Bankruptcy Code
and
Selected Provisions of Federal Law
Table of Contents
TITLE 11—BANKRUPTCY ........................................................................................... 12
§101. Definitions ........................................................................................................... 12
§102. Rules of construction ........................................................................................... 32
§103. Applicability of chapters ....................................................................................... 32
§104. Adjustment of dollar amounts .............................................................................. 33
§105. Power of court ..................................................................................................... 33
§106. Waiver of sovereign immunity ............................................................................. 34
§107. Public access to papers ...................................................................................... 35
§108. Extension of time ................................................................................................. 36
§109. Who may be a debtor .......................................................................................... 37
§110. Penalty for persons who negligently or fraudulently prepare bankruptcy petitions
......................................................................................................................... 39
§111. Nonprofit budget and credit counseling agencies; financial management
instructional courses ........................................................................................ 44
§112. Prohibition on disclosure of name of minor children ............................................ 47
SUBCHAPTER I—COMMENCEMENT OF A CASE ..................................................... 48
§301. Voluntary cases ................................................................................................... 49
§302. Joint cases .......................................................................................................... 49
§303. Involuntary cases ................................................................................................ 49
§304 [Repealed] ............................................................................................................ 51
§305. Abstention ........................................................................................................... 51
§306. Limited appearance ............................................................................................. 52
§307. United States trustee ........................................................................................... 52
§308. Debtor reporting requirements............................................................................. 52
SUBCHAPTER II—OFFICERS ..................................................................................... 52
§321. Eligibility to serve as trustee ................................................................................ 52
§322. Qualification of trustee ......................................................................................... 53
1

§323. Role and capacity of trustee ................................................................................ 53
§324. Removal of trustee or examiner .......................................................................... 53
§325. Effect of vacancy ................................................................................................. 53
§326. Limitation on compensation of trustee ................................................................. 54
§327. Employment of professional persons .................................................................. 54
§328. Limitation on compensation of professional persons ........................................... 55
§329. Debtor's transactions with attorneys .................................................................... 55
§330. Compensation of officers ..................................................................................... 56
§331. Interim compensation .......................................................................................... 57
§332. Consumer privacy ombudsman ........................................................................... 58
§333. Appointment of patient care ombudsman ............................................................ 58
SUBCHAPTER III—ADMINISTRATION........................................................................ 59
§341. Meetings of creditors and equity security holders................................................ 59
§342. Notice .................................................................................................................. 60
§343. Examination of the debtor ................................................................................... 62
§344. Self-incrimination; immunity................................................................................. 62
§345. Money of estates ................................................................................................. 62
§346. Special provisions related to the treatment of State and local taxes ................... 62
§347. Unclaimed property ............................................................................................. 64
§348. Effect of conversion ............................................................................................. 65
§349. Effect of dismissal ............................................................................................... 66
§350. Closing and reopening cases .............................................................................. 66
§351. Disposal of patient records .................................................................................. 66
SUBCHAPTER IV—ADMINISTRATIVE POWERS ....................................................... 67
§361. Adequate protection ............................................................................................ 67
§362. Automatic stay ..................................................................................................... 67
§363. Use, sale, or lease of property............................................................................. 81
§364. Obtaining credit ................................................................................................... 85
§365. Executory contracts and unexpired leases .......................................................... 85
§366. Utility service ....................................................................................................... 94
SUBCHAPTER I—CREDITORS AND CLAIMS ............................................................ 96
§501. Filing of proofs of claims or interests ................................................................... 96
§502. Allowance of claims or interests .......................................................................... 97
§503. Allowance of administrative expenses............................................................... 100
2

§504. Sharing of compensation ................................................................................... 103
§505. Determination of tax liability .............................................................................. 103
§506. Determination of secured status ........................................................................ 105
§507. Priorities ............................................................................................................ 106
§508. Effect of distribution other than under this title .................................................. 109
§509. Claims of codebtors ........................................................................................... 109
§510. Subordination .................................................................................................... 110
§511. Rate of interest on tax claims ............................................................................ 110
SUBCHAPTER II—DEBTOR'S DUTIES AND BENEFITS .......................................... 110
§521. Debtor's duties .................................................................................................. 110
§522. Exemptions ....................................................................................................... 115
§523. Exceptions to discharge .................................................................................... 124
§524. Effect of discharge............................................................................................. 129
§525. Protection against discriminatory treatment ...................................................... 143
§526. Restrictions on debt relief agencies................................................................... 144
§527. Disclosures ........................................................................................................ 145
§528. Requirements for debt relief agencies ............................................................... 147
SUBCHAPTER III—THE ESTATE .............................................................................. 148
§541. Property of the estate ........................................................................................ 148
§542. Turnover of property to the estate ..................................................................... 153
§543. Turnover of property by a custodian .................................................................. 154
§544. Trustee as lien creditor and as successor to certain creditors and purchasers . 155
§545. Statutory liens.................................................................................................... 155
§546. Limitations on avoiding powers ......................................................................... 156
§547. Preferences ....................................................................................................... 158
§548. Fraudulent transfers and obligations ................................................................. 161
§549. Postpetition transactions ................................................................................... 164
§550. Liability of transferee of avoided transfer........................................................... 165
§551. Automatic preservation of avoided transfer ....................................................... 166
§552. Postpetition effect of security interest ................................................................ 166
§553. Setoff ................................................................................................................. 167
§554. Abandonment of property of the estate ............................................................. 168
§555. Contractual right to liquidate, terminate, or accelerate a securities contract ..... 168
§556. Contractual right to liquidate, terminate, or accelerate a commodities contract or
forward contract ............................................................................................. 168
3

§557. Expedited determination of interests in, and abandonment or other disposition of
grain assets ................................................................................................... 169
§558. Defenses of the estate ...................................................................................... 171
§559. Contractual right to liquidate, terminate, or accelerate a repurchase agreement
....................................................................................................................... 171
§560. Contractual right to liquidate, terminate, or accelerate a swap agreement ........ 172
§561. Contractual right to terminate, liquidate, accelerate, or offset under a master
netting agreement and across contracts; proceedings under chapter 15....... 172
§562. Timing of damage measurement in connection with swap agreements, securities
contracts, forward contracts, commodity contracts, repurchase agreements,
and master netting agreements ..................................................................... 174
SUBCHAPTER I—OFFICERS AND ADMINISTRATION ............................................ 176
§701. Interim trustee ................................................................................................... 176
§702. Election of trustee.............................................................................................. 176
§703. Successor trustee.............................................................................................. 177
§704. Duties of trustee ................................................................................................ 177
§705. Creditors’ committee ......................................................................................... 180
§706. Conversion ........................................................................................................ 180
§707. Dismissal of a case or conversion to a case under chapter 11 or 13 ................ 180
SUBCHAPTER II—COLLECTION, LIQUIDATION, AND DISTRIBUTION OF THE
ESTATE ......................................................................................................... 187
§721. Authorization to operate business ..................................................................... 187
§722. Redemption ....................................................................................................... 187
§723. Rights of partnership trustee against general partners ...................................... 187
§724. Treatment of certain liens .................................................................................. 188
§725. Disposition of certain property ........................................................................... 189
§726. Distribution of property of the estate .................................................................. 189
§727. Discharge .......................................................................................................... 190
§728 Repealed ............................................................................................................ 193
SUBCHAPTER III—STOCKBROKER LIQUIDATION ................................................. 193
§741. Definitions for this subchapter ........................................................................... 193
§742. Effect of section 362 of this title in this subchapter ............................................ 196
§743. Notice ................................................................................................................ 196
§744. Executory contracts ........................................................................................... 197
§745. Treatment of accounts ....................................................................................... 197
§746. Extent of customer claims ................................................................................. 197
4

§747. Subordination of certain customer claims .......................................................... 197
§748. Reduction of securities to money ...................................................................... 198
§749. Voidable transfers ............................................................................................. 198
§750. Distribution of securities .................................................................................... 198
§751. Customer name securities ................................................................................. 198
§752. Customer property............................................................................................. 198
§753. Stockbroker liquidation and forward contract merchants, commodity brokers,
stockbrokers, financial institutions, financial participants, securities clearing
agencies, swap participants, repo participants, and master netting agreement
participants .................................................................................................... 199
SUBCHAPTER IV—COMMODITY BROKER LIQUIDATION...................................... 199
§761. Definitions for this subchapter ........................................................................... 199
§762. Notice to the Commission and right to be heard................................................ 204
§763. Treatment of accounts ....................................................................................... 204
§764. Voidable transfers ............................................................................................. 204
§765. Customer instructions ........................................................................................ 204
§766. Treatment of customer property ........................................................................ 205
§767. Commodity broker liquidation and forward contract merchants, commodity
brokers, stockbrokers, financial institutions, financial participants, securities
clearing agencies, swap participants, repo participants, and master netting
agreement participants .................................................................................. 207
SUBCHAPTER V—CLEARING BANK LIQUIDATION ................................................ 207
§781. Definitions ......................................................................................................... 207
§782. Selection of trustee............................................................................................ 207
§783. Additional powers of trustee .............................................................................. 207
§784. Right to be heard ............................................................................................... 208
SUBCHAPTER I—GENERAL PROVISIONS .............................................................. 209
§901. Applicability of other sections of this title ........................................................... 209
§902. Definitions for this chapter ................................................................................. 209
§903. Reservation of State power to control municipalities ......................................... 210
§904. Limitation on jurisdiction and powers of court .................................................... 210
SUBCHAPTER II—ADMINISTRATION....................................................................... 210
§921. Petition and proceedings relating to petition ...................................................... 210
§922. Automatic stay of enforcement of claims against the debtor ............................. 211
§923. Notice ................................................................................................................ 211
§924. List of creditors .................................................................................................. 211
5

§925. Effect of list of claims ......................................................................................... 212
§926. Avoiding powers ................................................................................................ 212
§927. Limitation on recourse ....................................................................................... 212
§928. Post petition effect of security interest ............................................................... 212
§929. Municipal leases ................................................................................................ 212
§930. Dismissal ........................................................................................................... 212
SUBCHAPTER III—THE PLAN ................................................................................... 213
§941. Filing of plan ...................................................................................................... 213
§942. Modification of plan ........................................................................................... 213
§943. Confirmation ...................................................................................................... 213
§944. Effect of confirmation......................................................................................... 213
§945. Continuing jurisdiction and closing of the case .................................................. 214
§946. Effect of exchange of securities before the date of the filing of the petition ....... 214
SUBCHAPTER I—OFFICERS AND ADMINISTRATION ............................................ 216
§1101. Definitions for this chapter ............................................................................... 216
§1102. Creditors’ and equity security holders’ committees ......................................... 216
§1103. Powers and duties of committees.................................................................... 217
§1104. Appointment of trustee or examiner ................................................................ 218
§1105. Termination of trustee's appointment .............................................................. 219
§1106. Duties of trustee and examiner........................................................................ 220
§1107. Rights, powers, and duties of debtor in possession ........................................ 221
§1108. Authorization to operate business ................................................................... 222
§1109. Right to be heard ............................................................................................. 222
§1110. Aircraft equipment and vessels ....................................................................... 222
§1111. Claims and interests ........................................................................................ 223
§1112. Conversion or dismissal .................................................................................. 224
§1113. Rejection of collective bargaining agreements ................................................ 226
§1114. Payment of insurance benefits to retired employees ....................................... 228
§1115. Property of the estate ...................................................................................... 231
§1116. Duties of trustee or debtor in possession in small business cases .................. 231
SUBCHAPTER II—THE PLAN .................................................................................... 232
§1121. Who may file a plan ......................................................................................... 232
§1122. Classification of claims or interests ................................................................. 233
§1123. Contents of plan .............................................................................................. 233
6

§1124. Impairment of claims or interests..................................................................... 235
§1125. Postpetition disclosure and solicitation ............................................................ 236
§1126. Acceptance of plan .......................................................................................... 238
§1127. Modification of plan ......................................................................................... 238
§1128. Confirmation hearing ....................................................................................... 239
§1129. Confirmation of plan ........................................................................................ 239
SUBCHAPTER III—POSTCONFIRMATION MATTERS ............................................. 243
§1141. Effect of confirmation ....................................................................................... 243
§1142. Implementation of plan .................................................................................... 245
§1143. Distribution ...................................................................................................... 245
§1144. Revocation of an order of confirmation............................................................ 245
§1145. Exemption from securities laws ....................................................................... 246
§1146. Special tax provisions ...................................................................................... 247
SUBCHAPTER IV—RAILROAD REORGANIZATION ................................................ 248
§1161. Inapplicability of other sections........................................................................ 248
§1162. Definition ......................................................................................................... 248
§1163. Appointment of trustee .................................................................................... 248
§1164. Right to be heard ............................................................................................. 248
§1165. Protection of the public interest ....................................................................... 248
§1166. Effect of subtitle IV of title 49 and of Federal, State, or local regulations ......... 248
§1167. Collective bargaining agreements ................................................................... 249
§1168. Rolling stock equipment .................................................................................. 249
§1169. Effect of rejection of lease of railroad line ........................................................ 250
§1170. Abandonment of railroad line........................................................................... 251
§1171. Priority claims .................................................................................................. 251
§1172. Contents of plan .............................................................................................. 252
§1173. Confirmation of plan ........................................................................................ 252
§1174. Liquidation ....................................................................................................... 253
SUBCHAPTER V—SMALL BUSINESS DEBTOR REORGANIZATION ..................... 253
§1181. Inapplicability of other sections........................................................................ 253
§1182. Definitions ....................................................................................................... 253
§1183. Trustee ............................................................................................................ 253
§1184. Rights and powers of a debtor in possession .................................................. 254
§1185. Removal of debtor in possession .................................................................... 254
7

§1186. Property of the estate ...................................................................................... 255
§1187. Duties and reporting requirements of debtors ................................................. 255
§1188. Status conference ........................................................................................... 255
§1189. Filing of the plan .............................................................................................. 255
§1190. Contents of plan .............................................................................................. 256
§1191. Confirmation of plan ........................................................................................ 256
§1192. Discharge ........................................................................................................ 257
§1193. Modification of plan ......................................................................................... 257
§1194. Payments ........................................................................................................ 258
§1195. Transactions with professionals ...................................................................... 258
SUBCHAPTER I—OFFICERS, ADMINISTRATION, AND THE ESTATE ................... 259
§1201. Stay of action against codebtor ....................................................................... 259
§1202. Trustee ............................................................................................................ 260
§1203. Rights and powers of debtor............................................................................ 261
§1204. Removal of debtor as debtor in possession..................................................... 262
§1205. Adequate protection ........................................................................................ 262
§1206. Sales free of interests ...................................................................................... 262
§1207. Property of the estate ...................................................................................... 262
§1208. Conversion or dismissal .................................................................................. 263
SUBCHAPTER II—THE PLAN .................................................................................... 263
§1221. Filing of plan .................................................................................................... 264
§1222. Contents of plan .............................................................................................. 264
§1223. Modification of plan before confirmation .......................................................... 265
§1224. Confirmation hearing ....................................................................................... 265
§1225. Confirmation of plan ........................................................................................ 265
§1226. Payments ........................................................................................................ 267
§1227. Effect of confirmation ....................................................................................... 267
§1228. Discharge ........................................................................................................ 267
§1229. Modification of plan after confirmation ............................................................. 268
§1230. Revocation of an order of confirmation ............................................................ 269
§1231. Special tax provisions ...................................................................................... 269
§1232. Claim by a governmental unit based on the disposition of property used in a
farming operation ........................................................................................... 270
SUBCHAPTER I—OFFICERS, ADMINISTRATION, AND THE ESTATE ................... 272
§1301. Stay of action against codebtor ....................................................................... 272
8

§1302. Trustee ............................................................................................................ 272
§1303. Rights and powers of debtor............................................................................ 274
§1304. Debtor engaged in business ............................................................................ 274
§1305. Filing and allowance of postpetition claims ..................................................... 274
§1306. Property of the estate ...................................................................................... 274
§1307. Conversion or dismissal .................................................................................. 275
§1308. Filing of prepetition tax returns ........................................................................ 276
SUBCHAPTER II—THE PLAN .................................................................................... 277
§1321. Filing of plan .................................................................................................... 277
§1322. Contents of plan .............................................................................................. 277
§1323. Modification of plan before confirmation .......................................................... 279
§1324. Confirmation hearing ....................................................................................... 279
§1325. Confirmation of plan ........................................................................................ 279
§1326. Payments ........................................................................................................ 282
§1327. Effect of confirmation ....................................................................................... 284
§1328. Discharge ........................................................................................................ 284
§1329. Modification of plan after confirmation ............................................................. 286
§1330. Revocation of an order of confirmation ............................................................ 287
§1501. Purpose and scope of application ................................................................... 288
SUBCHAPTER I—GENERAL PROVISIONS .............................................................. 289
§1502. Definitions ....................................................................................................... 289
§1503. International obligations of the United States .................................................. 290
§1504. Commencement of ancillary case ................................................................... 290
§1505. Authorization to act in a foreign country .......................................................... 290
§1506. Public policy exception .................................................................................... 290
§1507. Additional assistance....................................................................................... 290
§1508. Interpretation ................................................................................................... 290
SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS
TO THE COURT ............................................................................................ 290
§1509. Right of direct access ...................................................................................... 290
§1510. Limited jurisdiction ........................................................................................... 291
§1511. Commencement of case under section 301, 302, or 303 ................................ 291
§1512. Participation of a foreign representative in a case under this title.................... 291
§1513. Access of foreign creditors to a case under this title ....................................... 292
§1514. Notification to foreign creditors concerning a case under this title ................... 292
9

SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF . 292
§1515. Application for recognition ............................................................................... 292
§1516. Presumptions concerning recognition ............................................................. 293
§1517. Order granting recognition ............................................................................... 293
§1518. Subsequent information .................................................................................. 294
§1519. Relief that may be granted upon filing petition for recognition ......................... 294
§1520. Effects of recognition of a foreign main proceeding ......................................... 294
§1521. Relief that may be granted upon recognition ................................................... 295
§1522. Protection of creditors and other interested persons ....................................... 296
§1523. Actions to avoid acts detrimental to creditors .................................................. 296
§1524. Intervention by a foreign representative .......................................................... 296
SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND FOREIGN
REPRESENTATIVES .................................................................................... 296
§1525. Cooperation and direct communication between the court and foreign courts or
foreign representatives .................................................................................. 296
§1526. Cooperation and direct communication between the trustee and foreign courts or
foreign representatives .................................................................................. 297
§1527. Forms of cooperation ...................................................................................... 297
SUBCHAPTER V—CONCURRENT PROCEEDINGS ................................................ 297
§1528. Commencement of a case under this title after recognition of a foreign main
proceeding ..................................................................................................... 297
§1529. Coordination of a case under this title and a foreign proceeding ..................... 297
§1530. Coordination of more than 1 foreign proceeding ............................................. 298
§1531. Presumption of insolvency based on recognition of a foreign main proceeding
....................................................................................................................... 298
§1532. Rule of payment in concurrent proceedings .................................................... 298
SELECTED UNITED STATES CODE PROVISIONS.................................................. 299
TITLE 18 - CRIMES AND CRIMINAL PROCEDURE .................................................. 299
§ 151 – Definition ........................................................................................................ 299
§ 152 - Concealment of assets; false oaths and claims; bribery ................................. 299
§ 153 - Embezzlement against estate ......................................................................... 300
§ 154 - Adverse interest and conduct of officers ......................................................... 300
§ 155 - Fee agreements in cases under title 11 and receiverships ............................. 301
§ 156 - Knowing disregard of bankruptcy law or rule................................................... 301
§ 157 - Bankruptcy fraud ............................................................................................. 301
10

§ 158 - Designation of United States attorneys and agents of the Federal Bureau of
Investigation to address abusive reaffirmations of debt and materially fraudulent
statements in bankruptcy schedules .............................................................. 301
§ 1519 - Destruction, alteration, or falsification of records in Federal investigations and
bankruptcy ..................................................................................................... 302
§ 3284 - Concealment of bankrupt’s assets ................................................................ 302
TITLE 26 – INTERNAL REVENUE CODE .................................................................. 302
§ 6321 - Lien for taxes................................................................................................. 303
§ 6322 - Period of lien ................................................................................................. 303
§ 6323 - Validity and priority against certain persons .................................................. 303
§ 6334 - Property exempt from levy ............................................................................ 313
§ 7425 - Discharge of liens.......................................................................................... 317
TITLE 28 – JUDICIARY AND JUDICIAL PROCEDURE ............................................. 319
§ 157 – Procedures ..................................................................................................... 320
§ 158 – Appeals .......................................................................................................... 321
§ 959 - Trustees and receivers suable; management; State laws ............................... 324
§ 1334 - Bankruptcy cases and proceedings .............................................................. 324
§ 1408 - Venue of cases under title 11 ........................................................................ 325
§ 1409 - Venue of proceedings arising under title 11 or arising in or related to cases
under title 11 .................................................................................................. 325
§ 1410 - Venue of cases ancillary to foreign proceedings ........................................... 326
§ 1411 - Jury trials ....................................................................................................... 326
§ 1412 - Change of venue ........................................................................................... 326
§ 1452 - Removal of claims related to bankruptcy cases ............................................ 327

11

TITLE 11—BANKRUPTCY
This title was enacted by Pub. L. 95–598, title I, §101, Nov. 6, 1978, 92 Stat. 2549
TITLE 11—BANKRUPTCY ............................................. Error! Bookmark not defined.
CHAPTER 1—GENERAL PROVISIONS ........................ Error! Bookmark not defined.
§101. Definitions ............................................................. Error! Bookmark not defined.
§102. Rules of construction ............................................. Error! Bookmark not defined.
§103. Applicability of chapters ......................................... Error! Bookmark not defined.
§104. Adjustment of dollar amounts ................................ Error! Bookmark not defined.
§105. Power of court ....................................................... Error! Bookmark not defined.
§106. Waiver of sovereign immunity ............................... Error! Bookmark not defined.
§107. Public access to papers ........................................ Error! Bookmark not defined.
§108. Extension of time ................................................... Error! Bookmark not defined.
§109. Who may be a debtor ............................................ Error! Bookmark not defined.
§110. Penalty for persons who negligently or fraudulently prepare bankruptcy petitions
........................................................................... Error! Bookmark not defined.
§111. Nonprofit budget and credit counseling agencies; financial management
instructional courses .......................................... Error! Bookmark not defined.
§112. Prohibition on disclosure of name of minor children ............. Error! Bookmark not
defined.
CHAPTER 1—GENERAL PROVISIONS
§101. Definitions
In this title the following definitions shall apply:
(1) The term "accountant" means accountant authorized under applicable law to practice
public accounting, and includes professional accounting association, corporation, or
partnership, if so authorized.
(2) The term "affiliate" means—
(A) entity that directly or indirectly owns, controls, or holds with power to vote, 20
percent or more of the outstanding 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 that directly or indirectly owns, controls, or holds with power to vote, 20 percent
12

or more of the outstanding 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;
(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
agreement with the debtor; or
(D) entity that operates the business or substantially all of the property of the debtor
under a lease or operating agreement.
(3) The term "assisted person" means any person whose debts consist primarily of consumer
debts and the value of whose nonexempt property is less than $150,000 [$192,450 as of April
1, 2016].
(4) The term "attorney" means attorney, professional law association, corporation, or
partnership, authorized under applicable law to practice law.
(4A) The term "bankruptcy assistance" means any goods or services sold or otherwise
provided to an assisted person with the express or implied purpose of providing information,
advice, counsel, document preparation, or filing, or attendance at a creditors’ meeting or
appearing in a case or proceeding on behalf of another or providing legal representation with
respect to a case or proceeding under this title.
(5) The term "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.
(6) The term "commodity broker" means futures commission merchant, foreign futures
commission merchant, clearing organization, leverage transaction merchant, or commodity
options dealer, as defined in section 761 of this title, with respect to which there is a
customer, as defined in section 761 of this title.
(7) The term "community claim" means claim that arose before the commencement of the
case concerning the debtor for which property 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.
(7A) The term "commercial fishing operation" means—
(A) the catching or harvesting of fish, shrimp, lobsters, urchins, seaweed, shellfish, or
other aquatic species or products of such species; or
13

(B) for purposes of section 109 and chapter 12, aquaculture activities consisting of
raising for market any species or product described in subparagraph (A).
(7B) The term "commercial fishing vessel" means a vessel used by a family fisherman to
carry out a commercial fishing operation.
(8) The term "consumer debt" means debt incurred by an individual primarily for a
personal, family, or household purpose.
(9) The term "corporation"—
(A) includes—
(i) association having a power or privilege that a private corporation, but not an
individual or a partnership, possesses;
(ii) partnership association organized under a law that makes only the capital
subscribed responsible for the debts of such association;
(iii) joint-stock company;
(iv) unincorporated company or association; or
(v) business trust; but
(B) does not include limited partnership.
(10) The term "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;
(B) entity that has a claim against the estate of a kind specified in section 348(d),
502(f), 502(g), 502(h) or 502(i) of this title; or
(C) entity that has a community claim.
(10A) The term “current monthly income”—
(A) means the average monthly income from all sources that the debtor receives (or in
a joint case the debtor and the debtor's spouse receive) without regard to whether such
income is taxable income, derived during the 6-month period ending on—
(i) the last day of the calendar month immediately preceding the date of the
commencement of the case if the debtor files the schedule of current income
required by section 521(a)(1)(B)(ii); or
(ii) the date on which current income is determined by the court for purposes of
this title if the debtor does not file the schedule of current income required by
section 521(a)(1)(B)(ii); and
(B)(i) includes any amount paid by any entity other than the debtor (or in a joint case
the debtor and the debtor's spouse), on a regular basis for the household expenses of
the debtor or the debtor's dependents (and in a joint case the debtor's spouse if not
otherwise a dependent); and
(ii) excludes—
14

(I) benefits received under the Social Security Act (42 U.S.C. 301 et seq.);
(II) payments to victims of war crimes or crimes against humanity on
account of their status as victims of such crimes;
(III) payments to victims of international terrorism or domestic terrorism,
as those terms are defined in section 2331 of title 18, on account of their
status as victims of such terrorism; and
(IV) any monthly compensation, pension, pay, annuity, or allowance paid
under title 10, 37, or 38 in connection with a disability, combat-related
injury or disability, or death of a member of the uniformed services,
except that any retired pay excluded under this subclause shall include
retired pay paid under chapter 61 of title 10 only to the extent that such
retired pay exceeds the amount of retired pay to which the debtor would
otherwise be entitled if retired under any provision of title 10 other than
chapter 61 of that title.
(11) The term "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 law, 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.
(12) The term "debt" means liability on a claim.
(12A) The term "debt relief agency" means any person who provides any bankruptcy
assistance to an assisted person in return for the payment of money or other valuable
consideration, or who is a bankruptcy petition preparer under section 110, but does not
include—
(A) any person who is an officer, director, employee, or agent of a person who
provides such assistance or of the bankruptcy petition preparer;
(B) a nonprofit organization that is exempt from taxation under section 501(c)(3) of
the Internal Revenue Code of 1986;
(C) a creditor of such assisted person, to the extent that the creditor is assisting such
assisted person to restructure any debt owed by such assisted person to the creditor;
(D) a depository institution (as defined in section 3 of the Federal Deposit Insurance
Act) or any Federal credit union or State credit union (as those terms are defined in
section 101 of the Federal Credit Union Act), or any affiliate or subsidiary of such
depository institution or credit union; or
(E) an author, publisher, distributor, or seller of works subject to copyright protection
under title 17, when acting in such capacity.

15

(13) The term "debtor" means person or municipality concerning which a case under this
title has been commenced.
(13A) The term "debtor's principal residence"—
(A) means a residential structure if used as the principal residence by the debtor,
including incidental property, without regard to whether that structure is attached to
real property; and
(B) includes an individual condominium or cooperative unit, a mobile or manufactured
home, or trailer if used as the principal residence by the debtor.
(14) The term "disinterested person" means a person that—
(A) is not a creditor, an equity security holder, or an insider;
(B) is not and was not, within 2 years before the date of the filing of the petition, a
director, officer, or employee of the debtor; and
(C) 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
relationship to, connection with, or interest in, the debtor, or for any other reason.
(14A) The term "domestic support obligation" means a debt that accrues before, on, or after
the date of the order for relief in a case under this title, including interest that accrues on that
debt as provided under applicable nonbankruptcy law notwithstanding any other provision of
this title, that is—
(A) owed to or recoverable by—
(i) a spouse, former spouse, or child of the debtor or such child's parent, legal
guardian, or responsible relative; or
(ii) a governmental unit;
(B) in the nature of alimony, maintenance, or support (including assistance provided
by a governmental unit) of such spouse, former spouse, or child of the debtor or such
child's parent, without regard to whether such debt is expressly so designated;
(C) established or subject to establishment before, on, or after the date of the order for
relief in a case under this title, by reason of applicable provisions of—
(i) a separation agreement, divorce decree, or property settlement agreement;
(ii) an order of a court of record; or
(iii) a determination made in accordance with applicable nonbankruptcy law by a
governmental unit; and
(D) not assigned to a nongovernmental entity, unless that obligation is assigned
voluntarily by the spouse, former spouse, child of the debtor, or such child's parent,
legal guardian, or responsible relative for the purpose of collecting the debt.
(15) The term "entity" includes person, estate, trust, governmental unit, and United States
trustee.
(16) The term "equity security" means—
16

(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.
(17) The term "equity security holder" means holder of an equity security of the debtor.
(18) The term "family farmer" means—
(A) individual or individual and spouse engaged in a farming operation whose
aggregate debts do not exceed $3,237,000 [$4,153,150 as of April 1, 2016] and not
less than 50 percent of whose aggregate noncontingent, liquidated debts (excluding a
debt for the principal residence of such individual or such individual and spouse unless
such debt arises out of a farming operation), on the date the case is filed, arise out of a
farming operation owned or operated by such individual or such individual and
spouse, and such individual or such individual and spouse receive from such farming
operation more than 50 percent of such individual's or such individual and spouse's
gross income for—
(i) the taxable year preceding; or
(ii) each of the 2d and 3d taxable years preceding;
the taxable year in which the case concerning such individual or such individual and
spouse was filed; or
(B) corporation or partnership in which more than 50 percent of the outstanding stock
or equity is held by one family, or by one family and the relatives of the members of
such family, and such family or such relatives conduct the farming operation, and
(i) more than 80 percent of the value of its assets consists of assets related to the
farming operation;
(ii) its aggregate debts do not exceed $3,237,000 [$4,153,150 as of April 1,
2016] and not less than 50 percent of its aggregate noncontingent, liquidated
debts (excluding a debt for one dwelling which is owned by such corporation or
partnership and which a shareholder or partner maintains as a principal
residence, unless such debt arises out of a farming operation), on the date the
case is filed, arise out of the farming operation owned or operated by such
corporation or such partnership; and
(iii) if such corporation issues stock, such stock is not publicly traded.
(19) The term "family farmer with regular annual income" means family farmer whose
annual income is sufficiently stable and regular to enable such family farmer to make
payments under a plan under chapter 12 of this title.
(19A) The term "family fisherman" means—

17

(A) an individual or individual and spouse engaged in a commercial fishing
operation—
(i) whose aggregate debts do not exceed $1,500,000 [$1,924,550 as of April 1,
2016] and not less than 80 percent of whose aggregate noncontingent, liquidated
debts (excluding a debt for the principal residence of such individual or such
individual and spouse, unless such debt arises out of a commercial fishing
operation), on the date the case is filed, arise out of a commercial fishing
operation owned or operated by such individual or such individual and spouse;
and
(ii) who receive from such commercial fishing operation more than 50 percent of
such individual's or such individual's and spouse's gross income for the taxable
year preceding the taxable year in which the case concerning such individual or
such individual and spouse was filed; or
(B) a corporation or partnership—
(i) in which more than 50 percent of the outstanding stock or equity is held by—
(I) 1 family that conducts the commercial fishing operation; or
(II) 1 family and the relatives of the members of such family, and such family
or such relatives conduct the commercial fishing operation; and
(ii)
(I) more than 80 percent of the value of its assets consists of assets related to
the commercial fishing operation;
(II) its aggregate debts do not exceed $1,500,000 [$1,924,550 as of April 1,
2016] and not less than 80 percent of its aggregate noncontingent, liquidated
debts (excluding a debt for 1 dwelling which is owned by such corporation or
partnership and which a shareholder or partner maintains as a principal
residence, unless such debt arises out of a commercial fishing operation), on
the date the case is filed, arise out of a commercial fishing operation owned or
operated by such corporation or such partnership; and
(III) if such corporation issues stock, such stock is not publicly traded.
(19B) The term "family fisherman with regular annual income" means a family fisherman
whose annual income is sufficiently stable and regular to enable such family fisherman to
make payments under a plan under chapter 12 of this title.
(20) The term "farmer" means (except when such term appears in the term "family farmer")
person that received more than 80 percent of such person's gross income during the taxable
year of such person immediately preceding the taxable year of such person during which the
case under this title concerning such person was commenced from a farming operation
owned or operated by such person.
(21) The term "farming operation" includes farming, tillage 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.
18

(21A) The term "farmout agreement" means a written agreement in which—
(A) the owner of a right to drill, produce, or operate liquid or gaseous hydrocarbons on
property agrees or has agreed to transfer or assign all or a part of such right to another
entity; and
(B) such other entity (either directly or through its agents or its assigns), as
consideration, agrees to perform drilling, reworking, recompleting, testing, or similar
or related operations, to develop or produce liquid or gaseous hydrocarbons on the
property.
(21B) The term "Federal depository institutions regulatory agency" means—
(A) with respect to an insured depository institution (as defined in section 3(c)(2) of
the Federal Deposit Insurance Act) for which no conservator or receiver has been
appointed, the appropriate Federal banking agency (as defined in section 3(q) of such
Act);
(B) with respect to an insured credit union (including an insured credit union for which
the National Credit Union Administration has been appointed conservator or
liquidating agent), the National Credit Union Administration;
(C) with respect to any insured depository institution for which the Resolution Trust
Corporation has been appointed conservator or receiver, the Resolution Trust
Corporation; and
(D) with respect to any insured depository institution for which the Federal Deposit
Insurance Corporation has been appointed conservator or receiver, the Federal Deposit
Insurance Corporation.
(22) The term "financial institution" means—
(A) a Federal reserve bank, or an entity that is a commercial or savings bank, industrial
savings bank, savings and loan association, trust company, federally-insured credit
union, or receiver, liquidating agent, or conservator for such entity and, when any such
Federal reserve bank, receiver, liquidating agent, conservator or entity is acting as
agent or custodian for a customer (whether or not a "customer", as defined in section
741) in connection with a securities contract (as defined in section 741) such customer;
or
(B) in connection with a securities contract (as defined in section 741) an investment
company registered under the Investment Company Act of 1940.
(22A) The term "financial participant" means—
(A) an entity that, at the time it enters into a securities contract, commodity contract,
swap agreement, repurchase agreement, or forward contract, or at the time of the date
of the filing of the petition, has one or more agreements or transactions described in
paragraph (1), (2), (3), (4), (5), or (6) of section 561(a) with the debtor or any other
entity (other than an affiliate) of a total gross dollar value of not less than
$1,000,000,000 in notional or actual principal amount outstanding (aggregated across
counterparties) at such time or on any day during the 15-month period preceding the
date of the filing of the petition, or has gross mark-to-market positions of not less than
19

$100,000,000 (aggregated across counterparties) in one or more such agreements or
transactions with the debtor or any other entity (other than an affiliate) at such time or
on any day during the 15-month period preceding the date of the filing of the petition;
or
(B) a clearing organization (as defined in section 402 of the Federal Deposit Insurance
Corporation Improvement Act of 1991).
(23) The term "foreign proceeding" means a collective judicial or administrative proceeding
in a foreign country, including an interim proceeding, under a law relating to insolvency or
adjustment of debt in which proceeding the assets and affairs of the debtor are subject to
control or supervision by a foreign court, for the purpose of reorganization or liquidation.
(24) The term "foreign representative" means a person or body, including a person or body
appointed on an interim basis, authorized in a foreign proceeding to administer the
reorganization or the liquidation of the debtor's assets or affairs or to act as a representative
of such foreign proceeding.
(25) The term "forward contract" means—
(A) a contract (other than a commodity contract, as defined in section 761) for the
purchase, sale, or transfer of a commodity, 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, or product or byproduct
thereof, with a maturity date more than two days after the date the contract is entered
into, including, but not limited to, a repurchase or reverse repurchase transaction
(whether or not such repurchase or reverse repurchase transaction is a "repurchase
agreement", as defined in this section) 1 consignment, lease, swap, hedge transaction,
deposit, loan, option, allocated transaction, unallocated transaction, or any other
similar agreement;
(B) any combination of agreements or transactions referred to in subparagraphs (A)
and (C);
(C) any option to enter into an agreement or transaction referred to in subparagraph
(A) or (B);
(D) a master agreement that provides for an agreement or transaction referred to in
subparagraph (A), (B), or (C), together with all supplements to any such master
agreement, without regard to whether such master agreement provides for an
agreement or transaction that is not a forward contract under this paragraph, except
that such master agreement shall be considered to be a forward contract under this
paragraph only with respect to each agreement or transaction under such master
agreement that is referred to in subparagraph (A), (B), or (C); or
(E) any security agreement or arrangement, or other credit enhancement related to any
agreement or transaction referred to in subparagraph (A), (B), (C), or (D), including
any guarantee or reimbursement obligation by or to a forward contract merchant or
financial participant in connection with any agreement or transaction referred to in any
such subparagraph, but not to exceed the damages in connection with any such
agreement or transaction, measured in accordance with section 562.
20

(26) The term "forward contract merchant" means a Federal reserve bank, or an entity the
business of which consists in whole or in part of entering into forward contracts as or with
merchants in a commodity (as defined in section 761) 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.
(27) The term "governmental unit" means United States; State; Commonwealth; District;
Territory; municipality; foreign state; department, agency, or instrumentality of the United
States (but not a United States trustee while serving as a trustee in a case under this title), a
State, a Commonwealth, a District, a Territory, a municipality, or a foreign state; or other
foreign or domestic government.
(27A) The term "health care business"—
(A) means any public or private entity (without regard to whether that entity is
organized for profit or not for profit) that is primarily engaged in offering to the
general public facilities and services for—
(i) the diagnosis or treatment of injury, deformity, or disease; and
(ii) surgical, drug treatment, psychiatric, or obstetric care; and
(B) includes—
(i) any—
(I) general or specialized hospital;
(II) ancillary ambulatory, emergency, or surgical treatment facility;
(III) hospice;
(IV) home health agency; and
(V) other health care institution that is similar to an entity referred to in
subclause (I), (II), (III), or (IV); and
(ii) any long-term care facility, including any—
(I) skilled nursing facility;
(II) intermediate care facility;
(III) assisted living facility;
(IV) home for the aged;
(V) domiciliary care facility; and
(VI) health care institution that is related to a facility referred to in subclause
(I), (II), (III), (IV), or (V), if that institution is primarily engaged in offering
room, board, laundry, or personal assistance with activities of daily living and
incidentals to activities of daily living.
(27B) The term "incidental property" means, with respect to a debtor's principal
residence—

21

(A) property commonly conveyed with a principal residence in the area where the real
property is located;
(B) all easements, rights, appurtenances, fixtures, rents, royalties, mineral rights, oil or
gas rights or profits, water rights, escrow funds, or insurance proceeds; and
(C) all replacements or additions.
(28) The term "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.
(29) The term "indenture trustee" means trustee under an indenture.
(30) The term "individual with regular income" means individual whose income is
sufficiently stable and regular to enable such individual to make payments under a plan under
chapter 13 of this title, other than a stockbroker or a commodity broker.
(31) The term "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 partnership—
(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;
22

(D) if the debtor is a municipality, elected official of the debtor or relative of an
elected official of the debtor;
(E) affiliate, or insider of an affiliate as if such affiliate were the debtor; and
(F) managing agent of the debtor.
(32) The term "insolvent" means—
(A) with reference to an entity other than a partnership and a municipality, 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;
(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 nonpartnership
property, exclusive of property of the kind specified in subparagraph (A) of this
paragraph, over such partner's nonpartnership debts; and
(C) with reference to a municipality, financial condition such that the municipality
is—
(i) generally not paying its debts as they become due unless such debts are the
subject of a bona fide dispute; or
(ii) unable to pay its debts as they become due.
(33) The term "institution-affiliated party"—
(A) with respect to an insured depository institution (as defined in section 3(c)(2) of
the Federal Deposit Insurance Act), has the meaning given it in section 3(u) of the
Federal Deposit Insurance Act; and
(B) with respect to an insured credit union, has the meaning given it in section 206(r)
of the Federal Credit Union Act.
(34) The term "insured credit union" has the meaning given it in section 101(7) of the
Federal Credit Union Act.
(35) The term "insured depository institution"—
(A) has the meaning given it in section 3(c)(2) of the Federal Deposit Insurance Act;
and
(B) includes an insured credit union (except in the case of paragraphs (21B) and
(33)(A) of this subsection).
23

(35A) The term "intellectual property" means—
(A) trade secret;
(B) invention, process, design, or plant protected under title 35;
(C) patent application;
(D) plant variety;
(E) work of authorship protected under title 17; or
(F) mask work protected under chapter 9 of title 17;
to the extent protected by applicable nonbankruptcy law.
(36) The term "judicial lien" means lien obtained by judgment, levy, sequestration, or other
legal or equitable process or proceeding.
(37) The term "lien" means charge against or interest in property to secure payment of a debt
or performance of an obligation.
(38) The term "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.
(38A) The term "master netting agreement"—
(A) means an agreement providing for the exercise of rights, including rights of
netting, setoff, liquidation, termination, acceleration, or close out, under or in
connection with one or more contracts that are described in any one or more of
paragraphs (1) through (5) of section 561(a), or any security agreement or arrangement
or other credit enhancement related to one or more of the foregoing, including any
guarantee or reimbursement obligation related to 1 or more of the foregoing; and
(B) if the agreement contains provisions relating to agreements or transactions that are
not contracts described in paragraphs (1) through (5) of section 561(a), shall be
deemed to be a master netting agreement only with respect to those agreements or
transactions that are described in any one or more of paragraphs (1) through (5) of
section 561(a).
(38B) The term "master netting agreement participant" means an entity that, at any time
before the date of the filing of the petition, is a party to an outstanding master netting
agreement with the debtor.
(39) The term "mask work" has the meaning given it in section 901(a)(2) of title 17.
(39A) The term "median family income" means for any year—
(A) the median family income both calculated and reported by the Bureau of the
Census in the then most recent year; and
(B) if not so calculated and reported in the then current year, adjusted annually after
such most recent year until the next year in which median family income is both
calculated and reported by the Bureau of the Census, to reflect the percentage change
24

in the Consumer Price Index for All Urban Consumers during the period of years
occurring after such most recent year and before such current year.
(40) The term "municipality" means political subdivision or public agency or
instrumentality of a State.
(40A) The term "patient" means any individual who obtains or receives services from a
health care business.
(40B) The term "patient records" means any record relating to a patient, including a written
document or a record recorded in a magnetic, optical, or other form of electronic medium.
(41) The term "person" includes individual, partnership, and corporation, but does not
include governmental unit, except that a governmental unit that—
(A) acquires an asset from a person—
(i) as a result of the operation of a loan guarantee agreement; or
(ii) as receiver or liquidating agent of a person;
(B) is a guarantor of a pension benefit payable by or on behalf of the debtor or an
affiliate of the debtor; or
(C) is the legal or beneficial owner of an asset of—
(i) an employee pension benefit plan that is a governmental plan, as defined in
section 414(d) of the Internal Revenue Code of 1986; or
(ii) an eligible deferred compensation plan, as defined in section 457(b) of the
Internal Revenue Code of 1986;
shall be considered, for purposes of section 1102 of this title, to be a person with
respect to such asset or such benefit.
(41A) The term "personally identifiable information" means—
(A) if provided by an individual to the debtor in connection with obtaining a product
or a service from the debtor primarily for personal, family, or household purposes—
(i) the first name (or initial) and last name of such individual, whether given at
birth or time of adoption, or resulting from a lawful change of name;
(ii) the geographical address of a physical place of residence of such individual;
(iii) an electronic address (including an e-mail address) of such individual;
(iv) a telephone number dedicated to contacting such individual at such physical
place of residence;
(v) a social security account number issued to such individual; or
(vi) the account number of a credit card issued to such individual; or
(B) if identified in connection with 1 or more of the items of information specified in
subparagraph (A)—

25

(i) a birth date, the number of a certificate of birth or adoption, or a place of
birth; or
(ii) any other information concerning an identified individual that, if disclosed,
will result in contacting or identifying such individual physically or
electronically.
(42) The term "petition" means petition filed under section 301, 302, 303 and 3 1504 of this
title, as the case may be, commencing a case under this title.
(42A) The term "production payment" means a term overriding royalty satisfiable in cash
or in kind—
(A) contingent on the production of a liquid or gaseous hydrocarbon from particular
real property; and
(B) from a specified volume, or a specified value, from the liquid or gaseous
hydrocarbon produced from such property, and determined without regard to
production costs.
(43) The term "purchaser" means transferee of a voluntary transfer, and includes immediate
or mediate transferee of such a transferee.
(44) The term "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.
(45) The term "relative" means individual related by affinity or consanguinity within the
third degree as determined by the common law, or individual in a step or adoptive
relationship within such third degree.
(46) The term "repo participant" means an entity that, at any time before the filing of the
petition, has an outstanding repurchase agreement with the debtor.
(47) The term "repurchase agreement" (which definition also applies to a reverse
repurchase agreement)—
(A) means—
(i) an agreement, including related terms, which provides for the transfer of one
or more certificates of deposit, mortgage related securities (as defined in section
3 of the Securities Exchange Act of 1934), mortgage loans, interests in mortgage
related securities or mortgage loans, eligible bankers’ acceptances, qualified
foreign government securities (defined as a security that is a direct obligation of,
or that is fully guaranteed by, the central government of a member of the
Organization for Economic Cooperation and Development), or securities that are
direct obligations of, or that are fully guaranteed by, the United States or any
agency of the United States against the transfer of funds by the transferee of such
certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans,
or interests, with a simultaneous agreement by such transferee to transfer to the
transferor thereof certificates of deposit, eligible bankers’ acceptance, securities,
mortgage loans, or interests of the kind described in this clause, at a date certain
not later than 1 year after such transfer or on demand, against the transfer of
funds;
26

(ii) any combination of agreements or transactions referred to in clauses (i) and
(iii);
(iii) an option to enter into an agreement or transaction referred to in clause (i) or
(ii);
(iv) a master agreement that provides for an agreement or transaction referred to
in clause (i), (ii), or (iii), together with all supplements to any such master
agreement, without regard to whether such master agreement provides for an
agreement or transaction that is not a repurchase agreement under this paragraph,
except that such master agreement shall be considered to be a repurchase
agreement under this paragraph only with respect to each agreement or
transaction under the master agreement that is referred to in clause (i), (ii), or
(iii); or
(v) any security agreement or arrangement or other credit enhancement related to
any agreement or transaction referred to in clause (i), (ii), (iii), or (iv), including
any guarantee or reimbursement obligation by or to a repo participant or
financial participant in connection with any agreement or transaction referred to
in any such clause, but not to exceed the damages in connection with any such
agreement or transaction, measured in accordance with section 562 of this title;
and
(B) does not include a repurchase obligation under a participation in a commercial
mortgage loan.
(48) The term "securities clearing agency" means person that is registered as a clearing
agency under section 17A of the Securities Exchange Act of 1934, or exempt from such
registration under such section pursuant to an order of the Securities and Exchange
Commission, or whose business is confined to the performance of functions of a clearing
agency with respect to exempted securities, as defined in section 3(a)(12) of such Act for the
purposes of such section 17A.
(48A) The term "securities self regulatory organization" means either a securities
association registered with the Securities and Exchange Commission under section 15A of
the Securities Exchange Act of 1934 or a national securities exchange registered with the
Securities and Exchange Commission under section 6 of the Securities Exchange Act of
1934.
(49) The term "security"—
(A) includes—
(i) note;
(ii) stock;
(iii) treasury stock;
(iv) bond;
(v) debenture;
27

(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 participation in a profitsharing agreement or in an oil, gas, or mineral royalty or lease, if such contract or
interest is required to be the subject of a registration statement filed with the
Securities and Exchange Commission under the provisions of the Securities Act
of 1933, or is exempt under section 3(b) of such Act from the requirement to file
such a statement;
(xiii) interest of a limited partner in a limited partnership;
(xiv) other claim or interest commonly known as "security"; and
(xv) certificate of interest or participation in, temporary or interim certificate for,
receipt for, or warrant or right to subscribe to or purchase or sell, a security; but
(B) does not include—
(i) currency, check, draft, bill of exchange, or bank letter of credit;
(ii) leverage transaction, as defined in section 761 of this title;
(iii) commodity futures contract or forward contract;
(iv) option, warrant, or right to subscribe to or purchase or sell a commodity
futures contract;
(v) option to purchase or sell a commodity;
(vi) contract or certificate of a kind specified in subparagraph (A)(xii) of this
paragraph that is not required to be the subject of a registration statement filed
with the Securities and Exchange Commission and is not exempt under section
3(b) of the Securities Act of 1933 from the requirement to file such a statement;
or
(vii) debt or evidence of indebtedness for goods sold and delivered or services
rendered.
(50) The term "security agreement" means agreement that creates or provides for a security
interest.
(51) The term "security interest" means lien created by an agreement.
(51A) The term "settlement payment" means, for purposes of the forward contract
provisions of this title, a preliminary settlement payment, a partial settlement payment, an
interim settlement payment, a settlement payment on account, a final settlement payment, a
28

net settlement payment, or any other similar payment commonly used in the forward contract
trade.
(51B) The term "single asset real estate" means real property constituting a single property
or project, other than residential real property with fewer than 4 residential units, which
generates substantially all of the gross income of a debtor who is not a family farmer and on
which no substantial business is being conducted by a debtor other than the business of
operating the real property and activities incidental thereto.
(51C) The term "small business case" means a case filed under chapter 11 of this title in
which the debtor is a small business debtor and has not elected that subchapter V of chapter
11 of this title shall apply.
(51D) The term "small business debtor"—
(A) subject to subparagraph (B), means a person engaged in commercial or business
activities (including any affiliate of such person that is also a debtor under this title and
excluding a person whose primary activity is the business of owning single asset real
estate) that has aggregate noncontingent liquidated secured and unsecured debts as of
the date of the filing of the petition or the date of the order for relief in an amount not
more than $2,000,000 (excluding debts owed to 1 or more affiliates or insiders) not
less than 50 percent of which arose from the commercial or business activities of the
debtor; and
(B) does not include—
(i) any member of a group of affiliated debtors that has aggregate noncontingent
liquidated secured and unsecured debts in an amount greater than $2,000,000
(excluding debt owed to 1 or more affiliates or insiders);
(ii) any debtor that is a corporation subject to the reporting requirements under
section 13 or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m,
78o(d)); or
(iii) any corporation that—
(I) is subject to the reporting requirements under section 13 or 15(d) of the
Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)); and
(II) is an affiliate of a debtor.
(52) The term "State" includes the District of Columbia and Puerto Rico, except for the
purpose of defining who may be a debtor under chapter 9 of this title.
(53) The term "statutory lien" means lien arising solely by force of a statute on specified
circumstances or conditions, or lien of distress 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.
(53A) The term "stockbroker" means person—
(A) with respect to which there is a customer, as defined in section 741 of this title;
and
29

(B) that is engaged in the business of effecting transactions in securities—
(i) for the account of others; or
(ii) with members of the general public, from or for such person's own account.
(53B) The term "swap agreement"—
(A) means—
(i) any agreement, including the terms and conditions incorporated by reference
in such agreement, which is—
(I) an interest rate swap, option, future, or forward agreement, including a rate
floor, rate cap, rate collar, cross-currency rate swap, and basis swap;
(II) a spot, same day-tomorrow, tomorrow-next, forward, or other foreign
exchange, precious metals, or other commodity agreement;
(III) a currency swap, option, future, or forward agreement;
(IV) an equity index or equity swap, option, future, or forward agreement;
(V) a debt index or debt swap, option, future, or forward agreement;
(VI) a total return, credit spread or credit swap, option, future, or forward
agreement;
(VII) a commodity index or a commodity swap, option, future, or forward
agreement;
(VIII) a weather swap, option, future, or forward agreement;
(IX) an emissions swap, option, future, or forward agreement; or
(X) an inflation swap, option, future, or forward agreement;
(ii) any agreement or transaction that is similar to any other agreement or
transaction referred to in this paragraph and that—
(I) is of a type that has been, is presently, or in the future becomes, the subject
of recurrent dealings in the swap or other derivatives markets (including terms
and conditions incorporated by reference therein); and
(II) is a forward, swap, future, option, or spot transaction on one or more rates,
currencies, commodities, equity securities, or other equity instruments, debt
securities or other debt instruments, quantitative measures associated with an
occurrence, extent of an occurrence, or contingency associated with a
financial, commercial, or economic consequence, or economic or financial
indices or measures of economic or financial risk or value;
(iii) any combination of agreements or transactions referred to in this
subparagraph;
(iv) any option to enter into an agreement or transaction referred to in this
subparagraph;

30

(v) a master agreement that provides for an agreement or transaction referred to
in clause (i), (ii), (iii), or (iv), together with all supplements to any such master
agreement, and without regard to whether the master agreement contains an
agreement or transaction that is not a swap agreement under this paragraph,
except that the master agreement shall be considered to be a swap agreement
under this paragraph only with respect to each agreement or transaction under the
master agreement that is referred to in clause (i), (ii), (iii), or (iv); or
(vi) any security agreement or arrangement or other credit enhancement related
to any agreements or transactions referred to in clause (i) through (v), including
any guarantee or reimbursement obligation by or to a swap participant or
financial participant in connection with any agreement or transaction referred to
in any such clause, but not to exceed the damages in connection with any such
agreement or transaction, measured in accordance with section 562; and
(B) is applicable for purposes of this title only, and shall not be construed or applied so
as to challenge or affect the characterization, definition, or treatment of any swap
agreement under any other statute, regulation, or rule, including the Gramm-LeachBliley Act, the Legal Certainty for Bank Products Act of 2000, the securities laws (as
such term is defined in section 3(a)(47) of the Securities Exchange Act of 1934) and
the Commodity Exchange Act.
(53C) The term "swap participant" means an entity that, at any time before the filing of the
petition, has an outstanding swap agreement with the debtor.
(56A) The term "term overriding royalty" means an interest in liquid or gaseous
hydrocarbons in place or to be produced from particular real property that entitles the owner
thereof to a share of production, or the value thereof, for a term limited by time, quantity, or
value realized.
(53D) The term "timeshare plan" means and shall include that interest purchased in any
arrangement, plan, scheme, or similar device, but not including exchange programs, whether
by membership, agreement, tenancy in common, sale, lease, deed, rental agreement, license,
right to use agreement, or by any other means, whereby a purchaser, in exchange for
consideration, receives a right to use accommodations, facilities, or recreational sites,
whether improved or unimproved, for a specific period of time less than a full year during
any given year, but not necessarily for consecutive years, and which extends for a period of
more than three years. A "timeshare interest" is that interest purchased in a timeshare plan
which grants the purchaser the right to use and occupy accommodations, facilities, or
recreational sites, whether improved or unimproved, pursuant to a timeshare plan.
(54) The term "transfer" means—
(A) the creation of a lien;
(B) the retention of title as a security interest;
(C) the foreclosure of a debtor's equity of redemption; or
(D) each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of
disposing of or parting with—
31

(i) property; or
(ii) an interest in property.
(54A) The term "uninsured State member bank" means a State member bank (as defined in
section 3 of the Federal Deposit Insurance Act) the deposits of which are not insured by the
Federal Deposit Insurance Corporation.
(55) The term "United States", when used in a geographical sense, includes all locations
where the judicial jurisdiction of the United States extends, including territories and
possessions of the United States.
§102. Rules of construction
In this title—
(1) "after notice and a hearing", or a similar phrase—
(A) means after such notice as is appropriate in the particular 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 commenced 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;
(8) a definition, contained 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; and
(9) "United States trustee" includes a designee of the United States trustee.
§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, 12, or 13 of this title, and this chapter, sections 307, 362(o), 555
through 557, and 559 through 562 apply in a case under chapter 15.
(b) Subchapters I and II of chapter 7 of this title apply only in a case under such chapter.
(c) Subchapter III of chapter 7 of this title applies only in a case under such chapter
concerning a stockbroker.

32

(d) Subchapter IV of chapter 7 of this title applies only in a case under such chapter
concerning a commodity broker.
(e) Scope of Application.—Subchapter V of chapter 7 of this title shall apply only in a case
under such chapter concerning the liquidation of an uninsured State member bank, or a
corporation organized under section 25A of the Federal Reserve Act, which operates, or
operates as, a multilateral clearing organization pursuant to section 409 of the Federal
Deposit Insurance Corporation Improvement Act of 1991.
(f) 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.
(g) Except as provided in section 901 of this title, subchapters I, II, and III of chapter 11 of
this title apply only in a case under such chapter.
(h) Subchapter IV of chapter 11 of this title applies only in a case under such chapter
concerning a railroad.
(i) Subchapter V of chapter 11 of this title applies only in a case under chapter 11 in which a
small business debtor elects that subchapter V of chapter 11 shall apply.
(j) Chapter 13 of this title applies only in a case under such chapter.
(k) Chapter 12 of this title applies only in a case under such chapter.
(l) Chapter 15 applies only in a case under such chapter, except that—
(1) sections 1505, 1513, and 1514 apply in all cases under this title; and
(2) section 1509 applies whether or not a case under this title is pending.
§104. Adjustment of dollar amounts
(a) On April 1, 1998, and at each 3-year interval ending on April 1 thereafter, each dollar
amount in effect under sections 101(3), 101(18), 101(19A), 101(51D), 109(e), 303(b),
507(a), 522(d), 522(f)(3) and 522(f)(4), 522(n), 522(p), 522(q), 523(a)(2)(C), 541(b),
547(c)(9), 707(b), 1322(d), 1325(b), and 1326(b)(3) of this title and section 1409(b) of title
28 immediately before such April 1 shall be adjusted—
(1) to reflect the change in the Consumer Price Index for All Urban Consumers,
published by the Department of Labor, for the most recent 3-year period ending
immediately before January 1 preceding such April 1, and
(2) to round to the nearest $25 the dollar amount that represents such change.
(b) Not later than March 1, 1998, and at each 3-year interval ending on March 1 thereafter,
the Judicial Conference of the United States shall publish in the Federal Register the dollar
amounts that will become effective on such April 1 under sections 101(3), 101(18),
101(19A), 101(51D), 109(e), 303(b), 507(a), 522(d), 522(f)(3) and 522(f)(4), 522(n), 522(p),
522(q), 523(a)(2)(C), 541(b), 547(c)(9), 707(b), 1322(d), 1325(b), and 1326(b)(3) of this title
and section 1409(b) of title 28.
(c) Adjustments made in accordance with subsection (a) shall not apply with respect to cases
commenced before the date of such adjustments.
§105. Power of court
33

(a) The court may issue any order, process, or judgment that is necessary or appropriate to
carry out the provisions of this title. No provision of this title providing for the raising of an
issue by a party in interest shall be construed to preclude the court from, sua sponte, taking
any action or making any determination necessary or appropriate to enforce or implement
court orders or rules, or to prevent an abuse of process.
(b) Notwithstanding subsection (a) of this section, a court may not appoint a receiver
in a case under this title.
(c) The ability of any district judge or other officer or employee of a district court to
exercise any of the authority or responsibilities conferred upon the court under this
title shall be determined by reference to the provisions relating to such judge, officer,
or employee set forth in title 28. This subsection shall not be interpreted to exclude
bankruptcy judges and other officers or employees appointed pursuant to chapter 6 of
title 28 from its operation.
(d) The court, on its own motion or on the request of a party in interest—
(1) shall hold such status conferences as are necessary to further the expeditious
and economical resolution of the case; and
(2) unless inconsistent with another provision of this title or with applicable
Federal Rules of Bankruptcy Procedure, may issue an order at any such
conference prescribing such limitations and conditions as the court deems
appropriate to ensure that the case is handled expeditiously and economically,
including an order that—
(A) sets the date by which the trustee must assume or reject an executory
contract or unexpired lease; or
(B) in a case under chapter 11 of this title—
(i) sets a date by which the debtor, or trustee if one has been appointed,
shall file a disclosure statement and plan;
(ii) sets a date by which the debtor, or trustee if one has been appointed,
shall solicit acceptances of a plan;
(iii) sets the date by which a party in interest other than a debtor may file
a plan;
(iv) sets a date by which a proponent of a plan, other than the debtor,
shall solicit acceptances of such plan;
(v) fixes the scope and format of the notice to be provided regarding the
hearing on approval of the disclosure statement; or
(vi) provides that the hearing on approval of the disclosure statement
may be combined with the hearing on confirmation of the plan.
§106. Waiver of sovereign immunity
(a) Notwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as
to a governmental unit to the extent set forth in this section with respect to the following:
34

(1) Sections 105, 106, 107, 108, 303, 346, 362, 363, 364, 365, 366, 502, 503, 505, 506,
510, 522, 523, 524, 525, 542, 543, 544, 545, 546, 547, 548, 549, 550, 551, 552, 553,
722, 724, 726, 744, 749, 764, 901, 922, 926, 928, 929, 944, 1107, 1141, 1142, 1143,
1146, 1201, 1203, 1205, 1206, 1227, 1231, 1301, 1303, 1305, and 1327 of this title.
(2) The court may hear and determine any issue arising with respect to the application
of such sections to governmental units.
(3) The court may issue against a governmental unit an order, process, or judgment
under such sections or the Federal Rules of Bankruptcy Procedure, including an order
or judgment awarding a money recovery, but not including an award of punitive
damages. Such order or judgment for costs or fees under this title or the Federal Rules
of Bankruptcy Procedure against any governmental unit shall be consistent with the
provisions and limitations of section 2412(d)(2)(A) of title 28.
(4) The enforcement of any such order, process, or judgment against any governmental
unit shall be consistent with appropriate nonbankruptcy law applicable to such
governmental unit and, in the case of a money judgment against the United States,
shall be paid as if it is a judgment rendered by a district court of the United States.
(5) Nothing in this section shall create any substantive claim for relief or cause of
action not otherwise existing under this title, the Federal Rules of Bankruptcy
Procedure, or nonbankruptcy law.
(b) A governmental unit that has filed a proof of claim in the case is deemed to have waived
sovereign immunity with respect to a claim against such governmental unit that is property of
the estate and that arose out of the same transaction or occurrence out of which the claim of
such governmental unit arose.
(c) Notwithstanding any assertion of sovereign immunity by a governmental unit, there shall
be offset against a claim or interest of a governmental unit any claim against such
governmental unit that is property of the estate.
§107. Public access to papers
(a) Except as provided in subsections (b) and (c) and subject to section 112, 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 confidential 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.
(c)
(1) The bankruptcy court, for cause, may protect an individual, with respect to the
following types of information to the extent the court finds that disclosure of such
information would create undue risk of identity theft or other unlawful injury to the
individual or the individual's property:
35

(A) Any means of identification (as defined in section 1028(d) of title 18)
contained in a paper filed, or to be filed, in a case under this title.
(B) Other information contained in a paper described in subparagraph (A).
(2) Upon ex parte application demonstrating cause, the court shall provide access to
information protected pursuant to paragraph (1) to an entity acting pursuant to the
police or regulatory power of a domestic governmental unit.
(3) The United States trustee, bankruptcy administrator, trustee, and any auditor
serving under section 586(f) of title 28—
(A) shall have full access to all information contained in any paper filed or
submitted in a case under this title; and
(B) shall not disclose information specifically protected by the court under this
title.
§108. Extension of time
(a) If applicable nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or an
agreement 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; or
(2) two years after the order for relief.
(b) Except as provided in subsection (a) of this section, if applicable nonbankruptcy law, an
order entered in a nonbankruptcy proceeding, or an agreement fixes a period within which
the debtor or an individual protected under section 1201 or 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; or
(2) 60 days after the order for relief.
(c) Except as provided in section 524 of this title, if applicable nonbankruptcy law, an order
entered in a nonbankruptcy proceeding, or an agreement fixes a period for commencing or
continuing a civil action in a court other than a bankruptcy court on a claim against the
debtor, or against an individual with respect to which such individual is protected under
section 1201 or 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; or
(2) 30 days after notice of the termination or expiration of the stay under section 362,
922, 1201, or 1301 of this title, as the case may be, with respect to such claim.
36

§109. Who may be a debtor
(a) Notwithstanding any other provision of this section, only a person that resides 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 such person is not—
(1) a railroad;
(2) a domestic insurance company, bank, savings bank, cooperative bank, savings and
loan association, building and loan association, homestead association, a New Markets
Venture Capital company as defined in section 351 of the Small Business Investment
Act of 1958, a small business investment company licensed by the Small Business
Administration under section 301 of the Small Business Investment Act of 1958, credit
union, or industrial bank or similar institution which is an insured bank as defined in
section 3(h) of the Federal Deposit Insurance Act, except that an uninsured State
member bank, or a corporation organized under section 25A of the Federal Reserve
Act, which operates, or operates as, a multilateral clearing organization pursuant to
section 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991
may be a debtor if a petition is filed at the direction of the Board of Governors of the
Federal Reserve System; or
(3)
(A) a foreign insurance company, engaged in such business in the United States;
or
(B) a foreign bank, savings bank, cooperative bank, savings and loan association,
building and loan association, or credit union, that has a branch or agency (as
defined in section 1(b) of the International Banking Act of 1978) in the United
States.
(c) An entity may be a debtor under chapter 9 of this title if and only if such entity—
(1) is a municipality;
(2) is specifically authorized, in its capacity as a municipality or by name, 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;
(4) desires to effect a plan to adjust such debts; and
(5)
(A) has obtained 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;
(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;
37

(C) is unable to negotiate with creditors because such negotiation is
impracticable; or
(D) reasonably believes that a creditor may attempt to obtain a transfer that is
avoidable under section 547 of this title.
(d) Only a railroad, a person that may be a debtor under chapter 7 of this title (except a
stockbroker or a commodity broker), and an uninsured State member bank, or a corporation
organized under section 25A of the Federal Reserve Act, which operates, or operates as, a
multilateral clearing organization pursuant to section 409 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 may be a debtor under chapter 11 of this title.
(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 $250,000 [$394,725 as of April 1,
2016] and noncontingent, liquidated, secured debts of less than $750,000 [$1,184,200 as of
April 1, 2016], 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 $250,000 [$394,725 as of
April 1, 2016] and noncontingent, liquidated, secured debts of less than $750,000
[$1,184,200 as of April 1, 2016] may be a debtor under chapter 13 of this title.
(f) Only a family farmer or family fisherman with regular annual income may be a debtor
under chapter 12 of this title.
(g) Notwithstanding any other provision of this section, no individual or family farmer may
be a debtor under this title who has been a debtor in a case pending under this title at any
time in the preceding 180 days if—
(1) the case was dismissed by the court for willful failure of the debtor to abide by
orders of the court, or to appear before the court in proper prosecution of the case; or
(2) the debtor requested and obtained the voluntary dismissal of the case following the
filing of a request for relief from the automatic stay provided by section 362 of this
title.
(h)
(1) Subject to paragraphs (2) and (3), and notwithstanding any other provision of this
section other than paragraph (4) of this subsection, an individual may not be a debtor
under this title unless such individual has, during the 180-day period ending on the
date of filing of the petition by such individual, received from an approved nonprofit
budget and credit counseling agency described in section 111(a) an individual or group
briefing (including a briefing conducted by telephone or on the Internet) that outlined
the opportunities for available credit counseling and assisted such individual in
performing a related budget analysis.
(2)
(A) Paragraph (1) shall not apply with respect to a debtor who resides in a
district for which the United States trustee (or the bankruptcy administrator, if
any) determines that the approved nonprofit budget and credit counseling
agencies for such district are not reasonably able to provide adequate services to
38

the additional individuals who would otherwise seek credit counseling from such
agencies by reason of the requirements of paragraph (1).
(B) The United States trustee (or the bankruptcy administrator, if any) who
makes a determination described in subparagraph (A) shall review such
determination not later than 1 year after the date of such determination, and not
less frequently than annually thereafter. Notwithstanding the preceding sentence,
a nonprofit budget and credit counseling agency may be disapproved by the
United States trustee (or the bankruptcy administrator, if any) at any time.
(3)
(A) Subject to subparagraph (B), the requirements of paragraph (1) shall not
apply with respect to a debtor who submits to the court a certification that—
(i) describes exigent circumstances that merit a waiver of the
requirements of paragraph (1);
(ii) states that the debtor requested credit counseling services from an
approved nonprofit budget and credit counseling agency, but was unable
to obtain the services referred to in paragraph (1) during the 7-day
period beginning on the date on which the debtor made that request; and
(iii) is satisfactory to the court.
(B) With respect to a debtor, an exemption under subparagraph (A) shall cease
to apply to that debtor on the date on which the debtor meets the requirements
of paragraph (1), but in no case may the exemption apply to that debtor after
the date that is 30 days after the debtor files a petition, except that the court,
for cause, may order an additional 15 days.
(4) The requirements of paragraph (1) shall not apply with respect to a debtor
whom the court determines, after notice and hearing, is unable to complete those
requirements because of incapacity, disability, or active military duty in a
military combat zone. For the purposes of this paragraph, incapacity means that
the debtor is impaired by reason of mental illness or mental deficiency so that he
is incapable of realizing and making rational decisions with respect to his
financial responsibilities; and "disability" means that the debtor is so physically
impaired as to be unable, after reasonable effort, to participate in an in person,
telephone, or Internet briefing required under paragraph (1).
§110. Penalty for persons who negligently or fraudulently prepare bankruptcy petitions
(a) In this section—
(1) "bankruptcy petition preparer" means a person, other than an attorney for the
debtor or an employee of such attorney under the direct supervision of such attorney,
who prepares for compensation a document for filing; and
(2) "document for filing" means a petition or any other document prepared for filing
by a debtor in a United States bankruptcy court or a United States district court in
connection with a case under this title.
39

(b)
(1) A bankruptcy petition preparer who prepares a document for filing shall sign the
document and print on the document the preparer's name and address. If a bankruptcy
petition preparer is not an individual, then an officer, principal, responsible person, or
partner of the bankruptcy petition preparer shall be required to—
(A) sign the document for filing; and
(B) print on the document the name and address of that officer, principal,
responsible person, or partner.
(2)
(A) Before preparing any document for filing or accepting any fees from or on
behalf of a debtor, the bankruptcy petition preparer shall provide to the debtor a
written notice which shall be on an official form prescribed by the Judicial
Conference of the United States in accordance with rule 9009 of the Federal
Rules of Bankruptcy Procedure.
(B) The notice under subparagraph (A)—
(i) shall inform the debtor in simple language that a bankruptcy petition
preparer is not an attorney and may not practice law or give legal advice;
(ii) may contain a description of examples of legal advice that a bankruptcy
petition preparer is not authorized to give, in addition to any advice that the
preparer may not give by reason of subsection (e)(2); and
(iii) shall—
(I) be signed by the debtor and, under penalty of perjury, by the
bankruptcy petition preparer; and
(II) be filed with any document for filing.
(c)
(1) A bankruptcy petition preparer who prepares a document for filing shall place on
the document, after the preparer's signature, an identifying number that identifies
individuals who prepared the document.
(2)
(A) Subject to subparagraph (B), for purposes of this section, the identifying
number of a bankruptcy petition preparer shall be the Social Security account
number of each individual who prepared the document or assisted in its
preparation.
(B) If a bankruptcy petition preparer is not an individual, the identifying number
of the bankruptcy petition preparer shall be the Social Security account number
of the officer, principal, responsible person, or partner of the bankruptcy petition
preparer.

40

(d) A bankruptcy petition preparer shall, not later than the time at which a document for
filing is presented for the debtor's signature, furnish to the debtor a copy of the document.
(e)
(1) A bankruptcy petition preparer shall not execute any document on behalf of a
debtor.
(2)
(A) A bankruptcy petition preparer may not offer a potential bankruptcy debtor
any legal advice, including any legal advice described in subparagraph (B).
(B) The legal advice referred to in subparagraph (A) includes advising the
debtor—
(i) whether—
(I) to file a petition under this title; or
(II) commencing a case under chapter 7, 11, 12, or 13 is appropriate;
(ii) whether the debtor's debts will be discharged in a case under this title;
(iii) whether the debtor will be able to retain the debtor's home, car, or other
property after commencing a case under this title;
(iv) concerning—
(I) the tax consequences of a case brought under this title; or
(II) the dischargeability of tax claims;
(v) whether the debtor may or should promise to repay debts to a creditor or
enter into a reaffirmation agreement with a creditor to reaffirm a debt;
(vi) concerning how to characterize the nature of the debtor's interests in
property or the debtor's debts; or
(vii) concerning bankruptcy procedures and rights.
(f) A bankruptcy petition preparer shall not use the word "legal" or any similar term in any
advertisements, or advertise under any category that includes the word "legal" or any similar
term.
(g) A bankruptcy petition preparer shall not collect or receive any payment from the debtor
or on behalf of the debtor for the court fees in connection with filing the petition.
(h)
(1) The Supreme Court may promulgate rules under section 2075 of title 28, or the
Judicial Conference of the United States may prescribe guidelines, for setting a
maximum allowable fee chargeable by a bankruptcy petition preparer. A bankruptcy
petition preparer shall notify the debtor of any such maximum amount before
preparing any document for filing for the debtor or accepting any fee from or on behalf
of the debtor.

41

(2) A declaration under penalty of perjury by the bankruptcy petition preparer shall be
filed together with the petition, disclosing any fee received from or on behalf of the
debtor within 12 months immediately prior to the filing of the case, and any unpaid fee
charged to the debtor. If rules or guidelines setting a maximum fee for services have
been promulgated or prescribed under paragraph (1), the declaration under this
paragraph shall include a certification that the bankruptcy petition preparer complied
with the notification requirement under paragraph (1).
(3)
(A) The court shall disallow and order the immediate turnover to the bankruptcy
trustee any fee referred to in paragraph (2)—
(i) found to be in excess of the value of any services rendered by the
bankruptcy petition preparer during the 12-month period immediately
preceding the date of the filing of the petition; or
(ii) found to be in violation of any rule or guideline promulgated or prescribed
under paragraph (1).
(B) All fees charged by a bankruptcy petition preparer may be forfeited in any
case in which the bankruptcy petition preparer fails to comply with this
subsection or subsection (b), (c), (d), (e), (f), or (g).
(C) An individual may exempt any funds recovered under this paragraph under
section 522(b).
(4) The debtor, the trustee, a creditor, the United States trustee (or the bankruptcy
administrator, if any) or the court, on the initiative of the court, may file a motion for
an order under paragraph (3).
(5) A bankruptcy petition preparer shall be fined not more than $500 for each failure to
comply with a court order to turn over funds within 30 days of service of such order.
(i)
(1) If a bankruptcy petition preparer violates this section or commits any act that the
court finds to be fraudulent, unfair, or deceptive, on the motion of the debtor, trustee,
United States trustee (or the bankruptcy administrator, if any), and after notice and a
hearing, the court shall order the bankruptcy petition preparer to pay to the debtor—
(A) the debtor's actual damages;
(B) the greater of—
(i) $2,000; or
(ii) twice the amount paid by the debtor to the bankruptcy petition preparer for
the preparer's services; and
(C) reasonable attorneys’ fees and costs in moving for damages under this
subsection.

42

(2) If the trustee or creditor moves for damages on behalf of the debtor under this
subsection, the bankruptcy petition preparer shall be ordered to pay the movant the
additional amount of $1,000 plus reasonable attorneys’ fees and costs incurred.
(j)
(1) A debtor for whom a bankruptcy petition preparer has prepared a document for
filing, the trustee, a creditor, or the United States trustee in the district in which the
bankruptcy petition preparer resides, has conducted business, or the United States
trustee in any other district in which the debtor resides may bring a civil action to
enjoin a bankruptcy petition preparer from engaging in any conduct in violation of this
section or from further acting as a bankruptcy petition preparer.
(2)
(A) In an action under paragraph (1), if the court finds that—
(i) a bankruptcy petition preparer has—
(I) engaged in conduct in violation of this section or of any provision of
this title;
(II) misrepresented the preparer's experience or education as a
bankruptcy petition preparer; or
(III) engaged in any other fraudulent, unfair, or deceptive conduct; and
(ii) injunctive relief is appropriate to prevent the recurrence of such conduct,
the court may enjoin the bankruptcy petition preparer from engaging in such
conduct.
(B) If the court finds that a bankruptcy petition preparer has continually engaged
in conduct described in subclause (I), (II), or (III) of clause (i) and that an
injunction prohibiting such conduct would not be sufficient to prevent such
person's interference with the proper administration of this title, has not paid a
penalty imposed under this section, or failed to disgorge all fees ordered by the
court the court may enjoin the person from acting as a bankruptcy petition
preparer.
(3) The court, as part of its contempt power, may enjoin a bankruptcy petition preparer
that has failed to comply with a previous order issued under this section. The
injunction under this paragraph may be issued on the motion of the court, the trustee,
or the United States trustee (or the bankruptcy administrator, if any).
(4) The court shall award to a debtor, trustee, or creditor that brings a successful action
under this subsection reasonable attorneys’ fees and costs of the action, to be paid by
the bankruptcy petition preparer.
(k) Nothing in this section shall be construed to permit activities that are otherwise prohibited
by law, including rules and laws that prohibit the unauthorized practice of law.
(l)

43

(1) A bankruptcy petition preparer who fails to comply with any provision of
subsection (b), (c), (d), (e), (f), (g), or (h) may be fined not more than $500 for each
such failure.
(2) The court shall triple the amount of a fine assessed under paragraph (1) in any case
in which the court finds that a bankruptcy petition preparer—
(A) advised the debtor to exclude assets or income that should have been
included on applicable schedules;
(B) advised the debtor to use a false Social Security account number;
(C) failed to inform the debtor that the debtor was filing for relief under this title;
or
(D) prepared a document for filing in a manner that failed to disclose the identity
of the bankruptcy petition preparer.
(3) A debtor, trustee, creditor, or United States trustee (or the bankruptcy
administrator, if any) may file a motion for an order imposing a fine on the bankruptcy
petition preparer for any violation of this section.
(4)
(A) Fines imposed under this subsection in judicial districts served by United
States trustees shall be paid to the United States trustees, who shall deposit an
amount equal to such fines in the United States Trustee Fund.
(B) Fines imposed under this subsection in judicial districts served by
bankruptcy administrators shall be deposited as offsetting receipts to the fund
established under section 1931 of title 28, and shall remain available until
expended to reimburse any appropriation for the amount paid out of such
appropriation for expenses of the operation and maintenance of the courts of the
United States.
§111. Nonprofit budget and credit counseling agencies; financial management instructional
courses
(a) The clerk shall maintain a publicly available list of—
(1) nonprofit budget and credit counseling agencies that provide 1 or more services
described in section 109(h) currently approved by the United States trustee (or the
bankruptcy administrator, if any); and
(2) instructional courses concerning personal financial management currently
approved by the United States trustee (or the bankruptcy administrator, if any), as
applicable.
(b) The United States trustee (or bankruptcy administrator, if any) shall only approve a
nonprofit budget and credit counseling agency or an instructional course concerning personal
financial management as follows:
(1) The United States trustee (or bankruptcy administrator, if any) shall have
thoroughly reviewed the qualifications of the nonprofit budget and credit counseling
44

agency or of the provider of the instructional course under the standards set forth in
this section, and the services or instructional courses that will be offered by such
agency or such provider, and may require such agency or such provider that has sought
approval to provide information with respect to such review.
(2) The United States trustee (or bankruptcy administrator, if any) shall have
determined that such agency or such instructional course fully satisfies the applicable
standards set forth in this section.
(3) If a nonprofit budget and credit counseling agency or instructional course did not
appear on the approved list for the district under subsection (a) immediately before
approval under this section, approval under this subsection of such agency or such
instructional course shall be for a probationary period not to exceed 6 months.
(4) At the conclusion of the applicable probationary period under paragraph (3), the
United States trustee (or bankruptcy administrator, if any) may only approve for an
additional 1-year period, and for successive 1-year periods thereafter, an agency or
instructional course that has demonstrated during the probationary or applicable
subsequent period of approval that such agency or instructional course—
(A) has met the standards set forth under this section during such period; and
(B) can satisfy such standards in the future.
(5) Not later than 30 days after any final decision under paragraph (4), an interested
person may seek judicial review of such decision in the appropriate district court of the
United States.
(c)
(1) The United States trustee (or the bankruptcy administrator, if any) shall only
approve a nonprofit budget and credit counseling agency that demonstrates that it will
provide qualified counselors, maintain adequate provision for safekeeping and
payment of client funds, provide adequate counseling with respect to client credit
problems, and deal responsibly and effectively with other matters relating to the
quality, effectiveness, and financial security of the services it provides.
(2) To be approved by the United States trustee (or the bankruptcy administrator, if
any), a nonprofit budget and credit counseling agency shall, at a minimum—
(A) have a board of directors the majority of which—
(i) are not employed by such agency; and
(ii) will not directly or indirectly benefit financially from the outcome of the
counseling services provided by such agency;
(B) if a fee is charged for counseling services, charge a reasonable fee, and
provide services without regard to ability to pay the fee;
(C) provide for safekeeping and payment of client funds, including an annual
audit of the trust accounts and appropriate employee bonding;

45

(D) provide full disclosures to a client, including funding sources, counselor
qualifications, possible impact on credit reports, and any costs of such program
that will be paid by such client and how such costs will be paid;
(E) provide adequate counseling with respect to a client's credit problems that
includes an analysis of such client's current financial condition, factors that
caused such financial condition, and how such client can develop a plan to
respond to the problems without incurring negative amortization of debt;
(F) provide trained counselors who receive no commissions or bonuses based on
the outcome of the counseling services provided by such agency, and who have
adequate experience, and have been adequately trained to provide counseling
services to individuals in financial difficulty, including the matters described in
subparagraph (E);
(G) demonstrate adequate experience and background in providing credit
counseling; and
(H) have adequate financial resources to provide continuing support services for
budgeting plans over the life of any repayment plan.
(d) The United States trustee (or the bankruptcy administrator, if any) shall only approve an
instructional course concerning personal financial management—
(1) for an initial probationary period under subsection (b)(3) if the course will provide
at a minimum—
(A) trained personnel with adequate experience and training in providing
effective instruction and services;
(B) learning materials and teaching methodologies designed to assist debtors in
understanding personal financial management and that are consistent with stated
objectives directly related to the goals of such instructional course;
(C) adequate facilities situated in reasonably convenient locations at which such
instructional course is offered, except that such facilities may include the
provision of such instructional course by telephone or through the Internet, if
such instructional course is effective;
(D) the preparation and retention of reasonable records (which shall include the
debtor's bankruptcy case number) to permit evaluation of the effectiveness of
such instructional course, including any evaluation of satisfaction of instructional
course requirements for each debtor attending such instructional course, which
shall be available for inspection and evaluation by the Executive Office for
United States Trustees, the United States trustee (or the bankruptcy
administrator, if any), or the chief bankruptcy judge for the district in which such
instructional course is offered; and
(E) if a fee is charged for the instructional course, charge a reasonable fee, and
provide services without regard to ability to pay the fee; and

46

(2) for any 1-year period if the provider thereof has demonstrated that the course meets
the standards of paragraph (1) and, in addition—
(A) has been effective in assisting a substantial number of debtors to understand
personal financial management; and
(B) is otherwise likely to increase substantially the debtor's understanding of
personal financial management.
(e) The district court may, at any time, investigate the qualifications of a nonprofit budget
and credit counseling agency referred to in subsection (a), and request production of
documents to ensure the integrity and effectiveness of such agency. The district court may, at
any time, remove from the approved list under subsection (a) a nonprofit budget and credit
counseling agency upon finding such agency does not meet the qualifications of subsection
(b).
(f) The United States trustee (or the bankruptcy administrator, if any) shall notify the clerk
that a nonprofit budget and credit counseling agency or an instructional course is no longer
approved, in which case the clerk shall remove it from the list maintained under subsection
(a).
(g)
(1) No nonprofit budget and credit counseling agency may provide to a credit
reporting agency information concerning whether a debtor has received or sought
instruction concerning personal financial management from such agency.
(2) A nonprofit budget and credit counseling agency that willfully or negligently fails
to comply with any requirement under this title with respect to a debtor shall be liable
for damages in an amount equal to the sum of—
(A) any actual damages sustained by the debtor as a result of the violation; and
(B) any court costs or reasonable attorneys’ fees (as determined by the court)
incurred in an action to recover those damages.
§112. Prohibition on disclosure of name of minor children
The debtor may be required to provide information regarding a minor child involved in
matters under this title but may not be required to disclose in the public records in the case
the name of such minor child. The debtor may be required to disclose the name of such minor
child in a nonpublic record that is maintained by the court and made available by the court
for examination by the United States trustee, the trustee, and the auditor (if any) serving
under section 586(f) of title 28, in the case. The court, the United States trustee, the trustee,
and such auditor shall not disclose the name of such minor child maintained in such
nonpublic record.
CHAPTER 3—CASE ADMINISTRATION ....................... Error! Bookmark not defined.
SUBCHAPTER I—COMMENCEMENT OF A CASE ....... Error! Bookmark not defined.
§301. Voluntary cases ..................................................... Error! Bookmark not defined.
§302. Joint cases ............................................................ Error! Bookmark not defined.
47

§303. Involuntary cases .................................................. Error! Bookmark not defined.
§304 [Repealed] .............................................................. Error! Bookmark not defined.
§305. Abstention ............................................................. Error! Bookmark not defined.
§306. Limited appearance ............................................... Error! Bookmark not defined.
§307. United States trustee ............................................. Error! Bookmark not defined.
§308. Debtor reporting requirements............................... Error! Bookmark not defined.
SUBCHAPTER II—OFFICERS ....................................... Error! Bookmark not defined.
§321. Eligibility to serve as trustee .................................. Error! Bookmark not defined.
§322. Qualification of trustee ........................................... Error! Bookmark not defined.
§323. Role and capacity of trustee .................................. Error! Bookmark not defined.
§324. Removal of trustee or examiner ............................ Error! Bookmark not defined.
§325. Effect of vacancy ................................................... Error! Bookmark not defined.
§326. Limitation on compensation of trustee ................... Error! Bookmark not defined.
§327. Employment of professional persons .................... Error! Bookmark not defined.
§328. Limitation on compensation of professional persons ............ Error! Bookmark not
defined.
§329. Debtor's transactions with attorneys ...................... Error! Bookmark not defined.
§330. Compensation of officers ....................................... Error! Bookmark not defined.
§331. Interim compensation ............................................ Error! Bookmark not defined.
§332. Consumer privacy ombudsman ............................. Error! Bookmark not defined.
§333. Appointment of patient care ombudsman .............. Error! Bookmark not defined.
SUBCHAPTER III—ADMINISTRATION.......................... Error! Bookmark not defined.
§341. Meetings of creditors and equity security holders.. Error! Bookmark not defined.
§342. Notice .................................................................... Error! Bookmark not defined.
§343. Examination of the debtor ..................................... Error! Bookmark not defined.
§344. Self-incrimination; immunity................................... Error! Bookmark not defined.
§345. Money of estates ................................................... Error! Bookmark not defined.
§346. Special provisions related to the treatment of State and local taxes ............. Error!
Bookmark not defined.
§347. Unclaimed property ............................................... Error! Bookmark not defined.
§348. Effect of conversion ............................................... Error! Bookmark not defined.
§349. Effect of dismissal ................................................. Error! Bookmark not defined.
§350. Closing and reopening cases ................................ Error! Bookmark not defined.
§351. Disposal of patient records .................................... Error! Bookmark not defined.

48

SUBCHAPTER I—COMMENCEMENT OF A CASE
§301. Voluntary cases
(a) 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.
(b) The commencement of a voluntary case under a chapter of this title constitutes an order
for relief under such chapter.
§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 determine the extent, if any, to
which the debtors’ estates shall be consolidated.
§303. Involuntary cases
(a) An involuntary case may be commenced only under chapter 7 or 11 of this title, and only
against a person, except a farmer, family farmer, or a corporation that is not a moneyed,
business, or commercial corporation, that may be a debtor under the chapter under which
such case is commenced.
(b) An involuntary case against a person is commenced by the filing with the bankruptcy
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 the subject of a bona fide dispute as to
liability or amount, or an indenture trustee representing such a holder, if such
noncontingent, undisputed claims aggregate at least $10,000 [$15,775 as of April 1,
2016] 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 transfer that is voidable under section 544, 545, 547,
548, 549, or 724(a) of this title, by one or more of such holders that hold in the
aggregate at least $10,000 [$15,775 as of April 1, 2016] 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 general 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 proceeding concerning such
person.

49

(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 subsection (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
involuntary 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 order the United States trustee to 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 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.
(h) If the petition is not timely controverted, the court shall order relief against the debtor in
an involuntary case under the chapter under which 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
unless such debts are the subject of a bona fide dispute as to liability or amount; 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 against
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; or
(B) a reasonable attorney's fee; or
(2) against any petitioner that filed the petition in bad faith, for—
(A) any damages proximately caused by such filing; or
50

(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 debtor; or
(3) for want of prosecution.
(k)
(1) If—
(A) the petition under this section is false or contains any materially false,
fictitious, or fraudulent statement;
(B) the debtor is an individual; and
(C) the court dismisses such petition,
the court, upon the motion of the debtor, shall seal all the records of the court relating
to such petition, and all references to such petition.
(2) If the debtor is an individual and the court dismisses a petition under this section,
the court may enter an order prohibiting all consumer reporting agencies (as defined in
section 603(f) of the Fair Credit Reporting Act (15 U.S.C. 1681a(f))) from making any
consumer report (as defined in section 603(d) of that Act) that contains any
information relating to such petition or to the case commenced by the filing of such
petition.
(3) Upon the expiration of the statute of limitations described in section 3282 of title
18, for a violation of section 152 or 157 of such title, the court, upon the motion of the
debtor and for good cause, may expunge any records relating to a petition filed under
this section.
§304 [Repealed]
§305. Abstention
(a) The court, after notice and a hearing, may dismiss a case under this title, or may suspend
all proceedings in a case under this title, at any time if—
(1) the interests of creditors and the debtor would be better served by such dismissal or
suspension; or
(2)
(A) a petition under section 1515 for recognition of a foreign proceeding has
been granted; and
(B) the purposes of chapter 15 of this title would be best served by such
dismissal or suspension.
(b) A foreign representative may seek dismissal or suspension under subsection (a)(2) of this
section.
51

(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 reviewable by appeal
or otherwise by the court of appeals under section 158(d), 1291, or 1292 of title 28 or by the
Supreme Court of the United States under section 1254 of title 28.
§306. Limited appearance
An appearance in a bankruptcy court by a foreign representative in connection with a petition
or request under section 303 or 305 of this title does not submit such foreign representative to
the jurisdiction of any court in the United States for any other purpose, but the bankruptcy
court may condition any order under section 303 or 305 of this title on compliance by such
foreign representative with the orders of such bankruptcy court.
§307. United States trustee
The United States trustee may raise and may appear and be heard on any issue in any case or
proceeding under this title but may not file a plan pursuant to section 1121(c) of this title.
§308. Debtor reporting requirements
(a) For purposes of this section, the term "profitability" means, with respect to a debtor, the
amount of money that the debtor has earned or lost during current and recent fiscal periods.
(b) A debtor in a small business case shall file periodic financial and other reports containing
information including—
(1) the debtor's profitability;
(2) reasonable approximations of the debtor's projected cash receipts and cash
disbursements over a reasonable period;
(3) comparisons of actual cash receipts and disbursements with projections in prior
reports;
(4) whether the debtor is—
(A) in compliance in all material respects with postpetition requirements imposed by
this title and the Federal Rules of Bankruptcy Procedure; and
(B) timely filing tax returns and other required government filings and paying taxes
and other administrative expenses when due;
(5) if the debtor is not in compliance with the requirements referred to in paragraph
(4)(A) or filing tax returns and other required government filings and making the
payments referred to in paragraph (4)(B), what the failures are and how, at what cost,
and when the debtor intends to remedy such failures; and
(6) such other matters as are in the best interests of the debtor and creditors, and in the
public interest in fair and efficient procedures under chapter 11 of this title.
SUBCHAPTER II—OFFICERS
§321. Eligibility to serve as trustee
(a) A person may serve as trustee in a case under this title only if such person is—

52

(1) an individual that is competent to perform the duties of trustee and, in a case under
chapter 7, 12, or 13 of this title, resides or has an office in the judicial district within
which the case is pending, 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, 12, or 13 of this title, having an office in at least one of
such districts.
(b) A person that has served as an examiner in the case may not serve as trustee in the case.
(c) The United States trustee for the judicial district in which the case is pending is eligible to
serve as trustee in the case if necessary.
§322. Qualification of trustee
(a) Except as provided in subsection (b)(1), a person selected under section 701, 702, 703,
1104, 1163, 1183, 1202, or 1302 of this title to serve as trustee in a case under this title
qualifies if before seven 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)
(1) The United States trustee qualifies wherever such trustee serves as trustee in a case
under this title.
(2) The United States trustee shall determine—
(A) the amount of a bond required to be filed under subsection (a) of this section;
and
(B) 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.
§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.
§324. Removal of trustee or examiner
(a) The court, after notice and a hearing, may remove a trustee, other than the United States
trustee, or an examiner, for cause.
(b) Whenever the court removes a trustee or examiner under subsection (a) in a case under
this title, such trustee or examiner shall thereby be removed in all other cases under this title
in which such trustee or examiner is then serving unless the court orders otherwise.
§325. Effect of vacancy

53

A vacancy in the office of trustee during a case does not abate any pending action or
proceeding, and the successor trustee shall be substituted as a party in such action or
proceeding.
§326. Limitation on compensation of trustee
(a) In a case under chapter 7 or 11, other than a case under subchapter V of chapter 11, the
court may allow reasonable 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 25 percent on
the first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in excess of
$50,000, 5 percent on any amount in excess of $50,000 but not in excess of $1,000,000, and
reasonable compensation not to exceed 3 percent of such moneys in excess of $1,000,000,
upon all moneys disbursed or turned over in the case by the trustee to parties in interest,
excluding the debtor, but including holders of secured claims.
(b) In a case under subchapter V of chapter 11 or chapter 12 or 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
1202(a) or 1302(a) of this title for the trustee's services, payable after the trustee renders such
services, not to exceed five percent upon all payments under the plan.
(c) If more than one person serves as trustee in the case, the aggregate 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 or reimbursement of
expenses of the trustee if the trustee failed to make diligent inquiry into facts that would
permit denial of allowance under section 328(c) of this title or, with knowledge of such facts,
employed a professional person under section 327 of this title.
§327. Employment of professional persons
(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, 1202,
or 1108 of this title, and if the debtor has regularly employed attorneys, accountants, or other
professional persons on 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, 12, or 11 of this title, a person is not disqualified for
employment under this section solely because of such person's employment by or
representation of a creditor, unless there is objection by another creditor or the United States
trustee, in which case the court shall disapprove such employment if there is an actual
conflict of interest.
(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.
54

(e) The trustee, with the court's approval, may employ, for a specified special purpose, other
than to represent the trustee in 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
(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 title, as the case may be, on any reasonable terms and conditions of
employment, including on a retainer, on an hourly basis, on a fixed or percentage fee basis,
or on a contingent fee basis. Notwithstanding such terms and conditions, the court may allow
compensation different from the compensation provided under such terms and conditions
after the conclusion of such employment, if such terms and conditions prove to have been
improvident in light of developments not capable of being anticipated 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 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 person's employment under section 327 or 1103 of this title, such professional
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.
§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 or in connection with the case by such
attorney, and the source of 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 estate, 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 plan under chapter 11,
12, or 13 of this title; or
55

(2) the entity that made such payment.
§330. Compensation of officers
(a)
(1) After notice to the parties in interest and the United States Trustee and a hearing,
and subject to sections 326, 328, and 329, the court may award to a trustee, a
consumer privacy ombudsman appointed under section 332, an examiner, an
ombudsman appointed under section 333, or a professional person employed under
section 327 or 1103—
(A) reasonable compensation for actual, necessary services rendered by the
trustee, examiner, ombudsman, professional person, or attorney and by any
paraprofessional person employed by any such person; and
(B) reimbursement for actual, necessary expenses.
(2) The court may, on its own motion or on the motion of the United States Trustee,
the United States Trustee for the District or Region, the trustee for the estate, or any
other party in interest, award compensation that is less than the amount of
compensation that is requested.
(3) In determining the amount of reasonable compensation to be awarded to an
examiner, trustee under chapter 11, or professional person, the court shall consider the
nature, the extent, and the value of such services, taking into account all relevant
factors, including—
(A) the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the administration of, or beneficial at
the time at which the service was rendered toward the completion of, a case
under this title;
(D) whether the services were performed within a reasonable amount of time
commensurate with the complexity, importance, and nature of the problem,
issue, or task addressed;
(E) with respect to a professional person, whether the person is board certified or
otherwise has demonstrated skill and experience in the bankruptcy field; and
(F) whether the compensation is reasonable based on the customary
compensation charged by comparably skilled practitioners in cases other than
cases under this title.
(4)
(A) Except as provided in subparagraph (B), the court shall not allow
compensation for—
(i) unnecessary duplication of services; or
(ii) services that were not—
56

(I) reasonably likely to benefit the debtor's estate; or
(II) necessary to the administration of the case.
(B) In a chapter 12 or chapter 13 case in which the debtor is an individual, the
court may allow reasonable compensation to the debtor's attorney for
representing the interests of the debtor in connection with the bankruptcy case
based on a consideration of the benefit and necessity of such services to the
debtor and the other factors set forth in this section.
(5) The court shall reduce the amount of compensation awarded under this section by
the amount of any interim compensation awarded under section 331, and, if the
amount of such interim compensation exceeds the amount of compensation awarded
under this section, may order the return of the excess to the estate.
(6) Any compensation awarded for the preparation of a fee application shall be based
on the level and skill reasonably required to prepare the application.
(7) In determining the amount of reasonable compensation to be awarded to a trustee,
the court shall treat such compensation as a commission, based on section 326.
(b)
(1) There shall be paid from the filing fee in a case under chapter 7 of this title $45 to
the trustee serving in such case, after such trustee's services are rendered.
(2) The Judicial Conference of the United States—
(A) shall prescribe additional fees of the same kind as prescribed under section
1914(b) of title 28; and
(B) may prescribe notice of appearance fees and fees charged against
distributions in cases under this title;
to pay $15 to trustees serving in cases after such trustees’ services are rendered.
Beginning 1 year after the date of the enactment of the Bankruptcy Reform Act of
1994, such $15 shall be paid in addition to the amount paid under paragraph (1).
(c) Unless the court orders otherwise, in a case under chapter 12 or 13 of this title the
compensation paid to the trustee serving in the case shall not be less than $5 per month from
any distribution under the plan during the administration of the plan.
(d) In a case in which the United States trustee serves as trustee, the compensation of the
trustee under this section shall be paid to the clerk of the bankruptcy court and deposited by
the clerk into the United States Trustee System Fund established by section 589a of title 28.
§331. Interim compensation
A trustee, an examiner, a debtor's attorney, or any professional person 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
compensation for services rendered before the date of such an application or reimbursement
for expenses incurred before such date as is provided under section 330 of this title. After
notice and a hearing, the court may allow and disburse to such applicant such compensation
or reimbursement.
57

§332. Consumer privacy ombudsman
(a) If a hearing is required under section 363(b)(1)(B), the court shall order the United States
trustee to appoint, not later than 7 days before the commencement of the hearing, 1
disinterested person (other than the United States trustee) to serve as the consumer privacy
ombudsman in the case and shall require that notice of such hearing be timely given to such
ombudsman.
(b) The consumer privacy ombudsman may appear and be heard at such hearing and shall
provide to the court information to assist the court in its consideration of the facts,
circumstances, and conditions of the proposed sale or lease of personally identifiable
information under section 363(b)(1)(B). Such information may include presentation of—
(1) the debtor's privacy policy;
(2) the potential losses or gains of privacy to consumers if such sale or such lease is
approved by the court;
(3) the potential costs or benefits to consumers if such sale or such lease is approved
by the court; and
(4) the potential alternatives that would mitigate potential privacy losses or potential
costs to consumers.
(c) A consumer privacy ombudsman shall not disclose any personally identifiable
information obtained by the ombudsman under this title.
§333. Appointment of patient care ombudsman
(a)
(1) If the debtor in a case under chapter 7, 9, or 11 is a health care business, the court
shall order, not later than 30 days after the commencement of the case, the
appointment of an ombudsman to monitor the quality of patient care and to represent
the interests of the patients of the health care business unless the court finds that the
appointment of such ombudsman is not necessary for the protection of patients under
the specific facts of the case.
(2)
(A) If the court orders the appointment of an ombudsman under paragraph (1),
the United States trustee shall appoint 1 disinterested person (other than the
United States trustee) to serve as such ombudsman.
(B) If the debtor is a health care business that provides long-term care, then the
United States trustee may appoint the State Long-Term Care Ombudsman
appointed under the Older Americans Act of 1965 for the State in which the case
is pending to serve as the ombudsman required by paragraph (1).
(C) If the United States trustee does not appoint a State Long-Term Care
Ombudsman under subparagraph (B), the court shall notify the State Long-Term
Care Ombudsman appointed under the Older Americans Act of 1965 for the
State in which the case is pending, of the name and address of the person who is
appointed under subparagraph (A).
58

(b) An ombudsman appointed under subsection (a) shall—
(1) monitor the quality of patient care provided to patients of the debtor, to the extent
necessary under the circumstances, including interviewing patients and physicians;
(2) not later than 60 days after the date of appointment, and not less frequently than at
60-day intervals thereafter, report to the court after notice to the parties in interest, at a
hearing or in writing, regarding the quality of patient care provided to patients of the
debtor; and
(3) if such ombudsman determines that the quality of patient care provided to patients
of the debtor is declining significantly or is otherwise being materially compromised,
file with the court a motion or a written report, with notice to the parties in interest
immediately upon making such determination.
(c)
(1) An ombudsman appointed under subsection (a) shall maintain any information
obtained by such ombudsman under this section that relates to patients (including
information relating to patient records) as confidential information. Such ombudsman
may not review confidential patient records unless the court approves such review in
advance and imposes restrictions on such ombudsman to protect the confidentiality of
such records.
(2) An ombudsman appointed under subsection (a)(2)(B) shall have access to patient
records consistent with authority of such ombudsman under the Older Americans Act
of 1965 and under non-Federal laws governing the State Long-Term Care Ombudsman
program.
SUBCHAPTER III—ADMINISTRATION
§341. Meetings of creditors and equity security holders
(a) Within a reasonable time after the order for relief in a case under this title, the United
States trustee shall convene and preside at a meeting of creditors.
(b) The United States trustee may convene a meeting of any equity security holders.
(c) The court may not preside at, and may not attend, any meeting under this section
including any final meeting of creditors. Notwithstanding any local court rule, provision of a
State constitution, any otherwise applicable nonbankruptcy law, or any other requirement
that representation at the meeting of creditors under subsection (a) be by an attorney, a
creditor holding a consumer debt or any representative of the creditor (which may include an
entity or an employee of an entity and may be a representative for more than 1 creditor) shall
be permitted to appear at and participate in the meeting of creditors in a case under chapter 7
or 13, either alone or in conjunction with an attorney for the creditor. Nothing in this
subsection shall be construed to require any creditor to be represented by an attorney at any
meeting of creditors.
(d) Prior to the conclusion of the meeting of creditors or equity security holders, the trustee
shall orally examine the debtor to ensure that the debtor in a case under chapter 7 of this title
is aware of—

59

(1) the potential consequences of seeking a discharge in bankruptcy, including the
effects on credit history;
(2) the debtor's ability to file a petition under a different chapter of this title;
(3) the effect of receiving a discharge of debts under this title; and
(4) the effect of reaffirming a debt, including the debtor's knowledge of the provisions
of section 524(d) of this title.
(e) Notwithstanding subsections (a) and (b), the court, on the request of a party in interest and
after notice and a hearing, for cause may order that the United States trustee not convene a
meeting of creditors or equity security holders if the debtor has filed a plan as to which the
debtor solicited acceptances prior to the commencement of the case.
§342. Notice
(a) There shall be given such notice as is appropriate, including notice to any holder of a
community claim, of an order for relief in a case under this title.
(b) Before the commencement of a case under this title by an individual whose debts are
primarily consumer debts, the clerk shall give to such individual written notice containing—
(1) a brief description of—
(A) chapters 7, 11, 12, and 13 and the general purpose, benefits, and costs of
proceeding under each of those chapters; and
(B) the types of services available from credit counseling agencies; and
(2) statements specifying that—
(A) a person who knowingly and fraudulently conceals assets or makes a false
oath or statement under penalty of perjury in connection with a case under this
title shall be subject to fine, imprisonment, or both; and
(B) all information supplied by a debtor in connection with a case under this title
is subject to examination by the Attorney General.
(c)
(1) If notice is required to be given by the debtor to a creditor under this title, any rule,
any applicable law, or any order of the court, such notice shall contain the name,
address, and last 4 digits of the taxpayer identification number of the debtor. If the
notice concerns an amendment that adds a creditor to the schedules of assets and
liabilities, the debtor shall include the full taxpayer identification number in the notice
sent to that creditor, but the debtor shall include only the last 4 digits of the taxpayer
identification number in the copy of the notice filed with the court.
(2)
(A) If, within the 90 days before the commencement of a voluntary case, a
creditor supplies the debtor in at least 2 communications sent to the debtor with
the current account number of the debtor and the address at which such creditor
requests to receive correspondence, then any notice required by this title to be
60

sent by the debtor to such creditor shall be sent to such address and shall include
such account number.
(B) If a creditor would be in violation of applicable nonbankruptcy law by
sending any such communication within such 90-day period and if such creditor
supplies the debtor in the last 2 communications with the current account number
of the debtor and the address at which such creditor requests to receive
correspondence, then any notice required by this title to be sent by the debtor to
such creditor shall be sent to such address and shall include such account
number.
(d) In a case under chapter 7 of this title in which the debtor is an individual and in which the
presumption of abuse arises under section 707(b), the clerk shall give written notice to all
creditors not later than 10 days after the date of the filing of the petition that the presumption
of abuse has arisen.
(e)
(1) In a case under chapter 7 or 13 of this title of a debtor who is an individual, a
creditor at any time may both file with the court and serve on the debtor a notice of
address to be used to provide notice in such case to such creditor.
(2) Any notice in such case required to be provided to such creditor by the debtor or
the court later than 7 days after the court and the debtor receive such creditor's notice
of address, shall be provided to such address.
(f)
(1) An entity may file with any bankruptcy court a notice of address to be used by all
the bankruptcy courts or by particular bankruptcy courts, as so specified by such entity
at the time such notice is filed, to provide notice to such entity in all cases under
chapters 7 and 13 pending in the courts with respect to which such notice is filed, in
which such entity is a creditor.
(2) In any case filed under chapter 7 or 13, any notice required to be provided by a
court with respect to which a notice is filed under paragraph (1), to such entity later
than 30 days after the filing of such notice under paragraph (1) shall be provided to
such address unless with respect to a particular case a different address is specified in a
notice filed and served in accordance with subsection (e).
(3) A notice filed under paragraph (1) may be withdrawn by such entity.
(g)
(1) Notice provided to a creditor by the debtor or the court other than in accordance
with this section (excluding this subsection) shall not be effective notice until such
notice is brought to the attention of such creditor. If such creditor designates a person
or an organizational subdivision of such creditor to be responsible for receiving
notices under this title and establishes reasonable procedures so that such notices
receivable by such creditor are to be delivered to such person or such subdivision, then
a notice provided to such creditor other than in accordance with this section (excluding

61

this subsection) shall not be considered to have been brought to the attention of such
creditor until such notice is received by such person or such subdivision.
(2) A monetary penalty may not be imposed on a creditor for a violation of a stay in
effect under section 362(a) (including a monetary penalty imposed under section
362(k)) or for failure to comply with section 542 or 543 unless the conduct that is the
basis of such violation or of such failure occurs after such creditor receives notice
effective under this section of the order for relief.
§343. 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. The United States trustee may
administer the oath required under this section.
§344. Self-incrimination; immunity
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.
§345. Money of estates
(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 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 9303 of title 31;
unless the court for cause orders otherwise.
(c) An entity with which such moneys are deposited or invested is authorized to deposit or
invest such moneys as may be required under this section.
§346. Special provisions related to the treatment of State and local taxes
62

(a) Whenever the Internal Revenue Code of 1986 provides that a separate taxable estate or
entity is created in a case concerning a debtor under this title, and the income, gain, loss,
deductions, and credits of such estate shall be taxed to or claimed by the estate, a separate
taxable estate is also created for purposes of any State and local law imposing a tax on or
measured by income and such income, gain, loss, deductions, and credits shall be taxed to or
claimed by the estate and may not be taxed to or claimed by the debtor. The preceding
sentence shall not apply if the case is dismissed. The trustee shall make tax returns of income
required under any such State or local law.
(b) Whenever the Internal Revenue Code of 1986 provides that no separate taxable estate
shall be created in a case concerning a debtor under this title, and the income, gain, loss,
deductions, and credits of an estate shall be taxed to or claimed by the debtor, such income,
gain, loss, deductions, and credits shall be taxed to or claimed by the debtor under a State or
local law imposing a tax on or measured by income and may not be taxed to or claimed by
the estate. The trustee shall make such tax returns of income of corporations and of
partnerships as are required under any State or local law, but with respect to partnerships,
shall make such returns only to the extent such returns are also required to be made under
such Code. The estate shall be liable for any tax imposed on such corporation or partnership,
but not for any tax imposed on partners or members.
(c) With respect to a partnership or any entity treated as a partnership under a State or local
law imposing a tax on or measured by income that is a debtor in a case under this title, any
gain or loss resulting from a distribution of property from such partnership, or any
distributive share of any income, gain, loss, deduction, or credit of a partner or member 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 partner or
member, and if such partner or member is a debtor in a case under this title, shall be subject
to tax in accordance with subsection (a) or (b).
(d) For purposes of any State or local law imposing a tax on or measured by income, the
taxable period of a debtor in a case under this title shall terminate only if and to the extent
that the taxable period of such debtor terminates under the Internal Revenue Code of 1986.
(e) The estate in any case described in subsection (a) shall use the same accounting method
as the debtor used immediately before the commencement of the case, if such method of
accounting complies with applicable nonbankruptcy tax law.
(f) For purposes of any State or local law imposing a tax on or measured by income, a
transfer of property from the debtor to the estate or from the estate to the debtor shall not be
treated as a disposition for purposes of any provision assigning tax consequences to a
disposition, except to the extent that such transfer is treated as a disposition under the Internal
Revenue Code of 1986.
(g) Whenever a tax is imposed pursuant to a State or local law imposing a tax on or measured
by income pursuant to subsection (a) or (b), such tax shall be imposed at rates generally
applicable to the same types of entities under such State or local law.
(h) 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 applicable State or local tax law, and shall pay such withheld or collected
63

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 or
collected was paid.
(i)
(1) To the extent that any State or local law imposing a tax on or measured by income
provides for the carryover of any tax attribute from one taxable period to a subsequent
taxable period, the estate shall succeed to such tax attribute in any case in which such
estate is subject to tax under subsection (a).
(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) to the extent consistent
with the Internal Revenue Code of 1986.
(3) The estate may carry back any loss or tax attribute to a taxable period of the debtor
that ended before the date of the order for relief under this title to the extent that—
(A) applicable State or local tax law provides for a carryback in the case of the
debtor; and
(B) the same or a similar tax attribute may be carried back by the estate to such a
taxable period of the debtor under the Internal Revenue Code of 1986.
(j)
(1) For purposes of any State or local law imposing a tax on or measured by income,
income is not realized by the estate, the debtor, or a successor to the debtor by reason
of discharge of indebtedness in a case under this title, except to the extent, if any, that
such income is subject to tax under the Internal Revenue Code of 1986.
(2) Whenever the Internal Revenue Code of 1986 provides that the amount excluded
from gross income in respect of the discharge of indebtedness in a case under this title
shall be applied to reduce the tax attributes of the debtor or the estate, a similar
reduction shall be made under any State or local law imposing a tax on or measured by
income to the extent such State or local law recognizes such attributes. Such State or
local law may also provide for the reduction of other attributes to the extent that the
full amount of income from the discharge of indebtedness has not been applied.
(k)
(1) Except as provided in this section and section 505, the time and manner of filing
tax returns and the items of income, gain, loss, deduction, and credit of any taxpayer
shall be determined under applicable nonbankruptcy law.
(2) For Federal tax purposes, the provisions of this section are subject to the Internal
Revenue Code of 1986 and other applicable Federal nonbankruptcy law.
§347. Unclaimed property
(a) Ninety days after the final distribution under section 726, 1194. 1226, or 1326 of this title
in a case under chapter 7, subchapter V of chapter 11, 12, or 13 of this title, as the case may
be, the trustee shall stop payment on any check remaining unpaid, and any remaining

64

property of the estate shall be paid into the court 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, 11, or 12 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
plan confirmed under section 943(b), 1129, 1173, 1194 or 1225 of this title, as the case may
be, becomes the property of the debtor or of the entity acquiring the assets of the debtor
under the plan, as the case may be.
§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.
(b) Unless the court for cause orders otherwise, in sections 701(a), 727(a)(10), 727(b),
1102(a), 1110(a)(1), 1121(b), 1121(c), 1141(d)(4), 1201(a), 1221, 1228(a), 1301(a), and
1305(a) of this title, "the order for relief under this chapter" in a chapter to which a case has
been converted under section 706, 1112, 1208, or 1307 of this title means the conversion of
such case to such chapter.
(c) Sections 342 and 365(d) of this title apply in a case that has been converted under section
706, 1112, 1208, or 1307 of this title, as if the conversion order were the order for relief.
(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, 1208, 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, 1208, or 1307 of this title terminates the
service of any trustee or examiner that is serving in the case before such conversion.
(f)
(1) Except as provided in paragraph (2), when a case under chapter 13 of this title is
converted to a case under another chapter under this title—
(A) property of the estate in the converted case shall consist of property of the
estate, as of the date of filing of the petition, that remains in the possession of or
is under the control of the debtor on the date of conversion;
(B) valuations of property and of allowed secured claims in the chapter 13 case
shall apply only in a case converted to a case under chapter 11 or 12, but not in a
case converted to a case under chapter 7, with allowed secured claims in cases
under chapters 11 and 12 reduced to the extent that they have been paid in
accordance with the chapter 13 plan; and
(C) with respect to cases converted from chapter 13—

65

(i) the claim of any creditor holding security as of the date of the filing of the
petition shall continue to be secured by that security unless the full amount of
such claim determined under applicable nonbankruptcy law has been paid in
full as of the date of conversion, notwithstanding any valuation or
determination of the amount of an allowed secured claim made for the
purposes of the case under chapter 13; and
(ii) unless a prebankruptcy default has been fully cured under the plan at the
time of conversion, in any proceeding under this title or otherwise, the default
shall have the effect given under applicable nonbankruptcy law.
(2) If the debtor converts a case under chapter 13 of this title to a case under another
chapter under this title in bad faith, the property of the estate in the converted case
shall consist of the property of the estate as of the date of conversion.
§349. Effect of dismissal
(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; nor does the dismissal of a case under this title prejudice the debtor with
regard to the filing of a subsequent petition under this title, except as provided in section
109(g) of this title.
(b) Unless the court, for cause, orders otherwise, a dismissal of a case other than under
section 742 of this title—
(1) reinstates—
(A) any proceeding or custodianship superseded under section 543 of this title;
(B) any transfer avoided under section 522, 544, 545, 547, 548, 549, or 724(a) of
this title, or preserved under section 510(c)(2), 522(i)(2), or 551 of this title; and
(C) any lien voided under section 506(d) of this title;
(2) vacates any order, judgment, or transfer ordered, under section 522(i)(1), 542, 550,
or 553 of this title; and
(3) revests the property of the estate in the entity in which such property was vested
immediately before the commencement of the case under this title.
§350. Closing and reopening cases
(a) After an estate is fully administered and the court has discharged 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.
§351. Disposal of patient records
If a health care business commences a case under chapter 7, 9, or 11, and the trustee does not
have a sufficient amount of funds to pay for the storage of patient records in the manner
required under applicable Federal or State law, the following requirements shall apply:
(1) The trustee shall—
66

(A) promptly publish notice, in 1 or more appropriate newspapers, that if patient
records are not claimed by the patient or an insurance provider (if applicable law
permits the insurance provider to make that claim) by the date that is 365 days after
the date of that notification, the trustee will destroy the patient records; and
(B) during the first 180 days of the 365-day period described in subparagraph (A),
promptly attempt to notify directly each patient that is the subject of the patient
records and appropriate insurance carrier concerning the patient records by mailing to
the most recent known address of that patient, or a family member or contact person
for that patient, and to the appropriate insurance carrier an appropriate notice regarding
the claiming or disposing of patient records.
(2) If, after providing the notification under paragraph (1), patient records are not claimed
during the 365-day period described under that paragraph, the trustee shall mail, by certified
mail, at the end of such 365-day period a written request to each appropriate Federal agency
to request permission from that agency to deposit the patient records with that agency, except
that no Federal agency is required to accept patient records under this paragraph.
(3) If, following the 365-day period described in paragraph (2) and after providing the
notification under paragraph (1), patient records are not claimed by a patient or insurance
provider, or request is not granted by a Federal agency to deposit such records with that
agency, the trustee shall destroy those records by—
(A) if the records are written, shredding or burning the records; or
(B) if the records are magnetic, optical, or other electronic records, by otherwise
destroying those records so that those records cannot be retrieved.
SUBCHAPTER IV—ADMINISTRATIVE POWERS
§361. Adequate protection
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 a cash payment or 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 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 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.

§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, or an application filed under section 5(a)(3) of the Securities Investor
Protection Act of 1970, operates as a stay, applicable to all entities, of—
67

(1) the commencement or continuation, including the issuance or employment of
process, of a judicial, administrative, or other action or proceeding against the debtor
that was or could have been commenced before the commencement of the case under
this title, or to recover a claim against the debtor that arose before the commencement
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
or to exercise control over property of 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 a tax liability of a debtor that is a corporation for a taxable period the
bankruptcy court may determine or concerning the tax liability of a debtor who is an
individual for a taxable period ending before the date of the order for relief under this
title.
(b) The filing of a petition under section 301, 302, or 303 of this title, or of an application
under section 5(a)(3) of the Securities Investor Protection Act of 1970, 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)—
(A) of the commencement or continuation of a civil action or proceeding—
(i) for the establishment of paternity;
(ii) for the establishment or modification of an order for domestic support
obligations;
(iii) concerning child custody or visitation;
(iv) for the dissolution of a marriage, except to the extent that such proceeding
seeks to determine the division of property that is property of the estate; or
(v) regarding domestic violence;
(B) of the collection of a domestic support obligation from property that is not
property of the estate;
68

(C) with respect to the withholding of income that is property of the estate or
property of the debtor for payment of a domestic support obligation under a
judicial or administrative order or a statute;
(D) of the withholding, suspension, or restriction of a driver's license, a
professional or occupational license, or a recreational license, under State law, as
specified in section 466(a)(16) of the Social Security Act;
(E) of the reporting of overdue support owed by a parent to any consumer
reporting agency as specified in section 466(a)(7) of the Social Security Act;
(F) of the interception of a tax refund, as specified in sections 464 and 466(a)(3)
of the Social Security Act or under an analogous State law; or
(G) of the enforcement of a medical obligation, as specified under title IV of the
Social Security Act;
(3) under subsection (a) of this section, of any act to perfect, or to maintain or continue
the perfection of, an interest in property to the extent that the trustee's rights and
powers are subject to such perfection under section 546(b) of this title or to the extent
that such act is accomplished within the period provided under section 547(e)(2)(A) of
this title;
(4) under paragraph (1), (2), (3), or (6) of subsection (a) of this section, of the
commencement or continuation of an action or proceeding by a governmental unit or
any organization exercising authority under the Convention on the Prohibition of the
Development, Production, Stockpiling and Use of Chemical Weapons and on Their
Destruction, opened for signature on January 13, 1993, to enforce such governmental
unit's or organization's police and regulatory power, including the enforcement of a
judgment other than a money judgment, obtained in an action or proceeding by the
governmental unit to enforce such governmental unit's or organization's police or
regulatory power;
[(5) Repealed. Pub. L. 105–277, div. I, title VI, §603(1), Oct. 21, 1998, 112 Stat.
2681–866;]
(6) under subsection (a) of this section, of the exercise by a commodity broker,
forward contract merchant, stockbroker, financial institution, financial participant, or
securities clearing agency of any contractual right (as defined in section 555 or 556)
under any security agreement or arrangement or other credit enhancement forming a
part of or related to any commodity contract, forward contract or securities contract, or
of any contractual right (as defined in section 555 or 556) to offset or net out any
termination value, payment amount, or other transfer obligation arising under or in
connection with 1 or more such contracts, including any master agreement for such
contracts;
(7) under subsection (a) of this section, of the exercise by a repo participant or
financial participant of any contractual right (as defined in section 559) under any
security agreement or arrangement or other credit enhancement forming a part of or
related to any repurchase agreement, or of any contractual right (as defined in section
559) to offset or net out any termination value, payment amount, or other transfer
69

obligation arising under or in connection with 1 or more such agreements, including
any master agreement for such agreements;
(8) under subsection (a) of this section, of the commencement of any action by the
Secretary of Housing and Urban Development to foreclose a mortgage or deed of trust
in any case in which the mortgage or deed of trust held by the Secretary is insured or
was formerly insured under the National Housing Act and covers property, or
combinations of property, consisting of five or more living units;
(9) under subsection (a), of—
(A) an audit by a governmental unit to determine tax liability;
(B) the issuance to the debtor by a governmental unit of a notice of tax
deficiency;
(C) a demand for tax returns; or
(D) the making of an assessment for any tax and issuance of a notice and demand
for payment of such an assessment (but any tax lien that would otherwise attach
to property of the estate by reason of such an assessment shall not take effect
unless such tax is a debt of the debtor that will not be discharged in the case and
such property or its proceeds are transferred out of the estate to, or otherwise
revested in, the debtor).
(10) under subsection (a) of this section, of any act by a lessor to the debtor under a
lease of nonresidential real property that has terminated by the expiration of the stated
term of the lease before the commencement of or during a case under this title to
obtain possession of such property;
(11) under subsection (a) of this section, of the presentment of a negotiable instrument
and the giving of notice of and protesting dishonor of such an instrument;
(12) under subsection (a) of this section, after the date which is 90 days after the filing
of such petition, of the commencement or continuation, and conclusion to the entry of
final judgment, of an action which involves a debtor subject to reorganization pursuant
to chapter 11 of this title and which was brought by the Secretary of Transportation
under section 31325 of title 46 (including distribution of any proceeds of sale) to
foreclose a preferred ship or fleet mortgage, or a security interest in or relating to a
vessel or vessel under construction, held by the Secretary of Transportation under
chapter 537 of title 46 or section 109(h) of title 49, or under applicable State law;
(13) under subsection (a) of this section, after the date which is 90 days after the filing
of such petition, of the commencement or continuation, and conclusion to the entry of
final judgment, of an action which involves a debtor subject to reorganization pursuant
to chapter 11 of this title and which was brought by the Secretary of Commerce under
section 31325 of title 46 (including distribution of any proceeds of sale) to foreclose a
preferred ship or fleet mortgage in a vessel or a mortgage, deed of trust, or other
security interest in a fishing facility held by the Secretary of Commerce under chapter
537 of title 46;

70

(14) under subsection (a) of this section, of any action by an accrediting agency
regarding the accreditation status of the debtor as an educational institution;
(15) under subsection (a) of this section, of any action by a State licensing body
regarding the licensure of the debtor as an educational institution;
(16) under subsection (a) of this section, of any action by a guaranty agency, as
defined in section 435(j) of the Higher Education Act of 1965 or the Secretary of
Education regarding the eligibility of the debtor to participate in programs authorized
under such Act;
(17) under subsection (a) of this section, of the exercise by a swap participant or
financial participant of any contractual right (as defined in section 560) under any
security agreement or arrangement or other credit enhancement forming a part of or
related to any swap agreement, or of any contractual right (as defined in section 560)
to offset or net out any termination value, payment amount, or other transfer obligation
arising under or in connection with 1 or more such agreements, including any master
agreement for such agreements;
(18) under subsection (a) of the creation or perfection of a statutory lien for an ad
valorem property tax, or a special tax or special assessment on real property whether
or not ad valorem, imposed by a governmental unit, if such tax or assessment comes
due after the date of the filing of the petition;
(19) under subsection (a), of withholding of income from a debtor's wages and
collection of amounts withheld, under the debtor's agreement authorizing that
withholding and collection for the benefit of a pension, profit-sharing, stock bonus, or
other plan established under section 401, 403, 408, 408A, 414, 457, or 501(c) of the
Internal Revenue Code of 1986, that is sponsored by the employer of the debtor, or an
affiliate, successor, or predecessor of such employer—
(A) to the extent that the amounts withheld and collected are used solely for
payments relating to a loan from a plan under section 408(b)(1) of the Employee
Retirement Income Security Act of 1974 or is subject to section 72(p) of the
Internal Revenue Code of 1986; or
(B) a loan from a thrift savings plan permitted under subchapter III of chapter 84
of title 5, that satisfies the requirements of section 8433(g) of such title;
but nothing in this paragraph may be construed to provide that any loan made under a
governmental plan under section 414(d), or a contract or account under section 403(b),
of the Internal Revenue Code of 1986 constitutes a claim or a debt under this title;
(20) under subsection (a), of any act to enforce any lien against or security interest in
real property following entry of the order under subsection (d)(4) as to such real
property in any prior case under this title, for a period of 2 years after the date of the
entry of such an order, except that the debtor, in a subsequent case under this title, may
move for relief from such order based upon changed circumstances or for other good
cause shown, after notice and a hearing;
(21) under subsection (a), of any act to enforce any lien against or security interest in
real property—
71

(A) if the debtor is ineligible under section 109(g) to be a debtor in a case under
this title; or
(B) if the case under this title was filed in violation of a bankruptcy court order in
a prior case under this title prohibiting the debtor from being a debtor in another
case under this title;
(22) subject to subsection (l), under subsection (a)(3), of the continuation of any
eviction, unlawful detainer action, or similar proceeding by a lessor against a debtor
involving residential property in which the debtor resides as a tenant under a lease or
rental agreement and with respect to which the lessor has obtained before the date of
the filing of the bankruptcy petition, a judgment for possession of such property
against the debtor;
(23) subject to subsection (m), under subsection (a)(3), of an eviction action that seeks
possession of the residential property in which the debtor resides as a tenant under a
lease or rental agreement based on endangerment of such property or the illegal use of
controlled substances on such property, but only if the lessor files with the court, and
serves upon the debtor, a certification under penalty of perjury that such an eviction
action has been filed, or that the debtor, during the 30-day period preceding the date of
the filing of the certification, has endangered property or illegally used or allowed to
be used a controlled substance on the property;
(24) under subsection (a), of any transfer that is not avoidable under section 544 and
that is not avoidable under section 549;
(25) under subsection (a), of—
(A) the commencement or continuation of an investigation or action by a
securities self regulatory organization to enforce such organization's regulatory
power;
(B) the enforcement of an order or decision, other than for monetary sanctions,
obtained in an action by such securities self regulatory organization to enforce
such organization's regulatory power; or
(C) any act taken by such securities self regulatory organization to delist, delete,
or refuse to permit quotation of any stock that does not meet applicable
regulatory requirements;
(26) under subsection (a), of the setoff under applicable nonbankruptcy law of an
income tax refund, by a governmental unit, with respect to a taxable period that ended
before the date of the order for relief against an income tax liability for a taxable
period that also ended before the date of the order for relief, except that in any case in
which the setoff of an income tax refund is not permitted under applicable
nonbankruptcy law because of a pending action to determine the amount or legality of
a tax liability, the governmental unit may hold the refund pending the resolution of the
action, unless the court, on the motion of the trustee and after notice and a hearing,
grants the taxing authority adequate protection (within the meaning of section 361) for
the secured claim of such authority in the setoff under section 506(a);
72

(27) under subsection (a) of this section, of the exercise by a master netting agreement
participant of any contractual right (as defined in section 555, 556, 559, or 560) under
any security agreement or arrangement or other credit enhancement forming a part of
or related to any master netting agreement, or of any contractual right (as defined in
section 555, 556, 559, or 560) to offset or net out any termination value, payment
amount, or other transfer obligation arising under or in connection with 1 or more such
master netting agreements to the extent that such participant is eligible to exercise such
rights under paragraph (6), (7), or (17) for each individual contract covered by the
master netting agreement in issue; and
(28) under subsection (a), of the exclusion by the Secretary of Health and Human
Services of the debtor from participation in the medicare program or any other Federal
health care program (as defined in section 1128B(f) of the Social Security Act
pursuant to title XI or XVIII of such Act).
The provisions of paragraphs (12) and (13) of this subsection shall apply with respect to any
such petition filed on or before December 31, 1989.
(c) Except as provided in subsections (d), (e), (f), and (h) 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;
(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; or
(C) if the case is a case under chapter 7 of this title concerning an individual or a
case under chapter 9, 11, 12, or 13 of this title, the time a discharge is granted or
denied;
(3) if a single or joint case is filed by or against a debtor who is an individual in a case
under chapter 7, 11, or 13, and if a single or joint case of the debtor was pending
within the preceding 1-year period but was dismissed, other than a case refiled under a
chapter other than chapter 7 after dismissal under section 707(b)—
(A) the stay under subsection (a) with respect to any action taken with respect to
a debt or property securing such debt or with respect to any lease shall terminate
with respect to the debtor on the 30th day after the filing of the later case;
(B) on the motion of a party in interest for continuation of the automatic stay and
upon notice and a hearing, the court may extend the stay in particular cases as to
any or all creditors (subject to such conditions or limitations as the court may
then impose) after notice and a hearing completed before the expiration of the
30-day period only if the party in interest demonstrates that the filing of the later
case is in good faith as to the creditors to be stayed; and
(C) for purposes of subparagraph (B), a case is presumptively filed not in good
faith (but such presumption may be rebutted by clear and convincing evidence to
the contrary)—
73

(i) as to all creditors, if—
(I) more than 1 previous case under any of chapters 7, 11, and 13 in
which the individual was a debtor was pending within the preceding 1year period;
(II) a previous case under any of chapters 7, 11, and 13 in which the
individual was a debtor was dismissed within such 1-year period, after
the debtor failed to—
(aa) file or amend the petition or other documents as required by
this title or the court without substantial excuse (but mere
inadvertence or negligence shall not be a substantial excuse unless
the dismissal was caused by the negligence of the debtor's
attorney);
(bb) provide adequate protection as ordered by the court; or
(cc) perform the terms of a plan confirmed by the court; or
(III) there has not been a substantial change in the financial or personal
affairs of the debtor since the dismissal of the next most previous case
under chapter 7, 11, or 13 or any other reason to conclude that the later
case will be concluded—
(aa) if a case under chapter 7, with a discharge; or
(bb) if a case under chapter 11 or 13, with a confirmed plan that
will be fully performed; and
(ii) as to any creditor that commenced an action under subsection (d) in a
previous case in which the individual was a debtor if, as of the date of
dismissal of such case, that action was still pending or had been resolved by
terminating, conditioning, or limiting the stay as to actions of such creditor;
and
(4)
(A)
(i) if a single or joint case is filed by or against a debtor who is an individual
under this title, and if 2 or more single or joint cases of the debtor were
pending within the previous year but were dismissed, other than a case refiled
under a chapter other than chapter 7 after dismissal under section 707(b), the
stay under subsection (a) shall not go into effect upon the filing of the later
case; and
(ii) on request of a party in interest, the court shall promptly enter an order
confirming that no stay is in effect;
(B) if, within 30 days after the filing of the later case, a party in interest requests
the court may order the stay to take effect in the case as to any or all creditors
(subject to such conditions or limitations as the court may impose), after notice

74

and a hearing, only if the party in interest demonstrates that the filing of the later
case is in good faith as to the creditors to be stayed;
(C) a stay imposed under subparagraph (B) shall be effective on the date of the
entry of the order allowing the stay to go into effect; and
(D) for purposes of subparagraph (B), a case is presumptively filed not in good
faith (but such presumption may be rebutted by clear and convincing evidence to
the contrary)—
(i) as to all creditors if—
(I) 2 or more previous cases under this title in which the individual was a
debtor were pending within the 1-year period;
(II) a previous case under this title in which the individual was a debtor
was dismissed within the time period stated in this paragraph after the
debtor failed to file or amend the petition or other documents as required
by this title or the court without substantial excuse (but mere
inadvertence or negligence shall not be substantial excuse unless the
dismissal was caused by the negligence of the debtor's attorney), failed
to provide adequate protection as ordered by the court, or failed to
perform the terms of a plan confirmed by the court; or
(III) there has not been a substantial change in the financial or personal
affairs of the debtor since the dismissal of the next most previous case
under this title, or any other reason to conclude that the later case will
not be concluded, if a case under chapter 7, with a discharge, and if a
case under chapter 11 or 13, with a confirmed plan that will be fully
performed; or
(ii) as to any creditor that commenced an action under subsection (d) in a
previous case in which the individual was a debtor if, as of the date of
dismissal of such case, such action was still pending or had been resolved by
terminating, conditioning, or limiting the stay as to such action of such
creditor.
(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;
(2) with respect to a stay of an act against property under subsection (a) of this section,
if—
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization;
(3) with respect to a stay of an act against single asset real estate under subsection (a),
by a creditor whose claim is secured by an interest in such real estate, unless, not later
75

than the date that is 90 days after the entry of the order for relief (or such later date as
the court may determine for cause by order entered within that 90-day period) or 30
days after the court determines that the debtor is subject to this paragraph, whichever
is later—
(A) the debtor has filed a plan of reorganization that has a reasonable possibility
of being confirmed within a reasonable time; or
(B) the debtor has commenced monthly payments that—
(i) may, in the debtor's sole discretion, notwithstanding section 363(c)(2), be
made from rents or other income generated before, on, or after the date of the
commencement of the case by or from the property to each creditor whose
claim is secured by such real estate (other than a claim secured by a judgment
lien or by an unmatured statutory lien); and
(ii) are in an amount equal to interest at the then applicable nondefault
contract rate of interest on the value of the creditor's interest in the real estate;
or
(4) with respect to a stay of an act against real property under subsection (a), by a
creditor whose claim is secured by an interest in such real property, if the court finds
that the filing of the petition was part of a scheme to delay, hinder, or defraud creditors
that involved either—
(A) transfer of all or part ownership of, or other interest in, such real property
without the consent of the secured creditor or court approval; or
(B) multiple bankruptcy filings affecting such real property.
If recorded in compliance with applicable State laws governing notices of interests or
liens in real property, an order entered under paragraph (4) shall be binding in any
other case under this title purporting to affect such real property filed not later than 2
years after the date of the entry of such order by the court, except that a debtor in a
subsequent case under this title may move for relief from such order based upon
changed circumstances or for good cause shown, after notice and a hearing. Any
Federal, State, or local governmental unit that accepts notices of interests or liens in
real property shall accept any certified copy of an order described in this subsection
for indexing and recording.
(e)
(1) 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 the
conclusion of, 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. The court
shall order such stay continued in effect pending the conclusion of the final hearing
under subsection (d) of this section if there is a reasonable likelihood that the party
opposing relief from such stay will prevail at the conclusion of such final hearing. If
76

the hearing under this subsection is a preliminary hearing, then such final hearing shall
be concluded not later than thirty days after the conclusion of such preliminary
hearing, unless the 30-day period is extended with the consent of the parties in interest
or for a specific time which the court finds is required by compelling circumstances.
(2) Notwithstanding paragraph (1), in a case under chapter 7, 11, or 13 in which the
debtor is an individual, the stay under subsection (a) shall terminate on the date that is
60 days after a request is made by a party in interest under subsection (d), unless—
(A) a final decision is rendered by the court during the 60-day period beginning
on the date of the request; or
(B) such 60-day period is extended—
(i) by agreement of all parties in interest; or
(ii) by the court for such specific period of time as the court finds is required
for good cause, as described in findings made by the court.
(f) Upon request of a party in interest, the court, with or 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 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 concerning 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.
(h)
(1) In a case in which the debtor is an individual, the stay provided by subsection (a) is
terminated with respect to personal property of the estate or of the debtor securing in
whole or in part a claim, or subject to an unexpired lease, and such personal property
shall no longer be property of the estate if the debtor fails within the applicable time
set by section 521(a)(2)—
(A) to file timely any statement of intention required under section 521(a)(2)
with respect to such personal property or to indicate in such statement that the
debtor will either surrender such personal property or retain it and, if retaining
such personal property, either redeem such personal property pursuant to section
722, enter into an agreement of the kind specified in section 524(c) applicable to
the debt secured by such personal property, or assume such unexpired lease
pursuant to section 365(p) if the trustee does not do so, as applicable; and
(B) to take timely the action specified in such statement, as it may be amended
before expiration of the period for taking action, unless such statement specifies
the debtor's intention to reaffirm such debt on the original contract terms and the
creditor refuses to agree to the reaffirmation on such terms.
77

(2) Paragraph (1) does not apply if the court determines, on the motion of the trustee
filed before the expiration of the applicable time set by section 521(a)(2), after notice
and a hearing, that such personal property is of consequential value or benefit to the
estate, and orders appropriate adequate protection of the creditor's interest, and orders
the debtor to deliver any collateral in the debtor's possession to the trustee. If the court
does not so determine, the stay provided by subsection (a) shall terminate upon the
conclusion of the hearing on the motion.
(i) If a case commenced under chapter 7, 11, or 13 is dismissed due to the creation of a debt
repayment plan, for purposes of subsection (c)(3), any subsequent case commenced by the
debtor under any such chapter shall not be presumed to be filed not in good faith.
(j) On request of a party in interest, the court shall issue an order under subsection (c)
confirming that the automatic stay has been terminated.
(k)
(1) Except as provided in paragraph (2), an individual injured by any willful violation
of a stay provided by this section shall recover actual damages, including costs and
attorneys’ fees, and, in appropriate circumstances, may recover punitive damages.
(2) If such violation is based on an action taken by an entity in the good faith belief
that subsection (h) applies to the debtor, the recovery under paragraph (1) of this
subsection against such entity shall be limited to actual damages.
(l)
(1) Except as otherwise provided in this subsection, subsection (b)(22) shall apply on
the date that is 30 days after the date on which the bankruptcy petition is filed, if the
debtor files with the petition and serves upon the lessor a certification under penalty of
perjury that—
(A) under nonbankruptcy law applicable in the jurisdiction, there are
circumstances under which the debtor would be permitted to cure the entire
monetary default that gave rise to the judgment for possession, after that
judgment for possession was entered; and
(B) the debtor (or an adult dependent of the debtor) has deposited with the clerk
of the court, any rent that would become due during the 30-day period after the
filing of the bankruptcy petition.
(2) If, within the 30-day period after the filing of the bankruptcy petition, the debtor
(or an adult dependent of the debtor) complies with paragraph (1) and files with the
court and serves upon the lessor a further certification under penalty of perjury that the
debtor (or an adult dependent of the debtor) has cured, under nonbankruptcy law
applicable in the jurisdiction, the entire monetary default that gave rise to the judgment
under which possession is sought by the lessor, subsection (b)(22) shall not apply,
unless ordered to apply by the court under paragraph (3).
(3)
(A) If the lessor files an objection to any certification filed by the debtor under
paragraph (1) or (2), and serves such objection upon the debtor, the court shall
78

hold a hearing within 10 days after the filing and service of such objection to
determine if the certification filed by the debtor under paragraph (1) or (2) is
true.
(B) If the court upholds the objection of the lessor filed under subparagraph
(A)—
(i) subsection (b)(22) shall apply immediately and relief from the stay
provided under subsection (a)(3) shall not be required to enable the lessor to
complete the process to recover full possession of the property; and
(ii) the clerk of the court shall immediately serve upon the lessor and the
debtor a certified copy of the court's order upholding the lessor's objection.
(4) If a debtor, in accordance with paragraph (5), indicates on the petition that there
was a judgment for possession of the residential rental property in which the debtor
resides and does not file a certification under paragraph (1) or (2)—
(A) subsection (b)(22) shall apply immediately upon failure to file such
certification, and relief from the stay provided under subsection (a)(3) shall not
be required to enable the lessor to complete the process to recover full possession
of the property; and
(B) the clerk of the court shall immediately serve upon the lessor and the debtor
a certified copy of the docket indicating the absence of a filed certification and
the applicability of the exception to the stay under subsection (b)(22).
(5)
(A) Where a judgment for possession of residential property in which the debtor
resides as a tenant under a lease or rental agreement has been obtained by the
lessor, the debtor shall so indicate on the bankruptcy petition and shall provide
the name and address of the lessor that obtained that pre-petition judgment on the
petition and on any certification filed under this subsection.
(B) The form of certification filed with the petition, as specified in this
subsection, shall provide for the debtor to certify, and the debtor shall certify—
(i) whether a judgment for possession of residential rental housing in which
the debtor resides has been obtained against the debtor before the date of the
filing of the petition; and
(ii) whether the debtor is claiming under paragraph (1) that under
nonbankruptcy law applicable in the jurisdiction, there are circumstances
under which the debtor would be permitted to cure the entire monetary default
that gave rise to the judgment for possession, after that judgment of
possession was entered, and has made the appropriate deposit with the court.
(C) The standard forms (electronic and otherwise) used in a bankruptcy
proceeding shall be amended to reflect the requirements of this subsection.
(D) The clerk of the court shall arrange for the prompt transmittal of the rent
deposited in accordance with paragraph (1)(B) to the lessor.
79

(m)
(1) Except as otherwise provided in this subsection, subsection (b)(23) shall apply on
the date that is 15 days after the date on which the lessor files and serves a certification
described in subsection (b)(23).
(2)
(A) If the debtor files with the court an objection to the truth or legal sufficiency
of the certification described in subsection (b)(23) and serves such objection
upon the lessor, subsection (b)(23) shall not apply, unless ordered to apply by the
court under this subsection.
(B) If the debtor files and serves the objection under subparagraph (A), the court
shall hold a hearing within 10 days after the filing and service of such objection
to determine if the situation giving rise to the lessor's certification under
paragraph (1) existed or has been remedied.
(C) If the debtor can demonstrate to the satisfaction of the court that the situation
giving rise to the lessor's certification under paragraph (1) did not exist or has
been remedied, the stay provided under subsection (a)(3) shall remain in effect
until the termination of the stay under this section.
(D) If the debtor cannot demonstrate to the satisfaction of the court that the
situation giving rise to the lessor's certification under paragraph (1) did not exist
or has been remedied—
(i) relief from the stay provided under subsection (a)(3) shall not be required
to enable the lessor to proceed with the eviction; and
(ii) the clerk of the court shall immediately serve upon the lessor and the
debtor a certified copy of the court's order upholding the lessor's certification.
(3) If the debtor fails to file, within 15 days, an objection under paragraph
(2)(A)—
(A) subsection (b)(23) shall apply immediately upon such failure and relief
from the stay provided under subsection (a)(3) shall not be required to enable
the lessor to complete the process to recover full possession of the property;
and
(B) the clerk of the court shall immediately serve upon the lessor and the
debtor a certified copy of the docket indicating such failure.
(n)
(1) Except as provided in paragraph (2), subsection (a) does not apply in a case in
which the debtor—
(A) is a debtor in a small business case pending at the time the petition is filed;
(B) was a debtor in a small business case that was dismissed for any reason by an
order that became final in the 2-year period ending on the date of the order for
relief entered with respect to the petition;
80

(C) was a debtor in a small business case in which a plan was confirmed in the 2year period ending on the date of the order for relief entered with respect to the
petition; or
(D) is an entity that has acquired substantially all of the assets or business of a
small business debtor described in subparagraph (A), (B), or (C), unless such
entity establishes by a preponderance of the evidence that such entity acquired
substantially all of the assets or business of such small business debtor in good
faith and not for the purpose of evading this paragraph.
(2) Paragraph (1) does not apply—
(A) to an involuntary case involving no collusion by the debtor with creditors; or
(B) to the filing of a petition if—
(i) the debtor proves by a preponderance of the evidence that the filing of the
petition resulted from circumstances beyond the control of the debtor not
foreseeable at the time the case then pending was filed; and
(ii) it is more likely than not that the court will confirm a feasible plan, but not
a liquidating plan, within a reasonable period of time.
(o) The exercise of rights not subject to the stay arising under subsection (a) pursuant to
paragraph (6), (7), (17), or (27) of subsection (b) shall not be stayed by any order of a court
or a administrative agency in any proceeding under this title.
§363. Use, sale, or lease of property
(a) In this section, "cash collateral" means cash, negotiable instruments, documents of title,
securities, deposit accounts, or other cash equivalents whenever acquired in which the estate
and an entity other than the estate have an interest and includes the proceeds, products,
offspring, rents, or profits of property and the fees, charges, accounts or other payments for
the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging
properties subject to a security interest as provided in section 552(b) of this title, whether
existing before or after the commencement of a case under this title.
(b)
(1) The trustee, after notice and a hearing, may use, sell, or lease, other than in the
ordinary course of business, property of the estate, except that if the debtor in
connection with offering a product or a service discloses to an individual a policy
prohibiting the transfer of personally identifiable information about individuals to
persons that are not affiliated with the debtor and if such policy is in effect on the date
of the commencement of the case, then the trustee may not sell or lease personally
identifiable information to any person unless—
(A) such sale or such lease is consistent with such policy; or
(B) after appointment of a consumer privacy ombudsman in accordance with
section 332, and after notice and a hearing, the court approves such sale or such
lease—

81

(i) giving due consideration to the facts, circumstances, and conditions of such
sale or such lease; and
(ii) finding that no showing was made that such sale or such lease would
violate applicable nonbankruptcy law.
(2) If notification is required under subsection (a) of section 7A of the Clayton Act in
the case of a transaction under this subsection, then—
(A) notwithstanding subsection (a) of such section, the notification required by
such subsection to be given by the debtor shall be given by the trustee; and
(B) notwithstanding subsection (b) of such section, the required waiting period
shall end on the 15th day after the date of the receipt, by the Federal Trade
Commission and the Assistant Attorney General in charge of the Antitrust
Division of the Department of Justice, of the notification required under such
subsection (a), unless such waiting period is extended—
(i) pursuant to subsection (e)(2) of such section, in the same manner as such
subsection (e)(2) applies to a cash tender offer;
(ii) pursuant to subsection (g)(2) of such section; or
(iii) by the court after notice and a hearing.
(c)
(1) If the business of the debtor is authorized to be operated under section 721, 1108,
1183, 1184, 1203, 1204, or 1304 of this title and unless the court orders 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—

82

(1) in the case of a debtor that is a corporation or trust that is not a moneyed business,
commercial corporation, or trust, only in accordance with nonbankruptcy law
applicable to the transfer of property by a debtor that is such a corporation or trust; and
(2) only to the extent not inconsistent with any relief granted under subsection (c), (d),
(e), or (f) of section 362.
(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, with or without a hearing, shall prohibit or condition such use, sale,
or lease as is necessary to provide adequate protection of such interest. This subsection also
applies to property that is subject to any unexpired lease of personal property (to the
exclusion of such property being subject to an order to grant relief from the stay under
section 362).
(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 property free and clear of such
interest;
(2) such entity consents;
(3) such interest is a lien and the price at which such property is to be sold is greater
than the aggregate value of all liens on such property;
(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 section, and the interest of any co-owner in
property in which the debtor had, at the time of 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 synthetic gas for heat, light, or power.
(i) Before the consummation of a sale of property to which subsection (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,
83

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.
(j) 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
compensation of the trustee, of such sale, according to the interests of such spouse or coowners, 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, unless the court for cause orders otherwise the holder of such claim
may bid at such sale, and, if the holder of such claim purchases such property, such holder
may offset such claim against the purchase price of such property.
(l) Subject to the provisions of section 365, the trustee may use, sell, or lease property under
subsection (b) or (c) of this section, or a plan under chapter 11, 12, or 13 of this title may
provide for the use, sale, or lease of property, notwithstanding any provision in a contract, a
lease, or applicable law that is conditioned on the insolvency or financial condition of the
debtor, on the commencement of a case under this title concerning the debtor, or on the
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 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 avoid a sale under this section if the sale price 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 avoiding such sale or recovering such amount. In addition to any recovery under the
preceding sentence, the court may grant judgment for punitive damages in favor of the estate
and against any such party that entered into such an agreement in willful disregard of this
subsection.
(o) Notwithstanding subsection (f), if a person purchases any interest in a consumer credit
transaction that is subject to the Truth in Lending Act or any interest in a consumer credit
contract (as defined in section 433.1 of title 16 of the Code of Federal Regulations (January
1, 2004), as amended from time to time), and if such interest is purchased through a sale
under this section, then such person shall remain subject to all claims and defenses that are
related to such consumer credit transaction or such consumer credit contract, to the same
extent as such person would be subject to such claims and defenses of the consumer had such
interest been purchased at a sale not under this section.
(p) In any hearing under this section—
(1) the trustee has the burden of proof on the issue of adequate protection; and
84

(2) the entity asserting an interest in property has the burden of proof on the issue of
the validity, priority, or extent of such interest.
§364. Obtaining credit
(a) If the trustee is authorized to operate the business of the debtor under section 721, 1108,
1183, 1184, 1203, 1204, or 1304 of this title, unless the court orders 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.
(b) The court, after notice and a hearing, may authorize the trustee 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 otherwise 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 in section 1145(b) of this
title, section 5 of the Securities Act of 1933, the Trust Indenture Act of 1939, and any State
or local law requiring registration for offer or sale of a security or registration or licensing of
an issuer of, underwriter 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.
§365. Executory contracts and unexpired leases
85

(a) Except as provided in sections 765 and 766 of this title and in subsections (b), (c), and (d)
of this section, the trustee, subject to the 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 unexpired 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 other than a default that is a breach of a provision relating to the
satisfaction of any provision (other than a penalty rate or penalty provision)
relating to a default arising from any failure to perform nonmonetary obligations
under an unexpired lease of real property, if it is impossible for the trustee to
cure such default by performing nonmonetary acts at and after the time of
assumption, except that if such default arises from a failure to operate in
accordance with a nonresidential real property lease, then such default shall be
cured by performance at and after the time of assumption in accordance with
such lease, and pecuniary losses resulting from such default shall be
compensated in accordance with the provisions of this paragraph;
(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;
(C) the appointment of or taking possession by a trustee in a case under this title
or a custodian before such commencement; or
(D) the satisfaction of any penalty rate or penalty provision relating to a default
arising from any failure by the debtor to perform nonmonetary obligations under
the executory contract or unexpired lease.
(3) For the purposes of paragraph (1) of this subsection and paragraph (2)(B) of
subsection (f), adequate assurance of future performance of a lease of real property in
a shopping center includes adequate assurance—
(A) of the source of rent and other consideration due under such lease, and in the
case of an assignment, that the financial condition and operating performance of
the proposed assignee and its guarantors, if any, shall be similar to the financial

86

condition and operating performance of the debtor and its guarantors, if any, as
of the time the debtor became the lessee under the lease;
(B) that any percentage rent due under such lease will not decline substantially;
(C) that assumption or assignment of such lease is subject to all the provisions
thereof, including (but not limited to) provisions such as a radius, location, use,
or exclusivity provision, and will not breach any such provision contained 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 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 incidental 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 any 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 an entity
other than the debtor or the debtor in possession, 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 assignment; 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; or
(3) such lease is of nonresidential real property and has been terminated under
applicable nonbankruptcy law prior to the order for relief.
(d)
(1) In a case under chapter 7 of this title, if the trustee does not assume or reject an
executory contract or unexpired lease of residential real property or of personal
property of the debtor within 60 days after the order for relief, or within such
additional time as the court, for cause, within such 60-day period, fixes, then such
contract or lease is deemed rejected.
(2) In a case under chapter 9, 11, 12, or 13 of this title, the trustee may assume or
reject an executory contract or unexpired lease of residential real property or of
personal property of the debtor at any time before the confirmation of a plan but the
court, on the request of any party to such contract or lease, may order the trustee to
87

determine within a specified period of time whether to assume or reject such contract
or lease.
(3) The trustee shall timely perform all the obligations of the debtor, except those
specified in section 365(b)(2), arising from and after the order for relief under any
unexpired lease of nonresidential real property, until such lease is assumed or rejected,
notwithstanding section 503(b)(1) of this title. The court may extend, for cause, the
time for performance of any such obligation that arises within 60 days after the date of
the order for relief, but the time for performance shall not be extended beyond such
60-day period. This subsection shall not be deemed to affect the trustee's obligations
under the provisions of subsection (b) or (f) of this section. Acceptance of any such
performance does not constitute waiver or relinquishment of the lessor's rights under
such lease or under this title.
(4)
(A) Subject to subparagraph (B), an unexpired lease of nonresidential real
property under which the debtor is the lessee shall be deemed rejected, and the
trustee shall immediately surrender that nonresidential real property to the lessor,
if the trustee does not assume or reject the unexpired lease by the earlier of—
(i) the date that is 120 days after the date of the order for relief; or
(ii) the date of the entry of an order confirming a plan.
(B)
(i) The court may extend the period determined under subparagraph (A), prior
to the expiration of the 120-day period, for 90 days on the motion of the
trustee or lessor for cause.
(ii) If the court grants an extension under clause (i), the court may grant a
subsequent extension only upon prior written consent of the lessor in each
instance.
(5) The trustee shall timely perform all of the obligations of the debtor, except those
specified in section 365(b)(2), first arising from or after 60 days after the order for
relief in a case under chapter 11 of this title under an unexpired lease of personal
property (other than personal property leased to an individual primarily for personal,
family, or household purposes), until such lease is assumed or rejected
notwithstanding section 503(b)(1) of this title, unless the court, after notice and a
hearing and based on the equities of the case, orders otherwise with respect to the
obligations or timely performance thereof. This subsection shall not be deemed to
affect the trustee's obligations under the provisions of subsection (b) or (f). Acceptance
of any such performance does not constitute waiver or relinquishment of the lessor's
rights under such lease or under this title.
(e)
(1) Notwithstanding a provision in an executory contract or unexpired lease, or in
applicable law, an executory contract or unexpired lease of the debtor may not be
terminated or modified, and any right or obligation under such contract or lease may
88

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 assignment; 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 subsections (b) and (c) of this section, notwithstanding a
provision in an executory contract or unexpired lease of the debtor, or in applicable
law, that prohibits, restricts, or conditions 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 unexpired lease of the
debtor, or in applicable law that terminates or modifies, 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
contract, 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.

89

(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—
(1) if such contract or lease has not been assumed under this section or under a plan
confirmed under chapter 9, 11, 12, or 13 of this title, immediately before the date of
the filing of the petition; or
(2) if such contract or lease has been assumed under this section or under a plan
confirmed under chapter 9, 11, 12, or 13 of this title—
(A) if before such rejection the case has not been converted under section 1112,
1208, or 1307 of this title, at the time of such rejection; or
(B) if before such rejection the case has been converted under section 1112,
1208, or 1307 of this title—
(i) immediately before the date of such conversion, if such contract or lease
was assumed before such conversion; or
(ii) at the time of such rejection, if such contract or lease was assumed after
such conversion.
(h)
(1)
(A) If the trustee rejects an unexpired lease of real property under which the
debtor is the lessor and—
(i) if the rejection by the trustee amounts to such a breach as would entitle the
lessee to treat such lease as terminated by virtue of its terms, applicable
nonbankruptcy law, or any agreement made by the lessee, then the lessee
under such lease may treat such lease as terminated by the rejection; or
(ii) if the term of such lease has commenced, the lessee may retain its rights
under such lease (including rights such as those relating to the amount and
timing of payment of rent and other amounts payable by the lessee and any
right of use, possession, quiet enjoyment, subletting, assignment, or
hypothecation) that are in or appurtenant to the real property for the balance of
the term of such lease and for any renewal or extension of such rights to the
extent that such rights are enforceable under applicable nonbankruptcy law.
(B) If the lessee retains its rights under subparagraph (A)(ii), the 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 for the term of any renewal or
extension of such lease, the value of any damage caused by the nonperformance
after the date of such rejection, of any obligation of the debtor under such lease,
but the lessee shall not have any other right against the estate or the debtor on
account of any damage occurring after such date caused by such
nonperformance.

90

(C) The rejection of a lease of real property in a shopping center with respect to
which the lessee elects to retain its rights under subparagraph (A)(ii) does not
affect the enforceability under applicable nonbankruptcy law of any provision in
the lease pertaining to radius, location, use, exclusivity, or tenant mix or balance.
(D) In this paragraph, "lessee" includes any successor, assign, or mortgagee
permitted under the terms of such lease.
(2)
(A) If the trustee rejects a timeshare interest under a timeshare plan under which
the debtor is the timeshare interest seller and—
(i) if the rejection amounts to such a breach as would entitle the timeshare
interest purchaser to treat the timeshare plan as terminated under its terms,
applicable nonbankruptcy law, or any agreement made by timeshare interest
purchaser, the timeshare interest purchaser under the timeshare plan may treat
the timeshare plan as terminated by such rejection; or
(ii) if the term of such timeshare interest has commenced, then the timeshare
interest purchaser may retain its rights in such timeshare interest for the
balance of such term and for any term of renewal or extension of such
timeshare interest to the extent that such rights are enforceable under
applicable nonbankruptcy law.
(B) If the timeshare interest purchaser retains its rights under subparagraph (A),
such timeshare interest purchaser may offset against the moneys due for such
timeshare interest for the balance of the term after the date of the rejection of
such timeshare interest, and the term of any renewal or extension of such
timeshare interest, the value of any damage caused by the nonperformance after
the date of such rejection, of any obligation of the debtor under such timeshare
plan, but the timeshare interest purchaser shall not have any right against the
estate or the debtor on account of any damage occurring after such date caused
by such nonperformance.
(i)
(1) If the trustee rejects an executory contract of the debtor for the sale of real property
or for the sale of a timeshare interest under a timeshare plan, under which the
purchaser is in possession, such purchaser may treat such contract as terminated, or, in
the alternative, may remain in possession of such real property or timeshare interest.
(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

91

(B) the trustee shall deliver title to such purchaser in accordance 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
rejected 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.
(l) If an unexpired lease under which the debtor is the lessee is assigned pursuant to this
section, the lessor of the property may require a deposit or other security for the performance
of the debtor's obligations under the lease substantially the same as would have been required
by the landlord upon the initial leasing to a similar tenant.
(m) For purposes of this section 365 and sections 541(b)(2) and 362(b)(10), leases of real
property shall include any rental agreement to use real property.
(n)
(1) If the trustee rejects an executory contract under which the debtor is a licensor of a
right to intellectual property, the licensee under such contract may elect—
(A) to treat such contract as terminated by such rejection if such rejection by the
trustee amounts to such a breach as would entitle the licensee to treat such
contract as terminated by virtue of its own terms, applicable nonbankruptcy law,
or an agreement made by the licensee with another entity; or
(B) to retain its rights (including a right to enforce any exclusivity provision of
such contract, but excluding any other right under applicable nonbankruptcy law
to specific performance of such contract) under such contract and under any
agreement supplementary to such contract, to such intellectual property
(including any embodiment of such intellectual property to the extent protected
by applicable nonbankruptcy law), as such rights existed immediately before the
case commenced, for—
(i) the duration of such contract; and
(ii) any period for which such contract may be extended by the licensee as of
right under applicable nonbankruptcy law.
(2) If the licensee elects to retain its rights, as described in paragraph (1)(B) of this
subsection, under such contract—
(A) the trustee shall allow the licensee to exercise such rights;
(B) the licensee shall make all royalty payments due under such contract for the
duration of such contract and for any period described in paragraph (1)(B) of this
subsection for which the licensee extends such contract; and
92

(C) the licensee shall be deemed to waive—
(i) any right of setoff it may have with respect to such contract under this title
or applicable nonbankruptcy law; and
(ii) any claim allowable under section 503(b) of this title arising from the
performance of such contract.
(3) If the licensee elects to retain its rights, as described in paragraph (1)(B) of this
subsection, then on the written request of the licensee the trustee shall—
(A) to the extent provided in such contract, or any agreement supplementary to
such contract, provide to the licensee any intellectual property (including such
embodiment) held by the trustee; and
(B) not interfere with the rights of the licensee as provided in such contract, or
any agreement supplementary to such contract, to such intellectual property
(including such embodiment) including any right to obtain such intellectual
property (or such embodiment) from another entity.
(4) Unless and until the trustee rejects such contract, on the written request of the
licensee the trustee shall—
(A) to the extent provided in such contract or any agreement supplementary to
such contract—
(i) perform such contract; or
(ii) provide to the licensee such intellectual property (including any
embodiment of such intellectual property to the extent protected by applicable
nonbankruptcy law) held by the trustee; and
(B) not interfere with the rights of the licensee as provided in such contract, or
any agreement supplementary to such contract, to such intellectual property
(including such embodiment), including any right to obtain such intellectual
property (or such embodiment) from another entity.
(o) In a case under chapter 11 of this title, the trustee shall be deemed to have assumed
(consistent with the debtor's other obligations under section 507), and shall immediately cure
any deficit under, any commitment by the debtor to a Federal depository institutions
regulatory agency (or predecessor to such agency) to maintain the capital of an insured
depository institution, and any claim for a subsequent breach of the obligations thereunder
shall be entitled to priority under section 507. This subsection shall not extend any
commitment that would otherwise be terminated by any act of such an agency.
(p)
(1) If a lease of personal property is rejected or not timely assumed by the trustee
under subsection (d), the leased property is no longer property of the estate and the
stay under section 362(a) is automatically terminated.
(2)

93

(A) If the debtor in a case under chapter 7 is an individual, the debtor may notify
the creditor in writing that the debtor desires to assume the lease. Upon being so
notified, the creditor may, at its option, notify the debtor that it is willing to have
the lease assumed by the debtor and may condition such assumption on cure of
any outstanding default on terms set by the contract.
(B) If, not later than 30 days after notice is provided under subparagraph (A), the
debtor notifies the lessor in writing that the lease is assumed, the liability under
the lease will be assumed by the debtor and not by the estate.
(C) The stay under section 362 and the injunction under section 524(a)(2) shall
not be violated by notification of the debtor and negotiation of cure under this
subsection.
(3) In a case under chapter 11 in which the debtor is an individual and in a case under
chapter 13, if the debtor is the lessee with respect to personal property and the lease is
not assumed in the plan confirmed by the court, the lease is deemed rejected as of the
conclusion of the hearing on confirmation. If the lease is rejected, the stay under
section 362 and any stay under section 1301 is automatically terminated with respect
to the property subject to the lease.
§366. Utility service
(a) Except as provided in subsections (b) and (c) 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 of the commencement of a case under this title or 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 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.
(c)
(1)
(A) For purposes of this subsection, the term "assurance of payment" means—
(i) a cash deposit;
(ii) a letter of credit;
(iii) a certificate of deposit;
(iv) a surety bond;
(v) a prepayment of utility consumption; or
(vi) another form of security that is mutually agreed on between the utility and
the debtor or the trustee.
(B) For purposes of this subsection an administrative expense priority shall not
constitute an assurance of payment.
94

(2) Subject to paragraphs (3) and (4), with respect to a case filed under chapter 11, a
utility referred to in subsection (a) may alter, refuse, or discontinue utility service, if
during the 30-day period beginning on the date of the filing of the petition, the utility
does not receive from the debtor or the trustee adequate assurance of payment for
utility service that is satisfactory to the utility.
(3)
(A) On request of a party in interest and after notice and a hearing, the court may
order modification of the amount of an assurance of payment under paragraph
(2).
(B) In making a determination under this paragraph whether an assurance of
payment is adequate, the court may not consider—
(i) the absence of security before the date of the filing of the petition;
(ii) the payment by the debtor of charges for utility service in a timely manner
before the date of the filing of the petition; or
(iii) the availability of an administrative expense priority.
(4) Notwithstanding any other provision of law, with respect to a case subject to this
subsection, a utility may recover or set off against a security deposit provided to the
utility by the debtor before the date of the filing of the petition without notice or order
of the court.
CHAPTER 5—CREDITORS, THE DEBTOR, AND THE ESTATE . Error! Bookmark not
defined.
SUBCHAPTER I—CREDITORS AND CLAIMS .............. Error! Bookmark not defined.
§501. Filing of proofs of claims or interests ..................... Error! Bookmark not defined.
§502. Allowance of claims or interests ............................ Error! Bookmark not defined.
§503. Allowance of administrative expenses................... Error! Bookmark not defined.
§504. Sharing of compensation ....................................... Error! Bookmark not defined.
§505. Determination of tax liability .................................. Error! Bookmark not defined.
§506. Determination of secured status ............................ Error! Bookmark not defined.
§507. Priorities ................................................................ Error! Bookmark not defined.
§508. Effect of distribution other than under this title ...... Error! Bookmark not defined.
§509. Claims of codebtors ............................................... Error! Bookmark not defined.
§510. Subordination ........................................................ Error! Bookmark not defined.
§511. Rate of interest on tax claims ................................ Error! Bookmark not defined.
SUBCHAPTER II—DEBTOR'S DUTIES AND BENEFITS ............. Error! Bookmark not
defined.
§521. Debtor's duties ...................................................... Error! Bookmark not defined.
§522. Exemptions ........................................................... Error! Bookmark not defined.
95

§523. Exceptions to discharge ........................................ Error! Bookmark not defined.
§524. Effect of discharge................................................. Error! Bookmark not defined.
§525. Protection against discriminatory treatment .......... Error! Bookmark not defined.
§526. Restrictions on debt relief agencies....................... Error! Bookmark not defined.
§527. Disclosures ............................................................ Error! Bookmark not defined.
§528. Requirements for debt relief agencies ................... Error! Bookmark not defined.
SUBCHAPTER III—THE ESTATE .................................. Error! Bookmark not defined.
§541. Property of the estate ............................................ Error! Bookmark not defined.
§542. Turnover of property to the estate ......................... Error! Bookmark not defined.
§543. Turnover of property by a custodian ...................... Error! Bookmark not defined.
§544. Trustee as lien creditor and as successor to certain creditors and purchasers
........................................................................... Error! Bookmark not defined.
§545. Statutory liens........................................................ Error! Bookmark not defined.
§546. Limitations on avoiding powers ............................. Error! Bookmark not defined.
§547. Preferences ........................................................... Error! Bookmark not defined.
§548. Fraudulent transfers and obligations ..................... Error! Bookmark not defined.
§549. Postpetition transactions ....................................... Error! Bookmark not defined.
§550. Liability of transferee of avoided transfer ............... Error! Bookmark not defined.
§551. Automatic preservation of avoided transfer ........... Error! Bookmark not defined.
§552. Postpetition effect of security interest .................... Error! Bookmark not defined.
§553. Setoff ..................................................................... Error! Bookmark not defined.
§554. Abandonment of property of the estate ................. Error! Bookmark not defined.
§555. Contractual right to liquidate, terminate, or accelerate a securities contract . Error!
Bookmark not defined.
§556. Contractual right to liquidate, terminate, or accelerate a commodities contract or
forward contract ................................................. Error! Bookmark not defined.
§557. Expedited determination of interests in, and abandonment or other disposition of
grain assets ....................................................... Error! Bookmark not defined.
§558. Defenses of the estate .......................................... Error! Bookmark not defined.
§559. Contractual right to liquidate, terminate, or accelerate a repurchase agreement
........................................................................... Error! Bookmark not defined.
§560. Contractual right to liquidate, terminate, or accelerate a swap agreement .... Error!
Bookmark not defined.
§561. Contractual right to terminate, liquidate, accelerate, or offset under a master
netting agreement and across contracts; proceedings under chapter 15... Error!
Bookmark not defined.
96

§562. Timing of damage measurement in connection with swap agreements, securities
contracts, forward contracts, commodity contracts, repurchase agreements,
and master netting agreements ......................... Error! Bookmark not defined.
SUBCHAPTER I—CREDITORS AND CLAIMS
§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 creditor'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.
(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(e)(2), 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.
(e) A claim arising from the liability of a debtor for fuel use tax assessed consistent with the
requirements of section 31705 of title 49 may be filed by the base jurisdiction designated
pursuant to the International Fuel Tax Agreement (as defined in section 31701 of title 49)
and, if so filed, shall be allowed as a single claim.
§502. Allowance of claims or interests
(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 general partner in a partnership
that is a debtor in a case under chapter 7 of this title, objects.
(b) Except as provided in subsections (e)(2), (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 in lawful currency of the United States 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 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) if such claim is for a tax assessed against property of the estate, such claim exceeds
the value of the interest of the estate in such property;
(4) if such claim is for services of an insider or attorney of the debtor, such claim
exceeds the reasonable value of such services;
(5) such 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;
(6) if such claim is the claim of a lessor for damages resulting from the termination of
a lease of real property, such claim exceeds—
97

(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) the date of the filing of the petition; and
(ii) the date on which such lessor repossessed, or the lessee surrendered, the
leased property; plus
(B) any unpaid rent due under such lease, without acceleration, on the earlier of
such dates;
(7) if such claim is the claim of an employee 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; or
(ii) the date on which the employer directed the employee to terminate, or
such employee terminated, performance under such contract; plus
(B) any unpaid compensation due under such contract, without acceleration, on
the earlier of such dates;
(8) such claim results from a reduction, due to late payment, in the amount of an
otherwise applicable credit available to the debtor in connection with an employment
tax on wages, salaries, or commissions earned from the debtor; or
(9) proof of such claim is not timely filed, except to the extent tardily filed as
permitted under paragraph (1), (2), or (3) of section 726(a) of this title or under the
Federal Rules of Bankruptcy Procedure, except that a claim of a governmental unit
shall be timely filed if it is filed before 180 days after the date of the order for relief or
such later time as the Federal Rules of Bankruptcy Procedure may provide, and except
that in a case under chapter 13, a claim of a governmental unit for a tax with respect to
a return filed under section 1308 shall be timely if the claim is filed on or before the
date that is 60 days after the date on which such return was filed as required.
(c) There shall be estimated for purpose of allowance under this section—
(1) any contingent or unliquidated claim, the fixing or liquidation of which, as the case
may be, would unduly delay the administration of the case; or
(2) any right to payment arising from a right to an equitable remedy for breach of
performance.
(d) Notwithstanding subsections (a) and (b) of this section, the court shall disallow any claim
of any entity from which property is recoverable under section 542, 543, 550, or 553 of this
title or that is a transferee of a transfer avoidable under section 522(f), 522(h), 544, 545, 547,
548, 549, or 724(a) of this title, unless such entity or transferee has paid the amount, or
turned over any such property, for which such entity or transferee is liable under section
522(i), 542, 543, 550, or 553 of this title.
(e)
98

(1) Notwithstanding subsections (a), (b), and (c) 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—
(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 or disallowance of such claim for reimbursement or contribution; or
(C) such entity asserts a right of subrogation to the rights of such creditor under
section 509 of this title.
(2) A claim for reimbursement or contribution of such an entity that becomes fixed
after the commencement of the case shall be determined, 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)
(1) A claim arising from the rejection, under section 365 of this title or under a plan
under chapter 9, 11, 12, or 13 of this title, of an 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.
(2) A claim for damages calculated in accordance with section 562 shall be allowed
under subsection (a), (b), or (c), or disallowed under subsection (d) or (e), 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, 550, or 553 of this title
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.
(i) A claim that does not arise until after the commencement of the case for a tax entitled to
priority under section 507(a)(8) of this title 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.
(j) A claim that has been allowed or disallowed may be reconsidered for cause. A
reconsidered claim may be allowed or disallowed according to the equities of the case.
Reconsideration of a claim under this subsection does not affect the validity of any payment
99

or transfer from the estate made to a holder of an allowed claim on account of such allowed
claim that is not reconsidered, but if a reconsidered claim is allowed and is of the same class
as such holder's claim, such holder may not receive any additional payment or transfer from
the estate on account of such holder's allowed claim until the holder of such reconsidered and
allowed claim receives payment on account of such claim proportionate in value to that
already received by such other holder. This subsection does not alter or modify the trustee's
right to recover from a creditor any excess payment or transfer made to such creditor.
(k)
(1) The court, on the motion of the debtor and after a hearing, may reduce a claim filed
under this section based in whole on an unsecured consumer debt by not more than 20
percent of the claim, if—
(A) the claim was filed by a creditor who unreasonably refused to negotiate a
reasonable alternative repayment schedule proposed on behalf of the debtor by
an approved nonprofit budget and credit counseling agency described in section
111;
(B) the offer of the debtor under subparagraph (A)—
(i) was made at least 60 days before the date of the filing of the petition; and
(ii) provided for payment of at least 60 percent of the amount of the debt over
a period not to exceed the repayment period of the loan, or a reasonable
extension thereof; and
(C) no part of the debt under the alternative repayment schedule is
nondischargeable.
(2) The debtor shall have the burden of proving, by clear and convincing evidence,
that—
(A) the creditor unreasonably refused to consider the debtor's proposal; and
(B) the proposed alternative repayment schedule was made prior to expiration of
the 60-day period specified in paragraph (1)(B)(i).
§503. Allowance of administrative expenses
(a) An entity may timely file a request for payment of an administrative expense, or may
tardily file such request if permitted by the court for cause.
(b) After notice and a hearing, there shall be allowed administrative 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—
(i) wages, salaries, and commissions for services rendered after the
commencement of the case; and
(ii) wages and benefits awarded pursuant to a judicial proceeding or a
proceeding of the National Labor Relations Board as back pay attributable to
100

any period of time occurring after commencement of the case under this title,
as a result of a violation of Federal or State law by the debtor, without regard
to the time of the occurrence of unlawful conduct on which such award is
based or to whether any services were rendered, if the court determines that
payment of wages and benefits by reason of the operation of this clause will
not substantially increase the probability of layoff or termination of current
employees, or of nonpayment of domestic support obligations, during the case
under this title;
(B) any tax—
(i) incurred by the estate, whether secured or unsecured, including property
taxes for which liability is in rem, in personam, or both, except a tax of a kind
specified in section 507(a)(8) of this title; or
(ii) attributable to an excessive allowance of a tentative carryback adjustment
that the estate received, whether the taxable year to which such adjustment
relates ended before or after the commencement of the case;
(C) any fine, penalty, or reduction in credit relating to a tax of a kind specified in
subparagraph (B) of this paragraph; and
(D) notwithstanding the requirements of subsection (a), a governmental unit shall
not be required to file a request for the payment of an expense described in
subparagraph (B) or (C), as a condition of its being an allowed administrative
expense;
(2) compensation and reimbursement awarded under section 330(a) of this title;
(3) the actual, necessary expenses, other than compensation and reimbursement
specified in paragraph (4) of this subsection, incurred by—
(A) a creditor that files a petition under section 303 of this title;
(B) a creditor that recovers, after the court's approval, for the benefit of the estate
any property transferred or concealed 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 security holders other than a committee
appointed under section 1102 of this title, in making a substantial contribution in
a case under chapter 9 or 11 of this title;
(E) a custodian superseded under section 543 of this title, and compensation for
the services of such custodian; or
(F) a member of a committee appointed under section 1102 of this title, if such
expenses are incurred in the performance of the duties of such committee;
(4) reasonable compensation for professional services rendered by an attorney or an
accountant of an entity whose expense is allowable under subparagraph (A), (B), (C),
101

(D), or (E) of 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 indenture 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 comparable
services other than in a case under this title;
(6) the fees and mileage payable under chapter 119 of title 28;
(7) with respect to a nonresidential real property lease previously assumed under
section 365, and subsequently rejected, a sum equal to all monetary obligations due,
excluding those arising from or relating to a failure to operate or a penalty provision,
for the period of 2 years following the later of the rejection date or the date of actual
turnover of the premises, without reduction or setoff for any reason whatsoever except
for sums actually received or to be received from an entity other than the debtor, and
the claim for remaining sums due for the balance of the term of the lease shall be a
claim under section 502(b)(6);
(8) the actual, necessary costs and expenses of closing a health care business incurred
by a trustee or by a Federal agency (as defined in section 551(1) of title 5) or a
department or agency of a State or political subdivision thereof, including any cost or
expense incurred—
(A) in disposing of patient records in accordance with section 351; or
(B) in connection with transferring patients from the health care business that is
in the process of being closed to another health care business; and
(9) the value of any goods received by the debtor within 20 days before the date of
commencement of a case under this title in which the goods have been sold to the
debtor in the ordinary course of such debtor's business.
(c) Notwithstanding subsection (b), there shall neither be allowed, nor paid—
(1) a transfer made to, or an obligation incurred for the benefit of, an insider of the
debtor for the purpose of inducing such person to remain with the debtor's business,
absent a finding by the court based on evidence in the record that—
(A) the transfer or obligation is essential to retention of the person because the
individual has a bona fide job offer from another business at the same or greater
rate of compensation;
(B) the services provided by the person are essential to the survival of the
business; and
(C) either—
(i) the amount of the transfer made to, or obligation incurred for the benefit of,
the person is not greater than an amount equal to 10 times the amount of the
mean transfer or obligation of a similar kind given to nonmanagement
102

employees for any purpose during the calendar year in which the transfer is
made or the obligation is incurred; or
(ii) if no such similar transfers were made to, or obligations were incurred for
the benefit of, such nonmanagement employees during such calendar year, the
amount of the transfer or obligation is not greater than an amount equal to 25
percent of the amount of any similar transfer or obligation made to or incurred
for the benefit of such insider for any purpose during the calendar year before
the year in which such transfer is made or obligation is incurred;
(2) a severance payment to an insider of the debtor, unless—
(A) the payment is part of a program that is generally applicable to all full-time
employees; and
(B) the amount of the payment is not greater than 10 times the amount of the
mean severance pay given to nonmanagement employees during the calendar
year in which the payment is made; or
(3) other transfers or obligations that are outside the ordinary course of business and
not justified by the facts and circumstances of the case, including transfers made to, or
obligations incurred for the benefit of, officers, managers, or consultants hired after the
date of the filing of the petition.
§504. Sharing of compensation
(a) Except as provided in subsection (b) of this section, a person receiving compensation or
reimbursement under section 503(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 compensation or
reimbursement received under such sections by another member, partner, or regular
associate in such association, corporation, 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 contributing to the services rendered or expenses incurred by
such creditor's attorney.
(c) This section shall not apply with respect to sharing, or agreeing to share, compensation
with a bona fide public service attorney referral program that operates in accordance with
non-Federal law regulating attorney referral services and with rules of professional
responsibility applicable to attorney acceptance of referrals.
103

§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 previously 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 adjudicated by a judicial or
administrative tribunal of competent jurisdiction before the commencement of
the case under this title;
(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; or
(ii) a determination by such governmental unit of such request; or
(C) the amount or legality of any amount arising in connection with an ad
valorem tax on real or personal property of the estate, if the applicable period for
contesting or redetermining that amount under applicable nonbankruptcy law has
expired.
(b)
(1)
(A) The clerk shall maintain a list under which a Federal, State, or local
governmental unit responsible for the collection of taxes within the district
may—
(i) designate an address for service of requests under this subsection; and
(ii) describe where further information concerning additional requirements for
filing such requests may be found.
(B) If such governmental unit does not designate an address and provide such
address to the clerk under subparagraph (A), any request made under this
subsection may be served at the address for the filing of a tax return or protest
with the appropriate taxing authority of such governmental unit.
(2) 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 at the address and in the
manner designated in paragraph (1). Unless such return is fraudulent, or contains a
material misrepresentation, the estate, the trustee, the debtor, and any successor to the
debtor are discharged from any liability for such tax—
104

(A) upon payment of the tax shown on such return, if—
(i) such governmental unit does not notify the trustee, within 60 days after
such request, that such return has been selected for examination; or
(ii) such governmental unit does not complete such an examination and notify
the trustee of any tax due, within 180 days after such request or within such
additional time as the court, for cause, permits;
(B) upon payment of the tax determined by the court, after notice and a hearing,
after completion by such governmental unit of such examination; or
(C) 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 under
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
(a)
(1) 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.
(2) If the debtor is an individual in a case under chapter 7 or 13, such value with
respect to personal property securing an allowed claim shall be determined based on
the replacement value of such property as of the date of the filing of the petition
without deduction for costs of sale or marketing. With respect to property acquired for
personal, family, or household purposes, replacement value shall mean the price a
retail merchant would charge for property of that kind considering the age and
condition of the property at the time value is determined.
(b) To the extent that an allowed secured claim is secured by property 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
reasonable fees, costs, or charges provided for under the agreement or State statute under
which such claim arose.
(c) The trustee may recover from property securing an allowed secured claim the reasonable,
necessary costs and expenses of preserving, or disposing of, such property to the extent of
any benefit to the holder of such claim, including the payment of all ad valorem property
taxes with respect to the property.

105

(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) such claim was disallowed only under section 502(b)(5) or 502(e) of this title; or
(2) such claim is not an allowed secured claim due only to the failure of any entity to
file a proof of such claim under section 501 of this title.
§507. Priorities
(a) The following expenses and claims have priority in the following order:
(1) First:
(A) Allowed unsecured claims for domestic support obligations that, as of the
date of the filing of the petition in a case under this title, are owed to or
recoverable by a spouse, former spouse, or child of the debtor, or such child's
parent, legal guardian, or responsible relative, without regard to whether the
claim is filed by such person or is filed by a governmental unit on behalf of such
person, on the condition that funds received under this paragraph by a
governmental unit under this title after the date of the filing of the petition shall
be applied and distributed in accordance with applicable nonbankruptcy law.
(B) Subject to claims under subparagraph (A), allowed unsecured claims for
domestic support obligations that, as of the date of the filing of the petition, are
assigned by a spouse, former spouse, child of the debtor, or such child's parent,
legal guardian, or responsible relative to a governmental unit (unless such
obligation is assigned voluntarily by the spouse, former spouse, child, parent,
legal guardian, or responsible relative of the child for the purpose of collecting
the debt) or are owed directly to or recoverable by a governmental unit under
applicable nonbankruptcy law, on the condition that funds received under this
paragraph by a governmental unit under this title after the date of the filing of the
petition be applied and distributed in accordance with applicable nonbankruptcy
law.
(C) If a trustee is appointed or elected under section 701, 702, 703, 1104, 1202,
or 1302, the administrative expenses of the trustee allowed under paragraphs
(1)(A), (2), and (6) of section 503(b) shall be paid before payment of claims
under subparagraphs (A) and (B), to the extent that the trustee administers assets
that are otherwise available for the payment of such claims.
(2) Second, administrative expenses allowed under section 503(b) of this title,
unsecured claims of any Federal reserve bank related to loans made through programs
or facilities authorized under section 13(3) of the Federal Reserve Act (12 U.S.C.
343),1 and any fees and charges assessed against the estate under chapter 123 of title
28.
(3) Third, unsecured claims allowed under section 502(f) of this title.
(4) Fourth, allowed unsecured claims, but only to the extent of $10,000 [$12,850 as of
April 1, 2016] for each individual or corporation, as the case may be, earned within

106

180 days before the date of the filing of the petition or the date of the cessation of the
debtor's business, whichever occurs first, for—
(A) wages, salaries, or commissions, including vacation, severance, and sick
leave pay earned by an individual; or
(B) sales commissions earned by an individual or by a corporation with only 1
employee, acting as an independent contractor in the sale of goods or services for
the debtor in the ordinary course of the debtor's business if, and only if, during
the 12 months preceding that date, at least 75 percent of the amount that the
individual or corporation earned by acting as an independent contractor in the
sale of goods or services was earned from the debtor.
(5) Fifth, allowed unsecured claims for contributions to an employee benefit plan—
(A) arising from services rendered within 180 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) for each such plan, to the extent of—
(i) the number of employees covered by each such plan multiplied by $10,000
[$12,850 as of April 1, 2016]; less
(ii) the aggregate amount paid to such employees under paragraph (4) of this
subsection, plus the aggregate amount paid by the estate on behalf of such
employees to any other employee benefit plan.
(6) Sixth, allowed unsecured claims of persons—
(A) engaged in the production or raising of grain, as defined in section 557(b) of
this title, against a debtor who owns or operates a grain storage facility, as
defined in section 557(b) of this title, for grain or the proceeds of grain, or
(B) engaged as a United States fisherman against a debtor who has acquired fish
or fish produce from a fisherman through a sale or conversion, and who is
engaged in operating a fish produce storage or processing facility—
but only to the extent of $4,000 [$6,325 as of April 1, 2016] for each such individual.
(7) Seventh, allowed unsecured claims of individuals, to the extent of $1,800 [$2,850
as of April 1, 2016] 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 individuals, that were not delivered or provided.
(8) Eighth, allowed unsecured claims of governmental units, only to the extent that
such claims are for—
(A) a tax on or measured by income or gross receipts for a taxable year ending
on or before the date of the filing of the petition—
(i) for which a return, if required, is last due, including extensions, after three
years before the date of the filing of the petition;
107

(ii) assessed within 240 days before the date of the filing of the petition,
exclusive of—
(I) any time during which an offer in compromise with respect to that tax
was pending or in effect during that 240-day period, plus 30 days; and
(II) any time during which a stay of proceedings against collections was
in effect in a prior case under this title during that 240-day period, plus
90 days; 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 agreement, after, the commencement of the case;
(B) a property tax incurred before the commencement of 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 (4) 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 extension, 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—
(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 petition; 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 investigation
pending on such date into assessment of antidumping or countervailing duties
or fraud, or if information 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.
108

An otherwise applicable time period specified in this paragraph shall be suspended for
any period during which a governmental unit is prohibited under applicable
nonbankruptcy law from collecting a tax as a result of a request by the debtor for a
hearing and an appeal of any collection action taken or proposed against the debtor,
plus 90 days; plus any time during which the stay of proceedings was in effect in a
prior case under this title or during which collection was precluded by the existence of
1 or more confirmed plans under this title, plus 90 days.
(9) Ninth, allowed unsecured claims based upon any commitment by the debtor to a
Federal depository institutions regulatory agency (or predecessor to such agency) to
maintain the capital of an insured depository institution.
(10) Tenth, allowed claims for death or personal injury resulting from the operation of
a motor vehicle or vessel if such operation was unlawful because the debtor was
intoxicated from using alcohol, a drug, or another substance.
(b) If the trustee, under section 362, 363, or 364 of this title, provides adequate protection of
the interest of a holder of a claim secured by a lien on property of the debtor and if,
notwithstanding such protection, such creditor has a claim allowable under subsection (a)(2)
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 allowable 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 has the same priority 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)(1), (a)(4), (a)(5), (a)(6), (a)(7), (a)(8), or (a)(9) 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
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, payment 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
(a) Except as provided in subsection (b) or (c) of this section, an entity that is liable with the
debtor on, or that has secured, a claim of a creditor against the debtor, 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 on account of such
payment of such creditor's claim is—
109

(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 this section, 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.
§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) For the purpose of distribution under this title, a claim arising from rescission of a
purchase or sale of a security of the debtor or of an affiliate of the debtor, for damages arising
from the purchase or sale of such a security, or for reimbursement or contribution allowed
under section 502 on account of such a claim, shall be subordinated to all claims or interests
that are senior to or equal the claim or interest represented by such security, except that if
such security is common stock, such claim has the same priority as common stock.
(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.
§511. Rate of interest on tax claims
(a) If any provision of this title requires the payment of interest on a tax claim or on an
administrative expense tax, or the payment of interest to enable a creditor to receive the
present value of the allowed amount of a tax claim, the rate of interest shall be the rate
determined under applicable nonbankruptcy law.
(b) In the case of taxes paid under a confirmed plan under this title, the rate of interest shall
be determined as of the calendar month in which the plan is confirmed.
SUBCHAPTER II—DEBTOR'S DUTIES AND BENEFITS
§521. Debtor's duties
(a) The debtor shall—
(1) file—
(A) a list of creditors; and
(B) unless the court orders otherwise—
110

(i) a schedule of assets and liabilities;
(ii) a schedule of current income and current expenditures;
(iii) a statement of the debtor's financial affairs and, if section 342(b) applies,
a certificate—
(I) of an attorney whose name is indicated on the petition as the attorney
for the debtor, or a bankruptcy petition preparer signing the petition
under section 110(b)(1), indicating that such attorney or the bankruptcy
petition preparer delivered to the debtor the notice required by section
342(b); or
(II) if no attorney is so indicated, and no bankruptcy petition preparer
signed the petition, of the debtor that such notice was received and read
by the debtor;
(iv) copies of all payment advices or other evidence of payment received
within 60 days before the date of the filing of the petition, by the debtor from
any employer of the debtor;
(v) a statement of the amount of monthly net income, itemized to show how
the amount is calculated; and
(vi) a statement disclosing any reasonably anticipated increase in income or
expenditures over the 12-month period following the date of the filing of the
petition;
(2) if an individual debtor's schedule of assets and liabilities includes debts which are
secured by property of the estate—
(A) within thirty days after the date of the filing of a petition under chapter 7 of
this title or on or before the date of the meeting of creditors, whichever is earlier,
or within such additional time as the court, for cause, within such period fixes,
file with the clerk a statement of his intention with respect to the retention or
surrender of such property and, if applicable, specifying that such property is
claimed as exempt, that the debtor intends to redeem such property, or that the
debtor intends to reaffirm debts secured by such property; and
(B) within 30 days after the first date set for the meeting of creditors under
section 341(a), or within such additional time as the court, for cause, within such
30-day period fixes, perform his intention with respect to such property, as
specified by subparagraph (A) of this paragraph;
except that nothing in subparagraphs (A) and (B) of this paragraph shall alter the
debtor's or the trustee's rights with regard to such property under this title, except as
provided in section 362(h);
(3) if a trustee is serving in the case or an auditor is serving under section 586(f) of
title 28, cooperate with the trustee as necessary to enable the trustee to perform the
trustee's duties under this title;
(4) if a trustee is serving in the case or an auditor is serving under section 586(f) of
title 28, surrender to the trustee all property of the estate and any recorded information,
111

including books, documents, records, and papers, relating to property of the estate,
whether or not immunity is granted under section 344 of this title;
(5) appear at the hearing required under section 524(d) of this title;
(6) in a case under chapter 7 of this title in which the debtor is an individual, not retain
possession of personal property as to which a creditor has an allowed claim for the
purchase price secured in whole or in part by an interest in such personal property
unless the debtor, not later than 45 days after the first meeting of creditors under
section 341(a), either—
(A) enters into an agreement with the creditor pursuant to section 524(c) with
respect to the claim secured by such property; or
(B) redeems such property from the security interest pursuant to section 722; and
(7) unless a trustee is serving in the case, continue to perform the obligations required
of the administrator (as defined in section 3 of the Employee Retirement Income
Security Act of 1974) of an employee benefit plan if at the time of the commencement
of the case the debtor (or any entity designated by the debtor) served as such
administrator.
If the debtor fails to so act within the 45-day period referred to in paragraph (6), the
stay under section 362(a) is terminated with respect to the personal property of the
estate or of the debtor which is affected, such property shall no longer be property of
the estate, and the creditor may take whatever action as to such property as is
permitted by applicable nonbankruptcy law, unless the court determines on the motion
of the trustee filed before the expiration of such 45-day period, and after notice and a
hearing, that such property is of consequential value or benefit to the estate, orders
appropriate adequate protection of the creditor's interest, and orders the debtor to
deliver any collateral in the debtor's possession to the trustee.
(b) In addition to the requirements under subsection (a), a debtor who is an individual shall
file with the court—
(1) a certificate from the approved nonprofit budget and credit counseling agency that
provided the debtor services under section 109(h) describing the services provided to
the debtor; and
(2) a copy of the debt repayment plan, if any, developed under section 109(h) through
the approved nonprofit budget and credit counseling agency referred to in paragraph
(1).
(c) In addition to meeting the requirements under subsection (a), a debtor shall file with the
court a record of any interest that a debtor has in an education individual retirement account
(as defined in section 530(b)(1) of the Internal Revenue Code of 1986), an interest in an
account in a qualified ABLE program (as defined in section 529A(b) of such Code,1 or under
a qualified State tuition program (as defined in section 529(b)(1) of such Code).
(d) If the debtor fails timely to take the action specified in subsection (a)(6) of this section, or
in paragraphs (1) and (2) of section 362(h), with respect to property which a lessor or bailor
owns and has leased, rented, or bailed to the debtor or as to which a creditor holds a security
112

interest not otherwise voidable under section 522(f), 544, 545, 547, 548, or 549, nothing in
this title shall prevent or limit the operation of a provision in the underlying lease or
agreement that has the effect of placing the debtor in default under such lease or agreement
by reason of the occurrence, pendency, or existence of a proceeding under this title or the
insolvency of the debtor. Nothing in this subsection shall be deemed to justify limiting such a
provision in any other circumstance.
(e)
(1) If the debtor in a case under chapter 7 or 13 is an individual and if a creditor files
with the court at any time a request to receive a copy of the petition, schedules, and
statement of financial affairs filed by the debtor, then the court shall make such
petition, such schedules, and such statement available to such creditor.
(2)
(A) The debtor shall provide—
(i) not later than 7 days before the date first set for the first meeting of
creditors, to the trustee a copy of the Federal income tax return required under
applicable law (or at the election of the debtor, a transcript of such return) for
the most recent tax year ending immediately before the commencement of the
case and for which a Federal income tax return was filed; and
(ii) at the same time the debtor complies with clause (i), a copy of such return
(or if elected under clause (i), such transcript) to any creditor that timely
requests such copy.
(B) If the debtor fails to comply with clause (i) or (ii) of subparagraph (A), the
court shall dismiss the case unless the debtor demonstrates that the failure to so
comply is due to circumstances beyond the control of the debtor.
(C) If a creditor requests a copy of such tax return or such transcript and if the
debtor fails to provide a copy of such tax return or such transcript to such
creditor at the time the debtor provides such tax return or such transcript to the
trustee, then the court shall dismiss the case unless the debtor demonstrates that
the failure to provide a copy of such tax return or such transcript is due to
circumstances beyond the control of the debtor.
(3) If a creditor in a case under chapter 13 files with the court at any time a request to
receive a copy of the plan filed by the debtor, then the court shall make available to
such creditor a copy of the plan—
(A) at a reasonable cost; and
(B) not later than 7 days after such request is filed.
(f) At the request of the court, the United States trustee, or any party in interest in a case
under chapter 7, 11, or 13, a debtor who is an individual shall file with the court—
(1) at the same time filed with the taxing authority, a copy of each Federal income tax
return required under applicable law (or at the election of the debtor, a transcript of

113

such tax return) with respect to each tax year of the debtor ending while the case is
pending under such chapter;
(2) at the same time filed with the taxing authority, each Federal income tax return
required under applicable law (or at the election of the debtor, a transcript of such tax
return) that had not been filed with such authority as of the date of the commencement
of the case and that was subsequently filed for any tax year of the debtor ending in the
3-year period ending on the date of the commencement of the case;
(3) a copy of each amendment to any Federal income tax return or transcript filed with
the court under paragraph (1) or (2); and
(4) in a case under chapter 13—
(A) on the date that is either 90 days after the end of such tax year or 1 year after
the date of the commencement of the case, whichever is later, if a plan is not
confirmed before such later date; and
(B) annually after the plan is confirmed and until the case is closed, not later than
the date that is 45 days before the anniversary of the confirmation of the plan;
a statement, under penalty of perjury, of the income and expenditures of the debtor
during the tax year of the debtor most recently concluded before such statement is
filed under this paragraph, and of the monthly income of the debtor, that shows how
income, expenditures, and monthly income are calculated.
(g)
(1) A statement referred to in subsection (f)(4) shall disclose—
(A) the amount and sources of the income of the debtor;
(B) the identity of any person responsible with the debtor for the support of any
dependent of the debtor; and
(C) the identity of any person who contributed, and the amount contributed, to
the household in which the debtor resides.
(2) The tax returns, amendments, and statement of income and expenditures described
in subsections (e)(2)(A) and (f) shall be available to the United States trustee (or the
bankruptcy administrator, if any), the trustee, and any party in interest for inspection
and copying, subject to the requirements of section 315(c) of the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005.
(h) If requested by the United States trustee or by the trustee, the debtor shall provide—
(1) a document that establishes the identity of the debtor, including a driver's license,
passport, or other document that contains a photograph of the debtor; or
(2) such other personal identifying information relating to the debtor that establishes
the identity of the debtor.
(i)
(1) Subject to paragraphs (2) and (4) and notwithstanding section 707(a), if an
individual debtor in a voluntary case under chapter 7 or 13 fails to file all of the
114

information required under subsection (a)(1) within 45 days after the date of the filing
of the petition, the case shall be automatically dismissed effective on the 46th day after
the date of the filing of the petition.
(2) Subject to paragraph (4) and with respect to a case described in paragraph (1), any
party in interest may request the court to enter an order dismissing the case. If
requested, the court shall enter an order of dismissal not later than 7 days after such
request.
(3) Subject to paragraph (4) and upon request of the debtor made within 45 days after
the date of the filing of the petition described in paragraph (1), the court may allow the
debtor an additional period of not to exceed 45 days to file the information required
under subsection (a)(1) if the court finds justification for extending the period for the
filing.
(4) Notwithstanding any other provision of this subsection, on the motion of the
trustee filed before the expiration of the applicable period of time specified in
paragraph (1), (2), or (3), and after notice and a hearing, the court may decline to
dismiss the case if the court finds that the debtor attempted in good faith to file all the
information required by subsection (a)(1)(B)(iv) and that the best interests of creditors
would be served by administration of the case.
(j)
(1) Notwithstanding any other provision of this title, if the debtor fails to file a tax
return that becomes due after the commencement of the case or to properly obtain an
extension of the due date for filing such return, the taxing authority may request that
the court enter an order converting or dismissing the case.
(2) If the debtor does not file the required return or obtain the extension referred to in
paragraph (1) within 90 days after a request is filed by the taxing authority under that
paragraph, the court shall convert or dismiss the case, whichever is in the best interests
of creditors and the estate.
§522. Exemptions
(a) In this section—
(1) "dependent" includes spouse, whether or not actually dependent; and
(2) "value" means fair market value as of the date of the filing of the petition or, with
respect to property that becomes property of the estate after such date, as of the date
such property becomes property of the estate.
(b)
(1) Notwithstanding section 541 of this title, an individual debtor may exempt from
property of the estate the property listed in either paragraph (2) or, in the alternative,
paragraph (3) of this subsection. In joint cases filed under section 302 of this title and
individual cases filed under section 301 or 303 of this title by or against debtors who
are husband and wife, and whose estates are ordered to be jointly administered under
Rule 1015(b) of the Federal Rules of Bankruptcy Procedure, one debtor may not elect
to exempt property listed in paragraph (2) and the other debtor elect to exempt
115

property listed in paragraph (3) of this subsection. If the parties cannot agree on the
alternative to be elected, they shall be deemed to elect paragraph (2), where such
election is permitted under the law of the jurisdiction where the case is filed.
(2) Property listed in this paragraph is property that is specified under subsection (d),
unless the State law that is applicable to the debtor under paragraph (3)(A) specifically
does not so authorize.
(3) Property listed in this paragraph is—
(A) subject to subsections (o) and (p), 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 to the place in which the
debtor's domicile has been located for the 730 days immediately preceding the
date of the filing of the petition or if the debtor's domicile has not been located in
a single State for such 730-day period, the place in which the debtor's domicile
was located for 180 days immediately preceding the 730-day period or for a
longer portion of such 180-day period than in any other place;
(B) any interest in property in which the debtor had, immediately 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; and
(C) retirement funds to the extent that those funds are in a fund or account that is
exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of
the Internal Revenue Code of 1986.
If the effect of the domiciliary requirement under subparagraph (A) is to render
the debtor ineligible for any exemption, the debtor may elect to exempt property
that is specified under subsection (d).
(4) For purposes of paragraph (3)(C) and subsection (d)(12), the following shall apply:
(A) If the retirement funds are in a retirement fund that has received a favorable
determination under section 7805 of the Internal Revenue Code of 1986, and that
determination is in effect as of the date of the filing of the petition in a case
under this title, those funds shall be presumed to be exempt from the estate.
(B) If the retirement funds are in a retirement fund that has not received a
favorable determination under such section 7805, those funds are exempt from
the estate if the debtor demonstrates that—
(i) no prior determination to the contrary has been made by a court or the
Internal Revenue Service; and
(ii)
(I) the retirement fund is in substantial compliance with the applicable
requirements of the Internal Revenue Code of 1986; or

116

(II) the retirement fund fails to be in substantial compliance with the
applicable requirements of the Internal Revenue Code of 1986 and the
debtor is not materially responsible for that failure.
(C) A direct transfer of retirement funds from 1 fund or account that is exempt
from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the
Internal Revenue Code of 1986, under section 401(a)(31) of the Internal Revenue
Code of 1986, or otherwise, shall not cease to qualify for exemption under
paragraph (3)(C) or subsection (d)(12) by reason of such direct transfer.
(D)
(i) Any distribution that qualifies as an eligible rollover distribution within the
meaning of section 402(c) of the Internal Revenue Code of 1986 or that is
described in clause (ii) shall not cease to qualify for exemption under
paragraph (3)(C) or subsection (d)(12) by reason of such distribution.
(ii) A distribution described in this clause is an amount that—
(I) has been distributed from a fund or account that is exempt from
taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the
Internal Revenue Code of 1986; and
(II) to the extent allowed by law, is deposited in such a fund or account
not later than 60 days after the distribution of such amount.
(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 debt had arisen, before the commencement of the case, except—
(1) a debt of a kind specified in paragraph (1) or (5) of section 523(a) (in which case,
notwithstanding any provision of applicable nonbankruptcy law to the contrary, such
property shall be liable for a debt of a kind specified in such paragraph);
(2) a debt secured by a lien that is—
(A)
(i) not avoided under subsection (f) or (g) of this section or under section 544,
545, 547, 548, 549, or 724(a) of this title; and
(ii) not void under section 506(d) of this title; or
(B) a tax lien, notice of which is properly filed;
(3) a debt of a kind specified in section 523(a)(4) or 523(a)(6) of this title owed by an
institution-affiliated party of an insured depository institution to a Federal depository
institutions regulatory agency acting in its capacity as conservator, receiver, or
liquidating agent for such institution; or
(4) a debt in connection with fraud in the obtaining or providing of any scholarship,
grant, loan, tuition, discount, award, or other financial assistance for purposes of
financing an education at an institution of higher education (as that term is defined in
section 101 of the Higher Education Act of 1965 (20 U.S.C. 1001)).
117

(d) The following property may be exempted under subsection (b)(2) of this section:
(1) The debtor's aggregate interest, not to exceed $15,000 [$23,675 as of April 1,
2016] 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 $2,400 [$3,775 as of April 1, 2016] in value, in
one motor vehicle.
(3) The debtor's interest, not to exceed $400 [$600 as of April 1, 2016] in value in any
particular item or $8,000 [$12,625 as of April 1, 2016] in aggregate value, in
household furnishings, household goods, wearing apparel, appliances, books, animals,
crops, or musical instruments, 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 $1,000 [$1,600 as of April 1, 2016]
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 in any property, not to exceed in value $800
[$1,250 as of April 1, 2016] plus up to $7,500 [$11,850 as of April 1, 2016] of any
unused amount of the exemption provided under paragraph (1) of this subsection.
(6) The debtor's aggregate interest, not to exceed $1,500 [$2,375 as of April 1, 2016]
in value, in any implements, professional books, or tools, of the trade of the debtor or
the trade of a dependent of the debtor.
(7) Any unmatured life insurance contract owned by the debtor, other than a credit life
insurance contract.
(8) The debtor's aggregate interest, not to exceed in value $8,000 [$12,625 as of April
1, 2016] 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, disability, death, age, or length of service,
118

to the extent reasonably 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 section 401(a), 403(a),
403(b), or 408 of the Internal Revenue Code of 1986.
(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 reasonably necessary for the support of the debtor and any
dependent of the debtor;
(D) a payment, not to exceed $15,000 [$23,675 as of April 1, 2016], on account
of personal bodily injury, not including pain and suffering or compensation 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 support of the debtor and any dependent of the debtor.
(12) Retirement funds to the extent that those funds are in a fund or account that is
exempt from taxation under section 401, 403, 408, 408A, 414, 457, or 501(a) of the
Internal Revenue Code of 1986.
(e) A waiver of an exemption executed in favor of a creditor that holds an unsecured claim
against the debtor is unenforceable in a case 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)
(1) Notwithstanding any waiver of exemptions but subject to paragraph (3), 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—
(A) a judicial lien, other than a judicial lien that secures a debt of a kind that is
specified in section 523(a)(5); or
119

(B) a nonpossessory, nonpurchase-money security interest in any—
(i) household furnishings, household goods, wearing apparel, appliances,
books, animals, crops, musical instruments, or jewelry that are held primarily
for the personal, family, or household use of the debtor or a dependent of the
debtor;
(ii) implements, professional books, or tools, of the trade of the debtor or the
trade of a dependent of the debtor; or
(iii) professionally prescribed health aids for the debtor or a dependent of the
debtor.
(2)
(A) For the purposes of this subsection, a lien shall be considered to impair an
exemption to the extent that the sum of—
(i) the lien;
(ii) all other liens on the property; and
(iii) the amount of the exemption that the debtor could claim if there were no
liens on the property;
exceeds the value that the debtor's interest in the property would have in the
absence of any liens.
(B) In the case of a property subject to more than 1 lien, a lien that has been
avoided shall not be considered in making the calculation under subparagraph
(A) with respect to other liens.
(C) This paragraph shall not apply with respect to a judgment arising out of a
mortgage foreclosure.
(3) In a case in which State law that is applicable to the debtor—
(A) permits a person to voluntarily waive a right to claim exemptions under
subsection (d) or prohibits a debtor from claiming exemptions under subsection
(d); and
(B) either permits the debtor to claim exemptions under State law without
limitation in amount, except to the extent that the debtor has permitted the fixing
of a consensual lien on any property or prohibits avoidance of a consensual lien
on property otherwise eligible to be claimed as exempt property;
the debtor may not avoid the fixing of a lien on an interest of the debtor or a dependent
of the debtor in property if the lien is a nonpossessory, nonpurchase-money security
interest in implements, professional books, or tools of the trade of the debtor or a
dependent of the debtor or farm animals or crops of the debtor or a dependent of the
debtor to the extent the value of such implements, professional books, tools of the
trade, animals, and crops exceeds $5,000 [$6,425 as of April 1, 2016].
(4)
120

(A) Subject to subparagraph (B), for purposes of paragraph (1)(B), the term
"household goods" means—
(i) clothing;
(ii) furniture;
(iii) appliances;
(iv) 1 radio;
(v) 1 television;
(vi) 1 VCR;
(vii) linens;
(viii) china;
(ix) crockery;
(x) kitchenware;
(xi) educational materials and educational equipment primarily for the use of
minor dependent children of the debtor;
(xii) medical equipment and supplies;
(xiii) furniture exclusively for the use of minor children, or elderly or disabled
dependents of the debtor;
(xiv) personal effects (including the toys and hobby equipment of minor
dependent children and wedding rings) of the debtor and the dependents of the
debtor; and
(xv) 1 personal computer and related equipment.
(B) The term "household goods" does not include—
(i) works of art (unless by or of the debtor, or any relative of the debtor);
(ii) electronic entertainment equipment with a fair market value of more than
$500 [$675 as of April 1, 2016] in the aggregate (except 1 television, 1 radio,
and 1 VCR);
(iii) items acquired as antiques with a fair market value of more than $500
[$675 as of April 1, 2016] in the aggregate;
(iv) jewelry with a fair market value of more than $500 [$675 as of April 1,
2016] in the aggregate (except wedding rings); and
(v) a computer (except as otherwise provided for in this section), motor
vehicle (including a tractor or lawn tractor), boat, or a motorized recreational
device, conveyance, vehicle, watercraft, or aircraft.
(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 had not been transferred, if—
121

(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 subsection (f)(1)(B) 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 title; 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 subsection (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 may exempt such property under subsection (g)
of this 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 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 subsection (f) or (h) of this
section, or of recovery of property under subsection (i)(1) of this section, that the
debtor has not paid.
(l) 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.
122

(m) Subject to the limitation in subsection (b), this section shall apply separately with respect
to each debtor in a joint case.
(n) For assets in individual retirement accounts described in section 408 or 408A of the
Internal Revenue Code of 1986, other than a simplified employee pension under section
408(k) of such Code or a simple retirement account under section 408(p) of such Code, the
aggregate value of such assets exempted under this section, without regard to amounts
attributable to rollover contributions under section 402(c), 402(e)(6), 403(a)(4), 403(a)(5),
and 403(b)(8) of the Internal Revenue Code of 1986, and earnings thereon, shall not exceed
$1,000,000 [$1,283,025 as of April 1, 2016] in a case filed by a debtor who is an individual,
except that such amount may be increased if the interests of justice so require.
(o) For purposes of subsection (b)(3)(A), and notwithstanding subsection (a), the value of an
interest in—
(1) real or personal property that the debtor or a dependent of the debtor uses as a
residence;
(2) a cooperative that owns property that the debtor or a dependent of the debtor uses
as a residence;
(3) a burial plot for the debtor or a dependent of the debtor; or
(4) real or personal property that the debtor or a dependent of the debtor claims as a
homestead;
shall be reduced to the extent that such value is attributable to any portion of any property
that the debtor disposed of in the 10-year period ending on the date of the filing of the
petition with the intent to hinder, delay, or defraud a creditor and that the debtor could not
exempt, or that portion that the debtor could not exempt, under subsection (b), if on such date
the debtor had held the property so disposed of.
(p)
(1) Except as provided in paragraph (2) of this subsection and sections 544 and 548, as
a result of electing under subsection (b)(3)(A) to exempt property under State or local
law, a debtor may not exempt any amount of interest that was acquired by the debtor
during the 1215-day period preceding the date of the filing of the petition that exceeds
in the aggregate $125,000 [$160,375 as of April 1, 2016] in value in—
(A) real or personal property that the debtor or a dependent of the debtor uses as
a residence;
(B) a cooperative that owns property that the debtor or a dependent of the debtor
uses as a residence;
(C) a burial plot for the debtor or a dependent of the debtor; or
(D) real or personal property that the debtor or dependent of the debtor claims as
a homestead.
(2)

123

(A) The limitation under paragraph (1) shall not apply to an exemption claimed
under subsection (b)(3)(A) by a family farmer for the principal residence of such
farmer.
(B) For purposes of paragraph (1), any amount of such interest does not include
any interest transferred from a debtor's previous principal residence (which was
acquired prior to the beginning of such 1215-day period) into the debtor's current
principal residence, if the debtor's previous and current residences are located in
the same State.
(q)
(1) As a result of electing under subsection (b)(3)(A) to exempt property under State
or local law, a debtor may not exempt any amount of an interest in property described
in subparagraphs (A), (B), (C), and (D) of subsection (p)(1) which exceeds in the
aggregate $125,000 [$160,375 as of April 1, 2016] if—
(A) the court determines, after notice and a hearing, that the debtor has been
convicted of a felony (as defined in section 3156 of title 18), which under the
circumstances, demonstrates that the filing of the case was an abuse of the
provisions of this title; or
(B) the debtor owes a debt arising from—
(i) any violation of the Federal securities laws (as defined in section 3(a)(47)
of the Securities Exchange Act of 1934), any State securities laws, or any
regulation or order issued under Federal securities laws or State securities
laws;
(ii) fraud, deceit, or manipulation in a fiduciary capacity or in connection with
the purchase or sale of any security registered under section 12 or 15(d) of the
Securities Exchange Act of 1934 or under section 6 of the Securities Act of
1933;
(iii) any civil remedy under section 1964 of title 18; or
(iv) any criminal act, intentional tort, or willful or reckless misconduct that
caused serious physical injury or death to another individual in the preceding
5 years.
(2) Paragraph (1) shall not apply to the extent the amount of an interest in property
described in subparagraphs (A), (B), (C), and (D) of subsection (p)(1) is reasonably
necessary for the support of the debtor and any dependent of the debtor.
§523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this title 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)(3) or 507(a)(8) of
this title, whether or not a claim for such tax was filed or allowed;
124

(B) with respect to which a return, or equivalent report or notice, if required—
(i) was not filed or given; or
(ii) was filed or given after the date on which such return, report, or notice
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 money, property, services, or an extension, renewal, or refinancing of credit, to
the extent obtained by—
(A) false pretenses, a false representation, or actual fraud, other than a statement
respecting the debtor's or an insider's financial condition;
(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 such money,
property, services, or credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; or
(C)
(i) for purposes of subparagraph (A)—
(I) consumer debts owed to a single creditor and aggregating more than
$500 [$675 as of April 1, 2016] for luxury goods or services incurred by
an individual debtor on or within 90 days before the order for relief
under this title are presumed to be nondischargeable; and
(II) cash advances aggregating more than $750 [$950 as of April 1,
2016] that are extensions of consumer credit under an open end credit
plan obtained by an individual debtor on or within 70 days before the
order for relief under this title, are presumed to be nondischargeable; and
(ii) for purposes of this subparagraph—
(I) the terms "consumer", "credit", and "open end credit plan" have the
same meanings as in section 103 of the Truth in Lending Act; and
(II) the term "luxury goods or services" does not include goods or
services reasonably necessary for the support or maintenance of the
debtor or a dependent of the debtor;
(3) neither listed nor scheduled under section 521(a)(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
125

(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this
subsection, timely 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) for a domestic support obligation;
(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) of 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) unless excepting such debt from discharge under this paragraph would impose an
undue hardship on the debtor and the debtor's dependents, for—
(A)
(i) an educational benefit overpayment or loan made, insured, or guaranteed
by a governmental unit, or made under any program funded in whole or in
part by a governmental unit or nonprofit institution; or
(ii) an obligation to repay funds received as an educational benefit,
scholarship, or stipend; or
(B) any other educational loan that is a qualified education loan, as defined in
section 221(d)(1) of the Internal Revenue Code of 1986, incurred by a debtor
who is an individual;
(9) for death or personal injury caused by the debtor's operation of a motor vehicle,
vessel, or aircraft if such operation was unlawful because the debtor was intoxicated
from using alcohol, a drug, or another substance;
(10) 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, 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) provided in any final judgment, unreviewable order, or consent order or decree
entered in any court of the United States or of any State, issued by a Federal
depository institutions regulatory agency, or contained in any settlement agreement
entered into by the debtor, arising from any act of fraud or defalcation while acting in
a fiduciary capacity committed with respect to any depository institution or insured
credit union;
126

(12) for malicious or reckless failure to fulfill any commitment by the debtor to a
Federal depository institutions regulatory agency to maintain the capital of an insured
depository institution, except that this paragraph shall not extend any such
commitment which would otherwise be terminated due to any act of such agency;
(13) for any payment of an order of restitution issued under title 18, United States
Code;
(14) incurred to pay a tax to the United States that would be nondischargeable
pursuant to paragraph (1);
(14A) incurred to pay a tax to a governmental unit, other than the United States, that
would be nondischargeable under paragraph (1);
(14B) incurred to pay fines or penalties imposed under Federal election law;
(15) to a spouse, former spouse, or child of the debtor and not of the kind described in
paragraph (5) that is incurred by the debtor in the course of a divorce or separation or
in connection with a separation agreement, divorce decree or other order of a court of
record, or a determination made in accordance with State or territorial law by a
governmental unit;
(16) for a fee or assessment that becomes due and payable after the order for relief to a
membership association with respect to the debtor's interest in a unit that has
condominium ownership, in a share of a cooperative corporation, or a lot in a
homeowners association, for as long as the debtor or the trustee has a legal, equitable,
or possessory ownership interest in such unit, such corporation, or such lot, but
nothing in this paragraph shall except from discharge the debt of a debtor for a
membership association fee or assessment for a period arising before entry of the order
for relief in a pending or subsequent bankruptcy case;
(17) for a fee imposed on a prisoner by any court for the filing of a case, motion,
complaint, or appeal, or for other costs and expenses assessed with respect to such
filing, regardless of an assertion of poverty by the debtor under subsection (b) or (f)(2)
of section 1915 of title 28 (or a similar non-Federal law), or the debtor's status as a
prisoner, as defined in section 1915(h) of title 28 (or a similar non-Federal law);
(18) owed to a pension, profit-sharing, stock bonus, or other plan established under
section 401, 403, 408, 408A, 414, 457, or 501(c) of the Internal Revenue Code of
1986, under—
(A) a loan permitted under section 408(b)(1) of the Employee Retirement
Income Security Act of 1974, or subject to section 72(p) of the Internal Revenue
Code of 1986; or
(B) a loan from a thrift savings plan permitted under subchapter III of chapter 84
of title 5, that satisfies the requirements of section 8433(g) of such title;
but nothing in this paragraph may be construed to provide that any loan made under a
governmental plan under section 414(d), or a contract or account under section 403(b),
of the Internal Revenue Code of 1986 constitutes a claim or a debt under this title; or
(19) that—
127

(A) is for—
(i) the violation of any of the Federal securities laws (as that term is defined in
section 3(a)(47) of the Securities Exchange Act of 1934), any of the State
securities laws, or any regulation or order issued under such Federal or State
securities laws; or
(ii) common law fraud, deceit, or manipulation in connection with the
purchase or sale of any security; and
(B) results, before, on, or after the date on which the petition was filed, from—
(i) any judgment, order, consent order, or decree entered in any Federal or
State judicial or administrative proceeding;
(ii) any settlement agreement entered into by the debtor; or
(iii) any court or administrative order for any damages, fine, penalty, citation,
restitutionary payment, disgorgement payment, attorney fee, cost, or other
payment owed by the debtor.
For purposes of this subsection, the term "return" means a return that satisfies the
requirements of applicable nonbankruptcy law (including applicable filing
requirements). Such term includes a return prepared pursuant to section 6020(a)
of the Internal Revenue Code of 1986, or similar State or local law, or a written
stipulation to a judgment or a final order entered by a nonbankruptcy tribunal,
but does not include a return made pursuant to section 6020(b) of the Internal
Revenue Code of 1986, or a similar State or local law.
(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 17a(1), 17a(3), or
17a(5) of the Bankruptcy Act, under section 439A 1 of the Higher Education Act of 1965, or
under section 733(g) 1 of the Public Health Service Act 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)
(1) Except as provided in subsection (a)(3)(B) of this section, the debtor shall be
discharged from a debt of a kind 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.
(2) Paragraph (1) shall not apply in the case of a Federal depository institutions
regulatory agency seeking, in its capacity as conservator, receiver, or liquidating agent
for an insured depository institution, to recover a debt described in subsection (a)(2),
(a)(4), (a)(6), or (a)(11) owed to such institution by an institution-affiliated party
unless the receiver, conservator, or liquidating agent was appointed in time to
reasonably comply, or for a Federal depository institutions regulatory agency acting in
128

its corporate capacity as a successor to such receiver, conservator, or liquidating agent
to reasonably comply, with subsection (a)(3)(B) as a creditor of such institutionaffiliated party with respect to such debt.
(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
in favor of the debtor for the costs of, and a reasonable attorney's fee for, the proceeding if
the court finds that the position of the creditor was not substantially justified, except that the
court shall not award such costs and fees if special circumstances would make the award
unjust.
(e) Any institution-affiliated party of an insured depository institution shall be considered to
be acting in a fiduciary capacity with respect to the purposes of subsection (a)(4) or (11).
§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 727, 944, 1141, 1192, 1228, or 1328 of this title, whether or not
discharge of such debt is waived;
(2) operates as an injunction against the commencement or continuation of an action,
the employment of process, or an act, to collect, recover or offset any such debt as a
personal liability 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 an 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 excepted from discharge under section 523,
1192, 1228(a)(1), or 1328(a)(1), 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, 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 discharge 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
129

(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 discharge under section 727,
1141, 1192, 1228, or 1328 of this title;
(2) the debtor received the disclosures described in subsection (k) at or before the time
at which the debtor signed the agreement;
(3) such agreement has been filed with the court and, if applicable, accompanied by a
declaration or an affidavit of the attorney that represented the debtor during the course
of negotiating an agreement under this subsection, which states that—
(A) such agreement represents a fully informed and voluntary agreement by the
debtor;
(B) such agreement does not impose an undue hardship on the debtor or a
dependent of the debtor; and
(C) the attorney fully advised the debtor of the legal effect and consequences
of—
(i) an agreement of the kind specified in this subsection; and
(ii) any default under such an agreement;
(4) the debtor has not rescinded such agreement at any time prior to discharge or
within sixty days after such agreement is filed with the court, whichever occurs later,
by giving notice of rescission to the holder of such claim;
(5) the provisions of subsection (d) of this section have been complied with; and
(6)
(A) in a case concerning an individual who was not represented by an attorney
during the course of negotiating an agreement under this subsection, the court
approves such agreement as—
(i) not imposing an undue hardship on the debtor or a dependent of the debtor;
and
(ii) in the best interest of the debtor.
(B) Subparagraph (A) shall not apply to the extent that such debt is a consumer
debt secured by real property.
(d) In a case concerning an individual, when the court has determined whether to grant or not
to grant a discharge under section 727, 1141, 1192, 1228, or 1328 of this title, the court may
130

hold a hearing at which the debtor shall appear in person. At any such hearing, the court shall
inform the debtor that a discharge has been granted or the reason why a discharge has not
been granted. If a discharge has been granted and if the debtor desires to make an agreement
of the kind specified in subsection (c) of this section and was not represented by an attorney
during the course of negotiating such agreement, then the court shall hold a hearing at which
the debtor shall appear in person and 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; and
(2) determine whether the agreement that the debtor desires to make complies with the
requirements of subsection (c)(6) of this section, 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, discharge 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.
(f) Nothing contained in subsection (c) or (d) of this section prevents a debtor from
voluntarily repaying any debt.
(g)
(1)
(A) After notice and hearing, a court that enters an order confirming a plan of
reorganization under chapter 11 may issue, in connection with such order, an
injunction in accordance with this subsection to supplement the injunctive effect
of a discharge under this section.
(B) An injunction may be issued under subparagraph (A) to enjoin entities from
taking legal action for the purpose of directly or indirectly collecting, recovering,
or receiving payment or recovery with respect to any claim or demand that,
under a plan of reorganization, is to be paid in whole or in part by a trust
described in paragraph (2)(B)(i), except such legal actions as are expressly
allowed by the injunction, the confirmation order, or the plan of reorganization.
(2)
(A) Subject to subsection (h), if the requirements of subparagraph (B) are met at
the time an injunction described in paragraph (1) is entered, then after entry of
such injunction, any proceeding that involves the validity, application,
construction, or modification of such injunction, or of this subsection with
respect to such injunction, may be commenced only in the district court in which
131

such injunction was entered, and such court shall have exclusive jurisdiction over
any such proceeding without regard to the amount in controversy.
(B) The requirements of this subparagraph are that—
(i) the injunction is to be implemented in connection with a trust that, pursuant
to the plan of reorganization—
(I) is to assume the liabilities of a debtor which at the time of entry of
the order for relief has been named as a defendant in personal injury,
wrongful death, or property-damage actions seeking recovery for
damages allegedly caused by the presence of, or exposure to, asbestos or
asbestos-containing products;
(II) is to be funded in whole or in part by the securities of 1 or more
debtors involved in such plan and by the obligation of such debtor or
debtors to make future payments, including dividends;
(III) is to own, or by the exercise of rights granted under such plan
would be entitled to own if specified contingencies occur, a majority of
the voting shares of—
(aa) each such debtor;
(bb) the parent corporation of each such debtor; or
(cc) a subsidiary of each such debtor that is also a debtor; and
(IV) is to use its assets or income to pay claims and demands; and
(ii) subject to subsection (h), the court determines that—
(I) the debtor is likely to be subject to substantial future demands for
payment arising out of the same or similar conduct or events that gave
rise to the claims that are addressed by the injunction;
(II) the actual amounts, numbers, and timing of such future demands
cannot be determined;
(III) pursuit of such demands outside the procedures prescribed by such
plan is likely to threaten the plan's purpose to deal equitably with claims
and future demands;
(IV) as part of the process of seeking confirmation of such plan—
(aa) the terms of the injunction proposed to be issued under
paragraph (1)(A), including any provisions barring actions against
third parties pursuant to paragraph (4)(A), are set out in such plan
and in any disclosure statement supporting the plan; and
(bb) a separate class or classes of the claimants whose claims are to
be addressed by a trust described in clause (i) is established and
votes, by at least 75 percent of those voting, in favor of the plan;
and

132

(V) subject to subsection (h), pursuant to court orders or otherwise, the
trust will operate through mechanisms such as structured, periodic, or
supplemental payments, pro rata distributions, matrices, or periodic
review of estimates of the numbers and values of present claims and
future demands, or other comparable mechanisms, that provide
reasonable assurance that the trust will value, and be in a financial
position to pay, present claims and future demands that involve similar
claims in substantially the same manner.
(3)
(A) If the requirements of paragraph (2)(B) are met and the order confirming the
plan of reorganization was issued or affirmed by the district court that has
jurisdiction over the reorganization case, then after the time for appeal of the
order that issues or affirms the plan—
(i) the injunction shall be valid and enforceable and may not be revoked or
modified by any court except through appeal in accordance with paragraph
(6);
(ii) no entity that pursuant to such plan or thereafter becomes a direct or
indirect transferee of, or successor to any assets of, a debtor or trust that is the
subject of the injunction shall be liable with respect to any claim or demand
made against such entity by reason of its becoming such a transferee or
successor; and
(iii) no entity that pursuant to such plan or thereafter makes a loan to such a
debtor or trust or to such a successor or transferee shall, by reason of making
the loan, be liable with respect to any claim or demand made against such
entity, nor shall any pledge of assets made in connection with such a loan be
upset or impaired for that reason;
(B) Subparagraph (A) shall not be construed to—
(i) imply that an entity described in subparagraph (A)(ii) or (iii) would, if this
paragraph were not applicable, necessarily be liable to any entity by reason of
any of the acts described in subparagraph (A);
(ii) relieve any such entity of the duty to comply with, or of liability under,
any Federal or State law regarding the making of a fraudulent conveyance in a
transaction described in subparagraph (A)(ii) or (iii); or
(iii) relieve a debtor of the debtor's obligation to comply with the terms of the
plan of reorganization, or affect the power of the court to exercise its authority
under sections 1141 and 1142 to compel the debtor to do so.
(4)
(A)
(i) Subject to subparagraph (B), an injunction described in paragraph (1) shall
be valid and enforceable against all entities that it addresses.
133

(ii) Notwithstanding the provisions of section 524(e), such an injunction may
bar any action directed against a third party who is identifiable from the terms
of such injunction (by name or as part of an identifiable group) and is alleged
to be directly or indirectly liable for the conduct of, claims against, or
demands on the debtor to the extent such alleged liability of such third party
arises by reason of—
(I) the third party's ownership of a financial interest in the debtor, a past
or present affiliate of the debtor, or a predecessor in interest of the
debtor;
(II) the third party's involvement in the management of the debtor or a
predecessor in interest of the debtor, or service as an officer, director or
employee of the debtor or a related party;
(III) the third party's provision of insurance to the debtor or a related
party; or
(IV) the third party's involvement in a transaction changing the corporate
structure, or in a loan or other financial transaction affecting the
financial condition, of the debtor or a related party, including but not
limited to—
(aa) involvement in providing financing (debt or equity), or advice
to an entity involved in such a transaction; or
(bb) acquiring or selling a financial interest in an entity as part of
such a transaction.
(iii) As used in this subparagraph, the term "related party" means—
(I) a past or present affiliate of the debtor;
(II) a predecessor in interest of the debtor; or
(III) any entity that owned a financial interest in—
(aa) the debtor;
(bb) a past or present affiliate of the debtor; or
(cc) a predecessor in interest of the debtor.
(B) Subject to subsection (h), if, under a plan of reorganization, a kind of
demand described in such plan is to be paid in whole or in part by a trust
described in paragraph (2)(B)(i) in connection with which an injunction
described in paragraph (1) is to be implemented, then such injunction shall be
valid and enforceable with respect to a demand of such kind made, after such
plan is confirmed, against the debtor or debtors involved, or against a third party
described in subparagraph (A)(ii), if—
(i) as part of the proceedings leading to issuance of such injunction, the court
appoints a legal representative for the purpose of protecting the rights of
persons that might subsequently assert demands of such kind, and
134

(ii) the court determines, before entering the order confirming such plan, that
identifying such debtor or debtors, or such third party (by name or as part of
an identifiable group), in such injunction with respect to such demands for
purposes of this subparagraph is fair and equitable with respect to the persons
that might subsequently assert such demands, in light of the benefits provided,
or to be provided, to such trust on behalf of such debtor or debtors or such
third party.
(5) In this subsection, the term "demand" means a demand for payment, present or
future, that—
(A) was not a claim during the proceedings leading to the confirmation of a plan
of reorganization;
(B) arises out of the same or similar conduct or events that gave rise to the claims
addressed by the injunction issued under paragraph (1); and
(C) pursuant to the plan, is to be paid by a trust described in paragraph (2)(B)(i).
(6) Paragraph (3)(A)(i) does not bar an action taken by or at the direction of an
appellate court on appeal of an injunction issued under paragraph (1) or of the order of
confirmation that relates to the injunction.
(7) This subsection does not affect the operation of section 1144 or the power of the
district court to refer a proceeding under section 157 of title 28 or any reference of a
proceeding made prior to the date of the enactment of this subsection.
(h) Application to Existing Injunctions.—For purposes of subsection (g)—
(1) subject to paragraph (2), if an injunction of the kind described in subsection
(g)(1)(B) was issued before the date of the enactment of this Act, as part of a plan of
reorganization confirmed by an order entered before such date, then the injunction
shall be considered to meet the requirements of subsection (g)(2)(B) for purposes of
subsection (g)(2)(A), and to satisfy subsection (g)(4)(A)(ii), if—
(A) the court determined at the time the plan was confirmed that the plan was
fair and equitable in accordance with the requirements of section 1129(b);
(B) as part of the proceedings leading to issuance of such injunction and
confirmation of such plan, the court had appointed a legal representative for the
purpose of protecting the rights of persons that might subsequently assert
demands described in subsection (g)(4)(B) with respect to such plan; and
(C) such legal representative did not object to confirmation of such plan or
issuance of such injunction; and
(2) for purposes of paragraph (1), if a trust described in subsection (g)(2)(B)(i) is
subject to a court order on the date of the enactment of this Act staying such trust from
settling or paying further claims—
(A) the requirements of subsection (g)(2)(B)(ii)(V) shall not apply with respect
to such trust until such stay is lifted or dissolved; and

135

(B) if such trust meets such requirements on the date such stay is lifted or
dissolved, such trust shall be considered to have met such requirements
continuously from the date of the enactment of this Act.
(i) The willful failure of a creditor to credit payments received under a plan confirmed under
this title, unless the order confirming the plan is revoked, the plan is in default, or the creditor
has not received payments required to be made under the plan in the manner required by the
plan (including crediting the amounts required under the plan), shall constitute a violation of
an injunction under subsection (a)(2) if the act of the creditor to collect and failure to credit
payments in the manner required by the plan caused material injury to the debtor.
(j) Subsection (a)(2) does not operate as an injunction against an act by a creditor that is the
holder of a secured claim, if—
(1) such creditor retains a security interest in real property that is the principal
residence of the debtor;
(2) such act is in the ordinary course of business between the creditor and the debtor;
and
(3) such act is limited to seeking or obtaining periodic payments associated with a
valid security interest in lieu of pursuit of in rem relief to enforce the lien.
(k)
(1) The disclosures required under subsection (c)(2) shall consist of the disclosure
statement described in paragraph (3), completed as required in that paragraph, together
with the agreement specified in subsection (c), statement, declaration, motion and
order described, respectively, in paragraphs (4) through (8), and shall be the only
disclosures required in connection with entering into such agreement.
(2) Disclosures made under paragraph (1) shall be made clearly and conspicuously and
in writing. The terms "Amount Reaffirmed" and "Annual Percentage Rate" shall be
disclosed more conspicuously than other terms, data or information provided in
connection with this disclosure, except that the phrases "Before agreeing to reaffirm a
debt, review these important disclosures" and "Summary of Reaffirmation Agreement"
may be equally conspicuous. Disclosures may be made in a different order and may
use terminology different from that set forth in paragraphs (2) through (8), except that
the terms "Amount Reaffirmed" and "Annual Percentage Rate" must be used where
indicated.
(3) The disclosure statement required under this paragraph shall consist of the
following:
(A) The statement: "Part A: Before agreeing to reaffirm a debt, review these
important disclosures:";
(B) Under the heading "Summary of Reaffirmation Agreement", the statement:
"This Summary is made pursuant to the requirements of the Bankruptcy Code";
(C) The "Amount Reaffirmed", using that term, which shall be—

136

(i) the total amount of debt that the debtor agrees to reaffirm by entering into
an agreement of the kind specified in subsection (c), and
(ii) the total of any fees and costs accrued as of the date of the disclosure
statement, related to such total amount.
(D) In conjunction with the disclosure of the "Amount Reaffirmed", the
statements—
(i) "The amount of debt you have agreed to reaffirm"; and
(ii) "Your credit agreement may obligate you to pay additional amounts which
may come due after the date of this disclosure. Consult your credit
agreement.".
(E) The "Annual Percentage Rate", using that term, which shall be disclosed
as—
(i) if, at the time the petition is filed, the debt is an extension of credit under
an open end credit plan, as the terms "credit" and "open end credit plan" are
defined in section 103 of the Truth in Lending Act, then—
(I) the annual percentage rate determined under paragraphs (5) and (6) of
section 127(b) of the Truth in Lending Act, as applicable, as disclosed to
the debtor in the most recent periodic statement prior to entering into an
agreement of the kind specified in subsection (c) or, if no such periodic
statement has been given to the debtor during the prior 6 months, the
annual percentage rate as it would have been so disclosed at the time the
disclosure statement is given to the debtor, or to the extent this annual
percentage rate is not readily available or not applicable, then
(II) the simple interest rate applicable to the amount reaffirmed as of the
date the disclosure statement is given to the debtor, or if different simple
interest rates apply to different balances, the simple interest rate
applicable to each such balance, identifying the amount of each such
balance included in the amount reaffirmed, or
(III) if the entity making the disclosure elects, to disclose the annual
percentage rate under subclause (I) and the simple interest rate under
subclause (II); or
(ii) if, at the time the petition is filed, the debt is an extension of credit other
than under an open end credit plan, as the terms "credit" and "open end credit
plan" are defined in section 103 of the Truth in Lending Act, then—
(I) the annual percentage rate under section 128(a)(4) of the Truth in
Lending Act, as disclosed to the debtor in the most recent disclosure
statement given to the debtor prior to the entering into an agreement of
the kind specified in subsection (c) with respect to the debt, or, if no
such disclosure statement was given to the debtor, the annual percentage
rate as it would have been so disclosed at the time the disclosure

137

statement is given to the debtor, or to the extent this annual percentage
rate is not readily available or not applicable, then
(II) the simple interest rate applicable to the amount reaffirmed as of the
date the disclosure statement is given to the debtor, or if different simple
interest rates apply to different balances, the simple interest rate
applicable to each such balance, identifying the amount of such balance
included in the amount reaffirmed, or
(III) if the entity making the disclosure elects, to disclose the annual
percentage rate under (I) and the simple interest rate under (II).
(F) If the underlying debt transaction was disclosed as a variable rate transaction
on the most recent disclosure given under the Truth in Lending Act, by stating
"The interest rate on your loan may be a variable interest rate which changes
from time to time, so that the annual percentage rate disclosed here may be
higher or lower.".
(G) If the debt is secured by a security interest which has not been waived in
whole or in part or determined to be void by a final order of the court at the time
of the disclosure, by disclosing that a security interest or lien in goods or
property is asserted over some or all of the debts the debtor is reaffirming and
listing the items and their original purchase price that are subject to the asserted
security interest, or if not a purchase-money security interest then listing by
items or types and the original amount of the loan.
(H) At the election of the creditor, a statement of the repayment schedule using 1
or a combination of the following—
(i) by making the statement: "Your first payment in the amount of $______ is
due on ______ but the future payment amount may be different. Consult your
reaffirmation agreement or credit agreement, as applicable.", and stating the
amount of the first payment and the due date of that payment in the places
provided;
(ii) by making the statement: "Your payment schedule will be:", and
describing the repayment schedule with the number, amount, and due dates or
period of payments scheduled to repay the debts reaffirmed to the extent then
known by the disclosing party; or
(iii) by describing the debtor's repayment obligations with reasonable
specificity to the extent then known by the disclosing party.
(I) The following statement: "Note: When this disclosure refers to what a creditor
‘may’ do, it does not use the word ‘may’ to give the creditor specific permission.
The word ‘may’ is used to tell you what might occur if the law permits the
creditor to take the action. If you have questions about your reaffirming a debt or
what the law requires, consult with the attorney who helped you negotiate this
agreement reaffirming a debt. If you don't have an attorney helping you, the
judge will explain the effect of your reaffirming a debt when the hearing on the
reaffirmation agreement is held.".
138

(J)
(i) The following additional statements:
"Reaffirming a debt is a serious financial decision. The law requires you
to take certain steps to make sure the decision is in your best interest. If
these steps are not completed, the reaffirmation agreement is not
effective, even though you have signed it.
"1. Read the disclosures in this Part A carefully. Consider the decision to
reaffirm carefully. Then, if you want to reaffirm, sign the reaffirmation
agreement in Part B (or you may use a separate agreement you and your
creditor agree on).
"2. Complete and sign Part D and be sure you can afford to make the
payments you are agreeing to make and have received a copy of the
disclosure statement and a completed and signed reaffirmation
agreement.
"3. If you were represented by an attorney during the negotiation of your
reaffirmation agreement, the attorney must have signed the certification
in Part C.
"4. If you were not represented by an attorney during the negotiation of
your reaffirmation agreement, you must have completed and signed Part
E.
"5. The original of this disclosure must be filed with the court by you or
your creditor. If a separate reaffirmation agreement (other than the one
in Part B) has been signed, it must be attached.
"6. If you were represented by an attorney during the negotiation of your
reaffirmation agreement, your reaffirmation agreement becomes
effective upon filing with the court unless the reaffirmation is presumed
to be an undue hardship as explained in Part D.
"7. If you were not represented by an attorney during the negotiation of
your reaffirmation agreement, it will not be effective unless the court
approves it. The court will notify you of the hearing on your
reaffirmation agreement. You must attend this hearing in bankruptcy
court where the judge will review your reaffirmation agreement. The
bankruptcy court must approve your reaffirmation agreement as
consistent with your best interests, except that no court approval is
required if your reaffirmation agreement is for a consumer debt secured
by a mortgage, deed of trust, security deed, or other lien on your real
property, like your home.
"Your right to rescind (cancel) your reaffirmation agreement. You may
rescind (cancel) your reaffirmation agreement at any time before the
bankruptcy court enters a discharge order, or before the expiration of the
60-day period that begins on the date your reaffirmation agreement is
filed with the court, whichever occurs later. To rescind (cancel) your
139

reaffirmation agreement, you must notify the creditor that your
reaffirmation agreement is rescinded (or canceled).
"What are your obligations if you reaffirm the debt? A reaffirmed debt
remains your personal legal obligation. It is not discharged in your
bankruptcy case. That means that if you default on your reaffirmed debt
after your bankruptcy case is over, your creditor may be able to take
your property or your wages. Otherwise, your obligations will be
determined by the reaffirmation agreement which may have changed the
terms of the original agreement. For example, if you are reaffirming an
open end credit agreement, the creditor may be permitted by that
agreement or applicable law to change the terms of that agreement in the
future under certain conditions.
"Are you required to enter into a reaffirmation agreement by any law?
No, you are not required to reaffirm a debt by any law. Only agree to
reaffirm a debt if it is in your best interest. Be sure you can afford the
payments you agree to make.
"What if your creditor has a security interest or lien? Your bankruptcy
discharge does not eliminate any lien on your property. A ‘lien’ is often
referred to as a security interest, deed of trust, mortgage or security deed.
Even if you do not reaffirm and your personal liability on the debt is
discharged, because of the lien your creditor may still have the right to
take the property securing the lien if you do not pay the debt or default
on it. If the lien is on an item of personal property that is exempt under
your State's law or that the trustee has abandoned, you may be able to
redeem the item rather than reaffirm the debt. To redeem, you must
make a single payment to the creditor equal to the amount of the allowed
secured claim, as agreed by the parties or determined by the court.".
(ii) In the case of a reaffirmation under subsection (m)(2), numbered
paragraph 6 in the disclosures required by clause (i) of this subparagraph shall
read as follows:
"6. If you were represented by an attorney during the negotiation of your
reaffirmation agreement, your reaffirmation agreement becomes
effective upon filing with the court.".
(4) The form of such agreement required under this paragraph shall consist of the
following:
"Part B: Reaffirmation Agreement. I (we) agree to reaffirm the debts arising
under the credit agreement described below.
"Brief description of credit agreement:
"Description of any changes to the credit agreement made as part of this
reaffirmation agreement:
"Signature:

Date:
140

"Borrower:
"Co-borrower, if also reaffirming these debts:
"Accepted by creditor:
"Date of creditor acceptance:".
(5) The declaration shall consist of the following:
(A) The following certification:
"Part C: Certification by Debtor's Attorney (If Any).
"I hereby certify that (1) this agreement represents a fully informed and
voluntary agreement by the debtor; (2) this agreement does not impose an
undue hardship on the debtor or any dependent of the debtor; and (3) I have
fully advised the debtor of the legal effect and consequences of this agreement
and any default under this agreement.
"Signature of Debtor's Attorney:

Date:".

(B) If a presumption of undue hardship has been established with respect to such
agreement, such certification shall state that, in the opinion of the attorney, the
debtor is able to make the payment.
(C) In the case of a reaffirmation agreement under subsection (m)(2),
subparagraph (B) is not applicable.
(6)
(A) The statement in support of such agreement, which the debtor shall sign and
date prior to filing with the court, shall consist of the following:
"Part D: Debtor's Statement in Support of Reaffirmation Agreement.
"1. I believe this reaffirmation agreement will not impose an undue hardship
on my dependents or me. I can afford to make the payments on the reaffirmed
debt because my monthly income (take home pay plus any other income
received) is $______, and my actual current monthly expenses including
monthly payments on post-bankruptcy debt and other reaffirmation
agreements total $______, leaving $______ to make the required payments on
this reaffirmed debt. I understand that if my income less my monthly expenses
does not leave enough to make the payments, this reaffirmation agreement is
presumed to be an undue hardship on me and must be reviewed by the court.
However, this presumption may be overcome if I explain to the satisfaction of
the court how I can afford to make the payments here: ______.
"2. I received a copy of the Reaffirmation Disclosure Statement in Part A and
a completed and signed reaffirmation agreement.".
(B) Where the debtor is represented by an attorney and is reaffirming a debt
owed to a creditor defined in section 19(b)(1)(A)(iv) of the Federal Reserve Act,
the statement of support of the reaffirmation agreement, which the debtor shall
sign and date prior to filing with the court, shall consist of the following:
141

"I believe this reaffirmation agreement is in my financial interest. I can afford
to make the payments on the reaffirmed debt. I received a copy of the
Reaffirmation Disclosure Statement in Part A and a completed and signed
reaffirmation agreement.".
(7) The motion that may be used if approval of such agreement by the court is required
in order for it to be effective, shall be signed and dated by the movant and shall consist
of the following:
"Part E: Motion for Court Approval (To be completed only if the debtor is not
represented by an attorney.). I (we), the debtor(s), affirm the following to be true
and correct:
"I am not represented by an attorney in connection with this reaffirmation
agreement.
"I believe this reaffirmation agreement is in my best interest based on the income
and expenses I have disclosed in my Statement in Support of this reaffirmation
agreement, and because (provide any additional relevant reasons the court should
consider):
"Therefore, I ask the court for an order approving this reaffirmation agreement.".
(8) The court order, which may be used to approve such agreement, shall consist of the
following:
"Court Order: The court grants the debtor's motion and approves the
reaffirmation agreement described above.".
(l) Notwithstanding any other provision of this title the following shall apply:
(1) A creditor may accept payments from a debtor before and after the filing of an
agreement of the kind specified in subsection (c) with the court.
(2) A creditor may accept payments from a debtor under such agreement that the
creditor believes in good faith to be effective.
(3) The requirements of subsections (c)(2) and (k) shall be satisfied if disclosures
required under those subsections are given in good faith.
(m)
(1) Until 60 days after an agreement of the kind specified in subsection (c) is filed with
the court (or such additional period as the court, after notice and a hearing and for
cause, orders before the expiration of such period), it shall be presumed that such
agreement is an undue hardship on the debtor if the debtor's monthly income less the
debtor's monthly expenses as shown on the debtor's completed and signed statement in
support of such agreement required under subsection (k)(6)(A) is less than the
scheduled payments on the reaffirmed debt. This presumption shall be reviewed by the
court. The presumption may be rebutted in writing by the debtor if the statement
includes an explanation that identifies additional sources of funds to make the
payments as agreed upon under the terms of such agreement. If the presumption is not
rebutted to the satisfaction of the court, the court may disapprove such agreement. No
142

agreement shall be disapproved without notice and a hearing to the debtor and
creditor, and such hearing shall be concluded before the entry of the debtor's
discharge.
(2) This subsection does not apply to reaffirmation agreements where the creditor is a
credit union, as defined in section 19(b)(1)(A)(iv) of the Federal Reserve Act.
§525. Protection against discriminatory treatment
(a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the Packers
and Stockyards Act, 1921, 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, 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 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 discharged under the Bankruptcy Act.
(b) No private employer may terminate the employment of, or discriminate with respect to
employment against, an individual who is or has been a debtor under this title, a debtor or
bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt,
solely because such debtor or bankrupt—
(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy
Act;
(2) has been insolvent before the commencement of a case under this title or during the
case but before the grant or denial of a discharge; or
(3) has not paid a debt that is dischargeable in a case under this title or that was
discharged under the Bankruptcy Act.
(c)
(1) A governmental unit that operates a student grant or loan program and a person
engaged in a business that includes the making of loans guaranteed or insured under a
student loan program may not deny a student grant, loan, loan guarantee, or loan
insurance to a person that is or has been a debtor under this title or a bankrupt or
debtor under the Bankruptcy Act, or another person with whom the debtor or bankrupt
has been associated, because the debtor or bankrupt 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 a case under this title or during the pendency of 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 discharged under the Bankruptcy Act.

143

(2) In this section, "student loan program" means any program operated under title IV
of the Higher Education Act of 1965 or a similar program operated under State or local
law.
§526. Restrictions on debt relief agencies
(a) A debt relief agency shall not—
(1) fail to perform any service that such agency informed an assisted person or
prospective assisted person it would provide in connection with a case or proceeding
under this title;
(2) make any statement, or counsel or advise any assisted person or prospective
assisted person to make a statement in a document filed in a case or proceeding under
this title, that is untrue or misleading, or that upon the exercise of reasonable care,
should have been known by such agency to be untrue or misleading;
(3) misrepresent to any assisted person or prospective assisted person, directly or
indirectly, affirmatively or by material omission, with respect to—
(A) the services that such agency will provide to such person; or
(B) the benefits and risks that may result if such person becomes a debtor in a
case under this title; or
(4) advise an assisted person or prospective assisted person to incur more debt in
contemplation of such person filing a case under this title or to pay an attorney or
bankruptcy petition preparer a fee or charge for services performed as part of
preparing for or representing a debtor in a case under this title.
(b) Any waiver by any assisted person of any protection or right provided under this section
shall not be enforceable against the debtor by any Federal or State court or any other person,
but may be enforced against a debt relief agency.
(c)
(1) Any contract for bankruptcy assistance between a debt relief agency and an
assisted person that does not comply with the material requirements of this section,
section 527, or section 528 shall be void and may not be enforced by any Federal or
State court or by any other person, other than such assisted person.
(2) Any debt relief agency shall be liable to an assisted person in the amount of any
fees or charges in connection with providing bankruptcy assistance to such person that
such debt relief agency has received, for actual damages, and for reasonable attorneys’
fees and costs if such agency is found, after notice and a hearing, to have—
(A) intentionally or negligently failed to comply with any provision of this
section, section 527, or section 528 with respect to a case or proceeding under
this title for such assisted person;
(B) provided bankruptcy assistance to an assisted person in a case or proceeding
under this title that is dismissed or converted to a case under another chapter of
this title because of such agency's intentional or negligent failure to file any
required document including those specified in section 521; or
144

(C) intentionally or negligently disregarded the material requirements of this title
or the Federal Rules of Bankruptcy Procedure applicable to such agency.
(3) In addition to such other remedies as are provided under State law, whenever the
chief law enforcement officer of a State, or an official or agency designated by a State,
has reason to believe that any person has violated or is violating this section, the
State—
(A) may bring an action to enjoin such violation;
(B) may bring an action on behalf of its residents to recover the actual damages
of assisted persons arising from such violation, including any liability under
paragraph (2); and
(C) in the case of any successful action under subparagraph (A) or (B), shall be
awarded the costs of the action and reasonable attorneys’ fees as determined by
the court.
(4) The district courts of the United States for districts located in the State shall have
concurrent jurisdiction of any action under subparagraph (A) or (B) of paragraph (3).
(5) Notwithstanding any other provision of Federal law and in addition to any other
remedy provided under Federal or State law, if the court, on its own motion or on the
motion of the United States trustee or the debtor, finds that a person intentionally
violated this section, or engaged in a clear and consistent pattern or practice of
violating this section, the court may—
(A) enjoin the violation of such section; or
(B) impose an appropriate civil penalty against such person.
(d) No provision of this section, section 527, or section 528 shall—
(1) annul, alter, affect, or exempt any person subject to such sections from complying
with any law of any State except to the extent that such law is inconsistent with those
sections, and then only to the extent of the inconsistency; or
(2) be deemed to limit or curtail the authority or ability—
(A) of a State or subdivision or instrumentality thereof, to determine and enforce
qualifications for the practice of law under the laws of that State; or
(B) of a Federal court to determine and enforce the qualifications for the practice
of law before that court.
§527. Disclosures
(a) A debt relief agency providing bankruptcy assistance to an assisted person shall
provide—
(1) the written notice required under section 342(b)(1); and
(2) to the extent not covered in the written notice described in paragraph (1), and not
later than 3 business days after the first date on which a debt relief agency first offers

145

to provide any bankruptcy assistance services to an assisted person, a clear and
conspicuous written notice advising assisted persons that—
(A) all information that the assisted person is required to provide with a petition
and thereafter during a case under this title is required to be complete, accurate,
and truthful;
(B) all assets and all liabilities are required to be completely and accurately
disclosed in the documents filed to commence the case, and the replacement
value of each asset as defined in section 506 must be stated in those documents
where requested after reasonable inquiry to establish such value;
(C) current monthly income, the amounts specified in section 707(b)(2), and, in a
case under chapter 13 of this title, disposable income (determined in accordance
with section 707(b)(2)), are required to be stated after reasonable inquiry; and
(D) information that an assisted person provides during their case may be audited
pursuant to this title, and that failure to provide such information may result in
dismissal of the case under this title or other sanction, including a criminal
sanction.
(b) A debt relief agency providing bankruptcy assistance to an assisted person shall provide
each assisted person at the same time as the notices required under subsection (a)(1) the
following statement, to the extent applicable, or one substantially similar. The statement shall
be clear and conspicuous and shall be in a single document separate from other documents or
notices provided to the assisted person:
"IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE
SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER.
"If you decide to seek bankruptcy relief, you can represent yourself, you can hire an
attorney to represent you, or you can get help in some localities from a bankruptcy
petition preparer who is not an attorney. THE LAW REQUIRES AN ATTORNEY OR
BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN CONTRACT
SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION
PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST. Ask to see
the contract before you hire anyone.
"The following information helps you understand what must be done in a routine
bankruptcy case to help you evaluate how much service you need. Although
bankruptcy can be complex, many cases are routine.
"Before filing a bankruptcy case, either you or your attorney should analyze your
eligibility for different forms of debt relief available under the Bankruptcy Code and
which form of relief is most likely to be beneficial for you. Be sure you understand the
relief you can obtain and its limitations. To file a bankruptcy case, documents called a
Petition, Schedules, and Statement of Financial Affairs, and in some cases a Statement
of Intention, need to be prepared correctly and filed with the bankruptcy court. You
will have to pay a filing fee to the bankruptcy court. Once your case starts, you will
have to attend the required first meeting of creditors where you may be questioned by
a court official called a ‘trustee’ and by creditors.
146

"If you choose to file a chapter 7 case, you may be asked by a creditor to reaffirm a
debt. You may want help deciding whether to do so. A creditor is not permitted to
coerce you into reaffirming your debts.
"If you choose to file a chapter 13 case in which you repay your creditors what you
can afford over 3 to 5 years, you may also want help with preparing your chapter 13
plan and with the confirmation hearing on your plan which will be before a bankruptcy
judge.
"If you select another type of relief under the Bankruptcy Code other than chapter 7 or
chapter 13, you will want to find out what should be done from someone familiar with
that type of relief.
"Your bankruptcy case may also involve litigation. You are generally permitted to
represent yourself in litigation in bankruptcy court, but only attorneys, not bankruptcy
petition preparers, can give you legal advice.".
(c) Except to the extent the debt relief agency provides the required information itself after
reasonably diligent inquiry of the assisted person or others so as to obtain such information
reasonably accurately for inclusion on the petition, schedules or statement of financial affairs,
a debt relief agency providing bankruptcy assistance to an assisted person, to the extent
permitted by nonbankruptcy law, shall provide each assisted person at the time required for
the notice required under subsection (a)(1) reasonably sufficient information (which shall be
provided in a clear and conspicuous writing) to the assisted person on how to provide all the
information the assisted person is required to provide under this title pursuant to section 521,
including—
(1) how to value assets at replacement value, determine current monthly income, the
amounts specified in section 707(b)(2) and, in a chapter 13 case, how to determine
disposable income in accordance with section 707(b)(2) and related calculations;
(2) how to complete the list of creditors, including how to determine what amount is
owed and what address for the creditor should be shown; and
(3) how to determine what property is exempt and how to value exempt property at
replacement value as defined in section 506.
(d) A debt relief agency shall maintain a copy of the notices required under subsection (a) of
this section for 2 years after the date on which the notice is given the assisted person.
§528. Requirements for debt relief agencies
(a) A debt relief agency shall—
(1) not later than 5 business days after the first date on which such agency provides
any bankruptcy assistance services to an assisted person, but prior to such assisted
person's petition under this title being filed, execute a written contract with such
assisted person that explains clearly and conspicuously—
(A) the services such agency will provide to such assisted person; and
(B) the fees or charges for such services, and the terms of payment;

147

(2) provide the assisted person with a copy of the fully executed and completed
contract;
(3) clearly and conspicuously disclose in any advertisement of bankruptcy assistance
services or of the benefits of bankruptcy directed to the general public (whether in
general media, seminars or specific mailings, telephonic or electronic messages, or
otherwise) that the services or benefits are with respect to bankruptcy relief under this
title; and
(4) clearly and conspicuously use the following statement in such advertisement: "We
are a debt relief agency. We help people file for bankruptcy relief under the
Bankruptcy Code." or a substantially similar statement.
(b)
(1) An advertisement of bankruptcy assistance services or of the benefits of
bankruptcy directed to the general public includes—
(A) descriptions of bankruptcy assistance in connection with a chapter 13 plan
whether or not chapter 13 is specifically mentioned in such advertisement; and
(B) statements such as "federally supervised repayment plan" or "Federal debt
restructuring help" or other similar statements that could lead a reasonable
consumer to believe that debt counseling was being offered when in fact the
services were directed to providing bankruptcy assistance with a chapter 13 plan
or other form of bankruptcy relief under this title.
(2) An advertisement, directed to the general public, indicating that the debt relief
agency provides assistance with respect to credit defaults, mortgage foreclosures,
eviction proceedings, excessive debt, debt collection pressure, or inability to pay any
consumer debt shall—
(A) disclose clearly and conspicuously in such advertisement that the assistance
may involve bankruptcy relief under this title; and
(B) include the following statement: "We are a debt relief agency. We help
people file for bankruptcy relief under the Bankruptcy Code." or a substantially
similar statement.
SUBCHAPTER III—THE ESTATE
§541. Property of the estate
(a) The commencement of a case under section 301, 302, or 303 of this title creates an estate.
Such estate is comprised of all the following property, wherever located and by whomever
held:
(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 community property as of the
commencement of the case that is—
(A) under the sole, equal, or joint management and control of the debtor; or
148

(B) liable for an allowable claim against the debtor, or for 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 329(b), 363(n), 543,
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) Any 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 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 benefit plan.
(6) Proceeds, product, offspring, rents, or 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.
(7) Any interest in property that the estate acquires after the commencement of the
case.
(b) Property of the estate does not include—
(1) any power that the debtor may exercise solely for the benefit of an entity other than
the debtor;
(2) any interest of the debtor as a lessee under a lease of nonresidential real property
that has terminated at the expiration of the stated term of such lease before the
commencement of the case under this title, and ceases to include any interest of the
debtor as a lessee under a lease of nonresidential real property that has terminated at
the expiration of the stated term of such lease during the case;
(3) any eligibility of the debtor to participate in programs authorized under the Higher
Education Act of 1965 (20 U.S.C. 1001 et seq.; 42 U.S.C. 2751 et seq.), or any
accreditation status or State licensure of the debtor as an educational institution;
(4) any interest of the debtor in liquid or gaseous hydrocarbons to the extent that—
(A)
(i) the debtor has transferred or has agreed to transfer such interest pursuant to
a farmout agreement or any written agreement directly related to a farmout
agreement; and
(ii) but for the operation of this paragraph, the estate could include the interest
referred to in clause (i) only by virtue of section 365 or 544(a)(3) of this title;
or
(B)
149

(i) the debtor has transferred such interest pursuant to a written conveyance of
a production payment to an entity that does not participate in the operation of
the property from which such production payment is transferred; and
(ii) but for the operation of this paragraph, the estate could include the interest
referred to in clause (i) only by virtue of section 365 or 542 of this title;
(5) funds placed in an education individual retirement account (as defined in section
530(b)(1) of the Internal Revenue Code of 1986) not later than 365 days before the
date of the filing of the petition in a case under this title, but—
(A) only if the designated beneficiary of such account was a child, stepchild,
grandchild, or stepgrandchild of the debtor for the taxable year for which funds
were placed in such account;
(B) only to the extent that such funds—
(i) are not pledged or promised to any entity in connection with any extension
of credit; and
(ii) are not excess contributions (as described in section 4973(e) of the Internal
Revenue Code of 1986); and
(C) in the case of funds placed in all such accounts having the same designated
beneficiary not earlier than 720 days nor later than 365 days before such date,
only so much of such funds as does not exceed $5,000 [$6,425 as of April 1,
2016];
(6) funds used to purchase a tuition credit or certificate or contributed to an account in
accordance with section 529(b)(1)(A) of the Internal Revenue Code of 1986 under a
qualified State tuition program (as defined in section 529(b)(1) of such Code) not later
than 365 days before the date of the filing of the petition in a case under this title,
but—
(A) only if the designated beneficiary of the amounts paid or contributed to such
tuition program was a child, stepchild, grandchild, or stepgrandchild of the
debtor for the taxable year for which funds were paid or contributed;
(B) with respect to the aggregate amount paid or contributed to such program
having the same designated beneficiary, only so much of such amount as does
not exceed the total contributions permitted under section 529(b)(6) of such
Code with respect to such beneficiary, as adjusted beginning on the date of the
filing of the petition in a case under this title by the annual increase or decrease
(rounded to the nearest tenth of 1 percent) in the education expenditure category
of the Consumer Price Index prepared by the Department of Labor; and
(C) in the case of funds paid or contributed to such program having the same
designated beneficiary not earlier than 720 days nor later than 365 days before
such date, only so much of such funds as does not exceed $5,000 [$6,425 as of
April 1, 2016];
(7) any amount—
150

(A) withheld by an employer from the wages of employees for payment as
contributions—
(i) to—
(I) an employee benefit plan that is subject to title I of the Employee
Retirement Income Security Act of 1974 or under an employee benefit
plan which is a governmental plan under section 414(d) of the Internal
Revenue Code of 1986;
(II) a deferred compensation plan under section 457 of the Internal
Revenue Code of 1986; or
(III) a tax-deferred annuity under section 403(b) of the Internal Revenue
Code of 1986;
except that such amount under this subparagraph shall not constitute
disposable income as defined in section 1325(b)(2); or
(ii) to a health insurance plan regulated by State law whether or not subject to
such title; or
(B) received by an employer from employees for payment as contributions—
(i) to—
(I) an employee benefit plan that is subject to title I of the Employee
Retirement Income Security Act of 1974 or under an employee benefit
plan which is a governmental plan under section 414(d) of the Internal
Revenue Code of 1986;
(II) a deferred compensation plan under section 457 of the Internal
Revenue Code of 1986; or
(III) a tax-deferred annuity under section 403(b) of the Internal Revenue
Code of 1986;
except that such amount under this subparagraph shall not constitute
disposable income, as defined in section 1325(b)(2); or
(ii) to a health insurance plan regulated by State law whether or not subject to
such title;
(8) subject to subchapter III of chapter 5, any interest of the debtor in property where
the debtor pledged or sold tangible personal property (other than securities or written
or printed evidences of indebtedness or title) as collateral for a loan or advance of
money given by a person licensed under law to make such loans or advances, where—
(A) the tangible personal property is in the possession of the pledgee or
transferee;
(B) the debtor has no obligation to repay the money, redeem the collateral, or
buy back the property at a stipulated price; and

151

(C) neither the debtor nor the trustee have exercised any right to redeem
provided under the contract or State law, in a timely manner as provided under
State law and section 108(b);
(9) any interest in cash or cash equivalents that constitute proceeds of a sale by the
debtor of a money order that is made—
(A) on or after the date that is 14 days prior to the date on which the petition is
filed; and
(B) under an agreement with a money order issuer that prohibits the
commingling of such proceeds with property of the debtor (notwithstanding that,
contrary to the agreement, the proceeds may have been commingled with
property of the debtor),
unless the money order issuer had not taken action, prior to the filing of the petition, to
require compliance with the prohibition; or
(10) funds placed in an account of a qualified ABLE program (as defined in section
529A(b) of the Internal Revenue Code of 1986) not later than 365 days before the date
of the filing of the petition in a case under this title, but—
(A) only if the designated beneficiary of such account was a child, stepchild,
grandchild, or stepgrandchild of the debtor for the taxable year for which funds
were placed in such account;
(B) only to the extent that such funds—
(i) are not pledged or promised to any entity in connection with any extension
of credit; and
(ii) are not excess contributions (as described in section 4973(h) of the
Internal Revenue Code of 1986); and
(C) in the case of funds placed in all such accounts having the same designated
beneficiary not earlier than 720 days nor later than 365 days before such date,
only so much of such funds as does not exceed $6,225.
Paragraph (4) shall not be construed to exclude from the estate any consideration the
debtor retains, receives, or is entitled to receive for transferring an interest in liquid or
gaseous hydrocarbons pursuant to a farmout agreement.
(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 notwithstanding any provision in an agreement, transfer instrument, or
applicable nonbankruptcy law—
(A) that restricts or conditions transfer of such interest by the debtor; or
(B) that is conditioned on the insolvency or financial condition of the debtor, on
the commencement of a case under this title, or on the appointment of or taking
possession by a trustee in a case under this title or a custodian before such
152

commencement, 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.
(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)(1) or (2) 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) In determining whether any of the relationships specified in paragraph (5)(A) or (6)(A) of
subsection (b) exists, a legally adopted child of an individual (and a child who is a member of
an individual's household, if placed with such individual by an authorized placement agency
for legal adoption by such individual), or a foster child of an individual (if such child has as
the child's principal place of abode the home of the debtor and is a member of the debtor's
household) shall be treated as a child of such individual by blood.
(f) Notwithstanding any other provision of this title, property that is held by a debtor that is a
corporation described in section 501(c)(3) of the Internal Revenue Code of 1986 and exempt
from tax under section 501(a) of such Code may be transferred to an entity that is not such a
corporation, but only under the same conditions as would apply if the debtor had not filed a
case under this title.
§542. Turnover of property to the estate
(a) Except as provided in subsection (c) or (d) of this section, an entity, other than a
custodian, in possession, custody, or control, during 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
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 that has neither actual notice
nor actual knowledge of the commencement 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
153

premium or to carry out a nonforfeiture insurance option, and is required to be made
automatically, under a life insurance contract 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 turn
over or disclose such recorded information to the trustee.
§543. Turnover of property by a custodian
(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, product, offspring, rents, or profits 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.
(b) A custodian shall—
(1) deliver to the trustee any property of the debtor held by or transferred to such
custodian, or proceeds, product, offspring, rents, or profits 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 proceeds, product, offspring,
rents, or profits of such property, that, at any time, came into the possession, custody,
or control of such custodian.
(c) The court, after notice and a hearing, shall—
(1) protect all entities to which a custodian has become obligated with respect to such
property or proceeds, product, offspring, rents, or profits of such property;
(2) provide for the payment of reasonable compensation for services rendered and
costs and expenses incurred by such custodian; and
(3) surcharge such custodian, other than an assignee for the benefit of the debtor's
creditors that was appointed or took possession 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 that has been
approved, after notice and a hearing, by a court of competent jurisdiction before the
commencement of the case under this title.
(d) After notice and hearing, the bankruptcy court—
(1) may 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, and
(2) shall excuse compliance with subsections (a) and (b)(1) of this section if the
custodian is an assignee for the benefit of the debtor's creditors that was appointed or
took possession more than 120 days before the date of the filing of the petition, unless
compliance with such subsections is necessary to prevent fraud or injustice.
154

§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 such 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; or
(3) a bona fide purchaser of real property, other than fixtures, from the debtor, against
whom applicable law permits such transfer to be perfected, that obtains the status of a
bona fide purchaser and has perfected such transfer at the time of the commencement
of the case, whether or not such a purchaser exists.
(b)
(1) Except as provided in paragraph (2), 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.
(2) Paragraph (1) shall not apply to a transfer of a charitable contribution (as that term
is defined in section 548(d)(3)) that is not covered under section 548(a)(1)(B), by
reason of section 548(a)(2). Any claim by any person to recover a transferred
contribution described in the preceding sentence under Federal or State law in a
Federal or State court shall be preempted by the commencement of the case.
§545. Statutory liens
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 commenced;
(B) when an insolvency proceeding other than under this title concerning the
debtor is commenced;
(C) when a custodian is appointed or authorized to take 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;
155

(2) is not perfected or enforceable at the time of the commencement of the case against
a bona fide purchaser that purchases such property at the time of the commencement
of the case, whether or not such a purchaser exists, except in any case in which a
purchaser is a purchaser described in section 6323 of the Internal Revenue Code of
1986, or in any other similar provision of State or local law;
(3) is for rent; or
(4) is a lien of distress for rent.
§546. Limitations on avoiding powers
(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) the later of—
(A) 2 years after the entry of the order for relief; or
(B) 1 year after the appointment or election of the first trustee under section 702,
1104, 1163, 1202, or 1302 of this title if such appointment or such election
occurs before the expiration of the period specified in subparagraph (A); or
(2) the time the case is closed or dismissed.
(b)
(1) The rights and powers of a trustee under sections 544, 545, and 549 of this title are
subject to any generally applicable law that—
(A) permits perfection of an interest in property to be effective against an entity
that acquires rights in such property before the date of perfection; or
(B) provides for the maintenance or continuation of perfection of an interest in
property to be effective against an entity that acquires rights in such property
before the date on which action is taken to effect such maintenance or
continuation.
(2) If—
(A) a law described in paragraph (1) requires seizure of such property or
commencement of an action to accomplish such perfection, or maintenance or
continuation of perfection of an interest in property; and
(B) such property has not been seized or such an action has not been commenced
before the date of the filing of the petition;
such interest in such property shall be perfected, or perfection of such interest shall be
maintained or continued, by giving notice within the time fixed by such law for such
seizure or such commencement.
(c)
(1) Except as provided in subsection (d) of this section and in section 507(c), and
subject to the prior rights of a holder of a security interest in such goods or the
proceeds thereof, the rights and powers of the trustee under sections 544(a), 545, 547,
156

and 549 are subject to the right of a seller of goods that has sold goods to the debtor, in
the ordinary course of such seller's business, to reclaim such goods if the debtor has
received such goods while insolvent, within 45 days before the date of the
commencement of a case under this title, but such seller may not reclaim such goods
unless such seller demands in writing reclamation of such goods—
(A) not later than 45 days after the date of receipt of such goods by the debtor; or
(B) not later than 20 days after the date of commencement of the case, if the 45day period expires after the commencement of the case.
(2) If a seller of goods fails to provide notice in the manner described in paragraph (1),
the seller still may assert the rights contained in section 503(b)(9).
(d) In the case of a seller who is a producer of grain sold to a grain storage facility, owned or
operated by the debtor, in the ordinary course of such seller's business (as such terms are
defined in section 557 of this title) or in the case of a United States fisherman who has caught
fish sold to a fish processing facility owned or operated by the debtor in the ordinary course
of such fisherman's business, the rights and powers of the trustee under sections 544(a), 545,
547, and 549 of this title are subject to any statutory or common law right of such producer
or fisherman to reclaim such grain or fish if the debtor has received such grain or fish while
insolvent, but—
(1) such producer or fisherman may not reclaim any grain or fish unless such producer
or fisherman demands, in writing, reclamation of such grain or fish before ten days
after receipt thereof by the debtor; and
(2) the court may deny reclamation to such a producer or fisherman with a right of
reclamation that has made such a demand only if the court secures such claim by a
lien.
(e) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 548(b) of this title, the trustee
may not avoid a transfer that is a margin payment, as defined in section 101, 741, or 761 of
this title, or settlement payment, as defined in section 101 or 741 of this title, made by or to
(or for the benefit of) a commodity broker, forward contract merchant, stockbroker, financial
institution, financial participant, or securities clearing agency, or that is a transfer made by or
to (or for the benefit of) a commodity broker, forward contract merchant, stockbroker,
financial institution, financial participant, or securities clearing agency, in connection with a
securities contract, as defined in section 741(7), commodity contract, as defined in section
761(4), or forward contract, that is made before the commencement of the case, except under
section 548(a)(1)(A) of this title.
(f) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 548(b) of this title, the trustee
may not avoid a transfer made by or to (or for the benefit of) a repo participant or financial
participant, in connection with a repurchase agreement and that is made before the
commencement of the case, except under section 548(a)(1)(A) of this title.
(g) Notwithstanding sections 544, 545, 547, 548(a)(1)(B) and 548(b) of this title, the trustee
may not avoid a transfer, made by or to (or for the benefit of) a swap participant or financial
participant, under or in connection with any swap agreement and that is made before the
commencement of the case, except under section 548(a)(1)(A) of this title.
157

(h) Notwithstanding the rights and powers of a trustee under sections 544(a), 545, 547, 549,
and 553, if the court determines on a motion by the trustee made not later than 120 days after
the date of the order for relief in a case under chapter 11 of this title and after notice and a
hearing, that a return is in the best interests of the estate, the debtor, with the consent of a
creditor and subject to the prior rights of holders of security interests in such goods or the
proceeds of such goods, may return goods shipped to the debtor by the creditor before the
commencement of the case, and the creditor may offset the purchase price of such goods
against any claim of the creditor against the debtor that arose before the commencement of
the case.
(i)
(1) Notwithstanding paragraphs (2) and (3) of section 545, the trustee may not avoid a
warehouseman's lien for storage, transportation, or other costs incidental to the storage
and handling of goods.
(2) The prohibition under paragraph (1) shall be applied in a manner consistent with
any State statute applicable to such lien that is similar to section 7–209 of the Uniform
Commercial Code, as in effect on the date of enactment of the Bankruptcy Abuse
Prevention and Consumer Protection Act of 2005, or any successor to such section 7–
209.
(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 548(b) the trustee may not
avoid a transfer made by or to (or for the benefit of) a master netting agreement participant
under or in connection with any master netting agreement or any individual contract covered
thereby that is made before the commencement of the case, except under section
548(a)(1)(A) and except to the extent that the trustee could otherwise avoid such a transfer
made under an individual contract covered by such master netting agreement.
§547. Preferences
(a) In this section—
(1) "inventory" means personal property leased or furnished, held for sale or lease, or
to be furnished under a contract for service, raw materials, work in process, or
materials used or consumed 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, including proceeds of such property, 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 without
penalty, including any extension.
(b) Except as provided in subsections (c) and (i) of this section, the trustee may, based on
reasonable due diligence in the circumstances of the case and taking into account a party's
158

known or reasonably knowable affirmative defenses under subsection (c), avoid any transfer
of an interest of the debtor in property—
(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 the petition; or
(B) between ninety days and one year before the date of the filing of the petition,
if such creditor at the time of such transfer was an insider; 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 given to the debtor;
and
(B) in fact a substantially contemporaneous exchange;
(2) to the extent that such transfer was in payment of a debt incurred by the debtor in
the ordinary course of business or financial affairs of the debtor and the transferee, and
such transfer was—
(A) made in the ordinary course of business or financial affairs of the debtor and
the transferee; or
(B) made according to ordinary business terms;
(3) that creates 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 agreement that contains a
description of such property as collateral;
(ii) given by or on behalf of the secured party under such agreement;
(iii) given to enable the debtor to acquire such property; and
(iv) in fact used by the debtor to acquire such property; and

159

(B) that is perfected on or before 30 days after the debtor receives possession of
such property;
(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) that creates 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 interests 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; or
(B) the date on which new value was first given under the security agreement
creating such security interest;
(6) that is the fixing of a statutory lien that is not avoidable under section 545 of this
title;
(7) to the extent such transfer was a bona fide payment of a debt for a domestic
support obligation;
(8) if, in a case filed by an individual debtor whose debts are primarily consumer
debts, the aggregate value of all property that constitutes or is affected by such transfer
is less than $600; or
(9) if, in a case filed by a debtor whose debts are not primarily consumer debts, the
aggregate value of all property that constitutes or is affected by such transfer is less
than $5,000 [$6,425 as of April 1, 2016].
(d) The trustee may avoid a transfer of an interest in property of the debtor transferred to or
for the benefit of a surety to secure reimbursement of such a surety that furnished a bond or
other obligation to dissolve a judicial lien that would have been avoidable by the trustee
under 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—

160

(A) a transfer of real property other than fixtures, but including 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 permits 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 paragraph (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 30 days after, such time,
except as provided in subsection (c)(3)(B);
(B) at the time such transfer is perfected, if such transfer is perfected after such
30 days; or
(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; or
(ii) 30 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.
(g) For the purposes of this section, the trustee has the burden of proving the avoidability of a
transfer under subsection (b) of this section, and the creditor or party in interest against
whom recovery or avoidance is sought has the burden of proving the nonavoidability of a
transfer under subsection (c) of this section.
(h) The trustee may not avoid a transfer if such transfer was made as a part of an alternative
repayment schedule between the debtor and any creditor of the debtor created by an approved
nonprofit budget and credit counseling agency.
(i) If the trustee avoids under subsection (b) a transfer made between 90 days and 1 year
before the date of the filing of the petition, by the debtor to an entity that is not an insider for
the benefit of a creditor that is an insider, such transfer shall be considered to be avoided
under this section only with respect to the creditor that is an insider.
§548. Fraudulent transfers and obligations
(a)
(1) The trustee may avoid any transfer (including any transfer to or for the benefit of
an insider under an employment contract) of an interest of the debtor in property, or
161

any obligation (including any obligation to or for the benefit of an insider under an
employment contract) incurred by the debtor, that was made or incurred on or within 2
years before the date of the filing of the petition, if the debtor voluntarily or
involuntarily—
(A) 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 was made or such obligation was incurred, indebted; or
(B)
(i) received less than a reasonably equivalent value in exchange for such
transfer or obligation; and
(ii)
(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 a transaction, or was about to engage in
business or a transaction, for which any property remaining with the
debtor was an unreasonably small capital;
(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; or
(IV) made such transfer to or for the benefit of an insider, or incurred
such obligation to or for the benefit of an insider, under an employment
contract and not in the ordinary course of business.
(2) A transfer of a charitable contribution to a qualified religious or charitable entity or
organization shall not be considered to be a transfer covered under paragraph (1)(B) in
any case in which—
(A) the amount of that contribution does not exceed 15 percent of the gross
annual income of the debtor for the year in which the transfer of the contribution
is made; or
(B) the contribution made by a debtor exceeded the percentage amount of gross
annual income specified in subparagraph (A), if the transfer was consistent with
the practices of the debtor in making charitable contributions.
(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 2
years 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 transfer 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 or may retain any interest

162

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 is so
perfected that a bona fide purchaser from the debtor against whom applicable law
permits such transfer to be 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 transfer is
made immediately before the date of the filing of the petition.
(2) In this section—
(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;
(B) a commodity broker, forward contract merchant, stockbroker, financial
institution, financial participant, or securities clearing agency that receives a
margin payment, as defined in section 101, 741, or 761 of this title, or settlement
payment, as defined in section 101 or 741 of this title, takes for value to the
extent of such payment;
(C) a repo participant or financial participant that receives a margin payment, as
defined in section 741 or 761 of this title, or settlement payment, as defined in
section 741 of this title, in connection with a repurchase agreement, takes for
value to the extent of such payment;
(D) a swap participant or financial participant that receives a transfer in
connection with a swap agreement takes for value to the extent of such transfer;
and
(E) a master netting agreement participant that receives a transfer in connection
with a master netting agreement or any individual contract covered thereby takes
for value to the extent of such transfer, except that, with respect to a transfer
under any individual contract covered thereby, to the extent that such master
netting agreement participant otherwise did not take (or is otherwise not deemed
to have taken) such transfer for value.
(3) In this section, the term "charitable contribution" means a charitable contribution,
as that term is defined in section 170(c) of the Internal Revenue Code of 1986, if that
contribution—
(A) is made by a natural person; and
(B) consists of—
(i) a financial instrument (as that term is defined in section 731(c)(2)(C) of the
Internal Revenue Code of 1986); or
(ii) cash.

163

(4) In this section, the term "qualified religious or charitable entity or organization"
means—
(A) an entity described in section 170(c)(1) of the Internal Revenue Code of
1986; or
(B) an entity or organization described in section 170(c)(2) of the Internal
Revenue Code of 1986.
(e)
(1) In addition to any transfer that the trustee may otherwise avoid, the trustee may
avoid any transfer of an interest of the debtor in property that was made on or within
10 years before the date of the filing of the petition, if—
(A) such transfer was made to a self-settled trust or similar device;
(B) such transfer was by the debtor;
(C) the debtor is a beneficiary of such trust or similar device; and
(D) the debtor made such transfer 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 was made, indebted.
(2) For the purposes of this subsection, a transfer includes a transfer made in
anticipation of any money judgment, settlement, civil penalty, equitable order, or
criminal fine incurred by, or which the debtor believed would be incurred by—
(A) any violation of the securities laws (as defined in section 3(a)(47) of the
Securities Exchange Act of 1934 (15 U.S.C. 78c(a)(47))), any State securities
laws, or any regulation or order issued under Federal securities laws or State
securities laws; or
(B) fraud, deceit, or manipulation in a fiduciary capacity or in connection with
the purchase or sale of any security registered under section 12 or 15(d) of the
Securities Exchange Act of 1934
§549. Postpetition transactions
(a) Except as provided in subsection (b) or (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 only under section 303(f) or 542(c) of this title; or
(B) that is not authorized under this title or by the court.
(b) In an involuntary case, the trustee may not avoid under subsection (a) of this section a
transfer made after the commencement of such case but before the order for relief to the
extent any value, including services, but not including satisfaction or securing of a debt that
arose before the commencement of the case, is given after the commencement of the case in
164

exchange for such transfer, notwithstanding any notice or knowledge of the case that the
transferee has.
(c) The trustee may not avoid under subsection (a) of this section a transfer of an interest in
real property to a good faith purchaser without knowledge of the commencement of the case
and for present fair equivalent value unless a copy or notice of the petition was filed, where a
transfer of an interest in such real property may be recorded to perfect such transfer, before
such transfer is so perfected that a bona fide purchaser of such real property, against whom
applicable law permits such transfer to be perfected, could not acquire an interest that is
superior to such interest of such good faith purchaser. A good faith purchaser without
knowledge of the commencement of the case and for less than present fair equivalent value
has a lien on the property transferred to the extent of any present value given, unless a copy
or notice of the petition was so filed before such transfer was so perfected.
(d) An action or proceeding under this section may not be commenced after the earlier of—
(1) two years after the date of the transfer sought to be avoided; or
(2) the time the case is closed or dismissed.
§550. Liability of transferee of avoided transfer
(a) Except as otherwise provided in this section, to the extent that a transfer is avoided under
section 544, 545, 547, 548, 549, 553(b), 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
property, from—
(1) the initial transferee of such transfer or the entity for whose benefit such transfer
was made; or
(2) any immediate or mediate transferee of such initial transferee.
(b) The trustee may not recover under section 1 (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
(2) any immediate or mediate good faith transferee of such transferee.
(c) If a transfer made between 90 days and one year before the filing of the petition—
(1) is avoided under section 547(b) of this title; and
(2) was made for the benefit of a creditor that at the time of such transfer was an
insider;
the trustee may not recover under subsection (a) from a transferee that is not an
insider.
(d) The trustee is entitled to only a single satisfaction under subsection (a) of this section.
(e)
(1) A good faith transferee from whom the trustee may recover under subsection (a) of
this section has a lien on the property recovered to secure the lesser of—
165

(A) the cost, to such transferee, of any improvement made after the transfer, less
the amount of any profit realized by or accruing to such transferee from such
property; and
(B) any increase in the value of such property as a result of such improvement, of
the property transferred.
(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 that is superior or
equal to the rights of the trustee; and
(E) preservation of such property.
(f) An action or proceeding under this section may not be commenced after the earlier of—
(1) one year after the avoidance of the transfer on account of which recovery under
this section is sought; or
(2) the time the case is closed or dismissed.
§551. Automatic preservation of avoided transfer
Any transfer avoided under section 522, 544, 545, 547, 548, 549, or 724(a) of this title, or
any lien void under section 506(d) of this title, is preserved for the benefit of the estate but
only with respect to property of the estate.
§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.
(b)
(1) Except as provided in sections 363, 506(c), 522, 544, 545, 547, and 548 of this
title, if the debtor and an entity entered 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, products, offspring, or profits of such property, then such
security interest extends to such proceeds, products, offspring, or profits acquired by
the estate after the commencement of the case to the extent provided by such security
agreement and by applicable nonbankruptcy law, except to any extent that the court,
after notice and a hearing and based on the equities of the case, orders otherwise.
(2) Except as provided in sections 363, 506(c), 522, 544, 545, 547, and 548 of this
title, and notwithstanding section 546(b) of this title, if the debtor and an entity entered
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
166

before the commencement of the case and to amounts paid as rents of such property or
the fees, charges, accounts, or other payments for the use or occupancy of rooms and
other public facilities in hotels, motels, or other lodging properties, then such security
interest extends to such rents and such fees, charges, accounts, or other payments
acquired by the estate after the commencement of the case to the extent provided in
such security agreement, except to any extent that the court, after notice and a hearing
and based on the equities of the case, orders otherwise.
§553. Setoff
(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;
(2) such claim was transferred, by an entity other than the debtor, to such creditor—
(A) 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 (except for a setoff of a kind described in
section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 560, or
561); 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 (except for a
setoff of a kind described in section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27),
555, 556, 559, 560, or 561).
(b)
(1) Except with respect to a setoff of a kind described in section 362(b)(6), 362(b)(7),
362(b)(17), 362(b)(27), 555, 556, 559, 560, 561, 365(h), 546(h), or 365(i)(2) of this
title, if a creditor offsets a mutual debt owing to the debtor against a claim against the
debtor on 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 preceding the date of the filing
of the petition on which there is an insufficiency.

167

(2) In this subsection, "insufficiency" means amount, if any, by 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
(a) After notice and a hearing, the trustee may abandon any property of the estate that is
burdensome to the estate or that is of inconsequential value and benefit to the estate.
(b) On request of a party in interest and after notice and a hearing, the court may order the
trustee to abandon any property of the estate that is burdensome to the estate or that is of
inconsequential value and benefit to the estate.
(c) Unless the court orders otherwise, any property scheduled under section 521(a)(1) of this
title not otherwise administered at the time of the closing of a case is abandoned to the debtor
and administered for purposes of section 350 of this title.
(d) Unless the court orders otherwise, property of the estate that is not abandoned under this
section and that is not administered in the case remains property of the estate.
§555. Contractual right to liquidate, terminate, or accelerate a securities contract
The exercise of a contractual right of a stockbroker, financial institution, financial
participant, or securities clearing agency to cause the liquidation, termination, or acceleration
of a securities contract, as defined in section 741 of this title, because of a condition of the
kind specified in section 365(e)(1) of this title 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 unless such order is authorized under the provisions
of the Securities Investor Protection Act of 1970 or any statute administered by the Securities
and Exchange Commission. As used in this section, the term "contractual right" includes a
right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the
Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal
Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a
national securities association, a securities clearing agency, a contract market designated
under the Commodity Exchange Act, a derivatives transaction execution facility registered
under the Commodity Exchange Act, or a board of trade (as defined in the Commodity
Exchange Act), or in a resolution of the governing board thereof, and a right, whether or not
in writing, arising under common law, under law merchant, or by reason of normal business
practice.
§556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward
contract
The contractual right of a commodity broker, financial participant, or forward contract
merchant to cause the liquidation, termination, or acceleration of a commodity contract, as
defined in section 761 of this title, or forward contract because of a condition of the kind
specified in section 365(e)(1) of this title, and the right to a variation or maintenance margin
payment received from a trustee with respect to open commodity contracts or forward
contracts, shall not be stayed, avoided, or otherwise limited by operation of any provision of
this title or by the order of a court in any proceeding under this title. As used in this section,
168

the term "contractual right" includes a right set forth in a rule or bylaw of a derivatives
clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing
organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of
1991), a national securities exchange, a national securities association, a securities clearing
agency, a contract market designated under the Commodity Exchange Act, a derivatives
transaction execution facility registered under the Commodity Exchange Act, or a board of
trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board
thereof and a right, whether or not evidenced in writing, arising under common law, under
law merchant or by reason of normal business practice.
§557. Expedited determination of interests in, and abandonment or other disposition of grain
assets
(a) This section applies only in a case concerning a debtor that owns or operates a grain
storage facility and only with respect to grain and the proceeds of grain. This section does not
affect the application of any other section of this title to property other than grain and
proceeds of grain.
(b) In this section—
(1) "grain" means wheat, corn, flaxseed, grain sorghum, barley, oats, rye, soybeans,
other dry edible beans, or rice;
(2) "grain storage facility" means a site or physical structure regularly used to store
grain for producers, or to store grain acquired from producers for resale; and
(3) "producer" means an entity which engages in the growing of grain.
(c)
(1) Notwithstanding sections 362, 363, 365, and 554 of this title, on the court's own
motion the court may, and on the request of the trustee or an entity that claims an
interest in grain or the proceeds of grain the court shall, expedite the procedures for the
determination of interests in and the disposition of grain and the proceeds of grain, by
shortening to the greatest extent feasible such time periods as are otherwise applicable
for such procedures and by establishing, by order, a timetable having a duration of not
to exceed 120 days for the completion of the applicable procedure specified in
subsection (d) of this section. Such time periods and such timetable may be modified
by the court, for cause, in accordance with subsection (f) of this section.
(2) The court shall determine the extent to which such time periods shall be shortened,
based upon—
(A) any need of an entity claiming an interest in such grain or the proceeds of
grain for a prompt determination of such interest;
(B) any need of such entity for a prompt disposition of such grain;
(C) the market for such grain;
(D) the conditions under which such grain is stored;
(E) the costs of continued storage or disposition of such grain;
169

(F) the orderly administration of the estate;
(G) the appropriate opportunity for an entity to assert an interest in such grain;
and
(H) such other considerations as are relevant to the need to expedite such
procedures in the case.
(d) The procedures that may be expedited under subsection (c) of this section include—
(1) the filing of and response to—
(A) a claim of ownership;
(B) a proof of claim;
(C) a request for abandonment;
(D) a request for relief from the stay of action against property under section
362(a) of this title;
(E) a request for determination of secured status;
(F) a request for determination of whether such grain or the proceeds of grain—
(i) is property of the estate;
(ii) must be turned over to the estate; or
(iii) may be used, sold, or leased; and
(G) any other request for determination of an interest in such grain or the
proceeds of grain;
(2) the disposition of such grain or the proceeds of grain, before or after determination
of interests in such grain or the proceeds of grain, by way of—
(A) sale of such grain;
(B) abandonment;
(C) distribution; or
(D) such other method as is equitable in the case;
(3) subject to sections 701, 702, 703, 1104, 1183, 1202, and 1302 of this title, the
appointment of a trustee or examiner and the retention and compensation of any
professional person required to assist with respect to matters relevant to the
determination of interests in or disposition of such grain or the proceeds of grain; and
(4) the determination of any dispute concerning a matter specified in paragraph (1),
(2), or (3) of this subsection.
(e)
(1) Any governmental unit that has regulatory jurisdiction over the operation or
liquidation of the debtor or the debtor's business shall be given notice of any request
made or order entered under subsection (c) of this section.
170

(2) Any such governmental unit may raise, and may appear and be heard on, any issue
relating to grain or the proceeds of grain in a case in which a request is made, or an
order is entered, under subsection (c) of this section.
(3) The trustee shall consult with such governmental unit before taking any action
relating to the disposition of grain in the possession, custody, or control of the debtor
or the estate.
(f) The court may extend the period for final disposition of grain or the proceeds of grain
under this section beyond 120 days if the court finds that—
(1) the interests of justice so require in light of the complexity of the case; and
(2) the interests of those claimants entitled to distribution of grain or the proceeds of
grain will not be materially injured by such additional delay.
(g) Unless an order establishing an expedited procedure under subsection (c) of this section,
or determining any interest in or approving any disposition of grain or the proceeds of grain,
is stayed pending appeal—
(1) the reversal or modification of such order on appeal does not affect the validity of
any procedure, determination, or disposition that occurs before such reversal or
modification, whether or not any entity knew of the pendency of the appeal; and
(2) neither the court nor the trustee may delay, due to the appeal of such order, any
proceeding in the case in which such order is issued.
(h)
(1) The trustee may recover from grain and the proceeds of grain the reasonable and
necessary costs and expenses allowable under section 503(b) of this title attributable to
preserving or disposing of grain or the proceeds of grain, but may not recover from
such grain or the proceeds of grain any other costs or expenses.
(2) Notwithstanding section 326(a) of this title, the dollar amounts of money specified
in such section include the value, as of the date of disposition, of any grain that the
trustee distributes in kind.
(i) In all cases where the quantity of a specific type of grain held by a debtor operating a
grain storage facility exceeds ten thousand bushels, such grain shall be sold by the trustee and
the assets thereof distributed in accordance with the provisions of this section.
§558. Defenses of the estate
The estate shall have the benefit of any defense available to the debtor as against any entity
other than the estate, including statutes of 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.
§559. Contractual right to liquidate, terminate, or accelerate a repurchase agreement
The exercise of a contractual right of a repo participant or financial participant to cause the
liquidation, termination, or acceleration of a repurchase agreement because of a condition of
the kind specified in section 365(e)(1) of this title shall not be stayed, avoided, or otherwise
limited by operation of any provision of this title or by order of a court or administrative
171

agency in any proceeding under this title, unless, where the debtor is a stockbroker or
securities clearing agency, such order is authorized under the provisions of the Securities
Investor Protection Act of 1970 or any statute administered by the Securities and Exchange
Commission. In the event that a repo participant or financial participant liquidates one or
more repurchase agreements with a debtor and under the terms of one or more such
agreements has agreed to deliver assets subject to repurchase agreements to the debtor, any
excess of the market prices received on liquidation of such assets (or if any such assets are
not disposed of on the date of liquidation of such repurchase agreements, at the prices
available at the time of liquidation of such repurchase agreements from a generally
recognized source or the most recent closing bid quotation from such a source) over the sum
of the stated repurchase prices and all expenses in connection with the liquidation of such
repurchase agreements shall be deemed property of the estate, subject to the available rights
of setoff. As used in this section, the term "contractual right" includes a right set forth in a
rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange
Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance
Corporation Improvement Act of 1991), a national securities exchange, a national securities
association, a securities clearing agency, a contract market designated under the Commodity
Exchange Act, a derivatives transaction execution facility registered under the Commodity
Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a
resolution of the governing board thereof and a right, whether or not evidenced in writing,
arising under common law, under law merchant or by reason of normal business practice.
§560. Contractual right to liquidate, terminate, or accelerate a swap agreement
The exercise of any contractual right of any swap participant or financial participant to cause
the liquidation, termination, or acceleration of one or more swap agreements 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 payment amounts arising under or in connection with the termination,
liquidation, or acceleration of one or more swap agreements 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 set forth in a rule or bylaw of a derivatives clearing
organization (as defined in the Commodity Exchange Act), a multilateral clearing
organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of
1991), a national securities exchange, a national securities association, a securities clearing
agency, a contract market designated under the Commodity Exchange Act, a derivatives
transaction execution facility registered under the Commodity Exchange Act, or a board of
trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board
thereof and a right, whether or not evidenced in writing, arising under common law, under
law merchant, or by reason of normal business practice.
§561. Contractual right to terminate, liquidate, accelerate, or offset under a master netting
agreement and across contracts; proceedings under chapter 15
(a) Subject to subsection (b), the exercise of any contractual right, because of a condition of
the kind specified in section 365(e)(1), to cause the termination, liquidation, or acceleration
of or to offset or net termination values, payment amounts, or other transfer obligations
arising under or in connection with one or more (or the termination, liquidation, or
acceleration of one or more)—
172

(1) securities contracts, as defined in section 741(7);
(2) commodity contracts, as defined in section 761(4);
(3) forward contracts;
(4) repurchase agreements;
(5) swap agreements; or
(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation of any provision of this
title or by any order of a court or administrative agency in any proceeding under this
title.
(b)
(1) A party may exercise a contractual right described in subsection (a) to terminate,
liquidate, or accelerate only to the extent that such party could exercise such a right
under section 555, 556, 559, or 560 for each individual contract covered by the master
netting agreement in issue.
(2) If a debtor is a commodity broker subject to subchapter IV of chapter 7—
(A) a party may not net or offset an obligation to the debtor arising under, or in
connection with, a commodity contract traded on or subject to the rules of a
contract market designated under the Commodity Exchange Act or a derivatives
transaction execution facility registered under the Commodity Exchange Act
against any claim arising under, or in connection with, other instruments,
contracts, or agreements listed in subsection (a) except to the extent that the party
has positive net equity in the commodity accounts at the debtor, as calculated
under such subchapter; and
(B) another commodity broker may not net or offset an obligation to the debtor
arising under, or in connection with, a commodity contract entered into or held
on behalf of a customer of the debtor and traded on or subject to the rules of a
contract market designated under the Commodity Exchange Act or a derivatives
transaction execution facility registered under the Commodity Exchange Act
against any claim arising under, or in connection with, other instruments,
contracts, or agreements listed in subsection (a).
(3) No provision of subparagraph (A) or (B) of paragraph (2) shall prohibit the offset
of claims and obligations that arise under—
(A) a cross-margining agreement or similar arrangement that has been approved
by the Commodity Futures Trading Commission or submitted to the Commodity
Futures Trading Commission under paragraph (1) or (2) of section 5c(c) of the
Commodity Exchange Act and has not been abrogated or rendered ineffective by
the Commodity Futures Trading Commission; or
(B) any other netting agreement between a clearing organization (as defined in
section 761) and another entity that has been approved by the Commodity
Futures Trading Commission.
173

(c) As used in this section, the term "contractual right" includes a right set forth in a rule or
bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a
multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation
Improvement Act of 1991), a national securities exchange, a national securities association, a
securities clearing agency, a contract market designated under the Commodity Exchange Act,
a derivatives transaction execution facility registered under the Commodity Exchange Act, or
a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the
governing board thereof, and a right, whether or not evidenced in writing, arising under
common law, under law merchant, or by reason of normal business practice.
(d) Any provisions of this title relating to securities contracts, commodity contracts, forward
contracts, repurchase agreements, swap agreements, or master netting agreements shall apply
in a case under chapter 15, so that enforcement of contractual provisions of such contracts
and agreements in accordance with their terms will not be stayed or otherwise limited by
operation of any provision of this title or by order of a court in any case under this title, and
to limit avoidance powers to the same extent as in a proceeding under chapter 7 or 11 of this
title (such enforcement not to be limited based on the presence or absence of assets of the
debtor in the United States).
§562. Timing of damage measurement in connection with swap agreements, securities contracts,
forward contracts, commodity contracts, repurchase agreements, and master netting agreements
(a) If the trustee rejects a swap agreement, securities contract (as defined in section 741), forward
contract, commodity contract (as defined in section 761), repurchase agreement, or master netting
agreement pursuant to section 365(a), or if a forward contract merchant, stockbroker, financial
institution, securities clearing agency, repo participant, financial participant, master netting agreement
participant, or swap participant liquidates, terminates, or accelerates such contract or agreement,
damages shall be measured as of the earlier of—
(1) the date of such rejection; or
(2) the date or dates of such liquidation, termination, or acceleration.
(b) If there are not any commercially reasonable determinants of value as of any date referred to in
paragraph (1) or (2) of subsection (a), damages shall be measured as of the earliest subsequent date or
dates on which there are commercially reasonable determinants of value.
(c) For the purposes of subsection (b), if damages are not measured as of the date or dates of rejection,
liquidation, termination, or acceleration, and the forward contract merchant, stockbroker, financial
institution, securities clearing agency, repo participant, financial participant, master netting agreement
participant, or swap participant or the trustee objects to the timing of the measurement of damages—
(1) the trustee, in the case of an objection by a forward contract merchant, stockbroker, financial
institution, securities clearing agency, repo participant, financial participant, master netting agreement
participant, or swap participant; or
(2) the forward contract merchant, stockbroker, financial institution, securities clearing agency, repo
participant, financial participant, master netting agreement participant, or swap participant, in the case
of an objection by the trustee,
has the burden of proving that there were no commercially reasonable determinants of value as of such
date or dates.

CHAPTER 7—LIQUIDATION .......................................... Error! Bookmark not defined.
SUBCHAPTER I—OFFICERS AND ADMINISTRATION Error! Bookmark not defined.
§701. Interim trustee ....................................................... Error! Bookmark not defined.
174

§702. Election of trustee.................................................. Error! Bookmark not defined.
§703. Successor trustee.................................................. Error! Bookmark not defined.
§704. Duties of trustee .................................................... Error! Bookmark not defined.
§705. Creditors’ committee ............................................. Error! Bookmark not defined.
§706. Conversion ............................................................ Error! Bookmark not defined.
§707. Dismissal of a case or conversion to a case under chapter 11 or 13 ............ Error!
Bookmark not defined.
SUBCHAPTER II—COLLECTION, LIQUIDATION, AND DISTRIBUTION OF THE
ESTATE ............................................................. Error! Bookmark not defined.
§721. Authorization to operate business ......................... Error! Bookmark not defined.
§722. Redemption ........................................................... Error! Bookmark not defined.
§723. Rights of partnership trustee against general partners ......... Error! Bookmark not
defined.
§724. Treatment of certain liens ...................................... Error! Bookmark not defined.
§725. Disposition of certain property ............................... Error! Bookmark not defined.
§726. Distribution of property of the estate ...................... Error! Bookmark not defined.
§727. Discharge .............................................................. Error! Bookmark not defined.
§728 Repealed ................................................................ Error! Bookmark not defined.
SUBCHAPTER III—STOCKBROKER LIQUIDATION ..... Error! Bookmark not defined.
§741. Definitions for this subchapter ............................... Error! Bookmark not defined.
§742. Effect of section 362 of this title in this subchapter Error! Bookmark not defined.
§743. Notice .................................................................... Error! Bookmark not defined.
§744. Executory contracts ............................................... Error! Bookmark not defined.
§745. Treatment of accounts ........................................... Error! Bookmark not defined.
§746. Extent of customer claims ..................................... Error! Bookmark not defined.
§747. Subordination of certain customer claims .............. Error! Bookmark not defined.
§748. Reduction of securities to money .......................... Error! Bookmark not defined.
§749. Voidable transfers ................................................. Error! Bookmark not defined.
§750. Distribution of securities ........................................ Error! Bookmark not defined.
§751. Customer name securities ..................................... Error! Bookmark not defined.
§752. Customer property................................................. Error! Bookmark not defined.
§753. Stockbroker liquidation and forward contract merchants, commodity brokers,
stockbrokers, financial institutions, financial participants, securities clearing
agencies, swap participants, repo participants, and master netting agreement
participants ........................................................ Error! Bookmark not defined.

175

SUBCHAPTER IV—COMMODITY BROKER LIQUIDATION......... Error! Bookmark not
defined.
§761. Definitions for this subchapter ............................... Error! Bookmark not defined.
§762. Notice to the Commission and right to be heard.... Error! Bookmark not defined.
§763. Treatment of accounts ........................................... Error! Bookmark not defined.
§764. Voidable transfers ................................................. Error! Bookmark not defined.
§765. Customer instructions ............................................ Error! Bookmark not defined.
§766. Treatment of customer property ............................ Error! Bookmark not defined.
§767. Commodity broker liquidation and forward contract merchants, commodity
brokers, stockbrokers, financial institutions, financial participants, securities
clearing agencies, swap participants, repo participants, and master netting
agreement participants ...................................... Error! Bookmark not defined.
SUBCHAPTER V—CLEARING BANK LIQUIDATION .... Error! Bookmark not defined.
§781. Definitions ............................................................. Error! Bookmark not defined.
§782. Selection of trustee................................................ Error! Bookmark not defined.
§783. Additional powers of trustee .................................. Error! Bookmark not defined.
§784. Right to be heard ................................................... Error! Bookmark not defined.
SUBCHAPTER I—OFFICERS AND ADMINISTRATION
§701. Interim trustee
(a)
(1) Promptly after the order for relief under this chapter, the United States trustee shall
appoint one disinterested person that is a member of the panel of private trustees
established under section 586(a)(1) of title 28 or that is serving as trustee in the case
immediately before the order for relief under this chapter to serve as interim trustee in
the case.
(2) If none of the members of such panel is willing to serve as interim trustee in the
case, then the United States trustee may 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 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.
§702. Election of trustee
(a) A creditor may vote for a candidate for trustee only if such creditor—
(1) holds an allowable, undisputed, fixed, liquidated, unsecured claim of a kind
entitled to distribution under section 726(a)(2), 726(a)(3), 726(a)(4), 752(a), 766(h), or
766(i) of this title;

176

(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.
(b) At the meeting of creditors held under section 341 of this title, creditors may elect one
person to serve as trustee in the case if election 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 of a kind specified in
subsection (a)(1) of this section that are held by creditors that may vote under
subsection (a) of this section vote; and
(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 a trustee.
(d) If a trustee is not elected under this section, then the interim trustee shall serve as trustee
in the case.
§703. Successor trustee
(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, 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 United States trustee may appoint an interim trustee in the
manner specified in section 701(a).
(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 United States
trustee—
(1) shall appoint one disinterested person that is a member of the panel of private
trustees established under section 586(a)(1) of title 28 to serve as trustee in the case; or
(2) may, if none of the disinterested members of such panel is willing to serve as
trustee, serve as trustee in the case.
§704. Duties of trustee
(a) The trustee shall—
(1) collect and reduce to money the property of the estate for which such trustee
serves, and close such estate as expeditiously as is compatible with the best interests of
parties in interest;
(2) be accountable for all property received;

177

(3) ensure that the debtor shall perform his intention as specified in section
521(a)(2)(B) of this title;
(4) investigate the financial affairs of the debtor;
(5) if a purpose would be served, examine proofs of claims and object to the allowance
of any claim that is improper;
(6) if advisable, oppose the discharge of the debtor;
(7) unless the court orders otherwise, furnish such information concerning the estate
and the estate's administration as is requested by a party in interest;
(8) if the business of the debtor is authorized to be operated, file with the court, with
the United States trustee, 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 United States trustee or
the court requires;
(9) make a final report and file a final account of the administration of the estate with
the court and with the United States trustee;
(10) if with respect to the debtor there is a claim for a domestic support obligation,
provide the applicable notice specified in subsection (c);
(11) if, at the time of the commencement of the case, the debtor (or any entity
designated by the debtor) served as the administrator (as defined in section 3 of the
Employee Retirement Income Security Act of 1974) of an employee benefit plan,
continue to perform the obligations required of the administrator; and
(12) use all reasonable and best efforts to transfer patients from a health care business
that is in the process of being closed to an appropriate health care business that—
(A) is in the vicinity of the health care business that is closing;
(B) provides the patient with services that are substantially similar to those
provided by the health care business that is in the process of being closed; and
(C) maintains a reasonable quality of care.
(b)
(1) With respect to a debtor who is an individual in a case under this chapter—
(A) the United States trustee (or the bankruptcy administrator, if any) shall
review all materials filed by the debtor and, not later than 10 days after the date
of the first meeting of creditors, file with the court a statement as to whether the
debtor's case would be presumed to be an abuse under section 707(b); and
(B) not later than 7 days after receiving a statement under subparagraph (A), the
court shall provide a copy of the statement to all creditors.
(2) The United States trustee (or bankruptcy administrator, if any) shall, not later than
30 days after the date of filing a statement under paragraph (1), either file a motion to
dismiss or convert under section 707(b) or file a statement setting forth the reasons the
178

United States trustee (or the bankruptcy administrator, if any) does not consider such a
motion to be appropriate, if the United States trustee (or the bankruptcy administrator,
if any) determines that the debtor's case should be presumed to be an abuse under
section 707(b) and the product of the debtor's current monthly income, multiplied by
12 is not less than—
(A) in the case of a debtor in a household of 1 person, the median family income
of the applicable State for 1 earner; or
(B) in the case of a debtor in a household of 2 or more individuals, the highest
median family income of the applicable State for a family of the same number or
fewer individuals.
(c)
(1) In a case described in subsection (a)(10) to which subsection (a)(10) applies, the
trustee shall—
(A)
(i) provide written notice to the holder of the claim described in subsection
(a)(10) of such claim and of the right of such holder to use the services of the
State child support enforcement agency established under sections 464 and
466 of the Social Security Act for the State in which such holder resides, for
assistance in collecting child support during and after the case under this title;
(ii) include in the notice provided under clause (i) the address and telephone
number of such State child support enforcement agency; and
(iii) include in the notice provided under clause (i) an explanation of the rights
of such holder to payment of such claim under this chapter;
(B)
(i) provide written notice to such State child support enforcement agency of
such claim; and
(ii) include in the notice provided under clause (i) the name, address, and
telephone number of such holder; and
(C) at such time as the debtor is granted a discharge under section 727, provide
written notice to such holder and to such State child support enforcement agency
of—
(i) the granting of the discharge;
(ii) the last recent known address of the debtor;
(iii) the last recent known name and address of the debtor's employer; and
(iv) the name of each creditor that holds a claim that—
(I) is not discharged under paragraph (2), (4), or (14A) of section 523(a);
or
(II) was reaffirmed by the debtor under section 524(c).
179

(2)
(A) The holder of a claim described in subsection (a)(10) or the State child
support enforcement agency of the State in which such holder resides may
request from a creditor described in paragraph (1)(C)(iv) the last known address
of the debtor.
(B) Notwithstanding any other provision of law, a creditor that makes a
disclosure of a last known address of a debtor in connection with a request made
under subparagraph (A) shall not be liable by reason of making such disclosure.
§705. Creditors’ committee
(a) At the meeting under section 341(a) of this title, creditors that may vote for a trustee
under section 702(a) of this title may elect a 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 or
the United States trustee in connection with the administration of the estate, make
recommendations to the trustee or the United States trustee respecting the performance of the
trustee's duties, and submit to the court or the United States trustee any question affecting the
administration of the estate.
§706. Conversion
(a) The debtor may convert a case under this chapter to a case under chapter 11, 12, or 13 of
this title at any time, if the case has not been converted under section 1112, 1208, or 1307 of
this title. Any waiver of the right to convert a case under this subsection is unenforceable.
(b) On request 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 11 of this title at any time.
(c) The court may not convert a case under this chapter to a case under chapter 12 or 13 of
this title unless the debtor requests or consents to such conversion.
(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.
§707. Dismissal of a case or conversion to a case under chapter 11 or 13
(a) 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;
(2) nonpayment of any fees or charges required under chapter 123 of title 28; and
(3) failure of the debtor in a voluntary case to file, within fifteen days or such
additional time as the court may allow after the filing of the petition commencing such
case, the information required by paragraph (1) of section 521(a), but only on a motion
by the United States trustee.
(b)

180

(1) After notice and a hearing, the court, on its own motion or on a motion by the
United States trustee, trustee (or bankruptcy administrator, if any), or any party in
interest, may dismiss a case filed by an individual debtor under this chapter whose
debts are primarily consumer debts, or, with the debtor's consent, convert such a case
to a case under chapter 11 or 13 of this title, if it finds that the granting of relief would
be an abuse of the provisions of this chapter. In making a determination whether to
dismiss a case under this section, the court may not take into consideration whether a
debtor has made, or continues to make, charitable contributions (that meet the
definition of "charitable contribution" under section 548(d)(3)) to any qualified
religious or charitable entity or organization (as that term is defined in section
548(d)(4)).
(2)
(A)
(i) In considering under paragraph (1) whether the granting of relief would be
an abuse of the provisions of this chapter, the court shall presume abuse exists
if the debtor's current monthly income reduced by the amounts determined
under clauses (ii), (iii), and (iv), and multiplied by 60 is not less than the lesser
of—
(I) 25 percent of the debtor's nonpriority unsecured claims in the case, or
$6,000 [$7,700 as of April 1, 2016], whichever is greater; or
(II) $10,000 [$12,850 as of April 1, 2016].
(ii)
(I) The debtor's monthly expenses shall be the debtor's applicable
monthly expense amounts specified under the National Standards and
Local Standards, and the debtor's actual monthly expenses for the
categories specified as Other Necessary Expenses issued by the Internal
Revenue Service for the area in which the debtor resides, as in effect on
the date of the order for relief, for the debtor, the dependents of the
debtor, and the spouse of the debtor in a joint case, if the spouse is not
otherwise a dependent. Such expenses shall include reasonably
necessary health insurance, disability insurance, and health savings
account expenses for the debtor, the spouse of the debtor, or the
dependents of the debtor. Notwithstanding any other provision of this
clause, the monthly expenses of the debtor shall not include any
payments for debts. In addition, the debtor's monthly expenses shall
include the debtor's reasonably necessary expenses incurred to maintain
the safety of the debtor and the family of the debtor from family
violence as identified under section 302 of the Family Violence
Prevention and Services Act, or other applicable Federal law. The
expenses included in the debtor's monthly expenses described in the
preceding sentence shall be kept confidential by the court. In addition, if
it is demonstrated that it is reasonable and necessary, the debtor's
monthly expenses may also include an additional allowance for food and
181

clothing of up to 5 percent of the food and clothing categories as
specified by the National Standards issued by the Internal Revenue
Service.
(II) In addition, the debtor's monthly expenses may include, if
applicable, the continuation of actual expenses paid by the debtor that
are reasonable and necessary for care and support of an elderly,
chronically ill, or disabled household member or member of the debtor's
immediate family (including parents, grandparents, siblings, children,
and grandchildren of the debtor, the dependents of the debtor, and the
spouse of the debtor in a joint case who is not a dependent) and who is
unable to pay for such reasonable and necessary expenses. Such monthly
expenses may include, if applicable, contributions to an account of a
qualified ABLE program to the extent such contributions are not excess
contributions (as described in section 4973(h) of the Internal Revenue
Code of 1986) and if the designated beneficiary of such account is a
child, stepchild, grandchild, or stepgrandchild of the debtor.
(III) In addition, for a debtor eligible for chapter 13, the debtor's monthly
expenses may include the actual administrative expenses of
administering a chapter 13 plan for the district in which the debtor
resides, up to an amount of 10 percent of the projected plan payments, as
determined under schedules issued by the Executive Office for United
States Trustees.
(IV) In addition, the debtor's monthly expenses may include the actual
expenses for each dependent child less than 18 years of age, not to
exceed $1,500 [$1,925 as of April 1, 2016] per year per child, to attend a
private or public elementary or secondary school if the debtor provides
documentation of such expenses and a detailed explanation of why such
expenses are reasonable and necessary, and why such expenses are not
already accounted for in the National Standards, Local Standards, or
Other Necessary Expenses referred to in subclause (I).
(V) In addition, the debtor's monthly expenses may include an allowance
for housing and utilities, in excess of the allowance specified by the
Local Standards for housing and utilities issued by the Internal Revenue
Service, based on the actual expenses for home energy costs if the debtor
provides documentation of such actual expenses and demonstrates that
such actual expenses are reasonable and necessary.
(iii) The debtor's average monthly payments on account of secured debts shall
be calculated as the sum of—
(I) the total of all amounts scheduled as contractually due to secured
creditors in each month of the 60 months following the date of the filing
of the petition; and
(II) any additional payments to secured creditors necessary for the
debtor, in filing a plan under chapter 13 of this title, to maintain
182

possession of the debtor's primary residence, motor vehicle, or other
property necessary for the support of the debtor and the debtor's
dependents, that serves as collateral for secured debts;
divided by 60.
(iv) The debtor's expenses for payment of all priority claims (including
priority child support and alimony claims) shall be calculated as the total
amount of debts entitled to priority, divided by 60.
(B)
(i) In any proceeding brought under this subsection, the presumption of abuse
may only be rebutted by demonstrating special circumstances, such as a
serious medical condition or a call or order to active duty in the Armed
Forces, to the extent such special circumstances that justify additional
expenses or adjustments of current monthly income for which there is no
reasonable alternative.
(ii) In order to establish special circumstances, the debtor shall be required to
itemize each additional expense or adjustment of income and to provide—
(I) documentation for such expense or adjustment to income; and
(II) a detailed explanation of the special circumstances that make such
expenses or adjustment to income necessary and reasonable.
(iii) The debtor shall attest under oath to the accuracy of any information
provided to demonstrate that additional expenses or adjustments to income are
required.
(iv) The presumption of abuse may only be rebutted if the additional expenses
or adjustments to income referred to in clause (i) cause the product of the
debtor's current monthly income reduced by the amounts determined under
clauses (ii), (iii), and (iv) of subparagraph (A) when multiplied by 60 to be
less than the lesser of—
(I) 25 percent of the debtor's nonpriority unsecured claims, or $6,000
[$7,700 as of April 1, 2016], whichever is greater; or
(II) $10,000 [$12,850 as of April 1, 2016].
(C) As part of the schedule of current income and expenditures required under
section 521, the debtor shall include a statement of the debtor's current monthly
income, and the calculations that determine whether a presumption arises under
subparagraph (A)(i), that show how each such amount is calculated.
(D) Subparagraphs (A) through (C) shall not apply, and the court may not
dismiss or convert a case based on any form of means testing—
(i) if the debtor is a disabled veteran (as defined in section 3741(1) of
title 38), and the indebtedness occurred primarily during a period during
which he or she was—
(I) on active duty (as defined in section 101(d)(1) of title 10); or
183

(II) performing a homeland defense activity (as defined in section 901(1)
of title 32); or
(ii) with respect to the debtor, while the debtor is—
(I) on, and during the 540-day period beginning immediately after the
debtor is released from, a period of active duty (as defined in section
101(d)(1) of title 10) of not less than 90 days; or
(II) performing, and during the 540-day period beginning immediately
after the debtor is no longer performing, a homeland defense activity (as
defined in section 901(1) of title 32) performed for a period of not less
than 90 days;
if after September 11, 2001, the debtor while a member of a reserve
component of the Armed Forces or a member of the National Guard, was
called to such active duty or performed such homeland defense activity.
(3) In considering under paragraph (1) whether the granting of relief would be an
abuse of the provisions of this chapter in a case in which the presumption in paragraph
(2)(A)(i) does not arise or is rebutted, the court shall consider—
(A) whether the debtor filed the petition in bad faith; or
(B) the totality of the circumstances (including whether the debtor seeks to reject
a personal services contract and the financial need for such rejection as sought by
the debtor) of the debtor's financial situation demonstrates abuse.
(4)
(A) The court, on its own initiative or on the motion of a party in interest, in
accordance with the procedures described in rule 9011 of the Federal Rules of
Bankruptcy Procedure, may order the attorney for the debtor to reimburse the
trustee for all reasonable costs in prosecuting a motion filed under section
707(b), including reasonable attorneys’ fees, if—
(i) a trustee files a motion for dismissal or conversion under this subsection;
and
(ii) the court—
(I) grants such motion; and
(II) finds that the action of the attorney for the debtor in filing a case
under this chapter violated rule 9011 of the Federal Rules of Bankruptcy
Procedure.
(B) If the court finds that the attorney for the debtor violated rule 9011 of the
Federal Rules of Bankruptcy Procedure, the court, on its own initiative or on the
motion of a party in interest, in accordance with such procedures, may order—
(i) the assessment of an appropriate civil penalty against the attorney for the
debtor; and

184

(ii) the payment of such civil penalty to the trustee, the United States trustee
(or the bankruptcy administrator, if any).
(C) The signature of an attorney on a petition, pleading, or written motion shall
constitute a certification that the attorney has—
(i) performed a reasonable investigation into the circumstances that gave rise
to the petition, pleading, or written motion; and
(ii) determined that the petition, pleading, or written motion—
(I) is well grounded in fact; and
(II) is warranted by existing law or a good faith argument for the
extension, modification, or reversal of existing law and does not
constitute an abuse under paragraph (1).
(D) The signature of an attorney on the petition shall constitute a certification
that the attorney has no knowledge after an inquiry that the information in the
schedules filed with such petition is incorrect.
(5)
(A) Except as provided in subparagraph (B) and subject to paragraph (6), the
court, on its own initiative or on the motion of a party in interest, in accordance
with the procedures described in rule 9011 of the Federal Rules of Bankruptcy
Procedure, may award a debtor all reasonable costs (including reasonable
attorneys’ fees) in contesting a motion filed by a party in interest (other than a
trustee or United States trustee (or bankruptcy administrator, if any)) under this
subsection if—
(i) the court does not grant the motion; and
(ii) the court finds that—
(I) the position of the party that filed the motion violated rule 9011 of
the Federal Rules of Bankruptcy Procedure; or
(II) the attorney (if any) who filed the motion did not comply with the
requirements of clauses (i) and (ii) of paragraph (4)(C), and the motion
was made solely for the purpose of coercing a debtor into waiving a
right guaranteed to the debtor under this title.
(B) A small business that has a claim of an aggregate amount less than $1,000
[$1,300 as of April 1, 2016] shall not be subject to subparagraph (A)(ii)(I).
(C) For purposes of this paragraph—
(i) the term "small business" means an unincorporated business, partnership,
corporation, association, or organization that—
(I) has fewer than 25 full-time employees as determined on the date on
which the motion is filed; and
(II) is engaged in commercial or business activity; and
185

(ii) the number of employees of a wholly owned subsidiary of a corporation
includes the employees of—
(I) a parent corporation; and
(II) any other subsidiary corporation of the parent corporation.
(6) Only the judge or United States trustee (or bankruptcy administrator, if any) may
file a motion under section 707(b), if the current monthly income of the debtor, or in a
joint case, the debtor and the debtor's spouse, as of the date of the order for relief,
when multiplied by 12, is equal to or less than—
(A) in the case of a debtor in a household of 1 person, the median family income
of the applicable State for 1 earner;
(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest
median family income of the applicable State for a family of the same number or
fewer individuals; or
(C) in the case of a debtor in a household exceeding 4 individuals, the highest
median family income of the applicable State for a family of 4 or fewer
individuals, plus $525 [$700 as of April 1, 2016] per month for each individual
in excess of 4.
(7)
(A) No judge, United States trustee (or bankruptcy administrator, if any), trustee,
or other party in interest may file a motion under paragraph (2) if the current
monthly income of the debtor, including a veteran (as that term is defined in
section 101 of title 38), and the debtor's spouse combined, as of the date of the
order for relief when multiplied by 12, is equal to or less than—
(i) in the case of a debtor in a household of 1 person, the median family
income of the applicable State for 1 earner;
(ii) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest
median family income of the applicable State for a family of the same number
or fewer individuals; or
(iii) in the case of a debtor in a household exceeding 4 individuals, the highest
median family income of the applicable State for a family of 4 or fewer
individuals, plus $525 [$700 as of April 1, 2016] per month for each
individual in excess of 4.
(B) In a case that is not a joint case, current monthly income of the debtor's
spouse shall not be considered for purposes of subparagraph (A) if—
(i)
(I) the debtor and the debtor's spouse are separated under applicable
nonbankruptcy law; or
(II) the debtor and the debtor's spouse are living separate and apart, other
than for the purpose of evading subparagraph (A); and
186

(ii) the debtor files a statement under penalty of perjury—
(I) specifying that the debtor meets the requirement of subclause (I) or
(II) of clause (i); and
(II) disclosing the aggregate, or best estimate of the aggregate, amount
of any cash or money payments received from the debtor's spouse
attributed to the debtor's current monthly income.
(c)
(1) In this subsection—
(A) the term "crime of violence" has the meaning given such term in section 16
of title 18; and
(B) the term "drug trafficking crime" has the meaning given such term in section
924(c)(2) of title 18.
(2) Except as provided in paragraph (3), after notice and a hearing, the court, on a
motion by the victim of a crime of violence or a drug trafficking crime, may when it is
in the best interest of the victim dismiss a voluntary case filed under this chapter by a
debtor who is an individual if such individual was convicted of such crime.
(3) The court may not dismiss a case under paragraph (2) if the debtor establishes by a
preponderance of the evidence that the filing of a case under this chapter is necessary
to satisfy a claim for a domestic support obligation.
SUBCHAPTER II—COLLECTION, LIQUIDATION, AND DISTRIBUTION OF THE
ESTATE
§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.
§722. Redemption
An individual debtor may, whether or not the debtor has waived the right to redeem under
this section, redeem tangible personal property intended primarily for personal, family, or
household use, from a lien securing a dischargeable consumer debt, if such property is
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 in full at the time of redemption.
§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 which are allowed
in a case under this chapter concerning a partnership and with respect to which a general
partner of the partnership is personally liable, the trustee shall have a claim against such
general partner to the extent that under applicable nonbankruptcy law such general partner is
personally liable for such deficiency.

187

(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
with indemnity for, or assurance of payment of, any deficiency recoverable from such
partner, or not to dispose of property.
(c) 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 such partner's 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 by property of such partnership. The claim of the trustee under this
subsection is entitled to distribution in such partner's case under section 726(a) of this title
the same as any other claim of a 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
distribution 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
(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 (other than to the extent that there is a properly perfected
unavoidable tax lien arising in connection with an ad valorem tax on real or personal
property of the estate) and that secures an allowed claim for a tax, 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 any holder of a claim of a kind specified in section 507(a)(1)(C) or
507(a)(2) (except that such expenses under each such section, other than claims for
wages, salaries, or commissions that arise after the date of the filing of the petition,
shall be limited to expenses incurred under this chapter and shall not include expenses
incurred under chapter 11 of this title), 507(a)(1)(A), 507(a)(1)(B), 507(a)(3),
507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) 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 tax
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
188

(6) sixth, to the estate.
(c) If more than one holder of a claim is entitled to distribution under a particular paragraph
of subsection (b) of this section, distribution to such holders under such paragraph shall be in
the same order as distribution to such holders would have been other than under this section.
(d) A statutory lien the priority of which is determined in the same manner as the priority of a
tax lien under section 6323 of the Internal Revenue Code of 1986 shall be treated under
subsection (b) of this section the same as if such lien were a tax lien.
(e) Before subordinating a tax lien on real or personal property of the estate, the trustee
shall—
(1) exhaust the unencumbered assets of the estate; and
(2) in a manner consistent with section 506(c), recover from property securing an
allowed secured claim the reasonable, necessary costs and expenses of preserving or
disposing of such property.
(f) Notwithstanding the exclusion of ad valorem tax liens under this section and subject to the
requirements of subsection (e), the following may be paid from property of the estate which
secures a tax lien, or the proceeds of such property:
(1) Claims for wages, salaries, and commissions that are entitled to priority under
section 507(a)(4).
(2) Claims for contributions to an employee benefit plan entitled to priority under
section 507(a)(5).
§725. Disposition of certain property
After the commencement of a case under this chapter, but before final distribution of
property of the estate 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.
§726. Distribution of property of the estate
(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 the order specified in,
section 507 of this title, proof of which is timely filed under section 501 of this title or
tardily filed on or before the earlier of—
(A) the date that is 10 days after the mailing to creditors of the summary of the
trustee's final report; or
(B) the date on which the trustee commences final distribution under this section;
(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—
(A) 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—
189

(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
(ii) proof of such claim is filed in time to permit payment 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 subsection;
(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 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), (6), (7), (8), (9),
or (10) 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 each such particular
paragraph, except that in a case that has been converted to this chapter under section 1112,
1208, or 1307 of this title, a claim allowed under section 503(b) of this title incurred under
this chapter after such conversion has priority over a claim allowed under section 503(b) of
this title incurred under any other chapter of this title or under 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 proceeds shall be segregated from other property of the estate, and such property
or proceeds and other property of the estate shall be distributed as follows:
(1) Claims allowed under section 503 of this title shall be paid either from property of
the kind specified in section 541(a)(2) of this title, or from other property of the estate,
as the interest of justice requires.
(2) Allowed claims, other than claims allowed under section 503 of this title, shall be
paid 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 specified 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 paragraph, 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.
190

(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 subparagraph (A), (B), or (C) of this paragraph, such
claims shall be paid from all remaining property of the estate.
§727. Discharge
(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 creditor or an officer 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,
destroyed, mutilated, or concealed—
(A) property of the debtor, within one year before the date of the filing of the
petition; or
(B) property of the estate, after the date of the filing of the petition;
(3) the debtor has concealed, destroyed, mutilated, falsified, or 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
circumstances 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 possession 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 determination 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—
(A) to obey any lawful order of the court, other than an order to respond to a
material question or to testify;

191

(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 properly invoked privilege against selfincrimination, 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, under this title or under the
Bankruptcy Act, concerning an insider;
(8) the debtor has been granted a discharge under this section, under section 1141 of
this title, or under section 14, 371, or 476 of the Bankruptcy Act, in a case commenced
within 8 years before the date of the filing of the petition;
(9) the debtor has been granted a discharge under section 1228 or 1328 of this title, or
under section 660 or 661 of the Bankruptcy Act, in 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;
(10) the court approves a written waiver of discharge executed by the debtor after the
order for relief under this chapter;
(11) after filing the petition, the debtor failed to complete an instructional course
concerning personal financial management described in section 111, except that this
paragraph shall not apply with respect to a debtor who is a person described in section
109(h)(4) or who resides in a district for which the United States trustee (or the
bankruptcy administrator, if any) determines that the approved instructional courses
are not adequate to service the additional individuals who would otherwise be required
to complete such instructional courses under this section (The United States trustee (or
the bankruptcy administrator, if any) who makes a determination described in this
paragraph shall review such determination not later than 1 year after the date of such
determination, and not less frequently than annually thereafter.); or
(12) the court after notice and a hearing held not more than 10 days before the date of
the entry of the order granting the discharge finds that there is reasonable cause to
believe that—
(A) section 522(q)(1) may be applicable to the debtor; and

192

(B) there is pending any proceeding in which the debtor may be found guilty of a
felony of the kind described in section 522(q)(1)(A) or liable for a debt of the
kind described in section 522(q)(1)(B).
(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 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 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, a creditor, or the United States trustee may object to the granting of a
discharge under subsection (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, a creditor, or the United States trustee, 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 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 property to the trustee;
(3) the debtor committed an act specified in subsection (a)(6) of this section; or
(4) the debtor has failed to explain satisfactorily—
(A) a material misstatement in an audit referred to in section 586(f) of title 28; or
(B) a failure to make available for inspection all necessary accounts, papers,
documents, financial records, files, and all other papers, things, or property
belonging to the debtor that are requested for an audit referred to in section
586(f) of title 28.
(e) The trustee, a creditor, or the United States trustee may request a revocation of a
discharge—
(1) under subsection (d)(1) of this section within one year after such discharge is
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 Repealed
193

SUBCHAPTER III—STOCKBROKER LIQUIDATION
§741. Definitions for this subchapter
In this subchapter—
(1) "Commission" means Securities and Exchange Commission;
(2) "customer" includes—
(A) entity with whom a person deals as principal or agent and that has a claim
against such person on account of a security received, acquired, or held by such
person in the ordinary course of such person's business as a stockbroker, from or
for the securities account or accounts of such entity—
(i) for safekeeping;
(ii) with a view to sale;
(iii) to cover a consummated sale;
(iv) pursuant to a purchase;
(v) as collateral under a security agreement; or
(vi) for the purpose of effecting registration of transfer; and
(B) entity that has a claim against a person arising out of—
(i) a sale or conversion of a security received, acquired, or held as specified in
subparagraph (A) of this paragraph; or
(ii) a deposit of cash, a security, or other property with such person 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 property, and proceeds of such
cash, security, or property, 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 from and that is the lawful 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 of a customer based on a security of the
same class and series of an issuer;

194

(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; 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
(ii) property to the extent that a customer does not have a claim against the
debtor based on such property;
(5) "margin payment" means payment or deposit of cash, a security, or other property,
that is commonly known to the securities trade as original margin, initial margin,
maintenance margin, or variation margin, or as a mark-to-market payment, or that
secures an obligation of a participant in a securities clearing agency;
(6) "net equity" means, with respect to all accounts of a customer that such customer
has in the same capacity—
(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 any customer name securities
of such customer; minus
(ii) any claim of the debtor against such customer in such capacity that 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 business related claim of the debtor against
such customer in such capacity;
(7) "securities contract"—
(A) means—
(i) a contract for the purchase, sale, or loan of a security, a certificate of
deposit, a mortgage loan, any interest in a mortgage loan, a group or index of
securities, certificates of deposit, or mortgage loans or interests therein
(including an interest therein or based on the value thereof), or option on any
of the foregoing, including an option to purchase or sell any such security,
certificate of deposit, mortgage loan, interest, group or index, or option, and
including any repurchase or reverse repurchase transaction on any such
security, certificate of deposit, mortgage loan, interest, group or index, or

195

option (whether or not such repurchase or reverse repurchase transaction is a
"repurchase agreement", as defined in section 101);
(ii) any option entered into on a national securities exchange relating to
foreign currencies;
(iii) the guarantee (including by novation) by or to any securities clearing
agency of a settlement of cash, securities, certificates of deposit, mortgage
loans or interests therein, group or index of securities, or mortgage loans or
interests therein (including any interest therein or based on the value thereof),
or option on any of the foregoing, including an option to purchase or sell any
such security, certificate of deposit, mortgage loan, interest, group or index, or
option (whether or not such settlement is in connection with any agreement or
transaction referred to in clauses (i) through (xi));
(iv) any margin loan;
(v) any extension of credit for the clearance or settlement of securities
transactions;
(vi) any loan transaction coupled with a securities collar transaction, any
prepaid forward securities transaction, or any total return swap transaction
coupled with a securities sale transaction;
(vii) any other agreement or transaction that is similar to an agreement or
transaction referred to in this subparagraph;
(viii) any combination of the agreements or transactions referred to in this
subparagraph;
(ix) any option to enter into any agreement or transaction referred to in this
subparagraph;
(x) a master agreement that provides for an agreement or transaction referred
to in clause (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), or (ix), together with all
supplements to any such master agreement, without regard to whether the
master agreement provides for an agreement or transaction that is not a
securities contract under this subparagraph, except that such master agreement
shall be considered to be a securities contract under this subparagraph only
with respect to each agreement or transaction under such master agreement
that is referred to in clause (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), or (ix); or
(xi) any security agreement or arrangement or other credit enhancement
related to any agreement or transaction referred to in this subparagraph,
including any guarantee or reimbursement obligation by or to a stockbroker,
securities clearing agency, financial institution, or financial participant in
connection with any agreement or transaction referred to in this subparagraph,
but not to exceed the damages in connection with any such agreement or
transaction, measured in accordance with section 562; and
(B) does not include any purchase, sale, or repurchase obligation under a
participation in a commercial mortgage loan;
196

(8) "settlement payment" means a preliminary settlement payment, a partial settlement
payment, an interim settlement payment, a settlement payment on account, a final
settlement payment, or any other similar payment commonly used in the securities
trade; and
(9) "SIPC" means Securities Investor Protection Corporation.
§742. Effect of section 362 of this title in this subchapter
Notwithstanding section 362 of this title, SIPC may file an application for a protective decree
under the Securities Investor Protection Act of 1970. The filing of such application stays all
proceedings in the case under this title unless and until such application is dismissed. If SIPC
completes the liquidation of the debtor, then the court shall dismiss the case.
§743. Notice
The clerk shall give the notice required by section 342 of this title to SIPC and to the
Commission.
§744. Executory contracts
Notwithstanding section 365(d)(1) of this title, the trustee shall 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, but 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
(a) Accounts held by the debtor for 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 bank shall be treated as a separate customer of the debtor.
(c) Each 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 1986, shall be treated as a separate customer account for each
beneficiary under such trustee account.
§746. Extent of customer claims
(a) If, after the date of the filing of the petition, an entity enters into a transaction with the
debtor, in a manner that would have made such entity a customer had such transaction
occurred before the date of the filing of the petition, and such transaction was entered into by
such entity in good faith and before the qualification under section 322 of this title of a
trustee, such 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 purpose of determining such entity's
net equity.
(b) An entity does not have a claim as a customer to the extent that such entity transferred to
the debtor cash or a security that, by contract, agreement, understanding, or operation of law,
is—
197

(1) part of the capital of the debtor; or
(2) subordinated to the claims of any or all creditors.
§747. Subordination of certain customer claims
Except as provided in section 510 of this title, unless all other customer 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 the transaction giving rise to such claim
occurred—
(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 dividend and liquidation
rights; or
(B) interests of limited partners in a limited partnership;
(3) a limited partner with a participation of at least five percent 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.
§748. Reduction of securities to money
As soon as practicable after the date of the order for relief, the trustee shall reduce to money,
consistent with good market practice, all securities held as property of the estate, except for
customer name securities delivered or reclaimed under section 751 of this title.
§749. Voidable transfers
(a) Except as otherwise provided in this section, any transfer of property that, but for such
transfer, would have been customer property, may be avoided by the trustee, and such
property shall be treated as customer property, if and to the extent that the trustee avoids such
transfer under section 544, 545, 547, 548, or 549 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 transfer 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.
(b) Notwithstanding sections 544, 545, 547, 548, and 549 of this title, the trustee may not
avoid a transfer made before seven days after the order for relief if such transfer is approved
by the Commission by rule or order, either before or after such transfer, and if such transfer
is—
(1) a transfer of a securities contract entered into or carried by or through the debtor on
behalf of a customer, and of any cash, security, or other property margining or
securing such securities contract; or
(2) the liquidation of a securities contract entered into or carried by or through the
debtor on behalf of a customer.
§750. Distribution of securities
198

The trustee may not distribute a security except under section 751 of this title.
§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.
§752. Customer property
(a) 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 the kind specified in section 507(a)(2) of this title that are attributable to the
administration of such 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.
(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 of this
title.
(c) Any cash or security remaining after the liquidation of a security interest created under a
security agreement made by the debtor, excluding property excluded under section 741(4)(B)
of this title, shall be apportioned between the general estate and customer property in the
same proportion as the general estate of the debtor and customer property were subject to
such security interest.
§753. Stockbroker liquidation and forward contract merchants, commodity brokers,
stockbrokers, financial institutions, financial participants, securities clearing agencies, swap
participants, repo participants, and master netting agreement participants
Notwithstanding any other provision of this title, the exercise of rights by a forward contract
merchant, commodity broker, stockbroker, financial institution, financial participant,
securities clearing agency, swap participant, repo participant, or master netting agreement
participant under this title shall not affect the priority of any unsecured claim it may have
after the exercise of such rights.
SUBCHAPTER IV—COMMODITY BROKER LIQUIDATION
§761. Definitions for this subchapter
In this subchapter—
(1) "Act" means Commodity Exchange Act;
(2) "clearing organization" means a derivatives clearing organization registered under
the Act;
(3) "Commission" means Commodity Futures Trading Commission;
199

(4) "commodity contract" means—
(A) with respect to a futures commission merchant, 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;
(B) with respect to a foreign futures commission merchant, foreign future;
(C) with respect to a leverage transaction merchant, leverage transaction;
(D) with respect to 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 such clearing organization, or commodity option
traded on, or subject to the rules of, a contract market or board of trade that is
cleared by such clearing organization;
(E) with respect to a commodity options dealer, commodity option;
(F)
(i) any other contract, option, agreement, or transaction that is similar to a
contract, option, agreement, or transaction referred to in this paragraph; and
(ii) with respect to a futures commission merchant or a clearing organization,
any other contract, option, agreement, or transaction, in each case, that is
cleared by a clearing organization;
(G) any combination of the agreements or transactions referred to in this
paragraph;
(H) any option to enter into an agreement or transaction referred to in this
paragraph;
(I) a master agreement that provides for an agreement or transaction referred to
in subparagraph (A), (B), (C), (D), (E), (F), (G), or (H), together with all
supplements to such master agreement, without regard to whether the master
agreement provides for an agreement or transaction that is not a commodity
contract under this paragraph, except that the master agreement shall be
considered to be a commodity contract under this paragraph only with respect to
each agreement or transaction under the master agreement that is referred to in
subparagraph (A), (B), (C), (D), (E), (F), (G), or (H); or
(J) any security agreement or arrangement or other credit enhancement related to
any agreement or transaction referred to in this paragraph, including any
guarantee or reimbursement obligation by or to a commodity broker or financial
participant in connection with any agreement or transaction referred to in this
paragraph, but not to exceed the damages in connection with any such agreement
or transaction, measured in accordance with section 562;
(5) "commodity option" means agreement or transaction subject to regulation under
section 4c(b) of the Act;

200

(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 a registered entity;
(8) "contract of sale", "commodity", "derivatives clearing organization", "future
delivery", "board of trade", "registered entity", and "futures commission merchant"
have the meanings assigned to those terms in the Act;
(9) "customer" means—
(A) with respect to a futures commission merchant—
(i) entity for or with whom such futures commission merchant deals and that
holds a claim against such futures commission merchant on account of a
commodity contract made, received, acquired, or held by or through such
futures commission merchant in the ordinary course of such futures
commission merchant's business as a futures commission merchant from or
for a commodity contract account of such entity; or
(ii) entity that holds a claim against such futures commission merchant 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;
(II) a deposit or payment of cash, a security, or other property with such
futures commission merchant 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) with respect to a foreign futures commission merchant—
(i) entity for or with whom such foreign futures commission merchant deals
and that holds a claim against such foreign futures commission merchant on
account of a commodity contract made, received, acquired, or held by or
through such foreign futures commission merchant in the ordinary course of
such foreign futures commission merchant'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 such foreign futures commission merchant
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 such
foreign futures commission merchant for the purpose of making or
margining such a commodity contract; or
(III) the making or taking of delivery on such a commodity contract;
201

(C) with respect to a leverage transaction merchant—
(i) entity for or with whom such leverage transaction merchant deals and that
holds a claim against such leverage transaction merchant on account of a
commodity contract engaged in by or with such leverage transaction merchant
in the ordinary course of such leverage transaction merchant's business as a
leverage transaction merchant from or for the leverage account of such entity;
or
(ii) entity that holds a claim against such leverage transaction merchant 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 such
leverage transaction merchant for the purpose of entering into or
margining such a commodity contract; or
(III) the making or taking of delivery on such a commodity contract;
(D) with respect to a clearing organization, clearing member of such clearing
organization with whom such clearing organization deals and that holds a claim
against such clearing organization on account of cash, a security, or other
property received by such clearing organization to margin, guarantee, or secure a
commodity contract in such clearing member's proprietary account or customers’
account; or
(E) with respect to a commodity options dealer—
(i) entity for or with whom such commodity options dealer deals and that
holds a claim on account of a commodity contract made, received, acquired,
or held by or through such commodity options dealer in the ordinary course of
such commodity options dealer's business as a commodity options dealer from
or for the commodity options account of such entity; or
(ii) entity that holds a claim against such commodity options dealer arising out
of—
(I) the making of, liquidation of, exercise of, or a change in value 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 such
commodity options dealer for the purpose of making, exercising, or
margining such a commodity contract;
(10) "customer property" means cash, a security, or other property, or proceeds of such
cash, security, or property, received, acquired, or held by or for the account of the
debtor, from or for the account of a customer—
(A) including—

202

(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 from and that is the lawful
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 including
such property as customer property would not significantly increase customer
property; but
(B) not including 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
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
19 of the Commodity Exchange Act, 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 in the business of engaging in
leverage transactions;
(15) "margin payment" means payment or deposit of cash, a security, or other
property, that is commonly known to the commodities trade as original margin, initial
margin, maintenance margin, or variation margin, including mark-to-market payments,
settlement payments, variation payments, daily settlement payments, and final
settlement payments made as adjustments to settlement prices;
203

(16) "member property" means customer property 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 has in the same capacity—
(A) the balance remaining in such customer's accounts immediately after—
(i) all commodity contracts of such customer have been transferred,
liquidated, or become identified for delivery; and
(ii) all obligations of such customer in such capacity 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 which such customer is entitled that is
transferred to another person under section 766 of this title; and
(ii) any cash, security, or other property of such customer transferred to such
other person under section 766 of this title to margin or secure such
transferred commodity contract.
§762. Notice to the Commission and right to be heard
(a) The clerk shall give the notice required by section 342 of this title to the Commission.
(b) The Commission may raise and may appear and be heard on any issue in a case under this
chapter.
§763. Treatment of accounts
(a) Accounts held by the debtor for a particular customer in separate capacities shall be
treated as 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 customer.
§764. Voidable transfers
(a) Except as otherwise provided in this section, any transfer by the debtor of property that,
but for such transfer, would have been customer property, may be avoided by the trustee, and
such property 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 transfer 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.
204

(b) Notwithstanding sections 544, 545, 547, 548, 549, and 724(a) of this title, the trustee may
not avoid a transfer made before seven days after the order for relief, if such transfer is
approved by the Commission by rule or order, either before or after such transfer, 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 commodity contract; or
(2) the liquidation of a commodity contract entered into or carried by or through the
debtor on behalf of a customer.
§765. Customer instructions
(a) The notice required by section 342 of this title to customers shall instruct each
customer—
(1) to file a proof of such customer's claim promptly, and to specify in such claim any
specifically identifiable security, property, 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 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 commodity contract, the trustee shall transmit any such instruction to the
commodity broker to whom such commodity contract was so transferred.
§766. Treatment of customer property
(a) The trustee shall answer all margin calls with respect to a specifically 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
distribution to such customer 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 from remaining open after the last
day of trading in such commodity contract, 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 with respect to which delivery must be made or accepted under the
rules of the 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.

205

(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 the amount to which the customer of the debtor is entitled under subsection (h) or (i)
of this section, then such 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
then shall—
(1) return promptly such security, property, or commodity contract to such customer;
or
(2) 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.
(e) Subject to subsection (b) of this section, the trustee shall liquidate 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 section
507(a)(2) of this title that are attributable to the administration 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.
206

Notwithstanding any other provision of this subsection, a customer net equity claim based on
a proprietary account, as defined by Commission rule, regulation, or order, may not be paid
either in whole or in part, directly or indirectly, out of customer property unless all other
customer net equity claims have been paid in full.
(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)(2) of this title that are attributable
to the administration of such customer property; and
(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)(2) 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 accordance 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 of this
title.
§767. Commodity broker liquidation and forward contract merchants, commodity brokers,
stockbrokers, financial institutions, financial participants, securities clearing agencies, swap
participants, repo participants, and master netting agreement participants
Notwithstanding any other provision of this title, the exercise of rights by a forward contract
merchant, commodity broker, stockbroker, financial institution, financial participant,
securities clearing agency, swap participant, repo participant, or master netting agreement
participant under this title shall not affect the priority of any unsecured claim it may have
after the exercise of such rights.
SUBCHAPTER V—CLEARING BANK LIQUIDATION
§781. Definitions
For purposes of this subchapter, the following definitions shall apply:
(1) Board.—The term "Board" means the Board of Governors of the Federal Reserve
System.
(2) Depository institution.—The term "depository institution" has the same meaning as
in section 3 of the Federal Deposit Insurance Act.
(3) Clearing bank.—The term "clearing bank" means an uninsured State member bank,
or a corporation organized under section 25A of the Federal Reserve Act, which

207

operates, or operates as, a multilateral clearing organization pursuant to section 409 1
of the Federal Deposit Insurance Corporation Improvement Act of 1991.
§782. Selection of trustee
(a) In General.—
(1) Appointment.—Notwithstanding any other provision of this title, the conservator
or receiver who files the petition shall be the trustee under this chapter, unless the
Board designates an alternative trustee.
(2) Successor.—The Board may designate a successor trustee if required.
(b) Authority of Trustee.—Whenever the Board appoints or designates a trustee, chapter 3
and sections 704 and 705 of this title shall apply to the Board in the same way and to the
same extent that they apply to a United States trustee.
§783. Additional powers of trustee
(a) Distribution of Property Not of the Estate.—The trustee under this subchapter has power
to distribute property not of the estate, including distributions to customers that are mandated
by subchapters III and IV of this chapter.
(b) Disposition of Institution.—The trustee under this subchapter may, after notice and a
hearing—
(1) sell the clearing bank to a depository institution or consortium of depository
institutions (which consortium may agree on the allocation of the clearing bank among
the consortium);
(2) merge the clearing bank with a depository institution;
(3) transfer contracts to the same extent as could a receiver for a depository institution
under paragraphs (9) and (10) of section 11(e) of the Federal Deposit Insurance Act;
(4) transfer assets or liabilities to a depository institution; and
(5) transfer assets and liabilities to a bridge depository institution as provided in
paragraphs (1), (3)(A), (5), and (6) of section 11(n) of the Federal Deposit Insurance
Act, paragraphs (9) through (13) of such section, and subparagraphs (A) through (H)
and subparagraph (K) of paragraph (4) of such section 11(n), except that—
(A) the bridge depository institution to which such assets or liabilities are
transferred shall be treated as a clearing bank for the purpose of this subsection;
and
(B) any references in any such provision of law to the Federal Deposit Insurance
Corporation shall be construed to be references to the appointing agency and that
references to deposit insurance shall be omitted.
(c) Certain Transfers Included.—Any reference in this section to transfers of liabilities
includes a ratable transfer of liabilities within a priority class.
§784. Right to be heard

208

The Board or a Federal reserve bank (in the case of a clearing bank that is a member of that
bank) may raise and may appear and be heard on any issue in a case under this subchapter.
CHAPTER 9—ADJUSTMENT OF DEBTS OF A MUNICIPALITY . Error! Bookmark not
defined.
SUBCHAPTER I—GENERAL PROVISIONS .................. Error! Bookmark not defined.
§901. Applicability of other sections of this title ............... Error! Bookmark not defined.
§902. Definitions for this chapter ..................................... Error! Bookmark not defined.
§903. Reservation of State power to control municipalities ............ Error! Bookmark not
defined.
§904. Limitation on jurisdiction and powers of court ........ Error! Bookmark not defined.
SUBCHAPTER II—ADMINISTRATION........................... Error! Bookmark not defined.
§921. Petition and proceedings relating to petition .......... Error! Bookmark not defined.
§922. Automatic stay of enforcement of claims against the debtor Error! Bookmark not
defined.
§923. Notice .................................................................... Error! Bookmark not defined.
§924. List of creditors ...................................................... Error! Bookmark not defined.
§925. Effect of list of claims ............................................. Error! Bookmark not defined.
§926. Avoiding powers .................................................... Error! Bookmark not defined.
§927. Limitation on recourse ........................................... Error! Bookmark not defined.
§928. Post petition effect of security interest ................... Error! Bookmark not defined.
§929. Municipal leases .................................................... Error! Bookmark not defined.
§930. Dismissal ............................................................... Error! Bookmark not defined.
SUBCHAPTER III—THE PLAN ....................................... Error! Bookmark not defined.
§941. Filing of plan .......................................................... Error! Bookmark not defined.
§942. Modification of plan ............................................... Error! Bookmark not defined.
§943. Confirmation .......................................................... Error! Bookmark not defined.
§944. Effect of confirmation............................................. Error! Bookmark not defined.
§945. Continuing jurisdiction and closing of the case ...... Error! Bookmark not defined.
§946. Effect of exchange of securities before the date of the filing of the petition ... Error!
Bookmark not defined.
SUBCHAPTER I—GENERAL PROVISIONS
§901. Applicability of other sections of this title
(a) Sections 301, 333, 344, 347(b), 349, 350(b) 351,,1 361, 362, 364(c), 364(d), 364(e),
364(f), 365, 366, 501, 502, 503, 504, 506, 507(a)(2), 509, 510, 524(a)(1), 524(a)(2), 544,
545, 546, 547, 548, 549(a), 549(c), 549(d), 550, 551, 552, 553, 555, 556, 557, 559, 560, 561,
562, 1102, 1103, 1109, 1111(b), 1122, 1123(a)(1), 1123(a)(2), 1123(a)(3), 1123(a)(4),
209

1123(a)(5), 1123(b), 1123(d), 1124, 1125, 1126(a), 1126(b), 1126(c), 1126(e), 1126(f),
1126(g), 1127(d), 1128, 1129(a)(2), 1129(a)(3), 1129(a)(6), 1129(a)(8), 1129(a)(10),
1129(b)(1), 1129(b)(2)(A), 1129(b)(2)(B), 1142(b), 1143, 1144, and 1145 of this title 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) 2 of this title has the meaning defined for such
term for the purpose of such applicable section, unless such term is otherwise defined in
section 902 of this title.
(c) A section made applicable in a case under this chapter by subsection (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.
§902. Definitions for this chapter
In this chapter—
(1) "property of the estate", when used in a section that is made applicable in a case
under this chapter by section 103(e) 1 or 901 of this title, means property of the debtor;
(2) "special revenues" means—
(A) receipts derived from the ownership, operation, or disposition of projects or
systems of the debtor that are primarily used or intended to be used primarily to
provide transportation, utility, or other services, including the proceeds of
borrowings to finance the projects or systems;
(B) special excise taxes imposed on particular activities or transactions;
(C) incremental tax receipts from the benefited area in the case of tax-increment
financing;
(D) other revenues or receipts derived from particular functions of the debtor,
whether or not the debtor has other functions; or
(E) taxes specifically levied to finance one or more projects or systems,
excluding receipts from general property, sales, or income taxes (other than taxincrement financing) levied to finance the general purposes of the debtor;
(3) "special tax payer" means record owner or holder of legal or equitable title to real
property against which a special assessment or special tax has been levied the proceeds
of which are the sole source of payment of an obligation issued by the debtor to defray
the cost of an improvement relating to such real property;
(4) "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
(5) "trustee", when used in a section that is made applicable in a case under this
chapter by section 103(e) 1 or 901 of this title, means debtor, except as provided in
section 926 of this title.
210

§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 municipality, including expenditures for such exercise, but—
(1) a State law prescribing a method of composition of indebtedness 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 creditor that does not consent
to such composition.
§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.
SUBCHAPTER II—ADMINISTRATION
§921. Petition and proceedings relating to petition
(a) Notwithstanding sections 109(d) and 301 of this title, a case under this chapter concerning
an unincorporated tax or special assessment district that does not have such district's own
officials is commenced 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 obligations of such district.
(b) The chief judge of the court of appeals for the circuit embracing the district in which the
case is commenced shall designate the bankruptcy judge to conduct the case.
(c) After any objection to the petition, the court, after notice and a hearing, may dismiss the
petition if the debtor did not file the petition in good faith or if the petition does not meet the
requirements of this title.
(d) If the petition is not dismissed under subsection (c) of this section, the court shall order
relief under this chapter notwithstanding section 301(b).
(e) 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 proceeding 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.
§922. Automatic stay of enforcement of claims against the debtor
(a) A petition filed under this chapter operates as a stay, in addition to the stay provided by
section 362 of this title, applicable to all entities, of—
(1) the commencement or continuation, including the issuance or employment of
process, of a judicial, administrative, or other action or proceeding against an officer
or inhabitant of the debtor that seeks to enforce a claim against the debtor; and
211

(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.
(c) If the debtor provides, under section 362, 364, or 922 of this title, adequate protection of
the interest of the holder of a claim secured by a lien on property of the debtor and if,
notwithstanding such protection such creditor has a claim arising from the stay of action
against such property under section 362 or 922 of this title or from the granting of a lien
under section 364(d) of this title, then such claim shall be allowable as an administrative
expense under section 503(b) of this title.
(d) Notwithstanding section 362 of this title and subsection (a) of this section, a petition filed
under this chapter does not operate as a stay of application of pledged special revenues in a
manner consistent with section 927 of this title to payment of indebtedness secured by such
revenues.
§923. Notice
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
The debtor shall file a list of creditors.
§925. Effect of list of claims
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
(a) If the debtor refuses to pursue a cause of action under section 544, 545, 547, 548, 549(a),
or 550 of this title, then on request of a creditor, the court may appoint a trustee to pursue
such cause of action.
(b) A transfer of property of the debtor to or for the benefit of any holder of a bond or note,
on account of such bond or note, may not be avoided under section 547 of this title.
§927. Limitation on recourse
The holder of a claim payable solely from special revenues of the debtor under applicable
nonbankruptcy law shall not be treated as having recourse against the debtor on account of
such claim pursuant to section 1111(b) of this title.
§928. Post petition effect of security interest
212

(a) Notwithstanding section 552(a) of this title and subject to subsection (b) of this section,
special revenues acquired by the debtor after the commencement of the case shall remain
subject to any lien resulting from any security agreement entered into by the debtor before
the commencement of the case.
(b) Any such lien on special revenues, other than municipal betterment assessments, derived
from a project or system shall be subject to the necessary operating expenses of such project
or system, as the case may be.
§929. Municipal leases
A lease to a municipality shall not be treated as an executory contract or unexpired lease for
the purposes of section 365 or 502(b)(6) of this title solely by reason of its being subject to
termination in the event the debtor fails to appropriate rent.
§930. Dismissal
(a) After notice and a hearing, the court may dismiss a case under this chapter for cause,
including—
(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;
(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 a plan—
(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 confirmation of a plan under this
chapter is refused.
SUBCHAPTER III—THE PLAN
§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.
§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.
§943. Confirmation
(a) A special tax payer may object to confirmation of a plan.
(b) The court shall confirm the plan if—
213

(1) the plan complies with the provisions of this title made applicable by sections
103(e) 1 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 carry out
the plan;
(5) except to the extent that the holder of a particular claim has agreed to a different
treatment of such claim, the plan provides that on the effective date of the plan each
holder of a claim of a kind specified in section 507(a)(2) of this title will receive on
account of such claim cash equal to the allowed amount of such claim;
(6) any regulatory or electoral approval necessary under applicable nonbankruptcy law
in order to carry out any provision of the plan has been obtained, or such provision is
expressly conditioned on such approval; and
(7) the plan is in the best interests of creditors and is feasible.
§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 section 501 of this
title;
(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—
(A) that any security so deposited will constitute, after distribution, 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
(a) The court may retain jurisdiction over the case for such period of time as is necessary for
the successful implementation of the plan.
214

(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 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
number 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 .............................. Error! Bookmark not defined.
SUBCHAPTER I—OFFICERS AND ADMINISTRATION Error! Bookmark not defined.
§1101. Definitions for this chapter ................................... Error! Bookmark not defined.
§1102. Creditors’ and equity security holders’ committees ............ Error! Bookmark not
defined.
§1103. Powers and duties of committees........................ Error! Bookmark not defined.
§1104. Appointment of trustee or examiner .................... Error! Bookmark not defined.
§1105. Termination of trustee's appointment .................. Error! Bookmark not defined.
§1106. Duties of trustee and examiner............................ Error! Bookmark not defined.
§1107. Rights, powers, and duties of debtor in possession ........... Error! Bookmark not
defined.
§1108. Authorization to operate business ....................... Error! Bookmark not defined.
§1109. Right to be heard ................................................. Error! Bookmark not defined.
§1110. Aircraft equipment and vessels ........................... Error! Bookmark not defined.
§1111. Claims and interests ............................................ Error! Bookmark not defined.
§1112. Conversion or dismissal ...................................... Error! Bookmark not defined.
§1113. Rejection of collective bargaining agreements .... Error! Bookmark not defined.
§1114. Payment of insurance benefits to retired employees .......... Error! Bookmark not
defined.
§1115. Property of the estate .......................................... Error! Bookmark not defined.
§1116. Duties of trustee or debtor in possession in small business cases .............. Error!
Bookmark not defined.
SUBCHAPTER II—THE PLAN ........................................ Error! Bookmark not defined.
§1121. Who may file a plan ............................................. Error! Bookmark not defined.
§1122. Classification of claims or interests ..................... Error! Bookmark not defined.
§1123. Contents of plan .................................................. Error! Bookmark not defined.
§1124. Impairment of claims or interests......................... Error! Bookmark not defined.
§1125. Postpetition disclosure and solicitation ................ Error! Bookmark not defined.
215

§1126. Acceptance of plan .............................................. Error! Bookmark not defined.
§1127. Modification of plan ............................................. Error! Bookmark not defined.
§1128. Confirmation hearing ........................................... Error! Bookmark not defined.
§1129. Confirmation of plan ............................................ Error! Bookmark not defined.
SUBCHAPTER III—POSTCONFIRMATION MATTERS . Error! Bookmark not defined.
§1141. Effect of confirmation ........................................... Error! Bookmark not defined.
§1142. Implementation of plan ........................................ Error! Bookmark not defined.
§1143. Distribution .......................................................... Error! Bookmark not defined.
§1144. Revocation of an order of confirmation................ Error! Bookmark not defined.
§1145. Exemption from securities laws ........................... Error! Bookmark not defined.
§1146. Special tax provisions .......................................... Error! Bookmark not defined.
SUBCHAPTER IV—RAILROAD REORGANIZATION .... Error! Bookmark not defined.
§1161. Inapplicability of other sections............................ Error! Bookmark not defined.
§1162. Definition ............................................................. Error! Bookmark not defined.
§1163. Appointment of trustee ........................................ Error! Bookmark not defined.
§1164. Right to be heard ................................................. Error! Bookmark not defined.
§1165. Protection of the public interest ........................... Error! Bookmark not defined.
§1166. Effect of subtitle IV of title 49 and of Federal, State, or local regulations ..... Error!
Bookmark not defined.
§1167. Collective bargaining agreements ....................... Error! Bookmark not defined.
§1168. Rolling stock equipment ...................................... Error! Bookmark not defined.
§1169. Effect of rejection of lease of railroad line ............ Error! Bookmark not defined.
§1170. Abandonment of railroad line............................... Error! Bookmark not defined.
§1171. Priority claims ...................................................... Error! Bookmark not defined.
§1172. Contents of plan .................................................. Error! Bookmark not defined.
§1173. Confirmation of plan ............................................ Error! Bookmark not defined.
§1174. Liquidation ........................................................... Error! Bookmark not defined.
SUBCHAPTER V—SMALL BUSINESS DEBTOR REORGANIZATION ................. Error!
Bookmark not defined.
§1181. Inapplicability of other sections............................ Error! Bookmark not defined.
§1182. Definitions ........................................................... Error! Bookmark not defined.
§1183. Trustee ................................................................ Error! Bookmark not defined.
§1184. Rights and powers of a debtor in possession ...... Error! Bookmark not defined.
§1185. Removal of debtor in possession ........................ Error! Bookmark not defined.
§1186. Property of the estate .......................................... Error! Bookmark not defined.
216

§1187. Duties and reporting requirements of debtors ..... Error! Bookmark not defined.
§1188. Status conference ............................................... Error! Bookmark not defined.
§1189. Filing of the plan .................................................. Error! Bookmark not defined.
§1190. Contents of plan .................................................. Error! Bookmark not defined.
§1191. Confirmation of plan ............................................ Error! Bookmark not defined.
§1192. Discharge ............................................................ Error! Bookmark not defined.
§1193. Modification of plan ............................................. Error! Bookmark not defined.
§1194. Payments ............................................................ Error! Bookmark not defined.
§1195. Transactions with professionals .......................... Error! Bookmark not defined.
SUBCHAPTER I—OFFICERS AND ADMINISTRATION
§1101. Definitions for this chapter
In this chapter—
(1) "debtor in possession" means debtor except when a person that has qualified under
section 322 of this title is serving as trustee in the case;
(2) "substantial consummation" means—
(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.
§1102. Creditors’ and equity security holders’ committees
(a)
(1) Except as provided in paragraph (3), as soon as practicable after the order for relief
under chapter 11 of this title, the United States trustee shall appoint a committee of
creditors holding unsecured claims and may appoint additional committees of creditors
or of equity security holders as the United States trustee deems appropriate.
(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 United States trustee shall
appoint any such committee.
(3) Unless the court for cause orders otherwise, a committee of creditors may not be
appointed in a small business case or a case under subchapter V of this chapter.
(4) On request of a party in interest and after notice and a hearing, the court may order
the United States trustee to change the membership of a committee appointed under
this subsection, if the court determines that the change is necessary to ensure adequate
217

representation of creditors or equity security holders. The court may order the United
States trustee to increase the number of members of a committee to include a creditor
that is a small business concern (as described in section 3(a)(1) of the Small Business
Act), if the court determines that the creditor holds claims (of the kind represented by
the committee) the aggregate amount of which, in comparison to the annual gross
revenue of that creditor, is disproportionately large.
(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 commencement of the case 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 subsection (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.
(3) A committee appointed under subsection (a) shall—
(A) provide access to information for creditors who—
(i) hold claims of the kind represented by that committee; and
(ii) are not appointed to the committee;
(B) solicit and receive comments from the creditors described in subparagraph
(A); and
(C) be subject to a court order that compels any additional report or disclosure to
be made to the creditors described in subparagraph (A).
§1103. Powers and duties of committees
(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) An attorney or accountant employed to represent a committee appointed under section
1102 of this title may not, while employed by such committee, represent any other entity
having an adverse interest in connection with the case. Representation of one or more
creditors of the same class as represented by the committee shall not per se constitute the
representation of an adverse interest.
(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;

218

(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 determinations as to any plan formulated, and collect
and file with the court acceptances or rejections of a plan;
(4) request the appointment of a trustee or examiner under section 1104 of this title;
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 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 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)
(1) Except as provided in section 1163 of this title, on the request of a party in interest
made not later than 30 days after the court orders the appointment of a trustee under
subsection (a), the United States trustee shall convene a meeting of creditors for the
purpose of electing one disinterested person to serve as trustee in the case. The
election of a trustee shall be conducted in the manner provided in subsections (a), (b),
and (c) of section 702 of this title.
(2)
(A) If an eligible, disinterested trustee is elected at a meeting of creditors under
paragraph (1), the United States trustee shall file a report certifying that election.
(B) Upon the filing of a report under subparagraph (A)—
(i) the trustee elected under paragraph (1) shall be considered to have been
selected and appointed for purposes of this section; and
(ii) the service of any trustee appointed under subsection (a) shall terminate.
(C) The court shall resolve any dispute arising out of an election described in
subparagraph (A).
219

(c) 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 interests 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.
(d) 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 consultation
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.
(e) The United States trustee shall move for the appointment of a trustee under subsection (a)
if there are reasonable grounds to suspect that current members of the governing body of the
debtor, the debtor's chief executive or chief financial officer, or members of the governing
body who selected the debtor's chief executive or chief financial officer, participated in actual
fraud, dishonesty, or criminal conduct in the management of the debtor or the debtor's public
financial reporting.
§1105. 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 of the operation of the debtor's business.
§1106. Duties of trustee and examiner
(a) A trustee shall—
(1) perform the duties of the trustee, as specified in paragraphs (2), (5), (7), (8), (9),
(10), (11), and (12) of section 704(a);
(2) if the debtor has not done so, file the list, schedule, and statement required under
section 521(a)(1) of this title;
(3) except to the extent that the court orders otherwise, 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;
(4) as soon as practicable—
(A) file a statement of any investigation conducted under paragraph (3) of this
subsection, including any fact ascertained pertaining to fraud, dishonesty,
220

incompetence, misconduct, 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’ committee, 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 recommend conversion of the case to a case
under chapter 7, 12, 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 information 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 information;
(7) after confirmation of a plan, file such reports as are necessary or as the court
orders; and
(8) if with respect to the debtor there is a claim for a domestic support obligation,
provide the applicable notice specified in subsection (c).
(b) An examiner appointed under section 1104(d) of this title shall perform the duties
specified in paragraphs (3) and (4) of subsection (a) of this section, and, except to the extent
that the court orders otherwise, any other duties of the trustee that the court orders the debtor
in possession not to perform.
(c)
(1) In a case described in subsection (a)(8) to which subsection (a)(8) applies, the
trustee shall—
(A)
(i) provide written notice to the holder of the claim described in subsection
(a)(8) of such claim and of the right of such holder to use the services of the
State child support enforcement agency established under sections 464 and
466 of the Social Security Act for the State in which such holder resides, for
assistance in collecting child support during and after the case under this title;
and
(ii) include in the notice required by clause (i) the address and telephone
number of such State child support enforcement agency;
(B)
(i) provide written notice to such State child support enforcement agency of
such claim; and
(ii) include in the notice required by clause (i) the name, address, and
telephone number of such holder; and
(C) at such time as the debtor is granted a discharge under section 1141, provide
written notice to such holder and to such State child support enforcement agency
of—
221

(i) the granting of the discharge;
(ii) the last recent known address of the debtor;
(iii) the last recent known name and address of the debtor's employer; and
(iv) the name of each creditor that holds a claim that—
(I) is not discharged under paragraph (2), (4), or (14A) of section 523(a);
or
(II) was reaffirmed by the debtor under section 524(c).
(2)
(A) The holder of a claim described in subsection (a)(8) or the State child
enforcement support agency of the State in which such holder resides may
request from a creditor described in paragraph (1)(C)(iv) the last known address
of the debtor.
(B) Notwithstanding any other provision of law, a creditor that makes a
disclosure of a last known address of a debtor in connection with a request made
under subparagraph (A) shall not be liable by reason of making such disclosure.
§1107. Rights, powers, and duties of debtor in possession
(a) Subject to any limitations on a trustee serving in a case 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 compensation under section 330 of this title, and powers, and
shall perform all 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 disqualified for employment
under section 327 of this title by a debtor in possession solely because of such person's
employment by or representation of the debtor before the commencement of the case.
§1108. Authorization to operate business
Unless the court, on request of a party in interest and after notice and a hearing, orders
otherwise, the trustee may operate the debtor's business.
§1109. Right to be heard
(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’ 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
(a)
(1) Except as provided in paragraph (2) and subject to subsection (b), the right of a
secured party with a security interest in equipment described in paragraph (3), or of a
222

lessor or conditional vendor of such equipment, to take possession of such equipment
in compliance with a security agreement, lease, or conditional sale contract, and to
enforce any of its other rights or remedies, under such security agreement, lease, or
conditional sale contract, to sell, lease, or otherwise retain or dispose of such
equipment, is not limited or otherwise affected by any other provision of this title or
by any power of the court.
(2) The right to take possession and to enforce the other rights and remedies described
in paragraph (1) shall be subject to section 362 if—
(A) before the date that is 60 days after the date of the order for relief under this
chapter, the trustee, subject to the approval of the court, agrees to perform all
obligations of the debtor under such security agreement, lease, or conditional
sale contract; and
(B) any default, other than a default of a kind specified in section 365(b)(2),
under such security agreement, lease, or conditional sale contract—
(i) that occurs before the date of the order is cured before the expiration of
such 60-day period;
(ii) that occurs after the date of the order and before the expiration of such 60day period is cured before the later of—
(I) the date that is 30 days after the date of the default; or
(II) the expiration of such 60-day period; and
(iii) that occurs on or after the expiration of such 60-day period is cured in
compliance with the terms of such security agreement, lease, or conditional
sale contract, if a cure is permitted under that agreement, lease, or contract.
(3) The equipment described in this paragraph—
(A) is—
(i) an aircraft, aircraft engine, propeller, appliance, or spare part (as defined in
section 40102 of title 49) that is subject to a security interest granted by,
leased to, or conditionally sold to a debtor that, at the time such transaction is
entered into, holds an air carrier operating certificate issued pursuant to
chapter 447 of title 49 for aircraft capable of carrying 10 or more individuals
or 6,000 pounds or more of cargo; or
(ii) a vessel documented under chapter 121 of title 46 that is subject to a
security interest granted by, leased to, or conditionally sold to a debtor that is
a water carrier that, at the time such transaction is entered into, holds a
certificate of public convenience and necessity or permit issued by the
Department of Transportation; and
(B) includes all records and documents relating to such equipment that are
required, under the terms of the security agreement, lease, or conditional sale
contract, to be surrendered or returned by the debtor in connection with the
surrender or return of such equipment.
223

(4) Paragraph (1) applies to a secured party, lessor, or conditional vendor acting in its
own behalf or acting as trustee or otherwise in behalf of another party.
(b) The trustee and the secured party, lessor, or conditional vendor whose right to take
possession is protected under subsection (a) may agree, subject to the approval of the court,
to extend the 60-day period specified in subsection (a)(1).
(c)
(1) In any case under this chapter, the trustee shall immediately surrender and return to
a secured party, lessor, or conditional vendor, described in subsection (a)(1),
equipment described in subsection (a)(3), if at any time after the date of the order for
relief under this chapter such secured party, lessor, or conditional vendor is entitled
pursuant to subsection (a)(1) to take possession of such equipment and makes a written
demand for such possession to the trustee.
(2) At such time as the trustee is required under paragraph (1) to surrender and return
equipment described in subsection (a)(3), any lease of such equipment, and any
security agreement or conditional sale contract relating to such equipment, if such
security agreement or conditional sale contract is an executory contract, shall be
deemed rejected.
(d) With respect to equipment first placed in service on or before October 22, 1994, for
purposes of this section—
(1) the term "lease" includes any written agreement with respect to which the lessor
and the debtor, as lessee, have expressed in the agreement or in a substantially
contemporaneous writing that the agreement is to be treated as a lease for Federal
income tax purposes; and
(2) the term "security interest" means a purchase-money equipment security interest.
§1111. Claims and interests
(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 filed under section 521(a)(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 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 subsection; or
(ii) such holder does not have such recourse and such property is sold under
section 363 of this title or is to be sold under the plan.

224

(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 506(a) of this title, such
claim is a secured claim to the extent that such claim is allowed.
§1112. Conversion or dismissal
(a) The debtor may convert a case under this chapter to a case under chapter 7 of this title
unless—
(1) the debtor is not a debtor in possession;
(2) the case originally was commenced as an involuntary case under this chapter; or
(3) the case was converted to a case under this chapter other than on the debtor's
request.
(b)
(1) Except as provided in paragraph (2) and subsection (c), on request of a party in
interest, and after notice and a hearing, the court shall convert a case under this chapter
to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best
interests of creditors and the estate, for cause unless the court determines that the
appointment under section 1104(a) of a trustee or an examiner is in the best interests of
creditors and the estate.
(2) The court may not convert a case under this chapter to a case under chapter 7 or
dismiss a case under this chapter if the court finds and specifically identifies unusual
circumstances establishing that converting or dismissing the case is not in the best
interests of creditors and the estate, and the debtor or any other party in interest
establishes that—
(A) there is a reasonable likelihood that a plan will be confirmed within the
timeframes established in sections 1121(e) and 1129(e) of this title, or if such
sections do not apply, within a reasonable period of time; and
(B) the grounds for converting or dismissing the case include an act or omission
of the debtor other than under paragraph (4)(A)—
(i) for which there exists a reasonable justification for the act or omission; and
(ii) that will be cured within a reasonable period of time fixed by the court.
(3) The court shall commence the hearing on a motion under this subsection not later
than 30 days after filing of the motion, and shall decide the motion not later than 15
days after commencement of such hearing, unless the movant expressly consents to a

225

continuance for a specific period of time or compelling circumstances prevent the
court from meeting the time limits established by this paragraph.
(4) For purposes of this subsection, the term "cause" includes—
(A) substantial or continuing loss to or diminution of the estate and the absence
of a reasonable likelihood of rehabilitation;
(B) gross mismanagement of the estate;
(C) failure to maintain appropriate insurance that poses a risk to the estate or to
the public;
(D) unauthorized use of cash collateral substantially harmful to 1 or more
creditors;
(E) failure to comply with an order of the court;
(F) unexcused failure to satisfy timely any filing or reporting requirement
established by this title or by any rule applicable to a case under this chapter;
(G) failure to attend the meeting of creditors convened under section 341(a) or an
examination ordered under rule 2004 of the Federal Rules of Bankruptcy
Procedure without good cause shown by the debtor;
(H) failure timely to provide information or attend meetings reasonably
requested by the United States trustee (or the bankruptcy administrator, if any);
(I) failure timely to pay taxes owed after the date of the order for relief or to file
tax returns due after the date of the order for relief;
(J) failure to file a disclosure statement, or to file or confirm a plan, within the
time fixed by this title or by order of the court;
(K) failure to pay any fees or charges required under chapter 123 of title 28;
(L) revocation of an order of confirmation under section 1144;
(M) inability to effectuate substantial consummation of a confirmed plan;
(N) material default by the debtor with respect to a confirmed plan;
(O) termination of a confirmed plan by reason of the occurrence of a condition
specified in the plan; and
(P) failure of the debtor to pay any domestic support obligation that first
becomes payable after the date of the filing of the petition.
(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 corporation 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 12 or 13 of this
title only if—
(1) the debtor requests such conversion;
226

(2) the debtor has not been discharged under section 1141(d) of this title; and
(3) if the debtor requests conversion to chapter 12 of this title, such conversion is
equitable.
(e) Except as provided in subsections (c) and (f), the court, on request of the United States
trustee, 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
if the debtor in a voluntary case fails to file, within fifteen days after the filing of the petition
commencing such case or such additional time as the court may allow, the information
required by paragraph (1) of section 521(a), including a list containing the names and
addresses of the holders of the twenty largest unsecured claims (or of all unsecured claims if
there are fewer than twenty unsecured claims), and the approximate dollar amounts of each
of such claims.
(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.
§1113. Rejection of collective bargaining agreements
(a) The debtor in possession, or the trustee if one has been appointed under the provisions of
this chapter, other than a trustee in a case covered by subchapter IV of this chapter and by
title I of the Railway Labor Act, may assume or reject a collective bargaining agreement only
in accordance with the provisions of this section.
(b)
(1) Subsequent to filing a petition and prior to filing an application seeking rejection of
a collective bargaining agreement, the debtor in possession or trustee (hereinafter in
this section "trustee" shall include a debtor in possession), shall—
(A) make a proposal to the authorized representative of the employees covered
by such agreement, based on the most complete and reliable information
available at the time of such proposal, which provides for those necessary
modifications in the employees benefits and protections that are necessary to
permit the reorganization of the debtor and assures that all creditors, the debtor
and all of the affected parties are treated fairly and equitably; and
(B) provide, subject to subsection (d)(3), the representative of the employees
with such relevant information as is necessary to evaluate the proposal.
(2) During the period beginning on the date of the making of a proposal provided for
in paragraph (1) and ending on the date of the hearing provided for in subsection
(d)(1), the trustee shall meet, at reasonable times, with the authorized representative to
confer in good faith in attempting to reach mutually satisfactory modifications of such
agreement.
(c) The court shall approve an application for rejection of a collective bargaining agreement
only if the court finds that—
(1) the trustee has, prior to the hearing, made a proposal that fulfills the requirements
of subsection (b)(1);
227

(2) the authorized representative of the employees has refused to accept such proposal
without good cause; and
(3) the balance of the equities clearly favors rejection of such agreement.
(d)
(1) Upon the filing of an application for rejection the court shall schedule a hearing to
be held not later than fourteen days after the date of the filing of such application. All
interested parties may appear and be heard at such hearing. Adequate notice shall be
provided to such parties at least ten days before the date of such hearing. The court
may extend the time for the commencement of such hearing for a period not exceeding
seven days where the circumstances of the case, and the interests of justice require
such extension, or for additional periods of time to which the trustee and
representative agree.
(2) The court shall rule on such application for rejection within thirty days after the
date of the commencement of the hearing. In the interests of justice, the court may
extend such time for ruling for such additional period as the trustee and the
employees’ representative may agree to. If the court does not rule on such application
within thirty days after the date of the commencement of the hearing, or within such
additional time as the trustee and the employees’ representative may agree to, the
trustee may terminate or alter any provisions of the collective bargaining agreement
pending the ruling of the court on such application.
(3) The court may enter such protective orders, consistent with the need of the
authorized representative of the employee to evaluate the trustee's proposal and the
application for rejection, as may be necessary to prevent disclosure of information
provided to such representative where such disclosure could compromise the position
of the debtor with respect to its competitors in the industry in which it is engaged.
(e) If during a period when the collective bargaining agreement continues in effect, and if
essential to the continuation of the debtor's business, or in order to avoid irreparable damage
to the estate, the court, after notice and a hearing, may authorize the trustee to implement
interim changes in the terms, conditions, wages, benefits, or work rules provided by a
collective bargaining agreement. Any hearing under this paragraph shall be scheduled in
accordance with the needs of the trustee. The implementation of such interim changes shall
not render the application for rejection moot.
(f) No provision of this title shall be construed to permit a trustee to unilaterally terminate or
alter any provisions of a collective bargaining agreement prior to compliance with the
provisions of this section.
§1114. Payment of insurance benefits to retired employees
(a) For purposes of this section, the term "retiree benefits" means payments to any entity or
person for the purpose of providing or reimbursing payments for retired employees and their
spouses and dependents, for medical, surgical, or hospital care benefits, or benefits in the
event of sickness, accident, disability, or death under any plan, fund, or program (through the
purchase of insurance or otherwise) maintained or established in whole or in part by the
debtor prior to filing a petition commencing a case under this title.
228

(b)
(1) For purposes of this section, the term "authorized representative" means the
authorized representative designated pursuant to subsection (c) for persons receiving
any retiree benefits covered by a collective bargaining agreement or subsection (d) in
the case of persons receiving retiree benefits not covered by such an agreement.
(2) Committees of retired employees appointed by the court pursuant to this section
shall have the same rights, powers, and duties as committees appointed under sections
1102 and 1103 of this title for the purpose of carrying out the purposes of sections
1114 and 1129(a)(13) and, as permitted by the court, shall have the power to enforce
the rights of persons under this title as they relate to retiree benefits.
(c)
(1) A labor organization shall be, for purposes of this section, the authorized
representative of those persons receiving any retiree benefits covered by any collective
bargaining agreement to which that labor organization is signatory, unless (A) such
labor organization elects not to serve as the authorized representative of such persons,
or (B) the court, upon a motion by any party in interest, after notice and hearing,
determines that different representation of such persons is appropriate.
(2) In cases where the labor organization referred to in paragraph (1) elects not to
serve as the authorized representative of those persons receiving any retiree benefits
covered by any collective bargaining agreement to which that labor organization is
signatory, or in cases where the court, pursuant to paragraph (1) finds different
representation of such persons appropriate, the court, upon a motion by any party in
interest, and after notice and a hearing, shall appoint a committee of retired employees
if the debtor seeks to modify or not pay the retiree benefits or if the court otherwise
determines that it is appropriate, from among such persons, to serve as the authorized
representative of such persons under this section.
(d) The court, upon a motion by any party in interest, and after notice and a hearing, shall
order the appointment of a committee of retired employees if the debtor seeks to modify or
not pay the retiree benefits or if the court otherwise determines that it is appropriate, to serve
as the authorized representative, under this section, of those persons receiving any retiree
benefits not covered by a collective bargaining agreement. The United States trustee shall
appoint any such committee.
(e)
(1) Notwithstanding any other provision of this title, the debtor in possession, or the
trustee if one has been appointed under the provisions of this chapter (hereinafter in
this section "trustee" shall include a debtor in possession), shall timely pay and shall
not modify any retiree benefits, except that—
(A) the court, on motion of the trustee or authorized representative, and after
notice and a hearing, may order modification of such payments, pursuant to the
provisions of subsections (g) and (h) of this section, or
(B) the trustee and the authorized representative of the recipients of those
benefits may agree to modification of such payments,
229

after which such benefits as modified shall continue to be paid by the trustee.
(2) Any payment for retiree benefits required to be made before a plan confirmed
under section 1129 of this title is effective has the status of an allowed administrative
expense as provided in section 503 of this title.
(f)
(1) Subsequent to filing a petition and prior to filing an application seeking
modification of the retiree benefits, the trustee shall—
(A) make a proposal to the authorized representative of the retirees, based on the
most complete and reliable information available at the time of such proposal,
which provides for those necessary modifications in the retiree benefits that are
necessary to permit the reorganization of the debtor and assures that all creditors,
the debtor and all of the affected parties are treated fairly and equitably; and
(B) provide, subject to subsection (k)(3), the representative of the retirees with
such relevant information as is necessary to evaluate the proposal.
(2) During the period beginning on the date of the making of a proposal provided for
in paragraph (1), and ending on the date of the hearing provided for in subsection
(k)(1), the trustee shall meet, at reasonable times, with the authorized representative to
confer in good faith in attempting to reach mutually satisfactory modifications of such
retiree benefits.
(g) The court shall enter an order providing for modification in the payment of retiree
benefits if the court finds that—
(1) the trustee has, prior to the hearing, made a proposal that fulfills the requirements
of subsection (f);
(2) the authorized representative of the retirees has refused to accept such proposal
without good cause; and
(3) such modification is necessary to permit the reorganization of the debtor and
assures that all creditors, the debtor, and all of the affected parties are treated fairly and
equitably, and is clearly favored by the balance of the equities;
except that in no case shall the court enter an order providing for such modification which
provides for a modification to a level lower than that proposed by the trustee in the proposal
found by the court to have complied with the requirements of this subsection and subsection
(f): Provided, however, That at any time after an order is entered providing for modification
in the payment of retiree benefits, or at any time after an agreement modifying such benefits
is made between the trustee and the authorized representative of the recipients of such
benefits, the authorized representative may apply to the court for an order increasing those
benefits which order shall be granted if the increase in retiree benefits sought is consistent
with the standard set forth in paragraph (3): Provided further, That neither the trustee nor the
authorized representative is precluded from making more than one motion for a modification
order governed by this subsection.
(h)
230

(1) Prior to a court issuing a final order under subsection (g) of this section, if essential
to the continuation of the debtor's business, or in order to avoid irreparable damage to
the estate, the court, after notice and a hearing, may authorize the trustee to implement
interim modifications in retiree benefits.
(2) Any hearing under this subsection shall be scheduled in accordance with the needs
of the trustee.
(3) The implementation of such interim changes does not render the motion for
modification moot.
(i) No retiree benefits paid between the filing of the petition and the time a plan confirmed
under section 1129 of this title becomes effective shall be deducted or offset from the
amounts allowed as claims for any benefits which remain unpaid, or from the amounts to be
paid under the plan with respect to such claims for unpaid benefits, whether such claims for
unpaid benefits are based upon or arise from a right to future unpaid benefits or from any
benefits not paid as a result of modifications allowed pursuant to this section.
(j) No claim for retiree benefits shall be limited by section 502(b)(7) of this title.
(k)
(1) Upon the filing of an application for modifying retiree benefits, the court shall
schedule a hearing to be held not later than fourteen days after the date of the filing of
such application. All interested parties may appear and be heard at such hearing.
Adequate notice shall be provided to such parties at least ten days before the date of
such hearing. The court may extend the time for the commencement of such hearing
for a period not exceeding seven days where the circumstances of the case, and the
interests of justice require such extension, or for additional periods of time to which
the trustee and the authorized representative agree.
(2) The court shall rule on such application for modification within ninety days after
the date of the commencement of the hearing. In the interests of justice, the court may
extend such time for ruling for such additional period as the trustee and the authorized
representative may agree to. If the court does not rule on such application within
ninety days after the date of the commencement of the hearing, or within such
additional time as the trustee and the authorized representative may agree to, the
trustee may implement the proposed modifications pending the ruling of the court on
such application.
(3) The court may enter such protective orders, consistent with the need of the
authorized representative of the retirees to evaluate the trustee's proposal and the
application for modification, as may be necessary to prevent disclosure of information
provided to such representative where such disclosure could compromise the position
of the debtor with respect to its competitors in the industry in which it is engaged.
(l) If the debtor, during the 180-day period ending on the date of the filing of the petition—
(1) modified retiree benefits; and
(2) was insolvent on the date such benefits were modified;

231

the court, on motion of a party in interest, and after notice and a hearing, shall issue an order
reinstating as of the date the modification was made, such benefits as in effect immediately
before such date unless the court finds that the balance of the equities clearly favors such
modification.
(m) This section shall not apply to any retiree, or the spouse or dependents of such retiree, if
such retiree's gross income for the twelve months preceding the filing of the bankruptcy
petition equals or exceeds $250,000, unless such retiree can demonstrate to the satisfaction of
the court that he is unable to obtain health, medical, life, and disability coverage for himself,
his spouse, and his dependents who would otherwise be covered by the employer's insurance
plan, comparable to the coverage provided by the employer on the day before the filing of a
petition under this title.
§1115. Property of the estate
(a) In a case in which the debtor is an individual, property of the estate includes, in addition
to the property specified in section 541—
(1) all property of the kind specified in section 541 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, 12, or 13, whichever occurs first; and
(2) earnings from services performed by the debtor after the commencement of the
case but before the case is closed, dismissed, or converted to a case under chapter 7,
12, or 13, whichever occurs first.
(b) Except as provided in section 1104 or a confirmed plan or order confirming a plan, the
debtor shall remain in possession of all property of the estate.
§1116. Duties of trustee or debtor in possession in small business cases
In a small business case, a trustee or the debtor in possession, in addition to the duties
provided in this title and as otherwise required by law, shall—
(1) append to the voluntary petition or, in an involuntary case, file not later than 7 days
after the date of the order for relief—
(A) its most recent balance sheet, statement of operations, cash-flow statement,
and Federal income tax return; or
(B) a statement made under penalty of perjury that no balance sheet, statement of
operations, or cash-flow statement has been prepared and no Federal tax return
has been filed;
(2) attend, through its senior management personnel and counsel, meetings scheduled
by the court or the United States trustee, including initial debtor interviews, scheduling
conferences, and meetings of creditors convened under section 341 unless the court,
after notice and a hearing, waives that requirement upon a finding of extraordinary and
compelling circumstances;
(3) timely file all schedules and statements of financial affairs, unless the court, after
notice and a hearing, grants an extension, which shall not extend such time period to a
date later than 30 days after the date of the order for relief, absent extraordinary and
compelling circumstances;
232

(4) file all postpetition financial and other reports required by the Federal Rules of
Bankruptcy Procedure or by local rule of the district court;
(5) subject to section 363(c)(2), maintain insurance customary and appropriate to the
industry;
(6)
(A) timely file tax returns and other required government filings; and
(B) subject to section 363(c)(2), timely pay all taxes entitled to administrative
expense priority except those being contested by appropriate proceedings being
diligently prosecuted; and
(7) allow the United States trustee, or a designated representative of the United States
trustee, to inspect the debtor's business premises, books, and records at reasonable
times, after reasonable prior written notice, unless notice is waived by the debtor.
SUBCHAPTER II—THE PLAN
§1121. Who may file a plan
(a) The debtor may file a plan with a petition commencing a voluntary 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 of claims or interests that is
impaired under the plan.
(d)
(1) Subject to paragraph (2), on request of a party in interest made within the
respective periods specified in subsections (b) and (c) of this section and after notice
and a hearing, the court may for cause reduce or increase the 120-day period or the
180-day period referred to in this section.
(2)
(A) The 120-day period specified in paragraph (1) may not be extended beyond a
date that is 18 months after the date of the order for relief under this chapter.
(B) The 180-day period specified in paragraph (1) may not be extended beyond a
date that is 20 months after the date of the order for relief under this chapter.
(e) In a small business case—
233

(1) only the debtor may file a plan until after 180 days after the date of the order for
relief, unless that period is—
(A) extended as provided by this subsection, after notice and a hearing; or
(B) the court, for cause, orders otherwise;
(2) the plan and a disclosure statement (if any) shall be filed not later than 300 days
after the date of the order for relief; and
(3) the time periods specified in paragraphs (1) and (2), and the time fixed in section
1129(e) within which the plan shall be confirmed, may be extended only if—
(A) the debtor, after providing notice to parties in interest (including the United
States trustee), demonstrates by a preponderance of the evidence that it is more
likely than not that the court will confirm a plan within a reasonable period of
time;
(B) a new deadline is imposed at the time the extension is granted; and
(C) the order extending time is signed before the existing deadline has expired.
§1122. Classification of claims or interests
(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 interests 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
(a) Notwithstanding any otherwise applicable nonbankruptcy law, 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)(2), 507(a)(3), or 507(a)(8) of this title, and classes
of interests;
(2) specify any class of claims or interests that is not impaired under the plan;
(3) specify the treatment of any class of claims or interests 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 implementation, 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;
234

(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 similar instrument;
(G) curing or waiving of 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 paragraph (5)(B) or (5)(C) of this subsection, of a
provision prohibiting 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, including, 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;
(7) contain only provisions that are consistent with the interests 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; and
(8) in a case in which the debtor is an individual, provide for the payment to creditors
under the plan of all or such portion of earnings from personal services performed by
the debtor after the commencement of the case or other future income of the debtor as
is necessary for the execution of the plan.
(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;
(2) subject to section 365 of this title, provide for the assumption, rejection, or
assignment of any executory contract or unexpired lease of the debtor not previously
rejected under such section;
(3) provide for—
(A) the settlement or adjustment of any claim or interest belonging to the debtor
or to the estate; or

235

(B) the 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;
(4) provide for the sale of all or substantially all of the property of the estate, and the
distribution of the proceeds of such sale among holders of claims or interests;
(5) 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, or leave unaffected the rights of holders of any class of claims; and
(6) 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 522 of this title,
unless the debtor consents to such use, sale, or lease.
(d) Notwithstanding subsection (a) of this section and sections 506(b), 1129(a)(7), and
1129(b) of this title, if it is proposed in a plan to cure a default the amount necessary to cure
the default shall be determined in accordance with the underlying agreement and applicable
nonbankruptcy law.
§1124. Impairment of claims or interests
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; or
(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 that occurred before or after the commencement of the
case under this title, other than a default of a kind specified in section 365(b)(2)
of this title or of a kind that section 365(b)(2) expressly does not require to be
cured;
(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 applicable law;
(D) if such claim or such interest arises from any failure to perform a
nonmonetary obligation, other than a default arising from failure to operate a
nonresidential real property lease subject to section 365(b)(1)(A), compensates
the holder of such claim or such interest (other than the debtor or an insider) for
any actual pecuniary loss incurred by such holder as a result of such failure; and

236

(E) does not otherwise alter the legal, equitable, or contractual rights to which
such claim or interest entitles the holder of such claim or interest.
§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, including a discussion of the potential
material Federal tax consequences of the plan to the debtor, any successor to the
debtor, and a hypothetical investor typical of the holders of claims or interests in the
case, that would enable such a hypothetical investor of the relevant class to make an
informed judgment about the plan, but adequate information need not include such
information about any other possible or proposed plan and in determining whether a
disclosure statement provides adequate information, the court shall consider the
complexity of the case, the benefit of additional information to creditors and other
parties in interest, and the cost of providing additional information; and
(2) "investor typical of holders of claims or interests of the relevant class" means
investor having—
(A) a claim or interest of the relevant class;
(B) such a relationship with the debtor as the holders of other claims or interests
of such class generally have; and
(C) such ability to obtain such information from sources other than the disclosure
required by this section as holders of 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 information. 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 required under subsection (b) of this section 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 whether a disclosure statement contains
adequate information. Such an agency or official may not appeal from, or otherwise seek
review of, an order approving a disclosure statement.
(e) A person that solicits acceptance or rejection of a plan, 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
237

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 violation of any applicable law,
rule, or regulation governing solicitation of acceptance or rejection of a plan or the offer,
issuance, sale, or purchase of securities.
(f) Notwithstanding subsection (b), in a small business case—
(1) the court may determine that the plan itself provides adequate information and that
a separate disclosure statement is not necessary;
(2) the court may approve a disclosure statement submitted on standard forms
approved by the court or adopted under section 2075 of title 28; and
(3)
(A) the court may conditionally approve a disclosure statement subject to final
approval after notice and a hearing;
(B) acceptances and rejections of a plan may be solicited based on a
conditionally approved disclosure statement if the debtor provides adequate
information to each holder of a claim or interest that is solicited, but a
conditionally approved disclosure statement shall be mailed not later than 25
days before the date of the hearing on confirmation of the plan; and
(C) the hearing on the disclosure statement may be combined with the hearing on
confirmation of a plan.
(g) Notwithstanding subsection (b), an acceptance or rejection of the plan may be solicited
from a holder of a claim or interest if such solicitation complies with applicable
nonbankruptcy law and if such holder was solicited before the commencement of the case in
a manner complying with applicable nonbankruptcy law.
§1126. Acceptance of plan
(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 compliance 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 acceptance or rejection was
solicited after disclosure to such holder of adequate information, as defined in section
1125(a) 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 subsection (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
238

creditors, other than any entity designated under subsection (e) of this section, that have
accepted or rejected such plan.
(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, the court may designate
any entity whose acceptance or rejection of such plan was not in good faith, or was not
solicited or procured in good faith 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, and each holder of a claim or interest of such class, are conclusively presumed to have
accepted the plan, and solicitation of acceptances with respect to such class from the holders
of claims or interests 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 receive or retain any property under the plan on
account of such claims or interests.
§1127. Modification of plan
(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 of a plan files a modification of such plan
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 substantial 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 circumstances warrant such modification and the court, after notice and a hearing,
confirms such plan as modified, under section 1129 of this title.
(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.
(e) If the debtor is an individual, the plan may be modified at any time after confirmation of
the plan but before the completion of payments under the plan, whether or not the plan has
been substantially consummated, upon request of the debtor, the trustee, the United States
trustee, or the holder of an allowed unsecured claim, 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 period for such payments; or
239

(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 made other
than under the plan.
(f)
(1) Sections 1121 through 1128 and the requirements of section 1129 apply to any
modification under subsection (e).
(2) The plan, as modified, shall become the plan only after there has been disclosure
under section 1125 as the court may direct, notice and a hearing, and such
modification is approved.
§1128. Confirmation hearing
(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
(a) The court shall confirm a plan only if all of the following requirements are met:
(1) The plan complies with the applicable provisions of this title.
(2) The proponent of the plan complies with the applicable provisions of this title.
(3) The plan has been proposed in good faith and not by any means forbidden by law.
(4) Any payment made or to be made by the proponent, by the debtor, or by a person
issuing securities or acquiring property under the plan, for services or for costs and
expenses in or in connection with the case, or in connection with the plan and incident
to the case, has been approved by, or 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 confirmation 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; and
(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 governmental regulatory commission with jurisdiction, after confirmation 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 impaired class of claims or interests—
240

(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 effective date of the plan, that is not less than the
amount that such holder would so receive or retain if the debtor were
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 will 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 holder's interest in the estate's interest in the property that
secures such claims.
(8) With respect to each class of claims or interests—
(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 507(a)(2) or 507(a)(3)
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)(1),
507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) 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;
(C) with respect to a claim of a kind specified in section 507(a)(8) of this title,
the holder of such claim will receive on account of such claim regular
installment payments in cash—
(i) of a total value, as of the effective date of the plan, equal to the allowed
amount of such claim;
(ii) over a period ending not later than 5 years after the date of the order for
relief under section 301, 302, or 303; and
(iii) in a manner not less favorable than the most favored nonpriority
unsecured claim provided for by the plan (other than cash payments made to a
class of creditors under section 1122(b)); and
(D) with respect to a secured claim which would otherwise meet the description
of an unsecured claim of a governmental unit under section 507(a)(8), but for the
secured status of that claim, the holder of that claim will receive on account of
241

that claim, cash payments, in the same manner and over the same period, as
prescribed in subparagraph (C).
(10) If a class of claims is impaired under the plan, at least one class of claims that is
impaired under the plan has accepted the plan, determined without including any
acceptance of the plan by any insider.
(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.
(12) All fees payable under section 1930 of title 28, as determined by the court at the
hearing on confirmation of the plan, have been paid or the plan provides for the
payment of all such fees on the effective date of the plan.
(13) The plan provides for the continuation after its effective date of payment of all
retiree benefits, as that term is defined in section 1114 of this title, at the level
established pursuant to subsection (e)(1)(B) or (g) of section 1114 of this title, at any
time prior to confirmation of the plan, for the duration of the period the debtor has
obligated itself to provide such benefits.
(14) If the debtor is required by a judicial or administrative order, or by statute, to pay
a domestic support obligation, the debtor has paid all amounts payable under such
order or such statute for such obligation that first become payable after the date of the
filing of the petition.
(15) In a case in which the debtor is an individual and in which the holder of an
allowed unsecured claim objects to the confirmation of the plan—
(A) the value, as of the effective date of the plan, of the property to be distributed
under the plan on account of such claim is not less than the amount of such
claim; or
(B) the value of the property to be distributed under the plan is not less than the
projected disposable income of the debtor (as defined in section 1325(b)(2)) to
be received during the 5-year period beginning on the date that the first payment
is due under the plan, or during the period for which the plan provides payments,
whichever is longer.
(16) All transfers of property under the plan shall be made in accordance with any
applicable provisions of nonbankruptcy law that govern the transfer of property by a
corporation or trust that is not a moneyed, business, or commercial corporation or
trust.
(b)
(1) Notwithstanding section 510(a) of this title, if all of 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
unfairly, and is fair and equitable, with respect to each class of claims or interests that
is impaired under, and has not accepted, the plan.
242

(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 liens securing such claims,
whether the property subject to such liens 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 any property that is
subject to the liens securing such claims, free and clear of such liens, with
such liens to attach to the proceeds of such sale, and the treatment of such
liens 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 amount of such claim; or
(ii) the holder of any claim or interest that is junior to the claims of such class
will not receive or retain under the plan on account of such junior claim or
interest any property, except that in a case in which the debtor is an individual,
the debtor may retain property included in the estate under section 1115,
subject to the requirements of subsection (a)(14) of this section.
(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 interest 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, or 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.
(c) Notwithstanding subsections (a) and (b) of this section and except as provided in section
1127(b) of this title, the court may confirm 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

243

(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 the application of section 5 of the Securities Act
of 1933. In any hearing under this subsection, the governmental unit has the burden of proof
on the issue of avoidance.
(e) In a small business case, the court shall confirm a plan that complies with the applicable
provisions of this title and that is filed in accordance with section 1121(e) not later than 45
days after the plan is filed unless the time for confirmation is extended in accordance with
section 1121(e)(3).
SUBCHAPTER III—POSTCONFIRMATION MATTERS
§1141. Effect 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, equity security holder, 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 confirming the plan, the
confirmation of a plan vests all of the property of the estate in the debtor.
(c) Except as provided in subsections (d)(2) and (d)(3) of this section and except as otherwise
provided in the plan or in the order confirming the plan, after confirmation of a plan, the
property dealt with by the plan is free and clear of all claims and interests of creditors, equity
security holders, and of general partners in the debtor.
(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 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 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 holders and general
partners provided for by the plan.
(2) A discharge under this chapter does not discharge a debtor who is an individual
from any debt excepted from discharge under section 523 of this title.
244

(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 727(a) of this title if
the case were a case under chapter 7 of this title.
(4) The court may approve a written waiver of discharge executed by the debtor after
the order for relief under this chapter.
(5) In a case in which the debtor is an individual—
(A) unless after notice and a hearing the court orders otherwise for cause,
confirmation of the plan does not discharge any debt provided for in the plan
until the court grants a discharge on completion of all payments under the plan;
(B) at any time after the confirmation of the plan, and after notice and a hearing,
the court may grant a discharge to the debtor who has not completed payments
under the plan if—
(i) 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 under chapter 7 on such date;
(ii) modification of the plan under section 1127 is not practicable; and
(iii) subparagraph (C) permits the court to grant a discharge; and
(C) the court may grant a discharge if, after notice and a hearing held not more
than 10 days before the date of the entry of the order granting the discharge, the
court finds that there is no reasonable cause to believe that—
(i) section 522(q)(1) may be applicable to the debtor; and
(ii) there is pending any proceeding in which the debtor may be found guilty
of a felony of the kind described in section 522(q)(1)(A) or liable for a debt of
the kind described in section 522(q)(1)(B);
and if the requirements of subparagraph (A) or (B) are met.
(6) Notwithstanding paragraph (1), the confirmation of a plan does not discharge a
debtor that is a corporation from any debt—
(A) of a kind specified in paragraph (2)(A) or (2)(B) of section 523(a) that is
owed to a domestic governmental unit, or owed to a person as the result of an
action filed under subchapter III of chapter 37 of title 31 or any similar State
statute; or
(B) for a tax or customs duty with respect to which the debtor—
(i) made a fraudulent return; or
245

(ii) willfully attempted in any manner to evade or to defeat such tax or such
customs duty.
§1142. Implementation of plan
(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 property
dealt with by a confirmed plan, and to perform any other act, including the satisfaction of any
lien, that is necessary for the consummation of the plan.
§1143. Distribution
If a plan requires presentment or surrender of a security or the performance of any other act
as a condition to participation in distribution 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
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 and
only 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 acquiring rights in
good faith reliance on the order of confirmation; and
(2) revoke the discharge of the debtor.
§1145. Exemption from securities laws
(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 and any State or local law requiring
registration for offer or sale of a security or registration or licensing of an issuer of,
underwriter of, or broker or dealer in, a security do not apply 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—
(A) 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 security 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 affiliate, if—
246

(A) such security was owned by the debtor on the date of the filing of the
petition;
(B) the issuer of such security is—
(i) required to file reports under section 13 or 15(d) of the Securities Exchange
Act of 1934; and
(ii) in compliance with the disclosure and reporting provision of such
applicable section; 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 stockbroker 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 underwriter, if such stockbroker
provides, at the time of or before such transaction by such stockbroker, a disclosure
statement approved under section 1125 of this title, and, if the court orders,
information supplementing such disclosure statement.
(b)
(1) Except as provided in paragraph (2) of this subsection and except with respect to
ordinary trading transactions of an entity that is not an issuer, an entity is an
underwriter under section 2(a)(11) of the Securities Act of 1933, 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 from 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(a)(11), with respect to such securities.

247

(2) An entity is not an underwriter under section 2(a)(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 or combining of fractional interests in securities offered or
sold under the plan into whole interests; or
(ii) the purchase or sale of such fractional interests from or to 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 paragraph (1) of this
subsection is not an underwriter under section 2(a)(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.
(d) The Trust Indenture Act of 1939 does not apply to a note issued under the plan that
matures not later than one year after the effective date of the plan.
§1146. Special tax provisions
(a) 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 law imposing a stamp tax or similar tax.
(b) The court may authorize the proponent of a plan to request a determination, limited to
questions of law, by a State or local governmental unit charged with responsibility for
collection or determination 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 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; or
(2) 270 days after such request.
SUBCHAPTER IV—RAILROAD REORGANIZATION
§1161. Inapplicability of other sections
Sections 341, 343, 1102(a)(1), 1104, 1105, 1107, 1129(a)(7), and 1129(c) of this title do not
apply in a case concerning a railroad.
§1162. Definition
In this subchapter, "Board" means the "Surface Transportation Board".
§1163. Appointment of trustee

248

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 trustees in the case.
The United States trustee shall appoint one of such persons to serve as trustee in the case.
§1164. Right to be heard
The Board, 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
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 security holders.
§1166. Effect of subtitle IV of title 49 and of Federal, State, or local regulations
Except with respect to abandonment under section 1170 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 subtitle IV of title 49 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 Regional Rail
Reorganization Act of 1973.
§1167. Collective bargaining agreements
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 except in accordance with
section 6 of such Act.
§1168. Rolling stock equipment
(a)
(1) The right of a secured party with a security interest in or of a lessor or conditional
vendor of equipment described in paragraph (2) to take possession of such equipment
in compliance with an equipment security agreement, lease, or conditional sale
contract, and to enforce any of its other rights or remedies under such security
agreement, lease, or conditional sale contract, to sell, lease, or otherwise retain or
dispose of such equipment, is not limited or otherwise affected by any other provision
of this title or by any power of the court, except that right to take possession and
enforce those other rights and remedies shall be subject to section 362, if—

249

(A) before the date that is 60 days after the date of 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; and
(B) any default, other than a default of a kind described in section 365(b)(2),
under such security agreement, lease, or conditional sale contract—
(i) that occurs before the date of commencement of the case and is an event of
default therewith is cured before the expiration of such 60-day period;
(ii) that occurs or becomes an event of default after the date of
commencement of the case and before the expiration of such 60-day period is
cured before the later of—
(I) the date that is 30 days after the date of the default or event of the
default; or
(II) the expiration of such 60-day period; and
(iii) that occurs on or after the expiration of such 60-day period is cured in
accordance with the terms of such security agreement, lease, or conditional
sale contract, if cure is permitted under that agreement, lease, or conditional
sale contract.
(2) The equipment described in this paragraph—
(A) is rolling stock equipment or accessories used on rolling stock equipment,
including superstructures or racks, that is subject to a security interest granted by,
leased to, or conditionally sold to a debtor; and
(B) includes all records and documents relating to such equipment that are
required, under the terms of the security agreement, lease, or conditional sale
contract, that is to be surrendered or returned by the debtor in connection with
the surrender or return of such equipment.
(3) Paragraph (1) applies to a secured party, lessor, or conditional vendor acting in its
own behalf or acting as trustee or otherwise in behalf of another party.
(b) The trustee and the secured party, lessor, or conditional vendor whose right to take
possession is protected under subsection (a) may agree, subject to the court's approval, to
extend the 60-day period specified in subsection (a)(1).
(c)
(1) In any case under this chapter, the trustee shall immediately surrender and return to
a secured party, lessor, or conditional vendor, described in subsection (a)(1),
equipment described in subsection (a)(2), if at any time after the date of
commencement of the case under this chapter such secured party, lessor, or
conditional vendor is entitled pursuant to subsection (a)(1) to take possession of such
equipment and makes a written demand for such possession of the trustee.
(2) At such time as the trustee is required under paragraph (1) to surrender and return
equipment described in subsection (a)(2), any lease of such equipment, and any
250

security agreement or conditional sale contract relating to such equipment, if such
security agreement or conditional sale contract is an executory contract, shall be
deemed rejected.
(d) With respect to equipment first placed in service on or prior to October 22, 1994, for
purposes of this section—
(1) the term "lease" includes any written agreement with respect to which the lessor
and the debtor, as lessee, have expressed in the agreement or in a substantially
contemporaneous writing that the agreement is to be treated as a lease for Federal
income tax purposes; and
(2) the term "security interest" means a purchase-money equipment security interest.
(e) With respect to equipment first placed in service after October 22, 1994, for purposes of
this section, the term "rolling stock equipment" includes rolling stock equipment that is
substantially rebuilt and accessories used on such equipment.
§1169. Effect of rejection of lease of railroad line
(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 365 of this title, and if the trustee,
within such time as the court 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 contrary to the public interest,
the court, on request of such lessor, and 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 subject to the provisions of
subtitle IV of title 49 that are applicable to railroads.
§1170. Abandonment of railroad line
(a) The court, after notice and a hearing, may authorize the abandonment of all or a portion
of a railroad line if such abandonment is—
(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 Board under a law of the United States, the trustee shall initiate an
appropriate application for such abandonment with the Board. The court may fix a time
within which the Board shall report to the court on such application.
(c) After the court receives the report of the Board, or the expiration of the time fixed under
subsection (b) of this section, whichever occurs first, the court may authorize such
abandonment, after notice to the Board, the Secretary of Transportation, the trustee, any party
251

in interest that has requested notice, any affected shipper or community, 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 such abandonment is appealed, the court, on request of a
party in interest, may authorize suspension of service on a line or a portion of a line
pending the determination of such appeal, after notice to the Board, 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
suspension by the giving of a supersedeas bond or otherwise, during the pendency of
such appeal.
(e)
(1) In authorizing any abandonment of a railroad line under this section, the court shall
require the rail carrier to provide a fair arrangement at least as protective of the
interests of employees as that established under section 11326(a) of title 49.
(2) Nothing in this subsection shall be deemed to affect the priorities or timing of
payment of employee protection which might have existed in the absence of this
subsection.
§1171. Priority claims
(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 had been appointed by a Federal court on the
date of the order for relief under this title shall be entitled to the same priority in the case
under this chapter.
§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

252

(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 Board 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 Board
and, within such time as the court may fix, not exceeding 180 days, the Board, with or
without a hearing, as the Board may determine, and with or without modification or
condition, approves such application, or does not act on such application. Any action or order
of the Board approving, modifying, conditioning, or disapproving 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.
(c)
(1) In approving an application under subsection (b) of this section, the Board shall
require the rail carrier to provide a fair arrangement at least as protective of the
interests of employees as that established under section 11326(a) of title 49.
(2) Nothing in this subsection shall be deemed to affect the priorities or timing of
payment of employee protection which might have existed in the absence of this
subsection.
§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 were sold, and the proceeds of such sale, and the
other property of the estate, were distributed under 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 adequate 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 consistent 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.
§1174. Liquidation
On request of a party in interest and after notice and a 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
253

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.
SUBCHAPTER V—SMALL BUSINESS DEBTOR REORGANIZATION
§1181. Inapplicability of other sections
(a) In General.—Sections 105(d), 1101(1), 1104, 1105, 1106, 1107, 1108, 1115, 1116, 1121,
1123(a)(8), 1123(c), 1127, 1129(a)(15), 1129(b), 1129(c), 1129(e), and 1141(d)(5) of this
title do not apply in a case under this subchapter.
(b) Court Authority.—Unless the court for cause orders otherwise, paragraphs (1), (2), and
(4) of section 1102(a) and sections 1102(b), 1103, and 1125 of this title do not apply in a case
under this subchapter.
(c) Special Rule for Discharge.—If a plan is confirmed under section 1191(b) of this title,
section 1141(d) of this title shall not apply, except as provided in section 1192 of this title.
§1182. Definitions
In this subchapter:
(1) Debtor.—The term "debtor" means a small business debtor.
(2) Debtor in possession.—The term "debtor in possession" means the debtor, unless
removed as debtor in possession under section 1185(a) of this title.
§1183. Trustee
(a) In General.—If the United States trustee has appointed an individual under section 586(b)
of title 28 to serve as standing trustee in cases under this subchapter, and if such individual
qualifies as a trustee under section 322 of this title, then that individual shall serve as trustee
in any case under this subchapter. Otherwise, the United States trustee shall appoint one
disinterested person to serve as trustee in the case or the United States trustee may serve as
trustee in the case, as necessary.
(b) Duties.—The trustee shall—
(1) perform the duties specified in paragraphs (2), (5), (6), (7), and (9) of section
704(a) of this title;
(2) perform the duties specified in paragraphs (3), (4), and (7) of section 1106(a) of
this title, if the court, for cause and on request of a party in interest, the trustee, or the
United States trustee, so orders;
(3) appear and be heard at the status conference under section 1188 of this title and
any hearing that concerns—
(A) the value of property subject to a lien;
(B) confirmation of a plan filed under this subchapter;
(C) modification of the plan after confirmation; or
(D) the sale of property of the estate;

254

(4) ensure that the debtor commences making timely payments required by a plan
confirmed under this subchapter;
(5) if the debtor ceases to be a debtor in possession, perform the duties specified in
section 704(a)(8) and paragraphs (1), (2), and (6) of section 1106(a) of this title,
including operating the business of the debtor;
(6) if there is a claim for a domestic support obligation with respect to the debtor,
perform the duties specified in section 704(c) of this title; and
(7) facilitate the development of a consensual plan of reorganization.
(c) Termination of Trustee Service.—
(1) In general.—If the plan of the debtor is confirmed under section 1191(a) of this
title, the service of the trustee in the case shall terminate when the plan has been
substantially consummated, except that the United States trustee may reappoint a
trustee as needed for performance of duties under subsection (b)(3)(C) of this section
and section 1185(a) of this title.
(2) Service of notice of substantial consummation.—Not later than 14 days after the
plan of the debtor is substantially consummated, the debtor shall file with the court and
serve on the trustee, the United States trustee, and all parties in interest notice of such
substantial consummation.
§1184. Rights and powers of a debtor in possession
Subject to such limitations or conditions as the court may prescribe, a debtor in possession
shall have all the rights, other than the right to compensation under section 330 of this title,
and powers, and shall perform all functions and duties, except the duties specified in
paragraphs (2), (3), and (4) of section 1106(a) of this title, of a trustee serving in a case under
this chapter, including operating the business of the debtor.
§1185. Removal of debtor in possession
(a) In General.—On request of a party in interest, and after notice and a hearing, the court
shall order that the debtor shall not be a debtor in possession for cause, including fraud,
dishonesty, incompetence, or gross mismanagement of the affairs of the debtor, either before
or after the date of commencement of the case, or for failure to perform the obligations of the
debtor under a plan confirmed under this subchapter.
(b) Reinstatement.—On request of a party in interest, and after notice and a hearing, the court
may reinstate the debtor in possession.
§1186. Property of the estate
(a) Inclusions.—If a plan is confirmed under section 1191(b) of this title, property of the
estate includes, in addition to the property specified in section 541 of this title—
(1) all property of the kind specified in that section that the debtor acquires after the
date of commencement of the case but before the case is closed, dismissed, or
converted to a case under chapter 7, 12, or 13 of this title, whichever occurs first; and

255

(2) earnings from services performed by the debtor after the date of commencement of
the case but before the case is closed, dismissed, or converted to a case under chapter
7, 12, or 13 of this title, whichever occurs first.
(b) Debtor Remaining in Possession.—Except as provided in section 1185 of this title, a plan
confirmed under this subchapter, or an order confirming a plan under this subchapter, the
debtor shall remain in possession of all property of the estate.
§1187. Duties and reporting requirements of debtors
(a) Filing Requirements.—Upon electing to be a debtor under this subchapter, the debtor
shall file the documents required by subparagraphs (A) and (B) of section 1116(1) of this
title.
(b) Other Applicable Provisions.—A debtor, in addition to the duties provided in this title
and as otherwise required by law, shall comply with the requirements of section 308 and
paragraphs (2), (3), (4), (5), (6), and (7) of section 1116 of this title.
(c) Separate Disclosure Statement Exemption.—If the court orders under section 1181(b) of
this title that section 1125 of this title applies, section 1125(f) of this title shall apply.
§1188. Status conference
(a) In General.—Except as provided in subsection (b), not later than 60 days after the entry of
the order for relief under this chapter, the court shall hold a status conference to further the
expeditious and economical resolution of a case under this subchapter.
(b) Exception.—The court may extend the period of time for holding a status conference
under subsection (a) if the need for an extension is attributable to circumstances for which
the debtor should not justly be held accountable.
(c) Report.—Not later than 14 days before the date of the status conference under subsection
(a), the debtor shall file with the court and serve on the trustee and all parties in interest a
report that details the efforts the debtor has undertaken and will undertake to attain a
consensual plan of reorganization.
§1189. Filing of the plan
(a) Who May File a Plan.—Only the debtor may file a plan under this subchapter.
(b) Deadline.—The debtor shall file a plan not later than 90 days after the order for relief
under this chapter, except that the court may extend the period if the need for the extension is
attributable to circumstances for which the debtor should not justly be held accountable.
§1190. Contents of plan
A plan filed under this subchapter—
(1) shall include—
(A) a brief history of the business operations of the debtor;
(B) a liquidation analysis; and
(C) projections with respect to the ability of the debtor to make payments under the
proposed plan of reorganization;
256

(2) shall provide for the submission of all or such portion of the 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; and
(3) notwithstanding section 1123(b)(5) of this title, may modify the rights of the holder of a
claim secured only by a security interest in real property that is the principal residence of the
debtor if the new value received in connection with the granting of the security interest
was—
(A) not used primarily to acquire the real property; and
(B) used primarily in connection with the small business of the debtor.
§1191. Confirmation of plan
(a) Terms.—The court shall confirm a plan under this subchapter only if all of the
requirements of section 1129(a), other than paragraph (15) of that section, of this title 1 are
met.
(b) Exception.—Notwithstanding section 510(a) of this title, if all of the applicable
requirements of section 1129(a) of this title, other than paragraphs (8), (10), and (15) of that
section, are met with respect to a plan, the court, on request of the debtor, shall confirm the
plan notwithstanding the requirements of such paragraphs if the plan does not discriminate
unfairly, and is fair and equitable, with respect to each class of claims or interests that is
impaired under, and has not accepted, the plan.
(c) Rule of Construction.—For purposes of this section, the condition that a plan be fair and
equitable with respect to each class of claims or interests includes the following
requirements:
(1) With respect to a class of secured claims, the plan meets the requirements of
section 1129(b)(2)(A) of this title.
(2) As of the effective date of the plan—
(A) the plan provides that all of the projected disposable income of the debtor to
be received in the 3-year period, or such longer period not to exceed 5 years as
the court may fix, beginning on the date that the first payment is due under the
plan will be applied to make payments under the plan; or
(B) the value of the property to be distributed under the plan in the 3-year period,
or such longer period not to exceed 5 years as the court may fix, beginning on
the date on which the first distribution is due under the plan is not less than the
projected disposable income of the debtor.
(3)(A)(i) The debtor will be able to make all payments under the plan; or
(ii) there is a reasonable likelihood that the debtor will be able to make
all payments under the plan; and
(B) the plan provides appropriate remedies, which may include the
liquidation of nonexempt assets, to protect the holders of claims or
interests in the event that the payments are not made.

257

(d) Disposable Income.—For purposes of this section, the term "disposable income" means
the income that is received by the debtor and that is not reasonably necessary to be
expended—
(1) for—
(A) the maintenance or support of the debtor or a dependent of the debtor; or
(B) a domestic support obligation that first becomes payable after the date of the
filing of the petition; or
(2) for the payment of expenditures necessary for the continuation, preservation, or
operation of the business of the debtor.
(e) Special Rule.—Notwithstanding section 1129(a)(9)(A) of this title, a plan that provides
for the payment through the plan of a claim of a kind specified in paragraph (2) or (3) of
section 507(a) of this title may be confirmed under subsection (b) of this section.
§1192. Discharge
If the plan of the debtor is confirmed under section 1191(b) of this title, as soon as
practicable after completion by the debtor of all payments due within the first 3 years of the
plan, or such longer period not to exceed 5 years as the court may fix, 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 provided in section
1141(d)(1)(A) of this title, and all other debts allowed under section 503 of this title and
provided for in the plan, except any debt—
(1) on which the last payment is due after the first 3 years of the plan, or such other
time not to exceed 5 years fixed by the court; or
(2) of the kind specified in section 523(a) of this title.
§1193. Modification of plan
(a) Modification Before Confirmation.—The debtor may modify a plan at any time before
confirmation, but may not modify the plan so that the plan as modified fails to meet the
requirements of sections 1122 and 1123 of this title, with the exception of subsection (a)(8)
of such section 1123. After the modification is filed with the court, the plan as modified
becomes the plan.
(b) Modification After Confirmation.—If a plan has been confirmed under section 1191(a) of
this title, the debtor may modify the plan at any time after confirmation of the plan and
before substantial consummation of the plan, but may not modify the plan so that the plan as
modified fails to meet the requirements of sections 1122 and 1123 of this title, with the
exception of subsection (a)(8) of such section 1123. The plan, as modified under this
subsection, becomes the plan only if circumstances warrant the modification and the court,
after notice and a hearing, confirms the plan as modified under section 1191(a) of this title.
(c) Certain Other Modifications.—If a plan has been confirmed under section 1191(b) of this
title, the debtor may modify the plan at any time within 3 years, or such longer time not to
exceed 5 years, as fixed by the court, but may not modify the plan so that the plan as
modified fails to meet the requirements of section 1191(b) of this title. The plan as modified
under this subsection becomes the plan only if circumstances warrant such modification and
258

the court, after notice and a hearing, confirms such plan, as modified, under section 1191(b)
of this title.
(d) Holders of a Claim or Interest.—If a plan has been confirmed under section 1191(a) of
this title, any holder of a claim or interest that has accepted or rejected the plan is deemed to
have accepted or rejected, as the case may be, the plan as modified, unless, within the time
fixed by the court, such holder changes the previous acceptance or rejection of the holder.
§1194. Payments
(a) Retention and Distribution by Trustee.—Payments and funds received by the trustee shall
be retained by the trustee until confirmation or denial of confirmation of a plan. If a plan is
confirmed, the trustee shall distribute any such payment in accordance with the plan. If a plan
is not confirmed, the trustee shall return any such payments to the debtor after deducting—
(1) any unpaid claim allowed under section 503(b) of this title;
(2) any payment made for the purpose of providing adequate protection of an interest
in property due to the holder of a secured claim; and
(3) any fee owing to the trustee.
(b) Other Plans.—If a plan is confirmed under section 1191(b) of this title, except as
otherwise provided in the plan or in the order confirming the plan, the trustee shall make
payments to creditors under the plan.
(c) Payments Prior to Confirmation.—Prior to confirmation of a plan, the court, after notice
and a hearing, may authorize the trustee to make payments to the holder of a secured claim
for the purpose of providing adequate protection of an interest in property.
§1195. Transactions with professionals
Notwithstanding section 327(a) of this title, a person is not disqualified for employment
under section 327 of this title, by a debtor solely because that person holds a claim of less
than $10,000 that arose prior to commencement of the case.
CHAPTER 12—ADJUSTMENT OF DEBTS OF A FAMILY FARMER OR FISHERMAN
WITH REGULAR ANNUAL INCOME................. Error! Bookmark not defined.
SUBCHAPTER I—OFFICERS, ADMINISTRATION, AND THE ESTATE ............... Error!
Bookmark not defined.
§1201. Stay of action against codebtor ........................... Error! Bookmark not defined.
§1202. Trustee ................................................................ Error! Bookmark not defined.
§1203. Rights and powers of debtor................................ Error! Bookmark not defined.
§1204. Removal of debtor as debtor in possession......... Error! Bookmark not defined.
§1205. Adequate protection ............................................ Error! Bookmark not defined.
§1206. Sales free of interests .......................................... Error! Bookmark not defined.
§1207. Property of the estate .......................................... Error! Bookmark not defined.
§1208. Conversion or dismissal ...................................... Error! Bookmark not defined.
259

SUBCHAPTER II—THE PLAN ........................................ Error! Bookmark not defined.
§1221. Filing of plan ........................................................ Error! Bookmark not defined.
§1222. Contents of plan .................................................. Error! Bookmark not defined.
§1223. Modification of plan before confirmation .............. Error! Bookmark not defined.
§1224. Confirmation hearing ........................................... Error! Bookmark not defined.
§1225. Confirmation of plan ............................................ Error! Bookmark not defined.
§1226. Payments ............................................................ Error! Bookmark not defined.
§1227. Effect of confirmation ........................................... Error! Bookmark not defined.
§1228. Discharge ............................................................ Error! Bookmark not defined.
§1229. Modification of plan after confirmation ................. Error! Bookmark not defined.
§1230. Revocation of an order of confirmation ................ Error! Bookmark not defined.
§1231. Special tax provisions .......................................... Error! Bookmark not defined.
§1232. Claim by a governmental unit based on the disposition of property used in a
farming operation ............................................... Error! Bookmark not defined.
SUBCHAPTER I—OFFICERS, ADMINISTRATION, AND THE ESTATE
§1201. Stay of action against codebtor
(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 of this title.
(b) A creditor may present a negotiable instrument, and may give notice of dishonor of such
an instrument.
(c) On request of a party in interest and after notice and a hearing, the court shall grant relief
from the stay provided by subsection (a) 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 consideration 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 continuation of such stay.
(d) Twenty days after the filing of a request under subsection (c)(2) of this section for relief
from the stay provided by subsection (a) of this section, such stay is terminated with respect
to the party in interest making such request, unless the debtor or any individual that is liable
on such debt with the debtor files and serves upon such party in interest a written objection to
the taking of the proposed action.
260

§1202. Trustee
(a) If the United States trustee has appointed an individual under section 586(b) of title 28 to
serve as standing trustee in cases under this chapter and if such individual qualifies as a
trustee under section 322 of this title, then such individual shall serve as trustee in any case
filed under this chapter. Otherwise, the United States trustee shall appoint one disinterested
person to serve as trustee in the case or the United States trustee may serve as trustee in the
case if necessary.
(b) The trustee shall—
(1) perform the duties specified in sections 704(a)(2), 704(a)(3), 704(a)(5), 704(a)(6),
704(a)(7), and 704(a)(9) of this title;
(2) perform the duties specified in section 1106(a)(3) and 1106(a)(4) of this title if the
court, for cause and on request of a party in interest, the trustee, or the United States
trustee, so orders;
(3) appear and be heard at any hearing that concerns—
(A) the value of property subject to a lien;
(B) confirmation of a plan;
(C) modification of the plan after confirmation; or
(D) the sale of property of the estate;
(4) ensure that the debtor commences making timely payments required by a
confirmed plan;
(5) if the debtor ceases to be a debtor in possession, perform the duties specified in
sections 704(a)(8), 1106(a)(1), 1106(a)(2), 1106(a)(6), 1106(a)(7), and 1203; and
(6) if with respect to the debtor there is a claim for a domestic support obligation,
provide the applicable notice specified in subsection (c).
(c)
(1) In a case described in subsection (b)(6) to which subsection (b)(6) applies, the
trustee shall—
(A)
(i) provide written notice to the holder of the claim described in subsection
(b)(6) of such claim and of the right of such holder to use the services of the
State child support enforcement agency established under sections 464 and
466 of the Social Security Act for the State in which such holder resides, for
assistance in collecting child support during and after the case under this title;
and
(ii) include in the notice provided under clause (i) the address and telephone
number of such State child support enforcement agency;
(B)

261

(i) provide written notice to such State child support enforcement agency of
such claim; and
(ii) include in the notice provided under clause (i) the name, address, and
telephone number of such holder; and
(C) at such time as the debtor is granted a discharge under section 1228, provide
written notice to such holder and to such State child support enforcement agency
of—
(i) the granting of the discharge;
(ii) the last recent known address of the debtor;
(iii) the last recent known name and address of the debtor's employer; and
(iv) the name of each creditor that holds a claim that—
(I) is not discharged under paragraph (2), (4), or (14A) of section 523(a);
or
(II) was reaffirmed by the debtor under section 524(c).
(2)
(A) The holder of a claim described in subsection (b)(6) or the State child
support enforcement agency of the State in which such holder resides may
request from a creditor described in paragraph (1)(C)(iv) the last known address
of the debtor.
(B) Notwithstanding any other provision of law, a creditor that makes a
disclosure of a last known address of a debtor in connection with a request made
under subparagraph (A) shall not be liable by reason of making that disclosure.
§1203. Rights and powers of debtor
Subject to such limitations as the court may prescribe, a debtor in possession shall have all
the rights, other than the right to compensation under section 330, and powers, and shall
perform all the functions and duties, except the duties specified in paragraphs (3) and (4) of
section 1106(a), of a trustee serving in a case under chapter 11, including operating the
debtor's farm or commercial fishing operation.
§1204. Removal of debtor as debtor in possession
(a) On request of a party in interest, and after notice and a hearing, the court shall order that
the debtor shall not be a debtor in possession for cause, including fraud, dishonesty,
incompetence, or gross mismanagement of the affairs of the debtor, either before or after the
commencement of the case.
(b) On request of a party in interest, and after notice and a hearing, the court may reinstate
the debtor in possession.
§1205. Adequate protection
(a) Section 361 does not apply in a case under this chapter.

262

(b) In a case under this chapter, 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 a cash payment or 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 of a lien under section 364 of this title results in a
decrease in the value of property securing a claim or of an entity's ownership interest
in 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 decrease in the value of property securing a
claim or of an entity's ownership interest in property;
(3) paying to such entity for the use of farmland the reasonable rent customary in the
community where the property is located, based upon the rental value, net income, and
earning capacity of the property; or
(4) 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
adequately protect the value of property securing a claim or of such entity's ownership
interest in property.
§1206. Sales free of interests
After notice and a hearing, in addition to the authorization contained in section 363(f), the
trustee in a case under this chapter may sell property under section 363(b) and (c) free and
clear of any interest in such property of an entity other than the estate if the property is
farmland, farm equipment, or property used to carry out a commercial fishing operation
(including a commercial fishing vessel), except that the proceeds of such sale shall be subject
to such interest.
§1207. Property of the estate
(a) Property of the estate includes, in addition to the property specified in section 541 of this
title—
(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 of this title, whichever occurs first; and
(2) earnings from services performed by the debtor after the commencement of the
case but before the case is closed, dismissed, or converted to a case under chapter 7 of
this title, whichever occurs first.
(b) Except as provided in section 1204, a confirmed plan, or an order confirming a plan, the
debtor shall remain in possession of all property of the estate.
§1208. Conversion or dismissal
(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.

263

(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 a case under this chapter. Any waiver of the right
to dismiss under this subsection is unenforceable.
(c) On request of a party in interest, and after notice and a hearing, the court may dismiss a
case under this chapter for cause, including—
(1) unreasonable delay, or gross mismanagement, 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 1221 of this title;
(4) failure to commence making timely payments required by a confirmed plan;
(5) denial of confirmation of a plan under section 1225 of this title and denial of a
request made for additional time for filing another plan or a modification of a plan;
(6) material default by the debtor with respect to a term of a confirmed plan;
(7) revocation of the order of confirmation under section 1230 of this title, and denial
of confirmation of a modified plan under section 1229 of this title;
(8) termination of a confirmed plan by reason of the occurrence of a condition
specified in the plan;
(9) continuing loss to or diminution of the estate and absence of a reasonable
likelihood of rehabilitation; and
(10) failure of the debtor to pay any domestic support obligation that first becomes
payable after the date of the filing of the petition.
(d) On request of a party in interest, and after notice and a hearing, the court may dismiss a
case under this chapter or convert a case under this chapter to a case under chapter 7 of this
title upon a showing that the debtor has committed fraud in connection with the case.
(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
§1221. Filing of plan
The debtor shall file a plan not later than 90 days after the order for relief under this chapter,
except that the court may extend such period if the need for an extension is attributable to
circumstances for which the debtor should not justly be held accountable.
§1222. 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;

264

(2) provide for the full payment, in deferred cash payments, of all claims entitled to
priority under section 507, unless— the holder of a particular claim agrees to a
different treatment of that claim;
(3) if the plan classifies claims and interests, provide the same treatment for each claim
or interest within a particular class unless the holder of a particular claim or interest
agrees to less favorable treatment;
(4) notwithstanding any other provision of this section, a plan may provide for less
than full payment of all amounts owed for a claim entitled to priority under section
507(a)(1)(B) only if the plan provides that all of the debtor's projected disposable
income for a 5-year period beginning on the date that the first payment is due under
the plan will be applied to make payments under the plan; and
(5) subject to section 1232, provide for the treatment of any claim by a governmental
unit of a kind described in section 1232(a).
(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; however, such
plan may treat claims for a consumer debt of the debtor if an individual is liable on
such consumer debt with the debtor differently than other unsecured claims;
(2) modify the rights of holders of secured claims, or of holders of unsecured claims,
or leave unaffected the rights of holders of any class of claims;
(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 other unsecured claim;
(5) provide for the curing of any default within a reasonable time and maintenance 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) subject to section 365 of this title, provide for the assumption, rejection, or
assignment of any executory contract or unexpired lease of the debtor not previously
rejected under such section;
(7) provide for the payment of all or part of a claim against the debtor from property of
the estate or property of the debtor;
(8) provide for the sale of all or any part of the property of the estate or the distribution
of all or any part of the property of the estate among those having an interest in such
property;
(9) provide for payment of allowed secured claims consistent with section 1225(a)(5)
of this title, over a period exceeding the period permitted under section 1222(c);
(10) provide for the vesting of property of the estate, on confirmation of the plan or at
a later time, in the debtor or in any other entity;
(11) provide for the payment of interest accruing after the date of the filing of the
petition on unsecured claims that are nondischargeable under section 1228(a), except
265

that such interest may be paid only to the extent that the debtor has disposable income
available to pay such interest after making provision for full payment of all allowed
claims; and
(12) include any other appropriate provision not inconsistent with this title.
(c) Except as provided in subsections (b)(5) and (b)(9), 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.
(d) Notwithstanding subsection (b)(2) of this section and sections 506(b) and 1225(a)(5) of
this title, if it is proposed in a plan to cure a default, the amount necessary to cure the default,
shall be determined in accordance with the underlying agreement and applicable
nonbankruptcy law.
§1223. Modification of plan before confirmation
(a) 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 section 1222 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 acceptance or rejection.
§1224. Confirmation hearing
After expedited notice, the court shall hold a hearing on confirmation of the plan. A party in
interest, the trustee, or the United States trustee may object to the confirmation of the plan.
Except for cause, the hearing shall be concluded not later than 45 days after the filing of the
plan.
§1225. Confirmation of plan
(a) Except as provided in subsection (b), the court shall confirm a plan if—
(1) the plan complies with the provisions of this chapter and with the 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 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 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)
266

(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 property to be distributed
by the trustee or the debtor 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;
(6) the debtor will be able to make all payments under the plan and to comply with the
plan; and
(7) the debtor has paid all amounts that are required to be paid under a domestic
support obligation and that first become payable after the date of the filing of the
petition if the debtor is required by a judicial or administrative order, or by statute, to
pay such domestic support obligation.
(b)
(1) If the trustee or the holder of an allowed unsecured claim objects to the
confirmation of the plan, then the court may not approve the plan unless, as of the
effective date of the plan—
(A) the value of the property to be distributed under the plan on account of such
claim is not less than the amount of such claim;
(B) the plan provides that all of the debtor's projected disposable income to be
received in the three-year period, or such longer period as the court may approve
under section 1222(c), beginning on the date that the first payment is due under
the plan will be applied to make payments under the plan; or
(C) the value of the property to be distributed under the plan in the 3-year period,
or such longer period as the court may approve under section 1222(c), beginning
on the date that the first distribution is due under the plan is not less than the
debtor's projected disposable income for such period.
(2) For purposes of this subsection, "disposable income" means income which is
received by the debtor and which is not reasonably necessary to be expended—
(A) for the maintenance or support of the debtor or a dependent of the debtor or
for a domestic support obligation that first becomes payable after the date of the
filing of the petition; or
(B) for the payment of expenditures necessary for the continuation, preservation,
and operation of the debtor's business.
(c) 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.
§1226. Payments
(a) Payments and funds received by the trustee shall be retained by the trustee until
confirmation or denial of confirmation of a plan. If a plan is confirmed, the trustee shall

267

distribute any such payment in accordance with the plan. If a plan is not confirmed, the
trustee shall return any such payments to the debtor, after deducting—
(1) any unpaid claim allowed under section 503(b) of this title; and
(2) if a standing trustee is serving in the case, the percentage fee fixed for such
standing trustee.
(b) 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)(2) of this title; and
(2) if a standing trustee appointed under section 1202(c) 1 of this title is serving in the
case, the percentage fee fixed for such standing trustee under section 1202(d) 1 of this
title.
(c) Except as otherwise provided in the plan or in the order confirming the plan, the trustee
shall make payments to creditors under the plan.
§1227. Effect of confirmation
(a) Except as provided in section 1228(a) of this title, the provisions of a confirmed plan bind
the debtor, each creditor, each equity security holder, and each general partner in the debtor,
whether or not the claim of such creditor, such equity security holder, or such general partner
in the debtor is provided for by the plan, and whether or not such creditor, such equity
security holder, or such general partner in the debtor has objected to, has accepted, or has
rejected the plan.
(b) Except as otherwise provided in the plan or the order confirming the plan, the
confirmation of a plan vests all of the property of the estate in the debtor.
(c) Except as provided in section 1228(a) of this title and except as otherwise provided in the
plan or in the order confirming 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.
§1228. Discharge
(a) Subject to subsection (d), as soon as practicable after completion by the debtor of all
payments under the plan, and in the case of a debtor who is required by a judicial or
administrative order, or by statute, to pay a domestic support obligation, after such debtor
certifies that all amounts payable under such order or such statute that are due on or before
the date of the certification (including amounts due before the petition was filed, but only to
the extent provided for by the plan) have been paid, other than payments to holders of
allowed claims provided for under section 1222(b)(5) or 1222(b)(9) of this title, 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 provided for by the
plan, allowed under section 503 of this title or disallowed under section 502 of this title,
except any debt—
(1) provided for under section 1222(b)(5) or 1222(b)(9) of this title; or
(2) of a kind specified in section 523(a) of this title, except as provided in section
1232(c).
268

(b) Subject to subsection (d), at any time after the confirmation of the plan and after notice
and 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 circumstances 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
under chapter 7 of this title on such date; and
(3) modification of the plan under section 1229 of this title is not practicable.
(c) A discharge granted under subsection (b) of this section discharges 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 1222(b)(5) or 1222(b)(9) of this title; or
(2) of a kind specified in section 523(a) of this title, except as provided in section
1232(c).
(d) 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 by the debtor through fraud; and
(2) the requesting party did not know of such fraud until after such discharge was
granted.
(e) After the debtor is granted a discharge, the court shall terminate the services of any
trustee serving in the case.
(f) The court may not grant a discharge under this chapter unless the court after notice and a
hearing held not more than 10 days before the date of the entry of the order granting the
discharge finds that there is no reasonable cause to believe that—
(1) section 522(q)(1) may be applicable to the debtor; and
(2) there is pending any proceeding in which the debtor may be found guilty of a
felony of the kind described in section 522(q)(1)(A) or liable for a debt of the kind
described in section 522(q)(1)(B).
§1229. Modification of plan after confirmation
(a) At any time after confirmation of the plan but before the completion of payments under
such plan, the plan may be modified, on request of the debtor, the trustee, or the holder of an
allowed unsecured claim, 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;

269

(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; or
(4) provide for the payment of a claim described in section 1232(a) that arose after the
date on which the petition was filed.
(b)
(1) Sections 1222(a), 1222(b), and 1223(c) of this title and the requirements of section
1225(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 payments 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.
(d) A plan may not be modified under this section—
(1) to increase the amount of any payment due before the plan as modified becomes
the plan;
(2) by anyone except the debtor, based on an increase in the debtor's disposable
income, to increase the amount of payments to unsecured creditors required for a
particular month so that the aggregate of such payments exceeds the debtor's
disposable income for such month; or
(3) in the last year of the plan by anyone except the debtor, to require payments that
would leave the debtor with insufficient funds to carry on the farming operation after
the plan is completed.
§1230. 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 1225 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 1207 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 1229 of this title.
§1231. Special tax provisions
(a) The issuance, transfer, or exchange of a security, or the making or delivery of an
instrument of transfer under a plan confirmed under section 1225 of this title, may not be
taxed under any law imposing a stamp tax or similar tax.
(b) The court may authorize the proponent of a plan to request a determination, limited to
questions of law, by any governmental unit charged with responsibility for collection or
determination of a tax on or measured by income, of the tax effects, under section 346 of this
270

title and under the law imposing such tax, of the 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; or
(2) 270 days after such request.
§1232. Claim by a governmental unit based on the disposition of property used in a farming
operation
(a) Any unsecured claim of a governmental unit against the debtor or the estate that arises
before the filing of the petition, or that arises after the filing of the petition and before the
debtor's discharge under section 1228, as a result of the sale, transfer, exchange, or other
disposition of any property used in the debtor's farming operation—
(1) shall be treated as an unsecured claim arising before the date on which the petition
is filed;
(2) shall not be entitled to priority under section 507;
(3) shall be provided for under a plan; and
(4) shall be discharged in accordance with section 1228.
(b) For purposes of applying sections 1225(a)(4), 1228(b)(2), and 1229(b)(1) to a claim
described in subsection (a) of this section, the amount that would be paid on such claim if the
estate of the debtor were liquidated in a case under chapter 7 of this title shall be the amount
that would be paid by the estate in a chapter 7 case if the claim were an unsecured claim
arising before the date on which the petition was filed and were not entitled to priority under
section 507.
(c) For purposes of applying sections 523(a), 1228(a)(2), and 1228(c)(2) to a claim described
in subsection (a) of this section, the claim shall not be treated as a claim of a kind specified in
subparagraph (A) or (B) of section 523(a)(1).
(d)
(1) A governmental unit may file a proof of claim for a claim described in subsection
(a) that arises after the date on which the petition is filed.
(2) If a debtor files a tax return after the filing of the petition for a period in which a
claim described in subsection (a) arises, and the claim relates to the tax return, the
debtor shall serve notice of the claim on the governmental unit charged with the
responsibility for the collection of the tax at the address and in the manner designated
in section 505(b)(1). Notice under this paragraph shall state that the debtor has filed a
petition under this chapter, state the name and location of the court in which the case
under this chapter is pending, state the amount of the claim, and include a copy of the
filed tax return and documentation supporting the calculation of the claim.
(3) If notice of a claim has been served on the governmental unit in accordance with
paragraph (2), the governmental unit may file a proof of claim not later than 180 days
after the date on which such notice was served. If the governmental unit has not filed a
timely proof of the claim, the debtor or trustee may file proof of the claim that is
271

consistent with the notice served under paragraph (2). If a proof of claim is filed by the
debtor or trustee under this paragraph, the governmental unit may not amend the proof
of claim.
(4) A claim filed under this subsection shall be determined and shall be allowed under
subsection (a), (b), or (c) of section 502, or disallowed under subsection (d) or (e) of
section 502, in the same manner as if the claim had arisen immediately before the date
of the filing of the petition.
CHAPTER 13—ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR
INCOME ............................................................ Error! Bookmark not defined.
SUBCHAPTER I—OFFICERS, ADMINISTRATION, AND THE ESTATE ............... Error!
Bookmark not defined.
§1301. Stay of action against codebtor ........................... Error! Bookmark not defined.
§1302. Trustee ................................................................ Error! Bookmark not defined.
§1303. Rights and powers of debtor................................ Error! Bookmark not defined.
§1304. Debtor engaged in business ................................ Error! Bookmark not defined.
§1305. Filing and allowance of postpetition claims ......... Error! Bookmark not defined.
§1306. Property of the estate .......................................... Error! Bookmark not defined.
§1307. Conversion or dismissal ...................................... Error! Bookmark not defined.
§1308. Filing of prepetition tax returns ............................ Error! Bookmark not defined.
SUBCHAPTER II—THE PLAN ........................................ Error! Bookmark not defined.
§1321. Filing of plan ........................................................ Error! Bookmark not defined.
§1322. Contents of plan .................................................. Error! Bookmark not defined.
§1323. Modification of plan before confirmation .............. Error! Bookmark not defined.
§1324. Confirmation hearing ........................................... Error! Bookmark not defined.
§1325. Confirmation of plan ............................................ Error! Bookmark not defined.
§1326. Payments ............................................................ Error! Bookmark not defined.
§1327. Effect of confirmation ........................................... Error! Bookmark not defined.
§1328. Discharge ............................................................ Error! Bookmark not defined.
§1329. Modification of plan after confirmation ................. Error! Bookmark not defined.
§1330. Revocation of an order of confirmation ................ Error! Bookmark not defined.
SUBCHAPTER I—OFFICERS, ADMINISTRATION, AND THE ESTATE
§1301. Stay of action against codebtor
(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
272

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.
(b) A creditor may present a negotiable instrument, and may give notice of dishonor of such
an instrument.
(c) On request of a party in interest and after notice and a hearing, the court shall grant relief
from the stay provided by subsection (a) 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 consideration 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 continuation of such stay.
(d) Twenty days after the filing of a request under subsection (c)(2) of this section for relief
from the stay provided by subsection (a) of this section, such stay is terminated with respect
to the party in interest making such request, unless the debtor or any individual that is liable
on such debt with the debtor files and serves upon such party in interest a written objection to
the taking of the proposed action.
§1302. Trustee
(a) If the United States trustee appoints an individual under section 586(b) of title 28 to serve
as standing trustee in cases under this chapter and if such individual qualifies under section
322 of this title, then such individual shall serve as trustee in the case. Otherwise, the United
States trustee shall appoint one disinterested person to serve as trustee in the case or the
United States trustee may serve as a trustee in the case.
(b) The trustee shall—
(1) perform the duties specified in sections 704(a)(2), 704(a)(3), 704(a)(4), 704(a)(5),
704(a)(6), 704(a)(7), and 704(a)(9) 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;
(3) dispose of, under regulations issued by the Director of the Administrative Office of
the United States Courts, moneys received or to be received in a case under chapter
XIII of the Bankruptcy Act;
(4) advise, other than on legal matters, and assist the debtor in performance under the
plan;
273

(5) ensure that the debtor commences making timely payments under section 1326 of
this title; and
(6) if with respect to the debtor there is a claim for a domestic support obligation,
provide the applicable notice specified in subsection (d).
(c) If the debtor is engaged in business, then in addition to the duties specified in subsection
(b) of this section, the trustee shall perform the duties specified in sections 1106(a)(3) and
1106(a)(4) of this title.
(d)
(1) In a case described in subsection (b)(6) to which subsection (b)(6) applies, the
trustee shall—
(A)
(i) provide written notice to the holder of the claim described in subsection
(b)(6) of such claim and of the right of such holder to use the services of the
State child support enforcement agency established under sections 464 and
466 of the Social Security Act for the State in which such holder resides, for
assistance in collecting child support during and after the case under this title;
and
(ii) include in the notice provided under clause (i) the address and telephone
number of such State child support enforcement agency;
(B)
(i) provide written notice to such State child support enforcement agency of
such claim; and
(ii) include in the notice provided under clause (i) the name, address, and
telephone number of such holder; and
(C) at such time as the debtor is granted a discharge under section 1328, provide
written notice to such holder and to such State child support enforcement agency
of—
(i) the granting of the discharge;
(ii) the last recent known address of the debtor;
(iii) the last recent known name and address of the debtor's employer; and
(iv) the name of each creditor that holds a claim that—
(I) is not discharged under paragraph (2) or (4) of section 523(a); or
(II) was reaffirmed by the debtor under section 524(c).
(2)
(A) The holder of a claim described in subsection (b)(6) or the State child
support enforcement agency of the State in which such holder resides may
request from a creditor described in paragraph (1)(C)(iv) the last known address
of the debtor.
274

(B) Notwithstanding any other provision of law, a creditor that makes a
disclosure of a last known address of a debtor in connection with a request made
under subparagraph (A) shall not be liable by reason of making that disclosure.
§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 under sections 363(b), 363(d), 363(e), 363(f),
and 363(l), of this title.
§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 on a trustee under sections 363(c) and 364 of this
title and to such 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 trustee specified in section
704(a)(8) of this title.
§1305. Filing and allowance of postpetition claims
(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 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
(a) Property of the estate includes, in addition to the property specified in section 541 of this
title—
(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, 11, or 12 of this title, whichever occurs first; and
(2) earnings from services performed by the debtor after the commencement of the
case but before the case is closed, dismissed, or converted to a case under chapter 7,
11, or 12 of this title, whichever occurs first.
275

(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
(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,
1112, or 1208 of this title, the court shall dismiss a case under this chapter. Any waiver of the
right to dismiss under this subsection is unenforceable.
(c) Except as provided in subsection (f) of this section, on request of a party in interest or the
United States trustee 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 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) failure to commence making timely payments under section 1326 of this title;
(5) denial of confirmation of a plan under section 1325 of this title and denial of a
request made for additional time for filing another plan or a modification of a plan;
(6) material default by the debtor with respect to a term of a confirmed plan;
(7) 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;
(8) termination of a confirmed plan by reason of the occurrence of a condition
specified in the plan other than completion of payments under the plan;
(9) only on request of the United States trustee, failure of the debtor to file, within
fifteen days, or such additional time as the court may allow, after the filing of the
petition commencing such case, the information required by paragraph (1) of section
521(a);
(10) only on request of the United States trustee, failure to timely file the information
required by paragraph (2) of section 521(a); or
(11) failure of the debtor to pay any domestic support obligation that first becomes
payable after the date of the filing of the petition.
(d) Except as provided in subsection (f) 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 or the United States
trustee and after notice and a hearing, the court may convert a case under this chapter to a
case under chapter 11 or 12 of this title.
(e) Upon the failure of the debtor to file a tax return under section 1308, on request of a party
in interest or the United States trustee and after notice and a hearing, the court shall dismiss a
case or convert a case under this chapter to a case under chapter 7 of this title, whichever is in
the best interest of the creditors and the estate.
276

(f) The court may not convert a case under this chapter to a case under chapter 7, 11, or 12 of
this title if the debtor is a farmer, unless the debtor requests such conversion.
(g) 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.
§1308. Filing of prepetition tax returns
(a) Not later than the day before the date on which the meeting of the creditors is first
scheduled to be held under section 341(a), if the debtor was required to file a tax return under
applicable nonbankruptcy law, the debtor shall file with appropriate tax authorities all tax
returns for all taxable periods ending during the 4-year period ending on the date of the filing
of the petition.
(b)
(1) Subject to paragraph (2), if the tax returns required by subsection (a) have not been
filed by the date on which the meeting of creditors is first scheduled to be held under
section 341(a), the trustee may hold open that meeting for a reasonable period of time
to allow the debtor an additional period of time to file any unfiled returns, but such
additional period of time shall not extend beyond—
(A) for any return that is past due as of the date of the filing of the petition, the
date that is 120 days after the date of that meeting; or
(B) for any return that is not past due as of the date of the filing of the petition,
the later of—
(i) the date that is 120 days after the date of that meeting; or
(ii) the date on which the return is due under the last automatic extension of
time for filing that return to which the debtor is entitled, and for which request
is timely made, in accordance with applicable nonbankruptcy law.
(2) After notice and a hearing, and order entered before the tolling of any applicable
filing period determined under paragraph (1), if the debtor demonstrates by a
preponderance of the evidence that the failure to file a return as required under
paragraph (1) is attributable to circumstances beyond the control of the debtor, the
court may extend the filing period established by the trustee under paragraph (1) for—
(A) a period of not more than 30 days for returns described in paragraph (1)(A);
and
(B) a period not to extend after the applicable extended due date for a return
described in paragraph (1)(B).
(c) For purposes of this section, the term "return" includes a return prepared pursuant to
subsection (a) or (b) of section 6020 of the Internal Revenue Code of 1986, or a similar State
or local law, or a written stipulation to a judgment or a final order entered by a
nonbankruptcy tribunal.
SUBCHAPTER II—THE PLAN
§1321. Filing of plan
277

The debtor shall file a plan.
§1322. Contents of plan
(a) The plan—
(1) shall 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) shall provide for the full payment, in deferred cash payments, of 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;
(3) if the plan classifies claims, shall provide the same treatment for each claim within
a particular class; and
(4) notwithstanding any other provision of this section, may provide for less than full
payment of all amounts owed for a claim entitled to priority under section
507(a)(1)(B) only if the plan provides that all of the debtor's projected disposable
income for a 5-year period beginning on the date that the first payment is due under
the plan will be applied to make payments under the plan.
(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; however, such
plan may treat claims for a consumer debt of the debtor if an individual is liable on
such consumer debt with the debtor differently than other unsecured claims;
(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, or leave unaffected the rights of holders of any class of claims;
(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 other unsecured claim;
(5) notwithstanding paragraph (2) of this subsection, provide for the curing of any
default within a reasonable time and maintenance 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) subject to section 365 of this title, provide for the assumption, rejection, or
assignment of any executory contract or unexpired lease of the debtor not previously
rejected under such section;
(8) provide for the payment of all or 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 confirmation of the plan or at a
later time, in the debtor or in any other entity;
278

(10) provide for the payment of interest accruing after the date of the filing of the
petition on unsecured claims that are nondischargeable under section 1328(a), except
that such interest may be paid only to the extent that the debtor has disposable income
available to pay such interest after making provision for full payment of all allowed
claims; and
(11) include any other appropriate provision not inconsistent with this title.
(c) Notwithstanding subsection (b)(2) and applicable nonbankruptcy law—
(1) a default with respect to, or that gave rise to, a lien on the debtor's principal
residence may be cured under paragraph (3) or (5) of subsection (b) until such
residence is sold at a foreclosure sale that is conducted in accordance with applicable
nonbankruptcy law; and
(2) in a case in which the last payment on the original payment schedule for a claim
secured only by a security interest in real property that is the debtor's principal
residence is due before the date on which the final payment under the plan is due, the
plan may provide for the payment of the claim as modified pursuant to section
1325(a)(5) of this title.
(d)
(1) If the current monthly income of the debtor and the debtor's spouse combined,
when multiplied by 12, is not less than—
(A) in the case of a debtor in a household of 1 person, the median family income
of the applicable State for 1 earner;
(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest
median family income of the applicable State for a family of the same number or
fewer individuals; or
(C) in the case of a debtor in a household exceeding 4 individuals, the highest
median family income of the applicable State for a family of 4 or fewer
individuals, plus $525 [$700 as of April 1, 2016] per month for each individual
in excess of 4,
the plan may not provide for payments over a period that is longer than 5 years.
(2) If the current monthly income of the debtor and the debtor's spouse combined,
when multiplied by 12, is less than—
(A) in the case of a debtor in a household of 1 person, the median family income
of the applicable State for 1 earner;
(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest
median family income of the applicable State for a family of the same number or
fewer individuals; or
(C) in the case of a debtor in a household exceeding 4 individuals, the highest
median family income of the applicable State for a family of 4 or fewer
individuals, plus $525 [$700 as of April 1, 2016] per month for each individual
in excess of 4,
279

the plan may not provide for payments over a period that is longer than 3 years, unless
the court, for cause, approves a longer period, but the court may not approve a period
that is longer than 5 years.
(e) Notwithstanding subsection (b)(2) of this section and sections 506(b) and 1325(a)(5) of
this title, if it is proposed in a plan to cure a default, the amount necessary to cure the default,
shall be determined in accordance with the underlying agreement and applicable
nonbankruptcy law.
(f) A plan may not materially alter the terms of a loan described in section 362(b)(19) and
any amounts required to repay such loan shall not constitute "disposable income" under
section 1325.
§1323. Modification of plan before confirmation
(a) 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 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 acceptance or rejection.
§1324. Confirmation hearing
(a) Except as provided in subsection (b) and after notice, the court shall hold a hearing on
confirmation of the plan. A party in interest may object to confirmation of the plan.
(b) The hearing on confirmation of the plan may be held not earlier than 20 days and not later
than 45 days after the date of the meeting of creditors under section 341(a), unless the court
determines that it would be in the best interests of the creditors and the estate to hold such
hearing at an earlier date and there is no objection to such earlier date.
§1325. Confirmation of plan
(a) Except as provided in subsection (b), the court shall confirm a plan if—
(1) The plan complies with the provisions of this chapter and with the 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 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 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;
280

(B)
(i) the plan provides that—
(I) the holder of such claim retain the lien securing such claim until the
earlier of—
(aa) the payment of the underlying debt determined under
nonbankruptcy law; or
(bb) discharge under section 1328; and
(II) if the case under this chapter is dismissed or converted without
completion of the plan, such lien shall also be retained by such holder to
the extent recognized by applicable nonbankruptcy law;
(ii) the value, as of the effective date of the plan, of property to be distributed
under the plan on account of such claim is not less than the allowed amount of
such claim; and
(iii) if—
(I) property to be distributed pursuant to this subsection is in the form of
periodic payments, such payments shall be in equal monthly amounts;
and
(II) the holder of the claim is secured by personal property, the amount
of such payments shall not be less than an amount sufficient to provide
to the holder of such claim adequate protection during the period of the
plan; or
(C) the debtor surrenders the property securing such claim to such holder;
(6) the debtor will be able to make all payments under the plan and to comply with the
plan;
(7) the action of the debtor in filing the petition was in good faith;
(8) the debtor has paid all amounts that are required to be paid under a domestic
support obligation and that first become payable after the date of the filing of the
petition if the debtor is required by a judicial or administrative order, or by statute, to
pay such domestic support obligation; and
(9) the debtor has filed all applicable Federal, State, and local tax returns as required
by section 1308.
For purposes of paragraph (5), section 506 shall not apply to a claim described in that
paragraph if the creditor has a purchase money security interest securing the debt that is the
subject of the claim, the debt was incurred within the 910-day period preceding the date of
the filing of the petition, and the collateral for that debt consists of a motor vehicle (as
defined in section 30102 of title 49) acquired for the personal use of the debtor, or if
collateral for that debt consists of any other thing of value, if the debt was incurred during the
1-year period preceding that filing.
(b)
281

(1) If the trustee or the holder of an allowed unsecured claim objects to the
confirmation of the plan, then the court may not approve the plan unless, as of the
effective date of the plan—
(A) the value of the property to be distributed under the plan on account of such
claim is not less than the amount of such claim; or
(B) the plan provides that all of the debtor's projected disposable income to be
received in the applicable commitment period beginning on the date that the first
payment is due under the plan will be applied to make payments to unsecured
creditors under the plan.
(2) For purposes of this subsection, the term "disposable income" means current
monthly income received by the debtor (other than child support payments, foster care
payments, or disability payments for a dependent child made in accordance with
applicable nonbankruptcy law to the extent reasonably necessary to be expended for
such child) less amounts reasonably necessary to be expended—
(A)
(i) for the maintenance or support of the debtor or a dependent of the debtor,
or for a domestic support obligation, that first becomes payable after the date
the petition is filed; and
(ii) for charitable contributions (that meet the definition of "charitable
contribution" under section 548(d)(3)) to a qualified religious or charitable
entity or organization (as defined in section 548(d)(4)) in an amount not to
exceed 15 percent of gross income of the debtor for the year in which the
contributions are made; and
(B) if the debtor is engaged in business, for the payment of expenditures
necessary for the continuation, preservation, and operation of such business.
(3) Amounts reasonably necessary to be expended under paragraph (2), other than
subparagraph (A)(ii) of paragraph (2), shall be determined in accordance with
subparagraphs (A) and (B) of section 707(b)(2), if the debtor has current monthly
income, when multiplied by 12, greater than—
(A) in the case of a debtor in a household of 1 person, the median family income
of the applicable State for 1 earner;
(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest
median family income of the applicable State for a family of the same number or
fewer individuals; or
(C) in the case of a debtor in a household exceeding 4 individuals, the highest
median family income of the applicable State for a family of 4 or fewer
individuals, plus $525 [$700 as of April 1, 2016] per month for each individual
in excess of 4.
(4) For purposes of this subsection, the "applicable commitment period"—
(A) subject to subparagraph (B), shall be—
282

(i) 3 years; or
(ii) not less than 5 years, if the current monthly income of the debtor and the
debtor's spouse combined, when multiplied by 12, is not less than—
(I) in the case of a debtor in a household of 1 person, the median family
income of the applicable State for 1 earner;
(II) in the case of a debtor in a household of 2, 3, or 4 individuals, the
highest median family income of the applicable State for a family of the
same number or fewer individuals; or
(III) in the case of a debtor in a household exceeding 4 individuals, the
highest median family income of the applicable State for a family of 4 or
fewer individuals, plus $525 [$700 as of April 1, 2016] per month for
each individual in excess of 4; and
(B) may be less than 3 or 5 years, whichever is applicable under subparagraph
(A), but only if the plan provides for payment in full of all allowed unsecured
claims over a shorter period.
(c) 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.
§1326. Payments
(a)
(1) Unless the court orders otherwise, the debtor shall commence making payments
not later than 30 days after the date of the filing of the plan or the order for relief,
whichever is earlier, in the amount—
(A) proposed by the plan to the trustee;
(B) scheduled in a lease of personal property directly to the lessor for that portion
of the obligation that becomes due after the order for relief, reducing the
payments under subparagraph (A) by the amount so paid and providing the
trustee with evidence of such payment, including the amount and date of
payment; and
(C) that provides adequate protection directly to a creditor holding an allowed
claim secured by personal property to the extent the claim is attributable to the
purchase of such property by the debtor for that portion of the obligation that
becomes due after the order for relief, reducing the payments under subparagraph
(A) by the amount so paid and providing the trustee with evidence of such
payment, including the amount and date of payment.
(2) A payment made under paragraph (1)(A) shall be retained by the trustee until
confirmation or denial of confirmation. If a plan is confirmed, the trustee shall
distribute any such payment in accordance with the plan as soon as is practicable. If a
plan is not confirmed, the trustee shall return any such payments not previously paid
and not yet due and owing to creditors pursuant to paragraph (3) to the debtor, after
deducting any unpaid claim allowed under section 503(b).
283

(3) Subject to section 363, the court may, upon notice and a hearing, modify, increase,
or reduce the payments required under this subsection pending confirmation of a plan.
(4) Not later than 60 days after the date of filing of a case under this chapter, a debtor
retaining possession of personal property subject to a lease or securing a claim
attributable in whole or in part to the purchase price of such property shall provide the
lessor or secured creditor reasonable evidence of the maintenance of any required
insurance coverage with respect to the use or ownership of such property and continue
to do so for so long as the debtor retains possession of such property.
(b) 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)(2) of this title;
(2) if a standing trustee appointed under section 586(b) of title 28 is serving in the
case, the percentage fee fixed for such standing trustee under section 586(e)(1)(B) of
title 28; and
(3) if a chapter 7 trustee has been allowed compensation due to the conversion or
dismissal of the debtor's prior case pursuant to section 707(b), and some portion of that
compensation remains unpaid in a case converted to this chapter or in the case
dismissed under section 707(b) and refiled under this chapter, the amount of any such
unpaid compensation, which shall be paid monthly—
(A) by prorating such amount over the remaining duration of the plan; and
(B) by monthly payments not to exceed the greater of—
(i) $25; or
(ii) the amount payable to unsecured nonpriority creditors, as provided by the
plan, multiplied by 5 percent, and the result divided by the number of months
in the plan.
(c) Except as otherwise provided in the plan or in the order confirming the plan, the trustee
shall make payments to creditors under the plan.
(d) Notwithstanding any other provision of this title—
(1) compensation referred to in subsection (b)(3) is payable and may be collected by
the trustee under that paragraph, even if such amount has been discharged in a prior
case under this title; and
(2) such compensation is payable in a case under this chapter only to the extent
permitted by subsection (b)(3).
§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 confirming the plan, the
confirmation of a plan vests all of the property of the estate in the debtor.

284

(c) Except as otherwise provided in the plan or in the order confirming 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.
§1328. Discharge
(a) Subject to subsection (d), as soon as practicable after completion by the debtor of all
payments under the plan, and in the case of a debtor who is required by a judicial or
administrative order, or by statute, to pay a domestic support obligation, after such debtor
certifies that all amounts payable under such order or such statute that are due on or before
the date of the certification (including amounts due before the petition was filed, but only to
the extent provided for by the plan) have been paid, 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 provided for by the plan or disallowed
under section 502 of this title, except any debt—
(1) provided for under section 1322(b)(5);
(2) of the kind specified in section 507(a)(8)(C) or in paragraph (1)(B), (1)(C), (2), (3),
(4), (5), (8), or (9) of section 523(a);
(3) for restitution, or a criminal fine, included in a sentence on the debtor's conviction
of a crime; or
(4) for restitution, or damages, awarded in a civil action against the debtor as a result
of willful or malicious injury by the debtor that caused personal injury to an individual
or the death of an individual.
(b) Subject to subsection (d), at any time after the confirmation of the plan and after notice
and 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 circumstances 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
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 discharges 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.
(d) Notwithstanding any other provision of this section, a discharge granted under this
section does not discharge the debtor from any 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.
285

(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 by the debtor through fraud; and
(2) the requesting party did not know of such fraud until after such discharge was
granted.
(f) Notwithstanding subsections (a) and (b), the court shall not grant a discharge of all debts
provided for in the plan or disallowed under section 502, if the debtor has received a
discharge—
(1) in a case filed under chapter 7, 11, or 12 of this title during the 4-year period
preceding the date of the order for relief under this chapter, or
(2) in a case filed under chapter 13 of this title during the 2-year period preceding the
date of such order.
(g)
(1) The court shall not grant a discharge under this section to a debtor unless after
filing a petition the debtor has completed an instructional course concerning personal
financial management described in section 111.
(2) Paragraph (1) shall not apply with respect to a debtor who is a person described in
section 109(h)(4) or who resides in a district for which the United States trustee (or the
bankruptcy administrator, if any) determines that the approved instructional courses
are not adequate to service the additional individuals who would otherwise be required
to complete such instructional course by reason of the requirements of paragraph (1).
(3) The United States trustee (or the bankruptcy administrator, if any) who makes a
determination described in paragraph (2) shall review such determination not later than
1 year after the date of such determination, and not less frequently than annually
thereafter.
(h) The court may not grant a discharge under this chapter unless the court after notice and a
hearing held not more than 10 days before the date of the entry of the order granting the
discharge finds that there is no reasonable cause to believe that—
(1) section 522(q)(1) may be applicable to the debtor; and
(2) there is pending any proceeding in which the debtor may be found guilty of a
felony of the kind described in section 522(q)(1)(A) or liable for a debt of the kind
described in section 522(q)(1)(B).
§1329. Modification of plan after confirmation
(a) At any time after confirmation of the plan but before the completion of payments under
such plan, the plan may be modified, upon request of the debtor, the trustee, or the holder of
an allowed unsecured claim, 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;
286

(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; or
(4) reduce amounts to be paid under the plan by the actual amount expended by the
debtor to purchase health insurance for the debtor (and for any dependent of the debtor
if such dependent does not otherwise have health insurance coverage) if the debtor
documents the cost of such insurance and demonstrates that—
(A) such expenses are reasonable and necessary;
(B)
(i) if the debtor previously paid for health insurance, the amount is not
materially larger than the cost the debtor previously paid or the cost necessary
to maintain the lapsed policy; or
(ii) if the debtor did not have health insurance, the amount is not materially
larger than the reasonable cost that would be incurred by a debtor who
purchases health insurance, who has similar income, expenses, age, and health
status, and who lives in the same geographical location with the same number
of dependents who do not otherwise have health insurance coverage; and
(C) the amount is not otherwise allowed for purposes of determining disposable
income under section 1325(b) of this title;
and upon request of any party in interest, files proof that a health insurance policy was
purchased.
(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 payments over a period that
expires after the applicable commitment period under section 1325(b)(1)(B) 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.

287

CHAPTER 15—ANCILLARY AND OTHER CROSS-BORDER CASESError! Bookmark
not defined.
§1501. Purpose and scope of application ....................... Error! Bookmark not defined.
SUBCHAPTER I—GENERAL PROVISIONS .................. Error! Bookmark not defined.
§1502. Definitions ........................................................... Error! Bookmark not defined.
§1503. International obligations of the United States ...... Error! Bookmark not defined.
§1504. Commencement of ancillary case ....................... Error! Bookmark not defined.
§1505. Authorization to act in a foreign country .............. Error! Bookmark not defined.
§1506. Public policy exception ........................................ Error! Bookmark not defined.
§1507. Additional assistance........................................... Error! Bookmark not defined.
§1508. Interpretation ....................................................... Error! Bookmark not defined.
SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS
TO THE COURT ................................................ Error! Bookmark not defined.
§1509. Right of direct access .......................................... Error! Bookmark not defined.
§1510. Limited jurisdiction ............................................... Error! Bookmark not defined.
§1511. Commencement of case under section 301, 302, or 303 ... Error! Bookmark not
defined.
§1512. Participation of a foreign representative in a case under this title................ Error!
Bookmark not defined.
§1513. Access of foreign creditors to a case under this title .......... Error! Bookmark not
defined.
§1514. Notification to foreign creditors concerning a case under this title ............... Error!
Bookmark not defined.
SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF
........................................................................... Error! Bookmark not defined.
§1515. Application for recognition ................................... Error! Bookmark not defined.
§1516. Presumptions concerning recognition ................. Error! Bookmark not defined.
§1517. Order granting recognition ................................... Error! Bookmark not defined.
§1518. Subsequent information ...................................... Error! Bookmark not defined.
§1519. Relief that may be granted upon filing petition for recognition ... Error! Bookmark
not defined.
§1520. Effects of recognition of a foreign main proceeding ............ Error! Bookmark not
defined.
§1521. Relief that may be granted upon recognition ....... Error! Bookmark not defined.
§1522. Protection of creditors and other interested persons .......... Error! Bookmark not
defined.
§1523. Actions to avoid acts detrimental to creditors ...... Error! Bookmark not defined.
288

§1524. Intervention by a foreign representative .............. Error! Bookmark not defined.
SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND FOREIGN
REPRESENTATIVES ........................................ Error! Bookmark not defined.
§1525. Cooperation and direct communication between the court and foreign courts or
foreign representatives ...................................... Error! Bookmark not defined.
§1526. Cooperation and direct communication between the trustee and foreign courts or
foreign representatives ...................................... Error! Bookmark not defined.
§1527. Forms of cooperation .......................................... Error! Bookmark not defined.
SUBCHAPTER V—CONCURRENT PROCEEDINGS .... Error! Bookmark not defined.
§1528. Commencement of a case under this title after recognition of a foreign main
proceeding ......................................................... Error! Bookmark not defined.
§1529. Coordination of a case under this title and a foreign proceeding ................. Error!
Bookmark not defined.
§1530. Coordination of more than 1 foreign proceeding . Error! Bookmark not defined.
§1531. Presumption of insolvency based on recognition of a foreign main proceeding
........................................................................... Error! Bookmark not defined.
§1532. Rule of payment in concurrent proceedings ........ Error! Bookmark not defined.
§1501. Purpose and scope of application
(a) The purpose of this chapter is to incorporate the Model Law on Cross-Border Insolvency
so as to provide effective mechanisms for dealing with cases of cross-border insolvency with
the objectives of—
(1) cooperation between—
(A) courts of the United States, United States trustees, trustees, examiners,
debtors, and debtors in possession; and
(B) the courts and other competent authorities of foreign countries involved in
cross-border insolvency cases;
(2) greater legal certainty for trade and investment;
(3) fair and efficient administration of cross-border insolvencies that protects the
interests of all creditors, and other interested entities, including the debtor;
(4) protection and maximization of the value of the debtor's assets; and
(5) facilitation of the rescue of financially troubled businesses, thereby protecting
investment and preserving employment.
(b) This chapter applies where—
(1) assistance is sought in the United States by a foreign court or a foreign
representative in connection with a foreign proceeding;
(2) assistance is sought in a foreign country in connection with a case under this title;
289

(3) a foreign proceeding and a case under this title with respect to the same debtor are
pending concurrently; or
(4) creditors or other interested persons in a foreign country have an interest in
requesting the commencement of, or participating in, a case or proceeding under this
title.
(c) This chapter does not apply to—
(1) a proceeding concerning an entity, other than a foreign insurance company,
identified by exclusion in section 109(b);
(2) an individual, or to an individual and such individual's spouse, who have debts
within the limits specified in section 109(e) and who are citizens of the United States
or aliens lawfully admitted for permanent residence in the United States; or
(3) an entity subject to a proceeding under the Securities Investor Protection Act of
1970, a stockbroker subject to subchapter III of chapter 7 of this title, or a commodity
broker subject to subchapter IV of chapter 7 of this title.
(d) The court may not grant relief under this chapter with respect to any deposit, escrow, trust
fund, or other security required or permitted under any applicable State insurance law or
regulation for the benefit of claim holders in the United States.
SUBCHAPTER I—GENERAL PROVISIONS
§1502. Definitions
For the purposes of this chapter, the term—
(1) "debtor" means an entity that is the subject of a foreign proceeding;
(2) "establishment" means any place of operations where the debtor carries out a
nontransitory economic activity;
(3) "foreign court" means a judicial or other authority competent to control or
supervise a foreign proceeding;
(4) "foreign main proceeding" means a foreign proceeding pending in the country
where the debtor has the center of its main interests;
(5) "foreign nonmain proceeding" means a foreign proceeding, other than a foreign
main proceeding, pending in a country where the debtor has an establishment;
(6) "trustee" includes a trustee, a debtor in possession in a case under any chapter of
this title, or a debtor under chapter 9 of this title;
(7) "recognition" means the entry of an order granting recognition of a foreign main
proceeding or foreign nonmain proceeding under this chapter; and
(8) "within the territorial jurisdiction of the United States", when used with reference
to property of a debtor, refers to tangible property located within the territory of the
United States and intangible property deemed under applicable nonbankruptcy law to
be located within that territory, including any property subject to attachment or
garnishment that may properly be seized or garnished by an action in a Federal or
State court in the United States.
290

§1503. International obligations of the United States
To the extent that this chapter conflicts with an obligation of the United States arising out of
any treaty or other form of agreement to which it is a party with one or more other countries,
the requirements of the treaty or agreement prevail.
§1504. Commencement of ancillary case
A case under this chapter is commenced by the filing of a petition for recognition of a foreign
proceeding under section 1515.
§1505. Authorization to act in a foreign country
A trustee or another entity (including an examiner) may be authorized by the court to act in a
foreign country on behalf of an estate created under section 541. An entity authorized to act
under this section may act in any way permitted by the applicable foreign law.
§1506. Public policy exception
Nothing in this chapter prevents the court from refusing to take an action governed by this
chapter if the action would be manifestly contrary to the public policy of the United States.
§1507. Additional assistance
(a) Subject to the specific limitations stated elsewhere in this chapter the court, if recognition
is granted, may provide additional assistance to a foreign representative under this title or
under other laws of the United States.
(b) In determining whether to provide additional assistance under this title or under other
laws of the United States, the court shall consider whether such additional assistance,
consistent with the principles of comity, will reasonably assure—
(1) just treatment of all holders of claims against or interests in the debtor's property;
(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 the debtor;
(4) distribution of proceeds of the debtor's property substantially in accordance with
the order prescribed by this title; and
(5) if appropriate, the provision of an opportunity for a fresh start for the individual
that such foreign proceeding concerns.
§1508. Interpretation
In interpreting this chapter, the court shall consider its international origin, and the need to
promote an application of this chapter that is consistent with the application of similar
statutes adopted by foreign jurisdictions.
SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO
THE COURT
§1509. Right of direct access
(a) A foreign representative may commence a case under section 1504 by filing directly with
the court a petition for recognition of a foreign proceeding under section 1515.
291

(b) If the court grants recognition under section 1517, and subject to any limitations that the
court may impose consistent with the policy of this chapter—
(1) the foreign representative has the capacity to sue and be sued in a court in the
United States;
(2) the foreign representative may apply directly to a court in the United States for
appropriate relief in that court; and
(3) a court in the United States shall grant comity or cooperation to the foreign
representative.
(c) A request for comity or cooperation by a foreign representative in a court in the United
States other than the court which granted recognition shall be accompanied by a certified
copy of an order granting recognition under section 1517.
(d) If the court denies recognition under this chapter, the court may issue any appropriate
order necessary to prevent the foreign representative from obtaining comity or cooperation
from courts in the United States.
(e) Whether or not the court grants recognition, and subject to sections 306 and 1510, a
foreign representative is subject to applicable nonbankruptcy law.
(f) Notwithstanding any other provision of this section, the failure of a foreign representative
to commence a case or to obtain recognition under this chapter does not affect any right the
foreign representative may have to sue in a court in the United States to collect or recover a
claim which is the property of the debtor.
§1510. Limited jurisdiction
The sole fact that a foreign representative files a petition under section 1515 does not subject
the foreign representative to the jurisdiction of any court in the United States for any other
purpose.
§1511. Commencement of case under section 301, 302, or 303
(a) Upon recognition, a foreign representative may commence—
(1) an involuntary case under section 303; or
(2) a voluntary case under section 301 or 302, if the foreign proceeding is a foreign
main proceeding.
(b) The petition commencing a case under subsection (a) must be accompanied by a certified
copy of an order granting recognition. The court where the petition for recognition has been
filed must be advised of the foreign representative's intent to commence a case under
subsection (a) prior to such commencement.
§1512. Participation of a foreign representative in a case under this title
Upon recognition of a foreign proceeding, the foreign representative in the recognized
proceeding is entitled to participate as a party in interest in a case regarding the debtor under
this title.
§1513. Access of foreign creditors to a case under this title

292

(a) Foreign creditors have the same rights regarding the commencement of, and participation
in, a case under this title as domestic creditors.
(b)
(1) Subsection (a) does not change or codify present law as to the priority of claims
under section 507 or 726, except that the claim of a foreign creditor under those
sections shall not be given a lower priority than that of general unsecured claims
without priority solely because the holder of such claim is a foreign creditor.
(2)
(A) Subsection (a) and paragraph (1) do not change or codify present law as to
the allowability of foreign revenue claims or other foreign public law claims in a
proceeding under this title.
(B) Allowance and priority as to a foreign tax claim or other foreign public law
claim shall be governed by any applicable tax treaty of the United States, under
the conditions and circumstances specified therein.
§1514. Notification to foreign creditors concerning a case under this title
(a) Whenever in a case under this title notice is to be given to creditors generally or to any
class or category of creditors, such notice shall also be given to the known creditors
generally, or to creditors in the notified class or category, that do not have addresses in the
United States. The court may order that appropriate steps be taken with a view to notifying
any creditor whose address is not yet known.
(b) Such notification to creditors with foreign addresses described in subsection (a) shall be
given individually, unless the court considers that, under the circumstances, some other form
of notification would be more appropriate. No letter or other formality is required.
(c) When a notification of commencement of a case is to be given to foreign creditors, such
notification shall—
(1) indicate the time period for filing proofs of claim and specify the place for filing
such proofs of claim;
(2) indicate whether secured creditors need to file proofs of claim; and
(3) contain any other information required to be included in such notification to
creditors under this title and the orders of the court.
(d) Any rule of procedure or order of the court as to notice or the filing of a proof of claim
shall provide such additional time to creditors with foreign addresses as is reasonable under
the circumstances.
SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF
§1515. Application for recognition
(a) A foreign representative applies to the court for recognition of a foreign proceeding in
which the foreign representative has been appointed by filing a petition for recognition.
(b) A petition for recognition shall be accompanied by—
293

(1) a certified copy of the decision commencing such foreign proceeding and
appointing the foreign representative;
(2) a certificate from the foreign court affirming the existence of such foreign
proceeding and of the appointment of the foreign representative; or
(3) in the absence of evidence referred to in paragraphs (1) and (2), any other evidence
acceptable to the court of the existence of such foreign proceeding and of the
appointment of the foreign representative.
(c) A petition for recognition shall also be accompanied by a statement identifying all foreign
proceedings with respect to the debtor that are known to the foreign representative.
(d) The documents referred to in paragraphs (1) and (2) of subsection (b) shall be translated
into English. The court may require a translation into English of additional documents.
§1516. Presumptions concerning recognition
(a) If the decision or certificate referred to in section 1515(b) indicates that the foreign
proceeding is a foreign proceeding and that the person or body is a foreign representative, the
court is entitled to so presume.
(b) The court is entitled to presume that documents submitted in support of the petition for
recognition are authentic, whether or not they have been legalized.
(c) In the absence of evidence to the contrary, the debtor's registered office, or habitual
residence in the case of an individual, is presumed to be the center of the debtor's main
interests.
§1517. Order granting recognition
(a) Subject to section 1506, after notice and a hearing, an order recognizing a foreign
proceeding shall be entered if—
(1) such foreign proceeding for which recognition is sought is a foreign main
proceeding or foreign nonmain proceeding within the meaning of section 1502;
(2) the foreign representative applying for recognition is a person or body; and
(3) the petition meets the requirements of section 1515.
(b) Such foreign proceeding shall be recognized—
(1) as a foreign main proceeding if it is pending in the country where the debtor has
the center of its main interests; or
(2) as a foreign nonmain proceeding if the debtor has an establishment within the
meaning of section 1502 in the foreign country where the proceeding is pending.
(c) A petition for recognition of a foreign proceeding shall be decided upon at the earliest
possible time. Entry of an order recognizing a foreign proceeding constitutes recognition
under this chapter.
(d) The provisions of this subchapter do not prevent modification or termination of
recognition if it is shown that the grounds for granting it were fully or partially lacking or
have ceased to exist, but in considering such action the court shall give due weight to
294

possible prejudice to parties that have relied upon the order granting recognition. A case
under this chapter may be closed in the manner prescribed under section 350.
§1518. Subsequent information
From the time of filing the petition for recognition of a foreign proceeding, the foreign
representative shall file with the court promptly a notice of change of status concerning—
(1) any substantial change in the status of such foreign proceeding or the status of the
foreign representative's appointment; and
(2) any other foreign proceeding regarding the debtor that becomes known to the
foreign representative.
§1519. Relief that may be granted upon filing petition for recognition
(a) From the time of filing a petition for recognition until the court rules on the petition, the
court may, at the request of the foreign representative, where relief is urgently needed to
protect the assets of the debtor or the interests of the creditors, grant relief of a provisional
nature, including—
(1) staying execution against the debtor's assets;
(2) entrusting the administration or realization of all or part of the debtor's assets
located in the United States to the foreign representative or another person authorized
by the court, including an examiner, in order to protect and preserve the value of assets
that, by their nature or because of other circumstances, are perishable, susceptible to
devaluation or otherwise in jeopardy; and
(3) any relief referred to in paragraph (3), (4), or (7) of section 1521(a).
(b) Unless extended under section 1521(a)(6), the relief granted under this section terminates
when the petition for recognition is granted.
(c) It is a ground for denial of relief under this section that such relief would interfere with
the administration of a foreign main proceeding.
(d) The court may not enjoin a police or regulatory act of a governmental unit, including a
criminal action or proceeding, under this section.
(e) The standards, procedures, and limitations applicable to an injunction shall apply to relief
under this section.
(f) The exercise of rights not subject to the stay arising under section 362(a) pursuant to
paragraph (6), (7), (17), or (27) of section 362(b) or pursuant to section 362(o) shall not be
stayed by any order of a court or administrative agency in any proceeding under this chapter.
§1520. Effects of recognition of a foreign main proceeding
(a) Upon recognition of a foreign proceeding that is a foreign main proceeding—
(1) sections 361 and 362 apply with respect to the debtor and the property of the
debtor that is within the territorial jurisdiction of the United States;
(2) sections 363, 549, and 552 apply to a transfer of an interest of the debtor in
property that is within the territorial jurisdiction of the United States to the same extent
that the sections would apply to property of an estate;
295

(3) unless the court orders otherwise, the foreign representative may operate the
debtor's business and may exercise the rights and powers of a trustee under and to the
extent provided by sections 363 and 552; and
(4) section 552 applies to property of the debtor that is within the territorial
jurisdiction of the United States.
(b) Subsection (a) does not affect the right to commence an individual action or proceeding
in a foreign country to the extent necessary to preserve a claim against the debtor.
(c) Subsection (a) does not affect the right of a foreign representative or an entity to file a
petition commencing a case under this title or the right of any party to file claims or take
other proper actions in such a case.
§1521. Relief that may be granted upon recognition
(a) Upon recognition of a foreign proceeding, whether main or nonmain, where necessary to
effectuate the purpose of this chapter and to protect the assets of the debtor or the interests of
the creditors, the court may, at the request of the foreign representative, grant any appropriate
relief, including—
(1) staying the commencement or continuation of an individual action or proceeding
concerning the debtor's assets, rights, obligations or liabilities to the extent they have
not been stayed under section 1520(a);
(2) staying execution against the debtor's assets to the extent it has not been stayed
under section 1520(a);
(3) suspending the right to transfer, encumber or otherwise dispose of any assets of the
debtor to the extent this right has not been suspended under section 1520(a);
(4) providing for the examination of witnesses, the taking of evidence or the delivery
of information concerning the debtor's assets, affairs, rights, obligations or liabilities;
(5) entrusting the administration or realization of all or part of the debtor's assets
within the territorial jurisdiction of the United States to the foreign representative or
another person, including an examiner, authorized by the court;
(6) extending relief granted under section 1519(a); and
(7) granting any additional relief that may be available to a trustee, except for relief
available under sections 522, 544, 545, 547, 548, 550, and 724(a).
(b) Upon recognition of a foreign proceeding, whether main or nonmain, the court may, at
the request of the foreign representative, entrust the distribution of all or part of the debtor's
assets located in the United States to the foreign representative or another person, including
an examiner, authorized by the court, provided that the court is satisfied that the interests of
creditors in the United States are sufficiently protected.
(c) In granting relief under this section to a representative of a foreign nonmain proceeding,
the court must be satisfied that the relief relates to assets that, under the law of the United
States, should be administered in the foreign nonmain proceeding or concerns information
required in that proceeding.

296

(d) The court may not enjoin a police or regulatory act of a governmental unit, including a
criminal action or proceeding, under this section.
(e) The standards, procedures, and limitations applicable to an injunction shall apply to relief
under paragraphs (1), (2), (3), and (6) of subsection (a).
(f) The exercise of rights not subject to the stay arising under section 362(a) pursuant to
paragraph (6), (7), (17), or (27) of section 362(b) or pursuant to section 362(o) shall not be
stayed by any order of a court or administrative agency in any proceeding under this chapter.
§1522. Protection of creditors and other interested persons
(a) The court may grant relief under section 1519 or 1521, or may modify or terminate relief
under subsection (c), only if the interests of the creditors and other interested entities,
including the debtor, are sufficiently protected.
(b) The court may subject relief granted under section 1519 or 1521, or the operation of the
debtor's business under section 1520(a)(3), to conditions it considers appropriate, including
the giving of security or the filing of a bond.
(c) The court may, at the request of the foreign representative or an entity affected by relief
granted under section 1519 or 1521, or at its own motion, modify or terminate such relief.
(d) Section 1104(d) shall apply to the appointment of an examiner under this chapter. Any
examiner shall comply with the qualification requirements imposed on a trustee by section
322.
§1523. Actions to avoid acts detrimental to creditors
(a) Upon recognition of a foreign proceeding, the foreign representative has standing in a
case concerning the debtor pending under another chapter of this title to initiate actions under
sections 522, 544, 545, 547, 548, 550, 553, and 724(a).
(b) When a foreign proceeding is a foreign nonmain proceeding, the court must be satisfied
that an action under subsection (a) relates to assets that, under United States law, should be
administered in the foreign nonmain proceeding.
§1524. Intervention by a foreign representative
Upon recognition of a foreign proceeding, the foreign representative may intervene in any
proceedings in a State or Federal court in the United States in which the debtor is a party.
SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND FOREIGN
REPRESENTATIVES
§1525. Cooperation and direct communication between the court and foreign courts or foreign
representatives
(a) Consistent with section 1501, the court shall cooperate to the maximum extent possible
with a foreign court or a foreign representative, either directly or through the trustee.
(b) The court is entitled to communicate directly with, or to request information or assistance
directly from, a foreign court or a foreign representative, subject to the rights of a party in
interest to notice and participation.

297

§1526. Cooperation and direct communication between the trustee and foreign courts or foreign
representatives
(a) Consistent with section 1501, the trustee or other person, including an examiner,
authorized by the court, shall, subject to the supervision of the court, cooperate to the
maximum extent possible with a foreign court or a foreign representative.
(b) The trustee or other person, including an examiner, authorized by the court is entitled,
subject to the supervision of the court, to communicate directly with a foreign court or a
foreign representative.
§1527. Forms of cooperation
Cooperation referred to in sections 1525 and 1526 may be implemented by any appropriate
means, including—
(1) appointment of a person or body, including an examiner, to act at the direction of
the court;
(2) communication of information by any means considered appropriate by the court;
(3) coordination of the administration and supervision of the debtor's assets and
affairs;
(4) approval or implementation of agreements concerning the coordination of
proceedings; and
(5) coordination of concurrent proceedings regarding the same debtor.
SUBCHAPTER V—CONCURRENT PROCEEDINGS
§1528. Commencement of a case under this title after recognition of a foreign main proceeding
After recognition of a foreign main proceeding, a case under another chapter of this title may
be commenced only if the debtor has assets in the United States. The effects of such case
shall be restricted to the assets of the debtor that are within the territorial jurisdiction of the
United States and, to the extent necessary to implement cooperation and coordination under
sections 1525, 1526, and 1527, to other assets of the debtor that are within the jurisdiction of
the court under sections 541(a) of this title, and 1334(e) of title 28, to the extent that such
other assets are not subject to the jurisdiction and control of a foreign proceeding that has
been recognized under this chapter.
§1529. Coordination of a case under this title and a foreign proceeding
If a foreign proceeding and a case under another chapter of this title are pending concurrently
regarding the same debtor, the court shall seek cooperation and coordination under sections
1525, 1526, and 1527, and the following shall apply:
(1) If the case in the United States is pending at the time the petition for recognition of
such foreign proceeding is filed—
(A) any relief granted under section 1519 or 1521 must be consistent with the
relief granted in the case in the United States; and
(B) section 1520 does not apply even if such foreign proceeding is recognized as
a foreign main proceeding.
298

(2) If a case in the United States under this title commences after recognition, or after
the date of the filing of the petition for recognition, of such foreign proceeding—
(A) any relief in effect under section 1519 or 1521 shall be reviewed by the court
and shall be modified or terminated if inconsistent with the case in the United
States; and
(B) if such foreign proceeding is a foreign main proceeding, the stay and
suspension referred to in section 1520(a) shall be modified or terminated if
inconsistent with the relief granted in the case in the United States.
(3) In granting, extending, or modifying relief granted to a representative of a foreign
nonmain proceeding, the court must be satisfied that the relief relates to assets that,
under the laws of the United States, should be administered in the foreign nonmain
proceeding or concerns information required in that proceeding.
(4) In achieving cooperation and coordination under sections 1528 and 1529, the court
may grant any of the relief authorized under section 305.
§1530. Coordination of more than 1 foreign proceeding
In matters referred to in section 1501, with respect to more than 1 foreign proceeding
regarding the debtor, the court shall seek cooperation and coordination under sections 1525,
1526, and 1527, and the following shall apply:
(1) Any relief granted under section 1519 or 1521 to a representative of a foreign
nonmain proceeding after recognition of a foreign main proceeding must be consistent
with the foreign main proceeding.
(2) If a foreign main proceeding is recognized after recognition, or after the filing of a
petition for recognition, of a foreign nonmain proceeding, any relief in effect under
section 1519 or 1521 shall be reviewed by the court and shall be modified or
terminated if inconsistent with the foreign main proceeding.
(3) If, after recognition of a foreign nonmain proceeding, another foreign nonmain
proceeding is recognized, the court shall grant, modify, or terminate relief for the
purpose of facilitating coordination of the proceedings.
§1531. Presumption of insolvency based on recognition of a foreign main proceeding
In the absence of evidence to the contrary, recognition of a foreign main proceeding is, for
the purpose of commencing a proceeding under section 303, proof that the debtor is generally
not paying its debts as such debts become due.
§1532. Rule of payment in concurrent proceedings
Without prejudice to secured claims or rights in rem, a creditor who has received payment
with respect to its claim in a foreign proceeding pursuant to a law relating to insolvency may
not receive a payment for the same claim in a case under any other chapter of this title
regarding the debtor, so long as the payment to other creditors of the same class is
proportionately less than the payment the creditor has already received.
SELECTED UNITED STATES CODE PROVISIONS
TITLE 18 - CRIMES AND CRIMINAL PROCEDURE
299

§ 151 – Definition ............................................................ Error! Bookmark not defined.
§ 152 - Concealment of assets; false oaths and claims; bribery .... Error! Bookmark not
defined.
§ 153 - Embezzlement against estate ............................. Error! Bookmark not defined.
§ 154 - Adverse interest and conduct of officers ............. Error! Bookmark not defined.
§ 155 - Fee agreements in cases under title 11 and receiverships Error! Bookmark not
defined.
§ 156 - Knowing disregard of bankruptcy law or rule....... Error! Bookmark not defined.
§ 157 - Bankruptcy fraud ................................................. Error! Bookmark not defined.
§ 158 - Designation of United States attorneys and agents of the Federal Bureau of
Investigation to address abusive reaffirmations of debt and materially fraudulent
statements in bankruptcy schedules .................. Error! Bookmark not defined.
§ 1519 - Destruction, alteration, or falsification of records in Federal investigations and
bankruptcy ......................................................... Error! Bookmark not defined.
§ 3284 - Concealment of bankrupt’s assets .................... Error! Bookmark not defined.
§ 151 – Definition
As used in this chapter, the term “debtor” means a debtor concerning whom a petition has
been filed under title 11.
§ 152 - Concealment of assets; false oaths and claims; bribery
A person who—
(1) knowingly and fraudulently conceals from a custodian, trustee, marshal, or other
officer of the court charged with the control or custody of property, or, in connection
with a case under title 11, from creditors or the United States Trustee, any property
belonging to the estate of a debtor;
(2) knowingly and fraudulently makes a false oath or account in or in relation to any
case under title 11;
(3) knowingly and fraudulently makes a false declaration, certificate, verification, or
statement under penalty of perjury as permitted under section 1746 of title 28, in or in
relation to any case under title 11;
(4) knowingly and fraudulently presents any false claim for proof against the estate of
a debtor, or uses any such claim in any case under title 11, in a personal capacity or as
or through an agent, proxy, or attorney;
(5) knowingly and fraudulently receives any material amount of property from a
debtor after the filing of a case under title 11, with intent to defeat the provisions of
title 11;
(6) knowingly and fraudulently gives, offers, receives, or attempts to obtain any
money or property, remuneration, compensation, reward, advantage, or promise
thereof for acting or forbearing to act in any case under title 11;
300

(7) in a personal capacity or as an agent or officer of any person or corporation, in
contemplation of a case under title 11 by or against the person or any other person or
corporation, or with intent to defeat the provisions of title 11, knowingly and
fraudulently transfers or conceals any of his property or the property of such other
person or corporation;
(8) after the filing of a case under title 11 or in contemplation thereof, knowingly and
fraudulently conceals, destroys, mutilates, falsifies, or makes a false entry in any
recorded information (including books, documents, records, and papers) relating to the
property or financial affairs of a debtor; or
(9) after the filing of a case under title 11, knowingly and fraudulently withholds from
a custodian, trustee, marshal, or other officer of the court or a United States Trustee
entitled to its possession, any recorded information (including books, documents,
records, and papers) relating to the property or financial affairs of a debtor,
shall be fined under this title, imprisoned not more than 5 years, or both.
§ 153 - Embezzlement against estate
(a) Offense.—
A person described in subsection (b) who knowingly and fraudulently appropriates to
the person’s own use, embezzles, spends, or transfers any property or secretes or
destroys any document belonging to the estate of a debtor shall be fined under this
title, imprisoned not more than 5 years, or both.
(b) Person to Whom Section Applies.—
A person described in this subsection is one who has access to property or documents
belonging to an estate by virtue of the person’s participation in the administration of
the estate as a trustee, custodian, marshal, attorney, or other officer of the court or as
an agent, employee, or other person engaged by such an officer to perform a service
with respect to the estate.
§ 154 - Adverse interest and conduct of officers
A person who, being a custodian, trustee, marshal, or other officer of the court—
(1) knowingly purchases, directly or indirectly, any property of the estate of which the
person is such an officer in a case under title 11;
(2) knowingly refuses to permit a reasonable opportunity for the inspection by parties
in interest of the documents and accounts relating to the affairs of estates in the
person’s charge by parties when directed by the court to do so; or
(3) knowingly refuses to permit a reasonable opportunity for the inspection by the
United States Trustee of the documents and accounts relating to the affairs of an estate
in the person’s charge,
shall be fined under this title and shall forfeit the person’s office, which shall thereupon
become vacant.
§ 155 - Fee agreements in cases under title 11 and receiverships
301

Whoever, being a party in interest, whether as a debtor, creditor, receiver, trustee or
representative of any of them, or attorney for any such party in interest, in any receivership or
case under title 11 in any United States court or under its supervision, knowingly and
fraudulently enters into any agreement, express or implied, with another such party in interest
or attorney for another such party in interest, for the purpose of fixing the fees or other
compensation to be paid to any party in interest or to any attorney for any party in interest for
services rendered in connection therewith, from the assets of the estate, shall be fined under
this title or imprisoned not more than one year, or both.
§ 156 - Knowing disregard of bankruptcy law or rule
(a)Definitions.—In this section—
(1) the term “bankruptcy petition preparer” means a person, other than the debtor’s
attorney or an employee of such an attorney, who prepares for compensation a
document for filing; and
(2) the term “document for filing” means a petition or any other document prepared
for filing by a debtor in a United States bankruptcy court or a United States district
court in connection with a case under title 11.
(b)Offense.—
If a bankruptcy case or related proceeding is dismissed because of a knowing attempt
by a bankruptcy petition preparer in any manner to disregard the requirements of title
11, United States Code, or the Federal Rules of Bankruptcy Procedure, the bankruptcy
petition preparer shall be fined under this title, imprisoned not more than 1 year, or
both.
§ 157 - Bankruptcy fraud
A person who, having devised or intending to devise a scheme or artifice to defraud and for
the purpose of executing or concealing such a scheme or artifice or attempting to do so—
(1) files a petition under title 11, including a fraudulent involuntary petition under
section 303 of such title;
(2) files a document in a proceeding under title 11; or
(3) makes a false or fraudulent representation, claim, or promise concerning or in
relation to a proceeding under title 11, at any time before or after the filing of the
petition, or in relation to a proceeding falsely asserted to be pending under such title,
shall be fined under this title, imprisoned not more than 5 years, or both.
§ 158 - Designation of United States attorneys and agents of the Federal Bureau of Investigation
to address abusive reaffirmations of debt and materially fraudulent statements in bankruptcy
schedules
(a) In General.—
The Attorney General of the United States shall designate the individuals described in
subsection (b) to have primary responsibility in carrying out enforcement activities in
addressing violations of section 152 or 157 relating to abusive reaffirmations of debt.
In addition to addressing the violations referred to in the preceding sentence, the
302

individuals described under subsection (b) shall address violations of section 152 or
157 relating to materially fraudulent statements in bankruptcy schedules that are
intentionally false or intentionally misleading.
(b) United States Attorneys and Agents of the Federal Bureau of Investigation.—The
individuals referred to in subsection (a) are—
(1) the United States attorney for each judicial district of the United States; and
(2) an agent of the Federal Bureau of Investigation for each field office of the Federal
Bureau of Investigation.
(c) Bankruptcy Investigations.—
Each United States attorney designated under this section shall, in addition to any
other responsibilities, have primary responsibility for carrying out the duties of a
United States attorney under section 3057.
(d) Bankruptcy Procedures.—
The bankruptcy courts shall establish procedures for referring any case that may
contain a materially fraudulent statement in a bankruptcy schedule to the individuals
designated under this section.
§ 1519 - Destruction, alteration, or falsification of records in Federal investigations and
bankruptcy
Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a
false entry in any record, document, or tangible object with the intent to impede, obstruct, or
influence the investigation or proper administration of any matter within the jurisdiction of
any department or agency of the United States or any case filed under title 11, or in relation
to or contemplation of any such matter or case, shall be fined under this title, imprisoned not
more than 20 years, or both.
§ 3284 - Concealment of bankrupt’s assets
The concealment of assets of a debtor in a case under title 11 shall be deemed to be a
continuing offense until the debtor shall have been finally discharged or a discharge denied,
and the period of limitations shall not begin to run until such final discharge or denial of
discharge.
TITLE 26 – INTERNAL REVENUE CODE
§ 6321 - Lien for taxes..................................................... Error! Bookmark not defined.
§ 6322 - Period of lien ..................................................... Error! Bookmark not defined.
§ 6323 - Validity and priority against certain persons ...... Error! Bookmark not defined.
§ 6334 - Property exempt from levy ................................ Error! Bookmark not defined.
§ 7425 - Discharge of liens.............................................. Error! Bookmark not defined.
§ 6321 - Lien for taxes
303

If any person liable to pay any tax neglects or refuses to pay the same after demand, the
amount (including any interest, additional amount, addition to tax, or assessable penalty,
together with any costs that may accrue in addition thereto) shall be a lien in favor of the
United States upon all property and rights to property, whether real or personal, belonging to
such person.
§ 6322 - Period of lien
Unless another date is specifically fixed by law, the lien imposed by section 6321 shall arise
at the time the assessment is made and shall continue until the liability for the amount so
assessed (or a judgment against the taxpayer arising out of such liability) is satisfied or
becomes unenforceable by reason of lapse of time.
§ 6323 - Validity and priority against certain persons
(a) Purchasers, holders of security interests, mechanic’s lienors, and judgment lien creditors
The lien imposed by section 6321 shall not be valid as against any purchaser, holder of
a security interest, mechanic’s lienor, or judgment lien creditor until notice thereof
which meets the requirements of subsection (f) has been filed by the Secretary.
(b) Protection for certain interests even though notice filed. Even though notice of a lien
imposed by section 6321 has been filed, such lien shall not be valid—
(1) Securities. With respect to a security (as defined in subsection (h)(4))—
(A) as against a purchaser of such security who at the time of purchase did not
have actual notice or knowledge of the existence of such lien; and
(B) as against a holder of a security interest in such security who, at the time
such interest came into existence, did not have actual notice or knowledge of the
existence of such lien.
(2) Motor vehicles. With respect to a motor vehicle (as defined in subsection (h)(3)),
as against a purchaser of such motor vehicle, if—
(A) at the time of the purchase such purchaser did not have actual notice or
knowledge of the existence of such lien, and
(B) before the purchaser obtains such notice or knowledge, he has acquired
possession of such motor vehicle and has not thereafter relinquished possession
of such motor vehicle to the seller or his agent.
(3) Personal property purchased at retail
With respect to tangible personal property purchased at retail, as against a
purchaser in the ordinary course of the seller’s trade or business, unless at the
time of such purchase such purchaser intends such purchase to (or knows such
purchase will) hinder, evade, or defeat the collection of any tax under this title.
(4) Personal property purchased in casual sale
With respect to household goods, personal effects, or other tangible personal
property described in section 6334(a) purchased (not for resale) in a casual sale
for less than $1,000, as against the purchaser, but only if such purchaser does not
304

have actual notice or knowledge (A) of the existence of such lien, or (B) that this
sale is one of a series of sales.
(5) Personal property subject to possessory lien
With respect to tangible personal property subject to a lien under local law
securing the reasonable price of the repair or improvement of such property, as
against a holder of such a lien, if such holder is, and has been, continuously in
possession of such property from the time such lien arose.
(6) Real property tax and special assessment liens. With respect to real property, as
against a holder of a lien upon such property, if such lien is entitled under local law to
priority over security interests in such property which are prior in time, and such lien
secures payment of—
(A) a tax of general application levied by any taxing authority based upon the
value of such property;
(B) a special assessment imposed directly upon such property by any taxing
authority, if such assessment is imposed for the purpose of defraying the cost of
any public improvement; or
(C) charges for utilities or public services furnished to such property by the
United States, a State or political subdivision thereof, or an instrumentality of
any one or more of the foregoing.
(7) Residential property subject to a mechanic’s lien for certain repairs and
improvements
With respect to real property subject to a lien for repair or improvement of a
personal residence (containing not more than four dwelling units) occupied by
the owner of such residence, as against a mechanic’s lienor, but only if the
contract price on the contract with the owner is not more than $5,000.
(8) Attorneys’ liens
With respect to a judgment or other amount in settlement of a claim or of a cause
of action, as against an attorney who, under local law, holds a lien upon or a
contract enforcible against such judgment or amount, to the extent of his
reasonable compensation for obtaining such judgment or procuring such
settlement, except that this paragraph shall not apply to any judgment or amount
in settlement of a claim or of a cause of action against the United States to the
extent that the United States offsets such judgment or amount against any
liability of the taxpayer to the United States.
(9) Certain insurance contracts with respect to a life insurance, endowment, or annuity
contract, as against the organization which is the insurer under such contract, at any
time—
(A) before such organization had actual notice or knowledge of the existence of
such lien;

305

(B) after such organization had such notice or knowledge, with respect to
advances required to be made automatically to maintain such contract in force
under an agreement entered into before such organization had such notice or
knowledge; or
(C) after satisfaction of a levy pursuant to section 6332(b), unless and until the
Secretary delivers to such organization a notice, executed after the date of such
satisfaction, of the existence of such lien.
(10) Deposit-secured loans
With respect to a savings deposit, share, or other account with an institution
described in section 581 or 591, to the extent of any loan made by such
institution without actual notice or knowledge of the existence of such lien, as
against such institution, if such loan is secured by such account.
(c) Protection for certain commercial transactions financing agreements, etc.
(1) In general. To the extent provided in this subsection, even though notice of a lien
imposed by section 6321 has been filed, such lien shall not be valid with respect to a
security interest which came into existence after tax lien filing but which—
(A) is in qualified property covered by the terms of a written agreement entered
into before tax lien filing and constituting—
(i) a commercial transactions financing agreement,
(ii) a real property construction or improvement financing agreement, or
(iii) an obligatory disbursement agreement, and
(B) is protected under local law against a judgment lien arising, as of the time of
tax lien filing, out of an unsecured obligation.
(2) Commercial transactions financing agreement. For purposes of this subsection—
(A) Definition. The term “commercial transactions financing agreement” means
an agreement (entered into by a person in the course of his trade or business)—
(i) to make loans to the taxpayer to be secured by commercial financing
security acquired by the taxpayer in the ordinary course of his trade or
business, or
(ii) to purchase commercial financing security (other than inventory) acquired
by the taxpayer in the ordinary course of his trade or business;
but such an agreement shall be treated as coming within the term only to the
extent that such loan or purchase is made before the 46th day after the date of tax
lien filing or (if earlier) before the lender or purchaser had actual notice or
knowledge of such tax lien filing.
(B) Limitation on qualified property

306

The term “qualified property”, when used with respect to a commercial
transactions financing agreement, includes only commercial financing security
acquired by the taxpayer before the 46th day after the date of tax lien filing.
(C) Commercial financing security defined
The term “commercial financing security” means (i) paper of a kind ordinarily
arising in commercial transactions, (ii) accounts receivable, (iii) mortgages on
real property, and (iv) inventory.
(D) Purchaser treated as acquiring security interest
A person who satisfies subparagraph (A) by reason of clause (ii) thereof shall
be treated as having acquired a security interest in commercial financing
security
(3) Real property construction or improvement financing agreement. For purposes of
this subsection—
(A) Definition. The term “real property construction or improvement financing
agreement” means an agreement to make cash disbursements to finance—
(i) the construction or improvement of real property,
(ii) a contract to construct or improve real property, or
(iii) the raising or harvesting of a farm crop or the raising of livestock or other
animals.
For purposes of clause (iii), the furnishing of goods and services shall be treated
as the disbursement of cash.
(B) Limitation on qualified property. The term “qualified property”, when used
with respect to a real property construction or improvement financing agreement,
includes only—
(i) in the case of subparagraph (A)(i), the real property with respect to which
the construction or improvement has been or is to be made,
(ii) in the case of subparagraph (A)(ii), the proceeds of the contract described
therein, and
(iii) in the case of subparagraph (A)(iii), property subject to the lien imposed
by section 6321 at the time of tax lien filing and the crop or the livestock or
other animals referred to in subparagraph (A)(iii).
(4) Obligatory disbursement agreement. For purposes of this subsection—
(A) Definition
The term “obligatory disbursement agreement” means an agreement (entered
into by a person in the course of his trade or business) to make disbursements,
but such an agreement shall be treated as coming within the term only to the
extent of disbursements which are required to be made by reason of the
intervention of the rights of a person other than the taxpayer.
307

(B) Limitation on qualified property
The term “qualified property”, when used with respect to an obligatory
disbursement agreement, means property subject to the lien imposed by
section 6321 at the time of tax lien filing and (to the extent that the acquisition
is directly traceable to the disbursements referred to in subparagraph (A))
property acquired by the taxpayer after tax lien filing.
(C) Special rules for surety agreements
Where the obligatory disbursement agreement is an agreement ensuring the
performance of a contract between the taxpayer and another person—
(i) the term “qualified property” shall be treated as also including the proceeds
of the contract the performance of which was ensured, and
(ii) if the contract the performance of which was ensured was a contract to
construct or improve real property, to produce goods, or to furnish services,
the term “qualified property” shall be treated as also including any tangible
personal property used by the taxpayer in the performance of such ensured
contract.
(d) 45-day period for making disbursements. Even though notice of a lien imposed by section
6321 has been filed, such lien shall not be valid with respect to a security interest which came
into existence after tax lien filing by reason of disbursements made before the 46th day after
the date of tax lien filing, or (if earlier) before the person making such disbursements had
actual notice or knowledge of tax lien filing, but only if such security interest—
(1) is in property (A) subject, at the time of tax lien filing, to the lien imposed by
section 6321, and (B) covered by the terms of a written agreement entered into before
tax lien filing, and
(2) is protected under local law against a judgment lien arising, as of the time of tax
lien filing, out of an unsecured obligation.
(e) Priority of interest and expenses. If the lien imposed by section 6321 is not valid as
against a lien or security interest, the priority of such lien or security interest shall extend
to—
(1) any interest or carrying charges upon the obligation secured,
(2) the reasonable charges and expenses of an indenture trustee or agent holding the
security interest for the benefit of the holder of the security interest,
(3) the reasonable expenses, including reasonable compensation for attorneys, actually
incurred in collecting or enforcing the obligation secured,
(4) the reasonable costs of insuring, preserving, or repairing the property to which the
lien or security interest relates,
(5) the reasonable costs of insuring payment of the obligation secured, and
(6) amounts paid to satisfy any lien on the property to which the lien or security
interest relates, but only if the lien so satisfied is entitled to priority over the lien
imposed by section 6321,
308

to the extent that, under local law, any such item has the same priority as the lien or security
interest to which it relates.
(f) Place for filing notice; form
(1) Place for filing. The notice referred to in subsection (a) shall be filed—
(A) Under State laws
(i) Real property
In the case of real property, in one office within the State (or the county,
or other governmental subdivision), as designated by the laws of such
State, in which the property subject to the lien is situated; and
(ii) Personal property
In the case of personal property, whether tangible or intangible, in one
office within the State (or the county, or other governmental
subdivision), as designated by the laws of such State, in which the
property subject to the lien is situated, except that State law merely
conforming to or reenacting Federal law establishing a national filing
system does not constitute a second office for filing as designated by the
laws of such State; or
(B) With clerk of district court
In the office of the clerk of the United States district court for the judicial
district in which the property subject to the lien is situated, whenever the State
has not by law designated one office which meets the requirements of
subparagraph (A); or
(C) With Recorder of Deeds of the District of Columbia
In the office of the Recorder of Deeds of the District of Columbia, if the
property subject to the lien is situated in the District of Columbia.
(2) Situs of property subject to lien. For purposes of paragraphs (1) and (4), property
shall be deemed to be situated—
(A) Real property
In the case of real property, at its physical location; or
(B) Personal property
In the case of personal property, whether tangible or intangible, at the
residence of the taxpayer at the time the notice of lien is filed.
For purposes of paragraph (2)(B), the residence of a corporation or partnership
shall be deemed to be the place at which the principal executive office of the
business is located, and the residence of a taxpayer whose residence is without
the United States shall be deemed to be in the District of Columbia.
(3) Form
309

The form and content of the notice referred to in subsection (a) shall be
prescribed by the Secretary. Such notice shall be valid notwithstanding any other
provision of law regarding the form or content of a notice of lien.
(4) Indexing required with respect to certain real property. In the case of real property,
if—
(A) under the laws of the State in which the real property is located, a deed is not
valid as against a purchaser of the property who (at the time of purchase) does
not have actual notice or knowledge of the existence of such deed unless the fact
of filing of such deed has been entered and recorded in a public index at the
place of filing in such a manner that a reasonable inspection of the index will
reveal the existence of the deed, and
(B) there is maintained (at the applicable office under paragraph (1)) an adequate
system for the public indexing of Federal tax liens,
then the notice of lien referred to in subsection (a) shall not be treated as meeting the
filing requirements under paragraph (1) unless the fact of filing is entered and recorded
in the index referred to in subparagraph (B) in such a manner that a reasonable
inspection of the index will reveal the existence of the lien.
(5) National filing systems
The filing of a notice of lien shall be governed solely by this title and shall not be
subject to any other Federal law establishing a place or places for the filing of
liens or encumbrances under a national filing system.
(g) Refiling of notice
For purposes of this section—
(1) General rule
Unless notice of lien is refiled in the manner prescribed in paragraph (2)
during the required refiling period, such notice of lien shall be treated as filed
on the date on which it is filed (in accordance with subsection (f)) after the
expiration of such refiling period.
(2) Place for filing
A notice of lien refiled during the required refiling period shall be effective
only—
(A) if—
(i) such notice of lien is refiled in the office in which the prior
notice of lien was filed, and
(ii) in the case of real property, the fact of refiling is entered and
recorded in an index to the extent required by subsection (f)(4);
and
(B) in any case in which, 90 days or more prior to the date of a refiling
of notice of lien under subparagraph (A), the Secretary received written
310

information (in the manner prescribed in regulations issued by the
Secretary) concerning a change in the taxpayer’s residence, if a notice of
such lien is also filed in accordance with subsection (f) in the State in
which such residence is located.
(3) Required refiling period. In the case of any notice of lien, the term “required
refiling period” means—
(A) the one-year period ending 30 days after the expiration of 10 years after
the date of the assessment of the tax, and
(B) the one-year period ending with the expiration of 10 years after the close
of the preceding required refiling period for such notice of lien.
(4) Transitional rule
Notwithstanding paragraph (3), if the assessment of the tax was made before
January 1, 1962, the first required refiling period shall be the calendar year
1967.
(h) Definitions. For purposes of this section and section 6324—
(1) Security interest
The term “security interest” means any interest in property acquired by contract
for the purpose of securing payment or performance of an obligation or
indemnifying against loss or liability. A security interest exists at any time (A) if,
at such time, the property is in existence and the interest has become protected
under local law against a subsequent judgment lien arising out of an unsecured
obligation, and (B) to the extent that, at such time, the holder has parted with
money or money’s worth.
(2) Mechanic’s lienor
The term “mechanic’s lienor” means any person who under local law has a lien
on real property (or on the proceeds of a contract relating to real property) for
services, labor, or materials furnished in connection with the construction or
improvement of such property. For purposes of the preceding sentence, a person
has a lien on the earliest date such lien becomes valid under local law against
subsequent purchasers without actual notice, but not before he begins to furnish
the services, labor, or materials.
(3) Motor vehicle
The term “motor vehicle” means a self-propelled vehicle which is registered for
highway use under the laws of any State or foreign country.
(4) Security
The term “security” means any bond, debenture, note, or certificate or other
evidence of indebtedness, issued by a corporation or a government or political
subdivision thereof, with interest coupons or in registered form, share of stock,
voting trust certificate, or any certificate of interest or participation in, certificate
of deposit or receipt for, temporary or interim certificate for, or warrant or right
311

to subscribe to or purchase, any of the foregoing; negotiable instrument; or
money.
(5) Tax lien filing
The term “tax lien filing” means the filing of notice (referred to in subsection (a))
of the lien imposed by section 6321.
(6) Purchaser.
The term “purchaser” means a person who, for adequate and full consideration in
money or money’s worth, acquires an interest (other than a lien or security
interest) in property which is valid under local law against subsequent purchasers
without actual notice. In applying the preceding sentence for purposes of
subsection (a) of this section, and for purposes of section 6324—
(A) a lease of property,
(B) a written executory contract to purchase or lease property,
(C) an option to purchase or lease property or any interest therein, or
(D) an option to renew or extend a lease of property,
which is not a lien or security interest shall be treated as an interest in property.
(i) Special rules
(1) Actual notice or knowledge
For purposes of this subchapter, an organization shall be deemed for purposes of
a particular transaction to have actual notice or knowledge of any fact from the
time such fact is brought to the attention of the individual conducting such
transaction, and in any event from the time such fact would have been brought to
such individual’s attention if the organization had exercised due diligence. An
organization exercises due diligence if it maintains reasonable routines for
communicating significant information to the person conducting the transaction
and there is reasonable compliance with the routine. Due diligence does not
require an individual acting for the organization to communicate information
unless such communication is part of his regular duties or unless he has reason to
know of the transaction and that the transaction would be materially affected by
the information.
(2) Subrogation
Where, under local law, one person is subrogated to the rights of another with
respect to a lien or interest, such person shall be subrogated to such rights for
purposes of any lien imposed by section 6321 or 6324.
(3) Forfeitures
For purposes of this subchapter, a forfeiture under local law of property seized
by a law enforcement agency of a State, county, or other local governmental
subdivision shall relate back to the time of seizure, except that this paragraph
shall not apply to the extent that under local law the holder of an intervening
312

claim or interest would have priority over the interest of the State, county, or
other local governmental subdivision in the property.
(4) Cost-of-living adjustment
In the case of notices of liens imposed by section 6321 which are filed in any
calendar year after 1998, each of the dollar amounts under paragraph (4) or (7) of
subsection (b) shall be increased by an amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for the
calendar year, determined by substituting “calendar year 1996” for “calendar
year 2016” in subparagraph (A)(ii) thereof.
If any amount as adjusted under the preceding sentence is not a multiple of $10,
such amount shall be rounded to the nearest multiple of $10.
(j) Withdrawal of notice in certain circumstances
(1) In general. The Secretary may withdraw a notice of a lien filed under this section
and this chapter shall be applied as if the withdrawn notice had not been filed, if the
Secretary determines that—
(A) the filing of such notice was premature or otherwise not in accordance with
administrative procedures of the Secretary,
(B) the taxpayer has entered into an agreement under section 6159 to satisfy the
tax liability for which the lien was imposed by means of installment payments,
unless such agreement provides otherwise,
(C) the withdrawal of such notice will facilitate the collection of the tax liability,
or
(D) with the consent of the taxpayer or the National Taxpayer Advocate, the
withdrawal of such notice would be in the best interests of the taxpayer (as
determined by the National Taxpayer Advocate) and the United States.
Any such withdrawal shall be made by filing notice at the same office as the
withdrawn notice. A copy of such notice of withdrawal shall be provided to the
taxpayer.
(2) Notice to credit agencies, etc.
Upon written request by the taxpayer with respect to whom a notice of a lien was
withdrawn under paragraph (1), the Secretary shall promptly make reasonable
efforts to notify credit reporting agencies, and any financial institution or creditor
whose name and address is specified in such request, of the withdrawal of such
notice. Any such request shall be in such form as the Secretary may prescribe.
§ 6334 - Property exempt from levy
(a) Enumeration. There shall be exempt from levy—
(1) Wearing apparel and school books
313

Such items of wearing apparel and such school books as are necessary for the
taxpayer or for members of his family;
(2) Fuel, provisions, furniture, and personal effects
So much of the fuel, provisions, furniture, and personal effects in the taxpayer’s
household, and of the arms for personal use, livestock, and poultry of the
taxpayer, as does not exceed $6,250 in value;
(3) Books and tools of a trade, business, or profession
So many of the books and tools necessary for the trade, business, or profession of
the taxpayer as do not exceed in the aggregate $3,125 in value.
(4) Unemployment benefits
Any amount payable to an individual with respect to his unemployment
(including any portion thereof payable with respect to dependents) under an
unemployment compensation law of the United States, of any State, or of the
District of Columbia or of the Commonwealth of Puerto Rico.
(5) Undelivered mail
Mail, addressed to any person, which has not been delivered to the addressee.
(6) Certain annuity and pension payments
Annuity or pension payments under the Railroad Retirement Act, benefits under
the Railroad Unemployment Insurance Act, special pension payments received
by a person whose name has been entered on the Army, Navy, Air Force, and
Coast Guard Medal of Honor roll (38 U.S.C. 1562), and annuities based on
retired or retainer pay under chapter 73 of title 10 of the United States Code.
(7) Workmen’s compensation
Any amount payable to an individual as workmen’s compensation (including any
portion thereof payable with respect to dependents) under a workmen’s
compensation law of the United States, any State, the District of Columbia, or
the Commonwealth of Puerto Rico.
(8) Judgments for support of minor children
If the taxpayer is required by judgment of a court of competent jurisdiction,
entered prior to the date of levy, to contribute to the support of his minor
children, so much of his salary, wages, or other income as is necessary to comply
with such judgment.
(9) Minimum exemption for wages, salary, and other income
Any amount payable to or received by an individual as wages or salary for
personal services, or as income derived from other sources, during any period, to
the extent that the total of such amounts payable to or received by him during
such period does not exceed the applicable exempt amount determined under
subsection (d).
314

(10) Certain service-connected disability payments
Any amount payable to an individual as a service-connected (within the meaning
of section 101(16) of title 38, United States Code) disability benefit under—
(A) subchapter II, III, IV, V,,[1] or VI of chapter 11 of such title 38, or
(B) chapter 13, 21, 23, 31, 32, 34, 35, 37, or 39 of such title 38.
(11) Certain public assistance payments. Any amount payable to an individual as a
recipient of public assistance under—
(A) title IV or title XVI (relating to supplemental security income for the
aged, blind, and disabled) of the Social Security Act, or
(B) State or local government public assistance or public welfare programs for
which eligibility is determined by a needs or income test.
(12) Assistance under Job Training Partnership Act
Any amount payable to a participant under the Job Training Partnership Act (29
U.S.C. 1501 et seq.) from funds appropriated pursuant to such Act.
(13) Residences exempt in small deficiency cases and principal residences and certain
business assets exempt in absence of certain approval or jeopardy
(A) Residences in small deficiency cases.If the amount of the levy does not
exceed $5,000—
(i) any real property used as a residence by the taxpayer; or
(ii) any real property of the taxpayer (other than real property which is rented)
used by any other individual as a residence.
(B) Principal residences and certain business assets. Except to the extent
provided in subsection (e)—
(i) the principal residence of the taxpayer (within the meaning of section 121);
and
(ii) tangible personal property or real property (other than real property which
is rented) used in the trade or business of an individual taxpayer.
(b) Appraisal
The officer seizing property of the type described in subsection (a) shall appraise and
set aside to the owner the amount of such property declared to be exempt. If the
taxpayer objects at the time of the seizure to the valuation fixed by the officer making
the seizure, the Secretary shall summon three disinterested individuals who shall make
the valuation.
(c) No other property exempt
Notwithstanding any other law of the United States (including section 207 of the
Social Security Act), no property or rights to property shall be exempt from levy other
than the property specifically made exempt by subsection (a).
315

(d) Exempt amount of wages, salary, or other income
(1) Individuals on weekly basis
In the case of an individual who is paid or receives all of his wages, salary, and
other income on a weekly basis, the amount of the wages, salary, and other
income payable to or received by him during any week which is exempt from
levy under subsection (a)(9) shall be the exempt amount.
(2) Exempt amount. For purposes of paragraph (1), the term “exempt amount” means
an amount equal to—
(A) the sum of—
(i) the standard deduction, and
(ii) the aggregate amount of the deductions for personal exemptions allowed
the taxpayer under section 151 in the taxable year in which such levy occurs,
divided by
(B) 52.
Unless the taxpayer submits to the Secretary a written and properly verified
statement specifying the facts necessary to determine the proper amount under
subparagraph (A), subparagraph (A) shall be applied as if the taxpayer were a
married individual filing a separate return with only 1 personal exemption.
(3) Individuals on basis other than weekly
In the case of any individual not described in paragraph (1), the amount of the
wages, salary, and other income payable to or received by him during any
applicable pay period or other fiscal period (as determined under regulations
prescribed by the Secretary) which is exempt from levy under subsection (a)(9)
shall be an amount (determined under such regulations) which as nearly as
possible will result in the same total exemption from levy for such individual
over a period of time as he would have under paragraph (1) if (during such
period of time) he were paid or received such wages, salary, and other income on
a regular weekly basis.
(4) Years when personal exemption amount is zero
(A) In general. In the case of any taxable year in which the exemption amount
under section 151(d) is zero, paragraph (2) shall not apply and for purposes of
paragraph (1) the term “exempt amount” means an amount equal to—
(i) the sum of the amount determined under subparagraph (B) and the standard
deduction, divided by
(ii) 52.
(B) Amount determined
For purposes of subparagraph (A), the amount determined under this
subparagraph is $4,150 multiplied by the number of the taxpayer’s dependents
for the taxable year in which the levy occurs.
316

(C) Inflation adjustment. In the case of any taxable year beginning in a calendar
year after 2018, the $4,150 amount in subparagraph (B) shall be increased by an
amount equal to—
(i) such dollar amount, multiplied by
(ii) the cost-of-living adjustment determined under section 1(f)(3) for the
calendar year in which the taxable year begins, determined by substituting
“2017” for “2016” in subparagraph (A)(ii) thereof.
If any increase determined under the preceding sentence is not a multiple of
$100, such increase shall be rounded to the next lowest multiple of $100.
(D) Verified statement
Unless the taxpayer submits to the Secretary a written and properly verified
statement specifying the facts necessary to determine the proper amount under
subparagraph (A), subparagraph (A) shall be applied as if the taxpayer were a
married individual filing a separate return with no dependents.
(e) Levy allowed on principal residences and certain business assets in certain circumstances
(1) Principal residences
(A) Approval required
A principal residence shall not be exempt from levy if a judge or magistrate of
a district court of the United States approves (in writing) the levy of such
residence.
(B) Jurisdiction
The district courts of the United States shall have exclusive jurisdiction to
approve a levy under subparagraph (A).
(2) Certain business assets. Property (other than a principal residence) described in
subsection (a)(13)(B) shall not be exempt from levy if—
(A) a district director or assistant district director of the Internal Revenue Service
personally approves (in writing) the levy of such property; or
(B) the Secretary finds that the collection of tax is in jeopardy.
An official may not approve a levy under subparagraph (A) unless the official
determines that the taxpayer’s other assets subject to collection are insufficient to pay
the amount due, together with expenses of the proceedings.
(f) Levy allowed on certain specified payments
Any payment described in subparagraph (B) or (C) of section 6331(h)(2) shall not be
exempt from levy if the Secretary approves the levy thereon under section 6331(h).
(g) Inflation adjustment

317

(1) In general. In the case of any calendar year beginning after 1999, each dollar
amount referred to in paragraphs (2) and (3) of subsection (a) shall be increased by an
amount equal to—
(A) such dollar amount, multiplied by
(B) the cost-of-living adjustment determined under section 1(f)(3) for such
calendar year, by substituting “calendar year 1998” for “calendar year 2016” in
subparagraph (A)(ii) thereof.
(2) Rounding
If any dollar amount after being increased under paragraph (1) is not a multiple
of $10, such dollar amount shall be rounded to the nearest multiple of $10.
§ 7425 - Discharge of liens
(a) Judicial proceedings. If the United States is not joined as a party, a judgment in any
civil action or suit described in subsection (a) of section 2410 of title 28 of the United
States Code, or a judicial sale pursuant to such a judgment, with respect to property on
which the United States has or claims a lien under the provisions of this title—
(1) shall be made subject to and without disturbing the lien of the United States,
if notice of such lien has been filed in the place provided by law for such filing at
the time such action or suit is commenced, or
(2) shall have the same effect with respect to the discharge or divestment of such
lien of the United States as may be provided with respect to such matters by the
local law of the place where such property is situated, if no notice of such lien
has been filed in the place provided by law for such filing at the time such action
or suit is commenced or if the law makes no provision for such filing.
If a judicial sale of property pursuant to a judgment in any civil action or suit to which
the United States is not a party discharges a lien of the United States arising under the
provisions of this title, the United States may claim, with the same priority as its lien
had against the property sold, the proceeds (exclusive of costs) of such sale at any time
before the distribution of such proceeds is ordered.
(b) Other sales. Notwithstanding subsection (a) a sale of property on which the United
States has or claims a lien, or a title derived from enforcement of a lien, under the
provisions of this title, made pursuant to an instrument creating a lien on such
property, pursuant to a confession of judgment on the obligation secured by such an
instrument, or pursuant to a nonjudicial sale under a statutory lien on such property—
(1) shall, except as otherwise provided, be made subject to and without
disturbing such lien or title, if notice of such lien was filed or such title recorded
in the place provided by law for such filing or recording more than 30 days
before such sale and the United States is not given notice of such sale in the
manner prescribed in subsection (c)(1); or
(2) shall have the same effect with respect to the discharge or divestment of such
lien or such title of the United States, as may be provided with respect to such
matters by the local law of the place where such property is situated, if—
318

(A) notice of such lien or such title was not filed or recorded in the place
provided by law for such filing more than 30 days before such sale,
(B) the law makes no provision for such filing, or
(C) notice of such sale is given in the manner prescribed in subsection (c)(1).
(c) Special rules
(1) Notice of sale
Notice of a sale to which subsection (b) applies shall be given (in accordance
with regulations prescribed by the Secretary) in writing, by registered or certified
mail or by personal service, not less than 25 days prior to such sale, to the
Secretary.
(2) Consent to sale
Notwithstanding the notice requirement of subsection (b)(2)(C), a sale described
in subsection (b) of property shall discharge or divest such property of the lien or
title of the United States if the United States consents to the sale of such property
free of such lien or title.
(3) Sale of perishable goods
Notwithstanding the notice requirement of subsection (b)(2)(C), a sale described
in subsection (b) of property liable to perish or become greatly reduced in price
or value by keeping, or which cannot be kept without great expense, shall
discharge or divest such property of the lien or title of the United States if notice
of such sale is given (in accordance with regulations prescribed by the Secretary)
in writing, by registered or certified mail or by personal service, to the Secretary
before such sale. The proceeds (exclusive of costs) of such sale shall be held as a
fund subject to the liens and claims of the United States, in the same manner and
with the same priority as such liens and claims had with respect to the property
sold, for not less than 30 days after the date of such sale.
(4) Forfeitures of land sales contracts
For purposes of subsection (b), a sale of property includes any forfeiture of a
land sales contract.
(d) Redemption by United States
(1) Right to redeem
In the case of a sale of real property to which subsection (b) applies to satisfy a
lien prior to that of the United States, the Secretary may redeem such property
within the period of 120 days from the date of such sale or the period allowable
for redemption under local law, whichever is longer.
(2) Amount to be paid
In any case in which the United States redeems real property pursuant to
paragraph (1), the amount to be paid for such property shall be the amount
319

prescribed by subsection (d) of section 2410 of title 28 of the United States
Code.
(3) Certificate of redemption
(A) In general
In any case in which real property is redeemed by the United States pursuant
to this subsection, the Secretary shall apply to the officer designated by local
law, if any, for the documents necessary to evidence the fact of redemption
and to record title to such property in the name of the United States. If no such
officer is designated by local law or if such officer fails to issue such
documents, the Secretary shall execute a certificate of redemption therefor.
(B) Filing
The Secretary shall, without delay, cause such documents or certificate to be
duly recorded in the proper registry of deeds. If the State in which the real
property redeemed by the United States is situated has not by law designated
an office in which such certificate may be recorded, the Secretary shall file
such certificate in the office of the clerk of the United States district court for
the judicial district in which such property is situated.
(C) Effect
A certificate of redemption executed by the Secretary shall constitute prima
facie evidence of the regularity of such redemption and shall, when recorded,
transfer to the United States all the rights, title, and interest in and to such
property acquired by the person from whom the United States redeems such
property by virtue of the sale of such property.
TITLE 28 – JUDICIARY AND JUDICIAL PROCEDURE
§ 157 – Procedures ......................................................... Error! Bookmark not defined.
§ 158 – Appeals .............................................................. Error! Bookmark not defined.
§ 959 - Trustees and receivers suable; management; State laws .. Error! Bookmark not
defined.
§ 1334 - Bankruptcy cases and proceedings .................. Error! Bookmark not defined.
§ 1408 - Venue of cases under title 11 ............................ Error! Bookmark not defined.
§ 1409 - Venue of proceedings arising under title 11 or arising in or related to cases
under title 11 ...................................................... Error! Bookmark not defined.
§ 1410 - Venue of cases ancillary to foreign proceedings Error! Bookmark not defined.
§ 1411 - Jury trials ........................................................... Error! Bookmark not defined.
§ 1412 - Change of venue ............................................... Error! Bookmark not defined.
§ 1452 - Removal of claims related to bankruptcy cases Error! Bookmark not defined.

320

§ 157 – Procedures
(a) Each district court may provide that any or all cases under title 11 and any or all
proceedings arising under title 11 or arising in or related to a case under title 11 shall be
referred to the bankruptcy judges for the district.
(b)
(1) Bankruptcy judges may hear and determine all cases under title 11 and all core
proceedings arising under title 11, or arising in a case under title 11, referred under
subsection (a) of this section, and may enter appropriate orders and judgments, subject
to review under section 158 of this title.
(2) Core proceedings include, but are not limited to—
(A) matters concerning the administration of the estate;
(B) allowance or disallowance of claims against the estate or exemptions from
property of the estate, and estimation of claims or interests for the purposes of
confirming a plan under chapter 11, 12, or 13 of title 11but not the liquidation or
estimation of contingent or unliquidated personal injury tort or wrongful death
claims against the estate for purposes of distribution in a case under title 11;
(C) counterclaims by the estate against persons filing claims against the estate;
(D) orders in respect to obtaining credit;
(E) orders to turn over property of the estate;
(F) proceedings to determine, avoid, or recover preferences;
(G) motions to terminate, annul, or modify the automatic stay;
(H) proceedings to determine, avoid, or recover fraudulent conveyances;
(I) determinations as to the dischargeability of particular debts;
(J) objections to discharges;
(K) determinations of the validity, extent, or priority of liens;
(L) confirmations of plans;
(M) orders approving the use or lease of property, including the use of cash
collateral;
(N) orders approving the sale of property other than property resulting from
claims brought by the estate against persons who have not filed claims against
the estate;
(O) other proceedings affecting the liquidation of the assets of the estate or the
adjustment of the debtor-creditor or the equity security holder relationship,
except personal injury tort or wrongful death claims; and
(P) recognition of foreign proceedings and other matters under chapter 15 of title
11.
321

(3) The bankruptcy judge shall determine, on the judge’s own motion or on timely
motion of a party, whether a proceeding is a core proceeding under this subsection or
is a proceeding that is otherwise related to a case under title 11. A determination that a
proceeding is not a core proceeding shall not be made solely on the basis that its
resolution may be affected by State law.
(4) Non-core proceedings under section 157(b)(2)(B) of title 28, United States Code,
shall not be subject to the mandatory abstention provisions of section 1334(c)(2).
(5) The district court shall order that personal injury tort and wrongful death claims
shall be tried in the district court in which the bankruptcy case is pending, or in the
district court in the district in which the claim arose, as determined by the district court
in which the bankruptcy case is pending.
(c)
(1) A bankruptcy judge may hear a proceeding that is not a core proceeding but that is
otherwise related to a case under title 11. In such proceeding, the bankruptcy judge
shall submit proposed findings of fact and conclusions of law to the district court, and
any final order or judgment shall be entered by the district judge after considering the
bankruptcy judge’s proposed findings and conclusions and after reviewing de novo
those matters to which any party has timely and specifically objected.
(2) Notwithstanding the provisions of paragraph (1) of this subsection, the district
court, with the consent of all the parties to the proceeding, may refer a proceeding
related to a case under title 11 to a bankruptcy judge to hear and determine and to enter
appropriate orders and judgments, subject to review under section 158 of this title.
(d) The district court may withdraw, in whole or in part, any case or proceeding
referred under this section, on its own motion or on timely motion of any party, for
cause shown. The district court shall, on timely motion of a party, so withdraw a
proceeding if the court determines that resolution of the proceeding requires
consideration of both title 11 and other laws of the United States regulating
organizations or activities affecting interstate commerce.
(e) If the right to a jury trial applies in a proceeding that may be heard under this
section by a bankruptcy judge, the bankruptcy judge may conduct the jury trial if
specially designated to exercise such jurisdiction by the district court and with the
express consent of all the parties.
§ 158 – Appeals
(a) The district courts of the United States shall have jurisdiction to hear appeals [1]
(1) from final judgments, orders, and decrees;
(2) from interlocutory orders and decrees issued under section 1121(d) of title 11
increasing or reducing the time periods referred to in section 1121 of such title; and
(3) with leave of the court, from other interlocutory orders and decrees;
of bankruptcy judges entered in cases and proceedings referred to the bankruptcy judges
under section 157 of this title. An appeal under this subsection shall be taken only to the
district court for the judicial district in which the bankruptcy judge is serving.
322

(b)
(1) The judicial council of a circuit shall establish a bankruptcy appellate panel service
composed of bankruptcy judges of the districts in the circuit who are appointed by the
judicial council in accordance with paragraph (3), to hear and determine, with the
consent of all the parties, appeals under subsection (a) unless the judicial council finds
that—
(A) there are insufficient judicial resources available in the circuit; or
(B) establishment of such service would result in undue delay or increased cost
to parties in cases under title 11.
Not later than 90 days after making the finding, the judicial council shall submit to the
Judicial Conference of the United States a report containing the factual basis of such
finding.
(2)
(A) A judicial council may reconsider, at any time, the finding described in
paragraph (1).
(B) On the request of a majority of the district judges in a circuit for which a
bankruptcy appellate panel service is established under paragraph (1), made after
the expiration of the 1-year period beginning on the date such service is
established, the judicial council of the circuit shall determine whether a
circumstance specified in subparagraph (A) or (B) of such paragraph exists.
(C) On its own motion, after the expiration of the 3-year period beginning on the
date a bankruptcy appellate panel service is established under paragraph (1), the
judicial council of the circuit may determine whether a circumstance specified in
subparagraph (A) or (B) of such paragraph exists.
(D) If the judicial council finds that either of such circumstances exists, the
judicial council may provide for the completion of the appeals then pending
before such service and the orderly termination of such service.
(3) Bankruptcy judges appointed under paragraph (1) shall be appointed and may be
reappointed under such paragraph.
(4) If authorized by the Judicial Conference of the United States, the judicial councils
of 2 or more circuits may establish a joint bankruptcy appellate panel comprised of
bankruptcy judges from the districts within the circuits for which such panel is
established, to hear and determine, upon the consent of all the parties, appeals under
subsection (a) of this section.
(5) An appeal to be heard under this subsection shall be heard by a panel of 3 members
of the bankruptcy appellate panel service, except that a member of such service may
not hear an appeal originating in the district for which such member is appointed or
designated under section 152 of this title.
(6) Appeals may not be heard under this subsection by a panel of the bankruptcy
appellate panel service unless the district judges for the district in which the appeals
323

occur, by majority vote, have authorized such service to hear and determine appeals
originating in such district.
(c)
(1) Subject to subsections (b) and (d)(2), each appeal under subsection (a) shall be
heard by a 3-judge panel of the bankruptcy appellate panel service established under
subsection (b)(1) unless—
(A) the appellant elects at the time of filing the appeal; or
(B) any other party elects, not later than 30 days after service of notice of the
appeal;
to have such appeal heard by the district court.
(2) An appeal under subsections (a) and (b) of this section shall be taken in the same
manner as appeals in civil proceedings generally are taken to the courts of appeals
from the district courts and in the time provided by Rule 8002 of the Bankruptcy
Rules.
(d)
(1) The courts of appeals shall have jurisdiction of appeals from all final decisions,
judgments, orders, and decrees entered under subsections (a) and (b) of this section.
(2)
(A) The appropriate court of appeals shall have jurisdiction of appeals described
in the first sentence of subsection (a) if the bankruptcy court, the district court, or
the bankruptcy appellate panel involved, acting on its own motion or on the
request of a party to the judgment, order, or decree described in such first
sentence, or all the appellants and appellees (if any) acting jointly, certify that—
(i) the judgment, order, or decree involves a question of law as to which there
is no controlling decision of the court of appeals for the circuit or of the
Supreme Court of the United States, or involves a matter of public
importance;
(ii) the judgment, order, or decree involves a question of law requiring
resolution of conflicting decisions; or
(iii) an immediate appeal from the judgment, order, or decree may materially
advance the progress of the case or proceeding in which the appeal is taken;
and if the court of appeals authorizes the direct appeal of the judgment, order, or
decree.
(B) If the bankruptcy court, the district court, or the bankruptcy appellate
panel—
(i) on its own motion or on the request of a party, determines that a
circumstance specified in clause (i), (ii), or (iii) of subparagraph (A) exists; or
(ii) receives a request made by a majority of the appellants and a majority of
appellees (if any) to make the certification described in subparagraph (A);
324

then the bankruptcy court, the district court, or the bankruptcy appellate panel
shall make the certification described in subparagraph (A).
(C) The parties may supplement the certification with a short statement of the
basis for the certification.
(D) An appeal under this paragraph does not stay any proceeding of the
bankruptcy court, the district court, or the bankruptcy appellate panel from which
the appeal is taken, unless the respective bankruptcy court, district court, or
bankruptcy appellate panel, or the court of appeals in which the appeal is
pending, issues a stay of such proceeding pending the appeal.
(E) Any request under subparagraph (B) for certification shall be made not later
than 60 days after the entry of the judgment, order, or decree.
§ 959 - Trustees and receivers suable; management; State laws
(a) Trustees, receivers or managers of any property, including debtors in possession, may be
sued, without leave of the court appointing them, with respect to any of their acts or
transactions in carrying on business connected with such property. Such actions shall be
subject to the general equity power of such court so far as the same may be necessary to the
ends of justice, but this shall not deprive a litigant of his right to trial by jury.
(b) Except as provided in section 1166 of title 11, a trustee, receiver or manager appointed in
any cause pending in any court of the United States, including a debtor in possession, shall
manage and operate the property in his possession as such trustee, receiver or manager
according to the requirements of the valid laws of the State in which such property is
situated, in the same manner that the owner or possessor thereof would be bound to do if in
possession thereof.
§ 1334 - Bankruptcy cases and proceedings
(a) Except as provided in subsection (b) of this section, the district courts shall have original
and exclusive jurisdiction of all cases under title 11.
(b) Except as provided in subsection (e)(2), and 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 under
title 11, or arising in or related to cases under title 11.
(c)
(1) Except with respect to a case under chapter 15 of title 11, nothing in this section
prevents a district court in the interest of justice, or in the interest of comity with State
courts or respect for State law, from abstaining from hearing a particular proceeding
arising under title 11 or arising in or related to a case under title 11.
(2) Upon timely motion of a party in a proceeding based upon a State law claim or
State law cause of action, related to a case under title 11 but not arising under title 11
or arising in a case under title 11, with respect to which an action could not have been
commenced in a court of the United States absent jurisdiction under this section, the
district court shall abstain from hearing such proceeding if an action is commenced,
and can be timely adjudicated, in a State forum of appropriate jurisdiction.
325

(d) Any decision to abstain or not to abstain made under subsection (c) (other than a decision
not to abstain in a proceeding described in subsection (c)(2)) is not reviewable by appeal or
otherwise by the court of appeals under section 158(d), 1291, or 1292 of this title or by the
Supreme Court of the United States under section 1254 of this title. Subsection (c) and this
subsection shall not be construed to limit the applicability of the stay provided for by section
362 of title 11, United States Code, as such section applies to an action affecting the property
of the estate in bankruptcy.
(e) The district court in which a case under title 11 is commenced or is pending shall have
exclusive jurisdiction—
(1) of all the property, wherever located, of the debtor as of the commencement of
such case, and of property of the estate; and
(2) over all claims or causes of action that involve construction of section 327 of title
11, United States Code, or rules relating to disclosure requirements under section 327.
§ 1408 - Venue of cases under title 11
Except as provided in section 1410 of this title, a case under title 11 may be commenced in
the district court for the district—
(1) in which the domicile, residence, principal place of business 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 one hundred and eighty days immediately
preceding such commencement, or for a longer portion of such one-hundred-andeighty-day period than the domicile, residence, or principal place of business, in the
United States, or principal 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.
§ 1409 - Venue of proceedings arising under title 11 or arising in or related to cases under title
11
(a) Except as otherwise provided in subsections (b) and (d), a proceeding arising under title
11 or arising in or related to a case under title 11 may be commenced in the district 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 [1] or a consumer debt of less than $15,000,[1] or a debt
(excluding a consumer debt) against a noninsider of less than $10,000,[1] only in the district
court for the district in which the defendant resides.
(c) Except as provided in subsection (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 11in the district court for the district where
the State or Federal court sits in which, under applicable nonbankruptcy 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.
326

(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 district 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 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, may be commenced against the representative of the estate in such case in the
district court for the district where the State or Federal court sits in which the party
commencing such proceeding may, under applicable nonbankruptcy venue provisions, have
brought an action on such claim, or in the district court in which such case is pending.
§ 1410 - Venue of cases ancillary to foreign proceedings
A case under chapter 15 of title 11 may be commenced in the district court of the United
States for the district—
(1) in which the debtor has its principal place of business or principal assets in the
United States;
(2) if the debtor does not have a place of business or assets in the United States, in
which there is pending against the debtor an action or proceeding in a Federal or State
court; or
(3) in a case other than those specified in paragraph (1) or (2), in which venue will be
consistent with the interests of justice and the convenience of the parties, having
regard to the relief sought by the foreign representative.
§ 1411 - Jury trials
(a) Except as provided in subsection (b) of this section, this chapter and title 11 do not affect
any right to trial by jury that an individual has under applicable nonbankruptcy law with
regard to a personal injury or wrongful death tort claim.
(b) The district court may order the issues arising under section 303 of title 11 to be tried
without a jury.
§ 1412 - Change of venue
A district court may transfer a case or proceeding under title 11 to a district court for another
district, in the interest of justice or for the convenience of the parties.
§ 1452 - Removal of claims related to bankruptcy cases
(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 governmental unit to enforce such
governmental unit’s police or regulatory power, to the district court for the district where
such civil action is pending, if such district court has jurisdiction of such claim or cause of
action under section 1334 of this title.
(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 entered under this subsection remanding a
claim or cause of action, or a decision to not remand, is not reviewable by appeal or
327

otherwise by the court of appeals under section 158(d), 1291, or 1292 of this title or by the
Supreme Court of the United States under section 1254 of this title.

328