To amend title 11 of the United States Code regarding swap agreements and forward contracts.
PL 101-311 (H.R.4612), enacted 06/25/1990

PUBLIC LAW 101-311—JUNE 25, 1990 
104 STAT. 267 
Public Law 101-311 
101st Congress 
An Act 
To amend title 11 of the United States Code regarding swap agreements and forward 
June 25, 1990 
contracts. 
[H.R. 4612] 
Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled, 
TITLE I—SWAP AGREEMENTS 
SEC. 101. DEFINITION OF SWAP AGREEMENT AND SWAP PARTICIPANT. 
Section 101 of title 11, United States Code, is amended by— 
(1) redesignating paragraphs (49), (50), (51), (52), and (53) as 
paragraphs (51), (52), (53), (54), and (55), respectively; and 
(2) inserting after paragraph (48) the following: 
"(49) 'swap agreement' means— 
"(A) an agreement (including terms and conditions incor-
porated by reference therein) which is a rate swap agree-
ment, basis swap, forward rate agreement, commodity 
swap, interest rate option, forward foreign exchange agree-
ment, rate cap agreement, rate floor agreement, rate collar 
agreement, currency swap agreement, cross-currency rate 
swap agreement, currency option, any other similar agree-
ment (including any option to enter into any of the 
foregoing); 
"(B) any combination of the foregoing; or 
"(C) a master agreement for any of the foregoing together 
with all supplements; 
"(50) 'swap participant' means an entity that, at any time 
before the filing of the petition, has an outstanding swap agree-
ment with the debtor;". 
SEC. 102. AUTOMATIC STAY. 
Section 3620?) of title 11, United States Code, is amended— 
(1) in paragraph (12) by striking "or" at the end; 
(2) in paragraph (13) by striking the period and inserting 
"; or"; and 
(3) by adding at the end the following: 
"(14) under subsection (a) of this section, of the setoff by a 
Claims, 
swap participant, of any mutual debt and claim under or in 
connection with any swap agreement that constitutes the setoff 
of a claim against the debtor for any payment due from the 
debtor under or in connection with any swap agreement against 
any pajnnent due to the debtor from the swap participant under 
or in connection with any swap agreement or against cash, 
securities, or other property of the debtor held by or due from 
such swap participant to guarantee, secure or settle any swap 
agreement.". 
104 STAT. 268 
PUBLIC LAW 101-311—JUNE 25, 1990 
SEC. 103. LIMITATION ON AVOIDING POWERS. 
Section 546 of title 11, United States Code, is amended by adding 
at the end the following: 
"(g) Notwithstanding sections 544, 545, 547, 548(a)(2) and 548(b) of 
this title, the trustee may not avoid a transfer under a swap 
agreement, made by or to a swap participant, in connection with a 
swap agreement and that is made before the commencement of the 
case, except under section 548(a)(1) of this title.". 
SEC. 104. FRAUDULENT TRANSFERS AND OBLIGATIONS. 
Section 548(dX2) of title 11, United States Code, is amended— 
(1) in subparagraph (B) by striking "and" at the end; 
(2) in subparagraph (C) by striking the period and inserting "; 
and"; and 
(3) by adding at the end the following: 
"(D) a swap participant that receives a transfer in connection 
with a swap agreement takes for value to the extent of such 
transfer.". 
SEC. 105. SETOFF. 
Section 553(bXl) of title 11, United States Code, is amended by 
striking "362(bX7)," and inserting "362(b)(7), 362(bX14),". 
SEC. 106. CONTRACTUAL RIGHT TO TERMINATE SWAP AGREEMENTS. 
(a) TERMINATION OF SWAP AGREEMENTS.—Subchapter III of chap-
ter 5 of title 11, United States Code, is amended by adding at the end 
the following: 
"§ 560. Contractual right to terminate a swap agreement 
"The exercise of any contractual right of any swap participant to 
cause the termination of a swap agreement because of a condition of 
the kind specified in section 365(e)(1) of this title or to offset or net 
out any termination values or pajrment amounts arising under or in 
connection with any swap agreement shall not be stayed, avoided, or 
otherwise limited by operation of any provision of this title or by 
order of a court or administrative agency in any proceeding under 
this title. As used in this section, the term 'contractual right' 
includes a right, whether or not evidenced in writing, arising under 
common law, under law merchant, or by reason of normal business 
practice.". 
(b) TECHNICAL AMENDMENT.—The table of sections of chapter 5 of 
title 11, United States Code, is amended by adding at the end the 
following item: 
"560. Contractual right to terminate a swap agreement.". 
TITLE II—FORWARD CONTRACTS 
SEC. 201. DEFINITION OF COMMODITY. 
Section 101 of title 11, United States Code (as amended by section 
101), is amended— 
PUBLIC LAW 101-311—JUNE 25, 1990 
104 STAT. 269 
(1) in paragraph (24)— 
(A) by inserting "as defined in section 761(8) of this title, 
or any similar good, article, service, right, or interest which 
is presently or in the future becomes the subject of dealing 
in the forward contract trade," after "transfer of a commod-
ity,", and 
(B) by inserting ", including, but not limited to, a re-
purchase transaction, reverse repurchase 
transaction, 
consignment, lease, swap, hedge transaction, deposit, loan, 
option, allocated transaction, unallocated transaction, or 
any combination thereof or option thereon" after "entered 
into"; 
(2) in paragraph (25) by striking out "commodities" and 
inserting "a commodity, as defined in section 761(8) of this title, 
or £iny similar good, article, service, right, or interest which is 
presently or in the future becomes the subject of dealing in the 
forward contract trade"; 
(3) by redesignating paragraphs (34) through (55), as para-
graphs (36) through (57), respectively; and 
(4) by inserting after paragraph (33) the following: 
"(34) 'margin payment' means, for purposes of the forward 
contract provisions of this title, payment or deposit of cash, a 
security or other property, that is commonly known in the 
forward contract trade as original margin, initial margin, 
maintenance margin, or variation margin, including mark-to-
market payments, or variation payments; and 
"(35) 'settlement payment' means, for purposes of the forward 
contract provisions of this title, a preliminary settlement pay-
ment, a partial settlement payment, an interim settlement 
pajrment, a settlement pa5nnent on account, a final settlement 
pa3rment, a net settlement payment, or any other similar pay-
ment commonly used in the forward contract trade;". 
SEC. 202. AUTOMATIC STAY. 
Section 362(bX6) of title 11, United States (Dode, is amended— 
(1) by striking "section 741(5) or 761(15)" and inserting "sec-
tion 101(34), 741(5), or 761(15)"; and 
(2) by striking "section 741(8)" and inserting "section 101(35) 
or 741(8)". 
SEC. 203. LIMITATIONS ON AVOIDING POWERS. 
Section 546(e) of title 11, United States Code, is amended— 
(1) by striking "section 741(5) or 761(15)" and inserting "sec-
tion 101(34), 741(5), or 761(15)"; and 
(2) by striking "section 741(8)" and inserting "section 101(35) 
or 741(8)". 
SEC. 204. FRAUDULENT TRANSFERS AND OBLIGATIONS. 
Section 548(d)(2)(B) of title 11, United States Code, is amended— 
(1) by striking "section 741(5) or 761(15)" and inserting "sec- , 
tion 101(34), 741(5) or 761(15)"; and 
(2) by striking "section 741(8)" and inserting "section 101(35) 
or 741(8)". 
104 STAT. 270 
PUBLIC LAW 101-311—JUNE 25, 1990 
SEC. 205. CONTRACTUAL RIGHT TO LIQUIDATE A COMMODITY CONTRACT 
OR FORWARD CONTRACT. 
Section 556 of title 11, United States Code, is amended by striking 
the period at the end of the last sentence of the section and inserting 
"and a right, whether or not evidenced in writing, arising under 
common law, under law merchant or by reason of normal business 
practice.". 
Approved June 25, 1990. 
LEGISLATIVE HISTORY—H.R. 4612 (S. 396): 
HOUSE REPORTS: No. 101-484 (Comm. on the Judiciary). 
SENATE REPORTS: No. 101-285 accompanying S. 396 (Comm. on the Judiciary). 
CONGRESSIONAL RECORD, Vol. 136 (1990): 
May 15, considered and passed House. 
June 6, S. 396 and H.R. 4612 considered and passed Senate.