[Congressional Record Volume 140, Number 142 (Tuesday, October 4, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 4, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                     BANKRUPTCY REFORM ACT OF 1994

  Mr. BROOKS. Mr. Speaker, I move to suspend the rules and pass the 
bill (H.R. 5116) to amend title II of the United States Code, as 
amended.
  The Clerk read as follows:

                               H.R. 5116

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

     SECTION 1. SHORT TITLE.

       (a) Short Title.--This Act may be cited as the ``Bankruptcy 
     Reform Act of 1994''.
       (b) Table of Contents.--The table of contents is as 
     follows:

Sec. 1. Short title.

              TITLE I--IMPROVED BANKRUPTCY ADMINISTRATION

Sec. 101. Expedited hearing on automatic stay.
Sec. 102. Jurisdiction to review interlocutory orders increasing or 
              reducing certain time periods for filing plan.
Sec. 103. Expedited procedure for reaffirmation of debts.
Sec. 104. Powers of bankruptcy courts.
Sec. 105. Participation by bankruptcy administrator at meetings of 
              creditors and equity security holders.
Sec. 106. Definition relating to eligibility to serve on chapter 11 
              committees.
Sec. 107. Increased incentive compensation for trustees.
Sec. 108. Dollar adjustments.
Sec. 109. Premerger notification.
Sec. 110. Allowance of creditor committee expenses.
Sec. 111. Supplemental injunctions.
Sec. 112. Authority of bankruptcy judges to conduct jury trials in 
              civil proceedings.
Sec. 113. Sovereign immunity.
Sec. 114. Service of process in bankruptcy proceedings on an insured 
              depository institution.
Sec. 115. Meetings of creditors and equity security holders.
Sec. 116. Tax assessment.
Sec. 117. Additional trustee compensation.

                 TITLE II--COMMERCIAL BANKRUPTCY ISSUES

Sec. 201. Aircraft equipment and vessels; rolling stock equipment.
Sec. 202. Limitation on liability of non-insider transferee for avoided 
              transfer.
Sec. 203. Perfection of purchase-money security interest.
Sec. 204. Continued perfection.
Sec. 205. Rejection of unexpired leases of real property or timeshare 
              interests.
Sec. 206. Contents of plan.
Sec. 207. Priority for independent sales representatives.
Sec. 208. Exclusion from the estate of interests in liquid and gaseous 
              hydrocarbons transferred by the debtor pursuant to 
              production payment agreements.
Sec. 209. Seller's right to reclaim goods.
Sec. 210. Investment of money of the estate.
Sec. 211. Election of trustee under chapter 11.
Sec. 212. Rights of partnership trustee against general partners.
Sec. 213. Impairment of claims and interests.
Sec. 214. Protection of security interest in post-petition rents and 
              lodging payments.
Sec. 215. Amendment to definition of swap agreement.
Sec. 216. Limitation on avoiding powers.
Sec. 217. Small businesses.
Sec. 218. Single asset real estate.
Sec. 219. Leases of personal property.
Sec. 220. Exemption for small business investment companies.
Sec. 221. Payment of taxes with borrowed funds.
Sec. 222. Return of goods.
Sec. 223. Proceeds of money order agreements.
Sec. 224. Trustee duties; professional fees.
Sec. 225. Notices to creditors.

                 TITLE III--CONSUMER BANKRUPTCY ISSUES

Sec. 301. Period for curing default relating to principal residence.
Sec. 302. Nondischargeability of fine under chapter 13.
Sec. 303. Impairment of exemptions.
Sec. 304. Protection of child support and alimony.
Sec. 305. Interest on interest.
Sec. 306. Exception to discharge.
Sec. 307. Payments under chapter 13.
Sec. 308. Bankruptcy petition preparers.
Sec. 309. Fairness to condominium and cooperative owners.
Sec. 310. Nonavoidability of fixing of lien on tools and implements of 
              trade, animals, and crops.
Sec. 311. Conversion of case under chapter 13.
Sec. 312. Bankruptcy fraud.
Sec. 313. Protection against discriminatory treatment of applications 
              for student loans.

                TITLE IV--GOVERNMENTAL BANKRUPTCY ISSUES

Sec. 401. Exception from automatic stay for post-petition property 
              taxes.
Sec. 402. Municipal bankruptcy.

                     TITLE V--TECHNICAL CORRECTIONS

Sec. 501. Amendments to bankruptcy definitions, necessitated by 
              enactment of Public Law 101-647.
Sec. 502. Title 28 of the United States Code.

                 TITLE VI--BANKRUPTCY REVIEW COMMISSION

Sec. 601. Short title.
Sec. 602. Establishment.
Sec. 603. Duties of the commission.
Sec. 604. Membership.
Sec. 605. Compensation of the commission.
Sec. 606. Staff of commission; experts and consultants.
Sec. 607. Powers of the commission.
Sec. 608. Report.
Sec. 609. Termination.
Sec. 610. Authorization of appropriations.

  TITLE VII--SEVERABILITY; EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

Sec. 701. Severability.
Sec. 702. Effective date; application of amendments.
              TITLE I--IMPROVED BANKRUPTCY ADMINISTRATION

     SEC. 101. EXPEDITED HEARING ON AUTOMATIC STAY.

       The last sentence of section 362(e) of title 11, United 
     States Code, is amended--
       (1) by striking ``commenced'' and inserting ``concluded'', 
     and
       (2) by inserting before the period at the end the 
     following:

     ``, 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''.

     SEC. 102. JURISDICTION TO REVIEW INTERLOCUTORY ORDERS 
                   INCREASING OR REDUCING CERTAIN TIME PERIODS FOR 
                   FILING PLAN.

       Section 158(a) of title 28, United States Code, is amended 
     by striking ``from'' the first place it appears and all that 
     follows through ``decrees,'', and inserting the following:
       ``(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;''.

     SEC. 103. EXPEDITED PROCEDURE FOR REAFFIRMATION OF DEBTS.

       (a) Reaffirmation.--Section 524(c) of title 11, United 
     States Code, is amended--
       (1) in paragraph (2)--
       (A) by inserting ``(A)'' after ``(2)'',
       (B) by adding ``and'' at the end, and
       (C) by inserting after subparagraph (A), as so designated, 
     the following:
       ``(B) such agreement contains a clear and conspicuous 
     statement which advises the debtor that such agreement is not 
     required under this title, under nonbankruptcy law, or under 
     any agreement not in accordance with the provisions of this 
     subsection;'', and
       (2) in paragraph (3)--
       (A) in the matter preceding subparagraph (A) by striking 
     ``such agreement'' the last place it appears,
       (B) in subparagraph (A)--
       (i) by inserting ``such agreement'' after ``(A)'', and
       (ii) by striking ``and'' at the end,
       (C) in subparagraph (B)--
       (i) by inserting ``such agreement'' after ``(B)'', and
       (ii) by adding ``and'' at the end, and
       (3) by adding at the end the following:
       ``(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;''.
       (b) Effect of Discharge.--The third sentence of section 
     524(d) of title 11, United States Code, is amended in the 
     matter preceding paragraph (1) by inserting ``and was not 
     represented by an attorney during the course of negotiating 
     such agreement'' after ``this section''.

     SEC. 104. POWERS OF BANKRUPTCY COURTS.

       (a) Status Conferences.--Section 105 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(d) The court, on its own motion or on the request of a 
     party in interest, may--
       ``(1) hold a status conference regarding any case or 
     proceeding under this title after notice to the parties in 
     interest; and
       ``(2) unless inconsistent with another provision of this 
     title or with applicable Federal Rules of Bankruptcy 
     Procedure, 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.''.
       (b) Abstention.--Section 1334 of title 28, United States 
     Code, is amended--
       (1) by redesignating subsection (d) as subsection (e), and
       (2) in the second sentence of subsection (c)(2)--
       (A) by inserting ``(other than a decision not to abstain in 
     a proceeding described in subsection (c)(2))'' after 
     ``subsection'', and
       (B) by striking ``Any'' and inserting the following:
       ``(d) Any''.
       (c) Establishment, Operation, and Termination of Bankruptcy 
     Appellate Panel Service.--Section 158(b) of title 28, United 
     States Code, is amended--
       (1) by striking paragraphs (3) and (4),
       (2) by redesignating paragraph (2) as paragraph (4),
       (3) by striking paragraph (1) and inserting the following:
       ``(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.'', 
     and
       (4) by inserting after paragraph (4), as so redesignated, 
     the following:
       ``(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 occur, 
     by majority vote, have authorized such service to hear and 
     determine appeals originating in such district.''.
       (d) Appeals To Be Heard by Bankruptcy Appellate Panel 
     Service.--Section 158 of title 28, United States Code, is 
     amended--
       (1) in subsection (c) by striking ``(c)'' and inserting 
     ``(2)'', and
       (2) by inserting after subsection (b) the following:
       ``(c)(1) Subject to subsection (b), 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.''.
       (e) rules of procedure and evidence; method of 
     prescribing.--Section 2073 of title 28, United States Code, 
     is amended--
       (1) in subsection (a)(2) by striking ``section 2072'' and 
     inserting ``sections 2072 and 2075'', and
       (2) in subsections (d) and (e) by inserting ``or 2075'' 
     after ``2072'' each place it appears.
       (f) Effective Date of Bankruptcy Rules.--The third 
     undesignated paragraph of section 2075 of title 28, United 
     States Code, is amended to read as follows:
       ``The Supreme Court shall transmit to Congress not later 
     than May 1 of the year in which a rule prescribed under this 
     section is to become effective a copy of the proposed rule. 
     The rule shall take effect no earlier than December 1 of the 
     year in which it is transmitted to Congress unless otherwise 
     provided by law.''.

     SEC. 105. PARTICIPATION BY BANKRUPTCY ADMINISTRATOR AT 
                   MEETINGS OF CREDITORS AND EQUITY SECURITY 
                   HOLDERS.

       (a) Presiding Officer.--A bankruptcy administrator 
     appointed under section 302(d)(3)(I) of the Bankruptcy 
     Judges, United States Trustees, and Family Farmer Bankruptcy 
     Act of 1986 (28 U.S.C. 581 note; Public Law 99-554; 100 Stat. 
     3123), as amended by section 317(a) of the Federal Courts 
     Study Committee Implementation Act of 1990 (Public Law 101-
     650; 104 Stat. 5115), or the bankruptcy administrator's 
     designee may preside at the meeting of creditors convened 
     under section 341(a) of title 11, United States Code. The 
     bankruptcy administrator or the bankruptcy administrator's 
     designee may preside at any meeting of equity security 
     holders convened under section 341(b) of title 11, United 
     States Code.
       (b) Examination of the Debtor.--The bankruptcy 
     administrator or the bankruptcy administrator's designee may 
     examine the debtor at the meeting of creditors and may 
     administer the oath required under section 343 of title 11, 
     United States Code.

     SEC. 106. DEFINITION RELATING TO ELIGIBILITY TO SERVE ON 
                   CHAPTER 11 COMMITTEES.

       Section 101(41) of title 11, United States Code, is amended 
     to read as follows:
       ``(41) `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;''.

     SEC. 107. INCREASED INCENTIVE COMPENSATION FOR TRUSTEES.

       Section 326(a) of title 11, United States Code, is amended 
     by striking ``fifteen'' and all that follows through 
     ``$3,000'' the last place it appears, and inserting the 
     following:

     ``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''.

     SEC. 108. DOLLAR ADJUSTMENTS.

       (a) Who May Be a Debtor Under Chapter 13.--Section 109(e) 
     of title 11, United States Code, is amended--
       (1) by striking ``$100,000'' each place it appears and 
     inserting ``$250,000'', and
       (2) by striking ``$350,000'' each place it appears and 
     inserting ``$750,000''.
       (b) Involuntary Cases.--Section 303(b) of title 11, United 
     States Code, is amended--
       (1) in paragraph (1) by striking ``$5,000'' and inserting 
     ``$10,000'', and
       (2) in paragraph (2) by striking ``$5,000'' and inserting 
     ``$10,000''.
       (c) Priorities.--Section 507(a) of title 11, United States 
     Code, is amended--
       (1) in paragraph (4)(B)(i) by striking ``$2,000'' and 
     inserting ``$4,000'',
       (2) in paragraph (5) by striking ``$2,000'' and inserting 
     ``$4,000'', and
       (3) in paragraph (6) by striking ``$900'' and inserting 
     ``$1,800''.
       (d) Exemptions.--Section 522(d) of title 11, United States 
     Code, is amended--
       (1) in paragraph (1) by striking ``$7,500'' and inserting 
     ``$15,000'',
       (2) in paragraph (2) by striking ``$1,200'' and inserting 
     ``$2,400'',
       (3) in paragraph (3)--
       (A) by striking ``$200'' and inserting ``$400'', and
       (B) by striking ``$4,000'' and inserting ``$8,000'',
       (4) in paragraph (4) by striking ``$500'' and inserting 
     ``$1,000'',
       (5) in paragraph (5)--
       (A) by striking ``$400'' and inserting ``$800'', and
       (B) by striking ``$3,750'' and inserting ``$7,500'',
       (6) in paragraph (6) by striking ``$750'' and inserting 
     ``$1,500'',
       (7) in paragraph (8) by striking ``$4,000'' and inserting 
     ``$8,000'', and
       (8) in paragraph (11)(D) by striking ``$7,500'' and 
     inserting ``$15,000''.
       (e) Future Adjustments.--Section 104 of title 11, United 
     States Code, is amended--
       (1) by inserting ``(a)'' before ``The'', and
       (2) by adding at the end the following:
       ``(b)(1) On April 1, 1998, and at each 3-year interval 
     ending on April 1 thereafter, each dollar amount in effect 
     under sections 109(e), 303(b), 507(a), 522(d), and 
     523(a)(2)(C) immediately before such April 1 shall be 
     adjusted--
       ``(A) 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
       ``(B) to round to the nearest $25 the dollar amount that 
     represents such change.
       ``(2) 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 109(e), 303(b), 507(a), 522(d), 
     and 523(a)(2)(C) of this title.
       ``(3) Adjustments made in accordance with paragraph (1) 
     shall not apply with respect to cases commenced before the 
     date of such adjustments.''.

     SEC. 109. PREMERGER NOTIFICATION.

       Subparagraphs (A) and (B) of section 363(b)(2) of title 11, 
     United States Code, are amended to read as follows:
       ``(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.''.

     SEC. 110. ALLOWANCE OF CREDITOR COMMITTEE EXPENSES.

       Section 503(b)(3) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (D) by striking ``or'' at the end,
       (2) in subparagraph (E) by inserting ``or'' at the end, and
       (3) by adding at the end the following:
       ``(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;''.

     SEC. 111. SUPPLEMENTAL INJUNCTIONS.

       (a) Supplemental Injunctions.--Section 524 of title 11, 
     United States Code, is amended by adding at the end the 
     following:
       ``(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 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
       ``(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.
       ``(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
       ``(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
       ``(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.''.
       (b) Rule of Construction.--Nothing in subsection (a), or in 
     the amendments made by subsection (a), shall be construed to 
     modify, impair, or supersede any other authority the court 
     has to issue injunctions in connection with an order 
     confirming a plan of reorganization.

     SEC. 112. AUTHORITY OF BANKRUPTCY JUDGES TO CONDUCT JURY 
                   TRIALS IN CIVIL PROCEEDINGS.

       Section 157 of title 28, United States Code, is amended by 
     adding at the end the following:
       ``(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.''.

     SEC. 113. SOVEREIGN IMMUNITY.

       Section 106 of title 11, United States Code, is amended to 
     read as follows:

     ``Sec. 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:
       ``(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, 728, 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.''.

     SEC. 114. SERVICE OF PROCESS IN BANKRUPTCY PROCEEDINGS ON AN 
                   INSURED DEPOSITORY INSTITUTION.

       Rule 7004 of the Federal Rules of Bankruptcy Procedure is 
     amended--
       (1) in subdivision (b) by striking ``In addition'' and 
     inserting ``Except as provided in subdivision (h), in 
     addition'', and
       (2) by adding at the end the following:
       ``(h) Service of Process on an Insured Depository 
     Institution.--Service on an insured depository institution 
     (as defined in section 3 of the Federal Deposit Insurance 
     Act) in a contested matter or adversary proceeding shall be 
     made by certified mail addressed to an officer of the 
     institution unless--
       ``(1) the institution has appeared by its attorney, in 
     which case the attorney shall be served by first class mail;
       ``(2) the court orders otherwise after service upon the 
     institution by certified mail of notice of an application to 
     permit service on the institution by first class mail sent to 
     an officer of the institution designated by the institution; 
     or
       ``(3) the institution has waived in writing its entitlement 
     to service by certified mail by designating an officer to 
     receive service.''.

     SEC. 115. MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS.

       Section 341 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(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--
       ``(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.''.

     SEC. 116. TAX ASSESSMENT.

       Section 362(b)(9) of title 11, United States Code, is 
     amended to read as follows:
       ``(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).''.

     SEC. 117. ADDITIONAL TRUSTEE COMPENSATION.

       Section 330(b) of title 11, United States Code, is 
     amended--
       (1) by inserting ``(1)'' after ``(b)'', and
       (2) by adding at the end thereof the following:
       ``(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).''.
                 TITLE II--COMMERCIAL BANKRUPTCY ISSUES

     SEC. 201. AIRCRAFT EQUIPMENT AND VESSELS; ROLLING STOCK 
                   EQUIPMENT.

       (a) Amendment of Section 1110.--Section 1110 of title 11, 
     United States Code, is amended to read as follows:

     ``Sec. 1110. Aircraft equipment and vessels

       ``(a)(1) The right of a secured party with a security 
     interest in equipment described in paragraph (2) or of a 
     lessor or conditional vendor of such equipment to take 
     possession of such equipment in compliance with a security 
     agreement, lease, or conditional sale contract is not 
     affected by section 362, 363, or 1129 or by any power of the 
     court to enjoin the taking of possession unless--
       ``(A) before the date that is 60 days after the date of the 
     order for relief under this chapter, the trustee, subject to 
     the court's approval, agrees to perform all obligations of 
     the debtor that become due on or after the date of the order 
     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; and
       ``(ii) that occurs after the date of the order 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.
       ``(2) Equipment is described in this paragraph if it is--
       ``(A) 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 is a citizen of the 
     United States (as defined in 40102 of title 49) holding an 
     air carrier operating certificate issued by the Secretary of 
     Transportation 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
       ``(B) a documented vessel (as defined in section 30101(1) 
     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 holds a certificate of public convenience 
     and necessity or permit issued by the Interstate Commerce 
     Commission.
       ``(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) With respect to equipment first placed in service on 
     or prior to the date of enactment of this subsection, 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.''.
       (b) Amendment of Section 1168.--Section 1168 of title 11, 
     United States Code, is amended to read as follows:

     ``Sec. 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 is not affected by 
     section 362, 363, or 1129 or by any power of the court to 
     enjoin the taking of possession, unless--
       ``(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 that become due on or after the 
     date of commencement of the case 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; and
       ``(ii) that occurs or becomes an event of default after the 
     date of commencement of the case is cured before the later 
     of--
       ``(I) the date that is 30 days after the date of the 
     default or event of default; or
       ``(II) the expiration of such 60-day period.
       ``(2) Equipment is described in this paragraph if it is 
     rolling stock equipment or accessories used on such 
     equipment, including superstructures and racks, that is 
     subject to a security interest granted by, leased to, or 
     conditionally sold to the debtor.
       ``(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) With respect to equipment first placed in service on 
     or prior to the date of enactment of this subsection, 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.
       ``(d) With respect to equipment first placed in service 
     after the date of enactment of this subsection, for purposes 
     of this section, the term `rolling stock equipment' includes 
     rolling stock equipment that is substantially rebuilt and 
     accessories used on such equipment.''.

     SEC. 202. LIMITATION ON LIABILITY OF NON-INSIDER TRANSFEREE 
                   FOR AVOIDED TRANSFER.

       Section 550 of title 11, United States Code, is amended--
       (1) by redesignating subsections (c), (d), and (e) as 
     subsections (d), (e), and (f), respectively, and
       (2) by inserting after subsection (b) the following:
       ``(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.''.

     SEC. 203. PERFECTION OF PURCHASE-MONEY SECURITY INTEREST.

       Section 547 of title 11, United States Code, is amended--
       (1) in subsection (c)(3)(B) by striking ``10'' and 
     inserting ``20'', and
       (2) in subsection (e)(2)(A) by inserting ``, except as 
     provided in subsection (c)(3)(B)'' before the semicolon at 
     the end.

     SEC. 204. CONTINUED PERFECTION.

       (a) Automatic Stay.--Section 362(b)(3) of title 11, United 
     States Code, is amended by inserting ``, or to maintain or 
     continue the perfection of,'' after ``to perfect''.
       (b) Limitations On Avoiding Powers.--Section 546(b) of 
     title 11, United States Code, is amended to read as follows:
       ``(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.''.

     SEC. 205. REJECTION OF UNEXPIRED LEASES OF REAL PROPERTY OR 
                   TIMESHARE INTERESTS.

       (a) Amendment to Section 365.--Section 365(h) of title 11, 
     United States Code, is amended to read as follows:
       ``(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.
       ``(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.''.
       (b) Technical Amendment.--Section 553(b)(1) of title 11, 
     United States Code, is amended by striking ``365(h)(2)'' and 
     inserting ``365(h)''.

     SEC. 206. CONTENTS OF PLAN.

       Section 1123(b) of title 11, United States Code, is 
     amended--
       (1) in paragraph (4) by striking ``and'' at the end,
       (2) by redesignating paragraph (5) as paragraph (6), and
       (3) by inserting after paragraph (4) the following:
       ``(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''.

     SEC. 207. PRIORITY FOR INDEPENDENT SALES REPRESENTATIVES.

       Section 507(a)(3) of title 11, United States Code, is 
     amended to read as follows:
       ``(3) Third, allowed unsecured claims, but only to the 
     extent of $4,000 for each individual or corporation, as the 
     case may be, earned within 90 days before the date of the 
     filing of the petition or the date of the cessation of the 
     debtor's business, whichever occurs first, 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;''.

     SEC. 208. EXCLUSION FROM THE ESTATE OF INTERESTS IN LIQUID 
                   AND GASEOUS HYDROCARBONS TRANSFERRED BY THE 
                   DEBTOR PURSUANT TO PRODUCTION PAYMENT 
                   AGREEMENTS.

       (a) Definition.--Section 101 of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (42) the following:
       ``(42A) `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;'', and
       (2) by inserting after the first paragraph (56) the 
     following:
       ``(56A) `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;''.
       (b) Property of the Estate.--Section 541(b)(4) of title 11, 
     United States Code, is amended--
       (1) in subparagraph (A) by striking ``(A)'' and inserting 
     ``(A)(i)'',
       (2) in subparagraph (B)--
       (A) by striking ``(B)'' and inserting ``(ii),
       (B) by striking ``such interest'' and inserting ``the 
     interest referred to in clause (i)'', and
       (C) by striking the period at the end and inserting ``; 
     or'', and
       (3) by adding at the end the following:
       ``(B)(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 542 of this title;''.

     SEC. 209. SELLER'S RIGHT TO RECLAIM GOODS.

       Section 546(c)(1) of title 11, United States Code, is 
     amended to read as follows:
       ``(1) such a seller may not reclaim any such goods unless 
     such seller demands in writing reclamation of such goods--
       ``(A) before 10 days after receipt of such goods by the 
     debtor; or
       ``(B) if such 10-day period expires after the commencement 
     of the case, before 20 days after receipt of such goods by 
     the debtor; and''.

     SEC. 210. INVESTMENT OF MONEY OF THE ESTATE.

       Section 345(b) of title 11, United States Code, is 
     amended--
       (1) in paragraph (2) by striking the period at the end and 
     inserting a semicolon, and
       (2) by adding at the end the following:
     ``unless the court for cause orders otherwise.''.

     SEC. 211. ELECTION OF TRUSTEE UNDER CHAPTER 11.

       (a) Election Authorized.--Section 1104 of title 11 of the 
     United States Code is amended--
       (1) by redesignating subsections (b) and (c) as subsections 
     (c) and (d), respectively, and
       (2) by inserting after subsection (a) the following:
       ``(b) 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.''.
       (b) Conforming Amendment.--Section 1106(b) of title 11, 
     United States Code, is amended by striking ``1104(c)'' and 
     inserting ``1104(d)''.

     SEC. 212. RIGHTS OF PARTNERSHIP TRUSTEE AGAINST GENERAL 
                   PARTNERS.

       Section 723(a) of title 11, United States Code, is amended 
     by striking ``for the full amount of the deficiency'' and 
     inserting ``to the extent that under applicable nonbankruptcy 
     law such general partner is personally liable for such 
     deficiency''.

     SEC. 213. IMPAIRMENT OF CLAIMS AND INTERESTS.

       (a) Objection to Claims Filed Untimely.--Section 502(b) of 
     title 11, United States Code, is amended--
       (1) in paragraph (7) by striking ``or'' at the end,
       (2) in paragraph (8) by striking the period at the end and 
     inserting ``; or'', and
       (3) by adding at the end the following:
       ``(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.''.
       (b) Tardily Filed Priority Claims.--Section 726(a)(1) of 
     title 11, United States Code, is amended by adding before the 
     semicolon the following: ``, proof of which is timely filed 
     under section 501 of this title or tardily filed before the 
     date on which the trustee commences distribution under this 
     section''.
       (c) Filing of Request for Administrative Expenses.--Section 
     503(a) of title 11, United States Code, is amended--
       (1) by inserting ``timely'' after ``may'', and
       (2) by inserting ``, or may tardily file such request if 
     permitted by the court for cause'' before the period at the 
     end.
       (d) Impairment of Claims or Interests.--Section 1124 of 
     title 11, United States Code, is amended--
       (1) in paragraph (1) by inserting ``or'' at the end,
       (2) in paragraph (2) by striking ``; or'' at the end and 
     inserting a period, and
       (3) by striking paragraph (3).

     SEC. 214. PROTECTION OF SECURITY INTEREST IN POST-PETITION 
                   RENTS AND LODGING PAYMENTS.

       (a) Postpetition Effect of Security Interest.--Section 
     552(b) of title 11, United States Code, is amended--
       (1) by inserting ``(1)'' after ``(b)'',
       (2) by striking ``rents,'' each place it appears, and
       (3) by adding at the end the following:
       ``(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 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.''.
       (b) Use Sale, or Lease of Property.--Section 363(a) of 
     title 11, United States Code, is amended by inserting: ``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'' after ``property''.

     SEC. 215. AMENDMENT TO DEFINITION OF SWAP AGREEMENT.

       Subparagraph (A) of the first paragraph (55) of section 101 
     of title 11, United States Code, is amended by inserting 
     ``spot foreign exchange agreement,'' after ``forward foreign 
     exchange agreement,''.

     SEC. 216. LIMITATION ON AVOIDING POWERS.

       Section 546(a)(1) of title 11, United States Code, is 
     amended to read as follows:
       ``(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''.

     SEC. 217. SMALL BUSINESSES.

       (a) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting after paragraph (51) the 
     following:
       ``(51C) `small business' means a person engaged in 
     commercial or business activities (but does not include a 
     person whose primary activity is the business of owning or 
     operating real property and activities incidental thereto) 
     whose aggregate noncontingent liquidated secured and 
     unsecured debts as of the date of the petition do not exceed 
     $2,000,000;''.
       (b) Creditors' Committees.--Section 1102(a) of title 11, 
     United States Code, is amended--
       (1) in paragraph (1) by striking ``As'' and inserting 
     ``Except as provided in paragraph (3), as''; and
       (2) by adding at the end the following:
       ``(3) On request of a party in interest in a case in which 
     the debtor is a small business and for cause, the court may 
     order that a committee of creditors not be appointed.''.
       (c) Conversion or Dismissal.--Section 1112(b) of title 11, 
     United States Code, is amended by inserting ``or bankruptcy 
     administrator'' after ``United States trustee''.
       (d) Who May File a Plan.--Section 1121 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(e) In a case in which the debtor is a small business and 
     elects to be considered a small business--
       ``(1) only the debtor may file a plan until after 100 days 
     after the date of the order for relief under this chapter;
       ``(2) all plans shall be filed within 160 days after the 
     date of the order for relief; and
       ``(3) on request of a party in interest made within the 
     respective periods specified in paragraphs (1) and (2) and 
     after notice and a hearing, the court may--
       ``(A) reduce the 100-day period or the 160-day period 
     specified in paragraph (1) or (2) for cause; and
       ``(B) increase the 100-day period specified in paragraph 
     (1) if the debtor shows that the need for an increase is 
     caused by circumstances for which the debtor should not be 
     held accountable.''.
       (e) Postpetition Disclosure.--Section 1125 of title 11, 
     United States Code, is amended by adding at the end the 
     following:
       ``(f) Notwithstanding subsection (b), in a case in which 
     the debtor has elected under section 1121(e) to be considered 
     a small business--
       ``(1) the court may conditionally approve a disclosure 
     statement subject to final approval after notice and a 
     hearing;
       ``(2) acceptances and rejections of a plan may be solicited 
     based on a conditionally approved disclosure statement as 
     long as 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 
     at least 10 days prior to the date of the hearing on 
     confirmation of the plan; and
       ``(3) a hearing on the disclosure statement may be combined 
     with a hearing on confirmation of a plan.''.

     SEC. 218. SINGLE ASSET REAL ESTATE.

       (a) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting after paragraph (51) the 
     following:
       ``(51B) `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 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 having 
     aggregate noncontingent, liquidated secured debts in an 
     amount no more than $4,000,000;''.
       (b) Automatic Stay.--Section 362(d) of title 11, United 
     States Code, is amended--
       (1) in paragraph (1) by striking ``or'' at the end,
       (2) in paragraph (2) by striking the period at the end and 
     inserting ``; or'', and
       (3) by adding at the end the following:
       ``(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 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)--
       ``(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 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), which payments are in an amount equal to 
     interest at a current fair market rate on the value of the 
     creditor's interest in the real estate.''.

     SEC. 219. LEASES OF PERSONAL PROPERTY.

       (a) Assumption.--Section 365(b)(2) of title 11, United 
     States Code is amended--
       (1) in subparagraph (B) by striking ``or'' at the end,
       (2) in subparagraph (C) by striking the period and 
     inserting ``; or'',
       (3) by adding at the end the following:
       ``(D) the satisfaction of any penalty rate or provision 
     relating to a default arising from any failure by the debtor 
     to perform nonmonetary obligations under the executory 
     contract or unexpired lease.''.
       (b) Performance.--Section 365(d) of title 11, United States 
     Code is amended by adding at the end the following:
       ``(10) 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.''.
       (c) Limitation.--Section 363(e) of title 11, United States 
     Code is amended by adding at the end the following:
     ``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).''.

     SEC. 220. EXEMPTION FOR SMALL BUSINESS INVESTMENT COMPANIES.

       Section 109(b)(2) of title 11, United States Code, is 
     amended by inserting after ``homestead association,'' the 
     following: ``a small business investment company licensed by 
     the Small Business Administration under subsection (c) or (d) 
     of section 301 of the Small Business Investment Act of 
     1958,''.

     SEC. 221. PAYMENT OF TAXES WITH BORROWED FUNDS.

       Section 523(a) of title 11, United States Code is amended--
       (1) in paragraph (13) by striking the period at the end and 
     inserting a semicolon, and
       (2) by adding at the end the following:
       ``(14) incurred to pay a tax to the United States that 
     would be nondischargeable pursuant to paragraph (1);''.

     SEC. 222. RETURN OF GOODS.

       (a) Limitation on Avoiding Powers.--Section 546 of title 
     11, United States Code, is amended by adding at the end the 
     following:
       ``(g) 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, 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.''.
       (b) Setoff.--Section 553(b)(1) is amended by inserting 
     ``546(h),'' after ``365(h),''.

     SEC. 223. PROCEEDS OF MONEY ORDER AGREEMENTS.

       Section 541(b) of title 11, United States Codeis amended--
       (1) in paragraph (3) by striking ``or'' at the end and 
     inserting a semicolon,
       (2) in paragraph (4) by striking the period at the end and 
     inserting ``; or'', and
       (3) by inserting after paragraph (4) the following:
       ``(5) 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.''.

     SEC. 224. TRUSTEE DUTIES; PROFESSIONAL FEES.

       (a) Trustee's Duties.--Section 586(a)(3)(A) of title 28, 
     United States Code, is amended to read as follows:
       ``(A)(i) reviewing, in accordance with procedural 
     guidelines adopted by the Executive Office of the United 
     States Trustee (which guidelines shall be applied uniformly 
     by the United States trustee except when circumstances 
     warrant different treatment), applications filed for 
     compensation and reimbursement under section 330 of title 11; 
     and
       ``(ii) filing with the court comments with respect to such 
     application and, if the United States Trustee considers it to 
     be appropriate, objections to such application.''.
       (b)  Professional Fees.--Section 330(a) of title 11, United 
     States Code, is amended to read as follows:
       ``(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, an 
     examiner, a professional person employed under section 327 or 
     1103--
       ``(A) reasonable compensation for actual, necessary 
     services rendered by the trustee, examiner, 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)(A) In determining the amount of reasonable 
     compensation to be awarded, 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; and
       ``(E) 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--
       ``(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.''.

     SEC. 225. NOTICES TO CREDITORS.

       Section 342 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(c) 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 taxpayer identification number of the debtor, 
     but the failure of such notice to contain such information 
     shall not invalidate the legal effect of such notice.''.
                 TITLE III--CONSUMER BANKRUPTCY ISSUES

     SEC. 301. PERIOD FOR CURING DEFAULT RELATING TO PRINCIPAL 
                   RESIDENCE.

       Section 1322 of title 11, United States Code, is amended--
       (1) by redesignating subsection (c) as subsection (d), and
       (2) by inserting after subsection (b) the following:
       ``(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.''.

     SEC. 302. NONDISCHARGEABILITY OF FINE UNDER CHAPTER 13.

       Section 1328(a)(3) of title 11, United States Code, is 
     amended by inserting ``, or a criminal fine,'' after 
     ``restitution''.

     SEC. 303. IMPAIRMENT OF EXEMPTIONS.

       Section 522(f) of title 11, United States Code, is 
     amended--
       (1) in paragraph (2)--
       (A) by redesignating subparagraphs (A), (B), and (C) as 
     clauses (i), (ii), and (iii), respectively, and
       (B) by striking ``(2)'' and inserting ``(B),
       (2) by redesignating paragraph (1) as subparagraph (A),
       (3) by inserting ``(1)'' before ``Notwithstanding'', and
       (4) by adding at the end the following:
       ``(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.''.

     SEC. 304. PROTECTION OF CHILD SUPPORT AND ALIMONY.

       (a) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting after paragraph (12) the 
     following:
       ``(12A) `debt for child support' means a debt of a kind 
     specified in section 523(a)(5) of this title for maintenance 
     or support of a child of the debtor;''.
       (b) Relief From Automatic Stay.--Section 362(b)(2) of title 
     11, United States Code, is amended to read as follows:
       ``(2) under subsection (a) of this section--
       ``(A) of the commencement or continuation of an action or 
     proceeding for--
       ``(i) the establishment of paternity; or
       ``(ii) the establishment or modification of an order for 
     alimony, maintenance, or support; or
       ``(B) of the collection of alimony, maintenance, or support 
     from property that is not property of the estate;''.
       (c) Priority of Claims.--Section 507(a) of title 11, United 
     States Code, is amended--
       (1) in paragraph (8) by striking ``(8) Eighth'' and 
     inserting ``(9) Ninth'',
       (2) in paragraph (7) by striking ``(7) Seventh'' and 
     inserting ``(8) Eighth'', and
       (3) by inserting after paragraph (6) the following:
       ``(7) Seventh, allowed claims for debts to a spouse, former 
     spouse, or child of the debtor, for alimony to, maintenance 
     for, or support of such spouse or child, in connection with a 
     separation agreement, divorce decree or other order of a 
     court of record, determination made in accordance with State 
     or territorial law by a governmental unit, or property 
     settlement agreement, but not to the extent that such debt--
       ``(A) is assigned to another entity, voluntarily, by 
     operation of law, or otherwise; or
       ``(B) includes a liability designated as alimony, 
     maintenance, or support, unless such liability is actually in 
     the nature of alimony, maintenance or support.''.
       (d) Protection of Liens.--Section 522(f)(1)(A) of title 11, 
     United States Code, as amended by section 303, is amended by 
     inserting after ``lien'' the following:
     ``, other than a judicial lien that secures a debt--
       ``(i) to a spouse, former spouse, or child of the debtor, 
     for alimony to, maintenance for, or support of such spouse or 
     child, in connection with a separation agreement, divorce 
     decree or other order of a court of record, determination 
     made in accordance with State or territorial law by a 
     governmental unit, or property settlement agreement; and
       ``(ii) to the extent that such debt--
       ``(I) is not assigned to another entity, voluntarily, by 
     operation of law, or otherwise; and
       ``(II) includes a liability designated as alimony, 
     maintenance, or support, unless such liability is actually in 
     the nature of alimony, maintenance or support.''.
       (e) Exception to Discharge.--Section 523 of title 11, 
     United States Code, as amended by section 221, is amended by 
     adding at the end the following:
       ``(15) 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, a 
     determination made in accordance with State or territorial 
     law by a governmental unit unless--
       ``(A) the debtor does not have the ability to pay such debt 
     from income or property of the debtor not reasonably 
     necessary to be expended for the maintenance or support of 
     the debtor or a dependent of the debtor and, if the debtor is 
     engaged in a business, for the payment of expenditures 
     necessary for the continuation, preservation, and operation 
     of such business; or
       ``(B) discharging such debt would result in a benefit to 
     the debtor that outweighs the detrimental consequences to a 
     spouse, former spouse, or child of the debtor;'', and
       (2) in subsection (c)(1) by striking ``or (6)'' each place 
     it appears and inserting ``(6), or (15)''.
       (f) Protection Against Trustee Avoidance.--Section 547(c) 
     of title 11, United States Code, is amended--
       (1) in paragraph (6) by striking ``or'' at the end,
       (2) by redesignating paragraph (7) as paragraph (8), and
       (3) by inserting after paragraph (6) the following:
       ``(7) to the extent such transfer was a bona fide payment 
     of a debt to a spouse, former spouse, or child of the debtor, 
     for alimony to, maintenance for, or support of such spouse or 
     child, in connection with a separation agreement, divorce 
     decree or other order of a court of record, determination 
     made in accordance with State or territorial law by a 
     governmental unit, or property settlement agreement, but not 
     to the extent that such debt--
       ``(A) is assigned to another entity, voluntarily, by 
     operation of law, or otherwise; or
       ``(B) includes a liability designated as alimony, 
     maintenance, or support, unless such liability is actually in 
     the nature of alimony, maintenance or support; or''.
       (g) Appearance Before Court.--Child support creditors or 
     their representatives shall be permitted to appear and 
     intervene without charge, and without meeting any special 
     local court rule requirement for attorney appearances, in any 
     bankruptcy case or proceeding in any bankruptcy court or 
     district court of the United States if such creditors or 
     representatives file a form in such court that contains 
     information detailing the child support debt, its status, and 
     other characteristics.
       (h) Conforming Amendments--Title 11 of the United States 
     Code is amended--
       (1) in section 502(i) by striking ``507(a)(7)'' and 
     inserting ``507(a)(8)'',
       (2) in section 503(b)(1)(B)(i) by striking ``507(a)(7)'' 
     and inserting ``507(a)(8)'',
       (3) in section 523(a)(1)(A) by striking ``507(a)(7)'' and 
     inserting ``507(a)(8)'',
       (4) in section 724(b)(2) by striking ``or 507(a)(6)'' and 
     inserting ``507(a)(6), or 507(a)(7)'',
       (5) in section 726(b) by striking ``or (7)'' and inserting 
     ``, (7), or (8)'',
       (6) in section 1123(a)(1) by striking ``507(a)(7)'' and 
     inserting ``507(a)(8)'',
       (7) in section 1129(a)(9)--
       (i) in subparagraph (B) by striking ``or 507(a)(6)'' and 
     inserting ``, 507(a)(6), or 507(a)(7)'', and
       (ii) in subparagraph (C) by striking ``507(a)(7)'' and 
     inserting ``507(a)(8)''.

     SEC. 305. INTEREST ON INTEREST.

       (a) Chapter 11.--Section 1123 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(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.''.
       (b) Chapter 12.--Section 1222 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(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.''.
       (c) Chapter 13.--Section 1322 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(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.''.

     SEC. 306. EXCEPTION TO DISCHARGE.

       Section 523(a)(2)(C) of title 11, United States Code, is 
     amended--
       (1) by striking ``$500'' and inserting ``$1,000'',
       (2) by striking ``forty'' and inserting ``60'', and
       (3) by striking ``twenty'' and inserting ``60''.

     SEC. 307. PAYMENTS UNDER CHAPTER 13.

       Section 1326(a)(2) of title 11, United States Code, is 
     amended in the second sentence by striking the period and 
     inserting ``as soon as practicable.''.

     SEC. 308. BANKRUPTCY PETITION PREPARERS.

       (a) Amendment of Chapter 1.--Chapter 1 of title 11, United 
     States Code, is amended by adding at the end the following:

     ``Sec. 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 or an employee of an 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.
       ``(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.
       ``(2) A bankruptcy petition preparer who fails to comply 
     with paragraph (1) may be fined not more than $500 for each 
     such failure unless the failure is due to reasonable cause.
       ``(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) 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.
       ``(3) A bankruptcy petition preparer who fails to comply 
     with paragraph (1) may be fined not more than $500 for each 
     such failure unless the failure is due to reasonable cause.
       ``(d)(1) 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.
       ``(2) A bankruptcy petition preparer who fails to comply 
     with paragraph (1) may be fined not more than $500 for each 
     such failure unless the failure is due to reasonable cause.
       ``(e)(1) A bankruptcy petition preparer shall not execute 
     any document on behalf of a debtor.
       ``(2) A bankruptcy petition preparer may be fined not more 
     than $500 for each document executed in violation of 
     paragraph (1).
       ``(f)(1) 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.
       ``(2) A bankruptcy petition preparer shall be fined not 
     more than $500 for each violation of paragraph (1).
       ``(g)(1) 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.
       ``(2) A bankruptcy petition preparer shall be fined not 
     more than $500 for each violation of paragraph (1).
       ``(h)(1) Within 10 days after the date of the filing of a 
     petition, a bankruptcy petition preparer shall file a 
     declaration under penalty of perjury 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.
       ``(2) The court shall disallow and order the immediate 
     turnover to the bankruptcy trustee of any fee referred to in 
     paragraph (1) found to be in excess of the value of services 
     rendered for the documents prepared. An individual debtor may 
     exempt any funds so recovered under section 522(b).
       ``(3) The debtor, the trustee, a creditor, or the United 
     States trustee may file a motion for an order under paragraph 
     (2).
       ``(4) 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 case or related proceeding is 
     dismissed because of the failure to file bankruptcy papers, 
     including papers specified in section 521(1) of this title, 
     the negligence or intentional disregard of this title or the 
     Federal Rules of Bankruptcy Procedure by a bankruptcy 
     petition preparer, or if a bankruptcy petition preparer 
     violates this section or commits any fraudulent, unfair, or 
     deceptive act, the bankruptcy court shall certify that fact 
     to the district court, and the district court, on motion of 
     the debtor, the trustee, or a creditor and after a hearing, 
     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.
       ``(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 a violation of which subjects a 
     person to criminal penalty;
       ``(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, or has not paid a penalty 
     imposed under this section, the court may enjoin the person 
     from acting as a bankruptcy petition preparer.
       ``(3) The court shall award to a debtor, trustee, or 
     creditor that brings a successful action under this 
     subsection reasonable attorney's 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.''.
       (b) The chapter analysis for chapter 1 of title 11, United 
     States Code, is amended by adding at the end the following 
     new item:

``110. Penalty for persons who negligently or fraudulently prepare 
              bankruptcy petitions.''.

     SEC. 309. FAIRNESS TO CONDOMINIUM AND COOPERATIVE OWNERS.

       Section 523(a) of title 11, United States Code, as amended 
     by sections 221 and 304, is amended by adding at the end the 
     following:
       ``(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 dwelling unit that has 
     condominium ownership or in a share of a cooperative housing 
     corporation, but only if such fee or assessment is payable 
     for a period during which--
       ``(A) the debtor physically occupied a dwelling unit in the 
     condominium or cooperative project; or
       ``(B) the debtor rented the dwelling unit to a tenant and 
     received payments from the tenant for such period,

     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.''.

     SEC. 310. NONAVOIDABILITY OF FIXING OF LIEN ON TOOLS AND 
                   IMPLEMENTS OF TRADE, ANIMALS, AND CROPS.

       Section 522(f) of title 11, United States Code, as amended 
     by sections 303 and 304, is amended--
       (1) in paragraph (1) by inserting ``but subject to 
     paragraph (3)'' after ``waiver of exemptions'', and
       (2) by adding at the end the following:
       ``(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.''.

     SEC. 311. CONVERSION OF CASE UNDER CHAPTER 13.

       Section 348 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(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; 
     and
       ``(B) valuations of property and of allowed secured claims 
     in the chapter 13 case shall apply in the converted case, 
     with allowed secured claims reduced to the extent that they 
     have been paid in accordance with the chapter 13 plan.
       ``(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 in the converted case shall 
     consist of the property of the estate as of the date of 
     conversion.''.

     SEC. 312. BANKRUPTCY FRAUD.

       (a) In General.--
       (1) Offenses.--Chapter 9 of title 18, United States Code, 
     is amended--
       (A) by amending sections 152, 153, and 154 to read as 
     follows:

     ``Sec. 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;
       ``(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 not more than $5,000, imprisoned not more than 
     5 years, or both.

     ``Sec. 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 not more than $5,000, 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.

     ``Sec. 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 not more than $5,000 and shall forfeit the 
     person's office, which shall thereupon become vacant.''; and
       (B) by adding at the end the following:

     ``Sec. 156. Knowing disregard of bankruptcy law or rule

       ``(a) Definitions.--In this section--
       ```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.
       ```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.
       ``(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.

     ``Sec. 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;
       ``(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.''.
       (2) Technical amendments.--The chapter analysis for chapter 
     9 of title 18, United States Code, is amended--
       (A) by amending the item relating to section 153 to read as 
     follows:

``Sec. 153. Embezzlement against estate.'';
     and
       (B) by adding at the end the following new items:

``Sec. 156. Knowing disregard of bankruptcy law or rule.
``Sec. 157. Bankruptcy fraud.''.
       (b) RICO.--Section 1961(1)(D) of title 18, United States 
     Code, is amended by inserting ``(except a case under section 
     157 of that title)'' after ``title 11''.

     SEC. 313. PROTECTION AGAINST DISCRIMINATORY TREATMENT OF 
                   APPLICATIONS FOR STUDENT LOANS.

       Section 525 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(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 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.
       ``(2) In this section, `student loan program' means the 
     program operated under part B, D, or E of title IV of the 
     Higher Education Act of 1965 or a similar program operated 
     under State or local law.''.
                TITLE IV--GOVERNMENTAL BANKRUPTCY ISSUES

     SEC. 401. EXCEPTION FROM AUTOMATIC STAY FOR POST-PETITION 
                   PROPERTY TAXES.

       Section 362(b) of title 11, United States Code, is amended 
     by inserting after paragraph (16) the following:
       ``(18) under subsection (a) of the creation or perfection 
     of a statutory lien for an ad valorem property tax imposed by 
     the District of Columbia, or a political subdivision of a 
     State, if such tax comes due after the filing of the 
     petition.''.

     SEC. 402. MUNICIPAL BANKRUPTCY.

       Section 109(c)(2) of title 11, United States Code, is 
     amended by striking ``generally authorized'' and inserting 
     ``specifically authorized, in its capacity as a municipality 
     or by name,''.
                     TITLE V--TECHNICAL CORRECTIONS

     SEC. 501. AMENDMENTS TO BANKRUPTCY DEFINITIONS, NECESSITATED 
                   BY ENACTMENT OF PUBLIC LAW 101-647.

       (a) Alphabetizing and Redesignating Definitions.--Section 
     101 of title 11 of the United States Code, as amended by 
     sections 208, 217, 218, and 304, is amended--
       (1) by redesignating paragraph (3) as paragraph (21B) and 
     transferring such paragraph so as to insert it after 
     paragraph (21A),
       (2) by redesignating paragraph (39) as paragraph (51A) and 
     transferring such paragraph so as to insert it after 
     paragraph (51),
       (3) by redesignating paragraphs (54) through (57), as so 
     redesignated by section 2522(e) of Public Law 101-647, as 
     paragraphs (53A) through (53D), respectively,
       (4) by redesignating paragraph (56) as in effect 
     immediately before the enactment of Public Law 101-647, as 
     paragraph (35A) and transferring such paragraph so as to 
     insert it after paragraph (35), and
       (5) by redesignating paragraph (57), as in effect 
     immediately before the enactment of Public Law 101-647, as 
     paragraph (39) and transferring such paragraph so as to 
     insert it after paragraph (38).
       (b) Conforming and Related Amendments to title 11 of the 
     United States Code, Based on Redesignated Definitions.--(1) 
     Section 101 of title 11 of the United States Code, as amended 
     by subsection (a), is amended--
       (A) in paragraph (6) by striking ``section 761(9)'' and 
     inserting ``section 761'',
       (B) in paragraph (22) by striking ``section 741(7)'' and 
     inserting ``section 741'',
       (C) in paragraph (35)(B) by striking ``paragraphs (3)'' and 
     inserting ``paragraphs (21B)'',
       (D) in paragraph (49)(B)(ii) by striking ``section 
     761(13)'' and inserting ``section 761'', and
       (E) in paragraph (53A)(A), as so redesignated, by striking 
     ``section 741(2)'' and inserting ``section 741''.
       (2) Section 362(b) of title 11, United States Code, is 
     amended--
       (A) in paragraph (6)--
       (i) by striking ``section 761(4)'' and inserting ``section 
     761'',
       (ii) by striking ``section 741(7)'' and inserting ``section 
     741'',
       (iii) by striking ``section 101(34), 741(5), or 761(15)'' 
     and inserting ``section 101, 741, or 761'', and
       (iv) by striking ``section 101(35) or 741(8)'' and 
     inserting ``section 101 or 741'', and
       (B) in paragraph (7)--
       (i) by striking ``section 741(5) or 761(15)'' and inserting 
     ``section 741 or 761'', and
       (ii) by striking ``section 741(8)'' and inserting ``section 
     741''.
       (3) Section 507(a)(5) of title 11, United States Code, is 
     amended--
       (A) by striking ``section 557(b)(1)'' and inserting 
     ``section 557(b)'', and
       (B) by striking ``section 557(b)(2)'' and inserting 
     ``section 557(b)''.
       (4) Section 546 of title 11, United States Code, is 
     amended--
       (A) in subsection (e)--
       (i) by striking ``section 101(34), 741(5), or 761(15)'' and 
     inserting ``section 101, 741, or 761'', and
       (ii) by striking ``section 101(35) or 741(8)'' and 
     inserting ``section 101 or 741'', and
       (B) in subsection (f)--
       (i) by striking ``section 741(5) or 761(15)'' and inserting 
     ``section 741 or 761'', and
       (ii) by striking ``section 741(8)'' and inserting ``section 
     741''.
       (5) Section 548(d)(2) of title 11, United States Code, is 
     amended--
       (A) in subparagraph (B)--
       (i) by striking ``section 101(34), 741(5) or 761(15)'' and 
     inserting ``section 101, 741, or 761'', and
       (ii) by striking ``section 101(35) or 741(8)'' and 
     inserting ``section 101 or 741'', and
       (B) in subparagraph (C)--
       (i) by striking ``section 741(5) or 761(15)'' and inserting 
     ``section 741 or 761'', and
       (ii) by striking ``section 741(8)'' and inserting ``section 
     741''.
       (6) Section 555 of title 11, United States Code, is amended 
     by striking ``section 741(7)'' and inserting ``section 741 of 
     this title''.
       (7) Section 556 of title 11, United States Code, is amended 
     by striking ``section 761(4)'' and inserting ``section 761 of 
     this title''.
       (c) Conforming Amendments to Other Laws Based on 
     Redesignated Definitions.--(1) Section 207(c)(8)(D) of the 
     Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is 
     amended--
       (A) in clause (ii)(I) by striking ``section 741(7)'' and 
     inserting ``section 741'',
       (B) in clause (iii) by striking ``section 101(24)'' and 
     inserting ``section 101'',
       (C) in clause (iv)(I) by striking ``section 101(41)'' and 
     inserting ``section 101'', and
       (D) in clause (v) by striking ``section 101(50)'' and 
     inserting ``section 101''.
       (2) Section 11(e)(8)(D) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1821(e)(8)(D)) is amended--
       (A) in clause (ii)(I) by striking ``section 741(7)'' and 
     inserting ``section 741'',
       (B) in clause (iii) by striking ``section 761(4)'' and 
     inserting ``section 761'',
       (C) in clause (iv) by striking ``section 101(24)'' and 
     inserting ``section 101'',
       (D) in clause (v)(I) by striking ``section 101(41)'' and 
     inserting ``section 101'', and
       (E) in clause (viii) by striking ``section 101(50)'' and 
     inserting ``section 101''.
       (d) Other Technical Amendments.--Title 11 of the United 
     States Code is amended--
       (1) in section 101--
       (A) in paragraph (33)--
       (i) in subparagraph (A) by striking ``(12 U.S.C. 
     1813(u))'', and
       (ii) in subparagraph (B) by striking ``(12 U.S.C. 
     1786(r))'',
       (B) in paragraph (34) by striking ``(12 U.S.C. 1752(7))'',
       (C) in paragraph (35)(A) by striking ``(12 U.S.C. 
     1813(c)(2))'',
       (D) in paragraph (48)--
       (i) by striking ``(15 U.S.C. 78q-1)'', and
       (ii) by striking ``(15 U.S.C. 78c(12))'',
       (E) in paragraph (49)--
       (i) in subparagraph (A)(xii)--

       (I) by striking ``(15 U.S.C. 77a et seq.)'', and
       (II) by striking ``(15 U.S.C. 77c(b))'', and

       (ii) in subparagraph (B)(vi) by striking ``(15 U.S.C. 
     77c(b))'', and
       (F) in paragraph (53D), as so redesignated by subsection 
     (a), by striking the period at the end and inserting a 
     semicolon,
       (2) in section 109(b)(2) by striking ``(12 U.S.C. 
     1813(h))'',
       (3) in section 322(a) by striking ``1302, or 1202'' and 
     inserting ``1202, or 1302'',
       (4) in section 346--
       (A) in subsection (a) by striking ``Internal Revenue Code 
     of 1954 (26 U.S.C. 1 et seq.)'' and inserting ``Internal 
     Revenue Code of 1986'', and
       (B) in subsection (g)(1)(C) by striking ``Internal Revenue 
     Code of 1954 (26 U.S.C. 371)'' and inserting ``Internal 
     Revenue Code of 1986'',
       (5) in section 348--
       (A) in subsection (b) by striking ``1301(a), 1305(a), 
     1201(a), 1221, and 1228(a)'' and inserting ``1201(a), 1221, 
     1228(a), 1301(a), and 1305(a)'', and
       (B) in subsections (b), (c), (d), and (e) by striking 
     ``1307, or 1208'' each place it appears and inserting ``1208, 
     or 1307'',
       (6) in section 349(a) by striking ``109(f)'' and inserting 
     ``109(g)'',
       (7) in section 362--
       (A) in subsection (a) by striking ``(15 U.S.C. 
     78eee(a)(3))'', and
       (B) in subsection (b)--
       (i) by striking ``(15 U.S.C. 78eee(a)(3))'',
       (ii) in paragraph (10) by striking ``or'' at the end,
       (iii) in paragraph (12)--

       (I) by striking ``the Ship Mortgage Act, 1920 (46 App. 
     U.S.C. 911 et seq.)'' and inserting ``section 31325 of title 
     46'', and
       (II) by striking ``(46 App. U.S.C. 1117 and 1271 et seq., 
     respectively)'',

       (iv) in paragraph (13)--

       (I) by striking ``the Ship Mortgage Act, 1920 (46 App. 
     U.S.C. 911 et seq.)'' each place it appears and inserting 
     ``section 31325 of title 46'',
       (II) by striking ``(46 App. U.S.C. 1117 and 1271 et seq., 
     respectively)'', and
       (III) by striking ``or'' at the end,

       (v) in paragraph (15), as added by Public Law 101-508, by 
     striking ``or'' at the end,
       (vi) in paragraph (16), as added by Public Law 101-508--

       (I) by striking ``(20 U.S.C. 1001 et seq.)'', and
       (II) by striking the period at the end and inserting a 
     semicolon, and

       (vii) in paragraph (14), as added by Public Law 101-311--

       (I) by striking the period at the end and inserting ``; 
     or'',
       (II) by redesignating such paragraph as paragraph (17), and
       (III) by transferring such paragraph so as to insert such 
     paragraph after paragraph (16),

       (8) in section 363--
       (A) in subsection (b)(2) by striking ``(15 U.S.C. 18a)'', 
     and
       (B) in subsection (c)(1) by striking ``1304, 1203, or 
     1204'' and inserting ``1203, 1204, or 1304'',
       (9) in section 364--
       (A) in subsection (a) by striking ``1304, 1203, or 1204'' 
     and inserting ``1203, 1204, or 1304'', and
       (B) in subsection (f)--
       (i) by striking ``(15 U.S.C. 77e)'', and
       (ii) by striking ``(15 U.S.C. 77aaa et seq.)'',
       (10) in section 365--
       (A) in subsection (d)(6)(C) by striking ``the Federal 
     Aviation Act of 1958 (49 U.S.C. 1301)'' and inserting 
     ``section 40102 of title 49'',
       (B) in subparagraphs (A) and (B) of subsection (g)(2) by 
     striking ``1307, or 1208'' each place it appears and 
     inserting ``1208, or 1307'',
       (C) in subsection (n)(1)(B) by striking ``to to'' and 
     inserting ``to'',
       (D) in subsection (o) by striking ``the Federal'' the first 
     place it appears and all that follows through 
     ``successors,'', and inserting ``a Federal depository 
     institutions regulatory agency (or predecessor to such 
     agency)'', and
       (E) by striking subsection (p),
       (11) in section 507, as amended by section 304--
       (A) in subsection (a)(9) by striking ``the Federal'' the 
     first place it appears and all that follows through 
     ``successors,'', and inserting ``a Federal depository 
     institutions regulatory agency (or predecessor to such 
     agency)'', and
       (B) in subsection (d) by striking ``or (a)(6)'' and 
     inserting ``(a)(6), (a)(7), (a)(8), or (a)(9)'',
       (12) in section 522--
       (A) in subsection (b) by striking ``Bankruptcy Rules'' and 
     inserting ``Federal Rules of Bankruptcy Procedure'', and
       (B) in subsection (d)(10)(E)(iii)--
       (i) by striking ``408, or 409'' the first place it appears 
     and inserting ``or 408'', and
       (ii) by striking ``Internal Revenue Code of 1954 (26 U.S.C. 
     401(a), 403(a), 403(b), 408, or 409)'' and inserting 
     ``Internal Revenue Code of 1986'',
       (13) in section 523--
       (A) in subsection (a)--
       (i) by striking ``1141,,'' and inserting ``1141,'', and
       (ii) in paragraph (2)(C) by striking ``(15 U.S.C. 1601 et 
     seq.)'',
       (B) in subsection (b)--
       (i) by striking ``(20 U.S.C. 1087-3)'', and
       (ii) by striking ``(42 U.S.C. 294f)'', and
       (C) in subsection (e) by striking ``depository institution 
     or insured credit union'' and inserting ``insured depository 
     institution'',
       (14) in section 524--
       (A) in subsection (a)(3) by striking ``1328(c)(1)'' and 
     inserting ``1328(a)(1)'',
       (B) in subsection (c)(4) by striking ``recission'' and 
     inserting ``rescission'', and
       (C) in subsection (d)(1)(B)(ii) by adding ``and'' at the 
     end,
       (15) in section 525(a)--
       (A) by striking ``(7 U.S.C. 499a-499s)'',
       (B) by striking ``(7 U.S.C. 181-229)'', and
       (C) by striking ``(57 Stat. 422; 7 U.S.C. 204)'',
       (16) in section 542(e) by striking ``to to'' and inserting 
     ``to'',
       (17) in section 543(d)(1) by striking ``section,'' and 
     inserting ``section'',
       (18) in section 549(b) inserting ``the trustee may not 
     avoid under subsection (a) of this section'' after 
     ``involuntary case,'',
       (19) in section 553--
       (A) in subsection (a)(1) by striking ``other than under 
     section 502(b)(3) of this title'', and
       (B) in subsection (b)(1) by striking ``362(b)(14),,'' and 
     inserting ``362(b)(14),'',
       (20) in section 555 by striking ``(15 U.S.C. 78aaa et 
     seq.)'',
       (21) in section 559 by striking ``(15 U.S.C. 78aaa et 
     seq.)'',
       (22) in section 706(a) by striking ``1307, or 1208'' and 
     inserting ``1208, or 1307'',
       (23) in section 724(d) by striking ``Internal Revenue Code 
     of 1954 (26 U.S.C. 6323)'' and inserting ``Internal Revenue 
     Code of 1986'',
       (24) in section 726(b)--
       (A) inserting a comma after ``section 1112'', and
       (B) by inserting ``1009,'' after ``chapter under section'',
       (25) in section 741(4)(A)(iii) by striking ``(15 U.S.C. 78a 
     et seq.)'',
       (26) in section 742 by striking ``(15 U.S.C. 78aaa et 
     seq.)'',
       (27) in section 743 by striking ``342(a)'' and inserting 
     ``342'',
       (28) in section 745(c) by striking ``Internal Revenue Code 
     of 1954 (26 U.S.C. 1 et seq.)'' and inserting ``Internal 
     Revenue Code of 1986'',
       (29) in section 761--
       (A) in paragraph (1) by striking ``(7 U.S.C. 1 et seq.)'',
       (B) in paragraph (5) by striking ``(7 U.S.C. 6c(b))'', and
       (C) in paragraph (13) by striking ``(7 U.S.C. 23)'',
       (30) in section 1104(d), as redesignated by section 211, 
     inserting a comma after ``interest'',
       (31) in section 1123(a)(1) inserting a comma after 
     ``title'' the last place it appears,
       (32) in section 1129--
       (A) in subsection (a)--
       (i) in paragraph (4) by striking the semicolon at the end 
     and inserting a period, and
       (ii) in paragraph (12) inserting ``of title 28'' after 
     ``section 1930'', and
       (B) in subsection (d) by striking ``(15 U.S.C. 77e)'',
       (33) in section 1145--
       (A) in subsection (a)--
       (i) by striking ``does'' and inserting ``do'',
       (ii) by striking ``(15 U.S.C. 77e)'', and
       (iii) in paragraph (3)(B)(i) by striking ``(15 U.S.C. 78m 
     or 78o(d))'',
       (B) in subsection (b)(1) by striking ``(15 U.S.C. 
     77b(11))'', and
       (C) in subsection (d) by striking ``(15 U.S.C. 77aaa et 
     seq.)'',
       (34) in section 1166(2) by striking ``(45 U.S.C. 791(b))'',
       (35) in section 1167--
       (A) by striking ``(45 U.S.C. 151 et seq.)'', and
       (B) by striking ``(45 U.S.C. 156)'',
       (36) in section 1226(b)(2)--
       (A) by striking ``1202(d)'' and inserting ``1202(c)'', and
       (B) by striking ``1202(e)'' and inserting ``1202(d)'',
       (37) in section 1302(b)(3) by striking ``and'' at the end, 
     and
       (38) in section 1328(a)--
       (A) in paragraph (2) by striking ``(5) or (8)'' and 
     inserting ``(5), (8), or (9)'', and
       (B) by striking the last paragraph (3), and
       (39) in the table of chapters by striking the item relating 
     to chapter 15.

     SEC. 502. TITLE 28 OF THE UNITED STATES CODE.

       Section 586(a)(3) of title 28, United States Code, is 
     amended in the matter preceding subparagraph (A) by inserting 
     ``12,'' after ``11,''.
                 TITLE VI--BANKRUPTCY REVIEW COMMISSION

     SEC. 601. SHORT TITLE.

       This title may be cited as the ``National Bankruptcy Review 
     Commission Act''.

     SEC. 602. ESTABLISHMENT.

       There is established the National Bankruptcy Review 
     Commission (referred to as the ``Commission'').

     SEC. 603. DUTIES OF THE COMMISSION.

       The duties of the Commission are--
       (1) to investigate and study issues and problems relating 
     to title 11, United States Code (commonly known as the 
     ``Bankruptcy Code'');
       (2) to evaluate the advisability of proposals and current 
     arrangements with respect to such issues and problems;
       (3) to prepare and submit to the Congress, the Chief 
     Justice, and the President a report in accordance with 
     section 608; and
       (4) to solicit divergent views of all parties concerned 
     with the operation of the bankruptcy system.

     SEC. 604. MEMBERSHIP.

       (a) Number and Appointment.--The Commission shall be 
     composed of 9 members as follows:
       (1) Three members appointed by the President, 1 of whom 
     shall be designated as chairman by the President.
       (2) One member shall be appointed by the President pro 
     tempore of the Senate.
       (3) One member shall be appointed by the Minority Leader of 
     the Senate.
       (4) One member shall be appointed by the Speaker of the 
     House of Representatives.
       (5) One member shall be appointed by the Minority Leader of 
     the House of Representatives.
       (6) Two members appointed by the Chief Justice.
     Members of Congress, and officers and employees of the 
     executive branch, shall be ineligible for appointment to the 
     Commission.
       (b) Term.--Members of the Commission shall be appointed for 
     the life of the Commission.
       (c) Quorum.--Five members of the Commission shall 
     constitute a quorum, but a lesser number may conduct 
     meetings.
       (d) Appointment Deadline.--The first appointments made 
     under subsection (a) shall be made within 60 days after the 
     date of enactment of this Act.
       (e) First Meeting.--The first meeting of the Commission 
     shall be called by the chairman and shall be held within 210 
     days after the date of enactment of this Act.
       (f) Vacancy.--A vacancy on the Commission resulting from 
     the death or resignation of a member shall not affect its 
     powers and shall be filled in the same manner in which the 
     original appointment was made.
       (g) Continuation of Membership.--If any member of the 
     Commission who was appointed to the Commission as an officer 
     or employee of a government leaves that office, or if any 
     member of the Commission who was not appointed in such a 
     capacity becomes an officer or employee of a government, the 
     member may continue as a member of the Commission for not 
     longer than the 90-day period beginning on the date the 
     member leaves that office or becomes such an officer or 
     employee, as the case may be.
       (h) Consultation Prior to Appointment.--Prior to the 
     appointment of members of the Commission, the President, the 
     President pro tempore of the Senate, the Speaker of the House 
     of Representatives, and the Chief Justice shall consult with 
     each other to ensure fair and equitable representation of 
     various points of view in the Commission and its staff.

     SEC. 605. COMPENSATION OF THE COMMISSION.

       (a) Pay.--
       (1) Nongovernment employees.--Each member of the Commission 
     who is not otherwise employed by the United States Government 
     shall be entitled to receive the daily equivalent of the 
     annual rate of basic pay payable for level IV of the 
     Executive Schedule under section 5315 of title 5, United 
     States Code, for each day (including travel time) during 
     which he or she is engaged in the actual performance of 
     duties as a member of the Commission.
       (2) Government employees.--A member of the Commission who 
     is an officer or employee of the United States Government 
     shall serve without additional compensation.
       (b) Travel.--Members of the Commission shall be reimbursed 
     for travel, subsistence, and other necessary expenses 
     incurred by them in the performance of their duties.

     SEC. 606. STAFF OF COMMISSION; EXPERTS AND CONSULTANTS.

       (a) Staff.--
       (1) Appointment.--The chairman of the Commission may, 
     without regard to the civil service laws and regulations, 
     appoint, and terminate an executive director and such other 
     personnel as are necessary to enable the Commission to 
     perform its duties. The employment of an executive director 
     shall be subject to confirmation by the Commission.
       (2) Compensation.--The chairman of the Commission may fix 
     the compensation of the executive director and other 
     personnel without regard to the provisions of chapter 51 and 
     subchapter II of chapter 53 of title 5, United States Code, 
     relating to classification of positions and General Schedule 
     pay rates, except that the rate of pay for the executive 
     director and other personnel may not exceed the rate payable 
     for level V of the Executive Schedule under section 5316 of 
     that title.
       (b) Experts and Consultants.--The Commission may procure 
     temporary and intermittent services of experts and 
     consultants under section 3109(b) of title 5, United States 
     Code.

     SEC. 607. POWERS OF THE COMMISSION.

       (a) Hearings and Meetings.--The Commission or, on 
     authorization of the Commission, a member of the Commission, 
     may hold such hearings, sit and act at such time and places, 
     take such testimony, and receive such evidence, as the 
     Commission considers appropriate. The Commission or a member 
     of the Commission may administer oaths or affirmations to 
     witnesses appearing before it.
       (b) Official Data.--The Commission may secure directly from 
     any Federal department, agency, or court information 
     necessary to enable it to carry out this title. Upon request 
     of the chairman of the Commission, the head of a Federal 
     department or agency or chief judge of a Federal court shall 
     furnish such information, consistent with law, to the 
     Commission.
       (c) Facilities and Support Services.--The Administrator of 
     General Services shall provide to the Commission on a 
     reimbursable basis such facilities and support services as 
     the Commission may request. Upon request of the Commission, 
     the head of a Federal department or agency may make any of 
     the facilities or services of the agency available to the 
     Commission to assist the Commission in carrying out its 
     duties under this title.
       (d) Expenditures and Contracts.--The Commission or, on 
     authorization of the Commission, a member of the Commission 
     may make expenditures and enter into contracts for the 
     procurement of such supplies, services, and property as the 
     Commission or member considers appropriate for the purposes 
     of carrying out the duties of the Commission. Such 
     expenditures and contracts may be made only to such extent or 
     in such amounts as are provided in appropriation Acts.
       (e) Mails.--The Commission may use the United States mails 
     in the same manner and under the same conditions as other 
     Federal departments and agencies of the United States.
       (f) Gifts.--The Commission may accept, use, and dispose of 
     gifts or donations of services or property.

     SEC. 608. REPORT.

       The Commission shall submit to the Congress, the Chief 
     Justice, and the President a report not later than 2 years 
     after the date of its first meeting. The report shall contain 
     a detailed statement of the findings and conclusions of the 
     Commission, together with its recommendations for such 
     legislative or administrative action as it considers 
     appropriate.

     SEC. 609. TERMINATION.

       The Commission shall cease to exist on the date that is 30 
     days after the date on which it submits its report under 
     section 608.

     SEC. 610. AUTHORIZATION OF APPROPRIATIONS.

       There is authorized to be appropriated $1,500,000 to carry 
     out this title.
  TITLE VII--SEVERABILITY; EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

     SEC. 701. SEVERABILITY.

       If any provision of this Act or amendment made by this Act 
     or the application of such provision or amendment to any 
     person or circumstance is held to be unconstitutional, the 
     remaining provisions of and amendments made by this Act and 
     the application of such other provisions and amendments to 
     any person or circumstance shall not be affected thereby.

     SEC. 702. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

       (a) Effective Date.--Except as provided in subsection (b), 
     this Act shall take effect on the date of the enactment of 
     this Act.
       (b) Application of Amendments.--(1) Except as provided in 
     paragraph (2), the amendments made by this Act shall not 
     apply with respect to cases commenced under title 11 of the 
     United States Code before the date of the enactment of this 
     Act.
       (2)(A) Paragraph (1) shall not apply with respect to the 
     amendment made by section 111.
       (B) The amendments made by sections 113 and 117 shall apply 
     with respect to cases commenced under title 11 of the United 
     States Code before, on, and after the date of the enactment 
     of this Act.
       (C) Section 1110 of title 11, United States Code, as 
     amended by section 201 of this Act, shall apply with respect 
     to any lease, as defined in such section 1110(c) as so 
     amended, entered into in connection with a settlement of any 
     proceeding in any case pending under title 11 of the United 
     States Code on the date of the enactment of this Act.
       (D) The amendments made by section 305 shall apply only to 
     agreements entered into after the date of enactment of this 
     Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentleman from 
Texas [Mr. Brooks] will be recognized for 20 minutes, and the gentleman 
from New York [Mr. Fish] will be recognized for 20 minutes.
  The Chair recognizes the gentleman from Texas [Mr. Brooks].
  (Mr. BROOKS asked and was given permission to revise and extend his 
remarks.)
  Mr. BROOKS. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, the Bankruptcy Reform Act of 1994 will improve the 
administration of bankruptcy cases, as well as provide greater fairness 
and certainty for individuals, corporations, and governmental entities. 
It will help address problem areas, which have contributed to slow and 
inefficient case administration in the courts. The recent surge in the 
number of bankruptcy filings has only highlighted the need for a 
targeted legislative response.
  This bill is clearly a consensus product. It includes most issues 
addressed in H.R. 6020--the bill Congressman Fish and I introduced in 
the 103d Congress--as well as a select number of issues addressed by 
Congressman Synar--a leader in the field--Congresswoman Schroeder and 
many others in their bankruptcy proposals.
  I don't believe it is an overstatement to say that this legislation 
may be one of the most significant pieces of economic legislation to be 
considered by the House in this Congress. Without bankruptcy reform, 
companies, creditors, and debtors alike will continue to be placed on 
endless hold until their rights and obligations are adjudicated under 
the present system--and that slows down new ventures, new extensions of 
credit, and new investments.
  We have been very careful in striking a balance between creditors and 
debtors in the legislation. The excellent work of so many of the 
committee members on both sides of the aisle has produced a bill that 
deserves the wholehearted support of this body.
  But time is short. For that reason, we have been in close contact 
with our counterparts in the other body concerning the contours and 
general direction of the House bill. It is my hope that we can pass 
this bill today; that it can be sent to the other body and then 
forwarded post-haste to the President's desk to be signed into law.
  Mr. Speaker, I insert in the Record a section-by-section analysis of 
the provisions of the Bankruptcy Reform Act of 1994.
  I urge a favorable vote on this important legislation.

     Bankruptcy Reform Act of 1994--Section-by-Section Description


              title i. improved bankruptcy administration

            Section 101. Expedited hearing on automatic stay

       Section 362(e) of the Bankruptcy Code provides that a 
     preliminary hearing on a motion to lift the automatic stay 
     must conclude within 30 days, with the final hearing to 
     commence within 30 days thereafter. Under many court 
     interpretations, there is no specific limitation on when the 
     final hearing on the motion to lift the stay must conclude. 
     See, e.g., In re ML Barge Pool, 98 B.R. 957 (Bankr. E.D. Mo. 
     1989); In re Bogosian, 112 B.R. 2 (Bankr. D.R.I. 1990).
       This section provides that the final hearing must conclude 
     within 30 days of the preliminary hearing, unless extended by 
     consent of the parties or for a specific time which the court 
     finds is required by compelling circumstances. Under this 
     standard, for example, an extension should not be available 
     where the debtor was merely seeking to delay the bankruptcy 
     process or had neglected to consummate a pending contract. 
     Compelling circumstances that might justify an extension 
     might include, for example, the bona fide illness of any 
     party or the judge or the occurrence of an event beyond the 
     parties' control. Such a finding must be balanced with the 
     legitimate property rights at stake in each particular case. 
     The Committee believes speedy conclusion of hearings on the 
     automatic stay will reduce the time and cost of bankruptcy 
     proceedings by preventing unjustified or unwarranted 
     postponements of final action.

        Section 102. Expedited filing of plans under chapter 11

       Section 1121 of the Code, currently in effect, grants a 
     debtor the exclusive right to file a plan during the initial 
     120 days after an order for relief under chapter 11. This 
     exclusive period expires either at the end of the 120 day 
     period if the debtor has not filed a plan, or, if the debtor 
     has filed a plan and the plan has not bee accepted by 
     creditors, within 180 days after the order for relief. 
     Thereafter, any party-in-interest may file a plan. The 
     bankruptcy court may extend or shorten the exclusive period 
     at the request of the debtor or any other party-in-interest 
     upon a showing of ``cause.'' Exclusivity is intended to 
     promote an environment in which the debtor's business may be 
     rehabilitated and a consensual plan may be negotiated. 
     However, undue extension can result in excessively, prolonged 
     and costly delay, to the detriment of the creditors. See. 
     e.g., ``When Firms Go Bust.'' The Economist, August 1, 1992.
       Under current law, an order extending the debtor's 
     exclusive period to file a plan is an interlocutory order. 28 
     U.S.C. Sec. 158(a) provides that appeals from interlocutory 
     orders of a bankruptcy judge may be made to the district 
     court only upon leave of the district court, and not as a 
     matter of right. Section 102 of the bill would amend 28 
     U.S.C. Sec. 158 so as to provide for an immediate appeal as 
     of right to the district court from a bankruptcy court's 
     order extending or reducing that debtor's exclusive period in 
     which to file a plan. This will prevent those parties who 
     feel they were harmed by an extension, or a failure to 
     extend, to obtain possible recourse in the district court. 
     The Committee intends that the district court carefully 
     consider the circumstances of each case so appealed with a 
     view to encouraging a fair and equitable resolution of the 
     bankruptcy.

      Section 103. Expedited procedure for reaffirmation of debts

       Some uncertainty exists under current law regarding whether 
     a separate hearing is required for a debtor to reaffirm a 
     debt, even when the debtor is represented by an attorney who 
     files an affidavit stating that the reaffirmation was 
     voluntary and that is would not impose an undue hardship on 
     the debtor. See In re Richardson, 102 B.R. 254 (Bankr. M.D. 
     Fla. 1989); In re Churchill, B.R. 878 (Bankr. D. Colo. 1988); 
     In re James, B.R. 582 (Bankr. W.D. Okla. 1990) (cases holding 
     reaffirmation hearing is required); In re Carey, 51 B.R. 294 
     (Bankr. D.D.C. 1985); In re Reidenbach, 59 B.R. 248 (Bankr. 
     N.D. Ohio 1986); In re Pendlebury, 94 B.R. 120 (Bankr. E.D. 
     Tenn. 1988) (cases holding reaffirmation hearing is not 
     required).
       This section clarifies that a separate hearing is not 
     mandatory in order to reaffirm a debt where the debtor is 
     adequately represented by counsel. In addition, the section 
     supplements existing safeguards by requiring that the 
     reaffirmation agreement advise the debtor that reaffirmation 
     is not required, and by mandating that the attorney's 
     affidavit indicate that the debtor has been fully advised of 
     the ramifications of the reaffirmation agreement and any 
     default thereunder. The Committee intends that such 
     understandings be appropriately highlighted in the agreement 
     to ensure adequate notice to the debtor. In each of the above 
     circumstances, the Committee intends that before the debtor 
     agrees to a reaffirmation, that the debtor be made fully 
     aware of his or her rights under the Bankruptcy Code to 
     discharge the debt and of the effect of a reaffirmation to 
     continue the debt obligation as though a bankruptcy petition 
     had not been filed.

                Section 104. Powers of bankruptcy courts

       This section makes a number of changes to clarify the 
     powers of bankruptcy courts in managing bankruptcy cases. 
     Several of these changes are based on the recommendations of 
     the Federal Courts Study Commission. Subsection (a) 
     authorizes bankruptcy court judges to hold status conferences 
     in bankruptcy cases and thereby manage their dockets in a 
     more efficient and expenditious manner. Notwithstanding the 
     adoption of Bankruptcy Rule 7016 (relating to pretrial 
     conferences), some judges have appeared reluctant to do so 
     without clear and explicit statutory authorization. This 
     provision clarifies that such authority exists in the 
     Bankruptcy Code in adversary and nonadversary proceedings. 
     Subsection (b) allows the full appeal of certain bankruptcy 
     court refusals to abstain in State law legal proceedings. As 
     with most other portions of this Act, subsection (b) operates 
     prospectively and applies only to cases filed after the 
     effective date of the Act. Accordingly, it does not make any 
     existing orders appealable. Any future decisions not to 
     abstain, if made in cases filed before the effective date of 
     the Act, would also be governed by present law and thus would 
     not be appealable to the Circuit Court of Appeals. Subsection 
     (c) provides for the establishment in each judicial circuit 
     of a bankruptcy appellate panels, composed of sitting 
     bankruptcy judges, to serve in place of the district court in 
     reviewing bankruptcy court decisions. Under this subsection, 
     the judicial council of each circuit would be required to 
     establish a bankruptcy appellate panel service for this 
     purpose, unless the council finds there are insufficient 
     judicial resources available in the circuit or that 
     establishment would result in undue delay or increased cost 
     to the parties. Subsection (d) provides that all appeals from 
     bankruptcy courts shall be heard by a bankruptcy appellate 
     panel, if established and in operation as provided in 28 
     U.S.C. 158(b), unless a party makes a timely election to 
     have an appeal heard by a district court. Subsections (e) 
     and (f) conform the rulemaking procedure for bankruptcy 
     courts to the existing procedure for other Federal courts.

 Section 105. Participation by bankruptcy administrator at meetings of 
                 creditors and equity security holders.

       This section clarifies that for the States in which the 
     bankruptcy system is administered by a Bankruptcy 
     Administrator instead of U.S. Trustee, the Bankruptcy 
     Administrator would have the same power as a U.S. Trustee to 
     preside at creditor's meetings and conduct examinations of 
     the debtor.

Section 106. Definition relating to eligibility to serve on chapter 11 
                               committees

       This section amends the Bankruptcy Code to include pension 
     benefit grantors and certain pension plans within the 
     definition of a ``person'' for purposes of section 1102 of 
     the Code. This section is intended to clarify that the 
     Pension Benefit Guaranty Corporation and State employee 
     pension funds are authorized to serve on chapter 11 
     committees.

       Section 107. Increased incentive compensation for trustees

       Private trustees are responsible for supervising chapter 7 
     cases, and, in some instances, chapter 11 cases, as well as 
     for distributing funds to creditors. This section provides 
     for an increase in the court-approved compensation payable to 
     private trustees. Under current law, the private bankruptcy 
     trustees may receive 15 percent of the first $1,000 disbursed 
     in the case; 6 percent of the next $2,000 disbursed; and 3 
     percent of any additional monies disbursed. The section 
     increases the maximum compensation to 25 percent of the first 
     $5,000 in disbursements to creditors; 10 percent of 
     additional amounts up to $50,000; 5 percent of additional 
     amounts up to $1 million; and 3 percent of any amounts in 
     excess of $1 million. This increased compensation is not 
     borne by the Federal Treasury, but it to be paid by those 
     involved in the bankruptcy system. The American Bankruptcy 
     Institute has issued a report recommending increased trustee 
     compensation. See Am. Bankr. Inst., American Bankruptcy 
     Institute National Report on Professional Compensation in 
     Bankruptcy Cases (G.R. Warner rept. 1991).

                     Section 108. Dollar adjustment

       Subsection (a) revises the current debt limits applicable 
     to a chapter 13 filing from a maximum of $100,000 of 
     unsecured debt and $350,000 of secured debt to $250,000 of 
     unsecured debt and $750,000 of secured debt. These changes 
     should help encourage individual debtors to elect chapter 13 
     repayment over chapter 7 liquidation. Creditors generally 
     benefit when a debtor elects chapter 13. Notwithstanding the 
     fee increases in chapter 13 cases, the Committee does not 
     intend for debtors to be able to utilize chapter 13 as an 
     office solely to obtain discharge from certain liabilities. 
     For example, it is not contemplated that an individual who 
     committed to heinous crime would be able in good faith to use 
     chapter 13 solely as a means of discharging a civil 
     obligation owing to a harmed party. Among other things, the 
     remaining subsections increase the current dollar limitations 
     applicable to involuntary filings, bankruptcy priorities, and 
     bankruptcy exemptions based on recommendations received from 
     the Judicial Conference. This provision also provides for 
     automatic increases in response to future inflation every 3 
     years.

                  Section 109. Premerger notification

       This section conforms section 363(b)(2) of the Bankruptcy 
     Code more closely to the requirements for antitrust review of 
     transactions under section 7A of the Clayton Act (15 U.S.C. 
     18(a)). Section 7A requires parties to a merger or 
     acquisition to notify the Department of Justice and the 
     Federal Trade Commission and wait a specified period of time 
     before completing the transaction, to allow for review of its 
     competitive implications. Generally, the waiting period 
     terminates 30 days after the filing requirement is met, but 
     the period can be extended by a request from the Department 
     or the FTC for additional information.
       Under section 363(b)(2) of the Code, however, the section 
     7A waiting period for mergers and acquisitions involving 
     assets in bankruptcy is shortened by 10 days, and could be 
     shortened even further by order of the bankruptcy court. See, 
     e.g., CNBC/FNN matter, FTC File No. 911-0067.
       Section 109 of the bill extends the initial waiting period 
     for transactions in bankruptcy to 15 days after the 
     Department of Justice and the FTC receive the notification 
     required under section 7A(a). The provision also clarifies 
     that this waiting period can never be shortened, but only 
     extended. Finally, the provision specifies three ways in 
     which the 15-day waiting period can be extended: pursuant to 
     section 7(e)(2), if the Justice Department or the FTC makes a 
     ``second request''; pursuant to section 7A(g)(2), if the 
     parties fail to comply; and by the court, for bankruptcy 
     related or other reasons. The provision also makes a 
     number of other minor clarifying changes to section 
     363(b)(2) of the Code.

         Section 110. Allowance of creditor committee expenses

       The current Bankruptcy Code is silent regarding whether 
     members of official committees appointed in chapter 11 cases 
     are entitled to reimbursement of their out-of-pocket expenses 
     (such as travel and lodging), and the courts have split on 
     the question of allowing reimbursement. See e.g., In re Lyons 
     Machinery Co., Inc. 28 B.R. 600 (Bankr. E.D. Ark. 1983); In 
     re Mason's Nursing Center, Inc., 73 B.R. 360 (Bankr. S.D. 
     Fla. 1987) (cases prohibiting reimbursement); In re J.E. 
     Jennings, Inc., 96 B.R. 500 (Bankr. E.D. Pa. 1989); In re 
     Aviation Technical Support, Inc., 72 B.R. 32 (Bankr. W.D. 
     Tex. 1987) (cases permitting reimbursement).
       This section of the bill amends section 503(b) of the 
     Bankruptcy Code to specifically permit members of chapter 11 
     committees to receive court-approved reimbursement of their 
     actual and necessary out-of-pocket expenses. The new 
     provision would not allow the payment of compensation for 
     services rendered by or to the committee members.

                Section 111. Bankruptcy code injunctions

       This section adds a new subsection (g) to section 524 of 
     the Code, establishing a procedure for dealing in a chapter 
     11 reorganization proceeding with future personal injury 
     claims against the debtor based on exposure to asbestos-
     containing products. The procedure involves the establishment 
     of a trust to pay the future claims, coupled with an 
     injunction to prevent future claimants from suing the debtor.
       The procedure is modeled on the trust/injunction in the 
     Johns-Manville case, which pioneered the approach a decade 
     ago in response to the flood of asbestos lawsuits, it was 
     facing. Asbestos-related disease has a long latency period--
     up to 30 years or more--and many of the exposures from the 
     1940's, when asbestos was in widespread use as an insulating 
     material, had become the personal injury lawsuits of the 
     1970's and 1980's. In 1982, when Johns-Manville filed for 
     bankruptcy, it had been named in 12,500 lawsuits, and 
     epidemiologists estimated that 50,000 to 100,000 more could 
     be expected, with a potential liability totalling $2 billion. 
     Kane v. Johns-Manville Corp., 843 F.2d 636, 639 (2d Cir. 
     1988).
       From the beginning, a central element of the case was how 
     to deal with future claimants--those who were not yet before 
     the court, because their disease had not yet manifested 
     itself. The parties in the Manville case devised a creative 
     solution to help protect the future asbestos claimants, in 
     the form of a trust into which would be placed stock of the 
     emerging debtor company and a portion of future profits, 
     along with contributions from Johns-Manville's insurers. 
     Present, as well as future, asbestos personal injury 
     claimants would bring their actions against the trust. In 
     connection with the trust, an injunction would be issued 
     barring new asbestos claims against the emerging debtor 
     company. Asbestos claimants would have a stake in Johns-
     Manville's successful reorganization, because the company's 
     success would increase both the value of the stock held by 
     the trust and the company profits set aside for it.
       The bankruptcy court appointed a special representative for 
     the future claimants; this special representative was 
     centrally involved in formulating the plan and negotiating 
     support for it among the other creditors. The Johns-Manville 
     plan was confirmed and upheld on appeal. Kane v. Johns-
     Manville Corp., 68 B.R. 618 (Bankr. S.D.N.Y. 1986), aff'd in 
     part, rev'd in part, 78 B.R. 407 (S.D.N.Y. 1987), aff'd, 843 
     F.2d 636 (2d Cir. 1988). Nevertheless, lingering uncertainty 
     in the financial community as to whether the injunction can 
     withstand all challenges has apparently made it more 
     difficult for the company to meet its needs for capital and 
     has depressed the value of its stock. This has undermined the 
     ``fresh start'' objectives of bankruptcy and the goals of the 
     trust arrangement.
       Meanwhile, following Johns-Manville's lead, another 
     asbestos manufacturer, UNR, has resolved its chapter 11 
     reorganization with a similar trust/injunction arrangement. 
     And other asbestos manufacturers are reportedly considering 
     the same approach.
       The Committee remains concerned that full consideration be 
     accorded to the interests of future claimants, who, by 
     definition, do not have their own voice. Nevertheless, the 
     Committee also recognizes that the interests of future 
     claimants are ill-served if Johns-Manville and other asbestos 
     companies are forced into liquidation and lose their ability 
     to generate stock value and profits that can be used to 
     satisfy claims. Thus, the tension present in the trust/
     injunction mechanism is not unlike the tension present in 
     bankruptcy generally.
       The Committee has approved section 111 of the bill in order 
     to strengthen the Manville and UNR trust/injunction 
     mechanisms and to offer similar certitude to other asbestos 
     trust/injunction mechanisms that meet the same kind of high 
     standards with respect to regard for the rights of claimants, 
     present and future, as displayed in the two pioneering cases. 
     The Committee believes Johns-Manville and UNR were aided 
     in meeting these high standards, in part at least, by the 
     perceived legal uncertainty surrounding this mechanism, 
     which created strong incentives to take exceptional 
     precautions at every stage of the proceeding. The 
     Committee has concluded, therefore, that creating greater 
     certitude regarding the validity of the trust/injunction 
     mechanism must be accompanied by explicit requirements 
     simulating those met in the Manville case.
       Section 111 requires, in order for present claimants to be 
     bound by a trust/injunction, that the trust have the 
     capability of owning a majority of the shares of the debtor 
     or its parent or of a subsidiary; that the debtor prove that 
     it is likely to be subject to substantial future asbestos 
     claims, the number of which cannot be easily predicted, and 
     that the trust is needed in order to deal equitably with 
     present and future claims; and that a separate creditor class 
     be established for those with present claims, which must vote 
     by a 75 percent margin to approve the plan.
       In order for future claimants to be bound by a trust/
     injunction, section 111 requires that the trust operate in a 
     structure and manner necessary to give reasonable assurance 
     that the trust will value, and be able to pay, similar 
     present and future claims in substantially the same manner.
       The asbestos trust/injunction mechanism established in the 
     bill is available for use by any asbestos company facing a 
     similarly overwhelming liability. It is written, however, so 
     that Johns-Manville and UNR, both of which have met and 
     surpassed the standards imposed in this section, will be able 
     to take advantage of the certainty it provides without having 
     to reopen their cases.
       Section 111 contains a rule of construction to make clear 
     that the special rule being devised for the asbestos claim 
     trust/injunction mechanism is not intended to alter any 
     authority bankruptcy courts may already have to issue 
     injunctions in connection with a plan or reorganization. 
     Indeed, Johns-Manville and UNR firmly believe that the court 
     in their cases had full authority to approve the trust/
     injunction mechanism. And other debtors in other industries 
     are reportedly beginning to experiment with similar 
     mechanisms. The Committee expresses no opinion as to how much 
     authority a bankruptcy court may generally have under its 
     traditional equitable powers to issue an enforceable 
     injunction of this kind. The Committee has decided to provide 
     explicit authority in the asbestos area because of the 
     singular cumulative magnitude of the claims involved. How the 
     new statutory mechanism works in the asbestos area may help 
     the Committee judge whether the concept should be extended 
     into other areas.
     Section 112. Authority of bankruptcy judges to conduct jury 
         trials in civil proceedings
       This section would amend title 28 of the United States Code 
     to clarify that bankruptcy judges may conduct jury trials and 
     enter appropriate orders consistent with those trials if 
     designated by the district court and with the express consent 
     of all parties to the bankruptcy proceeding.
       This amendment world clarify a recent Supreme Court 
     decision and resolve conflicting opinions among the different 
     circuits regarding this issue. The Supreme Court in 
     conflicting opinions among the different circuits regarding 
     this issue. The Supreme Court in Granfinanciera, S.A. v. 
     Nordberg, 492 U.S. 33 (1989), held that in bankruptcy core 
     proceedings, there is a constitutional right to a trial by 
     jury.
       The Granfinanciera court had no finding on whether 
     bankruptcy judges could conduct civil trials, and the 
     circuits have reached contrary opinions regarding this issue. 
     Five circuits have held that, in the absence of enabling 
     legislation, bankruptcy judges could not hold jury trials. 
     See Official Committee of Unsecured Creditors v. Schwartzman 
     (In re Stansbury Poplar Place, Inc.), 13 F.3d 122 (4th Cir. 
     1993); In re Grabill Corp., 987 F.2d 1153, reh'g en hand 
     denied, 976 F.2d 1126 (7th Cir. 1992); Raforth v. National 
     Union Fire Insurance Co. (In re Baker & Getty Financial 
     Services Inc., 954 F.2d 1169 (6th Cir. 1992); Kaiser Steel 
     Corp v. Frates (In re Kaiser Steel Corp., 911 F.2d 380 (10th 
     Cir. 1990); In re United Missouri Bank of Kansas City, N.A., 
     901 F.2d 1449 (8th Cir. 1990). The Second Circuit has been 
     the lone circuit to hold that bankruptcy judges have implicit 
     authority to conduct jury trials. See In re Ben Cooper, Inc., 
     896 F.2d 1394 (2d Cir. 1990).
     Section 113. Sovereign immunity
       This section would effectively overrule two Supreme Court 
     cases that have held that the States and Federal Government 
     are not deemed to have waived their sovereign immunity by 
     virtue of enacting section 106(c) of the Bankruptcy Code. In 
     enacting section 106(c), Congress intended to make provisions 
     of title 11 that encompassed the words ``creditor,'' 
     ``entity,'' or ``governmental unit'' applicable to the 
     States. Congress also intended to make the States subject to 
     a money judgment. But the Supreme Court in Hoffman v. 
     Connecticut Department of Income Maintenance, 492 U.S. 96 
     (1989), held that even if the State did not file a claim, the 
     trustee in bankruptcy may not recover a money judgment from 
     the State notwithstanding section 106(c). This holding had 
     the effect of providing that preferences could not be 
     recovered from the States. In using such a narrow 
     construction, the Court held that use of the ``trigger 
     words'' would only bind the States, and not make them 
     subject to a money judgment. The Court did not find in the 
     text of the statute an ``unmistakenly clear'' intent of 
     Congress to waive sovereign immunity in accordance with 
     the language promulgated in Atascadero State Hospital v. 
     Scanlon, 473 U.S. 234, 242 (1985).
       The Court applied this reasoning in United States v. Nordic 
     Village, Inc., 112 S. Ct. 1011 (1992), in not allowing a 
     trustee to recover a postpetition payment by a chapter 11 
     debtor to the Internal Revenue Service. The Court found that 
     there was no such waiver expressly provided within the text 
     of the statute.
       This amendment expressly provides for a waiver of sovereign 
     immunity by governmental units with respect to monetary 
     recoveries as well as declaratory and injunctive relief. It 
     is the Committee's intent to make section 106 conform to the 
     Congressional intent of the Bankruptcy Reform Act of 1978 
     waiving the sovereign immunity of the States and the Federal 
     Government in this regard. Of course the entire Bankruptcy 
     Code is applicable to governmental units where sovereign 
     immunity is not or cannot be asserted. As suggested by the 
     Supreme Court, section 106(a)(1) specifically lists those 
     sections of title 11 with respect to which sovereign immunity 
     is abrogated. This allows the assertion of bankruptcy causes 
     of action, but specifically excludes causes of action 
     belonging to the debtor that become property of the estate 
     under section 541. The bankruptcy and appellate courts will 
     have jurisdiction to apply the specified sections to any kind 
     of governmental unit as provided in section 106(a)(2). The 
     bankruptcy court may issue any kind of legal or equitable 
     order, process, or judgment against a governmental unit 
     authorized by these sections or the rules, but may not enter 
     an award for punitive damages. Furthermore, in awarding fees 
     or costs under the Bankruptcy Code or under the Bankruptcy 
     Rules, the award is subject to the hourly rate limitations 
     contained in section 2412(d)(2)(a), title 28, United States 
     Code, and these limitations are applicable to all 
     governmental units, not just the Federal Government. Section 
     106(a)(4) permits an order, process, or judgment to be 
     enforced against a governmental unit in accordance with 
     appropriate nonbankruptcy law. Thus, an order against a 
     governmental unit will not be enforceable by attachment or 
     seizure of government assets, but will be subject to 
     collection in the same manner and subject to the same 
     nonbankruptcy law procedures as other judgments that are 
     enforceable against governmental units. Of course, the court 
     retains ample authority to enforce nonmonetary orders and 
     judgments. Nothing in this section is intended to create 
     substantive claims for relief or causes of action not 
     otherwise existing under title 11, the Bankruptcy Rules, or 
     nonbankruptcy law.
       Section 106(b) is clarified by allowing a compulsory 
     counterclaim to be asserted against a governmental unit only 
     where such unit has actually filed a proof of claim in the 
     bankruptcy case. This has the effect of overruling contrary 
     case law, such as Sullivan v. Town & Country Nursing Home 
     Services, Inc., 963 F.2d 1146 (9th Cir. 1992); In re Gribben, 
     158 B.R. 920 (S.D.N.Y. 1993); and In re the Craftsman, Inc., 
     163 B.R. 88 (Bankr. W.D. Tex. 1994), that interpreted section 
     106(a) of current law.

Section 114. Service of process in bankruptcy proceedings on an insured 
                         depository institution

       This section operates to amend bankruptcy rule 7004 to 
     require that service of process to an insured depository 
     institution be accomplished by certified mail in a contested 
     matter or adversary proceeding. The rule that is presently in 
     operation only requires that service be achieved by first 
     class mail.

     Section 115. Meetings of creditors and equity security holders

       This section, applicable only in chapter 7 cases, requires 
     the trustee to orally examine the debtor to ensure that he or 
     she is informed about the effects of bankruptcy, both 
     positive and negative. Its purpose is solely informational; 
     it is not intended to be an interrogation to which the debtor 
     must give any specific answers or which could be used against 
     the debtor in some later proceeding. No separate record need 
     be kept of the examination since it will be preserved along 
     with the remainder of the record of the meeting, which 
     normally is recorded on tape.
       The trustee conducting the meeting of creditors is directed 
     to orally inquire whether the debtor is aware of the 
     consequences of bankruptcy, including protections such as 
     those provided by the discharge and the automatic stay, as 
     well as the fact that the bankruptcy filing will appear on 
     the debtor's credit history. Since different creditors treat 
     bankruptcy debtors differently, the trustee is not expected 
     to predict whether the bankruptcy filing will make it more or 
     less difficult for the debtor to obtain credit; some 
     creditors may treat the debtor more favorably after 
     bankruptcy has removed all other debts, and many creditors 
     consider a bankruptcy filing a barrier to new credit only if 
     it occurred in the 2 or 3 years prior to the credit 
     application. For the same reasons, it is not expected that 
     the trustee would predict whether a dismissal or conversion 
     of the bankruptcy which has already been filed would 
     improve the debtor's chances of obtaining credit.
       The trustee must also verify that the debtor has knowingly 
     signed the section of the bankruptcy petition stating the 
     debtor's awareness of the right to file under other chapters 
     of the Code.
       Finally, the trustee must make sure the debtor is aware of 
     the effect of reaffirming a debt. Since section 103 of the 
     bill eliminates for most debtors the warnings and 
     explanations concerning reaffirmation previously given by the 
     court at the discharge hearing, it is important that trustees 
     explain not only the procedures for reaffirmation, but also 
     the potential risks of reaffirmation and the fact that the 
     debtor may voluntarily choose to repay any debt to a creditor 
     without reaffirming the debt, as provided in Bankruptcy Code 
     section 524(f).
       In view of the amount of information involved and the 
     limits on the time available for meetings of creditors, 
     trustees or courts may provide written information on these 
     topics at or in advance of the meeting and the trustee may 
     then ask questions to ensure that the debtor is aware of the 
     information.

                      Section 116. Tax assessment

       This section expands the tax exception to the automatic 
     stay that is contained in 11 U.S.C. Sec. 362(b)(9). This 
     section will lift the automatic stay as it applies to a tax 
     audit, a demand for tax returns, assessment of an uncontested 
     tax liability, or the making of certain assessments of tax 
     and issuance of a notice and demand for payment for such 
     assessment. The language of this provision is only intended 
     to apply to sales or transfers to the debtor. It has no 
     application to sales or transfers to third parties, such as 
     in sales free and clear of tax liens under section 363(f).

              Section 117. Additional trustee compensation

       This section provides an additional $15 compensation for 
     the services of a trustee in a chapter 7 case in addition to 
     the $45 already provided for in Bankruptcy code section 
     330(n). To obtain the funds to pay the additional fees, the 
     Judicial Conference of the United States is required to 
     prescribe additional fees payable by parties as provided in 
     section 1914(b) of title 29; the Judicial Conference of the 
     United States is also authorized to prescribe fees for 
     notices of appearances filed by parties-in-interest after a 
     bankruptcy case is filed and fees to be charged against 
     distributions to creditors. The latter fees would be 
     deducted, by trustees or other entities making distributions, 
     from the monies payable to creditors, constituting user fees 
     charged to those who participate in bankruptcy cases by 
     receiving distributions. Since the fees are payable by the 
     creditors from funds to be distributed to them, such 
     deductions would not affect the application of the best 
     interests of creditors test or other tests for confirmation 
     in chapters 11, 12 or 13. No higher payment from the debtor 
     would be necessary to meet these tests due to the deduction. 
     It is the Committee's intention that the funds for this 
     increase not be borne by the Federal Treasury or by debtors 
     in chapter 7 or 13 cases.


                 title ii. commercial bankruptcy issues

  Section 201. Aircraft equipment and vessels; rolling stock equipment

       Section 201 would effectuate a number of changes. It would 
     amend both sections 1110 and 1168 to delete the phrase 
     ``purchase-money equipment'' in order to clarify that these 
     sections protect all lease financing agreements and all debt 
     financings that involve a security interest, not only 
     security interests obtained at the time the equipment is 
     acquired. This change would be phased in so that only new 
     equipment first placed in service after enactment of the 
     amendment would be affected. Once this rule is fully phased 
     in, the distinction between leases and loans would no longer 
     be relevant for the purposes of these sections.
       During the time before this rule is phased in, a safe 
     harbor definition of the term ``lease'' for equipment first 
     placed in service prior to the date of enactment would apply. 
     Under the safe harbor, a lease would receive section 1110 or 
     section 1168 protection if the lessor and the debtor, as 
     lessee, have expressed in the lease agreement, or a 
     substantially contemporaneous writing, that such agreement is 
     to be treated as a lease for Federal income tax purposes. 
     This section also clarifies that the rights of a section 1110 
     or section 1168 creditor would not be affected by section 
     1129 ``cram-down.''

  Section 202. Limitation on liability of non-insider transferee for 
                            avoided transfer

       Section 547 of the Bankruptcy Code authorizes trustees to 
     recapture preferential payments made to creditors within 90 
     days prior to a bankruptcy filing. Because of the concern 
     that corporate insiders (such as officers and directors) who 
     are creditors of their own corporation have an unfair 
     advantage over outside creditors, secton 547 of the 
     Bankruptcy Code further authorizes trustees to recapture 
     preferential payments made to such insiders in their 
     capacity as creditors a full year prior to a bankruptcy 
     filing. Several recent court decisions have allowed 
     trustees to recapture payments made to non-insider 
     creditors a full year prior to the bankruptcy filing, if 
     an insider benefits from the transfer in some way. See 
     Levit v. Ingersoll Rand Financial Corp. (In re V.N. 
     DePrizio Construction Co.), 874 F.2d 1186 (7th Cir. 1989); 
     Ray v. City Bank & Trust Co. (In re C&L Cartage Co.), 899 
     F.2d 1490 (6th Cir. 1990); Manufacturers Hanover Leasing 
     Corp. v. Lowrey (In re Robinson Brothers Drilling), 892 
     F.2d 850 (10th Cir. 1989). Although the creditor is not an 
     insider in these cases, the courts have reasoned that 
     because the repayment benefitted a corporate insider 
     (namely the officer who signed the guarantee) the non-
     insider transferee should be liable for returning the 
     transfer to the bankrupt estate as if it were an insider 
     as well. This section overrules the DePrizio line of cases 
     and clarifies that non-insider transferees should not be 
     subject to the preference provisions of the Bankruptcy 
     Code beyond the 90-day statutory period.

      Section 203. Perfection of purchase-money security interest

       Section 547(c)(3) of the Bankruptcy Code provides that a 
     trustee may not avoid the perfection of purchase-money 
     security interest as a preference if it occurs within 10 days 
     of the debtor receiving possession of the property. This 
     section conforms bankruptcy law practices to most States' 
     practice by granting purchase-money security lenders a 20-day 
     period in which to perfect their security interest.

                   Section 204. Continued perfection

       This section sets forth an amendment to sections 362 and 
     546 of the Bankruptcy Code to confirm that certain actions 
     taken during bankruptcy proceedings pursuant to the Uniform 
     Commercial Code to maintain a secured creditor's position as 
     it was at the commencement of the case do not violate the 
     automatic stay. Such actions could include the filing of a 
     continuation statement and the filing of a financing 
     statement. The steps taken by a secured creditor to ensure 
     continued perfection merely maintain the status quo and do 
     not improve the position of the secured creditor.

            Section 205. Impact of lease rejection on leases

       This section clarifies section 365 of the Bankruptcy Code 
     to mandate that lessees cannot have their rights stripped 
     away if a debtor rejects its obligations as a lessor in 
     bankruptcy. This section expressly provides guidance in the 
     interpretation of the term ``possession'' in the context of 
     the statute. The term has been interpreted by some courts in 
     recent cases to be only a right of possession. See In re 
     Carlton Restaurant, Inc., 151 B.R. 353 (Bankr. E.D. Pa. 1993) 
     (preventing a tenant from assigning the lease); Home Express, 
     Inc. v. Arden Associates, Ltd. (In re Arden and Howe 
     Associates, Ltd.), 152 B.R. 971 (Bankr. E.D. Cal. 1993) 
     (preventing a tenant from enforcing restrictive covenants in 
     the least); In re Harborview Development 1986 Limited 
     Partnership, 152 B.R. 897 (D.S.C. 1993) (holding that 
     ``possession'' contemplated by the Code was physical 
     possession of the premises denying a holder of a ground lease 
     protection under the Code). This section will enable the 
     lessee to retain its rights that are appurtenant to its 
     leasehold. These rights include the amount and timing of 
     payment of rent or other amounts payable by the lessee, the 
     right to use, possess, quiet enjoyment, sublet, or assign.

                     Section 206. Contents of plan

       This amendment conforms the treatment of residential 
     mortgages in chapter 11 to that in chapter 13, preventing the 
     modification of the rights of a holder of a claim secured 
     only by a security interest in the debtor's principal 
     residence. Since it is intended to apply only to home 
     mortgages, it applies only when the debtor is an individual. 
     It does not apply to a commercial property, or to any 
     transaction in which the creditor acquired a lien on property 
     other than real property used as the debtor's residence. See 
     In re Hammond, 276 F.3d 52 (3d Cir. 1994); In re Rameriz, 62 
     B.R. 668 (Bankr.S.D.Cal. 1986).

      Section 207. Priority for independent sales representatives

       This section clarifies that independent sales 
     representatives of a bankrupt debtor are entitled to the same 
     priority as the employees of the debtor codifying In re Wang 
     Laboratories, Inc., 164 B.R. 404 (Bankr. Mass. 1994). This 
     section modifies section 507 of title 11 to include such 
     representatives in the section's third priority as employees 
     for the purposes of claims of a bankrupt debtor. The section 
     specifies that in order to be treated as an employee for the 
     purposes of priority, at least 75 percent of the income of 
     the independent sales representative must have been earned as 
     an independent contracting entity from the bankrupt debtor.

                    Section 208. Production payments

       A production payment is an interest in the product of an 
     oil or gas producer that lasts for a limited period of time 
     and that is not affected by production costs. The owner has 
     no other interest in the property or business of the producer 
     other than the interest in the product that is produced. 
     These payments, often transferred by way of oil and gas 
     leases, represent a means by which capital-strapped oil 
     producers may generate income from their property without 
     giving up operating control of their business. Although a 
     number of states use the ownership theory by treating 
     production payments as conveying interests in real property 
     (See In re Simasko Production Co., 74 B.R. 947 (D. Colo. 
     1987) (production payment treated as separate properly 
     interest)), it is not clear that this treatment will 
     necessarily apply in all States in case of bankruptcy. As a 
     result, this section modifies section 541 of the Bankruptcy 
     Code to exclude production payments sold by the debtor prior 
     to a bankruptcy filing from the debtor's estate in 
     bankruptcy.

             Section 209. Seller's rights to reclaim goods

       Section 209 addresses the concerns of trade creditors who 
     claim they often have insufficient notice to exercise their 
     reclamation rights. Section 209 amends section 546(c)(1) of 
     the Bankruptcy Code to give trade creditors up to 10 extra 
     days to utilize reclamation rights after the commencement of 
     a bankruptcy case.

             Section 210. Investment of money of the estate

       Section 345 of the Code governs investments of the funds of 
     bankrupt estates. The purpose is to make sure that the funds 
     of a bankrupt that are obligated to creditors are invested 
     prudently and safely with the eventual goal of being able to 
     satisfy all claims against the bankrupt estate. Under current 
     law, all investments are required to be FDIC insured, 
     collateralized or bonded. While this requirement is wise in 
     the case of a smaller debtor with limited funds that cannot 
     afford a risky investment to be lost, it can work to 
     needlessly handcuff larger, more sophisticated debtors. This 
     section would amend the Code to allow the courts to approve 
     investments other than those permitted by section 345(b) for 
     just cause, thereby overruling In re Columbia Gas Systems, 
     Inc., 1994 WL 463514 (3rd Cir. (Del).

     Section 211. Selection of private trustees in chapter 11 cases

       This section will conform selection of private trustees in 
     chapter 11 cases to the selection process in chapter 7 cases, 
     thereby allowing creditors in a chapter 11 case to elect 
     their own trustee under section 1104 of chapter 11.

              Section 212. Limited liability partnerships

       Section 723 of the Bankruptcy Code addresses the personal 
     liability of general partners for the debts of the 
     partnership. Section 723 grants the trustee a claim against 
     ``any general partner'' for the full partnership deficiency 
     owing to creditors to the extent the partner would be 
     personally liable for claims against the partnership. It is 
     unclear how this provision would be construed to apply with 
     regard to registered limited liability partnerships which 
     have been authorized by a number of States since the advent 
     of the 1978 Bankruptcy Code. This section clarifies that a 
     partner of a registered limited liability partnership would 
     only be liable in bankruptcy to the extent a partner would be 
     personally liable for a deficiency according to the 
     registered limited liability statute under which the 
     partnership was formed.

            Section 213. Impairment of Claims and Interests

       The principal change in this section is set forth in 
     subsection (d) and relates to the award of postpetition 
     interest. In a recent Bankruptcy Court decision in In re New 
     Valley Corp., 168 B.R. 73 (Bankr. D.N.J. 1994), unsecured 
     creditors were denied the right to receive postpetition 
     interest on their allowed claims even though the debtor was 
     liquidation and reorganization solvent. The New Valley 
     decision applied section 1124(3) of the Bankruptcy Code 
     literally by asserting, in a decision granting a declaratory 
     judgment, that a class that is paid the allowed amount of its 
     claims in cash on the effective date of a plan is unimpaired 
     under section 1124(3), therefore is not entitled to vote, and 
     is not entitled to receive postpetition interest. The Court 
     left open whether the good faith plan proposal requirement of 
     section 1129(a)(3) would require the payment of or provision 
     for postpetition interest. In order to preclude this unfair 
     result in the future, the Committee finds it appropriate to 
     delete section 1124(3) from the Bankruptcy Code.
       As a result of this change, if a plan proposed to pay a 
     class of claims in cash in the full allowed amount of the 
     claims, the class would be impaired entitling creditors to 
     vote for or against the plan of reorganization. If creditors 
     vote for the plan of reorganization, it can be confirmed over 
     the vote of a dissenting class of creditors only if it 
     complies with the ``fair and equitable'' test under 
     section 1129(b)(2) of the Bankruptcy code and it can be 
     confirmed over the vote of dissenting individual creditors 
     only if it complies with the ``best interests of 
     creditors'' test under section 1129(a)(7) of the 
     Bankruptcy Code.
       The words ``fair and equitable'' are terms of art that have 
     a well established meaning under the case law of the 
     Bankruptcy Act as well as under the Bankruptcy Code. 
     Specifically, courts have held that where an estate is 
     solvent, in order for a plan to be fair and equitable, 
     unsecured and undersecured creditors' claims must be paid in 
     full, including postpetition interest, before equity holders 
     may participate in any recovery. See, e.g., Consolidated Rock 
     Products Co. v. Dubois, 312 U.S. 510, 527, 61 S.Ct. 675, 685 
     (1941); Dentureholders Protective Committee of Continental 
     Inv. Corp., 679 F.2d 264 (1st Cir.), cert. denied, 459 U.S. 
     894 (1982) and cases cited therein.
       With respect to section 1124(1) and (2), subsection (d) 
     would not change the beneficial 1984 amendment to section 
     1129(a)(7) of the Bankruptcy code, which excluded from 
     application of the best interests of creditors test classes 
     that are unimpaired under section 1124.
       The other subsections deal with the issue of late-filed 
     claims. The amendment to section 502(b) is designed to 
     overrule In re Hausladen, 146 B.R. 557 (Bankr. D. Minn. 
     1992), and its progeny by disallowing claims that are not 
     timely filed. The amendment also specifies rules relating to 
     the filing of certain governmental claims. These changes are 
     not intended to detract from the ability of the court to 
     extend the bar date for claims when authorized to do so under 
     the Federal Rules of Bankruptcy Procedure. The amendments to 
     section 726(a) of the Code, governing the distribution of 
     property of the estate in a chapter 7 liquidation, conform to 
     the amendments to section 1129(b) and 502(b). The amendments 
     to paragraphs (2) and (3) of section 726(a) assure that the 
     disallowance of late-filed claims under new section 502(b)(4) 
     does not affect their treatment under section 726(a).

   Section 214. Protection of security interest in postpetition rents

       Under current section 552 of the Bankruptcy Code, real 
     estate lenders are deemed to have a security interest in 
     postpetition rents only to the extent their security interest 
     has been ``perfected'' under applicable State law procedures, 
     Butner v. United States, 440 U.S. 48 (1979). Inclusion under 
     section 552, in turn, allows such proceeds to be treated as 
     ``cash collateral'' under section 363(a) of the Bankruptcy 
     Code, which prohibits a trustee or debtor-in-possession from 
     using such proceeds without the consent of the lender or 
     authorization by the court. In a number of States, however, 
     it is not feasible for real estate lenders to perfect their 
     security interest prior to a bankruptcy filing; and, as a 
     result, courts have denied lenders having interests in 
     postpetition rents the protection offered under sections 552 
     and 363 of the Bankruptcy Code. See, e.g., In re Multi-Group 
     III Ltd. Partnership, 99 B.R. 5 (Bankr. D. Ariz. 1989); In re 
     Association Center Ltd. Partnership, 87 B.R. 142 (Bankr. W.D. 
     Wash. 1988); In re TM Carlton House Partners, Ltd., 91 B.R. 
     349 (Bankr. E.D. Pa. 1988); In re Metro Square, 93 B.R. 990 
     (Bankr. D. Minn. 1988). Section 214 provides that lenders may 
     have valid security interests in postpetition rents for 
     bankruptcy purposes notwithstanding their failure to have 
     fully perfected their security interest under applicable 
     State law. This is accomplished by adding a new provision to 
     section 552 of the Bankruptcy Code, applicable to lenders 
     having a valid security interest which extends to the 
     underlying property and the postpetition rents.
       Section 214 also clarifies the bankruptcy treatment of 
     hotel revenues which have been used to secure loans to hotels 
     and other lodging accommodations. These revenue streams, 
     while critical to a hotel's continued operations, are also 
     the most liquid and most valuable collateral the hotel can 
     provide to its financiers. When the hotel experiences 
     financial distress, the interests of the hotel operations, 
     including employment for clerks, maids, and other workers can 
     collide with the interests of persons to whom the revenues 
     are pledged. Section 214 recognizes the importance of this 
     revenue stream for the two competing interests and attempts 
     to strike a fair balance between them. Thus, subsection (a) 
     expressly includes hotel revenues in the category of 
     collateral in which postpetition revenues are subject to 
     prepetition security interests, and subsection (b) includes 
     such revenues in ``cash collateral'' as defined in section 
     363.
       These clarifications of the rights of hotel financiers are, 
     however, circumscribed. A critical limit is the ``equities of 
     the case'' provision in subsection (a) which is designed, 
     among other things, to prevent windfalls for secured 
     creditors and to give the courts broad discretion to balance 
     the protection of secured creditors, on the one hand, against 
     the strong public policies favoring continuation of jobs, 
     preservation of going concern values and rehabilitation of 
     distressed debtors, generally. Further circumscription is 
     supplied by the list of exceptions at the beginning of 
     subsection (a). Thus, among other things, the reference to 
     section 363 permits use of pledged revenues if adequate 
     protection is provided; the reference to section 506(c) 
     permits broad categories of operating expenses--such as the 
     cost of cleaning and repair services, utilities, employee 
     payroll and the like--to be charged against pledged 
     revenues; the reference to section 522 protects individual 
     debtors' rights; and the reference to sections 544, 545, 
     547 and 548 protect the debtor's right to use all its 
     avoiding powers against the lienholder. These rights, 
     preserved by the list of sections, would not be waivable 
     by the debtor, either pre- or postpetition.

                Section 215. Netting of swap agreements

       Parties active in the foreign exchange market generally 
     document spot and forward foreign exchange transactions under 
     a netting agreement. The Bankruptcy Code's definition of 
     ``swap agreement'' refers only to foreign exchange contracts, 
     but is silent as to whether spot transactions fall within the 
     definition. This section confirms the market understanding 
     that spot foreign exchange contracts are included in the term 
     ``swap agreement.'' It is expected that contracts that mature 
     in a period of time equalling 2 days or less will fall under 
     the umbrella of ``swap agreements.''

               Section 216. Limitation of avoiding powers

       This section clarifies section 546(a)(1) of the Bankruptcy 
     Code which imposes a 2-year statute of limitations within 
     which an appointed trustee must bring an avoidance action. 
     The purpose of a statute of limitations is to define the 
     period of time that a party is at risk of suit. This section 
     defines the applicable statute of limitations as 2 years from 
     the entry of an order of relief or 1 year after the 
     appointment of the first trustee if such appointment occurs 
     before the expiration of the original 2-year period. The 
     section is not intended to affect the validity of any tolling 
     agreement or to have any bearing on the equitable tolling 
     doctrine where there has been fraud determined to have 
     occurred. The time limits are not intended to be 
     jurisdictional and can be extended by stipulation between the 
     necessary parties to the action or proceeding.

                      Section 217. Small business

       This section amends title 11 to expedite the process by 
     which small businesses may reorganize under chapter 11. For 
     the purposes of this section, a small business is defined as 
     one whose aggregate noncontingent liquidated secured and 
     unsecured debts are less than $2,000,000 as of the date of 
     the bankruptcy filing. A qualified small business debtor who 
     elects coverage under this provision would be permitted to 
     dispense with creditor committees; would have an exclusivity 
     period for filing a plan of 100 days; and would be subject to 
     more liberal provisions for disclosure and solicitation of 
     acceptances for a proposed reorganization plan under Code 
     section 1125. This section permits an extension with respect 
     to the debtor's original filing time if the debtor shows 
     there were circumstances beyond its control.

                 Section 218. Single asset real estate

       This section will add a new definition to the Code for 
     ``single asset real estate,'' meaning real property that 
     constitutes a single property or project (other than 
     residential property with fewer than four units) which 
     generates substantially all of the gross income of the debtor 
     and has aggregate noncontingent, liquidated secured debts in 
     an amount up to $4 million. It amends the automatic stay 
     provision of section 362 to provide special circumstances 
     under which creditors of a single asset real estate debtor 
     may have the stay lifted if the debtor has not filed a 
     ``feasible'' reorganization plan within 90 days of filing, or 
     has not commenced monthly payments to secured creditors.

                Section 219. Leases of personal property

       Under current law, when a debtor files for bankruptcy, it 
     has an unspecified period of time to determine whether to 
     assume or reject a lease of personal property. Pending a 
     decision to assume or reject, lessors are permitted to 
     petition the court to require the lessee to make lease 
     payments to the extent use of the property actually benefits 
     the estate. Section 219 responds to concerns that this 
     procedure may be unduly burdensome on lessors of personal 
     property, while safeguarding the debtors ability to make 
     orderly decisions regarding assumption or rejection. The 
     section amends section 365(d) to specify that 60 days after 
     the order for relief the debtor must perform all obligations 
     under an equipment lease, unless the court, after notice and 
     a hearing and based on the equities of the case, orders 
     otherwise. This will shift to the debtor the burden of 
     bringing a motion while allowing the debtor sufficient 
     breathing room after the bankruptcy petition to make an 
     informed decision. Section 363(e) is also amended to clarify 
     that the lessor's interest is subject to ``adequate 
     protection.'' Such remedy is to the exclusion of the lessor's 
     being able to seek to lift the automatic stay under section 
     363. Finally, section 365(b) is clarified to provide that 
     when sought by a debtor, a lease can be cured at a nondefault 
     rate (i.e., it would not need to pay penalty rates).

     Section 220. Exemption for small business investment companies

       This section specifies that small business investment 
     companies are ineligible to file for bankruptcy protection. 
     This will prevent such filings from being utilized to 
     subordinate the interests of the Small Business 
     Administration to other creditors.

           Section 221. Payment of taxes with borrowed funds

       This section makes loans that are used to pay Federal taxes 
     nondischargeable under section 523. This will facilitate 
     individuals' ability to use their credit cards to pay their 
     Federal taxes.

                      Section 222. Return of goods

       This section clarifies section 546 of the Bankruptcy Code 
     by adding a subsection (b) permitting a bankruptcy court to 
     hold a hearing and allow a buyer to return to the seller 
     goods shipped before the commencement of the case if it is in 
     the best interests of the estate. This will allow debtors to 
     return unsold goods in order to offset their debts. The 
     notion may only be made by the trustee and must be made 
     within 120 days after the order for relief.

            Section 223. Proceeds of money order agreements

       This section excludes from the debtor's estate proceeds 
     from money orders sold within 14 days of the filing of the 
     bankruptcy pursuant to an agreement prohibiting the 
     commingling of such sale proceeds with property of the 
     debtor. To benefit from this section, the money order issuer 
     must have acted, prior to the petition, to require compliance 
     with the commingling prohibition.

             Section 224. Trustee duties; professional fees

       Subsection (a) requires the United States Trustee to invoke 
     procedural guidelines regarding fees in bankruptcy cases and 
     file comments with fee applications. The section also 
     clarifies the standards for court award of professional fees 
     in bankruptcy cases. These changes should help foster greater 
     uniformity in the application for and processing and approval 
     of fee applications.

                    Section 225. Notice of creditors

       This section amends section 342 of the Bankruptcy Code to 
     require that notices to creditors set forth the debtor's 
     name, address, and taxpayer identification (or social 
     security) number. The failure of a notice to contain such 
     information will not invalidate its legal effect, for 
     example, such failure could not result in a debtor failing to 
     obtain a discharge with respect to a particular creditor.
       The Committee anticipates that the Official Bankruptcy 
     Forms will be amended to provide that the information 
     required by this section will become a part of the caption on 
     every notice given in a bankruptcy case. As with other 
     similar requirements, the court retains the authority to 
     waive this requirement in compelling circumstances, such as 
     those of a domestic violence victim who must conceal her 
     residence for her own safety.


                 title iii. consumer bankruptcy issues

 Section 301. Period for curing default relating to principal residence

       Section 1322(b)(3) and (5) of the Bankruptcy Code permit a 
     debtor to cure defaults in connection with a chapter 13 plan, 
     including defaults on a home mortgage loan. Until the Third 
     Circuit's decision in Matter of Roach, 824 F.2d 1370 (3d Cir. 
     1987), all of the Federal Circuit Courts of Appeal had held 
     that such right continues at least up until the time of the 
     foreclosure sale. See In re Glenn, 760 F.2d 1428 (6th Cir. 
     1985), cert, denied, 474 U.S. 849 (1985); Matter of Clark, 
     738 F.2d 869 (7th Cir. 1984), cert, denied, 474 U.S. 849 
     (1985). The Roach case, however, held that the debtor's right 
     to cure was extinguished at the time of the foreclosure 
     judgment, which occurs in advance of the foreclosure sale. 
     This decision is in conflict with the fundamental bankruptcy 
     principle allowing the debtor a fresh start through 
     bankruptcy.
       This section of the bill safeguards a debtor's rights in a 
     chapter 13 case by allowing the debtor to cure home mortgage 
     defaults at least through completion of a foreclosure sale 
     under applicable nonbankruptcy law. However, if the State 
     provides the debtor more extensive ``cure'' rights (through, 
     for example, some later redemption period), the debtor would 
     continue to enjoy such rights in bankruptcy. The changes made 
     by this section, in conjunction with those made in section 
     305 of this bill, would also overrule the result in First 
     National Fidelity Corp. v. Perry, 945 F.2d 61 (3d Cir. 1991) 
     with respect to mortgages on which the last payment on the 
     original payment schedule is due before the date on which the 
     final payment under the plan is due. In that case, the Third 
     Circuit held that subsequent to foreclosure judgment, a 
     chapter 13 debtor cannot provide for a mortgage debt by 
     paying the full amount of the allowed secured claim in 
     accordance with Bankruptcy Code section 1325(a)(5), because 
     doing so would constitute an impermissible modification of 
     the mortgage holder's right to immediate payment under 
     section 1322(b)(2) of the Bankruptcy Code.

       Section 302. Nondischargeability of fine under chapter 13

       This section adds criminal fines to the list of obligations 
     which may not be discharged pursuant to a chapter 13 case.

                 Section 303. Impairment of exemptions

       Because the Bankruptcy Code does not currently define the 
     meaning of the words ``impair an exemption'' in section 
     522(f), several court decisions have, in recent years, 
     reached results that were not intended by Congress when it 
     drafted the Code. This amendment would provide a simple 
     arithmetic test to determine whether a lien impairs an 
     exemption, based upon a decision, In re Brantz, 106 B.R. 62 
     (Bankr.E.D.Pa. 1989), that was favorably cited by the Supreme 
     Court in Owen v. Owen, 111 S.Ct. 1833, 1838, n.5.
       The decisions that would be overruled involve several 
     scenarios. The first is where the debtor has no equity in a 
     property over and above a lien senior to the judicial lien 
     the debtor is attempting to avoid, as in the case, for 
     example, of a debtor with a home worth $40,000 and a $40,000 
     mortgage. Most courts and commentators had understood that in 
     that situation the debtor is entitled to exempt his or her 
     residual interests, such as a possessory interest in the 
     property, and avoid a judicial lien or other lien of a type 
     subject to avoidance, in any amount, that attaches to that 
     interest. Otherwise, the creditor would retain the lien after 
     bankruptcy and could threaten to deprive the debtor of the 
     exemption Congress meant to protect, by executing on the 
     lien. Unfortunately, a minority of court decisions, such as 
     In re Gonzales, 149 B.R. 9 (Bankr.D.Mass. 1993), have 
     interpreted section 522(f) as not permitting avoidance of 
     liens in this situation. The formula in the section would 
     make clear that the liens are avoidable.
       The second situation is where the judicial lien the debtor 
     seeks to avoid is partially secured. Again, in an example 
     where the debtor has a $10,000 homestead exemption, a $50,000 
     house and a $40,000 first mortgage, most commentators and 
     courts would have said that a judicial lien of $20,000 could 
     be avoided in its entirety. Otherwise, the creditor would 
     retain all or part of the lien and be able to threaten 
     postbankruptcy execution against the debtor's interest which, 
     at the time of the bankruptcy is totally exempt. However, a 
     few courts, including the Ninth Circuit in In re Chabot, 992 
     F.2d 891 (9th Cir. 1992), held that the debtor could only 
     avoid $10,000 of the judicial lien in this situation, leaving 
     the creditor after bankruptcy with a $10,000 lien attached to 
     the debtor's exempt interest in property. This in turn will 
     result, at a minimum, in any equity created by mortgage 
     payments from the debtor's postpetition income--income which 
     the fresh start is supposed to protect--going to the benefit 
     of the lienholder. It may also prevent the debtor from 
     selling his or her home after bankruptcy without paying the 
     lienholder, even if that payment must come from the debtor's 
     $10,000 exempt interest. The formula in the section would not 
     permit this result.
       The third situation is in the Sixth Circuit, where the 
     Court of Appeals, in In re Dixon, 885 F.2d 327 (6th Cir. 
     1989), has ruled that the Ohio homestead exemption only 
     applies in execution sale situations. Thus, the court ruled 
     that the debtor's exemption was never impaired in a 
     bankruptcy and could never be avoided, totally eliminating 
     the right to avoid liens. This leaves the debtor in the 
     situation where, if he or she wishes to sell the house after 
     bankruptcy, that can be done only by paying the lienholder 
     out of equity that should have been protected as exempt 
     property. By focusing on the dollar amount of the exemption 
     and defining ``impaired,'' the amendment should correct this 
     problem. By defining ``impairment,'' the amendment also 
     clarifies that a judicial lien on a property can impair an 
     exemption even if the lien cannot be enforced through an 
     execution sale, thereby supporting the result in In re 
     Henderson, 18 F.3d 1305 (5th Cir. 1994), which permitted a 
     debtor to avoid a lien that impaired the homestead exemption 
     even though the lien could not be enforced through a judicial 
     sale.
       The amendment also overrules In re Simonson, 758 F.2d 103 
     (3d Cir. 1985), in which the Third Circuit Court of Appeals 
     held that a judicial lien could not be avoided in a case in 
     which it was senior to a nonavoidable mortgage and the 
     mortgages on the property exceeded the value of the property. 
     The position of the dissent in that case is adopted.

          Section 304. Protection of child support and alimony

       This section is intended to provide greater protection for 
     alimony, maintenance, and support obligations owing to a 
     spouse, former spouse or child of a debtor in bankruptcy. The 
     Committee believes that a debtor should not use the 
     protection of a bankruptcy filing in order to avoid 
     legitimate marital and child support obligations.
       The section modifies several provisions of the Bankruptcy 
     Code. Subsection (b) specifies that the automatic stay does 
     not apply to a proceeding that seeks only the establishment 
     of paternity or the establishment or modification of an order 
     for alimony, maintenance, and support. Subsection (c) 
     provides a new bankruptcy priority relating to debts for 
     alimony, maintenance or support obligations. Subsection (d) 
     provides that section 522(f)(1) of the Bankruptcy Code may 
     not be used to avoid judicial liens securing alimony, 
     maintenance, or support obligations. (This subsection is 
     intended to supplement the reach of Farrey v. Sanderfoot, 111 
     S.Ct. 1825, 114 L.Ed.2d 337 (1991), which held that a former 
     husband could not avoid a judicial lien on a house previously 
     owned with his wife.)
       Subsection (e) adds a new exception to discharge for some 
     debts arising out of a divorce decree or separation agreement 
     that are not in the nature of alimony, maintenance or 
     support. In some instances, divorcing spouses have agreed to 
     make payments of marital debts, holding the other spouse 
     harmless from those debts, in exchange for a reduction in 
     alimony payments. In other cases, spouses have agreed to 
     lower alimony based on a larger property settlement. If such 
     ``hold harmless'' and property settlement obligations are not 
     found to be in the nature of alimony, maintenance, or 
     support, they are dischargeable under current law. The 
     nondebtor spouse may be saddled with substantial debt and 
     little or no alimony or support. This subsection will make 
     such obligations nondischargeable in cases where the 
     debtor has the ability to pay them and the detriment to 
     the nondebtor spouse from their nonpayment outweighs the 
     benefit to the debtor of discharging such debts. In other 
     words, the debt will remain dischargeable if paying the 
     debt would reduce the debtor's income below that necessary 
     for the support of the debtor and the debtor's dependents. 
     The Committee believes that payment of support needs must 
     take precedence over property settlement debts. The debt 
     will also be discharged if the benefit to the debtor of 
     discharging it outweighs the harm to the obligee. For 
     example, if a nondebtor spouse would suffer little 
     detriment from the debtor's nonpayment of an obligation 
     required to be paid under a hold harmless agreement 
     (perhaps because it could not be collected from the 
     nondebtor spouse or because the nondebtor spouse could 
     easily pay it) the obligation would be discharged. The 
     benefits of the debtor's discharge should be sacrificed 
     only if there would be substantial detriment to the 
     nondebtor spouse that outweighs the debtor's need for a 
     fresh start.
       The new exception to discharge, like the exceptions under 
     Bankruptcy Code section 523(a) (2), (4), and (6) must be 
     raised in an adversary proceeding during the bankruptcy case 
     within the time permitted by the Federal Rules of Bankruptcy 
     Procedure. Otherwise the debt in question is discharged. The 
     exception applies only to debts incurred in a divorce or 
     separation that are owed to a spouse or former spouse, and 
     can be asserted only by the other party to the divorce or 
     separation. If the debtor agrees to pay marital debts that 
     were owed to third parties, those third parties do not have 
     standing to assert this exception, since the obligations to 
     them were incurred prior to the divorce or separation 
     agreement. It is only the obligation owed to the spouse or 
     former spouse--an obligation to hold the spouse or former 
     spouse harmless--which is within the scope of this section. 
     See In re MacDonald, 69 B.R. 259, 278 (Bankr.D.N.J. 1986).
       Subsection (f) specifies that bona fide alimony, 
     maintenance or support payments are not subject to avoidance 
     under section 547 of the Bankruptcy Code. Subsection (g) 
     provides that child support creditors or their 
     representatives are permitted to appear at bankruptcy court 
     proceedings.

                   Section 305. Interest on interest

       This section will have the effect of overruling the 
     decision of the Supreme Court in Rake v. Wade, 113 S.Ct. 2187 
     (1993). In that case, the Court held that the Bankruptcy Code 
     required that interest be paid on mortgage arrearages paid by 
     debtors curing defaults on their mortgages. Notwithstanding 
     State law, this case has had the effect of providing a 
     windfall to secured creditors at the expense of unsecured 
     creditors by forcing debtors to pay the bulk of their income 
     to satisfy the secured creditors' claims. This had the effect 
     of giving secured creditors interest on interest payments, 
     and interest on the late charges and other fees, even where 
     applicable law prohibits such interest and even when it was 
     something that was not contemplated by either party in the 
     original transaction. This provision will be applicable 
     prospectively only, i.e., it will be applicable to all future 
     contracts, including transactions that refinance existing 
     contracts. It will limit the secured creditor to the benefit 
     of the initial bargain with no court contrived windfall. It 
     is the Committee's intention that a cure pursuant to a plan 
     should operate to put the debtor in the same position as if 
     the default had never occurred.

                  Section 306. Exception to discharge

       This section extends from 40 to 60 days the period in which 
     a consumer debt to acquire ``luxury goods or services'' may 
     be presumed nondischargeable in a proceeding under section 
     523(a)(2) of the Bankruptcy Code. The section also increases 
     from 20 to 60 days the period in which cash advances under an 
     open end credit plan may be presumed nondischargeable in such 
     a proceeding. In addition, the dollar amount necessary to 
     trigger such a presumption in the case of luxury goods is 
     increased from $500 to $1,000.

                 Section 307. Payments under chapter 13

       Currently, the practice of making payouts under a chapter 
     13 plan varies from one court to another. This section 
     clarifies Congressional intent that the trustee should 
     commence making the payments ``as soon as practicable'' after 
     the confirmation of the chapter 13 plan. Such payments should 
     be made even prior to the bar date for filing claims, but 
     only if the trustee can provide adequate protection against 
     any prejudice to later filing claimants caused by 
     distributions prior to the bar date.

               Section 308. Bankruptcy petition preparers

       This section adds a new section to chapter 1 of title 11 
     United States Code to create standards and penalties 
     pertaining to bankruptcy petition preparers. Bankruptcy 
     petition preparers not employed or supervised by any attorney 
     have proliferated across the country. While it is permissible 
     for a petition preparer to provide services solely limited to 
     typing, far too many of them also attempt to provide legal 
     advice and legal services to debtors. These preparers often 
     lack the necessary legal training and ethics regulation to 
     provide such services in an adequate and appropriate manner. 
     These services may take unfair advantage of persons who are 
     ignorant of their rights both inside and outside the 
     bankruptcy system. This section requires all bankruptcy 
     preparation services to provide their relevant personal 
     identifying information on the bankruptcy filing. It 
     requires copies of all bankruptcy documents to be given to 
     the debtor and signed by the debtor. The section also 
     provides that if the petition is dismissed as the result 
     of fraud or incompetence on the preparer's account, or if 
     the preparer commits an inappropriate or deceptive act, 
     the debtor is entitled to receive actual damages, plus 
     statutory damages of $2,000 or twice the amount paid to 
     the preparer, whichever is greater, plus reasonable 
     attorney's fees and costs of seeking such relief. The 
     bankruptcy preparer is also subject to injunctive action 
     preventing the preparer from further work in the 
     bankruptcy preparation business.

      Section 309. Fairness to condominium and cooperative owners

       This section amends section 523(a) of the Bankruptcy Code 
     to except from discharge those fees that become due to 
     condominiums, cooperatives, or similar membership 
     associations after the filing of a petition, but only to the 
     extent that the fee is payable for time during which the 
     debtor either lived in or received rent for the condominium 
     or cooperative unit. Except to the extent that the debt is 
     nondischargeable under this section, obligations to pay such 
     fees would be dischargeable. See Matter of Rosteck, 899 F.2d 
     694 (7th Cir. 1990).

    Section 310. Nonavoidability of security interests on tools and 
                implements of trade, animals, and crops

       This section adds a limited exception to the debtor's 
     ability to avoid nonpossessory nonpurchase-money security 
     interests in implements, professional books, or tools of 
     trade of the debtor or a dependent of the debtor, or farm 
     animals or crops of the debtor or a dependent of the debtor. 
     It applies only in cases in which the debtor has voluntarily 
     chosen the State exemptions rather than the Federal 
     bankruptcy exemptions or has been required to utilize State 
     exemptions because a State has opted out of the Federal 
     exemptions. In such case, if the State allows unlimited 
     exemption of property or prohibits avoidance of a consensual 
     lien on property that could otherwise be claimed as exempt, 
     the debtor may not avoid a security interest on the types of 
     property specified above under Bankruptcy Code section 
     522(f)(2) to the extent the value of such property is in 
     excess of $5,000. This section has no applicability if the 
     debtor chooses the Federal bankruptcy exemptions, which 
     cannot be waived. Like other exemption provisions, the new 
     provision applies separately to each debtor in a joint case.

            Section 311. Conversion of case under chapter 13

       This amendment would clarify the Code to resolve a split in 
     the case of law about what property is in the bankruptcy 
     estate when a debtor converts from chapter 13 to chapter 7. 
     The problem arises because in chapter 13 (and chapter 12), 
     any property acquired after the petition becomes property of 
     the estate, at least until confirmation of a plan. Some 
     courts have held that if the case is converted, all of this 
     after-acquired property becomes part of the estate in the 
     converted chapter 7 case, even though the statutory 
     provisions making it property of the estate does not apply to 
     chapter 7. Other courts have held that the property of the 
     estate in a converted case is the property the debtor had 
     when the original chapter 13 petition was filed.
       These latter courts have noted that to hold otherwise would 
     create a serious disincentive to chapter 13 filings. For 
     example, a debtor who had $10,000 equity in a home at the 
     beginning of the case, in a State with a $10,000 homestead 
     exemption, would have to be counseled concerning the risk 
     that after he or she paid off a $10,000 second mortgage in 
     the chapter 13 case, creating $10,000 in equity, there would 
     be a risk that the home could be lost if the case were 
     converted to chapter 7 (which can occur involuntarily). If 
     all of the debtor's property at the time of conversion is 
     property of the chapter 7 estate, the trustee would sell the 
     home, to realize the $10,000 in equity for the unsecured 
     creditors and the debtor would lose the home.
       This amendment overrules the holding in cases such as 
     Matter of Lybrook, 951 F.2d 136 (7th Cir. 1991) and adopts 
     the reasoning of In re Bobroff, 766 F.2d 797 (3d Cir. 1985). 
     However, it also gives the court discretion, in a case in 
     which the debtor has abused the right to convert and 
     converted in bad faith, to order that all property held at 
     the time of conversion shall constitute property of the 
     estate in the converted case.

                     Section 312. Bankruptcy fraud

       This section sets out criminal penalties for any person who 
     knowingly, fraudulently, and with specific intent to defraud 
     uses the filing of a bankruptcy petition or document, or 
     makes a false representation, for the purpose of carrying out 
     a fraudulent scheme. An essential element of the new fraud 
     action, as with other fraud actions, is requirement of proof 
     beyond a reasonable doubt of a specific intent to defraud. 
     Under no circumstance is this section to be operative if the 
     defendant is adjudicated as having committed the act alleged 
     to constitute fraud for a lawful purpose.
       The section would not apply to a person who makes a 
     misrepresentation on a financial statement, and then 
     subsequently files a bankruptcy case, so long as the debtor 
     had not at the time of the misrepresentation planned the 
     bankruptcy filing as part of a scheme in connection with this 
     misrepresentation. This would be the case, for example, where 
     the misrepresentation occurred a considerable period of time 
     before the bankruptcy filing, and the primary motivation 
     for the bankruptcy filing was not related to the 
     misrepresentation or fraud. It would also not be a crime 
     under this section for a person to make a false statement 
     or promise concerning a proceeding under title 11, as long 
     as the false statement or promise was not made as part of 
     a scheme to defraud involving the bankruptcy proceeding. 
     Similarly, a person who conveys incorrect information 
     about the pendency of a bankruptcy or the planned filing 
     of a bankruptcy case would not be within the scope of this 
     section unless that information was conveyed fraudulently 
     and to further a fraudulent scheme.
       The provision could, however, apply to creditors as well as 
     debtors. For example, if a creditor, as part of a scheme to 
     defraud a debtor or debtors, knowingly made false statements 
     to a debtor concerning the debtor's rights in connection with 
     a bankruptcy case, that creditor could be subject to this 
     section.

      Section 313. Protection against discriminatory treatment of 
                     applications for student loans

       This section clarifies the antidiscrimination provisions of 
     the Bankruptcy Code to ensure that applicants for student 
     loans or grants are not denied those benefits due to a prior 
     bankruptcy. The section overrules In re Goldrich, 771 F.2d 28 
     (2d Cir. 1985), which gave an unduly narrow interpretation to 
     Code section 525. Like section 525 itself, this section is 
     not meant to limit in any way other situations in which 
     discrimination should be prohibited. Under this section, as 
     under section 525 generally, a debtor should not be treated 
     differently based solely on the fact that the debtor once 
     owed a student loan which was not paid because it was 
     discharged; the debtor should be treated the same as if the 
     prior student loan had never existed.


                 title iv. government bankruptcy issues

 Section 401. Exception from automatic stay for postpetition property 
                                 taxes

       Local governments rely on real property taxes to constitute 
     one of their principal sources of revenue. These taxes are, 
     in turn, typically secured by statutory liens. Both the 
     property owner and any mortgage holder recognize that their 
     interest in real property is subject to the local 
     government's right to collect such property taxes. However, 
     several circuit courts have held that the automatic stay 
     prevents local governments from attaching a statutory lien to 
     property taxes accruing subsequent to a bankruptcy filing. 
     See, e.g., In re Paar Meadows, 880 F.2d 1540 (2d Cir. 1989), 
     cert. denied, 110 S.Ct. 869 (1990); Makaroff v. City of 
     Lockport, 916 F.2d 890 (3d Cir. 1990). These decisions create 
     a windfall for secured lenders, who would otherwise be 
     subordinated to such tax liens, and significantly impair the 
     revenue collecting capability of local governments. This 
     section overrules these cases and allow local governments to 
     utilize their statutory property tax liens in order to secure 
     the payment of property taxes.

                   Section 402. Municipal bankruptcy

       Under section 901 of the Bankruptcy Code, a municipality 
     may file for bankruptcy if, among other things, it is 
     ``generally authorized'' to do so under State law. The courts 
     have split regarding whether this provision requires express 
     statutory authorization by State law in order for a 
     municipality to file for bankruptcy. See In re Pleasant View 
     Utility District, 24 B.R. 632 (Bankr. M.D. Tenn. 1982); In re 
     City of Wellston, 43 B.R. 348 (Bankr. E.D. Mo. 1984); In re 
     Greene County Hospital, 59 B.R. 388 (Bankr. S.D. Miss. 1986); 
     In re City of Bridgeport, 128 B.R. 688 (Bankr. D. Conn. 1991) 
     (cases not requiring express authorization); but see In re 
     Carroll Township Authority, 119 B.R. 61 (Bankr. W.D. Pa. 
     1990); In re North and South Shenango Joint Municipal 
     Authority, 80 B.R. 57 (Bankr. W.D. Pa 1982) (cases requiring 
     express authorization). This section clarifies the 
     eligibility requirements applicable to municipal bankruptcy 
     filings by requiring that municipalities be specifically 
     authorized by the State in order to be eligible to file for 
     bankruptcy.


                     title v. technical corrections

       This title makes a number of technical corrections to the 
     Bankruptcy Code.


                 title vi. bankruptcy review commission

       This title establishes a National Bankruptcy Review 
     Commission. The Commission is empowered to review the 
     Bankruptcy Code and to prepare a report based upon its 
     findings and opinions. Although no exclusive list is set 
     forth, the Commission should be aware that Congress is 
     generally satisfied with the basic framework established in 
     the current Bankruptcy Code. Therefore, the work of the 
     Commission should be based upon reviewing, improving, and 
     updating the Code in ways which do not disturb the 
     fundamental tenets and balance of current law.
       The title mandates a nine-member Commission, Congress 
     appointing four members, the President appointing three 
     members, and the Chief Justice of the U.S. Supreme Court 
     appointing two members. The members of the Commission should 
     be knowledgeable in bankruptcy law, with diversity of 
     background and opinion considered in their selection. The 
     first meeting of the Commission shall be held 210 days after 
     the date of enactment. No Member of Congress or officer or 
     employee of the executive branch may be appointed to serve on 
     the Commission.


                title vii. severability; effective date

       Section 701 provides that if any provision of the Act is 
     held to be unconstitutional, the remaining provisions shall 
     not be affected thereby. Section 702 provides that the 
     amendments made by the Act shall only apply prospectively, 
     except as otherwise and specifically noted therein.
  Mr. Speaker, I yield 1 minute to the gentleman from Oklahoma, [Mr. 
Synar].
  (Mr. SYNAR asked and was given permission to revise and extend his 
remarks.)
  Mr. SYNAR. Mr. Speaker, I thank the chairman of the committee for 
yielding this time to me.
  Mr. Speaker, our bankruptcy laws have developed since the early 
1800's to embody two key principles which are respected in H.R. 5116, 
today's bankruptcy reform bill.
  First, our bankruptcy laws must continue to encourage economic 
expansion by offering creditors the privately enforced protection they 
need to feel secure in lending the capital that fuels economic growth. 
The reforms we offer today will continue the bankruptcy code's 
tradition of keeping private losses private. My colleagues should 
remember that there is no taxpayer backup in bankruptcy; no FDIC to 
make up losses if a company or an individual becomes insolvent. 
Instead, the code provides a system which allows debtors and creditors 
to resolve the differences in their ledgers with Government intrusion 
or involvement.
  And second, we must ensure that our bankruptcy laws protect debtors 
as well as creditors. We must truly give debtors a fresh start because 
our Nation is a nation of failures and has been since its earliest 
days. Capitalism demands that for every winner there are losers and the 
economic liberty that has brought generations of immigrants to our 
Nation has always embodied the freedom to fail as well as the chance to 
succeed.
  H.R. 5116 embodies both of these principles and deserves our support 
today. The bill helps individual debtors by raising the Chapter 13 debt 
limits to a new total of $1 million, by establishing new civil 
penalties bankruptcy petition preparers who negligently or fraudulently 
prepare bankruptcy petitions and by allowing Chapter 13 debtors to cure 
foreclosure judgments at least through the time of foreclosure on the 
property.
  Crecitors also benefit from today's bill. Specifically, provisions 
designed to curtail bankruptcy fraud and abuse and reduce the 
unnecessary costs and delays of the bankruptcy process will benefit all 
those who rely on the bankruptcy code for settling accounts. Commercial 
creditors should also find comfort in a number of reforms contained in 
the legislation with regard to bankruptcy trustees and new rights for 
creditors in certain bankruptcy situations.
  Finally, I would like to extend my warm and heartfelt thanks to 
Chairman Brooks for his consideration of this legislation and to the 
entire Economic and Commercial Law Subcommittee staff for their long 
hours of work on this legislation. Their dedication to commonsense 
reform of the code follows a fine tradition on the committee and they 
are to be commended for their efforts.
  Mr. FISH. Mr. Speaker, I yield myself such time as I may consume.
  (Mr. FISH asked and was given permission to revise and extend his 
remarks.)
  Mr. FISH. Mr. Speaker, I am pleased to speak in support of H.R. 5116, 
the Bankruptcy Reform Act of 1994, legislation I have joined with the 
gentleman from Texas [Mr. Brooks]--the chairman of the Committee on the 
Judiciary--and the gentleman from Oklahoma [Mr. Synar] in sponsoring. 
The bill comes to the floor in a form that reflects the outcome of 
informal discussions between the two bodies. A number of features of S. 
540, an omnibus bankruptcy bill that passed the Senate by unanimous 
vote in April of this year, are incorporated in the legislation we 
consider today.
  In the 102d Congress, the House and Senate Committees on the 
Judiciary compiled hearing records that documented the need for 
legislation to address a range of problems confronting participants in 
the bankruptcy process. The last comprehensive rewrite of U.S. 
bankruptcy law had been completed in 1978. By the early 1990's, 
substantial updating was needed in response to burgeoning bankruptcy 
filings including megacases, greater complexity characterizing 
financial transactions, and unanticipated economic consequences of 
Bankruptcy Code provisions.
  The priorities we recognized were to expedite bankruptcy procedures, 
stimulate greater recoveries, and mitigate adverse impacts of financial 
distress. Although each body passed a major bankruptcy bill, the 102d 
Congress adjourned before the process of reconciling House and Senate 
bills could be completed. For that reason, we have returned--although 
later in the 103d Congress than I would have hoped--to this important 
unfinished business.
  Bankruptcy case filings declined last year after eight consecutive 
years of significant increases, but the 1993 total nevertheless 
exceeded 875,000--more than double the 1985 figure. In view of these 
statistics--and the reality that some business bankruptcies in recent 
years have involved literally billions of dollars and many thousands of 
jobs--the profound economic consequences of bankruptcy cannot be 
overlooked. We must meet the challenge of reducing bankruptcy delays, 
discouraging abuses of the bankruptcy process, and resolving bankruptcy 
law problems that needlessly burden American businesses.
  This legislation includes many important provisions. The following 
are some of the highlights:
  We obviate the necessity of bankruptcy judges holding superfluous 
hearings when debtors, with the benefit of representation by counsel, 
seek to reaffirm obligations.
  We seek to facilitate more expeditious resolutions of requests for 
relief from the automatic stay--and we seek to discourage long 
postponements for filing proposed reorganization plans.
  We encourage greater reliance on Chapter 13 of the Bankruptcy Code--
an alternative to liquidation--by making a broader range of debtors 
eligible to file under that chapter and contribute income under a 
repayment plan.
  We provide explicit statutory authorization for bankruptcy judges to 
conduct jury trials with the consent of the parties when so designated 
by the district court--thus saving judicial resources in certain 
situations where the right to trial by jury is guaranteed.
  We give expression to the inappropriateness of penalizing lenders for 
obtaining loan guarantees--penalties that eventually can constrict 
credit and increase interest rates--and for that reason effectively 
overrule the DePrizio case.
  We clarify that important Bankruptcy Code protections for entities 
that finance or lease aircraft, vessels, and railroad equipment cover a 
broad range of transactions.
  We modify the automatic stay in response to abuses involving some 
single asset real estate entities that file under Chapter 11 solely for 
purposes of delay without any expectation of reorganizing successfully.
  We provide additional safeguards for equipment lessors in recognition 
of problems they often face during the bankruptcy process.
  We clarify judicial authority to issue injunctions in certain 
circumstances where trusts are created to pay asbestos related claims--
because we recognize that by removing uncertainty over the validity of 
such injunctions, the value of trust assets available to fund 
recoveries by victims can increase.
  We safeguard a seller's important right to reclaim goods by extending 
the reclamation period in limited circumstances.
  We remove the unjustifiable bar to the Pension Benefit Guaranty 
Corporation and State pensions funds serving on creditors' committees.

  H.R. 5116 encourages greater utilization of backruptcy appellate 
panels to hear appeals--with the consent of the parties--in bankruptcy 
cases. We recognize, however, that bankruptcy appellate panels may not 
improve the administration of justice in some circuits and therefore 
provide judicial councils with flexibility in broadly specified 
circumstances.
  The provisions of this bill necessarily are diverse because the 
bankruptcy process affects a wide range of activity in our complex 
economy. When Bankruptcy Code uncertainties make economic transactions 
cumbersome, the resulting higher costs affect everyone. Bankruptcy law 
reform is very important to the American public because we are all 
consumers.
  The bill before us makes important improvements in existing law. I 
urge my colleagues to support it.
  Mr. Speaker, I have no further requests for time, and I yield back 
the balance of my time.
  Mr. BROOKS. Mr. Speaker, I yield 2 minutes to the distinguished 
gentleman from California, [Mr. Howard Berman] an outstanding member of 
the committee who has worked long and hard on this issue.
  (Mr. BERMAN asked and was given permission to revise and extend his 
remarks, and include extraneous matter.)
  Mr. BERMAN. Mr. Speaker, I rise in strong support of H.R. 5116, the 
Bankruptcy Reform Act. I want to congratulate our chairman, the 
gentleman from Texas, for the careful balance he has struck in this 
legislation, and for the expert assistance provided by this excellent 
staff.
  I would like to speak in particular to three sections of the bill.
  First, I am very pleased by the inclusion of Section 113 in the bill, 
effectively overruling the decisions of the Supreme Court in U.S. 
versus Nordic Village and Hoffman versus Connecticut Department of 
Income Maintenance, and clarifying the original intent of Congress in 
enacting Section 106 of the Bankruptcy Code with regard to sovereign 
immunity.
  I would particularly note the import of Section 113 with regard to 
the rights of taxpayers. Section 113 establishes that the Federal and 
State governments cannot seize the property of taxpayers who have filed 
for bankruptcy. This provision establishes that the government cannot 
assert sovereign immunity as a shield to defend its actions in 
violating the automatic stay and discharge provisions of the Code, but 
instead must abide by the regular processes of the bankruptcy court 
applicable to all claimants.
  I would also like to comment on two provisions in the bill which will 
help respond to bankruptcy typing mills which have proliferated in the 
central district of California. The Justice Department reports that 
typing mills were responsible for 30 percent of all bankruptcy filings 
in the central district, many by individuals who were unfairly preyed 
upon because they do not speak English or understand the bankruptcy 
system. Section 308 of the bill creates a new set of civil standards 
and penalties pertaining to these typing services. Under this section, 
if a bankruptcy petition is dismissed as a result of fraud or 
incompetence by the preparer, the debtor will be entitled to actual as 
well as statutory damages.
  Section 312 of the bill, setting forth new criminal penalties for 
bankruptcy fraud, should also help limit abuses by typing mills. While 
many legitimate bankruptcy professionals have expressed concern 
regarding the scope of section 312, it is my understanding that because 
of existing case law precedent relative to mail fraud, section 312 
would only apply in cases where there existed proof beyond a reasonable 
doubt of a specific intent to defraud. In this regard, I attach an 
excerpt from a memorandum prepared by the Department of Justice 
acknowledging the very heavy burden they would face in bringing a fraud 
action under section 312.

       Intent to Defraud Must be Proved Beyond a Reasonable Doubt

       Proposed Sec. 157(a), patterned after the mail and wire 
     fraud statutes (18 U.S.C. Sec. 1341, 1343), would require 
     proof of devising or intending to devise a ``scheme or 
     artifice to defraud.'' Like the mail fraud statute, an 
     essential element of the proposed statute requires proof 
     beyond a reasonable doubt of a specific intent to defraud. 
     This is one of the highest mens rea standards in the criminal 
     law. Because of this high burden of proof, courses of action 
     permitted under the Bankruptcy Code and allowed by the 
     bankruptcy courts are unlikely to be prosecutable under this 
     new law or any fraud statute. Where a statute or case 
     supports the action taken and the person can show that he or 
     she relied on such law, it would not be possible to show the 
     intent to defraud required by the statute proposed.
       Knowledge and intent are elements in any fraud prosecution. 
     See, e.g., U.S. v. White, 879 F.2d 1509, cert. den., 494 U.S. 
     1027 (1990) (wife who had no knowledge of concealed business 
     property could not be prosecuted for signing false statements 
     that omitted such property); U.S. v. Tashjian, 660 F.2d 829, 
     cert. den., 454 U.S. 1102 (1982); U.S. v. Martin, 408 F.2d 
     949, cert. den., 396 U.S. 824 (1970); U.S. v. Goodstein, 883 
     F.2d 1362 (7th Cir.), cert. den., 494 U.S. 1007 (1990). 
     Similarly, the requirement that any fraud be ``material'' 
     (while not in any statutory language, ``materiality'' is an 
     element of bankruptcy fraud as well) would contemplate and 
     include a concept that the fraud would target and interfere 
     with the bankruptcy process.
       Because of this high burden of proof, most courses of 
     action allowed by the bankruptcy courts are unlikely to be 
     prosecutable under this new law or any fraud statute. Where a 
     statute or case supports the action taken and the person can 
     show that he or she relied on such law, it would be extremely 
     difficult to show an intent to defraud. Good faith has long 
     been recognized as a complete defense to any fraud 
     prosecution. See e.g., United States v. Williams, 728 F.2d 
     1402 (11th Cir. 1984) (good faith is a complete defense to 
     the element of intent to defraud). Advice of counsel is also 
     a defense that will counter a fraud prosecution where a 
     debtor took certain action based on an attorney's good faith 
     interpretation of the bankruptcy laws.
       The proposed statute is no broader than the mail fraud 
     statute, and in many respects is narrower because of the body 
     of bankruptcy law potential defendants could point to in 
     justifying their actions. The courts have the ability to 
     ensure that this proposed law is not abused, just as they 
     have monitored the application of the criminal laws in other 
     areas. For example, in prosecutions under the income tax 
     laws, the courts have allowed good faith but mistaken and 
     misguided reliance on civil laws to be raised as a defense to 
     a criminal prosecution. See e.g., United States v. Cheek, --
     -- U.S. ----, 111 S. Ct. 604 (1991).
  Ms. SLAUGHTER. Mr. Speaker, I rise in strong support of H.R. 5116, 
the Bankruptcy Reform Act of 1994.
  H.R. 5116 contains a number of improvements to the Bankruptcy Code, 
including expedited court procedure, increased protection against 
bankruptcy fraud, and the establishment of a National Bankruptcy 
Commission to pay close attention to key issues in bankruptcy 
procedure.
  One section of H.R. 5116 which I feel is vitally important is similar 
to the text of my own bill, H.R. 4711, the Spousal Equity in Bankruptcy 
Amendments. Here, H.R. 5116 gives added protection to child support and 
alimony payments in the event of a bankruptcy filing. Under the current 
Bankruptcy Code, child support and alimony are given no priority when a 
debtor's assets are distributed. It is incomprehensible that while many 
creditors can collect their fees, dependent spouses and children have 
to wait, and may never be included. H.R. 5116 elevates child support 
from its current status as a general, unsecured debt to a formally 
prioritized debt. This import change will help ensure that a custodial 
parent will not have to wait years to receive payment due.
  H.R. 5116 also closes a loophole which can be devastating for single-
parent families. During a divorce agreement, it is not uncommon for the 
custodial parent to accept a lower level of child support in exchange 
for the other parent assuming the couple's marital debts. If the non-
custodial parent declares bankruptcy, however, the marital debts than 
fall to the single parent. Think of what the custodial parent then 
faces: little or no child support payments, the heavy responsibilities 
of all the marital debts, and the expenses that come with rearing 
children alone.
  The Bankruptcy Reform Act would obligate the non-custodial spouse, 
who agreed to pay the couple's marital debts, to continue 
responsibility for these debts. I think it is outrageous that wives and 
dependent children must answer to creditors for debts the husband first 
agreed to pay. This relatively small--but vital--change in the 
Bankruptcy Code would prevent this situation, and ensure a more 
equitable treatment of all parties in the event of bankruptcy.
  Mr. Speaker, I have heard heartbreaking stories from single parents 
who want nothing but the best for their children, but find themselves 
forced to fight for their rightful level of child support. With no 
other recourse, these families often turn to welfare to provide the 
child support the absent parent ought to be responsible for. H.R. 5116 
takes an important first step in breaking this tragic cycle by 
strengthening current bankruptcy law and enforcing tougher measures for 
child support and alimony collection.
  Finally, Mr. Speaker, I would like to commend the distinguished 
Chairman of the Judiciary Committee, Jack Brooks, and ranking member 
Hamilton Fish, for their diligent efforts and hard work in moving 
omnibus bankruptcy reform before Congressional adjournment. I encourage 
my colleagues to join me in supporting the Bankruptcy Reform Act. Thank 
you, Mr. Speaker, and I yield back the balance of my time.

                              {time}  2030

  Mr. BROOKS. Mr. Speaker, I have no further requests for time, and I 
yield back the balance of my time.
  The SPEAKER pro tempore (Mr. Poshard). The question is on the motion 
offered by the gentleman from Texas [Mr. Brooks] that the House suspend 
the rules and pass the bill, H.R. 5116, as amended.
  The question was taken.
  Mr. GEKAS. Mr. Speaker, I object to the vote on the grounds that a 
quorum is not present and make the point of order that a quorum is not 
present.
  The SPEAKER pro tempore. Pursuant to clause 5, rule I, and the 
Chair's prior announcement, further proceedings on this motion will be 
postponed.
  The point of no quorum is considered withdrawn.

                          ____________________