[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5421 Engrossed in House (EH)]

113th CONGRESS
  2d Session
                                H. R. 5421

_______________________________________________________________________

                                 AN ACT


 
To amend title 11 of the United States Code in order to facilitate the 
    resolution of an insolvent financial institution in bankruptcy.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Financial Institution Bankruptcy Act 
of 2014''.

SEC. 2. GENERAL PROVISIONS RELATING TO COVERED FINANCIAL CORPORATIONS.

    (a) Definition.--Section 101 of title 11, United States Code, is 
amended by inserting the following after paragraph (9):
            ``(9A) The term `covered financial corporation' means any 
        corporation incorporated or organized under any Federal or 
        State law, other than a stockbroker, a commodity broker, or an 
        entity of the kind specified in paragraph (2) or (3) of section 
        109(b), that is--
                    ``(A) a bank holding company, as defined in section 
                2(a) of the Bank Holding Company Act of 1956; or
                    ``(B) a corporation that exists for the primary 
                purpose of owning, controlling and financing its 
                subsidiaries, that has total consolidated assets of 
                $50,000,000,000 or greater, and for which, in its most 
                recently completed fiscal year--
                            ``(i) annual gross revenues derived by the 
                        corporation and all of its subsidiaries from 
                        activities that are financial in nature (as 
                        defined in section 4(k) of the Bank Holding 
                        Company Act of 1956) and, if applicable, from 
                        the ownership or control of one or more insured 
                        depository institutions, represents 85 percent 
                        or more of the consolidated annual gross 
                        revenues of the corporation; or
                            ``(ii) the consolidated assets of the 
                        corporation and all of its subsidiaries related 
                        to activities that are financial in nature (as 
                        defined in section 4(k) of the Bank Holding 
                        Company Act of 1956) and, if applicable, 
                        related to the ownership or control of one or 
                        more insured depository institutions, 
                        represents 85 percent or more of the 
                        consolidated assets of the corporation.''.
    (b) Applicability of Chapters.--Section 103 of title 11, United 
States Code, is amended by adding at the end the following:
    ``(l) Subchapter V of chapter 11 of this title applies only in a 
case under chapter 11 concerning a covered financial corporation.''.
    (c) Who May Be a Debtor.--Section 109 of title 11, United States 
Code, is amended--
            (1) in subsection (b)--
                    (A) in paragraph (2), by striking ``or'' at the 
                end;
                    (B) in paragraph (3)(B), by striking the period at 
                the end and inserting ``; or''; and
                    (C) by adding at the end the following:
            ``(4) a covered financial corporation.''; and
            (2) in subsection (d)--
                    (A) by striking ``and'' before ``an uninsured State 
                member bank'';
                    (B) by striking ``or'' before ``a corporation''; 
                and
                    (C) by inserting ``, or a covered financial 
                corporation'' after ``Federal Deposit Insurance 
                Corporation Improvement Act of 1991''.
    (d) Conversion to Chapter 7.--Section 1112 of title 11, United 
States Code, is amended by adding at the end the following:
    ``(g) Notwithstanding section 109(b), the court may convert a case 
under subchapter V to a case under chapter 7 if--
            ``(1) a transfer approved under section 1185 has been 
        consummated;
            ``(2) the court has ordered the appointment of a special 
        trustee under section 1186; and
            ``(3) the court finds, after notice and a hearing, that 
        conversion is in the best interest of the creditors and the 
        estate.''.
    (e)(1) Section 726(a)(1) of title 11, United States Code, is 
amended by inserting after ``first,'' the following: ``in payment of 
any unpaid fees, costs, and expenses of a special trustee appointed 
under section 1186, and then''.
    (2) Section 1129(a) of title 11, United States Code, is amended by 
inserting after paragraph (16) the following:
            ``(17) In a case under subchapter V, all payable fees, 
        costs, and expenses of the special trustee have been paid or 
        the plan provides for the payment of all such fees, costs, and 
        expenses on the effective date of the plan.
            ``(18) In a case under subchapter V, confirmation of the 
        plan is not likely to cause serious adverse effects on 
        financial stability in the United States.''.
    (f) Section 322(b)(2) of title 11, United States Code, is amended 
by striking ``The'' and inserting ``In cases under subchapter V, the 
United States trustee shall recommend to the court, and in all other 
cases, the''.

SEC. 3. LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A COVERED 
              FINANCIAL CORPORATION.

    Chapter 11 of title 11, United States Code, is amended by adding at 
the end the following:

 ``SUBCHAPTER V--LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A 
                     COVERED FINANCIAL CORPORATION

``Sec. 1181. Inapplicability of other sections
    ``Sections 303 and 321(c) do not apply in a case under this 
subchapter concerning a covered financial corporation.
``Sec. 1182. Definitions for this subchapter
    ``In this subchapter, the following definitions shall apply:
            ``(1) The term `Board' means the Board of Governors of the 
        Federal Reserve System.
            ``(2) The term `bridge company' means a newly formed 
        corporation to which property of the estate may be transferred 
        under section 1185(a) and the equity securities of which may be 
        transferred to a special trustee under section 1186(a).
            ``(3) The term `capital structure debt' means all unsecured 
        debt of the debtor for borrowed money for which the debtor is 
        the primary obligor, other than a qualified financial contract 
        and other than debt secured by a lien on property of the estate 
        that is to be transferred to a bridge company pursuant to an 
        order of the court under section 1185(a).
            ``(4) The term `contractual right' means a contractual 
        right of a kind defined in section 555, 556, 559, 560, or 561.
            ``(5) The term `qualified financial contract' means any 
        contract of a kind defined in paragraph (25), (38A), (47), or 
        (53B) of section 101, section 741(7), or paragraph (4), (5), 
        (11), or (13) of section 761.
            ``(6) The term `special trustee' means the trustee of a 
        trust formed under section 1186(a)(1).
``Sec. 1183. Commencement of a case concerning a covered financial 
              corporation
    ``(a) A case under this subchapter concerning a covered financial 
corporation may be commenced by the filing of a petition with the 
court--
            ``(1) by the debtor under section 301 only if the debtor 
        states to the best of its knowledge under penalty of perjury in 
        the petition that it is a covered financial corporation; or
            ``(2) by the Board only if the Board states to the best of 
        its knowledge under penalty of perjury in the petition that--
                    ``(A) the debtor is a covered financial corporation 
                that--
                            ``(i) has incurred losses that will deplete 
                        all or substantially all of the capital of the 
                        covered financial corporation, and there is no 
                        reasonable prospect for the covered financial 
                        corporation to avoid such depletion;
                            ``(ii) is insolvent;
                            ``(iii) is not paying, or is unable to pay, 
                        the debts of the covered financial corporation 
                        (other than debts subject to a bona fide 
                        dispute as to liability or amount) as they 
                        become due; or
                            ``(iv) is likely to be in a financial 
                        condition specified in clause (i), (ii), or 
                        (iii) sufficiently soon such that the immediate 
                        commencement of a case under this subchapter is 
                        necessary to prevent serious adverse effects on 
                        financial stability in the United States; and
                    ``(B) the commencement of a case under this title 
                and effecting a transfer under section 1185 is 
                necessary to prevent serious adverse effects on 
                financial stability in the United States.
    ``(b)(1) Unless the debtor consents to an order for relief, the 
court shall hold a hearing on the Board's petition under subsection 
(a)(2) as soon as practicable but not later than 16 hours after the 
Board files such a petition, with notice only to--
            ``(A) the covered financial corporation;
            ``(B) the Federal Deposit Insurance Corporation;
            ``(C) the Office of the Comptroller of the Currency of the 
        Department of the Treasury; and
            ``(D) the Secretary of the Treasury.
    ``(2) Only the Board and the entities specified in paragraph (1) 
and their counsel may participate in a hearing described in this 
subsection. The Board or the trustee may request that pleadings, 
hearings, transcripts, and orders in connection with a hearing 
described in this subsection be sealed if their disclosure could create 
financial instability in the United States.
    ``(3) All pleadings, hearings, transcripts, and orders sealed under 
paragraph (2) shall be available to only the court, the appellate 
panel, the covered financial corporation, the Federal Deposit Insurance 
Corporation, the Office of the Comptroller of the Currency of the 
Department of the Treasury, the Secretary of the Treasury, and the 
Board. Notwithstanding paragraph (2), if the case is dismissed, all 
court documents, including pleadings, hearings, transcripts, and 
orders, shall be permanently sealed.
    ``(c)(1) The commencement of a case under subsection (a)(1) 
constitutes an order for relief under this subchapter.
    ``(2) In a case commenced under subsection (a)(2), after notice and 
hearing required under subsection (b) and not later than 18 hours after 
the filing of the Board's petition, the court shall enter--
            ``(A) an order for relief--
                    ``(i) if the Board has shown at the hearing under 
                this subsection that the requirements under subsection 
                (a)(2) are supported by a preponderance of the 
                evidence; or
                    ``(ii) if the debtor consents to the Board's 
                petition under subsection (a)(2); or
            ``(B) an order dismissing the case.
    ``(d)(1) The covered financial corporation or the Board may appeal 
to the court of appeals from an order entered by the court under 
subsection (c)(2) not later than 1 hour after the court enters such 
order, with notice only to the entities specified in subsection (b)(1) 
and the Board. Such order shall be stayed pending such appeal.
    ``(2) The appellate panel specified under section 298(c)(1) of 
title 28 for the judicial circuit in which the case is pending shall 
hear the appeal under paragraph (1) within 12 hours of the filing of 
the notice of appeal under this subsection. The standard of review 
shall be abuse of discretion. The appellate panel shall enter an order 
determining the matter that is the subject of the appeal not later than 
14 hours after the notice of appeal is filed.
    ``(3) The court may not, on account of an appeal from an order for 
relief under section 1183(d)(1), delay any proceeding under section 
1185, except that the court shall not authorize a transfer under 
section 1185 before the determination of the appeal.
    ``(e) The members of the board of directors (or body performing 
similar functions) of a covered financial company shall have no 
liability to shareholders, creditors or other parties in interest for a 
good faith filing or consenting in good faith to a petition with 
respect to a case under this subchapter, or for any reasonable action 
taken in good faith in contemplation of or in connection with such a 
petition or a transfer under section 1185 or section 1186, whether 
prior to or after commencement of the case.
    ``(f) Counsel to the debtor or the Board shall provide, to the 
greatest extent practicable, sufficient confidential notice to the 
Office of Court Services of the Administrative Office of the United 
States Courts regarding the potential commencement of a subchapter V 
case without disclosing the identity of the potential debtor in order 
to allow such office to randomly designate and ensure the ready 
availability of one of the bankruptcy judges designated under section 
298(b)(1) of title 28 to be available to preside over such subchapter V 
case.
``Sec. 1184. Regulators
    ``The Board, the Securities Exchange Commission, the Office of the 
Comptroller of the Currency of the Department of the Treasury, and the 
Federal Deposit Insurance Corporation may raise and may appear and be 
heard on any issue in any case or proceeding under this subchapter.
``Sec. 1185. Special transfer of property of the estate
    ``(a) On request of the trustee or the Board, and after notice and 
a hearing that shall occur not less than 24 hours after the order for 
relief, the court may order a transfer under this section of property 
of the estate, and the assignment of executory contracts, unexpired 
leases, and qualified financial contracts of the debtor, to a bridge 
company. Upon the entry of an order approving such transfer, any 
property transferred, and any executory contracts, unexpired leases, 
and qualified financial contracts assigned under such order shall no 
longer be property of the estate. Except as provided under this 
section, the provisions of sections 363 and 365 shall apply to a 
transfer and assignment under this section.
    ``(b) Unless the court orders otherwise, notice of a request for an 
order under subsection (a) shall consist of electronic or telephonic 
notice of not less than 24 hours to--
            ``(1) the debtor;
            ``(2) the holders of the 20 largest secured claims against 
        the debtor;
            ``(3) the holders of the 20 largest unsecured claims 
        against the debtor;
            ``(4) counterparties to any debt, executory contract, 
        unexpired lease, and qualified financial contract requested to 
        be transferred under this section;
            ``(5) the Board;
            ``(6) the Federal Deposit Insurance Corporation;
            ``(7) the Secretary of the Treasury and the Office of the 
        Comptroller of the Currency of the Treasury;
            ``(8) the Securities and Exchange Commission;
            ``(9) the United States trustee or bankruptcy 
        administrator; and
            ``(10) each primary financial regulatory agency, as defined 
        in section 2(12) of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act, with respect to any affiliate the 
        equity securities of which are proposed to be transferred under 
        this section.
    ``(c) The court may not order a transfer under this section unless 
the court determines, based upon a preponderance of the evidence, 
that--
            ``(1) the transfer under this section is necessary to 
        prevent serious adverse effects on financial stability in the 
        United States;
            ``(2) the transfer does not provide for the assumption of 
        any capital structure debt by the bridge company;
            ``(3) the transfer does not provide for the transfer to the 
        bridge company of any property of the estate that is subject to 
        a lien securing a debt, executory contract, unexpired lease or 
        agreement of the debtor unless--
                    ``(A)(i) the bridge company assumes such debt, 
                executory contract, unexpired lease or agreement, 
                including any claims arising in respect thereof that 
                would not be allowed secured claims under section 
                506(a)(1) and after giving effect to such transfer, 
                such property remains subject to the lien securing such 
                debt, executory contract, unexpired lease or agreement; 
                and
                    ``(ii) the court has determined that assumption of 
                such debt, executory contract, unexpired lease or 
                agreement by the bridge company is in the best 
                interests of the estate; or
                    ``(B) such property is being transferred to the 
                bridge company in accordance with the provisions of 
                section 363;
            ``(4) the transfer does not provide for the assumption by 
        the bridge company of any debt, executory contract, unexpired 
        lease or agreement of the debtor secured by a lien on property 
        in which the estate has an interest unless the transfer 
        provides for such property to be transferred to the bridge 
        company in accordance with paragraph (3)(A) of this subsection;
            ``(5) the transfer does not provide for the transfer of the 
        equity of the debtor;
            ``(6) the party requesting the transfer under this 
        subsection has demonstrated that the bridge company is not 
        likely to fail to meet the obligations of any debt, executory 
        contract, qualified financial contract, or unexpired lease 
        assumed and assigned to the bridge company;
            ``(7) the transfer provides for the transfer to a special 
        trustee all of the equity securities in the bridge company and 
        appointment of a special trustee in accordance with section 
        1186;
            ``(8) after giving effect to the transfer, adequate 
        provision has been made for the fees, costs, and expenses of 
        the estate and special trustee; and
            ``(9) the bridge company will have governing documents, and 
        initial directors and senior officers, that are in the best 
        interest of creditors and the estate.
    ``(d) Immediately before a transfer under the section, the bridge 
company that is the recipient of the transfer shall--
            ``(1) not have any property, executory contracts, unexpired 
        leases, or debts, other than any property acquired or executory 
        contracts, unexpired leases, or debts assumed when acting as a 
        transferee of a transfer under this section; and
            ``(2) have equity securities that are property of the 
        estate, which may be sold or distributed in accordance with 
        this title.
``Sec. 1186. Special trustee
    ``(a)(1) An order approving a transfer under section 1185 shall 
require the trustee to transfer to a qualified and independent special 
trustee, who is appointed by the court, all of the equity securities in 
the bridge company that is the recipient of a transfer under section 
1185 to hold in trust for the sole benefit of the estate, subject to 
satisfaction of the special trustee's fees, costs, and expenses. The 
trust of which the special trustee is the trustee shall be a newly 
formed trust governed by a trust agreement approved by the court as in 
the best interests of the estate, and shall exist for the sole purpose 
of holding and administering, and shall be permitted to dispose of, the 
equity securities of the bridge company in accordance with the trust 
agreement.
    ``(2) In connection with the hearing to approve a transfer under 
section 1185, the trustee shall confirm to the court that the Board has 
been consulted regarding the identity of the proposed special trustee 
and advise the court of the results of such consultation.
    ``(b) The trust agreement governing the trust shall provide--
            ``(1) for the payment of the fees, costs, expenses, and 
        indemnities of the special trustee from the assets of the 
        debtor's estate;
            ``(2) that the special trustee provide--
                    ``(A) quarterly reporting to the estate, which 
                shall be filed with the court; and
                    ``(B) information about the bridge company 
                reasonably requested by a party in interest to prepare 
                a disclosure statement for a plan providing for 
                distribution of any securities of the bridge company if 
                such information is necessary to prepare such 
                disclosure statement;
            ``(3) that for as long as the equity securities of the 
        bridge company are held by the trust, the special trustee shall 
        file a notice with the court in connection with--
                    ``(A) any change in a director or senior officer of 
                the bridge company;
                    ``(B) any modification to the governing documents 
                of the bridge company; and
                    ``(C) any material corporate action of the bridge 
                company, including--
                            ``(i) recapitalization;
                            ``(ii) a material borrowing;
                            ``(iii) termination of an intercompany debt 
                        or guarantee;
                            ``(iv) a transfer of a substantial portion 
                        of the assets of the bridge company; or
                            ``(v) the issuance or sale of any 
                        securities of the bridge company;
            ``(4) that any sale of any equity securities of the bridge 
        company shall not be consummated until the special trustee 
        consults with the Federal Deposit Insurance Corporation and the 
        Board regarding such sale and discloses the results of such 
        consultation with the court;
            ``(5) that, subject to reserves for payments permitted 
        under paragraph (1) provided for in the trust agreement, the 
        proceeds of the sale of any equity securities of the bridge 
        company by the special trustee be held in trust for the benefit 
        of or transferred to the estate;
            ``(6) the process and guidelines for the replacement of the 
        special trustee; and
            ``(7) that the property held in trust by the special 
        trustee is subject to distribution in accordance with 
        subsection (c).
    ``(c)(1) The special trustee shall distribute the assets held in 
trust--
            ``(A) if the court confirms a plan in the case, in 
        accordance with the plan on the effective date of the plan; or
            ``(B) if the case is converted to a case under chapter 7, 
        as ordered by the court.
    ``(2) As soon as practicable after a final distribution under 
paragraph (1), the office of the special trustee shall terminate, 
except as may be necessary to wind up and conclude the business and 
financial affairs of the trust.
    ``(d) After a transfer to the special trustee under this section, 
the special trustee shall be subject only to applicable nonbankruptcy 
law, and the actions and conduct of the special trustee shall no longer 
be subject to approval by the court in the case under this subchapter.
``Sec. 1187. Temporary and supplemental automatic stay; assumed debt
    ``(a)(1) A petition filed under section 1183 operates as a stay, 
applicable to all entities, of the termination, acceleration, or 
modification of any debt, contract, lease, or agreement of the kind 
described in paragraph (2), or of any right or obligation under any 
such debt, contract, lease, or agreement, solely because of--
            ``(A) a default by the debtor under any such debt, 
        contract, lease, or agreement; or
            ``(B) a provision in such debt, contract, lease, or 
        agreement, or in applicable nonbankruptcy law, that is 
        conditioned on--
                    ``(i) the insolvency or financial condition of the 
                debtor at any time before the closing of the case;
                    ``(ii) the commencement of a case under this title 
                concerning the debtor;
                    ``(iii) the appointment of or taking possession by 
                a trustee in a case under this title concerning the 
                debtor or by a custodian before the commencement of the 
                case; or
                    ``(iv) a credit rating agency rating, or absence or 
                withdrawal of a credit rating agency rating--
                            ``(I) of the debtor at any time after the 
                        commencement of the case;
                            ``(II) of an affiliate during the period 
                        from the commencement of the case until 48 
                        hours after such order is entered;
                            ``(III) of the bridge company while the 
                        trustee or the special trustee is a direct or 
                        indirect beneficial holder of more than 50 
                        percent of the equity securities of--
                                    ``(aa) the bridge company; or
                                    ``(bb) the affiliate, if all of the 
                                direct or indirect interests in the 
                                affiliate that are property of the 
                                estate are transferred under section 
                                1185; or
                            ``(IV) of an affiliate while the trustee or 
                        the special trustee is a direct or indirect 
                        beneficial holder of more than 50 percent of 
                        the equity securities of--
                                    ``(aa) the bridge company; or
                                    ``(bb) the affiliate, if all of the 
                                direct or indirect interests in the 
                                affiliate that are property of the 
                                estate are transferred under section 
                                1185.
    ``(2) A debt, contract, lease, or agreement described in this 
paragraph is--
            ``(A) any debt (other than capital structure debt), 
        executory contract, or unexpired lease of the debtor (other 
        than a qualified financial contract);
            ``(B) any agreement under which the debtor issued or is 
        obligated for debt (other than capital structure debt);
            ``(C) any debt, executory contract, or unexpired lease of 
        an affiliate (other than a qualified financial contract); or
            ``(D) any agreement under which an affiliate issued or is 
        obligated for debt.
    ``(3) The stay under this subsection terminates--
            ``(A) for the benefit of the debtor, upon the earliest of--
                    ``(i) 48 hours after the commencement of the case;
                    ``(ii) assumption of the debt, contract, lease, or 
                agreement by the bridge company under an order 
                authorizing a transfer under section 1185;
                    ``(iii) a final order of the court denying the 
                request for a transfer under section 1185; or
                    ``(iv) the time the case is dismissed; and
            ``(B) for the benefit of an affiliate, upon the earliest 
        of--
                    ``(i) the entry of an order authorizing a transfer 
                under section 1185 in which the direct or indirect 
                interests in the affiliate that are property of the 
                estate are not transferred under section 1185;
                    ``(ii) a final order by the court denying the 
                request for a transfer under section 1185;
                    ``(iii) 48 hours after the commencement of the case 
                if the court has not ordered a transfer under section 
                1185; or
                    ``(iv) the time the case is dismissed.
    ``(4) Subsections (d), (e), (f), and (g) of section 362 apply to a 
stay under this subsection.
    ``(b) A debt, executory contract (other than a qualified financial 
contract), or unexpired lease of the debtor, or an agreement under 
which the debtor has issued or is obligated for any debt, may be 
assumed by a bridge company in a transfer under section 1185 
notwithstanding any provision in an agreement or in applicable 
nonbankruptcy law that--
            ``(1) prohibits, restricts, or conditions the assignment of 
        the debt, contract, lease, or agreement; or
            ``(2) accelerates, terminates, or modifies, or permits a 
        party other than the debtor to terminate or modify, the debt, 
        contract, lease, or agreement on account of--
                    ``(A) the assignment of the debt, contract, lease, 
                or agreement; or
                    ``(B) a change in control of any party to the debt, 
                contract, lease, or agreement.
    ``(c)(1) A debt, contract, lease, or agreement of the kind 
described in subparagraph (A) or (B) of subsection (a)(2) may not be 
accelerated, terminated, or modified, and any right or obligation under 
such debt, contract, lease, or agreement may not be accelerated, 
terminated, or modified, as to the bridge company solely because of a 
provision in the debt, contract, lease, or agreement or in applicable 
nonbankruptcy law--
            ``(A) of the kind described in subsection (a)(1)(B) as 
        applied to the debtor;
            ``(B) that prohibits, restricts, or conditions the 
        assignment of the debt, contract, lease, or agreement; or
            ``(C) that accelerates, terminates, or modifies, or permits 
        a party other than the debtor to terminate or modify, the debt, 
        contract, lease or agreement on account of--
                    ``(i) the assignment of the debt, contract, lease, 
                or agreement; or
                    ``(ii) a change in control of any party to the 
                debt, contract, lease, or agreement.
    ``(2) If there is a default by the debtor under a provision other 
than the kind described in paragraph (1) in a debt, contract, lease or 
agreement of the kind described in subparagraph (A) or (B) of 
subsection (a)(2), the bridge company may assume such debt, contract, 
lease, or agreement only if the bridge company--
            ``(A) shall cure the default;
            ``(B) compensates, or provides adequate assurance in 
        connection with a transfer under section 1185 that the bridge 
        company will promptly compensate, a party other than the debtor 
        to the debt, contract, lease, or agreement, for any actual 
        pecuniary loss to the party resulting from the default; and
            ``(C) provides adequate assurance in connection with a 
        transfer under section 1185 of future performance under the 
        debt, contract, lease, or agreement, as determined by the court 
        under section 1185(c)(4).
``Sec. 1188. Treatment of qualified financial contracts and affiliate 
              contracts
    ``(a) Notwithstanding sections 362(b)(6), 362(b)(7), 362(b)(17), 
362(b)(27), 362(o), 555, 556, 559, 560, and 561, a petition filed under 
section 1183 operates as a stay, during the period specified in section 
1187(a)(3)(A), applicable to all entities, of the exercise of a 
contractual right--
            ``(1) to cause the modification, liquidation, termination, 
        or acceleration of a qualified financial contract of the debtor 
        or an affiliate;
            ``(2) to offset or net out any termination value, payment 
        amount, or other transfer obligation arising under or in 
        connection with a qualified financial contract of the debtor or 
        an affiliate; or
            ``(3) under any security agreement or arrangement or other 
        credit enhancement forming a part of or related to a qualified 
        financial contract of the debtor or an affiliate.
    ``(b)(1) During the period specified in section 1187(a)(3)(A), the 
trustee or the affiliate shall perform all payment and delivery 
obligations under such qualified financial contract of the debtor or 
the affiliate, as the case may be, that become due after the 
commencement of the case. The stay provided under subsection (a) 
terminates as to a qualified financial contract of the debtor or an 
affiliate immediately upon the failure of the trustee or the affiliate, 
as the case may be, to perform any such obligation during such period.
    ``(2) Any failure by a counterparty to any qualified financial 
contract of the debtor or any affiliate to perform any payment or 
delivery obligation under such qualified financial contract, including 
during the pendency of the stay provided under subsection (a), shall 
constitute a breach of such qualified financial contract by the 
counterparty.
    ``(c) Subject to the court's approval, a qualified financial 
contract between an entity and the debtor may be assigned to or assumed 
by the bridge company in a transfer under section 1185 if and only if--
            ``(1) all qualified financial contracts between the entity 
        and the debtor are assigned to and assumed by the bridge 
        company in the transfer under section 1185;
            ``(2) all claims of the entity against the debtor under any 
        qualified financial contract between the entity and the debtor 
        (other than any claim that, under the terms of the qualified 
        financial contract, is subordinated to the claims of general 
        unsecured creditors) are assigned to and assumed by the bridge 
        company;
            ``(3) all claims of the debtor against the entity under any 
        qualified financial contract between the entity and the debtor 
        are assigned to and assumed by the bridge company; and
            ``(4) all property securing or any other credit enhancement 
        furnished by the debtor for any qualified financial contract 
        described in paragraph (1) or any claim described in paragraph 
        (2) or (3) under any qualified financial contract between the 
        entity and the debtor is assigned to and assumed by the bridge 
        company.
    ``(d) Notwithstanding any provision of a qualified financial 
contract or of applicable nonbankruptcy law, a qualified financial 
contract of the debtor that is assumed or assigned in a transfer under 
section 1185 may not be accelerated, terminated, or modified, after the 
entry of the order approving a transfer under section 1185, and any 
right or obligation under the qualified financial contract may not be 
accelerated, terminated, or modified, after the entry of the order 
approving a transfer under section 1185 solely because of a condition 
described in section 1187(c)(1), other than a condition of the kind 
specified in section 1187(b) that occurs after property of the estate 
no longer includes a direct beneficial interest or an indirect 
beneficial interest through the special trustee, in more than 50 
percent of the equity securities of the bridge company.
    ``(e) Notwithstanding any provision of any agreement or in 
applicable nonbankruptcy law, an agreement of an affiliate (including 
an executory contract, an unexpired lease, qualified financial 
contract, or an agreement under which the affiliate issued or is 
obligated for debt) and any right or obligation under such agreement 
may not be accelerated, terminated, or modified, solely because of a 
condition described in section 1187(c)(1), other than a condition of 
the kind specified in section 1187(b) that occurs after the bridge 
company is no longer a direct or indirect beneficial holder of more 
than 50 percent of the equity securities of the affiliate, at any time 
after the commencement of the case if--
            ``(1) all direct or indirect interests in the affiliate 
        that are property of the estate are transferred under section 
        1185 to the bridge company within the period specified in 
        subsection (a);
            ``(2) the bridge company assumes--
                    ``(A) any guarantee or other credit enhancement 
                issued by the debtor relating to the agreement of the 
                affiliate; and
                    ``(B) any right of setoff, netting arrangement, or 
                debt of the debtor that directly arises out of or 
                directly relates to the guarantee or credit 
                enhancement; and
            ``(3) any property of the estate that directly serves as 
        collateral for the guarantee or credit enhancement is 
        transferred to the bridge company.
``Sec. 1189. Licenses, permits, and registrations
    ``(a) Notwithstanding any otherwise applicable nonbankruptcy law, 
if a request is made under section 1185 for a transfer of property of 
the estate, any Federal, State, or local license, permit, or 
registration that the debtor or an affiliate had immediately before the 
commencement of the case and that is proposed to be transferred under 
section 1185 may not be accelerated, terminated, or modified at any 
time after the request solely on account of--
            ``(1) the insolvency or financial condition of the debtor 
        at any time before the closing of the case;
            ``(2) the commencement of a case under this title 
        concerning the debtor;
            ``(3) the appointment of or taking possession by a trustee 
        in a case under this title concerning the debtor or by a 
        custodian before the commencement of the case; or
            ``(4) a transfer under section 1185.
    ``(b) Notwithstanding any otherwise applicable nonbankruptcy law, 
any Federal, State, or local license, permit, or registration that the 
debtor had immediately before the commencement of the case that is 
included in a transfer under section 1185 shall be valid and all rights 
and obligations thereunder shall vest in the bridge company.
``Sec. 1190. Exemption from securities laws
    ``For purposes of section 1145, a security of the bridge company 
shall be deemed to be a security of a successor to the debtor under a 
plan if the court approves the disclosure statement for the plan as 
providing adequate information (as defined in section 1125(a)) about 
the bridge company and the security.
``Sec. 1191. Inapplicability of certain avoiding powers
    ``A transfer made or an obligation incurred by the debtor to an 
affiliate prior to or after the commencement of the case, including any 
obligation released by the debtor or the estate to or for the benefit 
of an affiliate, in contemplation of or in connection with a transfer 
under section 1185 is not avoidable under section 544, 547, 
548(a)(1)(B), or 549, or under any similar nonbankruptcy law.
``Sec. 1192. Consideration of financial stability
    ``The court may consider the effect that any decision in connection 
with this subchapter may have on financial stability in the United 
States.''.

SEC. 4. AMENDMENTS TO TITLE 28, UNITED STATES CODE.

    (a) Amendment to Chapter 13.--Chapter 13 of title 28, United States 
Code, is amended by adding at the end the following:
``Sec. 298. Judge for a case under subchapter V of chapter 11 of title 
              11
    ``(a) Notwithstanding section 295, the Chief Justice of the United 
States shall designate not fewer than 3 judges of the courts of appeals 
in not fewer than 4 circuits to serve on an appellate panel to be 
available to hear an appeal under section 1183 of title 11 in a case 
under such title concerning a covered financial corporation. Appellate 
judges may request to be considered by the Chief Justice of the United 
States for such designation.
    ``(b)(1) Notwithstanding section 295, the Chief Justice of the 
United States shall designate not fewer than 10 bankruptcy judges to be 
available to hear a case under subchapter V of chapter 11 of title 11. 
Bankruptcy judges may request to be considered by the Chief Justice of 
the United States for such designation.
    ``(2) Notwithstanding section 155, a case under subchapter V of 
chapter 11 of title 11 shall be heard under section 157 by a bankruptcy 
judge designated under paragraph (1), who shall be assigned to hear 
such case by the chief judge of the court of appeals for the circuit 
embracing the district in which the case is pending. To the greatest 
extent practicable, the approvals required under section 155 should be 
obtained.
    ``(3) If the bankruptcy judge assigned to hear a case under 
paragraph (2) is not assigned to the district in which the case is 
pending, the bankruptcy judge shall be temporarily assigned to the 
district.
    ``(c)(1) The court of appeals shall have jurisdiction of appeals 
from all orders for relief and orders of dismissal under section 1183 
of title 11.
    ``(2) Notwithstanding section 295, in an appeal under paragraph (1) 
in a case under title 11 concerning a covered financial corporation 
shall be heard by--
            ``(A) 3 judges selected from the appellate panel designated 
        under subsection (a); or
            ``(B) if the 3 judges of such panel are not immediately 
        available to hear the case, 3 judges designated under 
        subsection (a) from another circuit and assigned by the Chief 
        Justice of the United States to hear the case.
    ``(3) If any of the judges of the appellate panel specified in 
paragraph (2) is not assigned to the circuit in which the appeal is 
pending, the judges shall be temporarily assigned to the circuit.
    ``(4) A case under subchapter V of chapter 11 of title 11, and all 
proceedings in the case, shall take place in the district in which the 
case is pending.
    ``(d) In this section, the term `covered financial corporation' has 
the meaning given that term in section 101(9A) of title 11.''.
    (b) Amendment to Section 1334.--Section 1334 of title 28, United 
States Code, is amended by adding at the end the following:
    ``(f) This section does not grant jurisdiction to the district 
court after a transfer pursuant to an order under section 1185 of title 
11 of any proceeding related to a special trustee appointed, or to a 
bridge company formed, in connection with a case under subchapter V of 
chapter 11 of title 11.''.
    (c) Technical and Conforming Amendment.--The table of sections for 
chapter 13 of title 28, United States Code, is amended by adding at the 
end the following:

``298. Judge for a case under subchapter V of chapter 11 of title 
                            11.''.

            Passed the House of Representatives December 1, 2014.

            Attest:

                                                                 Clerk.
113th CONGRESS

  2d Session

                               H. R. 5421

_______________________________________________________________________

                                 AN ACT

To amend title 11 of the United States Code in order to facilitate the 
    resolution of an insolvent financial institution in bankruptcy.