An Act to amend chapter IX of the Bankruptcy Act to provide by voluntary reorganization procedures for the adjustment of the debts of municipalities.
PL 94-260 (H.R.10624), enacted 04/08/1976

PUBLIC LAW 94-260—APR. 8, 1976 
90 STAT. 315 
Public Law 94-260 
94th Congress 
An Act 
To amend chapter IX of the Bankruptcy Act to provide by voluntary reorganiza-
tion procedures for the adjustment of the debts of municipalities. 
Whereas the Congress finds and declares this Act and proceedings 
thereunder providing for the composition of indebtedness of, or 
authorized by, municipalities to be within the subject of bank-
ruptcies under article I, section 8, clause 4 of the United States 
Constitution; and 
Whereas the Congress finds that the impracticability of existing Fed-
eral bankruptcy remedies for use by municipalities increases the 
likelihood of their default and will aggravate the adverse effects 
thereof; and 
Whereas the Congress finds that the financial disruptions and disloca-
tions resulting from default of such municipalities without availa-
bility of a Federal procedure to restructure their indebtedness in 
such fashion as to avoid continuing insolvency would have a 
substantial adverse effect on interstate commerce within the meaning 
of article I, section 8, clause 3 of the United States Constitution, by 
reason of the commercial importance of the municipalities involved. 
Be it enacted hy the Senate and House of Representatives of the 
United States of America in Congress assembled^ That chapter IX 
of the Bankruptcy Act is amended to read as follows: 
"CHAPTER 
IX 
"ADJUSTMENT OF DEBTS OF POLITICAL SUBDIVISIONS AND PUBLIC AGENCIES. 
A
N
D INSTRUMENTALITIES 
"SEC. 81. CHAPTER IX DEFINITIONS.—As used in this chapter the 
term— 
"(1) 'claim' includes all claims of whatever character against 
the petitioner or the property of the petitioner, whether or not 
such claims are provable under section 63 of this Act and whether 
secured or unsecured, liquidated or unliquidated as to amount, 
fixed or contingent; 
"(2) 'court' means court of bankruptcy in which the case is 
pending, or a judge of such court; 
"(3) 'creditor' means holder (including the United States, a 
State, or political subdivision or public agency or instrumentality 
of a State) of a claim against the petitioner; 
"(4) 'claim affected by the plan' means claim as to which the 
rights of its holder are proposed to be materially and adversely 
adjusted or modified by the plan; 
"(5) 'debt' means claim allowable under section 88(a); 
"(6) 'lien' means security interest in property, lien obtained 
on property by levy, sequestration, or other legal or equitable 
process, statutory or common law lien on property, or any other 
variety of charge against property to secure the performance of 
an obligation; 
Apr. 8, 1976 
[H.R. 10624] 
use prec. title 1. 
Bankruptcy Act, 
amendments. 
11 use 401 
et seq. 
11 use 401, 
11 use 103. 
90 STAT. 316 
PUBLIC LAW 94-260—APR. 8, 1976 
i' 
11 use 402. 
Notice and 
hearing. 
Notice and 
hearing. 
11 use 403. 
"(7) 'person' includes a corporation or a partnership, the 
United States, the several States, and political subdivisions and 
public agencies and instrumentalities of the several States; 
"(8) 'petitioner' means agency, instrumentality, or subdivision 
Avhich has filed a petition under this chapter; 
" (9) 'plan' means plan filed under section 90; 
"(10) 'special tax payer' means record owner or holder of title, 
legal or equitable, to real estate against which has been levied 
a special assessment or special tax the proceeds of which are the 
sole source of payment of obligations issued by the petitioner 
to defray the costs of local improvements; and 
"(11) 'special tax payer affected by the plan' means special 
tax payer with respect to whose real estate the plan proposes to 
increase the proportion of special assessments or special taxes 
referred to in paragraph (10) of this section assessed against that 
real estate. 
"SEC. 82. JURISDICTION AND POWERS OF COUKT.— 
"(a) JURISDICTION.—The court in Avhich a petition is filed under 
this chapter shall exercise exclusive original jurisdiction for the 
adjustment of the petitioner's debts, and for the purposes of this chap-
ter, shall have exclusive jurisdiction of the petitioner and its property, 
wherever located. 
"(b) POWERS.—After the filing of a petition under this chapter the 
court may— 
"(1) permit the petitioner to reject executory contracts and 
unexpired leases of the petitioner, after hearing on notice to the 
parties to such contracts leases and to such other parties in inter-
est as the court may designate; 
"(2) during the pendency of a case under this chapter, or after 
the confirmation of the plan if the court has retained jurisdiction 
under section 96(e), after hearing on such notice as the court may 
prescribe and for cause shown, permit the issuance of certificates 
of indebtedness for such consideration as is approved by the court, 
upon such terms and conditions, and with such security and prior-
ity in payment over existing obligations, secured or unsecured, 
and over costs and expenses of administration, not including oper-
ating expenses of the petitioner, as in the particular case may be 
equitable; and 
"(3) exercise such other powers as are not inconsistent with 
the provisions of this chapter. 
"(c) LIMITATION.—Unless the petitioner consents or the plan so 
provides, the court shall not, by any stay, order or decree, in the case 
or otherwise, interfere with— 
"(1) any of the political or governmental powers of the 
petitioner; 
"(2) any of the property or revenues of the petitioner; or 
" (3) the petitioner's use or enjoyment of any income-producing 
property. 
"(d) DESIGNATION or JUDGE.—After the filing of a petition, the chief 
judge of the court in the district in which the petition is filed shall 
immediately notify the chief judge of the circuit court of appeals of 
the circuit in which the district court is located, who shall designate 
the judge of the district court to conduct the proceedings under this 
chapter. 
"SEC. 83. RESERVATION OF STATE POWER T O CONTROL GOVERNMENTAL 
FUNCTIONS OF POLITICAL SUBDIVISIONS.—Nothing contained in this 
chapter shall be construed to limit or impair the power of any State 
PUBLIC LAW 94-260—APR. 8, 1976 
90 STAT. 317 
to control, by legislation or otherwise, any municipality or any politi-
cal subdivision of or in suoh. State in the exercise of its political or 
governmental powers, including expenditures therefor: Provided^ 
howeveryTh&t no State law prescribing a method of composition of 
indebtedness of such agencies shall be binding upon any creditor who 
does not consent to such composition, and no judgment shall be entered 
under such State law which would bind a creditor to such composition 
without his consent. 
"SEC. 84. ELIGIBILITY TOR RELIEF,—Any State's political subdivision 
or public agency or instrumentality, which is generally authorized to 
file a petition under this chapter by the legislature, or by a govern-
mental officer or organization empowered by Stata law to authorize the 
filing of a petition, is eligible for relief under this chapter if it is 
insolvent or unable to meet its debts as they mature, and desires to effect 
a plan to adjust its debts. An entity is not eligible for relief under this 
chapter unless— 
"(1) it has successfully negotiated a plan of adjustment of its 
debts with creditors holding at least a majority in amount of 
the claims of each class which are claims affected by that plan; 
"(2) it has negotiated in good faith with its creditors and has 
failed to obtain, with respect to a plan of adjustment of its debts, 
the agreement of creditors holding at least a majority in amount 
of the claims of each class which are claims affected by that plan; 
"(3) such negotiation is impracticable; or 
"(4) it has a reasonable fear that a creditor may attempt to 
obtain a preference. 
"SEC. 85. PETITION AND PROCEEDINGS RELATING TO PETITION.— 
"(a) PETITION,—An entity eligible under section 84 may file a peti-
tion for relief under this chapter. In the case of an unincorporated 
tax or special assessment district having no officials of its own, the 
petition may be filed by its governing authority or the board or body 
having authority to levy taxes or assessments to meet the obligations of 
the district. Any party in interest may file an answer to the petition 
with the court, not later than 15 days after the publication of notice 
required by subsection (d) is completed, objecting to the filing of the 
petition. Upon the filing of such an answer, the court may dismiss the 
petition after hearing on notice if the petitioner did not file the petition 
in good faith, or if the petition does not meet the requirements of this 
chapter. The court shall not, on account of an appeal from a finding of 
jurisdiction, delay any proO/Ceding under this chapter in ih^ case in 
which the appeal is being taken; nor shall any court order a stay of 
such proceeding pending such appeal. The reversal on appeal of a 
finding of jurisdiction shall not affect the validitv of any certificate 
of indebtedness authorized by the court and issued in such case. 
" (b) LIST.—The petitioner shall file with the court a list of the peti-
tioner's creditors, insofar as practicable. The list shall include for each 
known creditor, to the extent practicable, the name of the creditor, 
the address of the creditor so far as known to the petitioner, and a 
description of any claim of the creditor, showing the amount and char-
acter of the claim, the nature of any security for the claim, and 
whether the claim is disputed, contingent or unliquidated as to amount. 
If an identification of any of the petitioner's creditors is impracticable, 
the petitioner shall state the reason such identification is impracticable 
and the character of the claims of the creditors involved. The peti-
tioner shall supplement the list afi creditors who were unknown or 
unidentified at the time the list was filed become known or identified 
to the petitioner. If the list is not filed with the petition, the petitioner 
shall file the list at such later time as the court, upon its own motion or 
upon application of the petitioner, sets. 
11 use 404. 
Conditions. 
11 use 405. 
Notice, 
publication. 
Notice and 
hearing. 
90 STAT. 318 
PUBLIC LAW 94-260—APR. 8, 1976 
"(c) VENUE A
N
D FEES.—The petition and any accompanying papers, 
together with a filing fee of $100, shall be filed with a court in a district 
in which the petitioner is located. 
"(d) NOTICE.—The petitioner or such other person as the court desig-
nates shall ^ive notice of the filing or dismissal of the petition to the 
State in which the petitioner is located, to the Securities and Exchange 
Commission, and to creditors included in the list of creditors required 
by subsection (b) or in any supplement to that list. The notice shall 
also state that a creditor who files with the court a request, setting forth 
that creditor's name and address and the nature and amount of that 
creditor's claim, shall be given notice of any other matter in which 
Publication in 
that creditor has a direct and substantial interest. The notice required 
newspapers. 
\)y ^Jio first sentence of this subsection shall be published at least once 
a week for three successive weeks in at least one newspaper of general 
i:. 
circulation published within the jurisdiction of the court, and in such 
other papers having a general circulation among bond dealers and 
bondholders as may be designated by the court. The court may require 
that it be published in such other publication as the court deems 
proper. The court shall require that a copy of the notice required by 
the first sentence of this subsection be mailed, postage prepaid, to each 
creditor named in the list required by subsection (b) at the address of 
such creditor given in the list, or, if no address is given in the list 
for a creditor and the address of such creditor cannot with reason-
7 
able diligence be ascertained, then a copy of the notice may, if the 
r 
court so determines, be mailed, postage prepaid, to such creditor 
addressed as the court may prescribe. All expense of giving notice 
required by this subsection shall be paid by the petitioner, unless the 
court for good cause determines that the cost of notice in a particular 
instance should be borne by another party. The notice shall be first 
published as soon as practicable after the filing of the petition, and the 
mailing of copies of the notice shall be completed as soon as practicable 
after the filing of the list required by subsection (b). 
"(e) 
STAY OF ENFORCEMENT OF CLAIMS AGAINST PETITIONER.— 
i 
"(1) EFFECT OF FILING A PETITION.—A petition filed under this 
chapter shall operate as a stay of the commencement or the con-
! 
tinuation of any judicial or other proceeding against the peti-
tioner, its property, or an officer or inhabitant of the petitioner, 
which seeks to enforce any claim against the petitioner, or of an 
act or the commencement or continuation of a judicial or other 
proceeding which seeks to enforce a lien upon the property of the 
petitioner or a lien on or arising out of taxes or assessments due the 
petitioner, and shall operate as a sta}' of the enforcement of any 
set-off or counterclaim relating to a contract, debt, or obligation 
of the petitioner. 
" (2) DURATION OP AUTOMATIC STAY.—Except as it may be termi-
nated, annulled, modified, or conditioned by the court under the 
terms of this subsection, the stay provided for in this subsection 
shall continue until the case is closed or dismissed, or the property 
subject to the lien is, with the approval of the court, abandoned 
or transferred. 
Hearing. 
"(3) RELIEF FROM AUTOMATIC STAY.—^LTpon the filing of a com-
plaint seeking relief from a stay provided for by this section, the 
court shall set a hearing for the earliest possible date. The court 
may, for cause shoAvn, terminate, annul, modify, or condition such 
stay. 
PUBLIC LAW 94-260—APR. 8, 1976 
90 STAT. 319 
" (4) OTHER STATS.—The commencement or continuation of any 
other act or proceeding may be stayed, restrained, or enjoined by 
the court, upon notice to each person against whom such order 
would apply, and for cause shown. The court may issue an order 
under this paragraph without requiring the i^etitioner to give 
security as a condition to that order. 
" ( f ) 
UxENrORCEABILITY OF CERTAIN CONTRACTUAL PROVISIONS. 
A 
provision in a contract or lease, or in any law applicable to such a con-
tract or lease, which terminates or modifies, or permits a party other 
than the petitioner to terminate or modify, the contract or lease because 
of the insolvency of the petitioner or the commencement of a case under 
this chapter is not enforceaVjle if any defaults in prior performance of 
the petitioner are cured and adequate assurance of f utui-e performance 
is provided. 
"(g) RECOVERY OF SET-OFF.—Any set-off which relates to a contract, 
debt, or obligation of the petitioner and which set-off was effected 
within ft?'ir months prior to the filing of the petition, is voidable and 
recoverable by the petitioner after hearing on notice. The court may 
require as a condition to recovery that the petitioner furnish adequate 
protection for the realization by the person against whom or which 
recovery is sought of the claim which arises by reason of the recovery. 
" ( h ) AVOIDING POWERS.—Sections 60a, 60c, 67a, 67d, 70c, 70e (1), and 
70e(2), and the first three sentences of section 60b shall apply in cases 
H USC 96, 107, 
under this chapter as tliough the petitioner were the bankrupt, debtor, 
m * 
or trustee. If the petitioner refuses to pursue a cause of action under 
a section or sentence made applicable to this chapter by this subsection, 
the court may, upon the application of any creditor, appoint a trustee 
to pursue such cause of action. 
"SEC. 86. REPRESENTATION OF CREDITORS.— 
H USC 406. 
"(a) 
REPRESENTATION AND DISCLOSURE.—Any creditor nuiy act in 
that creditor's own behalf or by an attorney or a dul}'authorized agent 
or committee. Every person, not including governmental entities, rep-
resenting more than one creditor shall file with the court a list of the 
creditors represented by such perso)i, giving the name and address of 
' 
each such creditor, together with a statement of the amount, class, and 
character of the claim held by that creditor, and siiall attach to the 
list a copy of the instrument signed by the holder of such claim show-
ing such person'.^ authority, and shall file with the list a copy of the 
contract or agreement entered into between such person and the credi-
tors represented by that person. Such person shall disclose all com-
pensation incident to the case, received or to be received, directly or 
indirectly, by that person. That compensation shall be subject to 
modification and approval by the court. 
"(b) MULTIPLE COMPENSATION.—The court shall examine all of the 
contracts, pi-oposals, acceptances, deposit agreements, and all other 
papers relating to the plan, specifically for the purpose of ascertaining 
if any person, not including governmental entities, promoting the plan, 
or doing anything of such a nature, has been or is to be compensated, 
directly or indirectly, by both the petitioner and any of its creditors, 
and shall take evidence under oath to determine whether any such 
compensation has occurred or is to occur. After such examination the 
court shall make an adjudication of this issue, and if it be found that 
any such compensation has occuired or is to occur, the court shall 
dismiss the petition and tax all of the costs against the person promot-
ing the plan or doing anything of such a nature and receiving such 
-194 O—78—pt. 1 
24 
90 STAT. 320 
PUBLIC LAW 94-260—APR. 8, 1976 
11 use 407. 
11 use 408. 
Written notice. 
Hearing and 
notice. 
multiple compensation, or against the petitioner, unless such plan is 
modified, within the time to be allowed by the court, so as to eliminate 
the possibility of such compensation, in which event the court may 
proceed to further consideration of the confirmation of the plan. 
"SEC. 87. REFERENCE, EXPENSES, AND JOINT ADMINISTRATION.— 
" (a) REFERENCE.—The court may refer any special issue of fact to a 
referee in bankruptcy for consideration, the taking of testimony, and 
a report upon such special issue of fact, if the court finds that the con-
dition of its docket is such that it cannot take such testimony without 
unduly delaying the dispatch of other business pending in the court, 
and if it appears that such special issue is necessary to the determina-
tion of the case. A reference to a referee in bankruptcy shall be the 
exception and not the rule. The court shall not make a general reference 
of the case, but may only request findings of specific facts. 
"(b) EXPENSES.—The court may allow reasonable compensation for 
the actual and necessary expenses incurred in connection with the case, 
including compensation for services rendered and expenses incurred in 
obtaining the deposit of securities and the preparation of the plan, 
whether such work has been done by the petitioner or by a representa-
tive of creditors, and may allow reasonable compensation for an attor-
ney or agent of any of them. No fee, compensation, reimbursement, or 
other allowances for an attorney, agent, or representative of creditors 
shall be assessed against the petitioner or paid from any revenues, 
property, or funds of the petitioner except in the manner and in such 
sums, if any, as may be provided for in the plan. An appeal may be 
taken from any order allowing compensation to the United States 
court, of appeals for the circuit in which the case under this chapter is 
pending, independently of any other appeal which may be taken in 
the case. The court of appeals shall hear and determine such appeal 
summarily. 
"(c) JOINT ADMINISTRATION.—If two or more petitions by related 
entities are pending in the same court, the court may order joint 
administration of the cases. 
"SEC. 88. CLAIMS.— 
"(a) 
ALLOWANCE OF CLAIMS.—In the absence of an objection by a 
party in interest, or of a filing of a proof of claim, the claim of a credi-
tor that is not disputed, contingent, or unliquidated as to anioimt, and 
that appears in the list or in a supplement to the list filed by the peti-
tioner under section 85(b) shall be deemed allowed. The court may 
set a date by which proofs of other claims shall be filed. If the court 
does not set a date, such proofs of other claims shall be filed before 
the entry of an order confirming the plan. Within thirty days after the 
filing by tl^ie petitioner of the list or any supplement to the list under 
section 85 (b), the court shall give written notice to each person whose 
claim is listed as disputed, contingent, or unliquidated as to amount, 
informing each such person that a proof of claim must be filed with 
the court within the time fixed under this subsection. If there is no 
objection to such claim, the claim shall be deemed allowed. If there is 
an objection, the court shall hear and determine the objection. 
" (b) CLASSIFICATION OF CREDITORS.—The court shall designate classes 
of creditors whose claims are of substantially similar character and 
the members of which enjoy substantially similar rights, consistent 
with the provisions of section 89, except that the court may create a 
separate class of creditors having unsecured claims of less than $250 
for reasons of administrative convenience. If there is a controversy 
over the classification of a creditor, the court shall, after hearing on 
notice, summarily determine such controversy. 
PUBLIC LAW 94-260—APR. 8, 1976 
90 STAT. 321 
"(c) DAMAGES UPON REJECTION OP EXECUTORY CONTRACTS.—If an 
executory contract or an unexpired lease is rejected under the plan or 
under section 82(b), any person injured by such rejection may assert 
a claim against the petitioner. The rejection of an executory contract 
or unexpired lease constitutes a breach of the contract or lease as of the 
date of the commencement of the case imder this chapter. The claim of 
a landlord for injury resulting from the rejection of an imexpired 
lease of real estate or for damages or indemnity under a convenant 
contained in such lease shall be allowed, but shall l)e limited to an 
amount not to exceed the rent, without acceleration, reserved by such 
lease for the year next succeeding the dat« of the surrender of the 
premises to the landlord or the date of reentry of the landlord, which-
ever first occurs, whether before or after the filing of the petition, plus 
unpaid accrued rent, without acceleration, up to the date of such sur-
render or reentry. The court, shall scrutinize the circumstances of an 
assignment of a future rent claim and the amount of the consideration 
paid for such assignment in determining the amount of damages 
allowed the assignee of that claim. 
"SEC. 89. PRIORITIES.—The following shall be paid in full in advance i l USC 409. 
of any distribution to creditors under the plan, in the following order: 
"(1) The costs and expenses of administration which are 
incurred subsequent to the filing of a petition under this chapter. 
"(2) Debts owed for services or materials actually provided 
within three months before the date of the filing of the petition 
under this chapter. 
"(3) Debts owing to any person, which by the laws of the 
United States (other than this Act) are entitled to priority. 
"SEC. 90. FILING AND TRANSMISSION OF PLAN AND MODIFICATIONS.— H USC 410. 
"(a) FILING.—The petitioner shall file a plan for the adjustment of 
the petitioner's debts. If such plan is not filed with the petition, the 
petitioner shall file the plan at such later time as the court, upon its 
own motion or upon application of the petitioner, sets. At any 
time prior to the confirmation of a plan, the j)etitioner, or any creditor, 
if the petitioner has consented in writing to the modification to he 
filed by the creditor, may file a modification of the plan; but the 
modification shall comply with the provisions of this chapter. 
"(b) TRANSMISSION OF PLAN AND MODIFICATIONS.—As soon as prac-
ticable after the plan or any modification of the plan has been filed, 
the court shall set a time, which shall be ninety days from the filing of 
the plan or any modification of the plan, unless the court, for good 
cause, sets some other time, within which creditors may accept or reject 
the plan and any modification of the plan. The petitioner or such other 
person as the court designates shall transmit by mail a copy of such 
plan or modification, or a summary and any analysis of such plan or 
modification, a notice of the time within Avhich the plan or modification 
may be accepted or rejected, and a notice of the right to receive a 
copy, if it has not been sent, of such plan or modification, to each 
creditor whose claim is affected by the plan, to each special tax payer 
affected by the plan, and to any party in interest that the court desig-
nates. Upon request by a rexjipient of such summary and notice, the 
petitioner or such other person as the court designates shall transmit 
by mail a copy of the plan or modification to that recipient. The court Notice and 
shall, after hearing on notice, determine any controvei-sy as to whether hearing, 
a claim of a creditor or class of creditors is a claim affected by the 
plan and as to whether a special tax payer is a special tax payer 
affected by the plan. 
90 STAT. 322 
PUBLIC LAW 94-260~APR. 8, 1976 
11 use 411. 
"SEC. 91. PROVISIONS OF PLAN.—A petitioner's plan may include 
provisions modifying or altering the rights of creditors generally, or 
of any class of them, secured or unsecured, either through issuance 
of new securities of any character, or otherwise, and may contain such 
other provisions and agreements not inconsistent with this chapter 
as the parties may desire, including provisions for the rejection of 
any executory contract or unexpired lease. 
11 use 412. 
"SEC. 92. AccErTANCE.— 
" (a) W H O MAT ACCEPT OR REJECT.—^Unless a claim of a creditor who 
is included in the list or in a supplement to the list filed under section 
85(b) or who files a proof of claim and whose claim is not then dis-
puted, contingent, or unliquidated as to amount, or of a security 
holder of re-cord as of the date of the transmittal of infomiation under 
section 90(b), has been disallowed or is not a claim affected by the 
plan, that creditor or security holder may accept or reject the plan and 
any modification of the plan within the time set by the court. Notwith-
standing an objection to a claim, the court mnj temporarily allow such 
claim in such amount as the court deems proper for the purpose of 
acceptance or rejection under this section. 
"(b) GENERAL RULE.—Except as provided in subsection (d), the 
plan may be confirmed only if it has been accepted in writing by or 
on behalf of creditors holding at least two-thirds in amount of the 
claims of each class allowed under section 88 and more than 50 percent 
in number of the claims of each class allowed under section 88. 
"(e) COMPLYING ACCEPTANCE.—The two-thirds majority required 
by sul)section (b) is two-thirds in amount of the claims allowed under 
section 88 of creditors who file an acceptance or rejection within 
the time fixed by the court, but not including claims held or controlled 
by the petitioner, or claims of creditors specified in subsection (d). 
The more than 50 perccrit required by subsection (b) is more than 50 
percent in number of the claims allowed under section 88 of creditors 
who file ail acceptance or rejection Avithin the time fixed by the court, 
but not including claims held or controlled by the f)etitioner, or claims 
of creditors specified in subsection (d). 
"(d) P^xcEPTiON.—It is not requisite to the confirmation of the plan 
that there be such acceptance by any creditor or class of creditors— 
" (1) whose claims are not affected by the plan; 
"(2) if the plan makes provision for the payment of their 
claims in cash in full; or 
"(8) if provision is made in the plan for the protection of 
the interests, claims, or lien of such creditor or class of creditors. 
"(e) ACCEPTANCE or MODIFICATION.—If the court finds that a pro-
posed modification does not materially and adversely affect the interest 
of a creditor, the modification shall be deemed accc]Dted by that cred-
Notice. 
itor if that creditor has pre^-iously accepted the plan. If the court 
determines that a modification does materially and adversely affect 
the interest of a creditor, that creditor shall be given notice of the 
proposed modification and the time allowed for its acceptance or 
rejection. I'he number of acceptances of the plan as modified required 
by subsection (b) shall be obtained. The plan as modified shall be 
deemed to have been accepted by any creditor who accepted the plan 
and who fails to file a written rejection of the modification with the 
court within such reasonable time as shall be allowed in the notice to 
that creditor of the proposed modification. 
11 use 413. 
"SEC. 93. OP..TECTION TO PLAN.—A creditor who holds a claim affected 
by the plan or a special tax payer affected by the plan may file with 
the court an objection to the confirmation of the plan. The Securities 
PUBLIC LAW 94-260—APR. 8, 1976 
90 STAT. 323 
and Exchange Commission may also file with the court an objection 
to the confii-mation of the plan, but in the case of an objecticm filed 
under this section, the Securities and Excliange Commission may not 
appeal or file any petition for appeal. An objection to the confirmation 
of the plan may be filed with the court any time prior to ten days 
before the hearing on the confirmation of the plan, or within such 
other times set by the court. 
" S E C 94. CONFIRMATION.— 
"(a) HEARING ON CONFIRMATION.—Within a reasonable time after 
the expiration of the time set by the court within which the plan and 
any modifications of the plan may be accepted or rejected, the court 
shall hold a hearing on the confirmation of the plan and any modifi-
cations of the plan. The court shall give notice of the liearing and of 
the time allowed for filing objections to all parties entitled to object 
under section 93. The court may, for cause shown, permit a labor 
union or employees' association, that represents employees of the peti-
tioner, to be heard on the economic soundness of the plan affecting 
the interests of the represented employees. 
"(b) CONDITIONS FOR CONFIRMATION.—The court shall confirm the 
l)]an if— 
"(1) the plan is fair and equitable and feasible and does not 
discriminate unfairly in favor of any creditor or class of creditors; 
"(2) the plan complies with the provisions of this chapter; 
"(3) the plan has been accepted as required by section 92; 
"(4) all amounts to be paid by the petitioner or by any person, 
not including other governmental entities, for services and 
expenses in the case or incident to the plan liave been fully dis-
closed and are reasonable; 
"(5) the offer of the phm and its acceptance are in good faith; 
and 
"(6) the petitioner is not prohibited by law from taking any 
action necessary to be taken by it to carry out the plan. 
"SEC. 95. EFFECT OF CONFIRMATION.— 
"(a) PROVISIONS OF PLAN RINDING.—The provisions of a confirmed 
plan shall be binding on the petitioner and on an^' creditor who had 
timely notice or actual knowledge of the petition or plan, whether or 
not such creditor's claim lias been allowed under section 88, and 
whether or not such creditor has accepted the plan, 
"^b) DISCHARGE,— 
"(1) The petitioner is discharged from all claims against it pro-
vided for in the plan except as provided in paragraph (2) of this sub-
section as of the time when— 
" (A) the plan has been confirmed; 
"(B) the petitioner has deposited the money, securities, or other 
consideration to be distributed under the plan with a disbursing 
agent appointed by the court; and 
"(C) the court has determined— 
"(i) that any security so deposited will constitute upon 
distribution a valid legal obligation of the petitioner; and 
"(ii) that any provision made to pay or secure payment of 
such obligation is valid. 
"(2) The petitioner is not discharged under paragraph (1) of this 
subsection from any claim— 
" ( A ) excepted from discharge by the plan or order confirming 
the plan; or 
" ( B ) whose holder, prior to confirmation, had neither timely 
notice nor actual knowledge of neither the petition nor the plan. 
11 use 414. 
Notice. 
11 use 415. 
90 STAT. 324 
PUBLIC LAW 94-260--APR. 8, 1976 
11 use 416. 
"SEC. 96. POSTCONFIRMATTON MATTERS.— 
"(a) 
T I M E ALLOWED FOR DEPOSIT UNDER THE PLAN.—Prior to or 
promptly after confirmation of the plan, the court shall fix a time 
within which the petitioner shall deposit with the disbursing agent 
appointed by the court any consideration to be distributed under the 
plan. 
" (b) DUTIES OF PETITIONER.—The petitioner shall comply with the 
plan and the orders of the court relative to the plan, and shall take 
all actions necessary to c a n y out the plan. The court may direct the 
petitioner and other necessary parties to execute and deliver or to 
]oin in the execution and delivery of any instniment required to effect 
a transfer of property under the plan and to perform such other acts 
including the satisfaction of a lien, as the court determines to be 
necessary for the consummation of the plan. 
"(c) DISTRIBUTION.—Distribution shall be made in accordance with 
the provisions of the plan to creditors whose claims have been allowed 
under section 88. Distribution may be made at the date the order 
confirming the plan becomes final to holders of securities of record 
whose claims have not been disallowed. 
"(d) COMPLIANCE DATE.—^^Vhen a plan requires presentment or 
surrender of securities or the performance of any other action as a 
condition to participation under the plan, such action shall be taken 
not later than five years after the entry of the order of confirmation. 
A person who has not within such time presented or surrendered that 
person'^ securities or taken such otlier action required by the plan 
shall not participate in any distribution under the plan, and the 
cx)nsid6ration deposited with the disbursing agent for distribution 
to such person shall become the property of the petitioner. 
"(e) CONTINUING JURISDICTION.—The court may retain jurisdiction 
over the case for such period of time as the court determines is neces-
sary for the succe^ful execution of the plan. 
"(f) 
ORDER OR DECREE AS EVIDENCE AND NOTICE.—A certified copy of 
any order or decree entered by the court in a case under this chapter 
shall be evidence of the jurisdiction of the court, the regularity of the 
proceedings, and the fact that the order was made. A certified copy 
of an order providing for the transfer of any property dealt with by 
the plan shall be evidence of the transfer of title accordingly, and, if 
recorded as conveyances are recorded, shall impart the same notice 
that a deed, if recorded, would impart. 
11 use 417. 
"SEC. 97. EFFECT OF EXCHANGE OF DEBT SECURITIES BEFORE DATE 
OF THE PETITION.—The exchange of new debt securities under the 
plan for claims covered by the plan, whether the exchange occurred 
before or after the date of the petition, does not limit or impair the 
effectiveness of the plan or of any provision of this chapter. The 
written consents of the holders of any securities outstanding as the 
result of any such exchange under the plan shall be included as 
acceptances of such plan in computing the acceptance required imder 
section 92. 
PUBLIC LAW 94-260—APR. 8, 1976 
90 STAT. 325 
"SEC. 
98. DISMISSAL.— 
H USC 418. 
"(a) PERMISSIVE DISMISSAL.—The court may dismiss the case after 
hearing on notice— 
^Ul) for want of prosecution; 
" (2) if no plan is proposed within the time fixed or extended by 
the court; 
"(3) if no proposed plan is accepted within the time fixed or 
extended by the court; or 
"(4) where the court has retained jurisdiction after confirma-
tion of a plan— 
"(A) if the petitioner defaults in any of the terms of the 
plan; or 
"(B) if a plan terminates by reason of the happening of 
a condition specified therein. 
"(b) MANDATORY DISMISSAL.—The court shall dismiss the case if 
confirmation is refused.". 
SEC. 2. SEPARABILITY,—If any provision of this chapter or the appli- H USC 401 note, 
cation thereof to any agency, instrumentality, or subdivision is held 
invalid, the remainder of the chapter, or the application of such pro-
vision to any other agency or instrumentality or political subdivision 
shall not be affected by such holding. 
SEC. 3. If the amendment made by this Act is judicially finally deter- 11 USC 401 note, 
mined to be unconstitutional then chapter I X of the Bankruptcy Act, 
H USC 401 
as such chapter I X existed on the day before the date of enactment 
^* *«?'• 
of this Act, is revived and shall have full force and effect with respect 
to cases filed after such determination. 
Approved April 8, 1976. 
LEGISLATIVE HISTORY: 
HOUSE REPORTS: No. 94-686 (Comm. on the Judiciary) and No. 94-938 (Comm. of 
Conference). 
SENATE REPORT No. 94-458 accompanying S. 2597 (Comm. on the Judiciary). 
CONGRESSIONAL RECORD: 
VoL 121 (1975): Dec. 9, S. 2597 considered in Senate; considered and passed 
House. 
Dec. 10, considered and passed Senate, amended, in lieu of 
S. 2597. 
VoL 122 (1976): Mar. 25, House receded and concurred in Senate amendments 
' 
with amendments; Senate agreed to conference report, con-
curred in House amendments.