on or 
measured by income, the basis of the debtor's property or of property 
transferred to an entity required to use the debtor's basis in whole or 
in part shall be reduced by the lesser of— 
(A) (i) the amount by which the indebtedness of the debtor has 
been forgiven or discharged in a case under this title; minus 
(ii) the total amount of adjustments made under paragraphs 
(2) and (3) of this subsection; and 
(B) the amount by which the total basis of the debtor's assets 
that were property of the estate before such forgiveness or dis-
charge exceeds the debtor's total liabilities that were liabilities 
both before and after such forgiveness or discharge. 
(6) Notwithstanding paragraph (5) of this subsection, basis is not 
required to be reduced to the extent that the debtor elects to treat as 
taxable income, of the taxable period in which indebtedness is forgiven 
or discharged, the amount of indebtedness forgiven or discharged that 
otherwise would be applied in reduction of basis under paragraph (5) 
of this subsection. 
(7) For the purposes of this subsection, indebtedness with respect 
to which an equity security, other than an interest of a limited partner 
in a limited partnership, is issued to the creditor to whom such indebt-
edness was owned, or that is forgiven as a contribution to capital by an 
equity security holder other than a limited partner in the debtor, is not 
forgiven or discharged in a case under this title— 
(A) to any extent that such indebtedness did not consist of 
' 
items of a deductible nature; or 
(B) if the issuance of such equity security has the same con-
' 
sequences under a law imposing a tax on or measured by income 
to such creditor as a payment in cash to such creditor in an amount-
equal to the fair market value of such equity security, then to the 
lesser of— 
(i) the extent that such issuance has the same such con-
sequences; and 
(ii) the extent of such fair market value. 
11 use 347. 
§ 347. Unclaimed property 
(a) Ninety days after the final distribution under section 726 or 
Post, pp. 2608, 
1326 of this title in a case under chapter 7 or 13 of this title, as the case 
2650. 
may be, the trustee shall stop payment on any check remaining unpaid, 
and any remaining property of the estate shall be paid into the court 
28 use 2041. 
and disposed of under chapter 129 of title 28. 
(b) Any security, money, or other property remaining unclaimed at 
the expiration of the time allowed in a case under chapter 9 or 11 of 
this title for the presentation of a security or the performance of any 
other act as a condition to participation in the distribution under any 
Post, pp. 2624, 
plan confirmed under section 943(b), 1129, or 1173 of this title, as the 
2635, 2644. 
case may be, becomes the property of the debtor or of the entity acquir-
ing the assets of the debtor under the plan, as the case may be. 
11 use 348. 
§ 348. Effect of conversion 
(a) Conversion of a case from a case under one chapter of this title 
to a case under another chapter of this title constitutes an order for 
relief under the chapter to which the case is converted, but, except as 
provided in subsections (b) and (c) of this section, does not effect a 
change in the date of the filing of the petition, the commencement of 
the case, or the order for relief. 
Post, p. 2604. 
(b) Unless the court for cause orders otherwise, in sections 701(a), 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2569 
727(a) (10), 727(b), 728(a), 728(b), 1102(a), 1110(a)(1), 1121(b), Pos^ pp. 2609, 
1121(c), 1141(d) (4), 1146(a), 1146(b), 1301(a), 1305(a), and 1328(a) 2611,2626, 
of this title, "the order for relief under this chapter" in a chapter to ?^^^' ff^}' 
which a case has been converted under section 706,1112, or 1307 of this 2545 I547 
title means the conversion of such case to such chapter. 
265o' 
' 
(c) Sections 342 and 365(d) of this title apply in a case that has 
been converted under section 706, 1112, or 1307 of this title, as if the Post, pp. 2606, 
conversion order were the order for relief. 
2630, 2647. 
(d) A claim against the estate or the debtor that arises after the 
order for relief but before conversion in a case that is converted under 
section 1112 or 1307 of this title, other than a claim specified in section 
503(b) of this title, shall be treated for all purposes as if such claim 
had arisen immediately before the date of the filing of the petition. 
(e) Conversion of a case under section 706,1112, or 1307 of this title 
terminates the service of any trustee or examiner that is serving in the 
case before such conversion. 
§ 349. Effect of dismissal 
H USC 349. 
(a) Unless the court, for cause, orders otherwise, the dismissal of a 
case under this title does not bar the discharge, in a later case under 
this title, of debts that were dischargeable in the case dismissed. 
(b) Unless the court, for cause, orders otherwise, a dismissal of a 
case other than under section 742 of this title— 
Post, p. 2613. 
(1) reinstates— 
(A) any proceeding or custodianship superseded under 
section 543 of this title; 
Post, ip. 2595. 
(B) any transfer avoided under section 522, 544, 545, 547, 
548, 549, or 724(a) of this title, or preserved under section Post, pp. 
510(c) (2), 522(i) (2), or 551 of this title; and 
2596-2601, 
(C) any lien voided under section 506(d) of this title; 
j^^J' 
26O2 
(2) vacates any order, judgment, or transfer ordered, under 
^' 
section 522(i) (1), 542, 550, or 553 of this title; and 
Post, pp. 2601, 
(3) revests the property of the estate in the entity in which such 2602. 
property was vested immediately before the commencement of the 
case under this title. 
§ 350. Closing and reopening cases 
H USC 350. 
(a) After an estate is fully administered and the court has dis-
charged the trustee, the court shall close the case. 
(b) a case may be reopened in the court in which such case was 
closed to administer assets, to accord relief to the debtor, or for other 
cause. 
SUBCHAPTER IV—ADMINISTRATIVE POWERS 
§ 361. Adequate protection 
H USC 361. 
When adequate protection is required under section 362, 363, or 
364 of this title of an interest of an entity in property, such adequate 
protection may be provided by— 
(1) requiring the trustee to make periodic cash payments to 
such entity, to the extent that the stay under section 362 of this 
title, use, sale, or lease under section 363 of this title, or any grant 
f 
of a lien under section 364 of this title results in a decrease in 
the value of such entity's interest in such property; 
(2) providing to such entity an additional or replacement lien 
to the extent that such stay, use, sale, lease, or grant results in a 
92 STAT. 2570 
PUBLIC LAW 95-598—NOV. 6, 1978 
decrease in the value of such entity's interest in such property; or 
(3) granting such other relief, other than entitling such entity 
to compensation allowable under section 503(b) (1) of this title 
as an administrative expense, as will result in the realization by 
such entity of the indubitable equivalent of such entity's interest 
in such property. 
11 use 362. 
§ 362. Automatic stay 
(a) Except as provided in subsection (b) of this section, a petition 
filed under section 301, 302, or 303 of this title operates as a stay, 
applicable to all entities, of— 
(1) the commencement or continuation, including the issuance 
or employment of process, of a judicial, administrative, or other 
' . proceeding against the debtor that was or could have been com-
- 
menced before the commencement of the case under this title, or 
to recover a claim against the debtor that arose before the com-
mencement of the case under this title; 
(2) the enforcement, against the debtor or against property of 
the estate, of a judgment obtained before the commencement of the 
case under this title; 
(3) any act to obtain possession of property of the estate or 
^- 
of property from the estate; 
(4) any act to create, perfect, or enforce any lien against 
property of the estate; 
(5) any act to create, perfect, or enforce against property of 
the debtor any lien to the extent that such lien secures a claim 
that arose before the commencement of the case under this title; 
(6) any act to collect, assess, or recover a claim against the 
debtor that arose before the commencement of the case under this 
' : 
title; 
(7) the setoff of any debt owing to the debtor that arose before 
the commencement of the case under this title against any claim 
against the debtor; and 
(8) the commencement or continuation of a proceeding before 
the United States Tax Court concerning the debtor. 
(b) The filing of a petition under section 301, 302, or 303 of this title 
does not operate as a stay— 
(1) under subsection (a) of this section, of the commencement 
or continuation of a criminal action or proceeding against the 
debtor; 
(2) under subsection (a) of this section, of the collection of 
alimony, maintenance, or support from property that is not prop-
erty of the estate; 
(3) under subsection (a) of this section, of any act to perfect 
^ 
an interest in property to the extent that the trustee's rights and 
Post, p. 2597. 
powers are subject to such perfection under section 546(b) of this 
title; 
(4) under subsection (a) (1) of this section, of the commence-
ment or continuation of an action or proceeding by a govern-
mental unit to enforce such governmental unit's police or 
regulatory power; 
(5) under subsection (a)(2) of this section, of the enforce-
ment of a judgment, other than a money judgment, obtained in 
an action or proceeding by a governmental unit to enforce such 
I governmental unit's police or regulatory power; 
(6) under subsection (a)(7) of this section, of the setoff of 
any mutual debt and claim that are commodity futures contracts, 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2571 
forward commodity contracts, leverage transactions, options, 
warrants, rights to purchase or sell commodity futures contracts 
or securities, or options to purchase or sell commodities or 
securities; 
(7) under subsection (a) of this section, of the commencement 
of any action by the Secretary of Housing and Urban Develop-
ment to foreclose a mortgage or deed of trust in any case in which 
the mortgage or deed of trust held by said Secretary is insured 
or was formerly insured under the National Housing Act and 12 USC 1701. 
covers property, or combinations of property, consisting of five 
or more living units; or 
(8) under subsection (a) of this section, of the issuance to the 
debtor by a governmental unit of a notice of tax deficiency. 
(c) Except as provided in subsections (d), (e), and (f) of this 
section— 
(1) the stay of an act against property of the estate under 
subsection (a) of this section continues until such property is no 
longer property of the estate; and 
(2) the stay of any other act under subsection (a) of this 
section continues until the earliest of— 
(A) the time the case is closed; 
(B) the time the case is dismissed; and 
(C) if the case is a case under chapter 7 of this title con- Post, p. 2604. 
cerning an individual or a case under chapter 9, 11, or 13 of Post, pp. 2621, 
this title, the time a discharge is granted or denied. 
2626,2645. 
(d) On request of a party in interest and after notice and a hearing, 
the court shall grant relief from the stay provided under subsection 
(a) of this section, such as by terminating, annulling, modifying, or 
conditioning such stay— 
(1) for cause, including the lack of adequate protection of an 
interest in property of such party in interest; or 
(2) with respect to a stay of an act against property, if— 
(A) the debtor does not have an equity in such property; 
and 
(B) such property is not necessary to an effective 
reorganization. 
(e) Thirty days after a request under subsection (d) of this section 
for relief from the stay of any act against property of the estate under 
subsection (a) of this section, such stay is terminated with respect to 
the party in interest making such request, unless the court, after notice 
and a hearing, orders such stay continued in effect pending, or as a 
result of, a final hearing and determination under subsection (d) of this 
section. A hearing under this subsection may be a preliminary hearing, 
or may be consolidated with the final hearing under subsection (d) 
of this section. If the hearing under this subsection is a preliminary 
hearing— 
(1) the court shall order such stay so continued if there is a 
reasonable likelihood that the party opposing relief from such 
stay will prevail at the final hearing under subsection (d) of this 
section; and 
(2) such final hearing shall be commenced within thirty days 
after such preliminary hearing. 
(f) The court, without a hearing, shall grant such relief from the 
stay provided under subsection (a) of this section as is necessary to 
prevent irreparable damage to the interest of an entity in property, if 
such interest will suffer such damage before there is an opportunity 
92 STAT. 2572 
PUBLIC LAW 95-598—NOV. 6, 1978 
for notice and a hearing under subsection (d) or (e) of this section, 
(g) In any hearing under subsection (d) or (e) of this section con-
cerning relief from the stay of any act under subsection (a) of this 
section— 
(1) the party requesting such relief has the burden of proof 
on the issue of the debtor's equity in property; and 
(2) the party opposing such relief has the burden of proof on 
all other issues, 
11 use 363. 
§ 36a. Use, sale, or lease of property 
Cash collateral. 
(a) In this section, "cash collateral" means cash, negotiable instru-
ments, documents of title, securities, deposit accounts, or other cash 
equivalents in which the estate and an entity other than the estate 
have an interest. 
Notice and 
(b) The trustee, after notice and a hearing, may use, sell, or lease, 
hearing. 
other than in the ordinary course of business, property of the estate. 
(c) (1) If the business of the debtor is authorized to be operated 
Post, pp. 2606, 
under section 721,1108, or 1304 of this title and unless the court orders 
2629, 2646. 
otherwise, the trustee may enter into transactions, including the sale 
or lease of property of the estate, in the ordinary course of business, 
without notice or a hearing, and may use property of the estate in the 
ordinary course of business without notice or a hearing. 
(2) The trustee may not use, sell, or lease cash collateral under 
paragraph (1) of this subsection unless— 
(A) each entity that has an interest in such cash collateral 
consents; or 
(B) the court, after notice and a hearing, authorizes such use, 
sale, or lease in accordance with the provisions of this section. 
(3) Any hearing under paragraph (2) (B) of this subsection may 
be a preliminary hearing or may be consolidated with a hearing under 
subsection (e) of this section, but shall be scheduled in accordance 
with the needs of the debtor. If the hearing under paragraph (2) (B) 
of this subsection is a preliminary hearing, the court may authorize 
such use, sale, or lease only if there is a reasonable likelihood that the 
trustee will prevail at the final hearing under subsection (e) of this 
section. The court shall act promptly on any request for authorization 
under paragraph (2) (B) of this subsection. 
(4) Except as provided in paragraph (2) of this subsection, the 
trustee shall segregate and account for any cash collateral in the 
trustee's possession, custody, or control. 
(d) The trustee may use, sell, or lease property under subsection 
(b) or (c) of this section only to the extent not inconsistent with any 
relief granted under section 362(c), 362(d), 362(e), or 362(f) of this 
title. 
(e) Notwithstanding any other provision of this section, at any 
time, on request of an entity that has an interest in property used, sold, 
or leased, or proposed to be used, sold, or leased, by the trustee, the 
court shall prohibit or condition such use, sale, or lease as is necessary 
to provide adequate protection of such interest. In any hearing under 
this section, the trustee has the burden of proof on the issue of 
adequate protection. 
(f) The trustee may sell property under subsection (b) or (c) of 
this section free and clear of any interest in such property of an entity 
other than the estate, only if— 
(1) applicable nonbankruptcy law permits sale of such prop-
erty free and clear of such interest; . , 
(2) such entity consents; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2573 
(3) such interest is a lien and the price at which such property 
is to be sold is greater than the aggregate value of such interest; 
(4) such interest is in bona fide dispute; or 
(5) such entity could be compelled, in a legal or equitable 
proceeding, to accept a money satisfaction of such interest. 
(g) Notwithstanding subsection (f) of this section, the trustee may 
sell property under subsection (b) or (c) of this section free and clear 
of any vested or contingent right in the nature of dower or curtesy. 
(h) Notwithstanding subsection (f) of this section, the trustee may 
sell both the estate's interest, under subsection (b) or (c) of this sec-
tion, and the interest of any co-owner in property in which the debtor 
had, immediately before the commencement of the case, an undivided 
interest as a tenant in common, joint tenant, or tenant by the entirety, 
only if— 
(1) partition in kind of such property among the estate and 
such co-owners is impracticable; 
(2) sale of the estate's undivided interest in such property would 
realize significantly less for the estate than sale of such property 
free of the interests of such co-owners; 
(3) the benefit to the estate of a sale of such property free of 
the interests of co-owners outweighs the detriment, if any, to such 
co-owners; and 
(4) such property is not used in the production, transmission, 
or distribution, for sale, of electric energy or of natural or syn-
thetic gas for heat, light, or power. 
(i) Before the consummation of a sale of property to which subsec-
tion (g) or (h) of this section applies, or of property of the estate 
that was community property of the debtor and the debtor's spouse 
immediately before the commencement of the case, the debtor's spouse, 
or a co-owner of such property, as the case may be, may purchase such 
property at the price at which such sale is to be consummated. 
(]) After a sale of property to which subsection (g) or (h) of this 
section applies, the trustee shall distribute to the debtor's spouse or the 
co-owners of such property, as the case may be, and to the estate, the 
proceeds of such sale, less the costs and expenses, not including any 
compenation of the trustee, of such sale, according to the interests of 
such spouse or co-owners, and of the estate. 
(k) At a sale under subsection (b) of this section of property that is 
subject to a lien that secures an allowed claim, if the holder of such 
claim purchases such property, such holder may offset such claim 
against the purchase price of such property. 
(1) The trustee may use, sell, or lease property under subsection (b) 
or (c) of this section, or a plan under chapter 11 or 13 of this title may Post, pp. 2626, 
provide for the use, sale, or lease of property, notwithstanding any pro- 2645. 
vision in a contract, a lease, or applicable law that is conditioned on the 
insolvency or financial conditions of the debtor, on the commencement 
of a case under this title concerning the debtor, or on the appointment 
of a taking possession by a trustee in a case under this title or a 
, 
custodian, and that effects, or gives an option to effect, a forfeiture, 
modification, or termination of the debtor's interests in such property. 
(m) The reversal or modification on appeal of an authorization 
under subsection (b) or (c) of this section of a sale or lease of property 
does not affect the validity of a sale or lease under such authorization 
to an entity that purchased or leased such property in good faith, 
whether or not such entity knew of the pendency of the appeal, unless 
such authorization and such sale or lease were stayed pending appeal. 
(n) The trustee may void a sale under this section if the sale price 
92 STAT. 2574 
PUBLIC LAW 95-598—NOV. 6, 1978 
was controlled by an agreement among potential bidders at such sale, 
or may recover from a party to such agreement any amount by which 
the value of the property sold exceeds the price at which such sale was 
consummated, and may recover any costs, attorneys' fees, or expenses 
incurred in voiding such sale or recovering such amount. The court 
may grant judgment in favor of the estate and against any such 
party that entered into such agreement in willful disregard of this 
subsection for punitive damages in addition to any recovery under the 
preceding sentence. 
11 use 364. 
§ 364. Obtaining credit 
(a) If the trustee is authorized to operate the business of the debtor 
Post, pp. 2606, 
under section 721, 1108, or 1304 of this title, unless the court orders 
2629, 2646. 
otherwise, the trustee may obtain unsecured credit and incur unsecured 
debt in the ordinary course of business allowable under section 503 
(b) (1) of this title as an administrative expense. 
Notice and 
(b) The court, after notice and a hearing, may authorize the trustee 
hearing. 
to obtain unsecured credit or to incur unsecured debt other than under 
subsection (a) of this section, allowable under section 503(b) (1) of 
this title as an administrative expense. 
(c) If the trustee is unable to obtain unsecured credit allowable 
under section 503(b) (1) of this title as an administrative expense, the 
court, after notice and a hearing, may authorize the obtaining of credit 
or the incurring of debt— 
(1) with priority over any or all administrative expenses of the 
kind specified in section 503(b) or 507(b) of this title; 
(2) secured by a lien on property of the estate that is not other-
wise subject to a lien; or 
(3) secured by a junior lien on property of the estate that is 
subject to a lien. 
(d) (1) The court, after notice and a hearing, may authorize the 
obtaining of credit or the incurring of debt secured by a senior or equal 
lien on property of the estate that is subject to a lien only if— 
(A) the trustee is unable to obtain such credit otherwise; and 
(B) there is adequate protection of the interest of the holder of 
the lien on the property of the estate on which such senior or equal 
lien is proposed to be granted. 
(2) In any hearing under this subsection, the trustee has the burden 
of proof on the issue of adequate protection. 
(e) The reversal or modification on appeal of an authorization under 
this section to obtain credit or incur debt, or of a grant under this 
section of a priority or a lien, does not affect the validity of any debt 
so incurred, or any priority or lien so granted, to an entity that 
extended such credit in good faith, whether or not such entity knew of 
the pendency of the appeal, unless such authorization and the incurring 
of such debt, or the granting of such priority or lien, were stayed 
pending appeal. 
(f) Except with respect to an entity that is an underwriter as defined 
Post, p. 2639. 
in section 1145(b) of this title, section 5 of the Securities Act of 1933 
(15 U.S.C. 77e), the Trust Indenture Act of 1939 (15 U.S.C. 77aaa et 
seq.), and any State or local law requiring registration for offer or 
sale of a security or registration or licensing of an issuer of, under-
writer of, or broker or dealer in, a security does not apply to the offer 
or sale under this section of a security that is not an equity security. 
11 use 365. 
§ 365. Executory contracts and unexpired leases 
Post, p. 2619. 
(a) Except as provided in sections 765 and 766 of this title and in 
subsections (b), (c),and (d) of this section, the tinistee, subject to the 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2575 
court's approval, may assume or reject any executory contract or 
unexpired lease of the debtor. 
(b) (1) If there has been a default in an executory contract or unex-
pired lease of the debtor, the trustee may not assume such contract or 
lease unless, at the time of assumption of such contract or lease, the 
trustee—• 
(A) cures, or provides adequate assurance that the trustee will 
promptly cure, such default; 
(B) compensates, or provides adequate assurance that the 
trustee will promptly compensate, a party other than the debtor 
to such contract or lease, for any actual pecuniary loss to such 
party resulting from such default; and 
(C) provides adequate assurance of future performance under 
such contract or lease. 
(2) Paragraph (1) of this subsection does not apply to a default 
that is a breach of a provision relating to—• 
(A) the insolvency or financial condition of the debtor at any 
time before the closing of the case; 
(B) the commencement of a case under this title; or 
(C) the appointment of or taking possession by a trustee in a 
case under this title or a custodian before such commencement. 
(3) For the purposes of paragraph (1) of this section, adequate 
assurance of future performance of a lease of real property in a shop-
ping center includes adequate assurance— 
(A) of the source of rent and other consideration due under 
such lease; 
(B) that any percentage rent due under such lease will not 
decline substantially ; 
(C) that assumption or assignment of such lease will not breach 
substantially any provision, such as a radius, location, use, or 
exclusivity provision, in any other lease, financing agreement, or 
master agreement relating to such shopping center; and 
(D) that assumption or assignment of such lease will not disrupt 
substantially any tenant mix or balance in such shopping center. 
(4) Notwithstanding any other provision of this section, if there 
has been a default in an unexpired lease of the debtor, other than a 
default of a kind specified in paragraph (2) of this subsection, the 
trustee may not require a lessor to provide services or supplies inci-
dental to such lease before assumption of such lease unless the lessor 
is compensated under the terms of such lease for any services and 
supplies provided under such lease before assumption of such lease. 
(c) The trustee may not assume or assign an executory contract or 
unexpired lease of the debtor, whether or not such contract or lease 
prohibits or restricts assignment of rights or delegation of duties, if— 
(1) (A) applicable law excuses a party, other than the debtor, 
to such contract or lease from accepting performance from or 
rendering performance to the trustee or an assignee of such con-
tract or lease, whether or not such contract or lease prohibits or 
restricts assignment of rights or delegation of duties; and 
(B) such party does not consent to such assumption or assign-
ment; or 
(2) such contract is a contract to make a loan, or extend other 
debt financing or financial accommodations, to or for the benefit 
of the debtor, or to issue a security of the debtor. 
(d) (1) In a case under chapter 7 of this title, if the trustee does Post, p. 2604. 
not assume or reject an executory contract or unexpired lease of the 
debtor within 60 days after the order for relief, or within such addi-
92 STAT. 2576 
PUBLIC LAW 95-598—NOV. 6, 1978 
tional time as the court, for cause, within such 60-day period, fixes, 
then such contract or lease is deemed rejected. 
Post, pp. 2621, 
(2) In a case under chapter 9,11, or 13 of this title, the trustee may 
2626, 2645. 
assume or reject an executory contract or unexpired lease of the debtor 
at any time before the confirmation of a plan, but the court, on request 
of any party to such contract or lease, may order the trustee to deter-
mine within a specified period of time whether to assume or reject 
such contract or lease. 
(e) (1) Notwithstanding a provision in an executory contract or 
unexpired lease, or in applicable law, an executory contract or unex-
pired lease of the debtor may not be terminated or modified, and any 
right or obligation under such contract or lease may not be terminated 
or modified, at any time after the commencement of the case solely 
because of a provision in such contract or lease that is conditioned on— 
(A) the insolvency or financial condition of the debtor at any 
time before the closing of the case; 
(B) the commencement of a case under this title; or 
(C) the appointment of or taking possession by a trustee in 
a case under this title or a custodian before such commencement. 
(2) Paragraph (1) of this subsection does not apply to an executory 
contract or unexpired lease of the debtor, whether or not such contract 
or lease prohibits or restricts assignment of rights or delegation of 
duties, if— 
(A) (i) applicable law excuses a party, other than the debtor, 
to such contract or lease from accepting performance from or 
rendering performance to the trustee or to an assignee of such 
-
• • contract or lease, whether or not such contract or lease prohibits 
or restricts assignment of rights or delegation of duties; and 
(ii) such party does not consent to such assumption or assign-
ment ; or 
(B) such contract is a contract to make a loan, or extend other 
debt financing or financial accommodations, to or for the benefit 
of the debtor, or to issue a security of the debtor. 
(f)(1) Except as provided in subsection (c) of this section, not-
withstanding a provision in an executory contract or unexpired lease 
' of the debtor, or in applicable law, that prohibits, restricts, or condi-
tions the assignment of such contract or lease, the trustee may assign 
such contract or lease under paragraph (2) of this subsection. 
(2) The trustee may assign an executory contract or unexpired lease 
of the debtor only if— 
(A) the trustee assumes such contract or lease in accordance 
with the provisions of this section; and 
(B) adequate assurance of future performance by the assignee 
of such contract or lease is provided, whether or not there has 
been a default in such contract or lease. 
(3) Notwithstanding a provision in an executory contract or unex-
pired lease of the debtor, or in applicable law that terminates or modi-
fies, or permits a party other than the debtor to terminate or modify, 
such contract or lease or a right or obligation under such contract or 
lease on account of an assignment of such contract or lease, such con-
tract, lease, right, or obligation may not be terminated or modified 
under such provision because of the assumption or assignment of such 
contract or lease by the trustee. 
,, 
(g) Except as provided in subsections (h)(2) and (i) (2) of this 
* '* * 
section, the rejection of an executory contract or unexpired lease of 
the debtor constitutes a breach of such contract or lease— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2577 
(1) if such contract or lease has not been assumed under this 
section or under a plan confirmed under chapter 9, 11, or 13 of Post, pp. 2621, 
this title, immediately before the date of the filing of the petition; 2626, 2645. 
or 
(2) if such contract or lease has been assumed under this section 
or under a plan confirmed under chapter 9,11, or 13 of this title— 
(A) if before such rejection the case has not been converted 
under section 1112 or 1307 of this title, at the time of such Post, pp. 2630, 
rejection; or 
2647. 
(B) if before such rejection the case has been converted 
under section 1112 or 1307 of this title— 
7 
(i) immediately before the date of such conversion, if 
such contract or lease was assumed before such conver-
sion; or 
s : / 
(ii) at the time of such rejection, if such contract or 
lease was assumed after such conversion, 
(h) (1) If the trustee rejects an unexpired lease of real property of 
the debtor under which the debtor is the lessor, the lessee under such 
lease may treat the lease as terminated by such rejection, or, in the 
alternative, may remain in possession for the balance of the term of 
such lease and any renewal or extension of such term that is enforceable 
by such lessee under applicable nonbankruptcy law. 
(2) If such lessee remains in possession, such lessee may offset against 
the rent reserved under such lease for the balance of the term after 
the date of the rejection of such lease, and any such renewal or 
extension, any damages occurring after such date caused by the non-
performance of any obligation of the debtor after such date, but 
such lessee does not have any rights against the estate on account 
of any damages arising after such date from such rejection, other 
than such offset. 
(i) (1) If the trustee rejects an executory contract of the debtor 
for the sale of real property under which the purchaser is in possession, 
such purchaser may treat such contract as terminated, or, in the alter-
native, may remain in possession of such real property. 
(2) If such purchaser remains in possession— 
(A) such purchaser shall continue to make all payments due 
under such contract, but may, offset against such payments any 
damages occurring after the date of the rejection of such contract 
caused by the nonperformance of any obligation of the debtor 
after such date, but such purchaser does not have any rights 
against the estate on account of any damages arising after such 
date from such rejection, other than such offset; and 
(B) the trustee shall deliver title to such purchaser in accord-
ance with the provisions of such contract, but is relieved of all 
other obligations to perform under such contract. 
(j) A purchaser that treats an executory contract as terminated 
under subsection (i) of this section, or a party whose executory contract 
to purchase real property from the debtor is reiected and under which 
such party is not in possession, has a lien on the interest of the debtor in 
such property for the recovery of any portion of the purchase price that 
such purchaser or party has paid. 
; 
(k) Assignment by the trustee to an entity of a contract or lease 
assumed under this section relieves the trustee and the estate from any 
liability for any breach of such contract or lease occurring after such 
assignment. 
92 STAT. 2578 
PUBLIC LAW 95-598—NOV. 6, 1978 
11 use 366. 
§ 366. Utility service 
(a) Except as provided in subsection (b) of this section, a utility 
may not alter, refuse, or discontinue service to, or discriminate against, 
the trustee or the debtor solely on the basis that a debt owed by the 
debtor to such utility for service rendered before the order for relief 
was not paid when due. 
(b) Such utility may alter, refuse, or discontinue service if neither 
i' .; '
• the trustee nor the debtor, within 20 days after the date of the order for 
relief, furnishes adequate assurance of payment, in the form of a 
deposit or other security, for service after such date. On request of a 
party in interest and after notice and a hearing, the court may order 
reasonable modification of the amount of the deposit or other security 
necessary to provide adequate assurance of payment. 
CHAPTER 
5—CREDITORS, 
THE 
DEBTOR, 
AND 
THE 
ESTATE 
SUBCHAPTER I-CREDITORS AND CLAIMS 
Sec. 
501. Filing of proofs of claims or interests. 
502. Allowance of claims or interests. 
503. Allowance of administrative expenses. 
504. Sharing of compensation. 
505. Determination of tax liability, 
506. Determination of secured status. 
507. Priorities. 
508. Effect of distribution other than under this title. 
509. Claims of codebtors. 
510. Subordination. 
SUBCHAPTER II—DEBTOR'S 
DUTIES AND BENEFITS 
521. Debtor's duties. 
522. Exemptions. 
523. Exceptions to discharge. 
524. Effect of discharge. 
525. Protection against discriminatory treatment. 
SUBCHAPTER III—THE ESTATE 
541. Property of the estate. 
542. Turnover of property to the estate. 
543. Turnover of property by a custodian. 
544. Trustee as lien creditor and as successor to certain creditors and purchasers. 
545. Statutory liens. 
546. Limitations on avoiding powers. 
547. Preferences. 
548. Fraudulent transfers and obligations. 
549. Postpetition transactions. 
550. Liability of transferee of avoided transfer. 
551. Automatic preservation of avoided transfer. 
552. Postpetition effect of security interest. 
553. Setoff. 
554. Abandonment of property of the estate. 
SUBCHAPTER I—CREDITORS AND CLAIMS 
11 use 501. 
§ 501. Filing of proofs of claims or interests 
(a) A creditor or an indenture trustee may file a proof of claim. An 
equity security holder may file a proof of interest. 
(b) If a creditor does not timely file a proof of such creditx)r's claim, 
an entity that is liable to such creditor with the debtor, or that has 
secured such creditor, may file a proof of such claim. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2579 
(c) If a creditor does not timely file a proof of such creditor's claim, 
the debtor or the trustee may file a proof of such claim. 
(d) A claim of a kind specified in section 502(f), 502(g), 502(h) 
or 502(i) of this title may be filed under subsection (a), (b), or (c) of 
this section the same as if such claim were a claim against the debtor 
and had arisen before the date of the filing of the petition. 
§ 502. Allowance of claims or interests 
^^ ^^^ ^^2. 
(a) A claim or interest, proof of which is filed under section 501 of 
this title, is deemed allowed, unless a party in interest, including a 
creditor of a partner in a partnership that is a debtor in a case under 
chapter 7 of this title, objects. 
. 
Post, f. 2604. 
(b) Except as provided in subsections (f), (g), (h) and (i) of this 
section, if such objection to a claim is made, the court, after notice and 
a hearing, shall determine the amount of such claim as of the date 
of the filing of the petition, and shall allow such claim in such amount, 
except to the extent that— 
(1) such claim is unenforceable against the debtor, and unen-
forceable against property of the debtor, under any agreement or 
applicable law for a reason other than because such claim is 
contingent or unmatured; 
; 
(2) such claim is for unmatured interest; 
(3) such claim may be oiffset under section 553 of this title Post, p. 2602. 
against a debt owing to the debtor; 
(4) if such claim is for a tax assessed against property of the 
estate, such claim exceeds value of the interest of the estate in 
such property; 
(5) if such claim is for services of an insider or attorney of the 
debtor, such claim exceeds the reasonable value of such services; 
(6) the claim is for a debt that is unmatured on the date of the 
filing of the petition, and that is excepted from discharge under 
section 523 (a) (5) of this title | 
(7) if such claim is the claim of a lessor for damages resulting 
from the termination of a lease of real property, such claim 
exceeds— 
(A) the rent reserved by such lease, without acceleration, 
for the greater of one year, or 15 percent, not to exceed three 
years, of the remaining term of such lease, following the 
earlier of— 
(i 
j the date of the filing of the petition; and 
(ii) the date on which such lessor reposessed, or the 
lessee surrendered, the leased property; plus 
(B) any unpaid rent due under such lease, without accel-
eration, on the earlier of such dates; 
(8) if such claim is for damages resulting from the termination 
; 
of an employment contract, such claim exceeds— 
(A) the compensation provided by such contract, without 
acceleration, for one year following the earlier of— 
(i) the date of the filing of the petition; and 
(ii) the date on which the employer directed the 
employee to terminate, or such employee terminated, per-
formance under such contract; plus 
(B) the unpaid compensation due under such contract with-
out acceleration, on the earlier of such dates; or 
(9) such claim results from a reduction, due to late payment, 
in the amount of an otherwise applicable credit available to the 
92 STAT. 2580 
PUBLIC LAW 95-598—NOV. 6, 1978 
debtor in connection with an employment tax on wages, salaries, 
or commissions earned from the debtor. 
(c) There shall be estimated for purpose of allowance under this 
section— 
(1) any contingent or unliquidated claim, fixing or liquida-
tion of which, as the case may be, would unduly delay the closing 
i^n:.'].?^i • 
of the case; or 
(2) any right to an equitable remedy for breach of perform-
ance if such breach gives rise to a right to payment. 
(d) Notwithstanding subsections (a) and (b) of this section, the 
court shall disallow any claim of any entity from which property is 
Post, pp. 2601, 
recoverable under section 542, 543, 550, or 553 of this title or that is 
2602. 
a transferee of a transfer avoidable under section 522(f), 522(h), 
Post, pp. 2601, 
544, 545, 547, 548, 549, or 724(a) of this title, unless such entity or 
2607. 
transferee has paid the amount, or turned over any such property, 
r 
for which such entity or transferee is liable under section 522(i), 542, 
543,550, or 553 of this title. 
(e)(1) Notwithstanding subsections (a) and (b) of this section and 
paragraph (2) of this subsection, the court shall disallow any claim 
for reimbursement or contribution of an entity that is liable with 
the debtor on, or has secured, the claim of a creditor, to the extent 
that— 
> 
<^i^ -; '•''•••"' 
(A) such creditor's claim against the estate is disallowed; 
(B) such claim for reimbursement or contribution is contingent 
as of the time of allowance of such claim for reimbursement or 
contribution; or 
(C) such entity requests subrogation under section 509 of this 
title to the rights of such creditor. 
(2) A claim for reimbursement or contribution of such an entity 
that becomes fixed after the commencenient of the case shall be deter-
mined, and shall be allowed under subsection (a), (b), or (c) of this 
section, or disallowed under subsection (d) of this section, the same as 
if such claim had become fixed before the date of the filing of the 
petition. 
(f) In an involuntary case, a claim arising in the ordinary course 
of the debtor's business or financial affairs after the commencement 
of the case but before the earlier of the appointment of a trustee and 
the order for relief shall be determined as of the date such claim 
arises, and shall be allowed under subsection (a), (b), or (c) of this 
section or disallowed under subsection (d) or (e) of this section, 
the same as if such claim had arisen before the date of the filing of 
the petition. 
(g) A claim arising from the rejection, under section 365 of this 
Post, pp. 2621, 
title or under a plan under chapter 9, 11, or 13 of this title, of an 
2626, 2645. 
executory contract or unexpired lease of the debtor that has not been 
assumed shall be determined, and shall be allowed under subsection 
(a), (b),or (c) of this section or disallowed under subsection (d) or 
(e) of this section, the same as if such claim had arisen before the 
date of the filing of the petition. 
(h) A claim arising from the recovery of property under section 
522(i), 550, or 553 of this title shall be determined, and shall be 
allowed under subsection (a), (b), or (c) of this section, or disal-
lowed under subsection (d) or (e) of this section, the same as if such 
claim had arisen before the date of the filing of the petition. 
(i) A claim that does not arise until after the commencement of the 
case for a tax entitled to priority under section 507(a)(6) of this 
title shall be determined, and shall be allowed under subsection (a), 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2581 
(b), or (c) of this section, or disallowed under subsection (d) or (e) 
of this section, the same as if such claim had arisen before the date of 
the filing of the petition. 
(j) Before a case is closed, a claim that has been allowed may be 
reconsidered for cause, and reallowed or disallowed according to the 
equities of the case. 
§ 503. Allowance of administrative expenses 
11 USC 503. 
(a) An entity may file a request for payment of an administrative 
expense. 
(b) After notice and a hearing, there shall be allowed, administra-
tive expenses, other than claims allowed under section 502(f) of this 
title, including— 
(1) (A) the actual, necessary costs and expenses of preserving 
the estate, including wages, salaries, or commissions for services 
rendered after the commencement of the case; 
(B) any tax— 
(i) incurred by the estate, except a tax of a kind specified 
in section 507 (a)(6) of this title; or 
(ii) attributable to an excessive allowance of a tentative 
carryback adjustment that the estate received, whether the 
taxa,ble year to which such adjustment relates ended before 
or after the commencement of the case; and 
(C) any fine, penalty, or reduction in credit, relating to a tax 
; , 
. 
of a kind specified in subparagraph (B) of this paragraph; 
(2) compensation and reimbursement awarded under section 
3a0 of this title; 
(3) the actual, necessary expenses, other than compensation 
J 
and reimbursement specified in paragraph (4) of this subsection 
incurred by— 
(A) a creditor that files a petition under section 303 of Ante, p. 2559. 
this title; 
(B) a creditor that recovers, after the court's approval, for 
the benefit of the estate any property transferred or con-
cealed by the debtor; 
(C) a creditor in connection with the prosecution of a 
criminal offense relating to the case, or to the business or 
property of the debtor; 
" 
(D) a creditor, an indenture trustee, an equity security 
holder, or a committee representing creditors or equity secu-
rity holders other than a committee appointed under section 
1102 of this title, in making a substantial contribution in a Post, p. 2626. 
case under chapter 9 or 11 of this title; or 
Post, pp. 2621, 
(E) a custodian superseded under section 543 of this title, 2626. 
and compensation for the services of such custodian; 
(4) reasonable compensation for professional services rendered 
by an attorney or an accountant of an entity whose expense is 
allowable under paragraph (3) of this subsection, based on the 
time, the nature, the extent, and the value of such services, and 
the cost of comparable services other than in a case under this 
title, and reimbursement for actual, necessary expenses incurred 
by such attorney or accountant; 
(5) reasonable compensation for services rendered by an inden-
ture trustee in making a substantial contribution in a case 
under chapter 9 or 11 of this title, based on the time, the nature, 
the extent, and the value of such services, and the cost of com-
parable services other than in a case under this title; and 
92 STAT. 2582 
PUBLIC LAW 95-598—NOV. 6, 1978 
28 use 1821 et 
(6) the fees and mileage payable under chapter 119 of title 28. 
iTusC 504 
§ ^^^' Sharing of compensation 
(a) Except as provided in subsection (b) of this section, a person 
receiving compensation or reimbursement under section 603(b)(2) 
or 503(b) (4) of this title may not share or agree to share— 
(1) any such compensation or reimbursement with another 
person; or 
(2) any compensation or reimbursement received by another 
person under such sections. 
(b) (1) A member, partner, or regular associate in a professional 
association, corporation, or partnership may share compensation or 
reimbursement received under section 503(b)(2) or 503(b)(4) of 
this title with another member, partner, or regular associate in such 
association, corporation, or partnership, and may share in any com-
pensation or reimbursement received under such sections by another 
member, partner, or regular associate in such association, corpora-
tion, or partnership. 
(2) An attorney for a creditor that files a petition under section 303 
of this title may share compensation and reimbursement received 
under section 503(b)(4) of this title with any other attorney con-
tributing to the services rendered or expenses incurred by such credi-
tor's attorney. 
11 use 505. 
§ 505. Determination of tax liability 
(a) (1) Except as provided in paragraph (2) of this subsection, the 
court may determine the amount or legality of any tax, any fine or 
penalty relating to a tax, or any addition to tax, whether or not pre-
viously assessed, whether or not paid, and whether or not contested 
before and adjudicated by a judicial or administrative tribunal of 
competent jurisdiction. 
(2) The court may not so determine^— 
(A) the amount or legality of a tax, fine, penalty, or addition to 
tax if such amount or legality was contested before and adjudi-
cated by a judicial or administrative tribunal of competent juris-
, 
diction before the commencement of the case under this title; or 
(B) any right of the estate to a tax refund, before the earlier 
of— 
(i) 120 days after the trustee properly requests such refund 
from the governmental unit from which such refund is 
claimed; and 
(ii) a determination by such governmental unit of such 
, . 
request. 
(b) A trustee may request a determination of any unpaid liability 
of the estate for any tax incurred during the administration of the 
case by submitting a tax return for such tax and a request for such a 
determination to the governmental unit charged with responsibility 
for collection or determination of such tax. Unless such return is 
fraudulent, or contains a material misrepresentation, the trustee, the 
debtor, and any successor to the debtor are discharged from any 
liability for such tax— 
(1) upon payment of the tax shown on such return, if— 
(A) such governmental unit does not notify the trustee, 
within 60 days after such request, that such return has been 
J 
selected for examination; or 
' 
i. 
(B) such governmental unit does not complete such an 
examination and notify the trustee of any tax due, within 180 
PUBLIC L\W 95-598—NOV. 6, 1978 
92 STAT. 2583 
days after such request or within such additional time as the 
court, for cause, permits; 
(2) upon payment of the tax determined by the court, after 
notice and a hearing, after completion by such governmental unit 
of such examination; or 
(3) upon payment of the tax determined by such governmental 
unit to be due. 
(c) Notwithstanding section 362 of this title, after determination by 
the court of a tax imder this section, the governmental unit charged 
with responsibility for collection of such tax may assess such tax 
against the estate, the debtor, or a successor to the debtor, as the case 
may be, subject to any otherwise applicable law. 
§ 506. Determination of secured status 
11 USC 506, 
(a) An allowed claim of a creditor secured by a lien on property in 
which the estate has an interest, or that is subject to setoff under section 
553 of this title, is a secured claim to the extent of the value of such 
creditor's interest in the estate's interest in such property, or to the 
extent of the amount subject to setoff, as the case may be, and is an 
unsecured claim to the extent that the value of such creditor's interest 
or the amount so subject to setoff is less than the amount of such allowed 
claim. Such value shall be determined in light of the purpose of the 
valuation and of the proposed disposition or use of such property, and 
in conjunction with any hearing on such disposition or use or on a plan 
affecting such creditor's interest. 
(b) To the extent that an allowed secured claim is secured by prop-
erty the value of which, after any recovery under subsection (c) of 
this section, is greater than the amount of such claim, there shall be 
allowed to the holder of such claim, interest on such claim, and any rea-
sonable fees, costs, or charges provided under the agreement under 
which such claim arose. 
(c) The trustee may recover from property securing an allowed 
secured claim the reasonable, necessary costs and expenses of preserv-
ing, or disposing of, such property to the extent of any benefit to the 
holder of such claim. 
(d) To the extent that a lien secures a claim against the debtor that 
is not an allowed secured claim, such lien is void, unless— 
(1) a party in interest has not requested that the court deter-
mine and allow or disallow such claim under section 502 of this 
title; or 
(2) such claim was disallowed only under section 502(e) of this 
title. 
§ 507. Priorities 
11 USC 507. 
(a) The following expenses and claims have priority in the following 
order: 
(1) First, administrative expenses allowed under section 503 (b) 
of this title, and any fees and charges assessed against the estate 
under chapter 123 of title 28. 
28 USC 1911 e
f 
(2) Second, unsecured claims allowed under section 502(f) of seq. 
this title. 
(3) Third, allowed unsecured claims for wages, salaries, or com-
J 
missions, including vacation, severance and sick leave pay— 
(A) earned by an individual within 90 days before the 
date of the filing of the petition or the date of the cessation 
of the debtor's business, whichever occurs first; but only 
(B) to the extent of $2,000 for each such individual. 
92 STAT. 2584 
PUBLIC LAW 95-598—NOV. 6, 1978 
(4) Fourth, allowed unsecured claims for contributions to 
employee benefit plans— 
(A) arising from services rendered within 180 days before 
the date of the filing of the petition or the date of the cessa-
tion of the debtor's business, whichever occurs first; but only 
(B) for each such plan, to the extent of— 
(i) the number of employees covered by such plan 
multiplied by $2,000; less 
(ii) the aggregate amount paid to such employees 
under paragraph (3) of this subsection, plus the aggre-
gate amount paid by the estate on behalf of such 
employees to any other employee benefit plan. 
(5) Fifth, allowed unsecured claims of individuals, to the 
extent of $900 for each such individual, arising from the deposit, 
before the commencement of the case, of money in connection with 
the purchase, lease, or rental of property, or the purchase of 
services, for the personal, family, or household use of such indi-
viduals, that were not delivered or provided. 
(6) Sixth, allowed unsecured claims of governmental units, 
to the extent that such claims are for— 
(A) a tax on or measured by income or gross receipts— 
(i) for a taxable year ending on or before the date of 
the filing of the petition for which a return, if required, 
i 
is last due, including extensions, after three years before 
the date of the filing of the petition; 
(ii) assessed within 240 days, plus any time plus 30 
days during which an oflFer in compromise with respect 
to such tax that was made within 240 days after such 
assessment was pending, before the date of the filing of 
' = 
the petition; or 
(iii) other than a tax of a kind specified in section 523 
(a) (1) (B) or 523(a) (1) (C) of this title, not assessed 
before, but assessable, under applicable law or by agree-
ment, after, the commencement of the case; 
(B) a property tax assessed before the commencement of 
w 
the case and last payable without penalty after one year 
before the date of the filing of the petition; 
(C) a tax required to be collected or withheld and for 
which the debtor is liable in whatever capacity; 
(D) an employment tax on a wage, salary, or commission 
of a kind specified in paragraph (3) of this subsection earned 
from the debtor before the date of the filing of the petition, 
whether or not actually paid before such date, for which a 
return is last due, under applicable law or under any exten-
sion, after three years before the date of the filing of the 
petition; 
(E) an excise tax on— 
(i) a transaction occurring before the date of the filing 
of the petition for which a return, if required, is last due, 
under applicable law or under any extension, after three 
years before the date of the filing of the petition; or 
(ii) if a return is not required, a transaction occurring 
during the three years immediately preceding the date 
of the filing of the petition; 
(F) a customs duty arising out of the importation of 
merchandise— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2585 
(i) entered for consumption within one year before 
the date of the filing of the petition; 
(ii) covered by an entry liquidated or reliquidated 
within one year before the date of the filing of the peti-
' 
tion; or 
(iii) entered for consumption within four years before 
the date of the filing of the petition but unliquidated on 
such date, if the Secretary of the Treasury certifies that 
failure to liquidate such entry was due to an investiga-
tion pending on such date into assessment of antidump-
ing or countervailing duties or fraud, or if informatic/n 
needed for the proper appraisement or classification of 
such merchandise was not available to the appropriate 
customs officer before such date; or 
(G) a penalty related to a claim of a kind specified in this 
paragraph and in compensation for actual pecuniary loss. 
(b) If the trustee, under section 362, 363, or 364 of this title, pro-
vides adequate protection of the interest of a holder of a claim secured 
by a lien on'property of the debtor and if, notwithstanding such pro- 
,j . 
tection, such creditor has a claim allowable under subsection (a) (1) 
of this section arising from the stay of action against such property 
under section 362 of this title, from the use, sale, or lease of such 
property under section 363 of this title, or from the granting of a lien 
under section 364(d) of this title, then such creditor's claim under 
such subsection shall have priority over every other claim allow-
able under such subsection. 
(c) For the purpose of subsection (a) of this section, a claim of a 
governmental unit arising from an erroneous refund or credit of a 
tax shall be treated the same as a claim for the tax to which such 
refund or credit relates. 
(d) An entity that is subrogated to the rights of a holder of a claim 
of a kind specified in subsection (a) (3), (a) (4), (a) (5), or (a) (6) of 
this section is not subrogated to the right of the holder of such claim 
to priority under such subsection. 
§ 508. Effect of distribution other than under this title 
11 USC 508. 
(a) If a creditor receives, in a foreign proceeding, payment of, or 
a transfer of property on account of, a claim that is allowed under 
this title, such creditor may not receive any payment under this title 
on account of such claim until each of the other holders of claims on ac- 
; ; 
count of, which such holders are entitled to share equally with such 
creditor under this title has received payment under this title equal in 
value to the consideration received by such creditor in such foreign 
proceeding. 
(b) If a creditor of a partnership debtor receives, from a general 
partner that is not a debtor in a case under chapter 7 of this title, pay-
ment of, or a transfer of property on account of, a claim that is allowed 
under this title and that is not secured by a lien on property of such 
partner, such creditor may not receive any payment under this title 
on account of such claim until each of the other holders of claims on 
account of which such holders are entitled to share equally with such 
creditor under this title has received payment under this title equal 
in value to the consideration received by such creditor from such 
general partner. 
§ 509. Claims of codebtors 
H USC 509. 
(a) Except as provided in subsections (b) and (c) of this section, 
an entity that is liable with the debtor on, or that has secured, a claim 
92 STAT. 2586 
PUBLIC LAW 95-598—NOV. 6, 1978 
of a creditor, and that pays such claim, is subrogated to the rights of 
such creditor to the extent of such payment. 
(b) Such entity is not subrogated to the rights of such creditor to 
the extent that— 
(1) a claim of such entity for reimbursement or contribution 
i > on account of a payment of such creditor's claim is— 
(A) allowed under section 502 of this title; 
;;•' 
(B) disallowed other than under section 502(e) of this 
title; or 
(C) subordinated under section 510 of this title; or 
(2) as between the debtor and such entity, such entity received 
the consideration for the claim held by such creditor. 
(c) The court shall subordinate to the claim of a creditor and for 
the benefit of such creditor an allowed claim, by way of subrogation 
under section 509 of this title, or for reimbursement or contribution, 
of an entity that is liable with the debtor on, or that has secured, such 
creditor's claim, until such creditor's claim is paid in full, either 
through payments under this title or otherwise. 
11 use 510. 
§510. Subordination 
(a) A subordination agreement is enforceable in a case under this 
title to the same extent that such agreement is enforceable under 
applicable nonbankruptcy law. 
(b) Any claim for recission of a purchase or sale of a security of 
the debtor or of an affiliate or for damages arising from the purchase 
or sale of such a security shall be subordinated for purposes of dis-
tribution to all claims and interests that are senior or equal to the 
claim or interest represented by such security. 
(c) Notwithstanding subsections (a) and (b) of this section, after 
notice and a hearing, the court may— 
(1) under principles of equitable subordination, subordinate 
for purposes of distribution all or part of an allowed claim to all 
or part of another allowed claim or all or part of an allowed 
interest to all or part of another allowed interest; or 
(2) order that any lien securing such a subordinated claim be 
*
! 
transferred to the estate. 
SUBCHAPTER 
II—DEBTOR'S 
DUTIES 
AND 
BENEFITS 
11 use 521. 
§521. Debtor's duties 
The debtor shall— 
(1) file a list of creditors, and unless the court orders otherwise, 
a schedule of assets and liabilities, and a statement of the debtor's 
financial affairs; 
(2) if a trustee is serving in the case, cooperate with the trustee 
as necessary to enable the trustee to perform the trustee's duties 
under this title; 
(3) if a trustee is serving in the case, surrender to the trustee 
all property of the estate and any recorded information, includ-
ing books, documents, records, and papers, relating to property 
of the estate; and 
(4) appear at the hearing required under section 524(d) of 
this title. 
11 use 522. 
§522. Exemptions 
^ 
(a) In this section— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2587 
(1) "dependent" includes spouse, whether or not actually 
dependent; and 
(2) "value" means fair market value as of the date of the filing 
of tile petition. 
(b) Notwithstanding section 541 of this title, an individual debtor 
may exempt from property of the estate either— 
(1) property that is specified under subsection (d) of this sec-
tion, unless the State law that is applicable to the debtor under 
paragraph (2) (A) of this subsection specifically does not so 
authorize; or, in the alternative, 
(2) (A) any property that is exempt under Federal law, other 
than subsection (d) of this section, or State or local law that is 
applicable on the date of the filing of the petition at the place in 
which the debtor's domicile has been located for the 180 days 
immediately preceding the date of the filing of the petition, or for 
a longer portion of such 180-day period than in any other place; 
and 
(B) any interest in property in which the debtor had, immedi-
ately before the commencement of the case, an interest as a tenant 
by the entirety or joint tenant to the extent that such interest as a 
tenant by the entirety or joint tenant is exempt from process under 
applicable nonbankruptcy law. 
(c) Unless the case is dismissed, property exempted under this 
section is not liable during or after the case for any debt of the debtor 
that arose, or that is determined under section 502 of this title as if 
such claim had arisen before the commencement of the case, except— 
(1) a debt of a kind specified in section 523(a) (1) or section 
523(a)(5) of this title; or 
(2) a lien that is— 
(A) not avoided under section 544, 545, 547, 548, 549, or 
724(a) of this title; 
Post, p. 2607. 
(B) notvoidedunder section 506(d) of this title; or 
(C) (i) a tax lien, notice of which is properly filed; and 
(ii) avoided under section 545 (2) of this title. 
(d) The following property may be exempted under subsection 
(b)(1) of this section: 
(1) The debtor's aggregate interest, not to exceed $7,500 in 
value, in real property or personal property that the debtor or a 
dependent of the debtor uses as a residence, in a cooperative that 
owns property that the debtor or a dependent of the debtor uses as 
a residence, or in a burial plot for the debtor or a dependent of the 
debtor. 
(2) The debtor's interest, not to exceed $1,200 in value, in one 
motor vehicle. 
(3) The debtor's interest, not to exceed $200 in value in any 
particular item, in household furnishings, household goods, wear-
ing apparel, appliances, books, animals, crops, or musical instru-
ments, that are held primarily for the personal, family, or 
household use of the debtor or a dependent of the debtor. 
(4) The debtor's aggregate interest, not to exceed $500 in value, 
in jewelry held primarily for the personal, family, or household 
use of the debtor or a dependent of the debtor. 
(5) The debtor's aggregate interest, not to exceed in value $400 
plus any unused amount of the exemption provided under para-
graph (1) of this subsection, in any property. 
(6) The debtor's aggregate interest, not to exceed $750 in value, 
92 STAT. 2588 
PUBLIC LAW 95-598—NOV. 6, 1978 
in any implements, professional books, or tools, of the trade of the 
debtor or the trade of a dependent of the debtor. 
x»;. 
(7) Any unmatured life insurance contract owned by the 
debtor, other than a credit life insurance contract. 
1 I 
(8) The debtor's aggregate interest, not to exceed in value 
$4,000 less any amount of property of the estate transferred in the 
manner specified in section 542(d) of this title, in any accrued 
dividend or interest under, or loan value of, any unmatured life 
insurance contract owned by the debtor under which the insured 
is the debtor or an individual of whom the debtor is a dependent. 
(9) Professionally prescribed health aids for the debtor or a 
dependent of the debtor. 
(10) The debtor's right to receive— 
(A) a social security benefit, unemployment compensation, 
or a local public assistance benefit; 
(B) a veterans' benefit; 
(C) a disability, illness, or unemployment benefit; 
(D) alimony, support, or separate maintenance, to the 
extent reasonably necessary for the support of the debtor and 
any dependent of the debtor; 
(E) a payment under a stock bonus, pension, profitsharing, 
annuity, or similar plan or contract on account of illness, dis-
ability, death, age, or length of service, to the extent reason-
ably necessary for the support of the debtor and any 
dependent of the debtor, unless— 
(i) such plan or contract was established by or under 
the auspices of an insider that employed the debtor at the 
time the debtor's rights under such plan or contract arose; 
(ii) such payment is on account of age or length of 
service; and 
(iii) such plan or contract does not qualify under sec-
tion 401(a), 403(a), 403(b), 408, or 409 of the Internal 
Revenue Code of 1954 (26 U.S.C. 401 (a), 403(a), 403 (b), 
408,or409)._ 
(11) The debtor's right to receive, or property that is traceable 
to— 
(A) an award under a crime victim's reparation law; 
(B) a payment on account of the wrongful death of an 
individual of whom the debtor was a dependent, to the extent 
reasonably necessary for the support of the debtor and any 
dependent of the debtor; 
(C) a payment under a life insurance contract that insured 
the life of an individual of whom the debtor was a dependent 
on the date of such individual's death, to the extent reason-
ably necessary for the support of the debtor and any depend-
ent of the debtor; 
(D) a payment, not to exceed $7,500, on account of personal 
bodily injury, not including pain and suffering or compen-
sation for actual pecuniary loss, of the debtor or an individual 
of whom the debtor is a dependent; or 
(E) a payment in compensation of loss of future earnings 
of the debtor or an individual of whom the debtor is or was 
a dependent, to the extent reasonably necessary for the sup-
port of the debtor and any dependent of the debtor. 
Waiver. 
(e) A waiver of exemptions executed in favor of a creditor that 
holds an unsecured claim against the debtor is unenforceable in a case 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2589 
under this title with respect to such claim against property that the 
debtor may exempt under subsection (b) of this section. A waiver by 
the debtor of a power under subsection (f) or (h) of this section to 
avoid a transfer, under subsection (g) or (i) of this section to exempt 
property, or under subsection (i) of this section to recover property 
or to preserve a transfer, is unenforceable in a case under this title. 
(f) Notwithstanding any waiver of exemptions, the debtor may 
avoid the fixing of a lien on an interest of the debtor in property to 
the extent that such lien impairs an exemption to which the debtor 
would have been entitled under subsection (b) of this section, if such 
lien is— 
(1) a judicial lien; or 
t 
(2) a nonpossessory, nonpurchase-money security interest in 
any— 
(A) household furnishings, household goods, wearing 
apparel, appliances, books, animals, crops, musical instru-
ments, or jewelry that are held primarily for the personal, 
family, or household use of the debtor or a dependent of the 
debtor; 
(B) implements, professional books, or tools, of the trade of 
the debtor or the trade of a dependent of the debtor; or 
(C) professionally prescribed health aids for the debtor 
or a dependent of the debtor. 
(g) Notwithstanding sections 550 and 551 of this title, the debtor 
may exempt under subsection (b) of this section property that the 
trustee recovers under section 510(c) (2), 542, 543, 550, 551, or 553 of 
this title, to the extent that the debtor could have exempted such 
property under subsection (b) of this section if such property liad not 
been transferred, if— 
(1) (A) such transfer was not a voluntary transfer of such 
property by the debtor; and 
(B) the debtor did not conceal such property; or 
(2) the debtor could have avoided such transfer under sub-
section (f) (2) of this section. 
(h) The debtor may avoid a transfer of property of the debtor or 
recover a setoff to the extent that the debtor could have exempted such 
property under subsection (g) (1) of this section if the trustee had 
avoided such transfer, if— 
(1) such transfer is avoidable by the trustee under section 544, 
545, 547, 548, 549, or 724(a) of this title or recoverable by the 
trustee under section 553 of this tittle; and 
(2) the trustee does not attempt to avoid such transfer. 
(i) (1) If the debtor avoids a transfer or recovers a setoff under 
subsection (f) or (h) of this section, the debtor may recover in the 
manner prescribed by, and subject to the limitations of, section 550 of 
this title, the same as if the trustee had avoided such transfer, and may 
exempt any property so recovered under subsection (b) of this section. 
(2) Notwithstanding section 551 of this title, a transfer avoided 
under section 544, 545, 547, 548, 549, or 724(a) of this title, under sub-
section (f) or (h) of this section, or property recovered under section 
553 of this title, may be preserved for the benefit of the debtor to the 
extent that the debtor mav exempt such property under subsection (g) 
of his section or paragraph (1) of this subsection. 
(j) Notwithstanding subsections (g) and (i) of this section, the 
debtor may exempt a particular kind of property under subsections 
(g) and (i) of this section only to the extent that the debtor has 
92 STAT. 2590 
PUBLIC LAW 95-598—NOV. 6, 1978 
exempted less property in value of such kind than that to which the 
debtor is entitled under subsection (b) of this section, 
(k) Property that the debtor exempts under this section is not liable 
for payment of any administrative expense except— 
(1) the aliquot share of the costs and expenses of avoiding a 
transfer of property that the debtor exempts under subsection (g) 
,;. of this section, or of recovery of such property, that is attributable 
to the value of the portion of such property exempted in relation 
to the value of the property recovered; and 
(2) any costs and expenses of avoiding a transfer under sub-
section (f) or (h) of this section, or of recovery of property under 
subsection (i) (1) of this section, that the debtor has not paid. 
(1) The debtor shall file a list of property that the debtor claims as 
exempt under subsection (b) of this section. If the debtor does not file 
such a list, a dependent of the debtor may file such a list, or may claim 
property as exempt from property of the estate on behalf of the debtor. 
Unless a party in interest objects, the property claimed as exempt on 
such list is exempt. 
(m) This section shall apply separately with respect to each debtor 
in a joint case. 
11 use 523. 
§ 523. Exceptions to discharge 
Post, pp. 2638, 
(a) A discharge under section 727, 1141, or 1328(b) of this title 
2650. 
does not discharge an individual debtor from any debt--
(1) for a tax or a customs duty— 
(A) of the kind and for the periods specified in section 
507(a) (2) or 507(a) (6) of this title, whether or not a claim 
. 
for such tax was filed or allowed; 
(B) with respect to which a return, if required— 
(i) was not filed; or 
(ii) was filed after the date on which such return was 
last due, under applicable law or under any extension, 
and after two years before the date of the filing of the 
petition; or 
(C) with respect to which the debtor made a fraudulent 
return or willfully attempted in any manner to evade or 
defeat such tax; 
(2) for obtaining money, property, services, or an extension, 
renewal, or refinance of credit, by— 
(A) false pretenses, a false representation, or actual fraud, 
other than a statement respecting the debtor's or an insider's 
financial condition; or 
(B) use of a statement in writing— 
(i) that is materially false; 
(ii) respecting the debtor's or an insider's financial 
' 
condition; 
(iii) on which the creditor to whom the debtor is liable 
for obtaining such money, property, services, or credit 
* reasonably relied; and 
(iv) that the debtor caused to be made or published 
with intent to deceive; 
(3) neither listed nor scheduled under section 521(1) of this 
title, with the name, if known to the debtor, of the creditor to 
whom such debt is owed, in time to permit— 
(A) if such debt is not of a kind specified in paragraph 
(2), (4), or (6) of this subsection, timely filing of a proof of 
claim, unless such creditor had notice or actual knowledge of 
the case in time for such timely filing; or 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2591 
(B) if such debt is of a kind specified in paragraph (2), 
(4), or (6) of this subsection, timelj^ filing of a proof of claim 
and timely request for a determination of dischargeability of 
such debt under one of such paragraphs, unless such creditor 
had notice or actual knowledge of the case in time for such 
timely filing and request; 
(4) for fraud or defalcation while acting in a fiduciary capacity, 
embezzlement, or larceny; 
(5) to a spouse, former spouse, or child of the debtor, for ali-
mony to, maintenance for, or support of such spouse or child, in 
connection with a separation agreement, divorce decree, or prop-
erty settlement agreement, but not to the extent that— 
(A) such debt is assigned to another entity, voluntarily, 
by operation of law, or otherwise; or 
(B) such debt includes a liability designated as alimony, 
• 
maintenance, or support, unless such liability is actually in 
the nature of alimony, maintenance, or support; 
(6) for willful and malicious injury by the debtor to another 
entity or to the property of another entity; 
(7) to the extent such debt is for a fine, penalty, or forfeiture 
payable to and for the benefit of a governmental unit, and is not 
compensation for actual pecuniary loss, other than a tax penalty— 
(A) relating to a tax of a kind not specified in paragraph 
(1) 01 this subsection; or 
(B) imposed with respect to a transaction or event that 
occurred before three years before the date of the filing of the 
petition; 
(8) to a governmental unit, or a nonprofit institution of higher 
education, for an educational loan, unless— 
(A) such loan first became due before five years before 
the date of the filing of the petition; or 
(B) excepting such debt from discharge under this para-
graph will impose an undue hardship on the debtor and the 
debtor's dependents; or 
(9) that was or could have been listed or scheduled by the 
debtor in a prior case concerning the debtor under this title or 
under the Bankruptcy Act in which the debtor waived discharge, 11 USC prec. 1. 
or was denied a discharge under section 727(a) (2), (3), (4), (5), 
(6), or (7) of this title, or under section 14c (1), (2), (3), (4), 
(6), or (7) of such Act. 
11 USC 32. 
(b) Notwithstanding subsection (a) of this section, a debt that was 
excepted from discharge under subsection (a)(1), (a)(3), or (a)(8) 
of this section, under section l7a(l), l7a(3), or 17a(5) of the Bank-
ruptcy Act, under section 439A of the Higher Education Act of 1965 11 USC 35. 
(20 tJ.S.C. 1087-3), or under section 733(g) of the Public Health 
Services Act (42 U.S.C. 294f) in a prior case concerning the debtor 
under this title, or under the Bankruptcy Act, is dischargeable in a 
case under this title unless, by the terms of subsection (a) of this 
section, such debt is not dischargeable in the case under this title. 
(c) Except as provided in subsection (a) (3) (B) of this section, the 
debtor shall be discharged from a debt specified in paragraph (2), 
(4), or (6) of subsection (a) of this section, unless, on request of the 
creditor to whom such debt is owed, and after notice and a hearing, 
the court determines such debt to be excepted from discharge under 
paragraph (2), (4), or (6), as the case may be, of subsection (a) of 
this section. 
92 STAT. 2592 
PUBLIC LAW 95-598—NOV. 6, 1978 
(d) If a creditor requests a determination of dischargeability of a 
consumer debt under subsection (a) (2) of this section, and such debt 
is discharged, the court shall grant judgment against such creditor 
and in favor of the debtor for the costs of, and a reasonable attorney's 
fee for, the proceeding to determine dischargeability, unless such 
granting of judgment would be clearly inequitable. 
11 use 524. 
§ 524. Effect of discharge 
(a) A discharge in a case under this title— 
(1) voids any judgment at any time obtained, to the extent 
that such judgment is a determination of the personal liability 
of the debtor with respect to any debt discharged under section 
Post, pp. 2624, 
727, 944, 1141, or 1328 of this title, whether or not discharge of 
2638, 2650. 
such debt is waived; 
(2) operates as an injunction against the commencement or 
continuation of an action, the employment of process, or any act, 
to collect, recover or offset any such debt as a personal liability 
of the debtor, or from property of the debtor, whether or not 
discharge of such debt is waived; and 
(3) operates as an injunction against the commencement or 
continuation of an action, the employment of process, or any act, 
to collect or recover from, or offset against, property of the debtor 
of the kind specified in section 541(a) (2) of this title that is 
acquired after the commencement of the case, on account of any 
allowable community claim, except a community claim that is 
Post, p. 2650. 
excepted from discharge under section 523 or 1328(c) (1) of this 
title, or that would be so excepted, determined in accordance with 
the provisions of sections 523(c) and 523(d) of this title, in a 
case concerning the debtor's spouse commenced on the date of 
the filing of the petition in the case concerning the debtor, whether 
or not discharge of the debt based on such community claim is 
waived. 
(b) Subsection (a)(3) of this section does not apply if— 
(1) (A) the debtor's spouse is a debtor in a case under this title, 
11 use prec. 1. 
or a bankrupt or a debtor in a case under the Bankruptcy Act, 
commenced within six years of the date of the filing of the petition 
in the case concerning the debtor; and 
• ^' 
(B) the court does not grant the debtor's spouse a discharge 
, in such case concerning the debtor's spouse; or 
(2) (A) the court would not grant the debtor's spouse a dis-
charge in a case under chapter 7 of this title concerning such 
' ' spouse commenced on the date of the filing of the petition in the 
case concerning the debtor; and 
(B) a determination that the court would not so grant such 
' 
discharge is made by the bankruptcy court within the time and in 
the manner provided for a determination under section 727 of 
this title of whether a debtor is granted a discharge. 
(c) An agreement between a holder of a claim and the debtor, the 
consideration for which, in whole or in part, is based on a debt that 
is dischargeable in a case under this title is enforceable only to any 
extent enforceable under applicable nonbankruptcy law, whether or 
not discharge of such debt is waived, only if— 
(1) such agreement was made before the granting of the dis-
charge under section 727,1141, or 1328 of this title; 
(2) the debtor has not rescinded such agreement within 30 days 
after such agreement becomes enforceable; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2593 
(3) the provisions of subsection (d) of this section have been 
complied with; and 
(4) in a case concerning an individual, to the extent that such 
debt is a consumer debt that is not secured by real property of the 
debtor, the court approves such agreement as— 
(A) (i) not imposing an undue hardship on the debtor or a 
dependent of the debtor; and 
(ii) in the best interest of the debtor; or 
(B) (i) entered into in good faith; and 
-f'* 
(ii) in settlement of litigation under section 523 of this title, 
or providing for redemption under section 722 of this title. 
(d) In a case concerning an individual, when the court has deter- Hearing, 
mined whether to grant or not to grant a discharge under section 727, 
1141, or 1328 of this title, the court shall hold a hearing at which the Post, pp. 2638, 
debtor shall appear in person. At such hearing, the court shall inform 2650. 
the debtor that a discharge has been granted or the reason why a dis-
charge has not been granted. If a discharge has been granted and if 
the debtor desires to make an agreement of the kind specified in sub-
section (c) of this section, then at such hearing the court shall— 
(1) inform the debtor— 
(A) that such an agreement is not required under this title, 
under nonbankruptcy law, or under any agreement not made 
% 
in accordance with the provisions of subsection (c) of this 
section; and -
(B) of the legal effect and consequences of— 
- , 
(i) an agreement of the kind specified in subsection 
(c) of this section; and 
(ii) a default under such an agreement; 
(2) determine whether the agreement that the debtor desires to 
make complies with the requirements of subsection (c) (4) of this 
* 
subsection, if the consideration for such agreement is based in 
whole or in part on a consumer debt that is not secured by real 
property of the debtor. 
(e) Except as provided in subsection (a) (3) of this section, dis-
charge of a debt of the debtor does not affect the liability of any other 
entity on, or the property of any other entity for, such debt. 
§525. Pratection against discriminatory treatment 
11 USC 525. 
Except as provided in Perishable Agricultural Commodities Act, 
1930 (7 U.S.C. 499a-499s), the Packers and Stockyards Act, 1921 
(7 U.S.C. 181-229), and section 1 of the Act entitled "An Act making 
appropriations for the Department of Agriculture for the fiscal year 
ending June 30,1944, and for other purposes," approved July 12,1943 
(57 Stat. 422; 7 U.S.C. 204), a governmental unit may not deny, 
revoke, suspend, or refuse to renew a license, permit, charter, franchise, 
or other similar grant to, condition such a grant to, discriminate with 
respect to such a grant against, deny employment to, terminate the 
employment of, or discriminate with respect to employment against, a 
person that is or has been a debtor under this title or a bankrupt or a 
debtor under the Bankruptcy Act, or another person with whom such 11 USC prec. 1. 
bankrupt or debtor has been associated, solely because such bankrupt 
or debtor is or has been a debtor under this title or a bankrupt or 
debtor under the Bankruptcy Act, has been insolvent before the 
commencement of the case under this title, or during the case but 
before the debtor is granted or denied a discharge, or has not paid a 
debt that is dischargeable in the case under this title or that was dis-
charged under the Bankruptcy Act. 
j 
92 STAT. 2594 
PUBLIC LAW 95-598—NOV. 6, 1978 
f ' 
SUBCHAPTER III—THE ESTATE 
11 use 541. 
§ 541. Property of the estate 
Ante, pp. 2558, 
(a) The commencement of a case under under section 301, 302, or 
2559. 
303 of this title creates an estate. Such estate is comprised of all the 
following property, wherever located: 
(1) Except as provided in subsections (b) and (c) (2) of this 
section, all legal or equitable interests of the debtor in property 
/ 
as of the commencement of the case. 
(2) All interests of the debtor and the debtor's spouse in com-
munity property as of the commencement of the case that is— 
.^nh H 
(A) under the sole, equal, or joint management and control 
of the debtor; or 
itc/^n v.uv 
(B) liable for an allowable claim against the debtor, or for 
,
\
>
<
3
^
f
: 
both an allowable claim against the debtor and an allowable 
claim against the debtor's spouse, to the extent that such 
interest is so liable. 
(3) Any interest in property that the trustee recovers under 
section 643, 550, 553, or 723 of this title. 
(4) Any interest in property preserved for the benefit of or 
ordered transferred to the estate under section 510(c) or 551 of 
this title. 
(5) An interest in property that would have been property of 
the estate if such interest had been an interest of the debtor on the 
date of the filing of the petition, and that the debtor acquires or 
r : becomes entitled to acquire within 180 days after such date— 
(A) by bequest, devise, or inheritance; 
(B) as a result of a property settlement agreement with the 
debtor's spouse, or of an interlocutory or final divorce 
decree; or 
(C) as a beneficiary of a life insurance policy or of a death 
i. • 
benefit plan. 
(6) Proceeds, product, offspring, rents, and profits of or from 
property of the estate, except such as are earnings from services 
performed by an individual debtor after the commencement of 
the case. 
^
<
^
-
- 'v# J IJ 
(7) Any interest in property that the estate acquires after the 
commencement of the case. 
(b) Property of the estate does not include any power that the 
debtor may only exercise solely for the benefit of an entity other than 
the debtor. 
(c) (1) Except as provided in paragraph (2) of this subsection, an 
interest of the debtor in property becomes property of the estate 
under subsection (a)(1), (a)(2), or (a)(5) of this section notwith-
standing any provision— 
(A) that restricts or conditions transfer of such interest by 
the debtor; or 
(B) that is conditioned on the insolvency or financial condition 
,-. J 
of the debtor, on the commencement of a case under this title, or 
i ,
a
!
>
{
q j<^:, • 
^^ Q^^ appointment of or the taking possession by a trustee in a 
case under this title or a custodian, and that effects or gives an 
option to effect a forfeiture, modification, or termination of the 
debtor's interest in property. 
(2) A restriction on the transfer of a beneficial interest of the debtor 
in a trust that is enforceable under applicable nonbankruptcy law is 
enforceable in a case under this title. 
„,^ 
,^ .„, , 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2595 
(d) Property in which the debtor holds, as of the commencement 
of the case, only legal title and not an equitable interest, such as a 
mortgage secured by real property, or an interest in such a mortgage, 
sold by the debtor but as to which the debtor retains legal title to 
service or supervise the servicing of such mortgage or interest, becomes 
property of the estate under subsection (a) of this section only to the 
extent of the debtor's legal title to such property, but not to the extent 
of any equitable interest in such property that the debtor does not hold. 
(e) The estate shall have the benefit of any defense available to the 
debtor as against an entity other than the estate, including statutes of 
-^'^t >" -. ' 
limitation, statutes of frauds, usury, and other personal defenses, A 
-;'""•'• ' 
waiver of any such defense by the debtor after the commencement of 
the case does not bind the estate. 
§ 542. Turnover of property to the estate 
11 U
S
C 542. 
(a) Except as provided in subsection (c) or (d) of this section, an 
entity, other than a custodian, in possession, custody, or control, dur-
ing the case, of property that the trustee may use, sell, or lease under 
section 363 of this title, or that the debtor may exempt under section Ante, p. 2572. 
522 of this title, shall deliver to the trustee, and account for, such 
property or the value of such property, unless such property is of 
inconsequential value or benefit to the estate. 
(b) Except as provided in subsection (c) or (d) of this section, an 
entity that owes a debt that is property of the estate and that is 
matured, payable on demand, or payable on order, shall pay such debt 
to, or on the order of, the trustee, except to the extent that such debt 
may be offset under section 553 of this title against a claim against the 
debtor. 
(c) Except as provided in section 362(a) (7) of this title, an entity Ante, p. 2570. 
that has neither actual notice nor actual knowledge of the commence-
ment of the case concerning the debtor may transfer property of the 
estate, or pay a debt owing to the debtor, in good faith and other than in 
the manner specified in subsection (d) of this section, to an entity other 
than the trustee, with the same effect as to the entity making such 
transfer or payment as if the case under this title concerning the 
debtor had not been commenced. 
(d) A life insurance company may transfer property of the estate 
or property of the debtor to such company in good faith, with the 
same effect with respect to such company as if the case under this title 
concerning the debtor had not been commenced, if such transfer is 
to pay a premium or to carry out a nonforfeiture insurance option, 
and is required to be made automatically, under a life insurance con-
tract with such company that was entered into before the date of the 
filing of the petition and that is property of the estate. 
(e) Subject to any applicable privilege, after notice and a hearing, 
the court may order an attorney, accountant, or other person that 
holds recorded information, including books, documents, records, and 
papers, relating to the debtor's property or financial affairs, to disclose 
such recorded information to the trustee. 
§ 543. Turnover of property by a custodian 
H USC 543. 
(a) A custodian with knowledge of the commencement of a case 
under this title concerning the debtor may not make any disbursement 
from, or take any action in the administration of, property of the 
debtor, proceeds of such property, or property of the estate, in the 
possession, custody, or control of such custodian, except such action as 
is necessary to preserve such property. 
92 STAT. 2596 
PUBLIC LAW 95-598—NOV. 6, 1978 
(b) A custodian shall— 
(1) deliver to the trustee any property of the debtor trans-
ferred to such custodian, or proceeds of such property, that is in 
such custodian's possession, custody, or control on the date that 
such custodian acquires knowledge of the commencement of the 
case; and 
(2) file an accounting of any property of the debtor, or pro-
ceeds of such property, that, at any time, came into the possession, 
custody, or control of such custodian. 
Notice and 
(c) The court, after notice and a hearing, shall— 
hearing. 
(1) protect all entities to which a custodian has become obli-
gated with respect to such property; 
(2) provide for the payment of reasonable compensation for 
,^^,. ._ 
services rendered and costs and expenses incurred by such custo-
^"^ " ' 
dian; and 
^ 
(3) surcharge such custodian, other than an assignee for the 
benefit of the debtor's creditors that was appointed or took pos-
, ,. 
session more than 120 days before the date of the filing of the 
' 
* 
petition, for any improper or excessive disbursement, other than 
a disbursement that has been made in accordance with applicable 
law or approved, after notice and a hearing, by a court of compe-
tent jurisdiction before the commencement of the case under this 
title, 
(d) The bankruptcy court may, after notice and a hearing, excuse 
compliance with subsection (a), (b), or (c) of this section, if the 
interests of creditors, and, if the debtor is not insolvent, of equity 
security holders, would be better served by permitting a custodian to 
continue in possession, custody, or control of such property. 
11 use 544. 
§ 544. Trustee as lien creditor and as successor to certain 
creditors and purchasers 
(a) The trustee shall have, as of the commencement of the case, and 
without regard to any knowledge of the trustee or of any creditor, the 
rights and powers of, or may avoid any transfer of property of the 
debtor or any obligation incurred by the debtor that is voidable by— 
(1) a creditor that extends credit to the debtor at the time of 
the commencement of the case, and that obtains, at such time and 
with respect to such credit, a judicial lien on all property on which 
a creditor on a simple contract could have obtained a judicial lien, 
whether or not such a creditor exists; 
(2) a creditor that extends credit to the debtor at the time of 
the commencement of the case, and obtains, at such time and with 
respect to such credit, an execution against the debtor that is 
returned unsatisfied at such time, whether or not such a creditor 
exists; and 
(3) a bona fide purchaser of real property from the debtor, 
against whom applicable law permits such transfer to be per-
fected, that obtains the status of a bona fide purchaser at the 
time of the commencement of the case, whether or not such a 
^^- 5*;. 
purchaser exists. 
(b) The trustee may avoid any transfer of an interest of the debtor 
in property or any obligation incurred by the debtor that is voidable 
under applicable law by a creditor holding an unsecured claim that 
is allowable under section 502 of this title or that is not allowable only 
under section 502 (e) of this title. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2597 
§ 545. Statutory liens 
H USC 545. 
The trustee may avoid the fixing of a statutory lien on property of 
the debtor to the extent that such lien— 
(1) first becomes effective against the debtor— 
(A) when a case under this title concerning the debtor is 
is commenced; 
(B) when an insolvency proceeding other than under 
this title concerning the debtor is commenced; 
(C) when a custodian is apponted or takes possession; 
(D) when the debtor becomes insolvent; 
(E) when the debtor's financial condition fails to meet a 
specified standard; or 
(F) at the time of an execution against property of the 
'' 
debtor levied at the instance of an entity other than the holder 
of such statutory lien; 
(2) is not perfected or enforceable on the date of the filing of 
- 
the petition against a bona fide purchaser that purchases such 
property on the date of the filing of the petition, whether or not 
such a purchaser exists; 
(3) IS for rent; or 
(4) is a lien of distress for rent. 
§ 546. Limitations on avoiding powers 
11 usc 546. 
(a) An action or proceeding under section 544, 545, 547, 548, or 
553 of this title may not be commenced after the earlier of— 
(1) two years after the appointment of a trustee under section 
702,1104,1163, or 1302 of this title; and 
Post, pp. 2627, 
(2) the time the case is closed or dismissed. 
2641, 2645. 
(b) The rights and powers of the trustee under section 544, 545, 
or 549 of this title are subject to any generally applicable law that 
permits perfection of an interest in property to be effective against 
an entity that acquires rights in such property before the date of such 
perfection. If such law requires seizure of such property or commence-
ment of an action to accomplish such perfection, and such property 
has not been seized or such action has not been commenced before the 
date of the filing of the petition, such interest in such property shall 
be perfected by notice within the time fixed by such law for such seizure 
or commencement. 
(c) The rights and powers of the trustee under sections 544(a), 545, 
547, and 549 of this title are subject to any statutory right or common-
law right of a seller, in the ordinary course of such seller's business, 
of goods to the debtor to reclaim such goods if the debtor has received 
such goods while insolvent, but— 
(1) such a seller may not reclaim any such goods unless such 
seller demands in writing reclamation of such goods before ten 
days after receipt of such goods by the debtor; and 
(2) the court may deny reclamation to a seller with such a 
right of reclamation that has made such a demand only if court— 
(A) grants the claim of such a seller priority as an admin-
istrative expense; or 
(B) secures such claim by a lien. 
§ 547. Preferences 
11 USC 547. 
(a) In this section— 
Definitions. 
(1) "inventory" means personal property leased or furnished, 
held for sale or lease, or to be furnished under a contract for 
92 STAT. 2598 
PUBLIC LAW 95-598—NOV. 6, 1978 
SM :>aiJ if 
service, raw materials, work in process, or materials used or con-
•'.,. sumed in a business, including farm products such as crops or 
livestock, held for sale or lease; 
(2) "new value" means money or money's worth in goods, 
services, or new credit, or release by a transferee of property 
previously transferred to such transferee in a transaction that is 
neither void nor voidable by the debtor or the trustee under any 
applicable law, but does not include an obligation substituted 
for an existing obligation; 
(3) "receivable" means right to payment, whether or not such 
right has been earned by performance; and 
(4) a debt for a tax is incurred on the day when such tax is 
last payable, including any extension, without penalty. 
(b) Except as provided in subsection (c) of this section, the trustee 
may avoid any transfer of property of the debtor— 
(1) to or for the benefit of a creditor; 
(2) for or on account of an antecedent debt owed by the debtor 
before such transfer was made; 
(3) made while the debtor was insolvent; 
(4) made— 
(A) on or within 90 days before the date of the filing of 
1,, . , . 
^^^ petition; or 
>
?
<
!
'
. .,e J 
^g^ between 90 days and one year before the date of the 
*
^ 
filing 
of the petition, if such creditor, at the time of such 
transfer— 
''•'' 
(i) was an insider; and 
(ii) had reasonable cause to believe the debtor was 
"'' '- '^'' 
insolvent at the time of such transfer; and 
(5) that enables such creditor to receive more than such creditor 
would receive if— 
(A) the case were a case under chapter 7 of this title; 
(B) the transfer had not been made; and 
(C) such creditor received payment of such debt to the 
extent provided by the provisions of this title. 
(c) The trustee may not avoid under this section a transfer— 
(1) to the extent that such transfer was— 
(A) intended by the debtor and the creditor to or for whose 
benefit such transfer was made to be a contemporaneous 
exchange for new value ^ven to the debtor; and 
(B) m fact a substantially contemporaneous exchange; 
(2) to the extent that such transfer was— 
(A) in payment of a debt incurred in the ordinary course 
of business or financial affairs of the debtor and the transferee; 
(B) made not later than 45 days after such debt was 
incurred; 
(C) made in the ordinary course of business or financial 
affairs of the debtor and the transferee; and 
, 
(D) made according to ordinary business terms; 
(3) of a security interest in property acquired by the debtor— 
(A) to the extent such security interest secures new value 
that was— 
(i) given at or after the signing of a security agree-
ment that contains a description of such property as 
collateral; 
(ii) given by or on behalf of the secured party under 
such agreement; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2599 
.• '
> •'. 
(iii) given to enable the debtor to acquire such prop-
erty; and 
(iv) in fact used by the debtor to acquire such property; 
and 
(B) that is perfected before 10 days after such security 
interest attaches; 
(4) to or for the benefit of a creditor, to the extent that, after 
such transfer, such creditor gave new value to or for the benefit 
of the debtor— 
(A) not secured by an otherwise unavoidable security 
interest; and 
, - ,. < 
(B) on account of which new value the debtor did not make 
"
'
^ ^"" '' 
an otherwise unavoidable transfer to or for the benefit of 
such creditor; 
(5) of a perfected security interest in inventory or a receivable 
or the proceeds of either, except to the extent that the aggregate 
of all such transfers to the transferee caused a reduction, as of the 
date of the filing of the petition and to the prejudice of other 
creditors holding unsecured claims, of any amount by which the 
debt secured by such security interest exceeded the value of all 
security interest for such debt on the later of— 
(A) (i) with respect to a transfer to which subsection 
(b) (4) (A) of this section applies, 90 days before the date of 
the filing of the petition; or 
(ii) with respect to a transfer to which subsection (b) (4) 
(B) of this section applies, one year before the date of the 
filing of the petition; and 
(B) the date on which new value was first given under the 
security agreement creating such security interest; or 
(6) that is the fixing of a statutory lien that is not avoidable 
under section 545 of this title. 
(d) A trustee may avoid a transfer of property of the debtor trans-
ferred to secure reimbursement of a surety that furnished a bond or 
other obligation to dissolve a judicial lien that would have been avoid-
able by the trustee imder subsection (b) of this section. The liability 
of such surety under such bond or obligation shall be discharged to 
the extent of the value of such property recovered by the trustee or the 
amount paid to the trustee. 
(e) (1) For the purposes of this section— 
(A) a transfer of real property other than fixtures, but includ-
ing the interest of a seller or purchaser under a contract for the 
sale of real property, is perfected when a bona fide purchaser of 
such property from the debtor against whom applicable law per-
mits such transfer to be perfected cannot acquire an interest that 
is superior to the interest of the transferee; and 
(B) a transfer of a fixture or property other than real property 
is perfected when a creditor on a simple contract cannot acquire 
a judicial lien that is superior to the interest of the transferee. 
(2) For the purposes of this section, except as provided in para-
graph (3) of this subsection, a transfer is made— 
(A) at the time such transfer takes effect between the transferor 
and the transferee, if such transfer is perfected at, or within 
10 days after, such time; 
(B) at the time such transfer is perfected, if such transfer is 
,' >al«<^" 
perfected after such 10 days; or 
92 STAT. 2600 
PUBLIC LAW 95-598—NOV. 6, 1978 
(C) immediately before the date of the filing of the petition, 
if such transfer is not perfected at the later of— 
(i) the commencement of the case; and 
(ii) 10 days after such transfer takes effect between the 
transferor and the transferee. 
, 
(3) For the purposes of this section, a transfer is not made until 
the debtor has acquired rights in the property transferred. 
(f) For the purposes of this section, the debtor is presumed to have 
been insolvent on and during the 90 days immediately preceding the 
date of the filing of the petition. 
11 use 548. 
§ 548. Fraudulent transfers and obligations 
(a) The trustee may avoid any transfer of an interest of the debtor 
in property, or any obligation incurred by the debtor, that was made 
or incurred on or within one year before the date of the filing of the 
petition, if the debtor— 
(1) made such transfer or incurred such obligation with actual 
intent to hinder, delay, or defraud any entity to which the debtor 
was or became, on or after the date that such transfer occurred 
or such obligation was incurred, indebted; or 
(2) (A) received less than a reasonably equivalent value in 
exchange for such transfer or obligation; and 
(B) (i) was insolvent on the date that such transfer was made 
or such obligation was incurred, or became insolvent as a result 
of such transfer or obligation; 
(ii) was engaged in business, or was about to engage in busi-
ness or a transaction, for which any property remaining with 
the debtor was an unreasonably small capital; or 
(iii) intended to incur, or believed that the debtor would incur, 
debts that would be beyond the debtor's ability to pay as such 
debts matured. 
(b) The trustee of a partnership debtor may avoid any transfer of 
an interest of the debtor in property, or any obligation incurred by the 
debtor, that was made or incurred on or within one year before the 
date of the filing of the petition, to a general partner in the debtor, if 
the debtor was insolvent on the date such transfer was made or such 
obligation was incurred, or became insolvent as a result of such trans-
fer or obligation. 
(c) Except to the extent that a transfer or obligation voidable under 
this section is voidable under section 544, 545, or 547 of this title, a 
transferee or obligee of such a transfer or obligation that takes for 
value and in good faith has a lien on any interest transferred, may 
retain any lien transferred, or may enforce any obligation incurred, 
as the case may be, to the extent that such transferee or obligee gave 
value to the debtor in exchange for such transfer or obligation. 
(d) (1) For the purposes of this section, a transfer is made when 
such transfer becomes so far perfected that a bona fide purchaser 
from the debtor against whom such transfer could have been perfected 
cannot acquire an interest in the property transferred that is superior 
to the interest in such property of the transferee, but if such transfer 
is not so perfected before the commencement of the case, such transfei' 
occurs immediately before the date of the filing of the petition. 
(2) In this section— 
"Value". 
(A) "value" means property, or satisfaction or securing of a 
present or antecedent debt of the debtor, but does not include an 
unperformed promise to furnish support to the debtor or to a 
relative of the debtor; and 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2601 
(B) a commodity broker or forward contract merchant that 
receives a margin payment, as defined in section 761(15) of 
this title, takes for value. 
§ 549. Postpetition transactions 
11 USC 549. 
(a) Except as provided in subsection (b) and (c) of this section, the 
trustee may avoid a transfer of property of the estate— 
(1) that occurs after the commencement of the case; and 
(2) (A) that is authorized under section 303(f) or 542(c) of Ante, p. 2559. 
this title; or 
(B) that is not authorized under this title or by the court, 
(b) In an involuntary case, a transfer that occurs after the com- 
fti^si'?" 
I's? 
mencement of such case but before the order for relief is valid against 
the trustee to the extent of any value, including services, but not 
including satisfaction or securing of a debt that arose before the 
commencement of the case, given after the commencement of the case 
in exchange for such transfer, notwithstanding any notice or knowl-
edge of the case that the transferee has. 
(c) The trustee may not avoid under subsection (a) o,f this section 
a transfer, to a good faith purchaser without knowledge of the com-
mencement of the case and for present fair equivalent value or to a 
purchaser at a judicial sa^e, of real property located other than in 
the county in which the case is commenced, unless a copy of the peti-
tion was filed in the office where conveyances of real property in such 
county are recorded befoie such transfer was so far perfected that a 
•. 
•
•
-
bona fide purchaser of such property against whom applicable law 
permits such transfer to be perfected cannot acquire an interest that 
is superior to the interest of such good faith or judicial sale purchaser. 
A good faith purchaser, Avitliout knowledge of the commencement of 
, 
the case and for less than present fair equivalent value, of real prop-
erty located other than in the county in which the case is commenced, 
under a transfer that the trustee may avoid under this section, has a 
lien on the property transferred to the extent of any present value 
given, unless a copy of the petition was so filed before such transfer 
was so perfected. 
(d) An action or proceeding under this section may not be com- 
• '». 
- -i; ? 
menced after the earlier of— 
(1) two years after the date of the transfer sought to be 
avoided; and 
(2) the time the case is closed or dismissed. 
§ 550. Liability of transferee of avoided transfer 
11 USC 550. 
(a) Except as otherwise provided in this section, to the extent that 
a transfer is avoided under section 544, 545, 547, 548, 549, or 724(a) of 
this title, the trustee may recover, for the benefit of the estate, the 
property transferred, or, if the court so orders, the value of such 
propeity, from— 
(1) the initial transferee of such transfer or the entity for 
whose benefit such transfer was made; or 
' 
r -. l 
(2) any immediate or mediate transferee of such initial 
transferee. 
(b) The trustee may not recover under section (a) (2) of this 
section from— 
(1) a transferee that takes for value, including satisfaction or 
securing of a present or antecedent debt, in good faith, and 
without knowledge of the voidability of the transfer avoided; or 
*
^
f * .q ^i&i, 
' 
(2) any immediate or mediate good faith transferee of such 
transferee. 
92 STAT. 2602 
PUBLIC LAW 95-598—NOV. 6, 1978 
(c) The trustee is entitled to only a single satisfaction under sub-
section (a) of this section. 
(d) (1) A good faith transferee from whom the trustee may recover 
j3,|i 
under subsection (a) of this section has a lien on the property recovered 
to secure the lesser of— 
(A) the cost, to such transferee, of any improvement made 
after the transfer, less the amount of any profit realized by such 
^t^i-it 
transferee from such property; and 
(B) any increase m value as a result of such improvement, of 
the property transferred. 
"Improvement". 
(2) In this subsection, "improvement" includes— 
(A) physical additions or changes to the property transferred; 
(B) repairs to such property; 
^C) payment of any tax on such property; 
(D) payment of any debt secured by a lien on such property; 
(E) discharge of any lien against such property that is superior 
' 
or equal to the rights of the trustee; and 
(F) preservation of such property. 
(e) An action or proceeding under this section may not be com-
menced after the earlier of— 
(1) one year after the avoidance of the transfer on account of 
which recovery under this section is sought; and 
(2) the time the case is closed or dismissed. 
11 use 551. 
§ 551. Automatic preservation of avoided transfer 
Any transfer avoided under section 522, 544, 545, 547, 648, 549, or 
724(a) of this title, or anv lien void under section 506(d) of this title, 
is preserved for the benefit of the estate but only with respect to prop-
erty of the estate. 
11 use 552. 
§ 552. Postpetition effect of security interest 
(a) Except as provided in subsection (b) of this section, property 
acquired by the estate or by the debtor after the commencement of the 
case is not subject to any lien resulting from any security agreement 
entered into by the debtor before the commencement of the case. 
Ante, p. 2572. 
(b) Except as provided in sections 363, 506(c), 544, 545, 547, and 
548 of this title, if the debtor and a secured party enter into a security 
agreement before the commencement of the case and if the security 
interest created by such security agreement extends to property of the 
debtor acquired before the commencement of the case and to proceeds, 
product, offspring, rents, or profits of such property, then such secu-
rity interest extends to such proceeds, product, offspring, rents, or 
profits acquired by the estate after the commencement of the case to 
^ 
the extent provided by such security agreement and by applicable non-
bankruptcy law, except to the extent that the court, after notice and 
a hearing and based on the equities of the case, orders otherwise. 
11 use 553. 
§ 553. Setoff 
Ante, p. 2570. 
(a) Except as otherwise provided in this section and in sections 362 
and 363 of this title, this title does not affect any right of a creditor to 
offset a mutual debt owing by such creditor to the debtor that arose 
before the commencement of the case under this title against a claim of 
such creditor against the debtor that arose before the commencement 
of the case, except to the extent that— 
(1) the claim of such creditor against the debtor is disallowed 
Ante, p. 2579. 
other than under section 502 (b) (3) of this title; 
(2) such claim was transferred, by an entity other than the 
debtor, to such creditor— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2603 
fiti *i\?r 
^^^ after the commencement of the case; or 
(B) (i) after 90 days before the date of the filing of the 
petition; and 
(ii) while the debtor was insolvent; or 
(3) the debt owed to the debtor by such creditor was incurred 
by such creditor— 
(A) after 90 days before the date of the filing of the 
petition; 
(B) while the debtor was insolvent; and 
(C) for the purpose of obtaining a right of setoff against 
the debtor. 
(b) (1) Except with respect to a setoff of a kind described in sec-
tion 362(b)(6) or 365(h)(1) of this title, if a creditor offsets a Ante, fp. 2570, 
mutual debt owing to the debtor against a claim against the debtor on 2574. 
or within 90 days before the date of the filing of the petition, then the 
trustee may recover from such creditor the amount so offset to the 
extent that any insufficiency on the date of such setoff is less than the 
insufficiency on the later of— 
(A) 90 days before the date of the filing of the petition; and 
(B) the first date during the 90 days immediately pre-
ceding the date of the filing of the petition on which there is 
an insufficiency. 
(2) In this subsection, "insufficiency" means amount, if any, by "insufficiency", 
which a claim against the debtor exceeds a mutual debt owing to the 
debtor by the holder of such claim. 
(c) For the purposes of this section, the debtor is presumed to have 
been insolvent on and during the 90 days immediately preceding the 
date of the filing of the petition. 
§ 554. Abandonment of property of the estate 
11 USC 554. 
(a) After notice and a hearing, the trustee may abandon any prop-
erty of the estate that is burdensome to the estate or that is of incon- 
' *- ' -* 
sequential value to the estate. 
(b) On request of a party in interest and after notice and a hear-
ing, the court may order the trustee to abandon any property of the 
estate that is burdensome to the estate or that is of mconsequential 
value to the estate. 
(c) Unless the court orders otherwise, any property that is sched-
uled under section 521(1) of this title and that is not administered 
before a case is closed under section 350 of this title is deemed Ante, p. 2569. 
abandoned. 
^; 
(d) Unless the court orders otherwise, property of the estate that is 
not abandoned under section (a) or (b) of this section and that is not 
administered in the case remains property of the estate. 
M\ 
V
'
N J 11 
CHAPTER 7—LIQUIDATION 
SUBCHAPTER I—OFFICERS AND ADMINISTRATION 
Sec. 
701. Interim trustee. 
702. Election of trustee. 
703. Succesor trustee. 
' 
704. Duties of trustee. 
705. Creditors' committee. 
706. Conversion. 
707. Dismissal. 
,-5,,,. 
92 STAT. 2604 
PUBLIC LAW 95-598—NOV. 6, 1978 
SUBCHAPTER II—COLLECTION, LIQUIDATION, AND DISTRIBUTION OF 
THE ESTATE 
721. Authorization to operate business. 
; 
722. Redemption. 
723. Rights of partnership trustee against general partners. 
724. Treatment of certain liens. 
725. Disposition of certain property. 
726. Distribution of property of the estate. 
727. Discharge. 
728. Special tax provisions. 
SUBCHAPTER III—STOCKBROKER LIQUIDATION 
741. Definitions for this subchapter. 
.: 
742. Effect of section 362 of this title in this subchapter. 
743. Notice. 
744. Executory contracts. 
745. Treatment of accounts. 
746. Extent of customer claims. 
747. Subordination of certain customer claims. 
748. Reduction of securities to money. 
749. Voidable transfers. 
750. Distribution of securities. 
751. Customer name securities. 
752. Customer property. 
SUBCHAPTER IV—COMMODITY BROKER LIQUIDATION 
' * 
761. Definitions for this subchapter. 
762. Notice to the Commission and right to be heard. 
763. Treatment of accounts. 
764. Voidable transfers. 
765. Customer instructions. 
766. Treatment of customer property. 
SUBCHAPTER I—OFFICERS AND ADMINISTRATION 
11 use 701. 
§ 701. Interim trustee 
(a) Promptly after the order for relief under this chapter, the 
court shall appoint one disinterested person that is a member of 
the panel of private trustees established under section 604(f) of 
title 28 or that was serving as trustee in the case immediately before 
the order for relief under this chapter to serve as interim trustee in 
the case. 
(b) The service of an interim trustee under this section terminates 
when a trustee elected or designated under section 702 of this title 
Ante, p. 2562. 
to serve as trustee in the case qualifies under section 322 of this title. 
(c) An interim trustee serving under this section is a trustee in a 
case under this title. 
11 use 702. 
§702. Election of trustee 
(a) A creditor may vote for a candidate for trustee only if such 
creditor— 
(1) holds an allowable, imdisputed, fixed, liquidated, unsecured 
claim of a kind entitled to distribution under section 726(a) (2), 
726(a) (3), or 726 (a) (4) of this title; 
(2) does not have an interest materially adverse, other than 
an equity interest that is not substantial in relation to such 
creditor's interest as a creditor, to the interest of creditors entitled 
to such distribution; and 
(3) is not an insider. 
Ante, p. 2564. 
(b) At the meeting of creditors under section 341 of this title, 
creditors may elect one person to serve as trustee in the case if election 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2605 
of a trustee is requested by creditors that may vote under subsection 
(a) of this section, and that hold at least 20 percent in amount of 
the claims specified in subsection (a) (1) of this section that are held 
by creditors that may vote under subsection (a) of this section. 
(c) A candidate for trustee is elected trustee if— 
(1) creditors holding at least 20 percent in amount of the 
claims specified in subsection (a)(1) of this section that are 
held by creditors that may vote under subsection (a) of this 
section vote; and 
_ 
,«, . li t£ 
(2) such candidate receives the votes of creditors holding a 
majority in amount of claims specified in subsection (a)(1) of 
:^. .;, 
, ,
^ .
^
^ 
this section that are held by creditors that vote for trustee. 
(d) If a trustee is not elected under subsection (c) of this section, 
then the interim trustee shall serve as trustee in the case. 
§ 703. Successor trustee 
11 USC 703. 
(a) If a trustee dies or resigns during a case, fails to qualify under 
section 322 of this title, or is removed under section 324 of this title. Ante, p. 2562. 
creditors may elect, in the manner specified in section 702 of this 
title, a person to fill the vacancy in the office of trustee. 
(b) Pending election of a trustee under subsection (a) of this 
section, if necessary to preserve or prevent loss to the estate, the 
court may appoint an interim trustee in the manner specified in 
section 701(a) of this title. Sections 701(b) and 701(c) of this title 
vOt >£iJ i 
apply to such interim trustee. 
(c) If creditors do not elect a successor trustee under subsection 
(a) of this section, or if a trustee is needed in a case reopened under 
section 350 of this title, then the court shall appoint one disinterested Ante, p. 2569. 
person that is a member of the panel of private trustees established 
under section 604(f) of title 28 to serve as trustee in the case. 
§ 704. Duties of trustee 
11 usc 704. 
The trustee shall— 
(1) collect and reduce to money the property of the estate for 
which such trustee serves, and close up such estate as expeditiously 
as is compatible with the best interests of parties in interest; 
' 
" .• ' 
(2) be accountable for all property received; 
(3) investigate the financial affairs of the debtor; 
(4) if a purpose would be served, examine proofs of claims and 
object to the allowance of any claim that is improper; 
(5) if advisable, oppose the discharge of the debtor; 
' 
(6) unless the court orders otherwise, furnish such information 
concerning the estate and the estate's administration as is 
requested by a party in interest; 
(7) if the business of the debtor is authorized to be operated, 
file with the court and with any governmental unit charged with 
responsibility for collection or determination of any tax arising 
out of such operation, periodic reports and summaries of the 
operation of such business, including a statement of receipts and 
^.^ . 
disbursements, and such other information as the court requires; 
and 
(8) make a final report and file a final account of the adminis-
tration of the estate with the court. 
§ 705. Creditors' committee 
11 USC 705. 
(a) At the meeting under section 341 (a) of this title, creditors that Ante, p. 2564. 
may vote for a trustee under section 702(a) of this title may elect a 
92 STAT. 2606 
PUBLIC LAW 95-598—NOV. 6, 1978 
committee of not fewer than three, and not more than eleven, creditors, 
each of whom holds an allowable unsecured claim of a kind entitled to 
distribution under section 726(a) (2) of this title. 
(b) A committee elected under subsection (a) of this section may 
consult with the trustee in connection with the administration of the 
estate, make recommendations to the trustee respecting the perform-
ance of the trustee's duties, and submit to the court any question 
affecting the administration of the estate. 
11 use 706. 
§ 706. Conversion 
(a) The debtor may convert a case under this chapter to a case 
Post, pp. 2626, 
under chapter 11 or 13 of this title at any time, if the case has not been 
2645. 
converted under section 1112 or 1307 of this title. Any waiver of the 
Post, pp. 2630, 
right to convert a case under this subsection is unenforceable. 
2^^- 
(b) On request of a party in interest and after notice and a hear-
ing, the court may convert a case under this chapter to a case under 
chapter 11 of this title at any time. 
(c) The court may not convert a case under this chapter to a case 
under chapter 13 of this title unless the debtor requests such conver-
sion. 
(d) Notwithstanding any other provision of this section, a case 
may not be converted to a case under another chapter of this title 
unless the debtor may be a debtor under such chapter. 
11 use 707. 
§ 707. Dismissal 
The court may dismiss a case under this chapter only after notice 
and a hearing and only for cause, including— 
(1) unreasonable delay by the debtor that is prejudicial to 
creditors; and 
(2) nonpayment of any fees and charges required under 
28 use 1911 et 
chapter 123 of title 28. 
SUBCHAPTER II—COLLECTION, LIQUIDATION, AND 
DISTRIBUTION OF THE ESTATE 
11 use 721. 
§ 721. Authorization to operate business 
The court may authorize the trustee to operate the business of the 
debtor for a limited period, if such operation is in the best interest of 
the estate and consistent with the orderly liquidation of the estate. 
11 use 722. 
§ 722. Redemption 
An individual debtor may, whether or not the debtor has waived 
the right to redeem under this section, redeem tangible personal prop-
erty intended primarily for personal, family, or household use, from 
a Hen securing a dischargeable consumer debt, if such property is 
Ante, p. 2586. 
exempted under section 522 of this title or has been abandoned under 
section 554 of this title, by paying the holder of such lien the amount 
of the allowed secured claim of such holder that is secured by such lien. 
11 use 723. 
§ 723. Rights of partnership trustee against general partners 
(a) If there is a deficiency of property of the estate to pay in full 
all claims allowed in a case under this title concerning a partnership, 
then each general partner in such partnership is liable to the trustee for 
the full amount of such deficiency. 
(b) To the extent practicable, the trustee shall first seek recovery 
of such deficiency from any general partner in such partnership that 
is not a debtor in a case under this title. Pending determination of such 
deficiency, the court may order any such partner to provide the estate 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2607 
with indemnity for, or assurance of payment of, any deficiency 
./v,-
recoverable from such partner, or not to dispose of property. 
(c) Notwithstanding section 728(c) of this title, the trustee has a 
claim against the estate of each general partner in such partnership 
that is a debtor in a case under this title for the full amount of all 
claims of creditors allowed in the case concerning such partnership. 
Notwithstanding section 502 of this title, there shall not be allowed in Ante, p. 2579. 
such case a claim against such partner on which both such partner and 
such partnership are liable, except to any extent that such claim is 
secured only by property of such partner and not be property of such 
? •^'^•^^-
paitnership. The claim of the trustee under this subsection is entitled 
to distribution in such case under section 726(a) of this title the same 
as any other claim of the kind specified in such section. 
(d) If the aggregate that the trustee recovers from the estates of 
-"<' • -"•"•' 
general partners under subsection (c) of this section is greater than 
any deficiency not recovered under subsection (b) of this section, the 
court, after notice and a hearing, shall determine an equitable distribu-
tion of the surplus so recovered, and the trustee shall distribute such 
surplus to the estates of the general partners in such partnership 
according to such determination. 
§ 724. Treatment of certain liens 
11 USC 724. 
(a) The trustee may avoid a lien that secures a claim of a kind 
specified in section 726(a) (4) of this title. 
(b) Property in which the estate has an interest and that is subject 
to a lien that is not avoidable under this title and that secures an 
allowed claim for taxes, or proceeds of such property, shall be 
distributed— 
(1) first, to any holder of an allowed claim secured by a lien 
on such property that is not avoidable under this title and that is 
senior to such tax lien; 
(2) second, to claims specified in sections 507(a) (1), 507(a) 
Ante, p. 2583. 
(2), 507(a)(3), 507(a)(4), and 507(a)(5) of this title, to the 
extent of the amount of such allowed tax claim that is secured by 
such tax lien; 
(3) third, to the holder of such tax lien, to any extent that such 
holder's allowed claim that is secured by such tax lien exceeds any 
amount distributed under paragraph (2) of this subsection; 
(4) fourth, to any holder of an allowed claim secured by a lien 
on such property that is not avoidable under this title and that is 
junior to such tax lien; 
(5) fifth, to the holder of such tax lien, to the extent that such 
holder's allowed claim secured by such tax lien is not paid under 
paragraph (3) of this subsection; and 
(6) sixth, to the estate. 
(c) If more than one creditor is entitled to distribution under a par-
ticular paragraph of subsection (b) of this section, distribution to 
such creditor's under such paragraph shall be in the same order as 
distribution to such creditors would have been other than under this 
section. 
(d) A statutory lien whose priority is determined in the same man-
ner as the priority of a tax lien under section 6323 of the Internal 
Revenue Code of 1954 (26 U.S.C. 6323) shall be treated under sub-
section (b) of this section the same as a tax lien. 
§ 725. Disposition of certain property 
11 usc 725. 
After the commencement of a case under this chapter, but before 
92 STAT. 2608 
PUBLIC LAW 95-598—NOV. 6, 1978 
Infra. 
final 
distribution under section 726 of this title, the trustee, after 
notice and a hearing, shall dispose of any property in which an entity 
other than the estate has an interest, such as a lien, and that has not 
been disposed of under another section of this title. 
11 use 726. 
§ 726. Distribution of property of the estate 
Ante, p. 2586. 
(a) Except as provided in section 510 of this title, property of the 
estate shall be distributed— 
(1) first, in payment of claims of the kind specified in, and in 
Ante, p. 2583. 
the order specified in, section 507 of this title; 
(2) second, in payment of any allowed unsecured claim, other 
than a claim of a kind specified in paragraph (1), (3), or (4) of 
this subsection, proof of which is— 
Ante, p. 2578. 
(-^) timely filed under section 501(a) of this title; 
(B) timely filed under section 501(b) or 501(c) of this 
title; or 
(C) tardily filed under section 501(a) of this title, if— 
(i) the creditor that holds such claim did not have 
notice or actual knowledge of the case in time for timely 
filing of a proof of such claim under section 501(a) of 
this title; and 
*r:"^ :jgU U 
(ii) proof of such claim is filed in time to permit pay-
<-r .; 
ment of such claim; 
(3) third, in payment of any allowed unsecured claim proof of 
which is tardily filed under section 501 (a) of this title, other than 
a claim of the kind specified in paragraph (2)(C) of this sub-
section; 
(4) fourth, in payment of any allowed claim, whether secured 
or unsecured, for any fine, penalty, or forfeiture, or for multiple, 
exemplary, or punitive damages, arising before the earlier of the 
order for relief or the appointment of a trustee, to the extent that 
r.'oT'c ', , .i\i 
such fine, penalty, forfeiture, or damages are not compensation 
for actual pecuniary loss suffered by the holder of such claim; 
(5) fifth, in payment of interest at the legal rate from the date 
of the filing of the petition, on any claim paid under paragraph 
(1), (2), (3), or (4) of this subsection; and 
(6) sixth, to the debtor. 
(b) Payment on claims of a kind specified in paragraph (1), (2). 
(3), (4), (5), or (6) of section 507(a) of this title, or in paragraph 
(2), (3), (4), or (5) of subsection (a) of this section, shall be made 
pro rata among claims of the kind specified in a particular paragraph, 
except that in a case that has been converted to this chapter under 
Post, pp. 2630, 
section 1112 or 1307 of this title, administrative expenses incurred 
2647. 
under this chapter after such conversion have priority over adminis-
trative expenses incurred under any other chapter of this title or 
imder this chapter before such conversion and over any expenses of a 
custodian superseded under section 543 of this title. 
(c) Notwithstanding subsections (a) and (b) of this section, if 
there is property of the kind specified in section 541(a)(2) of this 
title, or proceeds of such property, in the estate, such property or pro-
ceeds shall be segregated from other property of the estate, and such 
property or proceeds and other property of the estate shall be dis-
tributed as follows: 
(1) Administrative expenses shall be paid either from property 
IS'^ S
f M a 
^^ ^^ kind specified in section 541(a) (2) of this title, or from 
other property of the estate, as the interest of justice requires. 
(2) Claims other than for administrative expenses shall be paid 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2609 
' 
in the order specified in subsection (a) of this section, and, with 
respect to claims of a kind specified in a particular paragraph of 
section 507 of this title or subsection (a) of this section, in the 
following order and manner: 
(A) First, community claims against the debtor or the 
debtor's spouse shall be paid from property of the kind speci-
fied in section 541 (a) (2) of this title, except to the extent that 
such property is solely liable for debts of the debtor. 
(B) Second, to the extent that community claims against 
the debtor are not paid under subparagraph (A) of this para-
graph, such community claims shall be paid from property 
of the kind specified in section 541 (a) (2) of this title that is 
solely liable for debts of the debtor. 
(C) Third, to the extent that all claims against the debtor 
including community claims against the debtor are not paid 
under subparagraph (A) or (B) of this paragraph such 
claims shall be paid from property of the estate other than 
property of the kind specified in section 541(a)(2) of this 
title. 
(D) Fourth, to the extent that community claims against 
the debtor or the debtor's spouse are not paid under subpara-
graph (A), (B), or (C) of this paragraph, such claims shall 
be paid from all remaining property of the estate. 
§ 727. Discharge 
11 USC 727. 
(a) The court shall grant the debtor a discharge, unless— 
(1) the debtor is not an individual; 
(2) the debtor, with intent to hinder, delay, or defraud a cred-
itor or an oflEicer of the estate charged with custody of property 
under this title, has transferred, removed, destroyed, mutilated, 
or concealed, or has permitted to be transferred, removed, 
_
, -.4 .
,
-
• v?. 
destroyed, mutilated, or concealed— 
(A) property of the debtor, within one year before the date 
of the filing of the petition; or 
^
*
; ,, ,T. .,-. 
(B) property of the estate, after the date of the filing of 
the petition; 
(3) the debtor has concealed, destroyed, mutilated, falsified, or 
p:; > , 3,.... 
failed to keep or preserve any recorded information, including 
books, documents, records, and papers, from which the debtor's 
financial condition or business transactions might be ascertained, 
unless such act or failure to act was justified under all of the cir-
cumstances of the case; 
(4) the debtor knowingly and fraudulently, in or in connection 
with the case— 
(A) made a false oath or account; 
(B) presented or used a false claim; 
(C) gave, offered, received, or attempted to obtain money, 
property, or advantage, or a promise of money, property, or 
advantage, for acting or forbearing to act; or 
(D) withheld from an officer of the estate entitled to pos-
session under this title, any recorded information, including 
books, documents, records, and papers, relating to the debtor's 
property or financial affairs; 
(5) the debtor has failed to explain satisfactorily, before deter-
mination of denial of discharge under this paragraph, any loss 
of assets or deficiency of assets to meet the debtor's liabilities; 
(6) the debtor has refused, in the case— 
92 STAT. 2610 
PUBLIC LAW 95-598—NOV. 6, 1978 
, !.• i 
(A) to obey any lawful order of the court, other than an 
order to respond to a material question or to testify; 
.
. 
(B) on the ground of privilege against self-incrimination, 
to respond to a material question approved by the court or to 
testify, after the debtor has been granted immunity with 
respect to the matter concerning which such privilege was 
invoked;or 
(C) on a ground other than the property invoked privilege 
against self-incrimination, to respond to a material question 
approved by the court or to testify: 
(7) the debtor has committed any act specified in paragraph 
(2), (3), (4), (5), or (6) of this subsection, on or within one year 
before the date of the filing of the petition, or during the case, 
in connection with another case concerning an insider; 
(8) the debtor has been granted a discharge under this section. 
Post, p. 2638. 
under section 1141 of this title, or under section 14, 371 or 476 of 
11 use 32 771 
^^® Bankruptcy Act, in a case commenced within six years before 
876. 
' 
' 
the date of the filing of the petition; 
(9) the debtor has been granted a discharge under section 1328 
11 use 1060, 
of this title, or under section 660 or 661 of the Bankruptcy Act, in 
1^1- 
a case commenced within six years before the date of the filing of 
the petition, unless payments under the plan in such case totaled 
at least— 
„:. .
^ 
, 
(A) 100 percent of the allowed unsecured claims in such 
'' 
'' 
'' 
case; or 
(B) (i) 70 percent of such claims; and 
(ii) the plan was proposed by the debtor in good faith, and 
was the debtor's best effort; or 
(10) the court approves a written waiver of discharge executed 
by the debtor after the order for relief under this chapter. 
Ante, p. 2590. 
(b) Except as provided in section 523 of this title, a discharge under 
subsection (a) of this section discharges the debtor from all debts that 
arose before the date of the order for relief under this chapter, and 
Ante, p. 2579. 
any liability on a claim that is determined under section 502 of this 
title as if such claim had arisen before the commencement of the case, 
whether or not a proof of claim based on any such debt or liability is 
Ante, p. 2578. 
filed 
under section 501 of this title, and whether or not a claim based 
on any such debt or liability is allowed under section 502 of this title, 
(c) (1) The trustee or a creditor may object to discharge under sub-
section (a) of this section. 
(2) On request of a party in interest, the court may order the trustee 
to examine the acts and conduct of the debtor to determine whether a 
ground exists for denial of discharge. 
-^ 
(d) On request of the trustee or a creditor, and after notice and a 
hearing, the court shall revoke a discharge granted under subsection 
(a) of this section if— 
(1) such discharge was obtained through the fraud of the 
debtor, and the requesting party did not know of such fraud until 
after the granting of such discharge; 
(2) the debtor acquired property that is property of the estate, 
or became entitled to acquire property that would ba^ property of 
the estate, and knowingly and fraudulently failed to report the 
acquisition of, or entitlement to, such property, or to deliver or 
surrender such property to the trustee; or 
(3) the debtor committed an act specified in subsection (a) (6) 
of this section. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2611 
(e) The trustee or a creditor may request a revocation of a dis-
charge — 
(1) under subsection (d) (1) of this section, within one year 
after such discharge was granted; or 
(2) under subsection (d) (2) or (d) (3) of this section, before 
the later of— 
(A) one year after the granting of such discharge; and 
(B) the date the case is closed. 
§ 728. Special tax provisions 
11 USC 728. 
(a) For the purposes of any State or local law imposing a tax on 
or measured by income, the taxable period of a debtor that is an 
individual shall terminate on the date of the order for relief under this 
chapter, unless the case was converted under section 1112 of this title. 
(b) Notwithstanding any State or local law imposing a tax on or 
measured by income, the trustee shall make tax returns of income for 
the estate of an individual debtor in a case under this chapter or for 
a debtor that is a corporation in a case under this chapter only if such 
estate or corporation has net taxable income for the entire period after 
the order for relief under this chapter during which the case is pend-
ing. If such entity has such income, or if the debtor is a partnership, 
then the trustee shall make and file a return of income for each taxable 
period during which the case was pending after the order for relief 
under this chapter. 
(c) If there are pending a case under this chapter concerning a 
partnership and a case under this chapter concerning a partner in such 
partnership, a governmental unit's claim for any unpaid liability of 
such partner for a State or local tax on or measured by income, to the 
extent that such liability arose from the inclusion in such partner's 
taxable income, of earnings of such partnership that were not -with-
drawn by such partner, is a claim only against such partnership. 
(d) Notwithstanding section 541 of this title, if there are pending 
a case under this chapter concerning a partnership and a case under 
this chapter concerning a partner in such partnership, then any State 
or local tax refund or reduction of tax of such partner that would have 
otherwise been property of the estate of such partner under section 
541 of this title— 
(1) is property of the estate of such partnership to the extent 
that such tax refund or reduction of tax is fairly apportionable 
to losses sustained by such partnership and not reimbursed by 
such partner; and 
(2) is property of the estate of such partner otherwise. 
SUBCHAPTER III—STOCKBROKER LIQUIDATION 
§ 741. Definitions for this subchapter 
ii usc 741. 
In this subchapter— 
(1) "Commission" means Securities and Exchange Commission; 
(2) "customer" includes— 
(A) entity with whom the debtor deals as principal or 
agent and that holds a claim against the debtor on account 
of a security received, acquired, or held by the debtor in the 
ordinary course of business as a stockbroker from or for 
the securities account or accounts of such entity— 
(i) for safekeeping; 
(ii) with a view to sale; 
92 STAT. 2612 
PUBLIC LAW 95-598—NOV. 6, 1978 
*' - ^' 
(iii) to cover a consummated sale; 
a ii ? 
(iv) pursuant to a purchase; 
%>.'/ 
. • 
(v) as collateral under a security agreement; or 
(vi) for the purpose of effecting registration of trans-
fer ; and 
(B) entity that holds a claim against the debtor arising 
1 r
v 
out of— 
(i) a sale or conversion of a security received, acquired, 
. ,. 
or held as specified in subparagraph (A) of this para-
graph ; or 
(ii) a deposit of cash, a security, or other property 
with the debtor for the purpose of purchasing or selling 
a security; 
(3) "customer name security" means security— 
(A) held for the account of a customer on the date of the 
filing of the petition by or on behalf of the debtor; 
- 
(B) registered in such customer's name on such date or in 
the process of being so registered under instructions from 
the debtor; and 
(C) not in a form transferable by delivery on such date; 
(4) "customer property" means cash, security, or other prop-
erty, and proceeds of such cash, security, or property, at any 
time received, acquired, or held by or for the account of the debtor, 
from or for the securities account of a customer— 
(A) including— 
(i) property that was unlawfully converted and that 
is property of the estate; 
(ii) a security held as property of the debtor to the 
extent such security is necessary to meet a net equity 
claim based on a security of the same class and series of an 
issuer; 
(iii) resources provided through the use or realization 
of a customer's debit cash balance or a debit item 
includible in the Formula for Determination of Reserve 
Requirement for Brokers and Dealers as promulgated by 
the Commission under the Securities Exchange Act of 
1934 (15 U.S.C. 78a et seq.); and 
(iv) other property of the debtor that any applicable 
law, rule, or regulation requires to be set aside or held for 
the benefit of a customer, unless including such property 
as customer property would not significantly increase 
customer property; but 
(B) not including— 
(i) a customer name security delivered to or reclaimed 
by a customer under section 751 of this title; or 
JM'MJ 
II 
(ii) property to the extent that a customer does not 
have a claim against the debtor based on such property; 
(5) "net equity" means, with respect to the aggregate of all of 
a customer's accounts that such customer holds in the same 
capacity— 
f 
(A) (i) aggregate dollar balance that would remain in such 
accounts after the liquidation, by sale or purchase, at the 
time of the filing of the petition of all securities positions in 
all such accounts, except customer name securities of such 
customer; minus 
(ii) any claim of the debtor against such customer that 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2613 
would have been owing immediately after such liquidation; 
plus 
(B) any payment by such customer to the trustee, within 
60 days after notice under section 342 of this title, of any Ante, p. 2565. 
business related claim of the debtor against such customer; 
(6) "SIPC" means Security Investor Protection Corporation. 
§ 742. Effect of section 362 of this title in this subchapter 
n USC 742. 
Notwithstanding section 362 of this title, SIPC may file an applica- Ante, p. 2570. 
tion for a protective decree under the Securities Investor Protection 
Act of 1970 (15 U.S.C. 78aaa et seq.). The filing of such application 
stays all proceedings in the case under this chapter unless and until 
such application is dismissed. If SIPC completes the liquidation of the 
debtor, then the court shall dismiss the case. 
§ 743. Notice 
11 usc 743. 
The clerk shall give the notice required by section 342(a) of this title 
to SIPC and to the Commission. 
§ 744. Executory contracts 
ii usc 744. 
Notwithstanding section 365(d) (1) of this title, the trustee shall Ante, p. 2574. 
assume or reject, under section 365 of this title, any executory contract 
of the debtor for the purchase or sale of a security in the ordinary 
course of the debtor's business, within a reasonable time after the date 
of the order for relief, not to exceed 30 days. If the trustee does not 
assume such a contract within such time, such contract is rejected. 
§ 745. Treatment of accounts 
H use 745. 
(a) Accounts held by a particular customer in separate capacities 
shall be treated as accounts of separate customers. 
(b) If a stockbroker or a bank holds a customer net equity claim 
against the debtor that arose out of a transaction for a customer of 
such stockbroker or bank, each such customer of such stockbroker or 
.t., , = *, 
bank shall be treated as a separate customer of the debtor. 
(c) A trustee's account specified as such on the debtor's books, and 
supported by a trust deed filed with, and qualified as such by, the 
Internal Revenue Service, and under the Internal Revenue Code of 
: 
1954 (26 U.S.C. 1 et seq.), shall be treated as a separate customer 
account for each beneficiary under such trustee account. 
§ 746. Extent of customer claim 
11 usc 746. 
(a) If, after the date of the filing of the petition, an entity effects, 
with respect to cash or a security, a transaction with the debtor, in a 
manner that would have made such entity a customer with respect to 
such cash or security had such transaction occurred before such date, 
and such transaction was effected by such entity in good faith and 
before the qualification under section 322 of this title of a trustee, such Ante, p. 2562. 
entity shall be deemed a customer, and the date of such transaction 
shall be deemed to be the date of the filing of the petition for the pur-
pose of determining such entity's net equity with respect to such cash 
or security. 
(b) An entity does not have a claim as a customer to the extent that 
such entity has a claim for cash or a security that, by contract, agree-
ment, understanding, or operation of law, is— 
(1) part of the capital of the debtor; or 
(2) is subordinated to the claims of any or all creditors. 
§ 747. Subordination of certain customer claims 
11 usc 747. 
Except as provided in section 510 of this title, unless all other cus- -^nte, p. 2586. 
92 STAT. 2614 
PUBLIC LAW 95-598—NOV. 6, 1978 
tomer net equity claims have been paid in full, the trustee may not pay 
in full or pay in part, directly or indirectly, any net equity claim of a 
customer that was, on the date such claim arose— 
(1) an insider; 
(2) a beneficial owner of at least five percent of any class of 
equity securities of the debtor, other than— 
; 
(A) nonconvertible stock having fixed preferential divi-
_ 
dend and liquidation rights; or 
'" 
(B) interests of limited partners in a limited partnership; 
(3) a limited partner with a participation of at least five per-
cent in the net assets or net profits of the debtor; or 
(4) an entity that, directly or indirectly, through agreement 
or otherwise, exercised or had the power to exercise control over 
the management or policies of the debtor. 
11 use 748. 
§ 748. Reduction of securities to money 
As soon as practicable after the date of the order for relief, the trus-
tee shall reduce to money, consistent with good market practice, all 
securities held as property of the estate, except for customer name secu-
Infra. 
rities delivered or reclaimed under section 751 of this title. 
11 use 749. 
§ 749. Voidable transfers 
Any transfer of property that, except for such transfer, would have 
been customer property, may be avoided by the trustee, and shall be 
treated as customer property, if and to the extent that the trustee 
avoids such transfer under section 544, 545, 547, 548, 549, or 724(a) of 
this title. For the purpose of such sections, the property so transferred 
shall be deemed to have been property of the debtor and, if such trans-
fer was made to a customer or for a customer's benefit, such customer 
shall be deemed, for the purposes of this section, to have been a 
creditor. 
11 use 750. 
§ 750. Distribution of securities 
The trustee may not distribute a security except under section 751 
of this title. 
11 use 751. 
§ 751. Customer name securities 
The trustee shall deliver any customer name security to or on 
behalf of the customer entitled to such security, unless such customer 
;^. , , 
has a negative net equity. With the approval of the trustee, a customer 
may reclaim a customer name security after payment to the trustee, 
within such period as the trustee allows, of any claim of the debtor 
against such customer to the extent that such customer will not have a 
negative net equity after such payment. 
11 use 752. 
§ 752. Customer property 
(a) The trustee shall distribute customer property ratably to cus-
tomers on the basis and to the extent of such customers allowed net 
equity claims and in priority to all other claims, except claims specified 
Ante, p. 2583. 
in section 507 (a)(1) of this title that are attributable to the administra-
tion of customer property. 
(b) (1) The trustee shall distribute customer property in excess of 
that distributed under subsection (a) of this section in accordance with 
section 726 of this title. 
Ante, p. 2586. 
(2) Except as provided in section 510 of this title, if a customer is 
not paid the full amount of such customer's allowed net equity claim 
from customer property, the unpaid portion of such claim is a claim 
entitled to distribution under section 726(a) of this title. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2615 
(c) Subject to section 741(4) (B) of this title, any cash or security 
remaining after the liquidation of a security interest created under a 
security agreement made by the debtor shall be apportioned between 
the general estate and customer property in the proportion that the 
^ 
general property of the debtor and the cash or securities of customers 
were subject to such security interest. 
SUBCHAPTER IV—COMMODITY BROKER LIQUIDATION 
§ 761. Definitions for this subchapter 
11 USC 761. 
In this subchapter— 
(1) "Act" means Commodity Exchange Act (7 U.S.C. 1 et 
seq.); 
(2) "clearing organization" means organization that clears com-
modity contracts on, or subject to the rules of, a contract market 
or board of trade; 
(3) 
"Commission" means Commodity 
Futures 
Trading 
Commission; 
(4) "commodity contract" means— 
(A) if the debtor is a futures commission merchant, con-
tract 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; 
(B) if the debtor is a foreign futures commission merchant, 
foreign future; 
(C) if the debtor is a leverage transaction merchant, lever-
age transaction; 
(D) if the debtor is a clearing organization, 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 
that is cleared by the debtor; or 
(E) if the debtor is a commodity options dealer, commodity 
option; 
(5) "commodity option" means agreement or transaction sub-
ject to regulation under section 4c(b) of the Act (7 U.S.C. 6c(b)); 
(6) "commodity options dealer" means person that extends 
credit to, or that accepts cash, a security, or other property from, 
a customer of such person for the purchase or sale of an interest 
in a commodity option; 
(7) "contract market" means board of trade designated as a 
contract market by the Commission under the Act; 
(8) "contract of sale", "commodity", "future delivery", "board 
of trade", and "futures commission merchant" have the meanings 
) 
assigned to those terms in the Act; 
(9) "customer" means— 
(A) if the debtor is a futures commission merchant— 
(i) entity for or with whom the debtor deals and that 
holds a claim against the debtor on account of a com-
modity contract made, received, acquired, or held by or 
through the debtor in the ordinary course of the debtor's 
business as a futures commission merchant from or for 
the commodity futures account of such entity; or 
(ii) entity that holds a claim against the debtor arising 
out of— 
^, 
, 
(I) the making, liquidation, or change in the value 
^ 
of a commodity contract of a kind specified in clause 
(i) of this subparagraph; 
92 STAT. 2616 
PUBLIC LAW 95-598—NOV. 6, 1978 
(II) a deposit or payment of cash, a security, or 
other property with the debtor for the purpose of 
making or margining such a commodity contract; or 
(III) the making or taking of delivery on such 
a commodity contract; 
(B) if the debtor is a foreign futures commission 
merchant— 
,': 
(i) entity for or with whom the debtor deals and that 
holds a claim against the debtor on account of a commod-
\ -K-, it 
ity contract made, received, acquired, or held by or 
through the debtor in the ordinary course of the debtor's 
business as a foreign futures commission merchant from 
or for the foreign futures account of such entity; or 
(ii) entity that holds a claim against the debtor arising 
out of— 
(I) the making, liquidation, or change in value of 
H
f Jc 
a commodity contract of a kind specified in clause 
(i) of this subparagraph; 
(II) a deposit or payment of cash, a security, or 
other property with the debtor for the purpose of 
making or margining such a commodity contract; or 
(III) the making or taking of delivery on such a 
commodity contract; 
(C) if the debtor is a leverage transaction merchant— 
(i) entity for or with whom the debtor deals and that 
holds a claim against the debtor on account of a commod-
ity contract engaged in by or with the debtor in the 
ordinary course of the debtor's business as a leverage 
transaction merchant from or for the leverage account of 
^ 
such entity; 
(ii) entity that hold a claim against the debtor arising 
out of— 
(I) the making, liquidation, or change in value of 
a commodity contract of a kind specified in clause (i) 
of this subparagraph; 
(II) a deposit or payment of cash, a security, or 
other property with the debtor for the purpose of 
entering into or margining such a commodity con-
tract; or 
(III) the making or taking of delivery on such a 
commodity contract; 
'
" 
(D) if the debtor is a clearing organization, clearing mem-
ber of the debtor with whom the debtor deals and that holds 
a claim against the debtor on account of cash, a security, or 
other property received by the debtor to margin, guarantee, 
or secure a commodity contract in such clearing member's 
proprietary account or customers' account; or 
(E) if the debtor is a commodity options dealer— 
(i) entity for or with whom the debtor deals and that 
holds a claim on account of a commodity contract made, 
received, acquired, or held by or through the debtor in 
the ordinary course of the debtor's business as a commod-
ity options dealer from or for the commodity options 
account of such entity; or 
i 
, 
(ii) entity that holds a claim against the debtor arising 
.. 
, , 
out of— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2617 
(I) the making of, liquidation of, exercise of, or 
a change in vahie of, a commodity contract of a kind 
specified in clause (i) of this subparagraph; or 
(II) a deposit or payment of cash, a security, or 
other property with the debtor for the purpose of 
making, exercising, or margining such a commodity 
contract; 
(10) "customer property" means cash, a security, or other prop-
erty, or proceeds of such cash, security, or property, at any time 
received, acquired, or held by or for the account of the debtor, 
from or for the account of a customer— 
(A) including— 
(i) property received, acquired, or held to margin, 
guarantee, secure, purchase, or sell a commodity contract ; 
(ii) profits or contractual or other rights accruing to 
a customer as a result of a commodity contract; 
(iii) an open commodity contract; 
(iv) specifically identifiable customer property; 
(v) warehouse receipt or other document held by the 
debtor evidencing ownership of or title to property to 
be delivered to fulfill a commodity contract from or for 
the account of a customer ; 
(vi) cash, a security, or other property received by the 
debtor as payment for a commodity to be delivered to 
fulfill a commodity contract from or for the account of 
a customer; 
(vii) a security held as property of the debtor to the 
extent such security is necessary to meet a net equity 
claim based on a security of the same class and series 
of an issuer; 
(viii) property that was unlawfully converted and 
that is property of the estate; and 
(ix) other property of the debtor that any applicable 
law, rule, or regulation requires to be set aside or held 
for the benefit of a customer, unless includina: such prop-
erty as customer property would not significantly increase 
customer property; but 
(B) not includmg property to the extent that a customer 
_, ^^ , ., 
does not have a claim against the debtor based on such 
* 
' ' 
' 
property; 
(11) "foreign future" means contract for the purchase or sale 
of a commodity for future delivery on, or subject to the rules of, 
a board of trade outside the United States; 
(12) "foreign futures commission merchant" means entity 
engaged in soliciting or accepting orders for the purchase or sale 
of a foreign future or that, in connection with such a solicitation 
or acceptance, accepts cash, a security, or other property or extends 
? j i | 
credit, to margin, guarantee, or secure any trade or contract that 
results from such a solicitation or acceptance; 
(13) "leverage transaction" means agreement that is subject to 
regulation under section 217 of the Commodity Futures Trading 
Commission Act of 1974 (7 U.S.C. 15a), and that is commonly 
known to the commodities trade as a margin account, margin 
contract, leverage account, or leverage contract; 
(14) "leverage transaction merchant" means person that is 
engaged in the business of engaging in leverage transactions; 
92 STAT. 2618 
PUBLIC LAW 95-598—NOV. 6, 1978 
(15) "margin payment" means payment or deposit of cash, a 
security, or other property, that is commonly known to the com-
modities trade as original margin, initial margin, maintenance 
margin, or variation margin, including a daily variation settle-
ment payment; 
(16) "member property" means customer property at any time 
received, acquired, or held by or for the account of a debtor that 
is a clearing organization, from or for the proprietary account 
of a customer that is a clearing member of the debtor; and 
(17) "net equity" means, subject to such rules and regulations 
as the Commission promulgates under the Act, with respect to 
the aggregate of all of a customer's accounts that such customer 
holds in the same capacity— 
(A) balance remaining in such customer's accounts imme-
diately after— 
(i) all commodity contracts of such customer have been 
transferred, liquidated, or become identified for delivery; 
and 
(ii) all obligations of such customer to the debtor have 
been offset; plus 
(B) the value, as of the date of return under section 766 
of this title, of any specifically identifiable customer property 
actually returned to such customer before the date specified 
in subparagraph (A) of this paragraph; plus 
(C) the value, as of the date of transfer, of— 
(i) any commodity contract to winch such customer is 
entitled that is transferred to another person under sec-
tion 766 of this title; and 
(ii) any cash, security, or other property of such cus-
tomer transferred to such other person under section 766 
of this title to margin or secure such transferred com-
modity contract. 
11 use 762. 
§ 762. Notice to the Commission and right to be heard 
Ante, p. 2565 
(a) The clerk shall give the notice required by section 342 of this 
title to the ComLmission. 
(b) The Commission may raise and may appear and be heard on any 
issue in a case imder this chapter. 
11 use 763. 
§ 763. Treatment of accounts 
(a) Accounts held by a particular customer in separate capacities 
shall be deemed to be accounts of separate customers. 
(b) A member of a clearing organization shall be deemed to hold 
such member's proprietary account in a separate capacity from such 
member's customers' account. 
(c) The net equity in a customer's account may not be offset against 
the net equity in the account of any other custonier. 
11 use 764. 
§ 764. Voidable transfers 
(a) Except as otherwise provided in this section, any transfer of 
property that, except for such transfer, would have been customer 
property, may be avoided by the trustee, and shall be treated as cus-
tomer property, if and to the extent that the trustee avoids such trans-
Ante, pp. 2596, 
fer under section 544, 545, 547, 548, 549, or 724(a) of this title. For the 
2597. 
purpose of such sections, the property so transferred is deemed to have 
been property of the debtor, and, if such transfer was made to a cus-
tomer or for a customer's benefit, such customer is deemed, for the 
purposes of this section, to have been a creditor. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2619 
(b) Notwithstanding sections 544, 545, 547, 548, 549, and 724(a) of Ante, pp. 2596, 
this title, the trustee may not avoid a transfer made before five days 2597. 
after the date of the filing of the petition, if such transfer is approved 
by the Commission bv nue or order, either before or after such trans-
fer, and if such transfer is— 
(1) a transfer of a commodity contract entered into or carried 
by or through the debtor on behalf of a customer, and of any cash, 
securities, or other property margining or securing such commod-
ity contract; or 
(2) the liquidation of a commodity contract entered into or car-
ried by or through the debtor on behalf of a customer. 
(c) Notwithstanding sections 544, 545, 547, 548, and 724(a) of this 
title, the trustee may not avoid a transfer that is a margin payment to 
or deposit with a commodity broker or forward contract merchant or 
is a settlement payment made by a clearing organization and that 
occurs before the commencement of the case, except under section 548 
ra)(l) of this title. 
§ 765. Customer instructions 
11 USC 765. 
(a) The notice under section 342 of this title to customers shall Ante, p. 2565. 
instruct each customer— 
(1) to file a proof of such customer's claim promptly, and to 
specify in such claim any specifically identifiable security, prop-
erty, or commodity contract; and 
(2) to instruct the trustee of such customer's desired disposition, 
including transfer under section 766 of this title or liquidation, of Infra. 
any commodity contract specifically identified to such customer. 
(b) The trustee shall comply, to the extent practicable, with any 
instruction received from a customer regarding such customer's desired 
disposition of any commodity contract specifically identified to such 
customer. If the trustee has transferred, under section 766 of this title, 
such a commitment, the trustee shall transmit any such instruction to 
the commodity broker to whom such commodity contract was so 
transferred. 
§ 766. Treatment of customer property 
11 usc 766. 
(a) The trustee shall answer all margin calls with respect to a spe-
cifically identifiable commodity contract of a customer until such time 
as the trustee returns or transfers such commodity contract, but the 
trustee may not make a margin payment that has the effect of a dis-
tribution of more than that to which such customer is entitled under 
subsection (h) or (i) of this section. 
(b) The trustee shall prevent any open commodity contract that is 
'^ 
bein^ a^ctively traded as of the date of the filing of the petition from 
remaining open after the last day of trading in such commodity con-
tract, or into the first day on which notice of intent to deliver on such 
commodity contract may be tendered, whichever occurs first. With 
respect to any commodity contract that has remained open after the last 
day of trading in such commodity contract or v>^ith respect to which 
delivery must be made or accepted under the rules of contract market 
on which such commodity contract was made, the trustee may operate 
the business of the debtor for the purpose of— 
(1) accepting or making tender of notice of intent to deliver 
the physical commodity underlying such commodity contract; 
(2) facilitating delivery of such commodity; or 
(3) disposing of such commodity if a party to such commodity 
contract defaults. 
92 STAT. 2620 
PUBLIC LAW 95-598—NOV. 6, 1978 
,c 
(c) The trustee shall return promptly to a customer any specifically 
identifiable security, property, or commodity contract to which such 
customer is entitled, or shall transfer, on such customer's behalf, such 
security, property, or commodity contract to a commodity broker that 
is not a debtor under this title, subject to such rules or regulations as 
the Commission may prescribe, to the extent that the value of such 
• 
security, property, or commodity contract does not exceed the amount 
to which such customer would be entitled under subsection (h) or (i) 
of this section if such security, property, or commodity contract were 
not returned or transferred under this subsection. 
(d) If the value of a specifically identifiable security, property, or 
commodity contract exceeds such amount, then the customer to whom 
such security, property, or commodity contract is specifically identified 
may deposit cash with the trustee equal to the difference between the 
value of such security, property, or commodity contract and such 
amount, and the trustee shall— 
(1) return promptly such security, property, or commodity 
contract to such customer; or 
(2) transfer, on such customer's behalf, such security, property, 
•i-' ' 
- •- 
or commodity contract to a commodity broker that is not a debtor 
under this title, subject to such rules or regulations as the Com-
mission may prescribe. 
(e) Subject to subsection (b) of this section, the trustee shall liqui-
date any commodity contract that— 
(1) is identified to a particular customer and with respect to 
which such customer has not timely instructed the trustee as to 
the desired disposition of such commodity contract; 
(2) cannot be transferred under subsection (c) of this section; 
or 
(3) cannot be identified to a particular customer. 
(f) As soon as practicable after the commencement of the case, the 
trustee shall reduce to money, consistent with good market practice, 
all securities and other property, other than commodity contracts, held 
as property of the estate, except for specifically identifiable securities 
;,; 
or property distributable under subsection (h) or (i) of this section. 
(g) The trustee may not distribute a security or other property 
except under subsection (h) or (i) of this section. 
(h) Except as provided in subsection (b) of this section, the 
trustee shall distribute customer property ratably to customers on 
the basis and to the extent of such customers' allowed net equity claims, 
and in priority to all other claims, except claims of a kind specified in 
Ante, p. 2583. 
section 507(a) (1) of this title that are attributable to the administra-
tion of customer property. Such distribution shall be in the form of— 
(1) cash; 
(2) the return or transfer, under subsection (c) or (d) of this 
section, of specifically identifiable customer securities, property, 
or commodity contracts; or 
(3) payment of margin calls under subsection (a) of this 
section. 
(i) If the debtor is a clearing organization, the trustee shall 
distribute— 
(1) customer property, other than member property, ratably 
to customers on the basis and to the extent of such customers' 
allowed net equity claims based on such customers' accounts other 
than proprietary accounts, and in priority to all other claims, 
except claims of a kind specified in section 507(a) (1) of this title 
that are attributable to the administration of such customer 
property; and 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2621 
(2) member property ratably to customers on the basis and 
to the extent of such customers' allowed net equity claims based 
on such customers' proprietary accounts, and in priority to all 
other claims, except claims of a kind specified in section 507(a) (1) -^nte, p. 2583. 
of this title that are attributable to the administration of member 
property or customer property, 
(j) (1) The trustee shall distribute customer property in excess of 
that distributed under subsection (h) or (i) of this section in accord-
ance with section 726 of this title. 
' '' *' **" *' 
(2) Except as provided in section 510 of this title, if a customer 
is not paid the full amount of such customer's allowed net equity claim 
from customer property, the unpaid portion of such claim is a claim 
entitled to distribution under section 726(a) of this title. 
CHAPTER 9—ADJUSTMENT OF DEBTS OF A 
MUNICIPALITY 
SUBCHAPTER I—GENERAL PROVISIONS 
Sec. 
901. Applicability of other sections of this title. 
902. Definitions for this chapter. 
903. Reservation of State power to control municipalities. 
904. Limitation on jurisdiction and powers of court. 
SUBCHAPTER II—ADMINISTRATION 
' 
' ' ' ' 
921. Petition and proceedings relating to petition. 
922. Automatic stay of enforcement of claims against the debtor. 
923. Notice. 
924. List of creditors. 
925. Effect of list of claims. 
926. Avoiding powers. 
927. Dismissal. 
SUBCHAPTER III—THE PLAN 
941. Filing of plan. 
942. Modification of plan. 
943. Confirmation. 
< v 
^r;, * ..; ; 
944. Effect of confirmation. 
945. Continuing jurisdiction and closing of the case. 
946. Effect of exchange of securities before the date of the filing of the petition. 
SUBCHAPTER I—GENERAL PROVISIONS 
§ 901. Applicability of other sections of this title 
H USC 901. 
(a) Sections 301, 344, 347(b), 349, 350(b), 361, 362, 364(c), 364(d), Ante, pp. 2558, 
364(e), 364(f), 365, 366, 501, 502, 503, 504, 506, 50r(a) (1), 509, 510, 2565, 
524(a) (1), 524(a) (2), 544, 545, 546, 547, 548, 549(a), 549(c), 549(d), 2568-2570, 
550, 551, 552, 553,1102,1103,1109,1111(b) 1122,1123(a) (1), 1123(a) tlH „.no 
(2), 1123(a)(3), 1123(a)(4), 1123(a)(5), 1123(b), 1124, 1125, 1126 iHTf^d 
(a), 1126(b), 1126(c), 1126(e), 1126(f), 1126(g), 1127(d), 1128,1129 2592! 2596! 
(a) (2), 1129(a) (3), 1129(a) (8), 1129(a) (10), 1129(b) (1), 1129(b) 2597, 
(2) (A), 1129(b) (2) (B), 1142(b), 1143, 1144, and 1145 of this title 2600-2602. 
apply in a case under this chapter. 
(b) A term used in a section of this title made applicable in a 
case under this chapter by subsection (a) of this section or section 
103(e) of this title has the meaning defined for such term for the Ante, p. 2555. 
purpose of such applicable section, unless such term is otherwise defined 
in section 902 of this title. 
92 STAT. 2622 
PUBLIC LAW 95-598—NOV. 6, 1978 
(c) A section made applicable in a case under this chapter by sub-
section (a) of this section that is operative if the business of the 
debtor is authorized to be operated is operative in a case under this 
chapter. 
11 use 902. 
§ 902. Definitions for this chapter 
In this chapter— 
(1) "property of the estate", when used in a section that is 
Ante, p. 2555. 
made applicable in a case under this chapter by section 103(e) 
or 901 of this title, means property of the debtor; 
(2) "special tax payer" means record owner or holder of title, 
legal or equitable, to real property against which has been levied a 
special assessment or special tax the proceeds of which are the 
sole source of payment of an obligation issued by the debtor to 
defray the cost oi an improvement relating to such real property; 
(3) "special tax payer affected by the plan" means special tax 
payer with respect to whose real property the plan proposes to 
increase the proportion of special assessments or special taxes 
referred to in paragraph (2) of this section assessed against such 
real property; and 
(4) "trustee", when used in a section that is made applicable 
in a case under this chapter by section 103(e) or 901 of this title, 
means debtor, except as provided in section 926 of this title. 
11 use 903. 
§ 903. Reservation of State power to control municipalities 
This chapter does not limit or impair the power of a State to 
control, by legislation or otherwise, a municipality of or in such State 
in the exercise of the political or governmental powers of such munici-
pality, including expenditures for such exercise, but— 
(1) a State law prescribing a method of composition of indebt-
edness of such municipality may not bind any creditor that does 
not consent to such composition; and 
(2) a judgment entered under such a law may not bind a cred-
itor to that does not consent to such composition. 
11 use 904. 
§ 904. Limitation on jurisdiction and powers of court 
Notwithstanding any power of the court, unless the debtor consents 
or the plan so provides, the court may not, by any stay, order, or decree, 
in the case or otherwise, interfere with— 
(1) any of the political or governmental powers of the debtor; 
(2) any of the property or revenues of the debtor; or 
(3) the debtor's use or enjoyment of any income-producing 
property. 
'' 
SUBCHAPER II—ADMINISTRATION 
11 use 921. 
§ 921. Petition and proceedings relating to petition 
Ante, pp. 2557, 
(a) Notwithstanding sections 109(c) and 301 of this title, a case 
2558. 
under this chapter concerning an unincorporated tax or special assess-
ment district that does not have such district's own officials is com-
menced by the filing under section 301 of this title of a petition under 
this chapter by such district's governing authority or the board or 
body having authority to levy taxes or assessments to meet the obliga-
tions of such district. 
(b) The chief judge of the court of appeals for the circuit embrac-
ing the district in which the case is commenced shall designate the 
bankruptcy judge to conduct the case. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2623 
(c) After an objection to the petition, the court, after notice and 
a hearing, may dismiss the petition, if the debtor did not file the peti-
tion in good faith, or if the petition does not meet the requirements of 
this title. 
(e) If the petition is not dismissed under subsection (d) of this 
section, the court shall order relief under this chapter. 
(f) The court may not, on account of an appeal from an order for 
relief, delay any proceeding under this chapter in the case in which 
the appeal is being taken; nor shall any court order a stay of such pro-
ceeding pending such appeal. The reversal on appeal of a finding of 
jurisdiction does not affect the validity of any debt incurred that is 
authorized by the court under section 364:(c) or 364(d) of this title, ^nte, p. 2574. 
§ 922. Automatic stay of enforcement of claims against the H USC 922. 
debtor 
(a) A petition filed under this chapter operates as a stay, in addi-
tion to the stay provided by section 362 of this title, applicable to all Ante, p. 2570. 
entities, of— 
(1) the commencement or continuation, including the issuance 
or employment of process, of judicial, administrative, or other 
y. 
• , ,• 
proceeding against an officer or inhabitant of the debtor that seeks 
to enforce a claim against the debtor; and 
(2) the enforcement of a lien on or arising out of taxes or 
assessments owed to the debtor. 
(b) Subsections (c), (d), (e), (f), and (g) of section 362 of this 
title apply to a stay under subsection (a) of this section the same as 
•'' 
' ' • 
such subsections apply to a stay under section 362(a) of this title. 
§ 923. Notice 
11 USC 923. 
There shall be given notice of the commencement of a case under 
; • ,,, , 
this chapter, notice of an order for relief under this chapter, and 
notice of the dismissal of a case under this chapter. Such notice shall 
also be published at least once a week for three successive weeks in 
at least one newspaper of general circulation published within the 
district in which the case is commenced, and in such other newspaper 
having a general circulation among bond dealers and bondholders as 
the court designates. 
§ 924. List of creditors 
11 USC 924. 
The debtor shall file a list of creditors. 
§ 925. Effect of list of claims 
11 USC 925. 
A proof of claim is deemed filed under section 501 of this title for any 
claim that appears in the list filed under section 924 of this title, except 
a claim that is listed as disputed, contingent, or unliquidated. 
§ 926. Avoiding powers 
11 USC 926. 
If the debtor refuses to pursue a cause of action under section 544, Ante, pp. 
545, 547, 548, 549(a), or 550 of this title, then on request of a creditor, 2596, 2597, 
the court may appoint a trustee to pursue such cause of action. 
2600, 2601. 
§ 927. Dismissal 
11 USC 927. 
(a) After notice and a hearing, the court may dismiss a case under Notice and 
this chapter for cause, including— 
hearing. 
(1) want of prosecution ; 
(2) unreasonable delay by the debtor that is prejudicial to 
creditors; 
(3) failure to propose a plan within the time fixed under section 
941 of this title; 
92 STAT. 2624 
PUBLIC LAW 95-598—NOV. 6, 1978 
(4) if a plan is not accepted within any time fixed by the court; 
(5) denial of confirmation of a plan under section 943(b) of 
this title and denial of additional time for filing another plan or 
a modification of a plan; or 
(6) if the court has retained jurisdiction after confirmation 
of apian— 
(A) material default by the debtor with respect to a term 
of such plan; or 
(B) termination of such plan by reason of the occurrence 
of a condition specified in such plan. 
(b) The court shall dismiss a case under this chapter if confirma-
tion is refused. 
SUBCHAPTER III—THE PLAN 
11 use 941. 
§ 941. Filing of plan 
The debtor shall file a plan for the adjustment of the debtor's debts. 
If such a plan is not filed with the petition, the debtor shall file such a 
plan at such later time as the court fixes. 
11 use 942. 
§ 942. Modification of plan 
The debtor may modify the plan at any time before confirmation, 
but may not modify the plan so that the plan as modified fails to meet 
the requirements of this chapter. After the debtor files a modification, 
the plan as modified becomes the plan. 
11 use 943. 
§ 943. Confirmation 
(a) A special tax payer may object to confirmation of a plan. 
(b) The court shall confirm the plan if— 
(1) the plan complies with the provisions of this title made 
Ante, p. 2555. 
applicable by sections 103 (e) and 901 of this title ; 
(2) the plan complies with the provisions of this chapter; 
(3) all amounts to be paid by the debtor or by any person for 
services or expenses in the case or incident to the plan have been 
fully disclosed and are reasonable; 
(4) the debtor is not prohibited by law from taking any action 
necessary to be taken to carry out the plan; 
(5) the plan provides that each holder of a claim of the kind 
Ante, p. 2583. 
specified in section 507(a) (1) of this title will receive, on account 
of such claim, property of a value, as of the effective date of the 
plan, equal to the allowed amount of such claim, except to the 
extent that the holder of a particular claim of such kind has 
waived such payment on such claim; and 
(6) the plan is in the best interests of creditors and is feasible. 
11 use 944. 
§ 944. Effect of confirmation 
(a) The provisions of a confirmed plan bind the debtor and any 
creditor, whether or not— 
(1) a proof of such creditor's claim is filed or deemed filed under 
Ante, p. 2578. 
section 501 of this title; 
Ante, p. 2579. 
(2) such claim is allowed under section 502 of this title; or 
(3) such creditor has accepted the plan. 
(b) Except as provided in subsection (c) of this section, the debtor is 
discharged from all debts as of the time when— 
(1) the plan is confirmed; 
(2) the debtor deposits any consideration to be distributed under 
the plan with a disbursing agent appointed by the court; and 
(3) the court has determined— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2625 
(A) that any security so deposited will constitute, after dis-
tribution, a valid legal obligation of the debtor; and 
(B) that any provision made to pay or secure payment of 
such obligation is valid. 
(c) The debtor is not discharged under subsection (b) of this section 
from any debt— 
(1) excepted from discharge by the plan or order confirming 
the plan; or 
(2) owed to an entity that, before confirmation of the plan, had 
neither notice nor actual knowledge of the case. 
§ 945. Continuing jurisdiction and closing of the case 
H USC 945. 
(a) The court may retain jurisdiction over the case for such period 
of time as is necessary for the successful execution of the plan. 
(b) Except as provided in subsection (a) of this section, the court 
shall close the case when administration of the case has been completed. 
§ 946. Effect of exchange of securities before the date of the filing H U
S
C 946. 
of the petition 
The exchange of a new security under the plan for a claim covered 
by the plan, whether such exchange occurred before or after the date 
of the filing of the petition, does not limit or impair the effectiveness 
of the plan or of any provision of this chapter. The amount and num-
ber specified in section 1126(c) of this title include the amount and 
number of claims formerly held by a creditor that has participated 
in any such exchange. 
CHAPTER 11—REORGANIZATION 
SUBCHAPTER I—OFFICERS AND ADMINISTRATION 
Sec. 
1101. Definitions for this chapter. 
; 
, i 
1102. Creditors' and equity security holders' committees. 
f 
1103. Powers and duties of committees. 
1104. Appointment of trustee or examiner. 
1105. Termination of trustee's appointment. 
1106. Duties of trustee and examiner. 
1107. Rights, powers, and duties of debtor in possession. 
1108. Authorization to operate business. 
1109. Right to be heard. 
1110. Aircraft equipment and vessels. 
1111. Claims and interests. 
1112. Conversion or dismissal. 
SUBCHAPTER II—THE PLAN 
1121. Who may file a plan. 
1122. Classification of claims or interests. 
1123. Contents of plan. 
1124. Impairment of claims or interests. 
1125. Postpetition disclosure and solicitation. 
1126. Acceptance of plan. 
1127. Modification of plan. 
1128. Confirmation hearing. 
1129. Confirmation of plan. 
SUBCHAPTER III—POSTCONFIRMATION MATTERS 
1141. Effect of confirmation. 
1142. Execution of plan. 
1143. Distribution. 
-
1144. Revocation of an order of confirmation. 
-, . 
1145. Exemption from securities laws. 
1146. Special tax provisions. 
aQ-lQ4 n
8 n
n t
9.
8R • oi\n
92 STAT. 2626 
PUBLIC LAW 95-598—NOV. 6, 1978 
SUBCHAPTER IV—RAILROAD REORGANIZATION 
Sec. 
1161. Inapplicability of other sections. 
1162. Definition. 
1163. Appointment of trustee. 
1164. Right to be heard. 
1165. Protection of the public interest. 
1166. Effect of Interstate Commerce Act and of Federal, State, or local 
regulations. 
1167. Collective bargaining agreements. 
1168. Rolling stock equipment. 
1169. Effect of rejection of lease of railroad line. 
,:;'• 
1170. Abandonment of railroad line. 
- .-
1171. Priority claims. 
1172. Contents of plan. 
1173. Confirmation of plan. 
- 
. ' 
1174. Liquidation. 
SUBCHAPTER I—OFFICERS AND ADMINISTRATION 
11 use 1101. 
§ 1101. Definitions for this chapter 
In this chapter— 
(1) "debtor in possession" means debtor except when a person 
Ante, p. 2562. 
that has qualified under section 322 of this title is serving as 
trustee in the case; 
(2) "substantial consummation" means— 
^v i... 
(A) transfer of all or substantially all of the property 
proposed by the plan to be transferred; 
(B) assumption by the debtor or by the successor to the 
debtor under the plan of the business or of the management 
of all or substantially all of the property dealt with by the 
plan; and 
(C) commencement of distribution under the plan. 
11 use 1102. 
§ 1102. Creditors' and equity security holders' committees 
(a) (1) As soon as practicable after the order for relief under this 
chapter, the court shall appoint a committee of creditors holding 
unsecured claims. 
(2) On request of a party in interest, the court may order the 
appointment of additional committees of creditors or of equity security 
holders if necessary to assure adequate representation of creditors or 
of equity security holders. The court shall appoint any such committee. 
(b) (1) A committee of creditors appointed under subsection (a) of 
this section shall ordinarily consist of the persons, willing to serve, 
that hold the seven largest claims against the debtor of the kinds 
represented on such committee, or of the members of a committee 
organized by creditors before the order for relief under this chapter, 
if such committee was fairly chosen and is representative of the 
different kinds of claims to be represented. 
(2) A committee of equity security holders appointed under sub-
section (a) (2) of this section shall ordinarily consist of the persons, 
willing to serve, that hold the seven largest amounts of equity securities 
of the debtor of the kinds represented on such committee. 
(c) On request of a party in interest and after notice and a hearing, 
the court may change the membership or the size of a committee 
appointed under subsection (a) of this section if the membership of 
such committee is not representative of the different kinds of claims 
or interests to be represented. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2627 
§ 1103. Powers and duties of committees 
H USC 1103. 
(a) At a scheduled meeting of a committee appointed under section 
1102 of this title, at which a majority of the members of such committee 
are present, and with the court's approval, such committee may select 
and authorize the employment by such committee of one or more 
attorneys, accountants, or other agents, to represent or perform services 
for such committee. 
(b) A person employed to represent a committee appointed under 
section 1102 of this title may not, while employed by such committee, 
represent any other entity in connection with the case. 
(c) A committee appointed under section 1102 of this title may— 
(1) consult with the trustee or debtor in possession concerning 
the administration of the case ; 
(2) investigate the acts, conduct, assets, liabilities, and financial 
condition of the debtor, the operation of the debtor's business and 
the desirability of the continuance of such business, and any other 
matter relevant to the case or to the formulation of a plan; 
(3) participate in the formulation of a plan, advise those 
represented by such committee of such committee's recommenda-
i, 
tions as to any plan formulated, and collect and file with the court 
acceptances of a plan; 
(4) request the appointment of a trustee or examiner under 
section 1104 of this title, if a trustee or examiner, as the case may ^"fi^ 
be, has not previously been appointed under this chapter in the 
case; and 
(5) perform such other services as are in the interest of those 
represented. 
(d) As soon as practicable after the appointment of a committee 
under section 1102 of this title, the trustee shall meet with such 
committee to transact such business as may be necessary and proper. 
§ 1104. Appointment of trustee or examiner 
^^ ^^^ ^^^'** 
(a) At any time after the commencement of the case but before 
confirmation of a plan, on request of a party in interest, and after 
notice and a hearing, the court shall order the appointment of a 
trustee— 
(1) for cause, including fraud, dishonesty, incompetence, or 
gross mismanagement of the affairs of the debtor by current 
management, either before or after the commencement of the 
case, or similar cause, but not including the number of holders of 
securities of the debtor or the amount of assets or liabilities of 
' 
the debtor; or 
(2) if such appointment is in the interests of creditors, any 
equity security holders, and other interests of the estate, without 
regard to the number of holders of securities of the debtor or the 
amount of assets or liabilities of the debtor. 
(b) If the court does not order the appointment of a trustee under 
this section, then at any time before the confirmation of a plan, on 
request of a party in interest, and after notice and a hearing, the court 
shall order the appointment of an examiner to conduct such an investi-
gation of the debtor as is appropriate, including an investigation of 
any allegations of fraud, dishonesty, incompetence, misconduct, mis-
management, or irregularity in the management of the affairs of the 
debtor of or by current or former management of the debtor, if— 
(1) such appointment»is in the interests of creditors, any equity 
:.; ^ 
security holders, and other interests of the estate; or 
92 STAT. 2628 
PUBLIC LAW 95-598—NOV. 6, 1978 
.: ;s: jti-! 
(2) the debtor's fixed, liquidated, unsecured debts, other than 
debts for goods, services, or taxes, or owing to an insider, exceed 
$5,000,000. 
(c) If the court orders the appointment of a trustee or an examiner, 
if a trustee or an examiner dies or resigns during the case or is removed 
Ante, p. 2562. 
under section 324 of this title, or if a trustee fails to qualify under 
Ante, p. 2562. 
section 322 of this title, then the court shall appoint one disinterested 
person to serve as trustee or examiner, as the case may be, in the case. 
11 use 1105. 
§ 1105. Termination of trustee's appointment 
At any time before confirmation of a plan, on request of a party in 
interest, and after notice and a hearing, the court may terminate the 
trustee's appointment and restore the debtor to possession and manage-
ment of the property of the estate, and operation of the debtor's 
business. 
11 use 1106. 
§1106. Duties of trustee and examiner 
(a) A trustee shall— 
Ante, p. 2605. 
(1) perform the duties of a trustee specified in sections 704(2), 
704(4), 704(6), 704(7), and 704(8) of this title; 
(2) if the debtor has not done so, file the list, schedule, and 
Ante, p. 2586. 
statement required under section 521 (1) of this title; 
(3) except to the extent that the court orders otherwise, investi-
gate the acts, conduct, assets, liabilities, and financial condition 
of the debtor, the operation of the debtor's business and the desir-
ability of the continuance of such business, and any other matter 
relevant to the case or to the formulation of a plan; 
(4) as soon as practicable— 
(A) file a statement of any investigation conducted under 
paragraph (3) of this subsection, including any fact ascer-
tained pertaining to fraud, dishonesty, incompetence, mis-
. '-JL * 
' 
conduct, mismanagement, or irregularity in the management 
, , 
of the affairs of the debtor, or to a cause of action available 
to the estate; and 
(B) transmit a copy or a summary of any such statement 
to any creditors' committee or equity security holders' com-
mittee, to any indenture trustee, and to such other entity as 
the court designates; 
(5) as soon as practicable, file a plan under section 1121 of this 
title, file a report of why the trustee will not file a plan, or recom-
Ante, p. 2603. 
mend conversion of the case to a case under chapter 7 or 13 of this 
title or dismissal of the case; 
(6) for any year for which the debtor has not filed a tax return 
required by law, furnish, without personal liability, such infor-
mation as may be required by the governmental unit with which 
such tax return was to be filed, in light of the condition of the 
debtor's books and records and the availability of such informa-
tion; and 
(7) after confirmation of a plan, file such reports as are neces-
sary or as the court orders. 
(b) An examiner appointed under section 1104(c) of this title shall 
perform the duties specified in paragraphs (3) and (4) of subsection 
(a) of this section, and any other duties of the trustee that the court 
orders the debtor in possession not to perform. 
11 use 1107. 
§ 1107. Rights, powers, and duties of debtor in possession 
(a) Subject to any limitations on a trustee under this chapter, and 
to such limitations or conditions as the court prescribes, a debtor in 
possession shall have all the rights, other than the right to compensa-
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2629 
tion under section 330 of this title, and powers, and shall perform all Ante, p. 2564. 
the functions and duties, except the duties specified in sections 1106(a) 
(2), (3), and (4) of this title, of a trustee serving in a case under this 
chapter. 
(b) Notwithstanding section 327(a) of this title, a person is not Ante, p. 2563. 
disqualified for employment under section 327 of this title by a debtor 
in possession solely because of such person's employment by or repre-
sentation of the debtor before the commencement of the case. 
§ 1108. Authorization to operate business 
H USC 1108. 
Unless the court orders otherwise, the trustee may operate the 
debtor's business. 
§ 1109. Right to be heard 
H USC 1109. 
(a) The Securities and Exchange Commission may raise and may 
appear and be heard on any issue in a case under this chapter, but 
the Securities and Exchange Commission may not appeal from any 
judgment, order, or decree entered in the case. 
(b) A party in interest, including the debtor, the trustee, a creditors' 
v 
committee, an equity security holders' committee, a creditor, an equity 
security holder, or any indenture trustee, may raise and may appear 
and be heard on any issue in a case under this chapter. 
§ 1110. Aircraft equipment and vessels 
11 USC 1110. 
(a) The right of a secured party with a purchase-money equipment 
security interest in, or of a lessor or conditional vendor of, whether 
as trustee or otherwise, aircraft, aircraft engines, propellers, appli-
ances, or spare parts, as defined in section 101 of the Federal Aviation 
Act of 1958 (49 U.S.C. 1301), or vessels of the United States, as defined 
in subsection B (4) of the Ship Mortgage Act, 1920 (46 U.S.C. 911 (4)), 
that are subject to a purchase-money equipment security interest 
granted by, leased to, or conditionally sold to, a debtor that is an air 
carrier operating under a certificate of convenience and necessity issued 
by the Civil Aeronautics Board, or a water carrier that holds a certifi-
cate of public convenience and necessity or permit issued by the 
Interstate Commerce Commission, as the case may be, to take posses-
sion of such equipment in compliance with the provisions of a 
purchase-money equipment security agreement, lease, or conditional 
sale contract, as the case may be, is not affected by section 362 or 363 Ante, pp. 2570, 
of this title or by any power of the court to enjoin such taking of 2572. 
possession, unless— 
(1) before 60 days after the date of the order for relief under 
this chapter, the trustee, subject to the court's approval, 
agrees to perform all obligations of the debtor that become due 
on or after such date under such security agreement, lease, or 
conditional sale contract, as the case may be; and 
(2) any default, other than a default of a kind specified in 
section 365(b)(2) of this title, under such security agreement, Ante, p. 2574,. 
lease, or conditional sale contract, as the case may be— 
(A) that occurred before such date is cured before the 
expiration of such 60-day period; and 
(B) that occurs after such date is cured before the later 
of— 
n) 30 days after the date of such default; and 
(ii) the expiration of such 60-day period. 
(b) The trustee and the secured party, lessor, or conditional vendor, 
as the case may be, whose right to take possession is protected under 
92 STAT. 2630 
PUBLIC LAW 95-598—NOV. 6, 1978 
subsection (a) of this section may a^ee, subject to the court's approval, 
to extend the 60-day period specified in subsection (a) (1) of this 
section. 
. 
11 use nil. 
§ n i l . Claims and interests 
Ante, p. 2578. 
(a-) A proof of claim or interest is deemed filed under section 501 
of this title for any claim or interest that appears in the schedules 
Ante, p. 2586. 
filed 
under section 521(1) or 1106(a) (2) of this title, except a claim 
or interest that is scheduled as disputed, contingent, or unliquidated. 
(b)(1)(A) A claim secured by a lien on property of the estate shall 
Ante, p. 2579. 
be allowed or disallowed under section 502 of this title the same as if 
the holder of such claim had recourse against the debtor on account of 
such claim, whether or not such holder has such recourse, unless— 
(i) the class of which such claim is a part elects, by at least 
two-thirds in amount and more than half in number of allowed 
claims of such class, application of paragraph (2) of this sub-
• section; or 
(ii) such holder does not have such recourse and such property 
Ante, p. 2572. 
is sold under section 363 of this title or is to be sold under the 
plan. 
(B) A class of claims may not elect application of paragraph (2) 
of this subsection if— 
' 
' 
' ' 
(i) the interest on account of such claims of the holders of such 
claims in such property is of inconsequential value; or 
(ii) the holder of a claim of such class has recourse against the 
debtor on account of such claim and such property is sold under 
section 363 of this title or is to be sold under the plan. 
(2) If such an election is made, then notwithstanding section 
Ante, p. 2583. 
506(a) of this title, such claim is a secured claim to the extent that 
such claim is allowed. 
11 use 1112. 
§ 1112. Conversion or dismissal 
(a) The debtor may convert a case under this chapter to a case 
Ante, p. 2603. 
under chapter 7 of this title unless— 
(1) the debtor is not a debtor in possession; 
(2) the case is an involuntary case originally commenced under 
this chapter; or 
(3) the case was converted to a case under this chapter on other 
' 
than the debtor's request. 
Notice and 
(b) Except as provided in subsection (c) of this section, on request 
hearing. 
of a party in interest, and after notice and a hearing, the court may 
convert a case under this chapter to a case under chapter 7 of this 
title or may dismiss a case under this chapter, whichever is in the 
best interest of creditors and the estate, for cause, including— 
(1) continuing loss to or diminution of the estate and absence 
of a reasonable likelihood of rehabilitation; 
(2) inability to effectuate a plan; 
(3) unreasonable delay by the debtor that is prejudicial to 
creditors; 
(4) failure to propose a plan under section 1121 of this title 
within any time fixed by the court; 
^' ^ 
(5) denial of confirmation of every proposed plan and denial 
of additional time for filing another plan or a modification of 
a plan; 
(6) revocation of an order of confirmation under section 1144 
of this title, and denial of confirmation of another plan or a 
modified plan under section 1129 of this title; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2631 
(7) inability to effectuate substantial consummation of a con-
firmed plan; 
(8) material default by the debtor with respect to a confirmed 
plan; and 
(9) termination of a plan by reason of the occurrence of a 
condition specified in the plan. 
(c) The court may not convert a case under this chapter to a case 
under chapter 7 of this title if the debtor is a farmer or a corpora- Ante, p. 2603. 
tion that is not a moneyed, business, or commercial corporation, unless 
the debtor requests such conversion. 
(d) The court may convert a case under this chapter to a case 
under chapter 13 of this title only if— 
(1) the debtor requests such conversion; and 
(2) the debtor has not been discharged under section 1141(d) 
of this title. 
(e) Notwithstanding any other provision of this section, a case 
may not be converted to a case under another chapter of this title 
unless the debtor may be a debtor under such chapter. 
SUBCHAPTER II—THE PLAN 
§ 1121. Who may file a plan 
11 USC 1121. 
(a) The debtor may file a plan with a petition commencing a volun-
tary case, or at any time in a voluntary case or an involuntary case. 
(b) Except as otherwise provided in this section, only the debtor 
may file a plan until after 120 days after the date of the order for 
relief under this chapter. 
(c) Any party in interest, including the debtor, the trustee, a 
creditors' committee, an equity security holders' committee, a creditor, 
an equity security holder, or any indenture trustee, may file a plan if 
and only if— 
(1) a trustee has been appointed under this chapter; 
(2) the debtor has not filed a plan before 120 days after the 
date of the order for relief under this chapter; or 
(3) the debtor has not filed a plan that has been accepted, 
before 180 days after the date of the order for relief under this 
chapter, by each class the claims or interests of which are 
impaired under the plan. 
(d) On request of a party in interest and after notice and a hear-
ing, the court may for cause reduce or increase the 120-day period or 
the 180-day period referred to in this section. 
§ 1122. Classification of claims or interests 
11 USC 1122. 
(a) Except as provided in subsection (b) of this section, a plan 
may place a claim or an interest in a particular class only if such 
claim or interest is substantially similar to the other claims or inter-
ests of such class. 
(b) A plan may designate a separate class of claims consisting 
only of every unsecured claim that is less than or reduced to an 
amount that the court approves as reasonable and necessary for 
administrative convenience. 
§ 1123. Contents of plan 
11 USC 1123. 
(a) A plan shall— 
(1) designate, subject to section 1122 of this title, classes of 
claims other than claims of a kind specified in section 507(a) (1), Ante, p. 2583. 
507(a) (2), or 507(a) (6) of this title and classes of interests; 
(2) specify any class of claims or interests that is not 
impaired under the plan; 
92 STAT. 2632 
PUBLIC LAW 95-598—NOV. 6, 1978 
(3) shall specify the treatment of any class of claims or inter-
ests that is impaired under the plan; 
(4) provide the same treatment for each claim or interest of 
a particular class, unless the holder of a particular claim or 
interest agrees to a less favorable treatment of such particular 
claim or interest; 
(5) provide adequate means for the plan's execution, such as— 
• 
' 
(A) retention by the debtor of all or any part of the 
property of the estate; 
(B) transfer of all or any part of the property of the estate 
to one or more entities, whether organized before or after the 
confirmation of such plan; 
(C) merger or consolidation of the debtor with one or more 
persons; 
(D) sale of all or any part of the property of the estate, 
either subject to or free of any lien, or the distribution of 
all or any part of the property of the estate among those 
having an interest in such property of the estate; 
(E) satisfaction or modification of any lien; 
(F) cancellation or modification of any indenture or simi-
j J 
; M
: . 
lar instrument; 
(G) curing or waiving any default; 
(H) extension of a maturity date or a change in an interest 
rate or other term of outstanding securities; 
(I) amendment of the debtor's charter; or 
(J) issuance of securities of the debtor, or of any entity 
referred to in subparagraph (B) or (C) of this paragraph, 
for cash, for property, for existing securities, or in exchange 
for claims or interests, or for any other appropriate purpose; 
(6) provide for the inclusion in the charter of the debtor, if the 
debtor is a corporation, or of any corporation referred to in para-
graph (5) (B) or (5) (C) of this subsection, of a provision pro-
hibiting the issuance of nonvoting equity securities, and providing, 
as to the several classes of securities possessing voting power, an 
appropriate distribution of such power among such classes, includ-
ing, in the case of any class of equity securities having a preference 
over another class of equity securities with respect to dividends, 
adequate provisions for the election of directors representing such 
preferred class in the event of default in the payment of such 
dividends; and 
(7) contain only provisions that are consistent with the interests 
ivxli V... 1
.
1 
of creditors and equity security holders and with public policy 
with respect to the manner of selection of any officer, director, or 
trustee under the plan and any successor to such officer, director, 
or trustee, 
(b) Subject to subsection (a) of this section, a plan may— 
(1) impair or leave unimpaired any class of claims, secured or 
unsecured, or of interests; 
Ante, p. 2574. 
(2) subject to section 365 of this title, provide for the assump-
tion or rejection of any executory contract or unexpired lease of 
j. 
> r j ; 
the debtor not previously rejected under section 365 of this title; 
(3) provide for— 
(A) the settlement or adjustment of any claim or interest 
,^ . 
belonging to the debtor or to the estate; or 
6?5- :; (
V
-
'
s 
^-g^ ^j^g retention and enforcement by the debtor, by the 
trustee, or by a representative of the estate appointed for such 
purpose, of any such claim or interest; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2633 
(4) provide for the sale of all or substantially all of the prop-
erty of the estate, and the distribution of the proceeds of such sale 
among holders of claims or interests; and 
(5) include any other appropriate provision not inconsistent 
with the applicable provisions of this title. 
(c) In a case concerning an individual, a plan proposed by an entity 
other than the debtor may not provide for the use, sale, or lease of 
property exempted under section 5'22 of this title, unless the debtor Ante, p. 2586. 
consents to such use, sale, or lease. 
§ 1124. Impairment of claims or interests 
11 USC 1124. 
Except as provided in section 1123(a) (4) of this title, a class of 
claims or interests is impaired under a plan unless, with respect to 
each claim or interest of such class, the plan— 
(1) leaves unaltered the legal, equitable, and contractual rights 
to which such claim or interest entitles the holder of such claim or 
interest; 
(2) notwithstanding any contractual provision or applicable 
law that entitles the holder of such claim or interest to demand or 
receive accelerated payment of such claim or interest after the 
occurrence of a default— 
(A) cures any such default, other than a default of a kind 
specified in section 365(b)(2) of this title, that occurred ^nte, p. 2574. 
before or after the commencement of the case under this title; 
(B) reinstates the maturity of such claim or interest as 
such maturity existed before such default; 
(C) compensates the holder of such claim or interest for 
any damages incurred as a result of any reasonable reliance 
by such holder on such contractual provision or such appli-
cable law; and 
(D) does not otherwise alter the legal, equitable, or con-
tractual rights to which such claim or interest entitles the 
holder of such claim or interest; or 
(3) provides that, on the effective date of the plan, the holder 
of such claim or interest receives, on account of such claim or 
interest, cash equal to— 
(A) with respect to a claim, the allowed amount of such 
' 
claim; or 
(B) with respect to an interest, if applicable, the 
greater of— 
(i) any fixed liquidation preference to which the terms 
of any security representing such interest entitle the 
holder of such interest; and 
(ii) any fixed price at which the debtor, under the 
terms of such security, may redeem such security from 
such holder. 
1125. Postpetition disclosure and solicitation 
(a) In this section— 
(1) "adequate information" means information of a kind, and 
in sufficient detail, as far as is reasonably practicable in light of 
the nature and history of the debtor and the condition of the 
debtor's books and records, that would enable a hypothetical 
reasonable investor typical of holders of claims or interests of the 
relevant class to make an informed judgment about the plan; and 
(2) "investor typical of holders of claims or interests of the 
relevant class" means investor having— 
11 USC 1125. 
"Adequate 
information. 
"Investor typical 
of holders of 
claims or 
interests of the 
relevant class." 
92 STAT. 2634 
PUBLIC LAW 95-598—NOV. 6, 1978 
(A) a claim or interest of the relevant class; 
; 
(B) such a relationship with debtor as the holders of other 
claims or interests of sucn class generally have; and 
(C) such ability to obtain such information from sources 
other than the disclosure required by this section as holders 
claims or interests in such class generally have. 
(b) An acceptance or rejection of a plan may not be solicited after 
the commencement of the case under this title from a holder of a claim 
or interest with respect to such claim or interest, unless, at the time of 
_ 
or before such solicitation, there is transmitted to such holder the plan 
or a summary of the plan, and a written disclosure statement approved, 
after notice and a hearing, by the court as containing adequate infor-
mation. The court may approve a disclosure statement without a 
valuation of the debtor or an appraisal of the debtor's assets. 
(c) The same disclosure statement shall be transmitted to each holder 
of a claim or interest of a particular class, but there may be transmitted 
different disclosure statements, differing in amount, detail, or kind of 
information, as between classes. 
(d) Whether a disclosure statement contains adequate information 
is not governed by any otherwise applicable nonbankruptcy law, rule, 
or regulation, but an agency or official whose duty is to administer or 
enforce such a law, rule, or regulation may be heard on the issue of 
i >; 
whether a disclosure statement contains adequate information. Such 
an agency or official may not appeal from an order approving a dis-
closure statement. 
(e) A person that solicits, in good faith and in compliance with the 
applicable provisions of this title, or that participates, in good faith 
and in compliance with the applicable provisions of this title, in the 
offer, issuance, sale, or purchase of a security, offered or sold under the 
plan, of the debtor, of an affiliate participating in a joint plan with the 
debtor, or of a newly organized successor to the debtor under the plan, 
is not liable, on account of such solicitation or participation, for viola-
tion of any applicable law, rule, or regulation governing the offer, issu-
ance, sale, or purchase of securities. 
11 use 1126. 
§ 1126. Acceptance of plan 
Ante, p. 2579. 
(a) The holder of a claim or interest allowed under section 502 of 
this title may accept or reject a plan. If the United States is a creditor 
or equity security holder, the Secretary of the Treasury may accept or 
reject the plan on behalf of the United States. 
(b) For the purposes of subsections (c) and (d) of this section, a 
holder of a claim or interest that has accepted or rejected the plan 
before the commencement of the case under this title is deemed to have 
accepted or rejected such plan, as the case may be, if— 
(1) the solicitation of such acceptance or rejection was in com-
pliance with any applicable nonbankruptcy law, rule, or regulation 
governing the adequacy of disclosure in connection with such 
solicitation; or 
(2) if there is not any such law, rule, or regulation, such accept-
ance or rejection was solicited after disclosure to such holder of 
adequate information, as defined in section 1125 (a) (1) of this title. 
(c) A class of claims has accepted a plan if such plan has been 
accepted by creditors, other than any entity designated under subsec-
tion (e) of this section, that hold at least two-thirds in amount and 
more than one-half in number of the allowed claims of such class held 
by creditors, other than any entity designated under subsection (e) of 
this section, that have accepted or rejected such plan. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2635 
(d) A class of interests has accepted a plan if such plan has been 
accepted by holders of such interests other than any entity designated 
under subsection (e) of this section, that hold at least two-thirds in 
amount of the allowed interests of such class held by holders of such 
interests, other than any entity designated under subsection (e) of 
this section, that have accepted or rejected such plan. 
(e) On request of a party in interest, and after notice and a hearing. Notice and 
the court may designate any entity whose acceptance or rejection of hearing, 
such plan was not in good faith, or was not solicited or procured in 
good laith or in accordance with the provisions of this title. 
(f) Notwithstanding any other provision of this section, a class that 
is not impaired under a plan is deemed to have accepted the plan, and 
solicititation of acceptances with respect to such class from the holders 
of claims or interest of such class is not required. 
(g) Notwithstanding any other provision of this section, a class is 
deemed not to have accepted a plan if such plan provides that the claims 
or interests of such class do not entitle the holders of such claims or 
interests to any payment or compensation under the plan on account of 
such claims or interests. 
§ 1127. Modification of plan 
H USC 1127. 
(a) The proponent of a plan may modify such plan at any time 
before confirmation, but may not modify such plan so that such plan 
as modified fails to meet the requirements of sections 1122 and 1123 of 
this title. After the proponent files a modification with the court, the 
plan as modified becomes the plan. 
(b) The proponent of a plan or the reorganized debtor may modify 
such plan at any time after confirmation of such plan and before sub-
stantial consummation of such plan, but may not modify such plan so 
that such plan as modified fails to meet the requirements of sections 
1122 and 1123 of this title. Such plan as modified under this subsection 
becomes the plan only if the court, after notice and a hearing, confirms 
such plan, as modified, under section 1129 of this title, and circum-
stances warrant such modification. 
(c) The proponent of a modification shall comply with section 1125 
of this title with respect to the plan as modified. 
(d) Any holder of a claim or interest that has accepted or rejected 
a plan is deemed to have accepted or rejected, as the case may be, such 
plan as modified, unless, within the time fixed by the court, such holder 
changes such holder's previous acceptance or rejection. 
§ 1128. Confirmation hearing 
H USC 1128. 
(a) After notice, the court shall hold a hearing on confirmation of a 
plan. 
(b) A party in interest may object to confirmation of a plan. 
§ 1129. Confirmation of plan 
11 USC 1129. 
(a) The court shall confirm a plan only if all of the following require-
ments are met: 
(1) The plan complies with the applicable provisions of this 
chapter. 
• 
(2) The proponent of the plan complies with the applicable 
provisions of this chapter. 
(3) The plan has been proposed in good faith and not by any 
means forbidden by law. 
(4) (A) Any payment made or promised by the proponent, by 
the debtor, or by a person issuing securities or acquiring property 
92 STAT. 2636 
PUBLIC LAW 95-598—NOV. 6, 1978 
under the plan, for services or for costs and expenses in, or in con-
nection with, the case, or in connection with the plan and incident 
to the case, has been disclosed to the court; and 
(B) (i) any such payment made before confirmation of the plan 
is reasonable; or 
(ii) if such payment is to be fixed after confirmation of the plan, 
such payment is subject to the approval of the court as reasonable. 
(5)(A)(i) The proponent of the plan has disclosed the identity 
and affiliations of any individual proposed to serve, after confir-
mation of the plan, as a director, officer, or voting trustee of the 
debtor, an affiliate of the debtor participating in a joint plan with 
the debtor, or a successor to the debtor under the plan; and 
(ii) the appointment to, or continuance in, such office of such 
individual, is consistent with the interests of creditors and equity 
security holders and with public policy. 
(B) The proponent of the plan has disclosed the identity of any 
insider that will be employed or retained by the reorganized 
debtor, and the nature of any compensation for such insider. 
(6) Any regulatory commission with jurisdiction, after con-
, 
y. 
firmation 
of the plan, over the rates of the debtor has approved 
any rate change provided for in the plan, or such rate change is 
expressly conditioned on such approval. 
(7) With respect to each class— 
(A) each holder of a claim or interest of such class— 
(i) has accepted the plan; or 
(ii) will receive or retain under the plan on account of 
such claim or interest property of a value, as of the effec-
tive date of the plan, that is not less than the amount that 
such holder would so receive or retain if the debtor were 
Ante, p. 2603. 
liquidated under chapter 7 of this title on such date; or 
(B) if section 1111 (b) (2) of this title applies to the claims 
of such class, each holder of a claim of such class vnll receive 
or retain under the plan on account of such claim property of 
a value, as of the effective date of the plan, that is not less than 
the value of such creditor's interest in the estate's interest in 
the property that secures such claims. 
C8) With respect to each class— 
(A) such class has accepted the plan; or 
(B) such class is not impaired under the plan. 
. 
(9) Except to the extent that the holder of a particular claim 
has agreed to a different treatment of such claim, the plan provides 
that— 
(A) with respect to a claim of a kind specified in section 
Ante, p. 2583. 
507(a) (1) or 507(a) (2) of this title, on the effective date of 
the plan, the holder of such claim will receive on account of 
such claim cash equal to the allowed amount of such claim; 
(B) with respect to a class of claims of a kind specified in 
section 507(a) (3), 507(a) (4), or 507(a) (5) of this title, each 
holder of a claim of such class will receive— 
(i) if such class has accepted the plan, deferred cash 
payments of a value, as of the effective date of the plan, 
equal to the allowed amount of such claim; or 
(ii) if such class has not accepted the plan, cash on the 
effective date of the plan equal to the allowed amount of 
such claim; and 
(C) with respect to a claim of a kind specified in section 
507(a) (6) of this title, the holder of such claim will receive 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2637 
on account of such claim deferred cash payments, over a 
period not exceeding six years after the date of assessment of 
such claim, of a value, as of the effective date of the plan, 
equal to the allowed amount of such claim. 
(10) At least one class of claims has accepted the plan, deter-
mined without including any acceptance of the plan by any insider 
holding a claim of such class. 
(11) Confirmation of the plan is not likely to be followed by the 
liquidation, or the need for further financial reorganization, of the 
debtor or any successor to the debtor under the plan, unless such 
liquidation or reorganization is proposed in the plan. 
(b)(1) Notwithstanding section 510(a) of this title, if all of Ante, p. 2586. 
the applicable requirements of subsection (a) of this section other than 
paragraph (8) are met with respect to a plan, the court, on request of 
the proponent of the plan, shall confirm the plan notwithstanding the 
requirements of such paragraph if the plan does not discriminate un-
fairly, and is fair and equitable, with respect to each class of claims or 
interests that is impaired under, and has not accepted, the plan. 
(2) For the purpose of this subsection, the condition that a plan be 
fair and equitable with respect to a class includes the following 
requirements: 
(A) With respect to a class of secured claims, the plan 
provides— 
(i) (I) that the holders of such claims retain the lien secur-
ing such claims, whether the property subject to such lien is 
retained by the debtor or transferred to another entity, to the 
extent of the allowed amount of such claims; and 
(II) that each holder of a claim of such class receive on 
account of such claim deferred cash payments totaling at least 
the allowed amount of such claim, of a value, as of the effective 
date of the plan, of at least the value of such holder's interest 
in the estate's interest in such property; 
(ii) for the sale, subject to section 363(k) of this title, of Ante, p. 2572. 
any property that is subject to the lien securing such claims, 
free and clear of such lien, with such lien to attach to the pro-
ceeds of such sale, and the treatment of such lien on proceeds 
under clause (i) or (iii) of this subparagraph; or 
(iii) for the realization by such holders of the indubitable 
equivalent of such claims. 
(B) With respect to a class of unsecured claims— 
(i) the plan provides that each holder of a claim of such 
class receive or retain on account of such claim property of a 
value, as of the effective date of the plan, equal to the allowed 
amoimt of such claim; or 
'
-
• * r 
(ii) the holder of any claim or interest that is junior to the 
claims of such class will not receive or retain on account of 
such junior claim or interest any property. 
(C) With respect to a class of interests— 
(i) the plan provides that each holder of an interest of such 
class receive or retain on account of such claim property of a 
value, as of the effective date of the plan, equal to the greatest 
of the allowed amount of any fixed liquidation preference to 
which such holder is entitled, any fixed redemption price to 
which such holder is entitled, and the value of such interest; or 
(ii) the holder of any interest that is junior to the 
interests of such class will not receive or retain under the plan 
on account of such junior interest any property. 
92 STAT. 2638 
PUBLIC LAW 95-598~NOV. 6, 1978 
(c) Notwithstanding subsections (a) and (b) of this section and 
except as provided in section 1127(b) of this title, the court may con-
firm only one plan, unless the order of confirmation in the case has 
been revoked under section 1144 of this title. If the requirements of 
subsections (a) and (b) of this section are met with respect to more 
than one plan, the court shall consider the preferences of creditors 
and equity security holders in determining which plan to confirm. 
(d) Notwithstanding any other provision of this section, on request 
of a party in interest that is a governmental unit, the court may not 
confirm a plan if the principal purpose of the plan is the avoidance 
of taxes or the avoidance of section 5 of the Securities Act of 1933 (15 
'•-'^-^••- 
U.S.C.77e). 
SUBCHAPTER III—POSTCONFIRMATION MATTERS 
11 use 1141. 
§ 1141. ElTect of confirmation 
(a) Except as provided in subsections (d) (2) and (d) (3) of this 
section, the provisions of a confirmed plan bind the debtor, any entity 
issuing securities under the plan, any entity acquiring property under 
the plan, and any creditor or equity security holder of, or general 
partner in, the debtor, whether or not the claim or interest of such 
creditor, equity security holder, or general partner is impaired under 
the plan and whether or not such creditor, equity security holder, or 
general partner has accepted the plan. 
(b) Except as otherwise provided in the plan or the order confirm-
ing the plan, the confirmation of a plan vests all of the property of 
the estate in the debtor. 
(c) After confirmation of a plan, the property dealt with by the 
plan is free and clear of all claims and interests of creditors, of equity 
security holders, and of general partners in the debtor, except as 
otherwise provided in the plan or in the order confirming the plan. 
(d) (1) Except as otherwise provided in this subsection, in the plan, 
or in the order confirming the plan, the confirmation of a plan— 
(A) discharges the debtor from any debt that arose before the 
date of such confirmation, and any debt of a kind specified in 
Ante, p. 2579. 
section 502(g), 502(h), or 502 (i) of this title, whether or not— 
(i) a proof of the claim based on such debt is filed or 
Ante, p. 2578. 
deemed filed under section 501 of this title; 
(ii) such claim is allowed under section 502 of this title; or 
(iii) the holder of such claim has accepted the plan; and 
(B) terminates all rights and interests of equity security hold-
ers and general partners provided for by the plan. 
(2) The confirmation of a plan does not discharge an individual 
Ante, p. 2590. 
debtor from any debt excepted from discharge under section 523 of 
this title. 
(3) The confirmation of a plan does not discharge a debtor if— 
(A) the plan provides for the liquidation of all or substantially 
all of the property of the estate; 
(B) the debtor does not engage in business after consummation 
of the plan; and 
(C) the debtor would be denied a discharge under section 
Ante, p. 2609. 
727(a) of this title if the case were a case under chapter 7 of this 
title. 
Waiver. 
(4) The court may approve a written waiver of discharge executed 
by the debtor after the order for relief under this chapter. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2639 
§ 1142. Execution of plan 
H USC 1142. 
(a) Notwithstanding any otherwise applicable nonbankruptcy law, 
rule, or regulation relating to financial condition, the debtor and any 
entity organized or to be organized for the purpose of carrying out the 
plan shall carry out the plan, and shall comply with any orders of the 
court. 
(b) The court may direct the debtor and any other necessary party 
to execute or deliver or to join in the execution or delivery of any 
instrument required to effect a transfer of propert;^ dealt with by con-
firmed plan, and to perform any other act, including the satisfaction 
of any lien, that is necessary for the consummation of the plan. 
§ 1143. Distribution 
H USC 1143. 
If a plan requires presentment or surrender of a security or the 
performance of any other act as a condition to participation in dis-
tribution under the plan, such action shall be taken not later than five 
years after the date of the entry of the order of confirmation. Any 
entity that has not within such time presented or surrendered such 
entity's security or taken any such other action that the plan requires 
may not participate in distribution under the plan. 
§ 1144. Revocation of an order of confirmation 
11 USC 1144. 
On request of a party in interest at any time before 180 days after 
the date of the entry of the order of confirmation, and after notice 
and a hearing, the court may revoke such order if such order was 
procured by fraud. An order under this section revoking an order of 
confirmation shall— 
(1) contain such provisions as are necessary to protect any 
entity accoutring rights in good faith reliance on the order of 
confirmation; and 
(2) revoke the discharge of the debtor. 
§ 1145. Exemption from securities laws 
H USC 1145. 
(a) Except with respect to an entity that is an underwriter as 
defined in subsection (b) of this section, section 5 of the Securities 
Act of 1933 (15 U.S.C. 77e) and any State or local law requiring 
registration for offer or sale of a security or registration or licensing 
of an is«uer of, underwriter of, or broker or dealer in, a security does 
not applv to— 
(1) the offer or sale under a plan of a security of the debtor, 
of an affiliate participating in a joint plan with the debtor, or of 
a successor to the debtor under the plan— 
CA) in exchange for a claim against, an interest in, or a 
claim for an administrative expense in the case concerning, 
the debtor or such affiliate; or 
(B) principally in such exchange and partly for cash or 
property; 
(2) the offer of a security through any warrant, option, right 
to subscribe, or conversion privilege that was sold in the manner 
specified in paragraph (1) of this subsection, or the sale of a se-
curitv upon the exercise of such a warrant, option, right, or 
privilege; 
(3)^ the offer or sale, other than under a plan, of a security 
of an issuer other than the debtor or an afiiliate, if— 
(A) such security was owned by the debtor on the date of 
the filing of the petition; 
(B) the issuer of such security is— 
92 STAT. 2640 
PUBLIC LAW 95-598—NOV. 6, 1978 
(i) required to file reports under section 13 of the Secu-
rities Exchange Act of 1934 (15 U.S.C. 78m); and 
(ii) in compliance with all applicable requirements 
for the continuance of trading in such security on the 
date of such offer or sale; and 
(C) such offer or sale is of securities that do not exceed— 
(i) during the two-year period immediately following 
the date of the filing of the petition, four percent of the 
securities of such class outstanding on such date; and 
(ii) during any 180-day period following such two-
year period, one percent of the securities outstanding at 
the beginning of such 180-day period; or 
(4) a transaction by a stockholder in a security that is executed 
after a transaction of a kind specified in paragraph (1) or (2) 
of this subsection in such security and before the expiration of 
40 days after the first date on which such security was bona fide 
offered to the public by the issuer or by or through an under-
writer, if such stockbroker provides, at the time of or before such 
transaction by such stockholder, a disclosure statement approved 
under section 1125 of this title, and, if the court orders, informa-
tion supplementing such disclosure statement. 
' 
' 
" 
(b)(1) Except as provided in paragraph (2) of this subsection, an 
entity is an underwriter under section 2(11) of the Securities Act of 
1933 (15 U.S.C. 77b (11)), if such entity— 
(A) purchases a claim against, interest in, or claim for an 
administrative expense in the case concerning, the debtor, if such 
purchase is with a view to distribution of any security received 
or to be received in exchange for such a claim or interest; 
(B) offers to sell securities offered or sold under the plan for 
the holders of such securities; 
(C) offers to buy securities offered or sold under the plan for 
-:A4I D'i J : 
the holders of such securities, if such offer to buy is— 
(i) with a view to distribution of such securities; and 
(ii) under an agreement made in connection with the plan, 
with the consummation of the plan, or with the offer or sale 
of securities under the plan; or 
(D) is an issuer, as used in such section 2(11), with respect to 
such securities. 
(2) An entity is not an underwriter under section 2(11) of the 
Securities Act of 1933 or under paragraph (1) of this subsection with 
respect to an agreement that provides only for— 
(A) (i) the matching combination of fractional interests in 
securities offered or sold under the plan into whole interests; or 
(ii) the purchase or sale of such fractional interests among 
entities receiving such fractional interests under the plan; or 
(B) the purchase or sale for such entities of such fractional 
or whole interests as are necessary to adjust for any remaining 
fractional interests after such matching. 
(3) An entity other than an entity of the kind specified in para-
graph (1) of this subsection is not an underwriter under section 2(11) 
of the Securities Act of 1933 with respect to any securities offered or 
sold to such entity in the manner specified in subsection (a) (1) of this 
section. 
(c) An offer or sale of securities of the kind and in the manner 
specified under subsection (a)(1) of this section is deemed to be a 
public offering. 
^. ,,, 
_ „ .. 
,. .. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2641 
(d) The Trust Indenture Act of 1939 (15 U.S.C. 77aaa et seq.) does 
not apply to a connuercial note issued under the plan that matures not 
later than one year after the effective date of the plan. 
§ 1146. Special tax provisions 
11 USC 1146. 
(a) For the purposes of any State or local law imposing a tax on or 
measured by income, the taxable period of a debtor that is an indi-
vidual shall terminate on the date of the order for relief under this 
chapter, unless the case was converted under section 706 of this title. ^«fe. P- 2606. 
(b) The trustee shall make a State or local tax return of income 
for the estate of an individual debtor in a case under this chapter 
for each taxable period after the order for relief under this chapter 
during which the case is pending. 
(c) The issuance, transfer, or exchange of a security, or the making 
or delivery of an instrument of transfer under a plan confirmed under 
section 1129 of this title, may not be taxed under any State or local 
law imposing a stamp tax or similar tax. 
(d) The court may authorize the proponent of a plan to request a 
determination, limited to questions of law, by a State or local gov-
ernmental unit charged with responsibility for collection or deter-
mination of a tax on or measured by income, of the tax effects, under 
section 346 of this title and under the law imposing such tax, of the ^nte, p. 2565. 
plan. In the event of an actual controversy, the court may declare 
such effects after the earlier of— 
(1) the date on which such governmental unit responds to the 
request under this subsection; and 
(2) 270 days after such request. 
SUBCHAPTER IV—RAILROAD REORGANIZATION 
§ 1161, Inapplicability of other sections 
11 USC 1161. 
Sections 341, 343, 1102(a)(1), 1104, 1105, 1107, 1129(a)(7), and Ante, pp.25M, 
1129(c) of this title do not apply in a case concerning a railroad. 2565. 
§ 1162. Definition 
11 USC 1162. 
In this subchapter, "Commission" means Interstate Commerce Com-
mission. 
§ 1163. Appointment of trustee 
11 USC 1163. 
As soon as practicable after the order for relief, the Secretary of 
Transportation shall submit a list of five disinterested persons that 
are qualified and willing to serve as trustee in the case. The court shall 
appoint one of such persons to serve as trustee in the case. 
§ 1164. Right to be heard 
11 USC 1164. 
The Commission, the Department of Transportation, and any State 
or local commission having regulatory jurisdiction over the debtor 
may raise and may appear and be heard on any issue in a case under 
this chapter, but may not appeal from any judgment, order, or decree 
entered in the case. 
§ 1165. Protection of the public interest 
11 USC 1165. 
In applying sections 1166, 1167, 1169, 1170, 1171, 1172, 1173, and 
1174 of this title, the court and the trustee shall consider the public 
interest in addition to the interests of the debtor, creditors, and equity 
securityholders. 
39-194 O—80—pt 2 
86 : QL3 
92 STAT. 2642 
PUBLIC LAW 95-598—NOV. 6, 1978 
11 use 1166. 
§ 1166. Effect of Interstate Commerce Act and of Federal, State, 
or local regulations 
Except with respect to abandonment under section llTO of this title, 
or merger, modification of the financial structure of the debtor, or 
issuance or sale of securities under a plan, the trustee and the debtor 
are subject to the provisions of the Interstate Commerce Act (49 
U.S.C. 1 et seq.) that are applicable to railroads, and the trustee is 
subject to orders of any Federal, State, or local regulatory body to the 
same extent as the debtor would be if a petition commencing the case 
under this chapter had not been filed, but— 
(1) any such order that would require the expenditure, or the 
incurring of an obligation for the expenditure, of money from 
the estate is not effective unless approved by the court; and 
(2) the provisions of this chapter are subject to section 601(b) 
of the Kegional Rail Reorganization Act of 1973 (45 U.S.C. 
791(b)). 
11 use 1167. 
§ 1167. Collective bargaining agreements 
Ante, p. 2574. 
Notwithstanding section 365 of this title, neither the court nor the 
trustee may change the wages or working conditions of employees of 
the debtor established by a collective bargaining agreement that is 
subject to the Railway Labor Act (45 U.S.C. 151 et seq.) except in 
accordance with section 6 of such Act (45 U.S.C. 156). 
11 use 1168. 
§ 1168. Rolling stock equipment 
(a) The right of a secured party with a purchase-money equipment 
security interest in, or of a lessor or conditional vendor of, whether as 
trustee or otherwise, rolling stock equipment or accessories used on 
such equipment, including superstructures and racks, that are subject 
to a purchase-money equipment security interest granted by, leased 
to, or conditionally sold to, the debtor to take possession of such equip-
ment in compliance with the provisions of a purchase-money equip-
ment security agreement, lease, or conditional sale contract, as the 
Ante, pp. 2570, 
case may be, is not affected by section 362 or 363 of this title or by 
2572. 
any power of the court to enjoin such taking of possession, unless— 
(1) before 60 days after the date of the commencement of a 
case under this chapter, the trustee, subject to the court's approval, 
agrees to perform all obligations of the debtor under such security 
agreement, lease, or conditional sale contract, as the case may be; 
and 
(2) any default, other than a default of a kind specified in sec-
Ante, p. 2574. 
tion 365(b) (2) of this title, under such security agreement, lease, 
or conditional sale contract, as the case may be— 
(A) that occurred before such date and is an event of 
default therewith is cured before the expiration of such 60-day 
period; and 
(B) that occurs or becomes an event of default after such 
date is cured before the later of— 
(i) 30 days after the date of such default or event of 
default; and 
(ii) the expiration of such 60-day period. 
(b) The trustee and the secured party, lessor, or conditional vendor, 
as the case may be, whose right to take possession is protected under 
subsection (a) of this section, may agree, subject to the court's approval 
to extend the 60-day period specified in subsection (a) (1) of this 
section. 
PIJBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2643 
§ 1169. Effect of rejection of lease of railroad line 
H USC 1169. 
(a) Except as provided in subsection (b) of this section, if a lease of 
a line of railroad under which the debtor is the lessee is rejected under 
section 366 of this title, and if the trustee, within such time as the court Ante, p. 2574. 
fixes, and with the court's approval, elects not to operate the leased 
line, the lessor under such lease, after such approval, shall operate the 
line. 
(b) If operation of such line by such lessor is impracticable or Notice and 
contrary to the public interest, the court, on request of such lessor, and hearing, 
after notice and a hearing, shall order the trustee to continue operation 
of such line for the account of such lessor until abandonment is ordered 
under section 1170 of this title, or until such operation is otherwise 
lawfully terminated, whichever occurs first. 
(c) During any such operation, such lessor is deemed a carrier sub-
ject to the provisions of the Interstate Commerce Act (49 U.S.C. 1 et 
seq.) that are applicable to railroads. 
§ 1170. Abandonment of railroad line 
H USC 1170. 
(a) The court, after notice and a hearing, may authorize the abandon- Notice and 
ment of a railroad line if such abandonment is— 
hearing. 
(1) (A) in the best interest of the estate; or 
(B) essential to the formulation of a plan; and 
(2) consistent with the public interest. 
(b) If, except for the pendency of the case under this chapter, such 
abandonment would require approval by the Commission under a law 
of the United States, the trustee shall initiate an appropriate applica-
tion for such abandonment with the Commission. The court may fix a 
time within which the Commission shall report to the court on such 
application. 
(c) After the court receives the report of the Commission, or the 
expiration of the time fixed under subsection (b) of this section, which-
ever occurs first, the court may authorize such abandonment after notice 
to the Commission, the Secretary of Transportation, the trustee, any 
party in interest that has requested notice, any affected shipper or com-
munity, and any other entity prescribed by the court, and a hearing. 
(d) (1) Enforcement of an order authorizing such abandonment 
shall be stayed until the time for taking an appeal has expired, or, if 
an appeal is timely taken, until such order has become final. 
(2) If an order authorizing the abandonment of a railroad line is 
appealed, the court, on request of a party in interest, may authorize 
termination of service on a line or a portion of a line pending the deter-
mination of such appeal, after notice to the Commission, the Secretary 
of Transportation, the trustee, any party in interest that has requested 
notice, any affected shipper or community, and any other entity 
prescribed by the court, and a hearing. An appellant may not obtain a 
stay of the enforcement of an order authorizing such termination by 
the giving of a supersedeas bond or otherwise, during the pendency of 
such appeal. 
§ 1171. Priority claims 
H USC 1171. 
(a) There shall be paid as an administrative expense any claim of 
an individual or of the personal representative of a deceased individual 
against the debtor or the estate, for personal injury to or death of such 
individual arising out of the operation of the debtor or the estate, 
whether such claim arose before or after the commencement of the case. 
(b) Any unsecured claim against the debtor that would have been 
entitled to priority if a receiver in equity of the property of the debtor 
92 STAT. 2644 
PUBLIC LAW 95-598—NOV. 6, 1978 
had been appointed by a Federal court on the date of the order for 
relief under this title shall be entitled to such priority in the case under 
this chapter. 
: 
11 use 1172. 
§ 1172. Contents of plan 
(a) In addition to the provisions required or permitted under section 
1123 of this title, a plan— 
(1) shall specify the extent to and the means by which the 
debtor's rail service is proposed to be continued, and the extent to 
which any of the debtor's rail service is proposed to be terminated; 
and 
(2) may include a provision for— 
' 
(A) the transfer of any or all of the operating railroad 
lines of the debtor to another operating railroad; or 
(B) abandonment of any railroad line in accordance with 
section 1170 of this title. 
(b) If, except for the pendency of the case under this chapter, 
• 
transfer of, or operation of or over, any of the debtor's rail lines by 
an entity other than the debtor or a successor to the debtor under the 
plan would require approval by the Commission under a law of the 
United States, then a plan may not propose such a transfer or such 
operation unless the proponent of the plan initiates an appropriate 
application for such a transfer or such operation with the Commission 
and, within such time as the court may fix, not exceeding 180 days, the 
Commission, with or without a hearing, as the Commission may deter-
mine, and with or without modification or condition, approves such 
application, or does not act on such application. Any action or order 
of the Commission approving, modifying, conditioning, or disapprov-
ing such application is subject to review by the court only under 
sections 706(2) (A), 706(2) (B), 706(2) (C), and 706(2) (D) of title 5. 
11 use 1173. 
§ 1173. Confirmation of plan 
(a) The court shall confirm a plan if— 
(1) the applicable requirements of section 1129 of this title have 
been met; 
(2) each creditor or equity security holder will receive or retain 
under the plan property of a value, as of the effective date of 
the plan, that is not less than the value of property that each 
such creditor or equity security holder would so receive or retain 
if all of the operating railroad lines of the debtor we^-e sold, and 
the proceeds of such sale, and the other property of the estate, 
Ante, p. 2603. 
were distributed imder chapter 7 of this title on such date; 
(3) in light of the debtor's past earnings and the probable 
prospective earnings of the reorganized debtor, there will be ade-
quate coverage by such prospective earnings of any fixed charges, 
such as interest on debt, amortization of funded debt, and rent 
for leased railroads, provided for by the plan; and 
(4) the plan is compatible with the public interest. 
(b) If the requirements of subsection (a) of this section are met with 
respect to more than one plan, the court shall confirm the plan that is 
most likely to maintain adequate rail service in the public interest. 
11 use 1174. 
§ 1174. Liquidation 
Notice and 
On request of a party in interest and after notice and a hearing, 
hearing. 
the court may, or, if a plan has not been confirmed under section 1173 
of this title before five years after the date of the order for relief, the 
court shall, order the trustee to cease the debtor's operation and to 
collect and reduce to money all of the property of the estate in the 
same manner as if the case were a case under chapter 7 of this title. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2645 
CHAPTER 13—ADJUSTMENT OF DEBTS OF AN 
INDIVIDUAL WITH REGULAR INCOME 
SUBCHAPTER I—OFFICERS, ADMINISTRATION, AND THE ESTATE 
Sec. 
1301. Stay of action against codebtor. 
1302. Trustee. 
1303. Bights and powers of debtor. 
; 
1304. Debtor engaged in business. 
i . 
1305. Filing and allowance of postpetition claims. 
1306. Property of the estate. 
1307. Conversion or dismissal. 
SUBCHAPTER II—THE PLAN 
1321. Filing of plan. 
1322. Contents of plan. 
1323. Modification of plan before confirmation. 
1324. Confirmation hearing. 
1325. Confirmation of plan. 
1326. Payments. 
1327. Effect of confirmation. 
1328. Discharge. 
.' 
1329. Modification of plan after confirmation. 
1330. Bevocation of an order of confirmation. 
SUBCHAPTEE I—OFFICERS, ADMINISTRATION, AND 
THE ESTATE 
§1301. Stay of action against codebtor 
H USC 1301. 
(a) Except as provided in subsections (b) and (c) of this section, 
after the order for relief under this chapter, a creditor may not act, or 
commence or continue any civil action, to collect all or any part of a 
consumer debt of the debtor from any individual that is liable on 
such debt with the debtor, or that secured such debt, unless— 
(1) such individual became liable on or secured such debt in 
the ordinary course of such individual's business; or 
(2) the case is closed, dismissed, or converted to a case under 
chapter 7 or 11 of this title. 
^«*e, pp. 2603, 
(b) A creditor may present a negotiable instrument, and may give 2625. 
notice of dishonor of such an instrument. 
(c) On request of a party in interest and after notice and a hearing, Notice and 
the court shall grant relief from the stay provided by subsection (a) 
hearing, 
of this section with respect to a creditor, to the extent that— 
(1) as between the debtor and the individual protected under 
subsection (a) of this section, such individual received the con-
sideration for the claim held by such creditor; 
(2) the plan filed by the debtor proposes not to pay such 
claim; or 
(3) such creditor's interest would be irreparably harmed by 
such stay. 
§1302. Trustee 
11 USC 1302. 
(a) If the court has appointed an individual under subsection (d) 
of this section to serve as standing trustee in cases under this chapter 
and if such individual qualifies under section 322 of this title, then Ante, p. 2562. 
such individual shall serve as trustee in the case. Otherwise, the court 
shall appoint a person to serve as trustee in the case. 
(b) The trustee shall— 
(1) perform the duties specified in sections 704(2), 704(3), Ante, f. 2605. 
704(4), 704(5), 704(6), and 704(8) of this title; 
92 STAT. 2646 
PUBLIC LAW 95-598—NOV. 6, 1978 
(2) appear and be heard at any hearing that concerns— 
(A) the value of property subject to a lien; 
(B) confirmation of a plan; or 
(C) modification of the plan after confirmation; and 
(3) advise, other than on legal matters, and assist the debtor 
in performance under the plan. 
(c) If the debtor is engaged in business, then in addition to the 
duties specified in subsection (b) of this section, the trustee shall per-
form the duties specified in sections 1106(a)(3) and 1106(a)(4) of 
this title. 
(d) If the number of cases under this chapter commenced in a par-
ticular judicial district so vs^arrant, the court may appoint one or more 
individuals to serve as standing trustee for such district in cases under 
this chapter. 
(e) (1) A court that has appointed an individual under subsection 
(d) of this section to serve as standing trustee in cases under this 
^ 
chapter shall fix— 
(A) a maximum annual compensation for such individual, not 
to exceed the lowest annual rate of basic pay in effect for grade 
GS-16 of the General Schedule prescribed under section 5332 of 
title 5; and 
(B) a percentage fee, not to exceed ten percent, based on such 
maximum annual compensation and the actual, necessary expenses 
incurred bv such individual as standing trustee. 
(2) Such individual shall collect such percentage fee from all pay-
ments under plans in the cases under this chapter for which such 
individual serves as standing trustee. Such individual shall pay annu-
ally to the Treasury— 
_ (A) any amount by which the actual compensation of such indi-
vidual exceeds five percent upon all pavments under plans in cases 
under this chapter for w^hich such individual serves as standing 
trustee; and 
(B) any amount by which the percentage fee fixed under para-
graph (1) (B) of this subsection for all such cases exceeds— 
(i) such individual's actual compensation for such cases, 
\v 
as adjusted under subparagraph (A) of this paragraph; plus 
(ii) the actual, necessary expenses incurred by such indi-
vidual as standing trustee in sucli cases. 
11USC1303. 
§ 1303. Rights and powers of debtor 
Subject to any limitations on a trustee under this chapter, the debtor 
shall have, exclusive of the trustee, the rights and powers of a trustee 
Ante, p. 2572. 
under sections 363(b), 363(d), 363(e), 363(f), and 363(1), of this title. 
11 use 1304. 
§ 1304. Debtor engaged in business 
(a) A debtor that is self-employed and incurs trade credit in the 
production of income from such employment is engaged in business. 
(b) Unless the court orders otherwise, a debtor engaged in business 
may operate the business of the debtor, and, subject to any limitations 
Ante, pp. 2572, 
on a trustee under sections 363(c) and 364 of this title and to such 
2574. 
limitations or conditions as the court prescribes, shall have, exclusive 
of the trustee, the rights and powers of the trustee under such sections. 
(c) A debtor engaged in business shall perform the duties of the 
.^nte, p. 2605. 
trustee specified in section 704 (7) of this title. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2647 
§ 1305. Filing and allowance of postpetition claims 
H USC 1305. 
(a) A proof of claim may be filed by any entity that holds a claim 
against the debtor— 
(1) for taxes that become payable to a governmental unit while 
the case is pending; or 
(2) that is a consumer debt, that arises after the date of the 
order for relief under this chapter, and that is for property or 
services necessary for the debtor's performance under the plan. 
(b) Except as provided in subsection (c) of this section, a claim filed 
under subsection (a) of this section shall be allowed or disallowed 
under section 502 of this title, but shall be determined as of the date Ante, p. 2579. 
such claim arises, and shall be allowed under section 502(a), 502(b), 
or 502(c) of this title, or disallowed under section 502(d) or 502(e) of 
this title, the same as if such claim had arisen before the date of the 
filing of the petition. 
(c) A claim filed under subsection (a) (2) of this section shall be 
disallowed if the holder of such claim knew or should have known that 
prior approval by the trustee of the debtor's incurring the obligation 
was practicable and was not obtained. 
§ 1306. Property of the estate 
H USC 1306. 
(a) Property of the estate includes, in addition to the property 
specified in section 541 of this title— 
^»*e, p. 2594. 
(1) all property of the kind specified in such section that the 
debtor acquires after the commencement of the case but before the 
case is closed, dismissed, or converted to a case under chapter 7 or 
11 of this title, whichever occurs first; and 
^«^e, pp. 2603, 
(2) earnings from services performed by the debtor after the 2625. 
commencement of the case but before the case is closed, dismissed, 
or converted to a case under chapter 7 or 11 of this title, whichever 
occurs first. 
(b) Except as provided in a confirmed plan or order confirming a 
plan, the debtor shall remain in possession of all property of the estate. 
§ 1307. Conversion or dismissal 
11 USC 1307, 
(a) The debtor may convert a case under this chapter to a case under 
chapter 7 of this title at any time. Any waiver of the right to convert 
under this subsection is unenforceable. 
(b) On request of the debtor at any time if the case has not been 
converted under section 706 or 1112 of this title, the court shall dismiss Ante, p. 2606. 
a case under this chapter. Any waiver of the right to dismiss under this 
subsection is unenforceable. 
(c) Except as provided in subsection (e) of this section, on request Notice and 
of a party in interest and after notice and a hearing, the court may hearing, 
convert a case under this chapter to a case under chapter 7 of this title, 
or may dismiss a case under this chapter, whichever is in the best 
interests of creditors and the estate, for cause, including— 
(1) unreasonable delay by the debtor that is prejudicial to 
creditors; 
(2) nonpayment of any fees and charges required under chapter 
123 of title 28; 
(3) failure to file a plan timely under section 1321 of this title; 
(4) denial of confirmation of a plan under section 1325 of this 
title and denial of additional time for filing another plan or a 
modification of a plan; 
(5) material default by the debtor with respect to a term of a 
confirmed plan; 
^ 
92 STAT. 2648 
PUBLIC LAW 95-598—NOV. 6, 1978 
(6) revocation of the order of confirmation under section 1330 
. 
of this title, and denial of confirmation of a modified plan under 
section 1329 of this title; and 
(7) termination of a confirmed plan by reason of the occurrence 
of a condition specified in the plan. 
(d) Except as provided in subsection (e) of this section, at any 
time before the confirmation of a plan under section 1325 of this title, 
on request of a party in interest and after notice and a hearing, the 
Ante, p. 2625. 
court may convert a case under this chapter to a case under chapter 11 
of this title. 
(e) The court may not convert a case under this chapter to a case 
Ante, p. 2603. 
under chapter 7 or 11 of this title if the debtor is a farmer, unless the 
debtor requests such conversion. 
(f) Notwithstanding any other provision of this section, a case may 
not be converted to a case under another chapter of this title unless 
the debtor may be a debtor under such chapter. 
SUBCHAPTER II—THE PLAN 
11 use 1321. 
§ 1321. Filing of plan 
The debtor shall file a plan. 
11 use 1322. 
§ 1322. Contents of plan 
(a) The plan shall— 
(1) provide for the submission of all or such portion of future 
earnings or other future income of the debtor to the supervision 
- 
and control of the trustee as is necessary for the execution of the 
plan; 
(2) provide for the full payment, in deferred cash payments of 
Ante, p. 2583. 
all claims entitled to priority under section 507 of this title, unless 
the holder of a particular claim agrees to a different treatment of 
such claim; and 
(3) if the plan classifies claims, provide the same treatment for 
each claim within a particular class. 
(b) Subject to subsections (a) and (c) of this section, the plan 
may— 
(1) designate a class or classes of unsecured claims, as provided 
in section 1122^ of this title, but may not discriminate unfairly 
against any class so designated; 
(2) modify the rights of holders of secured claims, other than 
a claim secured only by a security interest in real property that 
is the debtor's principal residence, or of holders of unsecured 
claims; 
Default. 
(3) provide for the curing or waiving of any default; 
(4) provide for payments on any unsecured claim to be made 
concurrently with payments on any secured claim or any 
unsecured claim; 
(5) notwithstanding paragraph (2) of this subsection, provide 
for the curing of any default within a reasonable time and mainte-
nance of payments while the case is pending on any unsecured 
claim or secured claim on which the last payment is due after the 
date on which the final payment under the plan is due; 
(6) provide for the payment of all or any part of any claim 
allowed under section 1305 of this title; 
(7) provide for the assumption or rejection of any executory 
contract or unexpired lease of the debtor not previously rejected 
Ante, p. 2574. 
under section 365 of this title; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 26^19 
(8) provide for the payment of all or any part of a claim 
against the debtor from property of the estate or property of the 
debtor; 
(9) provide for the vesting of property of the estate, on con-
firmation of the plan or at a later time, in the debtor or in any 
other entity; and 
(10) include any other appropriate provision not inconsistent 
with this title. 
(c) The plan may not provide for payments over a period that is 
longer than three years, unless the court, for cause, approves a longer 
period, but the court may not approve a period that is longer than 
five years. 
§ 1323. Modification of plan before confirmation 
H USC 1323. 
(a) The debtor may modify the plan at any time before confirma-
tion, but may not modify the plan so that the plan as modified fails to 
>,: 
meet the requirements of section 1322 of this title. 
(b) After the debtor files a modification under this section, the plan 
as modified becomes the plan. 
(c) Any holder of a secured claim that has accepted or rejected the 
plan is deemed to have accepted or rejected, as the case may be, the 
plan as modified, unless the modification provides for a change in the 
rights of such holder from what such rights were under the plan before 
modification, and such holder changes such holder's previous accept-
ance or rejection. 
§ 1324. Confirmation hearing 
H USC 1324. 
After notice, the court shall hold a hearing on the confirmation of 
the plan. A party in interest may object to the confirmation of the plan. 
§ 1325. Confirmation of plan 
H USC 1325. 
(a) The court shall confirm a plan if— 
(1) the plan complies with the provisions of this chapter and 
with other applicable provisions of this title; 
(2) any fee, charge, or amount required under chapter 123 of 
title 28, or by the plan, to be paid before confirmation, has been 28 USC 1911 at 
paid; 
*«?• 
(3) the plan has been proposed in good faith and not by any 
means forbidden by law; 
(4) the value, as of the effective date of the plan, of property to 
be distributed under the plan on account of each allowed unsecured 
claim is not less than the amount that would be paid on such claim 
if the estate of the debtor were liquidated under chapter 7 of this Ante, p. 2603. 
title on such date; 
(5) with respect to each allowed secured claim provided for by 
the plan— 
(A.) the holder of such claim has accepted the plan; 
(B) (i) the plan provides that the holder of such claim 
retain the lien securing such claim; and 
(ii) the value, as of the effective date of the plan, of prop-
erty to be distributed under the plan on account of such claim 
is not less than the allowed amount of such claim; or 
( C 
) the debtor surrenders the property securing such claim 
to such holder; and 
(6) the debtor will be able to make all payments under the plan 
and to comply with the plan. 
92 STAT. 2650 
PUBLIC LAW 95-598—NOV. 6, 1978 
(b) After confirmation of a plan, the court may order any entity 
from whom the debtor receives income to pay all or any part of such 
income to the trustee. 
11 use 1326. 
§ 1326. Payments 
(a) Before or at the time of each payment to creditors under the 
plan, there shall be paid— 
Ante, p. 2583. 
(1) any unpaid claim of the kind specified in section 507(a) (1) 
of this title; and 
(2) if a standing trustee appointed under section 1302(d) is 
serving in the case, the percentage fee fixed for such standing 
trustee under section 1302(e) of this title. 
(b) Except as otherwise provided in the plan or in the order con-
firming the plan, the trustee shall make payments to creditors under 
the plan. 
11 use 1327. 
§ 1327. Effect of confirmation 
(a) The provisions of a confirmed plan bind the debtor and each 
creditor, whether or not the claim of such creditor is provided for by 
the plan, and whether or not such creditor has objected to, has accepted, 
or has rejected the plan. 
(b) Except as otherwise provided in the plan or the order confirm-
ing the plan, the confirmation of a plan vests all of the property of the 
estate in the debtor. 
(c) Except as otherwise provided in the plan or in the order con-
firming the plan, the property vesting in the debtor under subsection 
- 
' 
(b) of this section is free and clear of any claim or interest of any 
creditor provided for by the plan. 
11 use 1328. 
§ 1328. Discharge 
(a) As soon as practicable after completion by the debtor of all pay-
ments under the plan, unless the court approves a written waiver of 
discharge executed by the debtor after the order for relief under this 
chapter, the court shall grant the debtor a discharge of all debts 
Ante, p. 2579. 
provided for by the plan or disallowed under section 502 of this title, 
except any debt— 
(1) provided for under section 1322(b) (5) of this title; or 
Ante, p. 2590. 
(2) of the kind specified in section 523(a) (5) of this title. 
Notice and 
(b) At any time after the confirmation of the plan and after notice 
hearing. 
^nd a hearing, the court may grant a discharge to a debtor that has not 
completed payments under the plan only if— 
(1) the debtor's failure to complete such payments is due to cir-
cumstances for which the debtor should not justly be held 
accountable; 
(2) the value, as of the effective date of the plan, of property 
actually distributed under the plan on account of each allowed 
unsecured claim is not less than the amount that would have been 
paid on such claim if the estate of the debtor had been liquidated 
Anu, p. 2603. 
under chapter 7 of this title on such date; and 
(3) modification of the plan under section 1329 of this title is 
not practicable. 
(c) A discharge granted under subsection (b) of this section dis-
charges the debtor from all unsecured debts provided for by the plan 
or disallowed under section 502 of this title, except any debt— 
(1 ^ provided for under section 1322 (b)(5) of this title; or 
(2) of a kind specified in section 523 (a) of this title. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2651 
(d) Notwithstanding any other provision of this section, a discharge 
granted under this section does not discharge the debtor from smj debt 
based on an allowed claim filed under section 1305 (a) (2) of this title if 
prior approval by the trustee of the debtor's incurring such debt was 
practicable and was not obtained. 
(e) On request of a party in interest before one year after a 
discharge under this section is granted, and after notice and a hearing, 
the court may revoke such discharge only if— 
(1) such discharge was obtained through fraud; and 
(2) knowledge of such fraud came to the requesting party after 
such discharge was granted. 
§ 1329. Modification of plan after confirmation 
(a) At any time after confirmation but before the completion of 
payments under a plan, the plan may be modified 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 for such payments; or 
(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 other than under the plan. 
(b) (1) Sections 1322(a), 1322(b), and 1323(c) of this title and the 
requirements of section 1325(a) of this title apply to any modification 
under subsection (a) of this section. 
(2) The plan as modified becomes the plan unless, after notice and 
a hearing, such modification is disapproved. 
(c) A plan modified under this section may not provide for pay-
ments over a period that expires after three years after the time that 
the first payment under the original confirmed plan was due, unless the 
court, for cause, approves a longer period, but the court may not 
approve a period that expires after five years after such time. 
§1330. Revocation of an order of confirmation 
(a) On request of a party in interest at any time within 180 days 
after the date of the entry of an order of confirmation under section 
1325 of this title, and after notice and a hearing, the court may revoke 
such order if such order was procured by fraud. 
(b) If the court revokes an order of confirmation under subsection 
(a) of this section, the court shall dispose of the case under section 
1307 of this title, unless, within the time fixed by the court, the debtor 
proposes and the court confirms a modification of the plan under 
section 1329 of this title. 
Notice and 
hearing. 
11 use 1329. 
Notice and 
hearing. 
11 use 1330. 
Notice and 
hearing. 
CHAPTER 15—UNITED STATES TRUSTEES 
Sec. 
1501. Applicability of this chapter. 
SUBCHAPTER I- -GENERAL PROVISIONS 
15101. Definitions. 
15102. Rule of construction. 
15103. Applicability of subchapters and sections. 
SUBCHAPTER III—CASE ADMINISTRATION 
15803. Involuntary cases. 
15321. Eligibility to serve as trustee. 
15322. Qualification of trustee. 
15324. Removal of trustee. 
15326. Limitation on compensation of trustee. 
15330. Compensation of ofiScers. 
15343. Examination of debtor. 
15345. Money of estates. 
92 STAT. 2652 
PUBLIC LAW 95-598—NOV. 6, 1978 
11 
use 
1501. 
11 
use 
15101. 
11 
use 
15102. 
11 
use 
15103. 
Ante, pp. 
2603, 
2625. 
SUBCHAPTER VII—LIQUIDATION 
Sec. 
15701. Interim trustee. 
15703. Successor trustee. 
15704. Duties of trustee. 
15727. Discharge. 
SUBCHAPTER XI—REORGANIZATION 
151102. Creditors' and equity security holders' committees. 
151104. Appointment of trustee or examiner. 
151105. Termination of trustee's appointment. 
151163. Appointment of trustee. 
-ADJUSTMENT OF DEBTS OF AN INDIVIDUAL 
WITH REGULAR INCOME 
SUBCHAPTER XIII-
151302. Trustee. 
151326. Payments. 
§ 1501. Applicability of cha^pter 
This chapter applies only in cases under this title pending in the 
following districts: 
(1) District of Maine, District of New Hampshire, District 
of Massachusetts, and District of Rhode Island. 
(2) Southern District of New York. 
(3) District of Delaware and District of New Jersey. 
(4) Eastern District of Virginia and District of District of 
Columbia. 
(5) Northern District of Alabama. 
(6) Northern District of Texas. 
(7) Northern District of Illinois. 
(8) District of Minnesota, District of North Dakota, and Dis-
trict of South Dakota. 
(9) Central District of California. 
(10) District of Colorado and District of Kansas. 
S U B C H A P T E R I — G E N E R A L P R O V I S I O N S 
§15101. Definitions 
In this title— 
(1) "entity" includes United States trustee; and 
(2) "governmental unit" does not include United States trustee 
while serving as a trustee in a case under this title. 
§ 15102. Rule of construction 
In this title, a reference to a section that is made inapplicable 
under section 15103(f) of this chapter refers to the section of this 
chapter that replaces such inapplicable section. 
§ 15103. Applicability of subchapters and sections 
(a) Subchapters I and I I I of this chapter apply in a case under 
chapter 7, 11, or 13 of this title, except that section 15343 of this title 
does not apply in a case concerning a railroad. 
(b) Subchapter V I I of this chapter applies only in a case under 
chapter 7 of this title. 
(c) Subchapter X I of this chapter applies only in a case under chap-
ter 11 of this title that does not concern a railroad. 
(d) Section 151163 of this title applies only in a case concerning a 
railroad. 
(e) Subchapter X I I I of this chapter applies only in a case imder 
chapter 13 of this title. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2653 
(f) Sections 303(g), 322(b), 324, 326(b), 343, 345(b), 701(a), 
703(b), 703(c), 704(8), 727(c), 727(d), 727(e), 1102(a), 1104, 1105, 
1163,1302(a), 1302(d), 1302(e), and 1326(a) of this title do not apply 
in a case under this title. 
SUBCHAPTER III—CASE ADMINISTRATION 
§15303. Involuntary cases 
At any time after the commencement of an involuntary case under 
chapter 7 of this title but before an order for relief in the case, the 
court, on request of a party in interest, after notice to the debtor 
and a hearing, and if necessary to preserve the property of the estate 
or to prevent loss to the estate, may order the United States trustee to 
appoint an interim trustee under section 15701 of this title to take 
possession of the property of the estate and to operate any business of 
the debtor. Before an order for relief, the debtor may regain posses-
sion of property in the possession of a trustee ordered appointed 
under this subsection if the debtor files such bond as the court requires, 
conditioned on the debtor's accounting for and delivering to the trustee 
if there is an order for relief in the case, such property, or the value, as 
of the date the debtor regains possession, of such property. 
§ 15321. Eligibility to serve as trustee 
The United States trustee for the judicial district in which the case 
is pending is eligible to serve as trustee in the case. 
§15322. Qualification of trustee 
(a) A United States trustee qualifies whenever such trustee serves 
in a case under this title. 
(b) The United States trustee shall determine— 
(1) the amount of a bond filed under section 322(a) (2); and 
(2) the sufficiency of the surety on such bond. 
§ 15324. Removal of trustee or examiner 
The court, after notice and a hearing, may remove a trustee other 
than the United States trustee, or an examiner, for cause. 
§ 15326. Limitation on compensation of trustee 
In a case under chapter 13 of this title, the court may not allow 
compensation for services or reimbursement of expenses of the United 
States trustee or of a standing trustee appointed under section 586(b) 
of title 28, but may allow reasonable compensation under section 330 
of this title of a trustee appointed under section 1302(a) of this title 
for the trustee's services, payable after the trustee renders such serv-
ices, not to exceed five percent upon all payments under the plan. 
§ 15330. Compensation of officers 
In a case in which the United States trustee serves as trustee, the 
compensation of the trustee under section 330 of this title shall be paid 
to the clerk of the bankruptcy court, and by the clerk, into the 
Treasury. 
§ 15343. Examination of the debtor 
The debtor shall appear and submit to examination under oath at 
the meeting of creditors under section 341(a) of this title. Creditors, 
any indenture trustee, any trustee or examiner in the case, or the 
United States trustee may examine the debtor. 
Ante, pp. 2559, 
2562, 2565, 
2604, 2605, 
2609, 
2626-2628, 
2641. 
11 u s e 15303. 
Notice and 
hearing. 
Ante, p. 2603. 
11 u s e 15321. 
11 use 15322. 
Ante, p. 2562. 
11 use 15324. 
Notice and 
hearing. 
11 u s e 15326. 
Post, p. 2663. 
Ante, p. 2564. 
11 use 15330. 
11 u s e 15343. 
Ante, p. 2564. 
92 STAT. 2654 
PUBLIC LAW 95-598—NOV. 6, 1978 
11 use 15345. 
§ 15345. Money of estates 
(a) Except with respect to a deposit or investment that is insured 
or guaranteed by the United States or by a department, agency, or 
instrumentality of the United States or backed by the full faith and 
credit of the United States, the trustee shall require from an entity 
with which such money is deposited or invested— 
(1) a bond— 
(A) in favor of the United States; 
(B) secured by the undertaking of a corporate surety 
approved by the United States trustee for the district in 
which the case is pending; and 
(C) conditioned on— 
(i) a proper accounting for all money so deposited 
or invested and for any return on such money; 
(ii) prompt repayment of such money and return; 
and 
(iii) faithful performance of duties as a depository; 
or 
(2) the deposit of securities of the kind specified in section 15 
of title 6. 
(b) The United States trustee may aggregate money of estates for 
which such United States trustee serves as trustee for deposit or invest-
ment under this section, in order to increase the return on such 
money, taking into account the safety of such deposit or investment. 
The United States trustee shall maintain complete records identifying 
separately the money of each estate included in such an aggregation. 
Any return on any such deposit or investment shall be paid by the 
United States trustee into the Treasury. 
SUBCHAPTER VII—LIQUIDATION 
11 use 15701. 
§ 15701. Interim trustee 
Ante, p. 2603. 
(a) Promptly after the order for relief under chapter 7 of this 
title, the United States trustee shall appoint one disinterested person 
that is a member of the panel of private trustee established under sec-
tion 586(a) (1) of title 28 or that was serving as trustee in the case 
immediately before the order for relief under this chapter to serve 
^ i as interim trustee in the case. 
(b) If none of such persons is willing to serve as interim trustee 
in the case, then the United States trustee shall serve as interim 
trustee in the case. 
11 use 15703. 
§ 15703. Successor trustee 
Ante, p. 2605. 
(a) Pending election of a trustee under section 703(a) of this title, 
if necessary to preserve or prevent loss to the estate, the United States 
trustee may appoint an interim trustee in the manner specified in sec-
Ante, p. 2604. 
tion 15701(a) of this title. Section 701(b) and 701(c) of this title 
apply to such interim trustee. 
(b) If creditors do not elect a successor trustee under section 703 (a) 
of this title, or if a trustee is needed in a case reopened under section 
Ante, p. 2569. 
350 of this title, then the United States truste shall serve, or shall 
appoint one disinterested person that is a member of the panel of 
Po5^ p. 2663. 
private trustees established under section 586(a)(1) of title 28 to 
serve, as trustee in the case. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2655 
§ 15704. Duties of trustee 
The trustee shall make a final report and file a final account of the 
administration of the estate with the court and with the United 
States trustee. 
§15727. Discharge 
(a) (1) The trustee, a creditor, or the United States trustee may 
object to discharge under section 727(a) of this title. 
(2) On request of a party in interest, the court may order the 
United States trustee to examine the acts and conduct of the debtor 
to determine whether a ground exists for denial of discharge. 
(b) On request of the trustee, a creditor, or the United States 
trustee, and after notice and a hearing, the court shall revoke a dis-
charge granted under section 727 (a) of this title if— 
(1) such discharge was obtained through the fraud of the 
debtor, and the requesting party did not know of such fraud 
until after the granting of such discharge; 
(2) the debtor acquired property that is property of the estate, 
or became entitled to acquire property that would be property 
of the estate, and knowingly and fraudulently failed to report the 
acquisition of, or entitlement to, such property, or to deliver or 
surrender such propert^r to the trustee; or 
(3) the debtor committed an act specified in section 727(a) (6) 
of this title. 
(c) The trustee, a creditor, or the United States trustee may 
request a revocation of a discharge— 
(1) under section 727(d) (1) of this title within one year after 
such discharge was granted; or 
(2) under section 727(d) (2) or 727(d) (3) of this title before 
the later of— 
(A) one year after the granting of such discharge; and 
(B) the date the case is closed. 
SUBCHAPTER XI—REORGANIZATION 
11 use 15704,. 
11 use 15727. 
Ante, p. 2609. 
11 use 151102. 
§ 151102. Creditors' and equity security holders' committees 
(a) As soon as practicable after the order for relief under chapter 
11 of this title, the United States trustee shall appoint a committee Ante, p. 2625 
of creditors holding unsecured claims. 
(b) On request of a party in interest of the court may order the 
appointment of additional committees of creditors or of equity secu-
rity holders if necessary to assure adequate representation of creditors 
or of equity security holders. The United States trustee shall appoint 
any such committee. 
§ 151104. Appointment of trustee or examiner 
(a) At any time after the commencement of the case but before 
confirmation of a plan, on request of a party in interest or the United 
States trustee, and after notice and a hearing, the court shall order 
the appointment of a trustee— 
(1) for cause, including fraud, dishonesty, incompetence, or 
gross mismanagement of the affairs of the debtor by current man-
agement, either before or after the commencement of the case, or 
similar cause, but not including the number of holders of securities 
of the debtor or the amount of assets or liabilities of the debtor; 
or 
11 use 151104. 
Notice and 
hearing. 
92 STAT. 2656 
PUBLIC LAW 95-598—NOV. 6, 1978 
Ante, p. 2562. 
Ante, p. 2562. 
11 use 151105. 
Notice and 
hearing. 
11 use 151163. 
(2) if such appointment is in the interests of creditors, any 
equity security holders, and other interests of the estate, without 
regard to the number of holders of securities of the debtor or the 
amount of assets or liabilities of the debtor. 
(b) If the court does not order the appointment of a trustee under 
this section, then at any time before the confirmation of a plan, on 
request of a party in interest or the United States trustee, and after 
notice and a hearing, the court shall order the appointment of an 
examiner to conduct such an investigation of the debtor as is 
appropriate, including an investigation of any allegations of fraud, 
dishonesty, incompetence, misconduct, mismanagement, or irregularity 
in the management of the affairs of the debtor of or by current or 
former management of the debtor, if— 
(1) such appointment is in the best interest of creditors, any 
equity security holders, and other interests of the estate; or 
(2) the debtor's fixed, liquidated, unsecured debts, other than 
debts for goods, services, or taxes, or owing to an insider, exceed 
$5,000,000. 
(c) If the court orders the appointment of a trustee or an examiner, 
if a trustee or an examiner dies or resigns during the case or is removed 
under section 324 of this title, or if a trustee fails to qualify under 
section 322 of this title, then the United States trustee, after consulta-
tion with parties in interest, shall appoint, subject to the court's 
approval, one disinterested person other than the United States trustee 
to serve as trustee or examiner, as the case may be, in the case. 
§ 151105. Termination of trustee's appointment 
At any time before confirmation of a plan, on request of a party in 
interest or the United States trustee, and after notice and a hearing, 
the court may terminate the trustee's appointment and restore the 
debtor to possession and management of the property of the estate, 
and operation of the debtor's business. 
§ 151163. Appointment of trustee 
As soon as practicable after the order for relief the Secretary of 
Transportation shall submit a list of five disinterested persons that 
are qualified and willing to serve as trustee in the case. The United 
States trustee shall appoint one of such persons to serve as trustee 
in the case. 
SUBCHAPTER XIII—ADJUSTMENT OF DEBTS OF AN 
INDIVIDUAL WITH REGULAR INCOME 
11 use 151302. § 151302. Trustee 
(a) If the United States trustee has appointed an individual under 
Post, p. 2663. 
section 586(b) of title 28 to serve as standing trustee in cases under 
chapter 13 of this title and if such individual qualifies under section 
322 of this title, then such individual shall serve as trustee in the case. 
The United States trustee shall serve as trustee in the case otherwise. 
(b) The trustee shall— 
(1) perform the duties specified in sections 704(2), 704(3), 
Ante, p. 2605. 
704 (4), 704 (5), 704(6), and 704(8) of this title; 
(2) appear and be heard at any hearing that concerns— 
(A) the value of property subject to a lien; 
(B) confirmation of a plan; or 
(C) modification of the plan after confirmation; and 
(3) advise, other than on legal matters, and assist the debtor 
in performance under the plan. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2657 
§ 151326. Payments 
11 USC 151326. 
Before or at the time of each payment to creditors under the plan, 
there shall be paid— 
(1) any unpaid claim of the kind specified in section 507(a) (1) ^nte, p. 2583. 
of this title; and 
(2) if a standing trustee appointed under section 586(b) of title Post, p. 2663. 
28 is serving in the case, the percentage fee fixed for such standing 
trustee under section 586(e) (1) (B) of title 28. 
TITLE II—AMENDMENTS TO TITLE 28 OF 
THE UNITED STATES CODE AND TO THE 
FEDERAL RULES OF EVIDENCE 
SEC. 201. (a) Title 28 of the United States Code is amended by 
inserting immediately after chapter 5 the following: 
"CHAPTER 6—BANKRUPTCY COURTS 
"Sec. 
"151. Creation and composition of bankruptcy courts. 
"152. Appointment of bankruptcy judges. 
"153. Tenure and residence of bankruptcy judges. 
"154. Salaries of bankruptcy judges. 
"155. Chief judge; precedence of bankruptcy judges. 
• 
"156. Division of business among bankruptcy judges. 
-
"157. Times of holding court. 
"158. Accommodations at places for holding court. 
* 
"159. Vacant judgeship as affecting proceedings. 
"160. Appellate panels. 
"§ 151. Creation and composition of bankruptcy courts 
28 USC 151. 
"(a) There shall be in each judicial district, as an adjunct to the 
district court for such district, a bankruptcy court which shall be a 
court of record known as the United States Bankruptcy Court for 
the district. 
"(b) Each bankruptcy court shall consist of the bankruptcy judge 
or judges for the district in regular active service. Justices or judges 
designated and assigned shall be competent to sit as judges of the 
bankruptcy court. 
"(c) Except as otherwise provided by law, or rule or order of court, 
the judicial power of a bankruptcy court with respect to any action, 
suit or proceeding may be exercised by a single bankruptcy judge, who 
may preside alone and hold a regular or special session of court at the 
same time other sessions are held by other bankruptcy judges. 
"§ 152. Appointment of bankruptcy judges 
28 USC 152. 
"The President shall appoint, by and with the advice and consent 
of the Senate, bankruptcy judges for the several judicial districts. In 
each instance, the President shall give due consideration to the recom-
mended nominee or nominees of the Judicial Council of the Circuit 
within which an appointment is to be made. 
"§ 153. Tenure and residence of bankruptcy judges 
28 USC 153. 
"(a) Each bankruptcy judge shall hold office for a term of 14 years, 
but may continue to perform the duties of his office until his successor 
takes office, unless such office has been eliminated. 
"(b) Removal of a bankruptcy judge during the term for which he 
is appointed shall be only for incompetency, misconduct, neglect of 
duty, or physical or mental disability. Removal shall be by the judi-
39-194 O—80—pt. 2 
87 : QL3 
92 STAT. 2658 
PUBLIC LAW 95-598—NOV. 6, 1978 
cial council of the circuit or circuits in which the bankruptcy judge 
serves, but removal may not occur unless a majority of all the judges 
of such circuit council or councils concur in the order of removal. 
Before any order of removal may be entered, a full specification of 
the charges shall be furnished to the bankruptcy judge, and he shall 
be accorded an opportunity to be heard on the charges. Any cause 
for removal of any bankruptcy judge coming to the knowledge of the 
Director of the Administrative Office of the United States Courts 
shall be reported by him to the chief judge of the circuit or circuits 
in which he serves, and a copy of the report shall at the same time 
be transmitted to the circuit council or councils and to the bankruptcy 
judge. 
"(c) Each bankruptcy judge shall reside in the district or one of 
the districts for which he is appointed, or within 20 miles of his official 
station. 
"(d) If the public interest and the nature of the business of a bank-
ruptcy court require that a bankruptcy judge should maintain his abode 
at or near a particular part of the district the judicial council of the 
circuit may so declare and may make an appropriate order. If the bank-
ruptcy judges of such a district are unable to agree as to which of them 
shall maintain his abode at or near the place or within the area specified 
in such an order the judicial council of the circuit may decide which of 
them shall do so. 
28 use 154. 
"§ 154. Salaries of bankruptcy judges 
"Each judge of a bankruptcy court shall receive a salary at an 
annual rate of $50,000, subject to adjustment under section 225 of 
the Federal Salarv Act of 1967 (2 U.'S.C. 351-361), and section 461 
28 use 461. 
of this title. 
28 use 155. 
«'§ 155. Chief judge; precedence of bankruptcy judges 
"(a) In each district having more than one judge the bankruptcy 
judge in regular active service who is senior in commission and under 
seventy years of age shall be the chief judge of the bankruptcy court. 
If all the bankruptcy judges in regular active service are 70 years 
of age or older the youngest shall act as chief judge until a judge has 
been appointed and qualified who is under 70 years of age, but a judge 
may not act as chief judge until he has served as a bankruptcy judge 
for one year. 
"(b) The chief judge shall have precedence and preside at any 
session which he attends. 
"Other bankruptcy judges shall have precedence and preside accord-
ing to the seniority of their commissions. Judges whose commissions 
bear the same date shall have precedence according to seniority in 
"(c) A judge whose commission extends over more than one district 
shall be jimior to all bankruptcy judges except in the district in which 
he resided at the time he entered upon the duties of his office. 
"(d) If the chief jud^e desires to be relieved of his duties as chief 
judge while retaining his active status as a bankruptcy judge, he may 
so certify to the chief judge of the court of appeals for the circuit 
in which the bankruptcy judge serves, and thereafter the bankruptcy 
judge in active service next in precedence and willing to serve shall 
be designated by the chief judge of the court of appeals as the chief 
judge of the bankruptcy court. 
"(e) If a chief judge is temporarily unable to perform his duties as 
such, they shall be performed by the bankruptcy judge in active 
service, present in the district and able and qualified to act, who is 
next in precedence. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2659 
"(f) Service as a referee in bankruptcy or as a bankruptcy judge 
under the Bankruptcy Act shall be taken into account in the determi- 11 USC prec. 1. 
nation of seniority of commission under this section. 
"§ 156. Division of business among bankruptcy judges 
28 U
S
C 156. 
"The business of a bankruptcy court having more than one judge 
shall be divided among the judges as provided by the rules and orders 
of the court. 
"The chief judge of the bankruptcy court shall be responsible for 
the observance of such rules and orders, and shall divide the business 
and assign the cases so far as such rules and orders do not otherwise 
prescribe. 
"If the bankruptcy judges in any district are unable to agree upon 
the adoption of rules or orders for that purpose the judicial council 
of the circuit shall make the necessary orders. 
"§ 157. Times of holding court 
28 USC 157. 
"(a) The bankruptcy couii: at each designated location shall be 
deemed to be in continuous session on all business days throughout the 
year, 
"(b) Each bankruptcy court may establish by local rule or order 
schedules of court sessions at designated places of holding court other 
than the headquarters oiSce of the court. Such schedules may be pre-
termitted by order of the court. 
" (c) Bankruptcy court may be held at any place within the territory 
served, in any case, on order of the bankruptcy court, for the con-
venience of the parties, on such notice as the bankruptcy court orders. 
*'§ 158. Accommodations at places for holding court 
28 USC 158. 
"Court shall be held only at places where Federal quarters and 
accommodations are available, or suitable quarters and accommoda-
tions are furnished without cost to the United States. The foregoing 
restrictions shall not, however, preclude the Administrator of General 
Services, at the request of the Director of the Administrative Office 
of the United States Courts, from providing such court quarters and 
accommodations as the Administrator determines can appropriately 
be made available at places where court is authorized by law to be 
held, but only if such court quarters and accommodations have been 
approved as necessary by the judicial council of the appropriate 
circuit. 
"§ 159. Vacant judgeship as affecting proceedings 
28 USC 159. 
"When the office of a bankruptcy judge becomes vacant, all pending 
process, pleadings and proceedings shall, when necessary, be continued 
by the clerk until a judge is appointed or designated to hold such court. 
"§ 160. Appellate panels 
28 USC 160. 
"(a) If the circuit council of a circuit ordei-s application of this 
section to a district within such circuit, the chief judge of each circuit 
shall designate panels of three bankruptcy judges to hear appeals 
from judgments, orders, and decrees of the bankruptcy court of the 
United States for such district. Except as provided in section 293(e) 
of this title, a panel shall be composed only of bankruptcy judges 
for districts located in the circuit in which the appeal arises. The 
chief judge shall designate a sufficient number of such panels so that 
appeals may be heard and disposed of exjjeditiously. 
"(b) A panel designated under subsection (a) of this section may 
not hear an appeal from a judgment, order, or decree entered by a 
member of the panel. 
92 STAT. 2660 
PUBLIC LAW 95-598—NOV. 6, 1978 
"(c) When hearing an appeal, a panel designated under subsection 
(a) of this section shall sit at a place convenient to the parties to the 
appeal.". 
(b) The table of chapters of part I of title 28 of the United States 
Code is amended by inserting immediately after the item relating to 
chapter 5 of such title the following: 
"6. Bankruptcy courts 
151". 
SEC. 202. Section 291(c) of title 28 of the United States Code is 
amended by inserting "or bankruptcy" immediately after "to hold 
a district". 
SEC. 203. Section 292(b) of title 28 of the United States Code is 
amended by inserting "or a bankruptcy court" immediately after "to 
hold a district court". 
SEC. 204. Section 292(d) of title 28 of the United States Code is 
amended— 
(1) by striking out "either"; 
(2) by inserting "bankruptcy court," immediately after "in 
a"; and 
(3) by inserting a comma immediately after "district court". 
SEC. 205. Section 293 of title 28 of the United States Code is amended 
by adding at the end thereof the following: 
"(e) (1) The Chief Justice of the United States may designate and 
assign temporarily a bankruptcy judge of one circuit for service in 
a bankruptcy court in another circuit upon presentation of a certifi-
cate of necessity by the chief judge or circuit justice of the circuit 
wherein the need arises. 
"(2) The chief judge of a circuit may, in the public interest, desig-
nate and assign temporarily a bankruptcy judge of the circuit to hold 
a bankruptcy court in any district within the circuit.". 
SEC. 206. Section 294 of title 28 of the United States Code is 
amended— 
(1) in subsection (c), by deleting "or district" and inserting 
"district or bankruptcy judge"; and 
(2) in subsection (d), by striking out "or district judge" and 
inserting in lieu thereof ", district judge or bankruptcy judge". 
SEC. 207. Section 295 of title 28 of the United States Code is amended 
by striking out "or district" and inserting in lieu thereof "district, 
or bankruptcy". 
SEC. 208. Section 331 of title 28 of the United States Code is 
amended— 
(1) by striking out "and a district judge from each judicial 
circuit" in the first sentence of the first paragraph thereof and 
inserting "a district judge from each judicial circuit, and two 
bankruptcy judges" in lieu thereof; 
(2) by inserting "circuit and district" in the second paragraph— 
(A) immediately after "amended section the"; 
(B) immediately after "for one year, the"; and 
, 
(C) immediately after "two years and the"; 
(3) by inserting immediately after the second paragraph the 
following: "The bankruptcy judges to be summoned shall be 
chosen at large by all the bankruptcy judges. Each bankruptcy 
judge chosen shall serve as a member of the conference for three 
successive years, except that in the year following the effective 
date of this sentence the bankruptcy judges shall choose one bank-
ruptcy judge to serve for two years."; 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2(161 
(4) by inserting "or a bankruptcy judge chosen by the bank-
ruptcy judges" immediately after "judges of the circuit" in the 
first sentence in the third paragraph; and 
(5) by inserting "or any other bankruptcy judge" immediately 
before the period in the first sentence in the third paragraph. 
SEC. 209. Section 332(d) of title 28 of the United States Code is 
amended by inserting "and bankruptcy judges" immediately after 
"The district judges". 
SEC. 210. Section 333 of title 28 of the United States Code is amended 
by striking out "and district" and inserting in lieu thereof ", district, 
and bankruptcy". 
SEC. 211. Section 376(a)(2)(A) of title 28 of the United States 
Code is amended by inserting ", or (iii) in the case of a bankruptcy 
judge, after retirement under section 337 of this title" immediately 
before the semicolon. 
SEC. 213. Section 451 of title 28 of the United States Code is 
amended— 
(1) by inserting a comma and "and bankruptcy courts, the 
judges of which are entitled to hold office for a term of 14 years" 
immediately before the period at the end of the paragraph begin-
ning with "The term 'court of the United States' "; and 
(2) by inserting a comma and "and judge of the bankruptcy 
courts, the judges of which are entitled to hold office for a term 
of 14 years" immediately before the period at the end of the 
paragraph beginning with "The term 'judge of the United 
States'". 
SEC. 214. (a) Sections 455(a) and 455(e) of title 28 of the United 
States Code are each amended by striking out "magistrate, or referee 
in bankruptcy" each place it appears and inserting in lieu thereof 
"or magistrate". 
(b) The heading for section 455 of title 28 of the United States 
Code is amended by striking out "magistrate, or referee in bank-
ruptcy" and inserting in lieu thereof, "or magistrate'*. 
(c) The item relating to section 455 in the table of sections of chap-
ter 21 of title 28 of the United States Code is amended by striking 
out "magistrate, or referee in bankruptcy" and inserting in lieu thereOT 
"or magistrate". 
SEC. 215. Section 456 of title 28 of the United States Code is 
amended— 
(1) by striking out "and the United States District Court for 
the District of Columbia," and inserting in lieu thereof "the 
United States District Court for the District of Colum-
bia, and the United States Bankruptcy Court for the District 
of Columbia,"; 
(2) by striking out "and district" and inserting in lieu thereof 
", district and bankruptcy"; and 
(3) by striking out "and each district judge" and inserting in 
lieu thereof ", each district judge; and each bankruptcy judge". 
SEC. 216. Section 457 of title 28 of the United States'" Code is 
amended by inserting "of bankruptcy courts," immediately after "The 
record". 
SEC. 217. (a) The heading for section 460 of title 28 of the 
United States Code is amended by striking out "Alaska,". 
(b) The item relating to section 460 in the table of sections of chap-
ter 2i of title 28 of the United States Code is amended by striking out 
"Alaska,". 
92 STAT. 2662 
" 
PUBLIC LAW 95-598—NOV. 6, 1978 
SEC. 218. Section 506 of title 28 of the United States Code is 
amended by striking out "nine" and inserting in lieu thereof "ten". 
SEC. 219.' (a) Section 526(a)(1) of title 28 of the United States 
Code is amended by striking out "and marshals" and inserting in 
lieu thereof ", marshals, and trustees". 
(b) The heading for section 526 of title 28 of the United States 
Code is amended by striking out "and marshals" and inserting in 
lieu thereof ", marshals, and trustee". 
(c) The item relating to section 526 in the table of sections of chap-
ter 31 of title 28 of the United States Code is amended by striking 
out "and marshals" and inserting in lieu thereof ", marshals, and trustees". 
SEC. 220. Section 526(a) (2) of title 28 of the United States Code 
is amended— 
(1) by striking out "referees,"; 
(2) by striking out "and receivers in bankruptcy" and insert-
ing in lieu thereof "in cases under title 11"; and 
(3) by striking out "commissioners" and inserting "magis-
trates" in lieu thereof. 
SEC. 221. Section 569(a) of title 28 of the United States Code is 
amended by striking out "of the district court" and inserting in lieu 
thereof "of the bankruptcy, of the district court,". 
SEC. 222. Section 571(a) of title 28 of the Ignited States Code is 
amended— 
(1) by striking out "and of the marshals" and inserting in lieu 
thereof "of the marshals"; and 
(2) by inserting ", and of the United States trustees, their 
assistants, staff and other employees" immediately after "clerical 
assistance". 
SEC. 223. Section 571(b) of title 28 of the United States Code is 
amended by striking out "and district" and inserting in lieu thereof 
", district, and bankruptcy". 
SEC. 224. (a) Title 28 of the United States Code is amended by 
inserting immediately after chapter 37 the following: 
"CHAPTER 
39—UNITED 
STATES 
TRUSTEES 
"Sec. 
"581. United States trustees. 
"582. Assistant United States trustees. 
"583. Oathof oflSce. 
"584. OflBcial stations. 
"585. Vacancies. 
"586. Duties; supervision by Attorney General. 
"587. Salaries. 
; 
"588. Expenses. 
, 
"589. Staff and other employees. 
28 use 581. 
«§ 581. United States trustees 
"(a) The Attorney General shall appoint one United States trustee 
for each of the following districts or groups of districts: 
"(1) District of Maine, District of New Hampshire, District 
of Massachusetts, and District of Rhode Island. 
"(2) Southern District of New York. 
"(3) District of Delaware and District of New Jersey. 
"(4) Eastern District of Virginia and District of District of 
Columbia. 
"(5) Northern District of Alabama. 
"(6) Northern District of Texas. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2663 
"(7) Northern District of Illinois. 
"(8) District of Minnesota, District of North Dakota, District 
of South Dakota. 
"(9) Central District of California. 
" (10) District of Colorado and District of Kansas. 
"(b) Each United States trustee shall be appointed for a term of 
seven years. On the expiration of his term, a United States trustee 
shall continue to perform the duties of his Office until his successor is 
appointed and qualifies. 
"(c) Each United States trustee is subject to removal for cause by 
the Attorney General. 
"§ 582. Assistant United States trustees 
28 USC 582. 
"(a) The Attorney General may appoint one or more assistant 
United States trustees in any district when the public interest so 
requires. 
"(b) Each assistant United States trustee is subject to removal for 
cause by the Attorney General. 
"§ 583. Oath of office 
28 USC 583. 
"Each United States trustee and assistant United States trustee, 
before taking office, shall take an oath to execute faithfully his duties. 
«§ 584. Official stations 
28 USC 584. 
"The Attorney General may determine the official stations of the 
United States trustees and assistant United States trustees within the 
districts for which they were appointed. 
"§ 585. Vacancies 
28 USC 585. 
"The Attorney General may appoint an acting United States trustee 
for a district in which the office of United States trustee is vacant, or 
may designate a United States trustee for another judicial district to 
serve as trustee for the district in which such vacancy exists. The 
individual so appointed or designated may serve until the earlier of 
90 days after such appointment or designation, as the case may be, or 
the date on which the vacancy is filled by appointment under section 
581 of this title. 
"§ 586. Duties; supervision by Attorney General 
28 USC 586. 
"(a) Each United States trustee, within his district, shall— 
"(1) establish, maintain, and supervise a panel of private 
trustees that are eligible and available to serve as trustees in cases 
under chapter 7 of title 11; 
^n«e. P- 2603. 
"(2) serve as and perform the duties of a trustee in a case 
under title 11 when required under title 11 to serve as trustee in 
such a case; 
"(3) supervise the administration of cases and trustees in cases 
under chapter 7,11, or 13 of title 11; 
j ^ ' PP- 2625, 
"(4) deposit or invest under section 345 of title 11 money yi 
2565 
received as trustee in cases under title 11; 
» P- 
• 
"(5) perform the duties prescribed for the United States 
trustee under title 11; and 
"(6) make such reports as the Attorney General directs. 
" (b) If the number of cases under chapter 13 of title 11 commenced 
in a particular judicial district so warrant, the United States trustee 
for such district may, subject to the approval of the Attorney General, 
appoint one or more individuals to serve as standing trustee, or 
designate one or more assistant United States trustee, in cases under 
such chapter. The United States trustee for such district shall 
92 STAT. 2664 
PUBLIC LAW 95-598—NOV. 6, 1978 
supervise any such individual appointed as standing trustee in the 
performance of the duties of standing trustee. 
"(c) Each United States trustee shall be under the general super-
vision of the Attorney General, who shall provide general coordination 
and assistance to the United States trustees. 
Rules. 
"(d) The Attorney General shall prescribe by rule qualifications 
for membership on the panels established by United States trustees 
under subsection (a) (1) of this section, and qualifications for appoint-
ment under subsection (b) of this section to serve as standing trustee 
Ante, p. 2645. 
in cases under chapter 13 of title 11. The Attorney General may not 
require that an individual be an attorney in order to qualify for 
appointment under subsection (b) of this section to serve as standing 
trustee in cases under chapter 13 of title 11. 
" ( e ) ( 1 ) The Attorney General, after consultation with a United 
States trustee that has appointed an individual under subsection (b) 
of this section to serve as standing trustee in cases under chapter 13 
of title 11, shall fix— 
"(A) a maximum annual compensation for such individual, 
not to exceed the lowest annual rate of basic pay in effect for 
grade GS-16 of the General Schedule prescribed under section 
5 use 5332 note. 
5332 of title 5; and 
"(B) a percentage fee, not to exceed ten percent, based on such 
maximum 
annual 
compensation 
and 
the 
actual, 
necessary 
expenses incurred by such individual as standing trustee. 
"(2) Such individual shall collect such percentage fee from all 
payments under plans in the cases under chapter 13 of title 11 for 
which such individual serves as standing trustee. Such individual 
shall pay to the United States trustee, and the United States trustee 
shall pay to the Treasury— 
"(A) any amount by which the actual compensation of such 
individual exceeds five percent upon all payments under plans in 
cases under chapter 13 of title 11 for which such individual serves 
as standing trustee; and 
"(B) any amount by which the percentage for all such cases 
exceeds— 
"(i) such individual actual compensation for such cases, 
as adiusted under subparagraph (A) of this paragraph; plus 
"(ii) the actual, necessary expenses incurred by such 
individual as standing trustee in such cases. 
28 use 587. 
«§ 587. Salaries 
"The Attorney General shall fix the annual salaries of United States 
trustees and assistant United States trustees at rates of compensation 
not to exceed the lowest annual rate of basic pay in effect for grade 
GS-16 of the General Schedule prescribed under section 5332 of title 5. 
28 use 588. 
«§ 588. Esqpenses 
"Necessary office expenses of the United States trustee shall be 
allowed Avhen authorized by the Attorney General. 
28 use 589. 
«§ 589. Staflf and other employees 
"The ITnited States trustee may employ staff and other employees 
on approval of the Attorney General.". 
(b) The table of chapters of part II of title 28 of the United States 
Code is amended by inserting at the end thereof the following: 
"39. United States Trustees 
581". 
SEC. 225. (a) Section 604(a) of title 28 of the United States Code 
is amended— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2665 
(1) by redesignating paragraph (13) as paragraph (14); and 
(2) by inserting immediately after paragraph 
(12) the 
following: 
"(13) Lay before Congress, annually, statistical tables that will 
accurately reflect the business transacted by the several bankruptcy 
courts, and all other pertinent data relating to such courts;". 
(b) Section 604 of title 28 of the United States Code, is amended 
by adding at the end thereof the following: 
"(f) For each bankruptcy court, the Director shall name qualified 
persons to membership on the panel of trustees. The number and 
qualifications of persons named to membership on the panel of trustees 
sTiall be determined by rules and regulations to be adopted by the 
Director, An individual named to membership on the panel of trustees 
shall have a residency or office in the State served by the court or in 
any adjacent State. A corporation named to membership on the panel 
of trustees shall be authorized by its charter or by law to act as trustee 
and shall have an office in the State served by the court. The Director 
on his own initiative may at any time remove for cause a person named 
to a panel of trustees or remove a trustee appointed from the panel.". 
SEC. 226. Section 610 of title 28 of the United States Code is amended 
by striking out "and district courts" and inserting in lieu thereof 
", district courts, and bankruptcy courts". 
SEC. 227. Section 620(b) (3) of title 28 of the United States Code 
is amended— 
(1) by striking out "referees,"; and 
(2) by striking out "commissioners" and inserting "magistrates" 
in lieu thereof. 
SEO. 228. Section 621(a) (2) of title 28 of the United StatesCode 
is amended by striking out "and three active judges of the district 
courts of the United States" and inserting in lieu thereof ", three active 
judges of the district courts of the United States, one active judge of 
the bankruptcy courts of the United States". 
SEC. 229. Section 621(b) of title 28 of the United States Code is 
amended by striking out everything after "years" down through "That 
a" and inserting in lieu thereof ". A". 
SEC. 230. Chapter 42 of title 28 of the United States Code is 
amended—• 
(1) by striking out section 629; and 
(2) by striking out the item relating to section 629 in the table 
of sections. 
SEC. 231. Section 631(c) of title 28 of the United States Code is 
amended—• 
(1) by striking out "of the conference, a part-time referee in 
bankruptcy or" and inserting in lieu thereof "of the conference,"; 
and 
" 
(2) by striking out "magistrate and part-time referee in bank-
niptcy," and inserting in lieu thereof "magistrate and". 
SEC. 232. Section 634(a) of title 28 of the United States Cbde is 
amended by striking out "for full-time and part-time United States 
magistrates not to exceed the rates now or hereafter provided for 
full-time and part-time referees in bankruptcy, respectively, referred 
to in section 40a of the Bankruptcy Act (11 U.S.C. 68(a)), as 
amended,", and inserting in lieu thereof "not to exceed $48,500 per 
annum, subject to adjustment in accordance with section 225 of the 
Federal Salary Act of 1967 and section 461 of this title,". 
SEC. 233. (a) Title 28 of the United States Code is amended by 
inserting immediately after chapter 49 the following: 
Statistical tables. 
Rules and 
regulations. 
28 use 620 et 
seq. 
2 use 351. 
92 STAT. 2666 
PUBLIC LAW 95-598—NOV. 6, 1978 
"CHAPTER 
50—BANKRUPTCY 
COURTS 
"Sec. 
"771. Clerks. 
"772. Other employees. 
; 
"773. Records of proceedings; reporters. 
: 
"774. Power to appoint. 
"775. Salaries of employees. 
28 use 771. 
«§ 771. Clerks 
" (a) Based on need each bankruptcy court may appoint a clerk who 
shall be subject to removal only by the court. 
"(b) The clerk may appoint, with the approval of the court, neces-
sary deputies, clerical assistants, and employees in such number as 
may be approved by the Director of the Administrative Office of the 
United States Courts. Such deputies, clerical assistants, and employees 
shall be subject to removal only by the clerk with the approval of the 
court. If there is no clerk, the Bankruptcy Judge shall perform the 
duties of this subsection. 
"(c) The clerk of each bankruptcy court shall reside in the district 
for which he is appointed. The bankruptcy court may designate places 
within the district for the offices of the clerk and his deputies, and 
their official stations. 
"(d) A clerk of a bankruptcy court or his deputy or assistant shall 
not receive any compensation or emoluments through any office or 
position to which he is appointed by the court, other than that received 
as such clerk, deputy or assistant, whether from the United States or 
from private litigants. 
"(e) The clerk of each bankruptcy court shall pay into the Treasury 
all fees, costs and other moneys collected by him, except uncollected 
fees not required by Act of Congress to be prepaid. 
"He shall make returns thereof to the Director of the Administrative 
Office of the United States Courts under regulations prescribed by him. 
28 use 772. 
"§772. Other employees 
"Bankruptcy judges may appoint necessary other employees, includ-
ing law clerks and secretaries, subject to any limitation on the aggre-
gate salaries of such employees which may be imposed by law. 
28 use 773. 
"§773. Records of proceedings; reporters 
" (a) The bankruptcy court shall require a record to be made, when-
ever practicable, of all proceedings in cases had in open court. The 
Judicial Conference shall prescribe that the record be taken by elec-
tronic sound recording means, by a court reporter appointed or 
employed by such bankruptcy court to take a verbatim record by 
shorthand or mechanical means, or by an employee of such court desig-
nated by such court to take such a verbatim record. 
"(b) On the request of a party to a proceeding that has been 
recorded who has agreed to pay the fee for a transcript, or a judge of 
the bankruptcy court, a transcript of the original record of the 
requested i:)arts of such proceeding shall be made and delivered 
promptly to such party or judge. Any such transcript that is certified 
shaU be deemed prima facie a correct statement of the testimony taken 
and proceedings liad. No transcript of the proceedings of the bank-
ruptcy court shall be considered as official except those made from 
certified records. 
"(c) Fees for transcripts furnished in proceedings to persons per-
•.!; 
mitted to appeal in forma pauperis shall be paid by the United States 
out of money appropriated for that purpose if the trial judge or a 
circuit judge certifies that the appeal is not frivolous (but presents a 
substantial question). 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2667 
"§ 774. Power to appoint 
28 USC 774. 
"Whenever a majority of the bankruptcy judges of any bankruptcy 
court cannot agree upon the appointment of any officer of such court, 
the chief judge shall make such appointment. 
"§ 775. Salaries of employees 
28 USC 775. 
"The salary of an individual appointed or employed under section 
771 (a), 772, or 773 (a) of this title shall be the same as the salary of an 
individual appointed or employed under section 751 (a), 752, or 753 (a) 
of this title, as the case may be. The salaries of individuals appointed 
under section 771 (b) of this title shall be comparable to the salaries of 
individuals appointed under section 751(b) of this title.". 
(b) The table of chapters of part III of title 28 of the United States 
Code is amended by inserting immediately after the item relating to 
chapter 49 the following: 
"SO. Bankruptcy Courts 
771". 
SEC. 234. Section 957(a) of title 28 of the United States Code is 
amended by inserting "or bankruptcy court" immediately after "dis-
i T*ict court 
SEC. 235.'Section 959(b) of title 28 of the United States Code is 
amended by striking out "A" and inserting in lieu thereof "Except as 
provided in section 1166 of title 11, a". 
SEC. 236. (a) Chapter 83 of title 28 of the United States Code is 
amended by inserting immediately after section 1292 the following: 
"§ 1293. Bankruptcy appeals 
28 USC 1293. 
"(a) The courts of appeals shall have jurisdiction of appeals from 
all final decisions of panels designated under section 160(a) of this 
title. 
"(b) Notwithstanding section 1482 of this title, a court of appeals Post, p. 2671. 
shall have jurisdiction of an appeal from a final judgment, order, or 
decree of an appellate panel created under section 160 or a District 
court of the United States or from a final judgment, order, or decree of 
a bankruptcy court of the United States if the parties to such appeal 
agree to a direct appeal to the court of appeals.". 
(b) The table of sections of chapter 83 of title 28 of the United 
States Code is amended by inserting immediately after the item relat-
ing to section 1292 the following: 
"1293. Bankruptcy appeals.". 
SEC. 237. Section 1294 of title 28 of the United States Code is 
amended— 
(1) by striking out "district and territorial" and inserting in 
lieu thereof "district, bankruptcy, and territorial"; 
(2) by striking out the period at the end thereof and inserting 
a semicolon; and 
(3) by adding at the end thereof the following: 
" (5) From a panel designated under section 160(a) of this title 
to the court of appeals for the circuit in which the panel was so 
designated; 
"(6) From a bankruptcy court of the United States to the court 
of appeals for the circuit embracing the district in which the 
bankruptcy court is located.". 
SEC. 238. (a) Section 1334 of title 28 of the United States Code is 
amended to read as follows: 
92 STAT. 2668 
PUBLIC LAW 95-598—NOV. 6, 1978 
28 use 1334. 
"§ 1334. Bankruptcy appeals 
" (a) The district courts for districts for which panels have not been 
ordered appointed under section 160 of this title shall have jurisdiction 
of appeals from all final judgments, orders, and decrees of bankruptcy 
courts. 
"(b) The district courts for such districts shall have jurisdiction of 
appeals from interlocutory orders and decrees of bankruptcy courts, 
but only by leave of the district court to which the appeal is taken. 
"(c) A district court may not refer an appeal under that section to 
a magistrate or to a special master.". 
(b) The table of sections of chapter 85 of title 28 of the United 
States Code is amended by striking out the item relating to section 
1334 and inserting in lieu thereof the following: 
"1334. Bankruptcy appeals.". 
SEC. 239. Section 1360(a) of title 28 of the United States Code is 
amended by striking out "within the Territory" and inserting in lieu 
thereof "within the State", 
SEC. 240. (a) Chapter 87 of title 28 of the United States Code is 
amended by adding at the end thereof the following : 
28 use 1408. 
"§ 1408. Bankruptcy appeals 
Supra. 
"An appeal under section 1334 of this title from a judgment, order, 
or decree of a bankruptcy court may be brought only in the judicial 
district in which such bankruptcy court is located.". 
(b) The table of sections of chapter 87 of title 28 of the United 
States Code is amended by adding at the end thereof the following: 
"1408. Bankruptcy appeals.". 
SEC. 241. (a) Title 28 of the United States Code is amended by 
inserting immediately after chapter 89 the following: 
"CHAPTER 90—DISTRICT COURTS AND BANK-
RUPTCY COURTS 
"Sec. 
"1471. Jurisdiction. 
"1472. Venue of cases under title 11. 
"1473. Venue of proceedings arising under or related to cases under title 11. 
"1474. Venue of cases ancillary to foreign proceedings. 
"1475. Change of venue. 
"1476. Creation or alteration of district or division. 
"1477. Cure or vpaiver of defects. 
"1478. Removal to the bankruptcy courts. 
"1479. Provisional remedies; security. 
"1480. Jury trials. 
"1481. Powers of bankruptcy court. 
"1482. Appeals. 
^,, 
28 use 1471. 
"§ 1471. Jurisdiction 
"(a) Except as provided in susbection (b) of this section, the dis-
trict courts shall have original and exclusive jurisdiction of all cases 
under title 11. 
"(b) Notwithstanding any Act of Congress that confers exclusive 
jurisdiction on a court or courts other than the district courts, the 
district courts shall have original but not exclusive jurisdiction of all 
civil proceedings arising imder title 11 or arising in or related to cases 
under title 11. 
"(c) The bankruptcy court for the district in which a case under 
title 11 is commenced shall exercise all of the jurisdiction conferred by 
this section on the district courts. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2669 
"(d) SuKisection (b) or (c) of this section does not prevent a district 
court or a bankruptcy court, in the interest of justice, from abstaining 
from hearing a particular proceeding arising under title 11 or arising 
in or related to a case under title 11. Such abstention, or a decision not 
to abstain, is not reviewable by appeal or otherwise. 
"(e) The bankruptcy court in which a case under title 11 is com-
menced shall have exclusive jurisdiction of all of the property, where-
ever located, of the debtor, as of the commencement of such case. 
§ 1472. Venue of cases under title 11 
28 USC 1472. 
"Except as provided in section 1474 of this title, a case under title 11 
may be commenced in the bankruptcy court for a district— 
"(1) in which the domicile, residence, principal place of busi-
ness, in the United States, or principal assets, in the United States, 
of the person or entity that is the subject of such case have been 
located for the 180 days immediately preceding such commence-
ment, or for a longer portion of such 180-day period than the dom-
icile, residence, principal place of business, in the United States, 
or principle assets, in the United States, of such person were 
located in any other district; or 
"(2) in which there is pending a case under title 11 concerning 
such person's affiliate, general partner, or partnership. 
"§ 1473. Venue of proceedings arising under or related to cases 28 U
S
C 1473. 
under title 11 
"(a) Except as provided in subsections (b) and (d) of this section, a 
proceeding arising in or related to a case under title 11 may be com-
menced in the bankruptcy court in which such case is pending. 
"(b) Except as provided in subsection (d) of this section, a trustee 
in a case under title 11 may commence a proceeding arising in or 
related to such case to recover a money judgment of or property worth 
less than $1,000 or a consumer debt of less than $5,000 only in the bank-
ruptcy court for the district in which a defendant resides. 
" (c) Except as provided in section (b) of this section, a trustee in a 
' 
case under title 11 may commence a proceeding arising in or related to 
such case as statutory successor to the debtor or creditors under section 
541 or 544(b) of title 11 in the bankruptcy court for the district where 
the State or Federal court sits in which, under applicable nonbank-
ruptcy venue provisions, the debtor or creditors, as the case may be, 
may have commenced an action on which such proceeding is based if 
the case under title 11 had not been commenced. 
"(d) A trustee may commence a proceeding arising under title 11 or 
arising in or related to a case under title 11 based on a claim arising 
after the commencement of such case from the operation of the business 
of the debtor only in the bankruptcy court for the district where a State 
or Federal court sits in which, under applicable nonbankruptcy venue 
provisions, an action on such claim may have been brought. 
" (e) A proceeding arising in or related to a case under title 11, based 
on a claim arising after the commencement of such case from the opera-
tion of the business of the debtor, may be commenced against the repre-
sentative of the estate in such case in the bankruptcy court for the 
, 
district where the State or Federal court sits in which the party com-
mencing such proceeding may, under applicable nonbankruptcy venue 
provisions, have brought an action on such claim, or in the bankruptcy 
court in which such case in pending. 
92 STAT. 2670 
PUBLIC LAW 95-598—NOV. 6, 1978 
28 use 1474. 
"§ 1474. Venue of cases ancillary to foreign proceedings 
" (a) A case under section 304 of title 11 to enjoin the commencement 
or continuation of an action or proceeding in a State or Federal court, 
or the enforcement of a judgment, may be commenced only in the bank-
ruptcy court for the district where the State or Federal court sits in 
which is pending the action or proceeding against which the injunction 
is sought. 
Ante, p. 2560. 
"(b) A case under section 304 of title 11 to enjoin the enforcement 
of a lien against property, or to require turnover of property of an 
estate, may be commenced only in the bankruptcy court for the district 
in which such property is found. 
"(c) A case under section 304 of title 11, other than a case specified 
in subsection (a) or (b) of this section, may be commenced only in the 
bankruptcy court for the district in which is located the principal 
assets in the United States, of the estate that is the subject of such case. 
28 use 1475. 
"§ 1475. Change of venue 
"A bankruptcy court may transfer a case under title 11 or a proceed-
ing arising under or related to such a case to a bankruptcy court for 
another district, in the interest of justice and for the convenience of 
the parties. 
28 use 1476. 
"§ 1476. Creation or alteration of district or division 
"Cases or proceedings pending at the time of the creation of a new 
district or division or transfer of a county or territory from one divi-
sion or district to another may be tried in the district or division as it 
existed at the institution of the case or proceeding, or in the district or 
division so created or to which the county or territory is so transferred 
as the parties shall agree or the court direct. 
28 use 1477. 
«§ 1477. Cure or waiver of defects 
"(a) The bankruptcy court of a district in which is filed a case or 
proceeding laying venue in the wrong division or district may, in the 
interest of justice and for the convenience of the parties, retain such 
case or proceeding, or may transfer, under section 1475 of this title, 
such case or proceeding to any other district or division. 
"(b) Nothing in this chapter shall impair the jurisdiction of a bank-
ruptcy court of any matter involving a party who does not interpose 
timely and sufficient objection to the venue. 
28 use 1478. 
«§ 1478. Removal to the bankruptcy courts 
"(a) A party may remove any claim or cause of action in a civil 
action, other than a proceeding before the United States Tax Court or 
a civil action by a Government unit to enforce such governmental unit's 
police or regulatory power, to the bankruptcy court for the district 
where such civil action is pending, if the bankruptcy courts have juris-
diction over such claim or cause of action. 
"(b) The court to which such claim or cause of action is removed 
may remand such claim or cause of action on any equitable ground. An 
order under this subsection remanding a claim or cause of action, or a 
decision not so remanding, is not reviewable by appeal or otherwise. 
28 use 1479. 
"§ 1479. Provisional remedies; security 
"(a) Whenever any action is removed to a bankruptcy court under 
section 1478 of this title, any attachment or sequestration of the goods 
or estate of the defendant in such action shall hold the goods or estate 
to answer the final judgment or decree in the same manner as they 
would have been held to answer final judgment or decree had it been 
rendered by the court from which the action was removed, unless the 
attachment or sequestration is invalidated under applicable law. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2671 
" (b) Any bond, undertaking, or security given by either party in an 
: -
action prior to removal under section 1478 of this title shall remain 
valid and effectual notwithstanding such removal, unless such bond, 
undertaking, or other security is invalidated under applicable law. 
"(c) All injunctions, orders, or other proceedings in an action prior 
to removal of such action under section 1478 of this title shall remain 
in full force and effect until dissolved or modified by the bankruptcy 
court. 
"§ 1480. Jury trials 
28 USC 1480. 
" (a) Except as provided in subsection (b) of this section, this chap-
ter and title 11 do not affect any right to trial by jury, in a case under 
title 11 or in a proceeding arising under title 11 or arising in or related 
to a case under title 11, that is provided by any statute in effect on 
September 30,1979. 
"(b) The bankruptcy court may order the issues arising under sec-
tion 303 of title 11 to be tried without a jury. 
Ante, p. 2559. 
•*§ 1481. Powers of bankruptcy court 
28 USC 1481. 
"A bankruptcy court shall have the powers of a court of equity, law, 
and admiralty, but may not enjoin another court or punish a criminal 
contempt not committed in the presence of the judge of the court or 
warranting a punishment of imprisonment. 
"§ 1482. Appeals 
28 USC 1482. 
"(a) Panels designated under section 160(a) of this title shall have Ante, p. 2659. 
jurisdiction of appeals from all final judgments, orders, and decrees 
of bankruptcy courts. 
"(b) Panels designated under section 160(a) of this title shall have 
jurisdiction of appeals from interlocutory judgments, orders, and 
decrees of bankruptcy courts, but only by leave of the panel to which 
the appeal is taken.". 
(b) The table of chapters of part IV of title 28 of the United States 
> 
Code is amended by inserting immediately after the item relating to 
chapter 89 the following: 
"90. District Courts and Bankruptcy Courts 
1471". 
SEC. 242. Section 1656 of title 28 of the United States Code is 
amended by inserting "or in a bankruptcy court" immediately after "a 
district court". 
SEC. 243. Section 1869(f) of title 28 of the United States Code is 
amended by inserting "chapter 6 of title 28, United States Code," 
immediately after "chapter 5 of title 28, United States Code,". 
SEC. 244. Section 1914(a) of title 28 of the United States Code is 
amended by striking out "$15" and inserting "$60" in lieu thereof. 
SEC. 245. Section 1923(b) of title 28 of the United States Code is 
amended by inserting "and United States trustees" immediately after 
"United States attorneys". 
SEC. 246. (a) Chapter 123 of title 28 of the United States Code is 
amended by inserting immediately after section 1929 the following: 
"§ 1930. Bankruptcy courts 
28 USC 1930. 
" (a) Notwithstanding section 1915 of this title, the parties commenc-
ing a case under title 11 shall pay to the clerk of the bankruptcy court 
the following filing fees: 
" (1) For a case commenced under chapter 7 or 13 of title 11, $60. Ante, pp. 2603, 
"(2) For a case commenced under chapter 9 of title 11, $300. 
2645. 
" (3) For a case commenced under chapter 11 of title 11 that does 'y'^' P
* ^^^^' 
not concern a railroad, as defined in section 101 of title 11, $200. 
'^"•^' P- ^^^^• 
' ^ 
Ante, p. 2549. 
92 STAT. 2672 
PUBLIC LAW 95-598—NOV. 6, 1978 
Anu, p. 2625. 
« (4) For a case commenced under chapter 11 of title 11 concern-
ing a railroad, as so defined, $500. 
An individual commencing a voluntary case or a joint case under title 
11 may pay such fee in installments. 
Fees. 
" (b) The Judicial Conference of the Uinited States may prescribe 
additional fees in cases under title 11 of the same kind as the Judicial 
Conference prescribes under section 1914(b) of this title. 
"(c) Upon the filing of any separate or joint notice of appeal or 
application for appeal or upon the receipt of any order allowing, or 
notice of the allowance of, an appeal or a writ of certiorari $5 shall be 
paid to the clerk of the bankruptcy court, by the appellant or petitioner. 
"(d) Wheoiever any case or proceeding is dismissed in any bank-
ruptcy court for want of jurisdiction, such court may order the 
payment of just costs. 
"(e) The clerk of the bankruptcy court may collect only the fees 
prescribed under this section.". 
(b) The table of sections of chapter 123 of title 28 of the United 
States Code is amended by adding at the end thereof the following: 
"1930. Bankruptcy courts.". 
SEC. 247. Section 2075 of title 28 of the United States Code is 
amended by— 
(1) striking out "under the Bankruptcy Act" and inserting in 
lieu thereof "in cases under title 11"; and 
(2) by striking out the last sentence thereof. 
SEC. 248. Section 2107 of title 28 of the United States Code is 
amended— 
(1) by inserting "or the bankruptcy court" immediately after 
"district court"; and 
(2) by striking out the final paragraph. 
SEC. 249. Section 2201 of title 28 of the United States Code is 
Ante, pp. 2582, 
amended by inserting "or a proceeding under section 505 or 1146 of 
2641. 
title 11" immediately after "the Internal Revenue Code of 1954". 
SEC. 250. (a) Chapter 153 of title 28 of the United States Code is 
amended by adding at the end thereof the following: 
28 use 2256. 
«§ 2256. Habeas corpus from bankruptcy courts 
"A bankruptcy court may issue a writ of habeas corpus— 
"(1) when appropriate to bring a person before the court— 
"(A) for examination; 
"(B) to testify; or 
"(C) to perform a duty imposed on such person under this 
title; or 
"(2) ordering the release of a debtor in a case under title 11 in 
custody under the judgment of a Federal or State court if— 
"(A) such debtor was arrested or imprisoned on process in 
any civil action; 
"(B) such process was issued for the collection of a debt— 
" (i) dischargeable under title 11; or 
"(ii) that is or will be provided for in a plan under 
Ante, p. 2645. 
chapter 11 or 13 of title 11; and 
"(C) before the issuance of such writ, notice and a hearing 
have been afforded the adverse party of such debtor in custody 
to contest the issuance of such writ.". 
(b) The table of sections for chapter 153 of title 28 of the United 
States Code is amended by adding at the end thereof the following: 
"2256. Habeas corpus from bankruptcy courts.". 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2673 
SEC. 251. (a) Kule 1101(a) of the Federal Rules of Evidence is 28 USC app. 
amended by striking out", referees in bankruptcy,". 
(b) Rule 1101(b) of the Federal Rules of Evidence is amended by 
striking out "the Bankruptcy Act" and inserting in lieu thereof "'title 
11, United States Code". 
SEC. 252. Rule 1101 (a) of the Federal Rules of Evidence is amended 
by inserting "the United States bankruptcy courts," immediately after 
"the United States district courts,". 
TITLE III—AMENDMENTS TO OTHER ACTS 
SEC. 301. Section 225 (f) (C) of the Federal Salaiy Act of 1967 (2 
U.S.C. 356(C)) is amended— 
(1) by striking out "sections 402(d) and" and inserting "sec-
tion" in lieu thereof; and 
(2) by inserting "and magistrates" immediately before the 
semicolon. 
SEC. 302. The Commodity Exchange Act (7 U.S.C. 1 et seq.) is 
amended by adding at the end thereof the following: 
"SEC. 19. (a) Notwithstanding title 11 of the United States Code, 7 USC 24. 
the Commission may provide, with respect to a commodity broker that 
is a debtor under chapter 7 of title 11 of the United States Code, by ^nte, p. 2603. 
rule or regulation— 
" (1) that certain cash, securities, other property, or commodity 
contracts are to be included in or excluded from customer prop- 
. i r 
erty or member property; 
"(2) that certain cash, securities, other property, or commodity 
contracts are to be specifically identifiable to a particular cus-
tomer in a specific capacity; 
"(3) the method by which the business of such commodity 
broker is to be conducted or liquidated after the date of the filing 
of the petition under such chapter; 
"(4) any persons to which customer property and commodity 
contracts may be transferred under section 766 of title 11 of the Ante, p. 2619. 
United States Code; and 
"(5) how the net equity of a customer is to be determined. 
"Cb) As used in this section, the terms 'commodity broker', 'com- Definitions, 
modity contract', 'customer', 'customer property', 'member property', 
'net equity', and 'security' have the meanings assigned such terms for 
the purposes of subchapter IV of chapter 7 of title 11 of the United Ante, p. 2615. 
States Code.". 
SEC. 303. (a) Subsection (a) of section 4 of the Perishable Agricul-
tural Commodities Act, 1930 (7 U.S.C. 499d (a)), isiamended by insert-
ing ", unless the Secretary finds upon examination of the circum-
stances of such bankruptcy, which he shall examine if requested to do 
so by said licensee, that such circumstances do not warrant such ter-
mination" immediately after "bankrupt".' 
(b) Subsection (e) of section 4 of such Act (7 U.S.C. 499d(e)) is 
amended by inserting "and if he finds that the circumstances of such 
bankruptcy warrant siich a refusal," immediately after "corporation 
adjudicated or discharged as a bankrupt,". 
SEC. 304. Section 21 ('a) of the Agricultural Adjustment Act (7 
U.S.C. 623 (a)) is amended— 
(1) by striking out "receivership, and bankruptcy" and insert-
ing "and receivership" in lieu thereof; and 
(2) by striking out "bankruptcy," in the second sentence. 
aQ-iQ4n—«n—nt 9
«« • ora
92 STAT. 2674 
PUBLIC LAW 95-598—NOV. 6, 1978 
.ff« D'-: • 
SEC. 305. The first section of the Act entitled "An Act to authorize 
the Secretary of Agriculture to compromise, adjust, or cancel certain 
indebtedness, and for other purposes." approved December 20, 1944 
(58 Stat. 836; 12 U.S.C. 1150), is amended by striking out "Act 
entitled 'An Act to establish a uniform system of bankruptcy through-
out the United States' " and inserting "Bankruptcy Act or under title 
11 of the United States Code" in lieu thereof. 
SEC. 306. (a) Section 3(a)(7) of the Securities Act of 1933 (15 
U.S.C. 77c(a) (7)) is amended by striking out "in bankruptcy" and 
inserting "or debtor in possession in a case under title 11 of the United 
States Code" in lieu thereof. 
(b) Paragraphs (9) and (10) of section 3(a) of such Act (15 U.S.C. 
77c(a) (9) and (10)) are each amended by striking out "Any" and 
inserting in lieu thereof the following: "Except with respect to a 
security exchanged in a case under title 11 of the United States Code, 
any". 
SEC. 307. Section 303(18) of the Trust Indenture Act of 1939 (15 
U.S.C. 77ccc( 18)) is amended by striking out "Act entitled'An Act to 
establish a uniform system of bankruptcy throughout the United 
States', approved July 1,1898, as amended, whether amended prior to 
or after the enactment of this title" and inserting "Bankruptcy Act 
or title 11 of the United States Code" in lieu thereof. 
SEC. 308. (a) Section 5(b) (1) (A) of the Securities Investor Protec-
tion Act of 1970 (15 U.S.C. 78eee(b) (1)) is amended— 
(1) by striking out "the Bankruptcy Act" and inserting "sec-
Ante, p. 2549. 
tion 101 of title 11 of the United States Code" in lieu thereof; 
(2) by strikina: out subparagraph (B) thereof; and 
(3) by redesignating subparagraphs (C), (D), and (E) as 
subparagraphs (B), (C),and (D),respectively. 
(b) Section 5(b) (2) (A) (iii) of such Act (15 U.S.C. 78eee(b) (2) 
(A) (iii)) is amended by striking out "bankruptcy by the Bankruptcy 
Act" and inserting "the United States having jurisdiction over cases 
under title 11 of the United States Code" in lieu thereof. 
(c) Section 5(b) (2) (B) (iii) of such Act (15 U.S.C. 78eee(b) (2) 
fB)(iii)) is amended by striking out ", the right of setoff provided 
11 use 108. 
in section 68 of the Bankruptcy Act, and" and inserting in lieu thereof 
"any right of setoff, except to the extent such right may be affected 
Anu, p. 2602. 
under section 553 of title 11 of the United States Code, and shall not 
abrogate". 
(d) Section .5/b) (3) of such Act (15 U.S.C. 78eee(b)(3)) is 
amended by striking out "the applicable provisions of the Bankruptcv 
Ante, p. 2562. 
Act" and inserting "section 322 of title 11 of the ITnited States Code" 
in lieu thereof. 
(e) Section 5(b) of such Act (15 U.S.C. 78eee(b)) is amended by 
strikino^ out paragraph (4) thereof and inserting in lieu thereof the 
following: 
,, 
"(4) 
REMOVAL, TO BAXKRUPTCY COURT.—Upon the issuance of a 
protective decree and appointment of a trustee, or a trustee and coun-
sel, under this section, the court shall forthwith order the removal of 
the entire liquidation proceeding to the court of the United States in 
the same judicial district having jurisdiction over cases under title 
11 of the United States Code. The latter court shall thereupon have 
all of the jurisdiction, powers, and duties conferred by this Act upon 
the court to which application for the issuance of the protective decree 
was made.". 
(f) Section 5(b)(5) of such Act (15 U.S.C. 78eee(b)(5)) is 
amended— 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2675 
(1) by striking out subparagraph (B); 
(2) by striking out "the Bankruptcy Act governing applica-
tions for allowances under such Act" in subparagraph (C) and 
inserting "title 11 of the United States Code governing applica-
tions for allowances under such title"; 
(3) by striking out "C" in subparagraph (D) and inserting 
" (B)" in lieu thereof; 
(4) by striking out "the Bankruptcy Act" in subparagraph (E) 
and inserting "section 504 of title 11 of the United States Code" Ante, p. 2582. 
in lieu thereof; and 
(5) by redesignating subparagraphs (C), (D), (E), and (F) 
as subparagraphs (B),(C),(D)5 and (E), respectively. 
(g) Section 6(b) of such Act (15 U.S.C. 78fff (b)) is amended— 
(1) by striking out", the Bankruptcy Act." and all that follows 
through the end of subsection (b), and inserting in lieu thereof 
"chapters 1, 3, and 5 and subchapters I and II of chapter 7 of title Ante, pp. 2549, 
11 of the United States Code. For the purposes of applying such 2558, 2578, 
title in carrying out this section, a reference in such title to the 2604, 2606. 
date of the filing of the petition shall be deemed to be a reference 
to the filing date under this Act."; and 
(2) by striking out "Application of Bankruptcy Act" and 
inserting "Application of Title 11 of the United States Code" in 
lieu thereof. 
(h) Section6(e) of suchAct (15U.S.C.78fff (e)) isamended— 
^nte, p. 260. 
(1) by striking out "in the Bankruptcy Act" and inserting "in 
section 726 of title 11 of the United States Code" in lieu thereof; Ante, p. 2608. 
and 
(2) by striking out "as a first priority under the Bankruptcy 
Act" and inserting "under section 507(a)(1) of title 11 of the ^rate, p. 2583. 
United States Code" in lieu thereof. 
(i) Section 7(a) of such Act (15 U.S.C. 78fff-l(a)) is amended by Ante, p. 260. 
striking out "bankruptcy under the Bankruptcy Act has with respect 
to a bankrupt and the property of a bankrupt" and inserting "a case 
under title 11 of the United States Code" in lieu thereof. 
:
;
.
. 
(j) Section 7(b) of such Act (15 U.S.C. 78fff-l(b)) is amended 
by striking out "in bankruptcy" and inserting "in a case under chapter 
7 of title 11 of the United States Code, including, if the debtor is a com-
modity broker, as defined under section 101 of such title, the duties 
specified in subchapter IV of such chapter 7," in lieu thereof. 
(k) Section 7(c) of such Act (15 U.S.C. 78fff-l (c)) is amended by 
striking out "by the Bankruptcy Act" and inserting "of a trustee in 
a case under chapter 7 of title 11 of the United States Code" in lieu 
thereof. 
(1) Section 8(a)(1) of such Act (15 U.S.C. 78fff-2(a) (1)) is Ante, p. 261. 
amended by striking out "the Bankruptcy Act" and inserting "title 11 
of the United States Code" in lieu thereof. 
(m) Section 8(c)(3) of such Act (15 U.S.C. 78fff-2(c) (3)) is 
amended by striking out "the Bankruptcy Act" and inserting "title 11 
of the United States Code" in lieu thereof. 
(n) Section 10(e) of such Act (15 U.S.C. 78fff-4(e)) IB amended— Ante, p. 266. 
(1) by striking out "Jurisdiction of District Courts" and 
inserting "Jurisdiction of Bankruptcy Courts" in lieu thereof; 
(2) by striking out "district courts of the United States" and 
inserting "courts of the United States having jurisdiction over 
cases under title 11 of the United States Code" in lieu thereof; 
and 
92 STAT. 2676 
PUBLIC LAW 95-598—NOV. 6, 1978 
(3) by striking out ", without regard to the citizenship of the 
parties or the amount in the controversy". 
Ante, p. 271. 
(Q) Section 16 of such Act (15 U.S.C. 78111) is amended— 
(1^ by striking out paragraph (1) thereof; 
(2) by striking out paragraph (8) (A) thereof and inserting 
- 
in lieu thereof the following: 
"(A) if a petition under title 11 of the United States Code con-
cerning the debtor was filed before such date, the term 'filing date' 
.g'ic.2 «
• 
means the date on which such petition was filed;" and 
(3) by redesignating paragraphs (2) through (15) thereof as 
paragraphs (1) through (14), respectively. 
SEC. 309. Section 11(f) of the Public Utility Holding Company Act 
of 1935 (15 U.S.C. 79k(f)) is amended by striking out "bankruptcy" 
and inserting "case under title 11 of the United States Code" in lieu 
thereof. 
-
^
"
* '• 
SEC. 310. (a) Section 2(a) (8) of the Investment Company Act of 
1940 (15 U.S.C. 80a-2(a)(8)) is amended by striking out "bank-
ruptcy" and inserting "a case under title 11 of the Unitde States Code" 
in lieu thereof. 
(b) Section 6(a)(2) of such Act (15 U.S.C. 80a-6(a)(2)) is 
amended by striking out "bankruptcy" and inserting "a case under 
title 11 of the United States Code" in lieu thereof. 
(c) Section 25(d) of such Act (15 U.S.C. 80a-25(d)) is amended 
'""' 
by striking out "the Bankruptcy Act of 1898, as amended" and insert-
ing "title 11 of the United States Code" in lieu thereof. 
Mm 
gEC. 311. Section 202 (a) (5) of the Investment Advisers Act of 1940 
(15 U.S.C. 80b-2(a)(5)) is amended by striking out "bankruptcy" 
^
^ ^, 
and inserting "a case under title 11 of the United States Code" in lieu 
.Mn% ., 
thereof. 
SEC. 312. (a) Section 303(b) (1) (B) of the Consumer Credit Pro-
^ 
.ess -<i 
tection Act (15 U.S.C. 1673(b) (1) (B)) is amended by striking out 
"court of bankruptcy under chapter X I I I of the Bankruptcy Act" and 
inserting "court of the United States having jurisdiction over cases 
Ante, p. 2645. 
under chapter 13 of title 11 of the United States Code" in lieu thereof. 
(b) Section 605(a) (1) of the Fair Credit Reporting Act (15 U.S.C. 
1681c(a) (1)) is amended to read as follows: 
" (1) cases under title 11 of the United States Code or under the 
11 use prec. 1. 
Bankruptcy Act that, from the date of entry of the order for 
relief or the date of adjudication, as the case may be, antedate the 
report by more than 10 years.". 
SEC. 313. Section 201(e) of title 17 of the United States Code is 
amended by striking out the period at the end thereof and inserting 
", except as provided under title 11." in lieu thereof. 
18 use 151 et 
SEC. 314. (a) Chapter 9 of title 18 of the United States Code is 
^- 
amended— 
(1) by striking out "bankrupt" each place it appears and 
inserting "debtor" in lieu thereof; 
(2) by striking out "bankruptcy proceeding" each place it 
appears and inserting "case under title 11" in lieu thereof; 
ddi .j 
(3) by striking out "bankruptcy law" each place it appears and 
inserting "provisions of title 11" in lieu thereof, 
(b) (1) Title 18 of the United States Code is amended by striking 
out section 151 and inserting in lieu thereof the following: 
18 use 151. 
«§ 151. Definition 
"As used in this chapter, the term 'debtor' mean a debtor concern-
ing whom a petition has been filed under title 11.". 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2677 
(2) The item relating to section 151 in the table of sections for chap-
ter 9 of title 18 of the United States Code is amended by striking out 
"Definitions" and inserting "Definition" in lieu thereof. 
(c) Section 152 of title 18 of the United States Code is amended by— 
(1) striking out "the receiver," each place it appears and insert-
ing "a" in lieu thereof; and 
(2) striking out "document affecting or relating to the property 
or affairs of a" and inserting in lieu thereof "recorded infor-
mation, including books, documents, records, and papers, relating 
to the property or financial affairs of a". 
(d) (1) Section 153 of title 18 of the United States Code is amended 
by striking out "receiver,". 
(2) The heading for section 153 of title 18 of the United States Code 
is amended by striking out", receiver". 
(3) The item relating to section 153 in the table of sections for 
chapter 9 of title 18 of the United States Code is amended by striking 
out". receiver". 
(e)(1) Section 154 of title 18 of the United States Code is 
amended— 
., 
(A) by striking out "Whoever knowingly acts as a referee in a 
'"'^^'^ 
case in which he is directly or indirectly interested; or"; and 
(B) by striking out "referee, receiver,". 
(2) The heading for section 154 of title 18 of the United States 
Code is amended by striking out "referees and other". 
(3) The item relating to section 154 in the table of contents for 
chapter 9 of title 18 of the United States Code is amended by striking 
out "referees and other". 
(f)(1) Section 155 of title 18 of the United States Code is 
amended— 
(A) by striking out the semicolon at the end of the first para-
graph thereof and all that follows down through "Shall" and 
inserting in lieu thereof ", shall"; 
(B) by inserting "knowingly and fraudulently" immediately 
after "supervision,"; and 
(C) by striking out ", bankruptcy or reorganization proceed-
ing" and inserting "or case under title 11" in lieu thereof. 
(2) The heading for section 155 of title 18 of the United States 
Code is amended by striking out "bankruptcy proceedings" and 
inserting in lieu thereof "cases under title 11 and receiverships". 
(3) The item relating to section 155 in the table of sections for 
chapter 9 of title 18 of the United States Code is amended by striking 
out "bankruptcy proceedings" a n d inserting "cases under title 11 and reeeiver-
siiips" in lieu thereof. 
(g) Section 1961(1) (D) of title 18 of the United States Code is 
" " ' 
amended by striking out "bankruptcy fraud" and inserting "fraud 
connected with a case under title 11" in lieu thereof. 
(h) Section 2516(1) (e) of title 18 of the United States Code is 
amended by striking out "bankruptcy fraud" and inserting "fraud 
connected with a case under title 11" in lieu thereof. 
(i) Section 3057 of title 18 of the United States Code is 
amended— 
< 
(1) by striking out "referee" each place it appears and insert-
ing "judge" in lieu thereof; and 
(2) by striking out "violations of the bankruptcy laws" and 
inserting "violation under chapter 9 of this title" in lieu thereof. 
(j) (1) Section 2256 of title 28 of the United States Code is redesig-
nated as section 3244 of title 18 of the United States Code. 
92 STAT. 2678 
PUBLIC LAW 95-598—NOV. 6, 1978 
18 use 3231 et 
(2) The table of sections of chapter 211 of title 18 of the United 
««?• 
States Code is amended by adding at the end thereof the folloAving: 
"3244. Jurisdiction of proceedings relating to transferred offenders.". 
(k) Section 3284 of title 18 of the United States Code is amended 
by striking out "bankrupt or other debtor" and inserting "debtor in a 
case under title 11" in lieu thereof. 
(1) Section 6001 (4) of title 18 of the United States Code is amended 
by inserting "a United States bankruptcy court established under 
chapter 6, title 28, United States Code," immediately after "title 28, 
V 
United States Code ". 
SEC. 315. Section'485(f) of the Tariff Act of 1930 (19 U.S.C. 1485 
(f)) is amended by striking out "receiver or trustee in bankruptcy" 
and inserting "trustee in a case under title 11 of the United States 
' 
Code" in lieu thereof. 
SEC. 316. Section 302(1) (3) of the Automotive Products Trade Act 
of 1965 (19 U.S.C. 2022(1) (3)) is amended by striking out "bank-
ruptcy" and inserting "cases under title 11 of the United States 
Code" in lieu thereof. 
Repeal. 
SEC. 317. Section 439A of part B of title I V of the Higher Edu-
cation Act of 1965 (20 U.S.C. 1087-3) is repealed. 
SEC. 318. Section 239(d) of the Foreign Assistance Act of 1961 
(22 U.S.C. 2199(d)) is amended by striking out "the priority" and 
inserting "any priority" in lieu thereof. 
SEC. 319. Section 2(1) of the National Labor Relations Act (29 
U.S.C. 152 (1)) is amended by striking out "bankruptcy" and inserting 
"cases under title 11 of the United States Code" in lieu thereof. 
"
^ 
SEC. 320. Section 3(d) of the Labor-Management Reporting and 
Disclosure Act of 1959 (29 U.S.C. 402(d)) is amended by striking 
out "bankruptcy" and inserting "cases under title 11 of the United 
States Code" in lieu thereof. 
SEC. 321. (a) Section 4042 of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1342) is amended in subsection (f ) — 
(1) by striking out "bankruptcy and of a court in a proceed-
ing under chapter X of the Bankruptcy Act" and inserting "the 
United States having jurisdiction over cases under chapter 11 of 
title 11 of the United States Code" in lieu thereof; and 
(2) by striking out "bankruptcy,". 
(b) Section 4062(c)(2) of such Act (29 U.S.C. 1362(c)(2)) is 
amended— 
(1) by striking out "the Bankruptcy Act" and inserting "title 
11 of the United States Code" in lieu thereof; and 
(2) by striking out "the subject of a proceeding imder that 
Ante, p. 2603. 
Act" and inserting "a debtor in a case under chapter 7 of such 
title" in lieu thereof. 
(c) Section 4068(c)(2) of such Act (29 U.S.C. 1368(c)(2)) is 
amended— 
/ 
(1) by striking out "the case of bankruptcy or" and inserting 
"a case under title 11 of the United States Code or in" in lieu 
thereof; and 
(2) by striking out "the Bankruptcy Act" and inserting "title 
, 
11 of the United States Code" in lieu thereof. 
SEC. 322. (a) Section 3466 of the Revised Statutes of the United 
States (31 U.S.C. 191) is amended by adding at the end the following: 
"The priority established under this section does not apply, however, 
in a case under title 11 of the United States Code." 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2679 
(b) Section 3467 of the Kevised Statutes of the United States (31 
U.S.C. 192) is amended by striking out "Every" and inserting in lieu 
thereof the following: "Except with respect to a trustee acting in 
accordance with the provisions of title 11 of the United States Code, 
every". 
(c) Section 3469 of the Kevised Statutes of the United States (31 Repeal. 
U.S.C. 194) is repealed. 
(d) Section 3473 of the Revised Statutes of the United States (31 Repeal. 
U.S.C. 198) is repealed. 
(e) Section 3474 of the Revised Statutes of the United States (31 Repeal. 
U.S.C. 199) is repealed. 
(f) The table of sections for title XXXVI of the Revised Statutes 
of the United States is amended by striking out the items relating to 
sections 3469,3473, and 3474. 
(g) Section 5256 of the Revised Statutes of the United States (45 
U.S.C. 81) is amended by striking out "The laws of the United States 
providing for proceedings in bankruptcy shall not be held to apply 
to said corporation.". 
SEC. 323. Section 1 of the Act entitled "An Act to provide for the 
alteration of certain bridges over navigable waters of the United 
States, for the apportionment of the cost of such alterations between 
the United States and the owners of such bridges, and for other pur-
poses", approved June 21, 1940 (54 Stat. 497; 33 U.S.C. 511), is 
amended by striking out "bankruptcy" and inserting "a case under 
title 11 of the United States Code" in lieu thereof. 
SEC. 324. Subsection (a) of section 17 of the Act of March 4, 1927 Repeal. 
(44 Stat. 1434; 33 U.S.C. 917(a)), is repealed. 
SEC. 325. Section 213 of the Transportation Act, 1920 (40 U.S.C. 
316), is amended by striking out "bankruptcy" and inserting "case 
under title 11 of the United States Code" in lieu thereof. 
SEC. 326. Section 7 of the Act entitled "An Act to provide conditions 
for the purchase of supplies and the making of contracts by the United 
States, and for other purposes", approved June 30, 1936 (49 Stat. 
2039; 41 U.S.C. 41), is amended by striking out "bankruptcy" and 
inserting "cases under title 11 of the United States Code" in lieu 
thereof. 
SEC. 327 Subsection (g) of section 733 of the Public Health Service Repeal. 
Act (42 U.S.C. 294f) is repealed. 
SEC. 328. Subsection (b) of section 456 of the Social Security Act Repeal. 
(42 U.S.C. 656 (b)) is repealed. 
SEC. 329. Section 503 (42 U.S.C. 1473) of the Housing Act of 1949 
is amended by striking out "This" and inserting "Except as provided 
in title 11 of the United States Code, this" in lieu thereof. 
SEC. 330. Section 701(a) of the Civil Rights Act of 1964 (42 U.S.C. 
2000e(a)) is amended by striking out "bankruptcy" and inserting 
"cases under title 11, United States Code" in lieu thereof. 
SEC. 331. Section 802(d) of the Act entitled "An Act to prescribe 
penalties for certain acts of violence or intimidation, and for other 
purposes", approved April 11,1968 (82 Stat. 81; 42 U.S.C. 3602(d)), 
is amended by striking out "bankruptcy" and inserting "cases under 
title 11 of the United States Code" in lieu thereof. 
SEC. 332. Section 17 of the Boulder Canyon Project Act (43 U.S.C. 
6l7p) is amended by striking out "Claims" and inserting "Except as 
provided in title 11 of the United States Code, claims" in lieu thereof. 
SEC. 333. Subsection (c) of section 3 of the Emergency Rail Services Repeal. 
Act of 1970 (54 U.S.C. 662) is repealed. 
45 USC 662. 
92 STAT. 2680 
PUBLIC LAW 95-598—NOV. 6, 1978 
SEC. 3 M . Title I X of the Merchant Marine Act, 1936 (46 U.S.C. 1241 
et seq.), is amended by adding at the end thereof the following: 
46 use 1247. 
"SEC. 908. (a) Notwithstanding any other provision of law, in any 
proceeding in a bankruptcy, equity, or admiralty court of the United 
States in which a receiver or trustee may be appointed for any corpora-
tion engaged in the operation of one or more vessels of United States 
registry between the United States and any foreign country, upon 
which the United States holds mortgages, the court, upon finding that 
it will inure to the advantage of the estate and the parties in interest 
and that it will tend to further the purposes of this Act, may con-
stitute and appoint the Secretary of Commerce as sole trustee or 
receiver, subject to the directions and orders of the court, and in any 
such proceeding the appointment of any person other than the Secre-
tary as trustee or receiver shall become etfective upon the ratification 
thereof by the Secretary without a hearing, unless the Secretary shall 
deem a hearing necessary. In no such proceeding shall the Secretary 
be constituted as trustee or receiver without the Secretary's express 
consent. 
"(b) If the court, in any such proceeding, is unwilling to permit the 
trustee or receiver to operate such vessels in such service pending the 
termination of such proceeding, without financial aid from the Govern-
ment, and the Secretary certifies to the court that the continued opera-
tion of such vessel is, in the opinion of the Secretary, essential to the 
foreign commerce of the United States and is reasonably calculated 
to carry out the purposes and policy of this Act, the court may permit 
the Secretary to operate the vessels subject to the orders of the court 
and upon terms decreed by the court sufficient to protect all the parties 
in interest, for the account of the trustee or receiver, directly or through 
a managing agent or operator employed by the Secretary, if the Secre-
tary undertakes to pay all operatmg losses resulting from such opera-
tion, and comply with the terms imposed by the court, and such vessel 
shall be considered to be a vessel of the United States within the mean-
46 use 741 et 
ing of the Suits in Admiralty Act. The Secretary shall have no claim 
**?• 
against the corporation, its estate, or its assets for the amount of such 
payments, but the Secretary may pay such sums for depreciation as it 
deems reasonable and such other sums as the court may deem just. 
' 
The payment of such sums, and compliance with other terms duly 
imposed by the court, together with the payment of the operating 
losses, shall be in satisfaction of all claims against the Secretary on 
account of the operation of such vessels.". 
SEC. 335. (a) Section 22(a) of the Organic Act of Guam ^ S U.S.C. 
1424(a)) is amended by inserting "and a bankruptcy court" immedi-
ately after "jurisdiction of a district court". 
(b) Section 22(b) of such Act (48 U.S.C. 1424(b)) is amended by 
striking out "30 of the Bankruptcy Act of July 1, 1898, as amended 
(title 11, TT.S.C, sec. 53), in bankruptcy cases;" and inserting "2075 
of title 28, United States Code, in cases under title 11, TTnited States 
Code," in lieu thereof. 
SEC. 336. (a) Section 22 of the Revised Organic Act of the Virgin 
Islands (48 U.S.C. 1612) is amended by inserting "and a bankruptcy 
court" immediately after "jurisdiction of a district court". 
Cb) Section 25 of such Act ('48 U.S.C. 1615) is amended by striking 
out "30 of the Bankruntcy Act in bankruptcy cases" and inserting 
"2075 of title 28. United States Code, in cases under title 11, United 
States Code" in lieu thereof. 
^ad :;- 
^^^* ^'^^' ^^^ Section 20c of the Interstate Commerce Act (49 U.S.C. 
20c) is amended by striking out "bankruptcy" and inserting "a case 
under title 11 of the United States Code" in lieu thereof. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 26fll 
(b) Section 213(a)(3) of such Act (49 U.S.C. 313(a)(3)) is 
amended— 
(1) by striking out "bankruptcy from" and inserting "a case 
under title 11 of the United States Code from" in lieu thereof; and 
(2) by striking out "bankruptcy" and inserting "such case" in 
lieu thereof. 
(c) Section 323 of such Act (49 U.S.C. 922a) is amended by striking 
out "bankruptcy" and inserting "a case under title 11 of the United 
States Code" in lieu thereof. 
SEC. 338. (a) Section 8339 of title 5 of the United States Code is 
amended— 
(1) by inserting in subsection (f), immediately after "sub-
sections (a)-(e)", the following: "and (o)"; 
(2) by inserting in subsection (i), immediately after "subsec-
tions (a)-(h)", the following "and (o)"; 
(3) by inserting in subsections (j) and (k)(l), immediately 
after "subsections (a)-(i)" each time it appears, the following: 
"and (o)"; 
(4) by inserting in subsection (1), immediately after "sub-
sections (a)-(k)," the following: "and (o)"; 
(6) by inserting in subsection (m), immediately after "sub-
sections (a)-(e)", the following: "and (o)"; 
(6) by adding at the end thereof the following: 
"(o) The annuity of an employee who is a bankruptcy judge is 
computed with respect to service after March 31, 1979 and before 
April 1, 1984, as a bankruptcy judge and his military service (not 
exceeding five years) creditable under section 8332 of this title by 
multiplying 2^/^ percent of his average annual pay by the years of 
that service.". 
(b) The first sentence of section 8334(c) of title 5, United States 
Code, is amended by adding at the end thereof the following new 
schedule: 
"Bankruptcy judge— 21/2 
August 1, 1920, to June 30, 1926. 
SVz 
July 3,1926, to June 30,1942. 
5 
July 1,1942, to June 30,1948. 
6 
July 1, 1948, to October 31, 1956. 
6% 
November 1, 1956, to December 31, 1969. 
7 
After January 1,1970.". 
(c) Section 8341 of title 5, United States Code is amended— 
(1) by inserting in subsection (b) (1), immediately after "sec-
tion 8339(a)-(i)^ the following: "and (o)"; and 
(2) by striking out of subsection (d) "section 8339(a)-(f) and 
(i)" and insert in lieu thereof the following: "section 8339 (a)-
(f),(i),and(o)". 
(d) Section 8344(a) (A) of title 5, United States Code, is amended 
by striking out "and (i)" and inserting in lieu thereof " (i), and (o)". 
(e) Section 8331 of title 5, United States Code, is amended— 
(1) by striking out "and" at the end of paragraph (20); 
(2) by striking out the period at the end of paragraph (21) and 
inserting in lieu thereof "; and"; and 
(3) by adding at the end thereof the following: 
"(22) 'bankruptcy judge' means an individual appointed under "Bankruptcy 
section 34 of the Bankruptcy Act (11 U.S.C. 62) or under section j"<ige"-
404 (d) of the Act adding this paragraph— 
"(A) who is serving as a United States bankruptcy judge 
on March 31, 1984, and that has agreed by filing a notice of 
such agreement with the President, the Senate, and the Direc-
92 STAT. 2682 
PUBLIC LAW 95-598—NOV. 6, 1978 
Ante, p. 2657. 
tor of the Administrative Office of the United States Courts, 
to accept an appointment as a judge of a United States bank-
ruptcy court established under section 201 of this Act but 
that is not appointed by the President as a judge of such court; 
or 
"(B) whose service as a United States bankruptcy judge 
during the transition period is terminated by reason of death 
or disability.". 
TITLE IV—TRANSITION 
Repeals. 
11 u s e prec. 1 
note. 
11 u s e 202a. 
REPEALER 
SEC. 401. (a) The Bankruptcy Act is repealed. 
(b) Section 3 of the Act entitled "An Act to amend an Act entitled 
'An Act to establish a uniform system of bankruptcy throughout the 
United States', approved July 1, 1898, and Acts amendatory thereof 
and supplementary thereto", approved March 3, 1933 (47 Stat. 1482; 
11 U.S.C. 101a), is repealed. 
(c) Sections 3, 6, and 7 of the Act entitled "An Act to amend an 
Act entitled 'An Act to establish a uniform system of bankruptcy 
throughout the United States, approved July 1,1898, and Acts amend-
atory thereof and supplementary thereto", approved June 7, 1934 
(48 Stat, 923, 924; 11 U.S.C. 76a, 203a, 205a), are repealed. 
(d) The sentence beginning "Said section 74" in section 2 of the 
Act entitled "An Act to amend an Act entitled 'An Act to establish 
a uniform system of bankruptcy throughout the United States', ap-
proved July 1,1898, and Acts amendatory thereof and supplementary 
thereto", approved June 7, 1934 (48 Stat. 924; 11 U.S.C. 103a), is 
repealed. 
(e) Subsection (b) of section 4 of the Act entitled "An Act to 
amend an Act entitled 'An Act to establish a uniform system of bank-
ruptcy throughout the United States', approved July 1, 1898, and 
Acts amendatory thereof and supplementary thereto", approved 
June 7, 1934 (48 Stat. 924; 11 U.S.C. 103a), is repealed. 
(f) Section 2 of the Act entitled "An Act to amend the Act entitled 
'An Act to establish a uniform system of bankruptcy throughout the 
United States', approved July 1,1898, as amended and supplemented", 
approved June 5, 1936 (49 Stat. 1476; 11 U.S.C. 93a), is repealed. 
(g) Section 3 of the Act entitled "An Act to amend the Interstate 
Commerce Act, as amended, and for other purposes", approved 
April 9,1948 (62 Stat. 167; 11 U.S.C. 208), is repealed. 
11 u s e prec. 101 
note. 
Ante, p. 2657. 
Ante, pp. 2661, 
2662. 
Ante, pp. 2661, 
2662. 
EFFECTIVE DATES 
SEC. 402. (a) Except as otherwise provided in this title, this Act 
shall take effect on October 1, 1979. 
(b) Except as provided in subsections (c) and (d) of this sec-
tion, the amendments made by title II of this Act shall take effect on 
April 1, 1984. 
(c) The amendments made by sections 210, 214, 219, 220, 222, 224, 
225, 228, 229, 235, 244, 245, 246, 249, and 251 of this Act shall take 
effect on October 1, 1979. 
(d) The amendments made by sections 217,218,230,247,302,314(j), 
317, 327, 328, 338, and 411 of this Act shall take effect on the date of 
enactment of this Act. 
(e) The amendments made by sections 335(a) and 336(a) of this 
Act shall take effect on April 1,1984. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2683 
SAVINGS PROVISIONS 
llUSCpreclOl 
note. 
Ante, pp. 
2641-2643. 
SEC. 403. (a) A case commenced under the Bankruptcy Act, and 
all matters and proceedings in or relating to any such case, shall be 
conducted and determined under such Act as if this Act had not been 
enacted, and the substantive rights of parties in connection with any 
such bankruptcy case, matter, or proceeding shall continue to be gov-
erned by the law applicable to such case, matter, or proceeding as if 
the Act had not been enacted. 
(b) Notwithstanding subsection (a) of this section, sections 1165, 
1167, 1168, 1169, and 1171 of title 11 of the United States Code, as 
enacted by section 101 of this Act, apply to cases pending under sec- -^nte, p. 2549 
tion 77 of the Bankruptcy Act (11 U.S.C. 205) on the date of 
enactment of this Act in which the trustee has not filed a plan of 
reorganization. 
(c) The repeal made by section 401(a) of this Act does not affect 
any right of a referee in bankruptcy. United States bankruptcy judge, 
or survivor of a referee in bankruptcy or United States bankruptcy 
judge to receive any annuity or other payment under the civil service 
retirement laws. 
(d) The amendments made by section 314 of this Act do not affect 
the application of chapter 9, chapter 96, section 2516, section 3057, or 
section 3284 of title 18 of the United States Code to any act of any 
person— 
(1) committed before October 1, 1979; or 
(2) committed after October 1, 1979, in connection with a case 
commenced before such date. 
(e) Notwithstanding subsection (a) of this section, a fee may not be 
charged under section 40c(2) (b) of the Bankruptcy Act in a case in 11 USC 68 
which the plan is confirmed after September 30,1978, to the extent that 
such fee exceeds $100,000. 
18 USC 151 et 
seq., 1961 et seq. 
COURTS DURING TRANSITION 
.SEC. 404. (a) The courts of bankruptcy, as defined under section 
1(10) of the Bankruptcy Act, created under section 2a of the Bank-
ruptcy Act, and existing on September 30,1979, shall continue through 
March 31,1984, to be the courts of bankruptcy for the purposes of this 
Act and the amendments made by this Act. Each of the courts of 
bankruptcy so continued shall constitute a separate department of the 
district court that is such court of bankruptcy under the Bankruptcy 
Act. 
(b) The term of a referee in bankruptcy who is serving on the date 
of enactment of this Act is extended to and expires on March 31, 1984 
or when his successor takes office. During the period commencing on 
October 1, 1979, and ending on March 31, 1984 (hereinafter in this 
title referred to as "the transition period"), unless such referee is 
found to be not qualified by the Chief Judge of the Circuit Court after 
consultation with a merit screening committee established as provided 
in subsection (c) of this section, such a referee in bankruptcy upon 
the expiration of his appointed term as referee shall have the title of 
United States bankruptcy judge, and shall serve in the court of bank-
ruptcy continued under subsection (a) of this section that appointed 
such United States bankruptcy judge, in the manner prescribed by this 
title. Section 8335(a) of title 5 of the United States Code shall not 
apply in respect of United States bankruptcy judges during the tran-
sition period. 
28USCprec. 151 
note. 
11 USC 1. 
11 USC 11. 
Referee. 
92 STAT. 2684 
PUBLIC LAW 95-598—NOV. 6, 1978 
State merit 
screening 
committee, 
establishment. 
Ante, p. 2657. 
Ante, p. 2665. 
(c) There shall be established for each State a merit screening com-
mittee composed of the president or the designee of the president of 
the State bar association, the dean or the designee of the dean of a law 
school located within the State, and the president or designee of the 
president of a local bar association for the area wherein a referee in 
bankruptcy maintains his official headquarters within the State. Each 
such merit screening committee shall be organized and summoned to 
meetings by the circuit executive for the circuit embracing the State, 
who shall serve as secretary of each such screening committee estab-
lished within the circuit. Before the expiration of the term of a referee 
in bankruptcy in office on the date of enactment of this Act, or if his 
successor has not been appointed before the date of enactment of this 
Act, a merit screening committee shall be organized by the circuit 
executive to pass on the qualifications of such referee for the purpose 
of determining whether the term of such referee shall be extended 
as provided under subsection (b) of this section. 
(d) Except as otherwise provided in this section or in section 407 
of this Act, matters relating to the office of United States bankruptcy 
judges and to United States bankruptcy judges shall contiivue to be 
governed during the transition period by the rules set forth in sections 
34, 35, 36, 40a, 40b, 40d, 41, and 43 of the Bankruptcy Act as such Act 
existed on September 30,1979. A court of bankruptcy may not appoint 
an individual under such section 34 if the merit screening committee 
established under subsection (c) of this section for the district of 
such court finds such individual to be not qualified. 
(e) During the transition period, the United States bankruptcy 
judges of each district may appoint a clerk, necessary other employees, 
including law clerks and secretaries, and court reporters the same as 
the judges of a United States bankruptcy court established under 
section 201 of this Act may appoint such officers and employees under 
the amendment made by section 233 of this Act. Such clerk, other 
employees, and reporters shall have the same rights and powers, 
shall perform the same functions and duties and shall be subject 
to the same provisions of title 28 of the United States Code, as a 
clerk, other employee, or reporter, as the case may be, appointed 
under the amendment made by section 233 of this Act by a United 
States bankruptcy court established under section 201 of this Act. 
The United States bankruptcy judges of each district shall have the 
same rights and powers as a United States bankruptcy court 
established under section 201 of this Act with respect to such clerk, 
other employees, and reporters. 
(f) During the transition period, the provisions of sections 
455, 456, 569(a), 571(b), 620(b)(3), and 957(a) of title 28 of the 
United States Code shall apply to United States bankruptcy judges 
and to any court officers or employees appointed or employed under 
subsection (e) of this section the same as such sections apply to the 
bankruptcy judges, and to any court officers or employees, of a United 
States bankruptcy court established under section 201 of this Act. 
During the transition period, the position of United States bankruptcy 
judge shall be deemed to be a position within the purview of 
subparagraph (C) of section 225(f) of the Federal Salary Act of 1967 
(2U.S.C.356(C)). 
(g) During the transition period, the Judicial Conference of 
the United States may from time to time in the light of the 
recommendations of the judicial councils of each circuit, made after 
advising with the district judges and the United States bankruptcy 
judges of the respective circuit, and of the Director of the Adminis-
trative Office of the United States Courts, increase the number of 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2685 
full-time United States bankruptcy judges, or provide that a part-time 
United States bankruptcy judge for a particular district may serve 
in the capacity and receive the salary of a full-time United States 
bankruptcy judge, as the expeditious transaction of the business of 
the several courts of bankruptcy may require. 
JURISDICTION AND PROCEDURE DURING TRANSITION 
SEC. 405. (a) (1) All cases commenced under title 11 of the United ^8 USC prec. 
States Code during the transition period shall be referred to the ^^'^ °°*®' 
United States bankruptcy judges. The United States bankruptcy 
judges may exercise in such cases the jurisdiction and powers con-
ferred by subsection (b) of this section on the courts of ^bankruptcy 
continued by section 404(a) of this Act, and all proceedings in such 
cases shall be before the United States bankruptcy judges, except— 
(A) a proceeding to enjoin a court; 
(B) a proceeding to punish a criminal contempt— 
(i) not committed in the bankruptcy judge's actual 
' 
presence; or 
(ii) warranting a punishment of imprisonment; or 
. ,; ;-
(C) an appeal from a judgment, order, decree, or decision 
of a United States bankruptcy judge. 
(2) Except as provided in subsection (c) of this section, any 
proceeding in a court of bankruptcy in a case under title 11 of the 
United States Code that is not before the United States bankruptcy 
judge shall be before the judge of the court of bankruptcy for the 
district in which such case is pending. 
(b) During the transition period, the amendments made by sections 
241,243,250, and 252 of this Act shall apply to the courts of bankruptcy 
continued by section 404(a) of this Act the same as such amendments 
apply to the United States bankruptcy courts established under 
section 201 of this Act. 
^nte, p. 2657. 
(c) (1) During the transition period, an appeal from a judgment, 
order, or decree of a United States bankruptcy judge shall be— 
(A) if the circuit council of the circuit in which the 
bankruptcy judge sits so orders for the district in which the 
bankruptcy judge sits, then to a panel of three bankruptcy judges 
appointed in the manner prescribed by section 160 of title 28 Ante, p. 2659. 
of the United States Code, as added by section 201 of this Act; 
(B) if the parties to the appeal agree to a direct appeal to the 
court of appeals for such circuit, then to such court of appeals; 
or 
(C) to the district court for the district in which the bank-
ruptcy judge sits. 
(2) During the transition period, the jurisdiction of the district 
courts, the courts of appeals, and panels of bankruptcy judges to 
\ 
hear appeals shall be the same as the jurisdiction of such courts and 
panels granted under the amendments made by sections 236, 237, 238, 
and 241 of this Act to hear appeals from the judgments, orders, and 
decrees of the bankruptcy courts established under section 201 of 
this Act. 
(d) The rules prescribed under section 2075 of title 28 of the 
United States Code and in effect on September 30, 1979, shall apply 
to cases under title 11, to the extent not inconsistent with the amend-
ments made by this Act, or with this Act, until such rules are 
repealed or superseded by rules prescribed and effective under such 
section, as amended by section 248 of this Act. 
28 use prec. 151 
note. 
Ante, p. 2657. 
Report. 
Recommenda-
tions to Congress 
and President. 
92 STAT. 2686 
PUBLIC LAW 95-598—NOV. 6, 1978 
TRANSITION STUDT 
. 
. , 
Sec, 406. (a) (1) During the transition period, the Director of the 
Administrative Office of the United States Courts shall make continu-
ing studies and surveys of conditions in the judicial districts to deter-
mine— 
(A) the number of bankruptcy judges of the United States 
bankruptcy courts established under section 201 of this Act that 
will be needed after March 31,1984, to provide for the expeditious 
and effective administration of justice; and 
(B) the regular places of offices and the places at which courts 
shall be held. 
(2) In the course of any survey, the Director shall take into account 
local conditions in each judicial district, including the areas and the 
population to be served, the transportation and communications facil-
ities available, the average number and types of bankruptcy cases 
filed and closed during the transition period, the number of cases pend-
ing and judicial matters heard, and any other material factors. The 
Director shall give consideration to suggestions from any interested 
parties. 
(b) Upon completion of the studies and surveys required by sub-
section (a) of this section, the Director shall report to the judicial 
councils of the circuits and the Judicial Conference of the United 
States his recommendations concerning the number of bankruptcy 
judges, their principal places of offices, and the places where court shall 
be held. The judicial councils shall advise the Conference, stating their 
recommendations and the reasons therefor. The Conference shall rec-
ommend to the Congress and to the President, before January 3, 1983, 
in light of the recommendations of the Director and the judicial coun-
cils, the number of bankruptcy judges of the United States bankruptcy 
courts established under section 201 of this Act that will be needed 
after March 31, 1984, and the locations at which they shall serve. 
JUDICIAL ADMINISTRATION 
Sec. 407. (a) The Director of the Administrative Office of the United 
States Courts shall appoint a committee of not fewer than seven 
United States bankruptcy judges to advise the Director with respect to 
matters that arise during the transition period or that are relevant to 
the purposes of the transition period. 
(b) During the transition period, the Congress strongly recommends 
at least one-third of the members of any committee of the Judicial 
Conference of the United States that is concerned with the adminis-
tration of the bankruptcy system shall be chosen from among the 
United States bankruptcy judges, and at least one member of any com-
mittee of the Judicial Conference that is concerned with court adminis-
tration, supporting personnel, or bankruptcy court rules shall be chosen 
from among the United States bankruptcy judges. 
(c) During the transition period, the chief judge of each circuit shall 
summon at least one bankruptcy judge from each judicial district 
within the circuit to the judicial conference of such circuit called and 
held under section 332 of title 28 of the United States Code. 
UNITED STATES TRUSTEE PILOT 
Studies and 
SEC. 408. (a) The Attorney General shall conduct such studies and 
surveys. 
surveys as necessary to evaluate the needs, feasibility, and effectiveness 
Congress 
^^ *^^ United States trustee system, and shall report the result of such 
President, and 
the Judicial 
Conference of the 
United States. 
28 use prec. 581 
note. 
^ 
28 use prec. 151 
note. 
PUBLIC LAW 95-598—NOV. 6, 1978 
92 STAT. 2687 
studies and surveys to the Congress, the President, and the Judicial 
Conference of the United States, beginning on or before January 3, 
1980, and annually thereafter during the transition period. 
(b) Not later than January 3, 1984, the Attorney General shall 
report to the Congress, to the President, and the Judicial Confer-
ence of the United States, as to the feasibility, projected annual 
cost and effectiveness of the United States trustee system, as deter-
mined on the basis of the studies and surveys respecting the operation 
of the United States trustee system in the districts, together with rec-
ommendations as to the desirability and method of proceeding with 
implementation of the United States trustee system in all judicial dis-
tricts of the United States. 
(c) Chapter 15 of title 11 of the United States Code and chapter 39 
of title 28 of the United States Code are repealed, and all references 
to the United States trustee contained in title 28 of the United States 
Code are deleted, as of April 1,1^84. The service of any United States 
trustee, of any assistant United States trustee, and of any employee 
employed or appointed under the authority of such chapter 39 is termi-
nated on such date. 
TRANSFER TO NEW COURT SYSTEM 
Report to 
Congress, 
President, and 
the Judicial 
Conference of ithe 
United States. 
Repeal. 
11 u s e 1501 e 
seq. 
Ante, p. 2662. 
28 u s e prec. 
1471 note. 
Ante, p. 2657. 
11 u s e prec. 1 
note. 
SEC. 409. (a) On April 1, 1984, there shall be transferred to the 
appropriate United States bankruptcy court established under section 
201 of this Acl^-
(1) cases, and matters and proceedings in cases, under the Bank-
ruptcy Act that are pending, at the end of September 30, 1983, in 
the courts of bankruptcy continued under section 404(a) of this 
Act, other than cases, and matters and proceedings in cases, 
under— 
(A) section 77 or chapter IX of the Bankruptcy Act; or 11 USe205,401 
(B) chapter X of the Bankruptcy Act in which a general «' *
«
?
• 
reference under section 117 of the Bankruptcy Act is not in 11 USC 501 et 
effect; and 
«
«
?
• 
(2) cases, and proceedings arising under or related to cases, H USC 517. 
under title 11 of the United States Code that are pending, at the 
end of March 31,1984, in the courts of bankruptcy continued under 
section 404(a) of this Act. 
(b) Civil actions pending on March 31, 1984, over which a United 
States bankrupcty court established under section 201 of this Act has 
jurisdiction on April 1, 1984, shall not abate, but continuation of any 
sucli action that has not been finally determined before April 1, 1985, 
may be enjoined, and any claims or causes of actions not resolved may 
be removed to a bankruptcy court under chapter 90 of title 28 of the 
United States Code. 
(c) All Government publications, law books, recording equipment, 
and other property furnished to bankruptcy judges' offices as of March 
31,1984, and of particular use to the offices of the judges of the United 
States bankruptcy courts, shall be transferred to the United States 
bankruptcy courts under the supervision of the Director of the 
Administrative Office of the United States Courts. 
ADDITIONAL RUIiEMAKING POWER 
SEC. 410. The Supreme Court may issue such additional rules of 28 USC prec. 
procedure, consistent with Acts of Congress, as may be necessary for l'*71 note, 
the orderly transfer of functions and records and the orderly transi-
tion to the new bankruptcy court system created by this Act. 
92 STAT. 2688 
PUBLIC LAW 95-598—NOV. 6, 1978 
SEC. 411. Section 40a of the Bankruptcy Act (11 U.S.C. 68(a)) is 
amended by striking out "$37,800" and inserting "$50,000" in lieu 
thereof, and by striking out "$18,900" and inserting "$25,000" in lieu 
thereof. 
Approved November 6, 1978. 
LEGISLATIVE HISTORY: 
HOUSE REPORT No. 95-595 (Comm. on the Judiciary). 
SENATE REPORTS: No. 95-989 accompanying S. 2266 (Comm. on the Judiciary) and 
No. 95-1106 accompanying S. 2266. (Comm. on Finance). 
CONGRESSIONAL RECORD: 
Vol. 123 (1977): Oct. 27, 28, considered in House. 
Vol. 124 (1978): Feb. 1, considered and passed House. 
Sept. 7, considered and passed Senate, amended, in lieu of 
S. 2266. 
Sept. 22, passage vitiated; amendment in the nature of a 
substitute agreed to by Senate. 
Sept. 28, House concurred in Senate amendment with an 
amendment. 
Oct. 5, Senate concurred in House amendment with an 
amendment. 
Oct. 6, House concurred in Senate amendment.