[Congressional Record Volume 148, Number 103 (Thursday, July 25, 2002)]
[House]
[Pages H5704-H5787]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




CONFERENCE REPORT ON H.R. 333, BANKRUPTCY ABUSE PREVENTION AND CONSUMER 
                         PROTECTION ACT OF 2002

  Mr. SENSENBRENNER submitted the following conference report and 
statement on the bill (H.R. 333) to amend title 11, United States Code, 
and for other purposes:

                  Conference Report (H. Rept. 107-617]

  The committee of conference on the disagreeing votes of the two 
Houses on the amendment of the Senate to the bill (H.R. 333), to amend 
title 11, United States Code, and for other purposes, having met, after 
full and free conference, have agreed to recommend and do recommend to 
their respective House as follows:
  That the House recede from its disagreement to the amendment of the 
Senate and agree to the same with an amendment as follows:
  In lieu of the matter proposed to be inserted by the Senate 
amendment, insert the following:

     SECTION 1. SHORT TITLE; REFERENCES; TABLE OF CONTENTS.

       (a) Short Title.--This Act may be cited as the ``Bankruptcy 
     Abuse Prevention and Consumer Protection Act of 2002''.
       (b) Table of Contents.--The table of contents for this Act 
     is as follows:
Sec. 1. Short title; references; table of contents.

                    TITLE I--NEEDS-BASED BANKRUPTCY

Sec. 101. Conversion.
Sec. 102. Dismissal or conversion.
Sec. 103. Sense of Congress and study.
Sec. 104. Notice of alternatives.
Sec. 105. Debtor financial management training test program.
Sec. 106. Credit counseling.
Sec. 107. Schedules of reasonable and necessary expenses.

                 TITLE II--ENHANCED CONSUMER PROTECTION

          Subtitle A--Penalties for Abusive Creditor Practices

Sec. 201. Promotion of alternative dispute resolution.
Sec. 202. Effect of discharge.
Sec. 203. Discouraging abuse of reaffirmation practices.
Sec. 204. Preservation of claims and defenses upon sale of predatory 
              loans.
Sec. 205. GAO study and report on reaffirmation process.

                   Subtitle B--Priority Child Support

Sec. 211. Definition of domestic support obligation.
Sec. 212. Priorities for claims for domestic support obligations.
Sec. 213. Requirements to obtain confirmation and discharge in cases 
              involving domestic support obligations.
Sec. 214. Exceptions to automatic stay in domestic support obligation 
              proceedings.
Sec. 215. Nondischargeability of certain debts for alimony, 
              maintenance, and support.
Sec. 216. Continued liability of property.
Sec. 217. Protection of domestic support claims against preferential 
              transfer motions.
Sec. 218. Disposable income defined.
Sec. 219. Collection of child support.
Sec. 220. Nondischargeability of certain educational benefits and 
              loans.

                 Subtitle C--Other Consumer Protections

Sec. 221. Amendments to discourage abusive bankruptcy filings.
Sec. 222. Sense of Congress.
Sec. 223. Additional amendments to title 11, United States Code.
Sec. 224. Protection of retirement savings in bankruptcy.
Sec. 225. Protection of education savings in bankruptcy.
Sec. 226. Definitions.
Sec. 227. Restrictions on debt relief agencies.
Sec. 228. Disclosures.
Sec. 229. Requirements for debt relief agencies.
Sec. 230. GAO study.
Sec. 231. Protection of personally identifiable information.
Sec. 232. Consumer privacy ombudsman.
Sec. 233. Prohibition on disclosure of name of minor children.

                TITLE III--DISCOURAGING BANKRUPTCY ABUSE

Sec. 301. Reinforcement of the fresh start.
Sec. 302. Discouraging bad faith repeat filings.
Sec. 303. Curbing abusive filings.
Sec. 304. Debtor retention of personal property security.
Sec. 305. Relief from the automatic stay when the debtor does not 
              complete intended surrender of consumer debt collateral.
Sec. 306. Giving secured creditors fair treatment in chapter 13.
Sec. 307. Domiciliary requirements for exemptions.
Sec. 308. Reduction of homestead exemption for fraud.
Sec. 309. Protecting secured creditors in chapter 13 cases.
Sec. 310. Limitation on luxury goods.
Sec. 311. Automatic stay.
Sec. 312. Extension of period between bankruptcy discharges.
Sec. 313. Definition of household goods and antiques.
Sec. 314. Debt incurred to pay nondischargeable debts.
Sec. 315. Giving creditors fair notice in chapters 7 and 13 cases.
Sec. 316. Dismissal for failure to timely file schedules or provide 
              required information.
Sec. 317. Adequate time to prepare for hearing on confirmation of the 
              plan.
Sec. 318. Chapter 13 plans to have a 5-year duration in certain cases.
Sec. 319. Sense of Congress regarding expansion of rule 9011 of the 
              Federal Rules of Bankruptcy Procedure.
Sec. 320. Prompt relief from stay in individual cases.
Sec. 321. Chapter 11 cases filed by individuals.
Sec. 322. Limitations on homestead exemption.
Sec. 323. Excluding employee benefit plan participant contributions and 
              other property from the estate.
Sec. 324. Exclusive jurisdiction in matters involving bankruptcy 
              professionals.
Sec. 325. United States trustee program filing fee increase.
Sec. 326. Sharing of compensation.
Sec. 327. Fair valuation of collateral.
Sec. 328. Defaults based on nonmonetary obligations.
Sec. 329. Clarification of postpetition wages and benefits.
Sec. 330. Nondischargeability of debts incurred through violations of 
              laws relating to the provision of lawful goods and 
              services.
Sec. 331 Delay of discharge during pendency of certain proceedings.

[[Page H5705]]

       TITLE IV--GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS

           Subtitle A--General Business Bankruptcy Provisions

Sec. 401. Adequate protection for investors.
Sec. 402. Meetings of creditors and equity security holders.
Sec. 403. Protection of refinance of security interest.
Sec. 404. Executory contracts and unexpired leases.
Sec. 405. Creditors and equity security holders committees.
Sec. 406. Amendment to section 546 of title 11, United States Code.
Sec. 407. Amendments to section 330(a) of title 11, United States Code.
Sec. 408. Postpetition disclosure and solicitation.
Sec. 409. Preferences.
Sec. 410. Venue of certain proceedings.
Sec. 411. Period for filing plan under chapter 11.
Sec. 412. Fees arising from certain ownership interests.
Sec. 413. Creditor representation at first meeting of creditors.
Sec. 414. Definition of disinterested person.
Sec. 415. Factors for compensation of professional persons.
Sec. 416. Appointment of elected trustee.
Sec. 417. Utility service.
Sec. 418. Bankruptcy fees.
Sec. 419. More complete information regarding assets of the estate.

            Subtitle B--Small Business Bankruptcy Provisions

Sec. 431. Flexible rules for disclosure statement and plan.
Sec. 432. Definitions.
Sec. 433. Standard form disclosure statement and plan.
Sec. 434. Uniform national reporting requirements.
Sec. 435. Uniform reporting rules and forms for small business cases.
Sec. 436. Duties in small business cases.
Sec. 437. Plan filing and confirmation deadlines.
Sec. 438. Plan confirmation deadline.
Sec. 439. Duties of the United States trustee.
Sec. 440. Scheduling conferences.
Sec. 441. Serial filer provisions.
Sec. 442. Expanded grounds for dismissal or conversion and appointment 
              of trustee.
  
Sec. 443. Study of operation of title 11, United States Code, with 
              respect to small businesses.
Sec. 444. Payment of interest.
Sec. 445. Priority for administrative expenses.
Sec. 446. Duties with respect to a debtor who is a plan administrator 
              of an employee benefit plan.
Sec. 447. Appointment of committee of retired employees.

                TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS

Sec. 501. Petition and proceedings related to petition.
Sec. 502. Applicability of other sections to chapter 9.

                       TITLE VI--BANKRUPTCY DATA

Sec. 601. Improved bankruptcy statistics.
Sec. 602. Uniform rules for the collection of bankruptcy data.
Sec. 603. Audit procedures.
Sec. 604. Sense of Congress regarding availability of bankruptcy data.

                  TITLE VII--BANKRUPTCY TAX PROVISIONS

Sec. 701. Treatment of certain liens.
Sec. 702. Treatment of fuel tax claims.
Sec. 703. Notice of request for a determination of taxes.
Sec. 704. Rate of interest on tax claims.
Sec. 705. Priority of tax claims.
Sec. 706. Priority property taxes incurred.
Sec. 707. No discharge of fraudulent taxes in chapter 13.
Sec. 708. No discharge of fraudulent taxes in chapter 11.
Sec. 709. Stay of tax proceedings limited to prepetition taxes.
Sec. 710. Periodic payment of taxes in chapter 11 cases.
Sec. 711. Avoidance of statutory tax liens prohibited.
Sec. 712. Payment of taxes in the conduct of business.
Sec. 713. Tardily filed priority tax claims.
Sec. 714. Income tax returns prepared by tax authorities.
Sec. 715. Discharge of the estate's liability for unpaid taxes.
Sec. 716. Requirement to file tax returns to confirm chapter 13 plans.
Sec. 717. Standards for tax disclosure.
Sec. 718. Setoff of tax refunds.
Sec. 719. Special provisions related to the treatment of State and 
              local taxes.
  
Sec. 720. Dismissal for failure to timely file tax returns.

           TITLE VIII--ANCILLARY AND OTHER CROSS-BORDER CASES

Sec. 801. Amendment to add chapter 15 to title 11, United States Code.
Sec. 802. Other amendments to titles 11 and 28, United States Code.

                TITLE IX--FINANCIAL CONTRACT PROVISIONS

Sec. 901. Treatment of certain agreements by conservators or receivers 
              of insured depository institutions.
Sec. 902. Authority of the corporation with respect to failed and 
              failing institutions.
Sec. 903. Amendments relating to transfers of qualified financial 
              contracts.
Sec. 904. Amendments relating to disaffirmance or repudiation of 
              qualified financial contracts.
Sec. 905. Clarifying amendment relating to master agreements.
Sec. 906. Federal Deposit Insurance Corporation Improvement Act of 
              1991.
Sec. 907. Bankruptcy law amendments.
Sec. 908. Recordkeeping requirements.
Sec. 909. Exemptions from contemporaneous execution requirement.
Sec. 910. Damage measure.
Sec. 911. SIPC stay.

       TITLE X--PROTECTION OF FAMILY FARMERS AND FAMILY FISHERMEN

Sec. 1001. Permanent reenactment of chapter 12.
Sec. 1002. Debt limit increase.
Sec. 1003. Certain claims owed to governmental units.
Sec. 1004. Definition of family farmer.
Sec. 1005. Elimination of requirement that family farmer and spouse 
              receive over 50 percent of income from farming operation 
              in year prior to bankruptcy.
Sec. 1006. Prohibition of retroactive assessment of disposable income.
Sec. 1007. Family fishermen.

              TITLE XI--HEALTH CARE AND EMPLOYEE BENEFITS

Sec. 1101. Definitions.
Sec. 1102. Disposal of patient records.
Sec. 1103. Administrative expense claim for costs of closing a health 
              care business and other administrative expenses.
Sec. 1104. Appointment of ombudsman to act as patient advocate.
Sec. 1105. Debtor in possession; duty of trustee to transfer patients.
Sec. 1106. Exclusion from program participation not subject to 
              automatic stay.

                    TITLE XII--TECHNICAL AMENDMENTS

Sec. 1201. Definitions.
Sec. 1202. Adjustment of dollar amounts.
Sec. 1203. Extension of time.
Sec. 1204. Technical amendments.
Sec. 1205. Penalty for persons who negligently or fraudulently prepare 
              bankruptcy petitions.
Sec. 1206. Limitation on compensation of professional persons.
Sec. 1207. Effect of conversion.
Sec. 1208. Allowance of administrative expenses.
Sec. 1209. Exceptions to discharge.
Sec. 1210. Effect of discharge.
Sec. 1211. Protection against discriminatory treatment.
Sec. 1212. Property of the estate.
Sec. 1213. Preferences.
Sec. 1214. Postpetition transactions.
Sec. 1215. Disposition of property of the estate.
Sec. 1216. General provisions.
Sec. 1217. Abandonment of railroad line.
Sec. 1218. Contents of plan.
Sec. 1219. Bankruptcy cases and proceedings.
Sec. 1220. Knowing disregard of bankruptcy law or rule.

[[Page H5706]]

Sec. 1221. Transfers made by nonprofit charitable corporations.
Sec. 1222. Protection of valid purchase money security interests.
Sec. 1223. Bankruptcy judgeships.
Sec. 1224. Compensating trustees.
Sec. 1225. Amendment to section 362 of title 11, United States Code.
Sec. 1226. Judicial education.
Sec. 1227. Reclamation.
Sec. 1228. Providing requested tax documents to the court.
Sec. 1229. Encouraging creditworthiness.
Sec. 1230. Property no longer subject to redemption.
Sec. 1231. Trustees.
Sec. 1232. Bankruptcy forms.
Sec. 1233. Direct appeals of bankruptcy matters to courts of appeals.
Sec. 1234. Involuntary cases.
Sec. 1235. Federal election law fines and penalties as nondischargeable 
              debt.
  

                 TITLE XIII--CONSUMER CREDIT DISCLOSURE

Sec. 1301. Enhanced disclosures under an open end credit plan.
Sec. 1302. Enhanced disclosure for credit extensions secured by a 
              dwelling.
Sec. 1303. Disclosures related to ``introductory rates''.
Sec. 1304. Internet-based credit card solicitations.
Sec. 1305. Disclosures related to late payment deadlines and penalties.
Sec. 1306. Prohibition on certain actions for failure to incur finance 
              charges.
Sec. 1307. Dual use debit card.
Sec. 1308. Study of bankruptcy impact of credit extended to dependent 
              students.
Sec. 1309. Clarification of clear and conspicuous.

      TITLE XIV--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

Sec. 1401. Effective date; application of amendments.

                    TITLE I--NEEDS-BASED BANKRUPTCY

     SEC. 101. CONVERSION.

       Section 706(c) of title 11, United States Code, is amended 
     by inserting ``or consents to'' after ``requests''.

     SEC. 102. DISMISSAL OR CONVERSION.

       (a) In General.--Section 707 of title 11, United States 
     Code, is amended--
       (1) by striking the section heading and inserting the 
     following:

     ``Sec. 707. Dismissal of a case or conversion to a case under 
       chapter 11 or 13'';

     and
       (2) in subsection (b)--
       (A) by inserting ``(1)'' after ``(b)'';
       (B) in paragraph (1), as so redesignated by subparagraph 
     (A) of this paragraph--
       (i) in the first sentence--

       (I) by striking ``but not at the request or suggestion of'' 
     and inserting ``trustee, bankruptcy administrator, or'';
       (II) by inserting ``, or, with the debtor's consent, 
     convert such a case to a case under chapter 11 or 13 of this 
     title,'' after ``consumer debts''; and
       (III) by striking ``a substantial abuse'' and inserting 
     ``an abuse''; and

       (ii) by striking the next to last sentence; and
       (C) by adding at the end the following:
       ``(2)(A)(i) In considering under paragraph (1) whether the 
     granting of relief would be an abuse of the provisions of 
     this chapter, the court shall presume abuse exists if the 
     debtor's current monthly income reduced by the amounts 
     determined under clauses (ii), (iii), and (iv), and 
     multiplied by 60 is not less than the lesser of--
       ``(I) 25 percent of the debtor's nonpriority unsecured 
     claims in the case, or $6,000, whichever is greater; or
       ``(II) $10,000.
       ``(ii)(I) The debtor's monthly expenses shall be the 
     debtor's applicable monthly expense amounts specified under 
     the National Standards and Local Standards, and the debtor's 
     actual monthly expenses for the categories specified as Other 
     Necessary Expenses issued by the Internal Revenue Service for 
     the area in which the debtor resides, as in effect on the 
     date of the entry of the order for relief, for the debtor, 
     the dependents of the debtor, and the spouse of the debtor in 
     a joint case, if the spouse is not otherwise a dependent. 
     Notwithstanding any other provision of this clause, the 
     monthly expenses of the debtor shall not include any payments 
     for debts. In addition, the debtor's monthly expenses shall 
     include the debtor's reasonably necessary expenses incurred 
     to maintain the safety of the debtor and the family of the 
     debtor from family violence as identified under section 309 
     of the Family Violence Prevention and Services Act, or other 
     applicable Federal law. The expenses included in the debtor's 
     monthly expenses described in the preceding sentence shall be 
     kept confidential by the court. In addition, if it is 
     demonstrated that it is reasonable and necessary, the 
     debtor's monthly expenses may also include an additional 
     allowance for food and clothing of up to 5 percent of the 
     food and clothing categories as specified by the National 
     Standards issued by the Internal Revenue Service.
       ``(II) In addition, the debtor's monthly expenses may 
     include, if applicable, the continuation of actual expenses 
     paid by the debtor that are reasonable and necessary for care 
and support of an elderly, chronically ill, or disabled household 
member or member of the debtor's immediate family (including parents, 
grandparents, siblings, children, and grandchildren of the debtor, the 
dependents of the debtor, and the spouse of the debtor in a joint case 
who is not a dependent) and who is unable to pay for such reasonable 
and necessary expenses.

       ``(III) In addition, for a debtor eligible for chapter 13, 
     the debtor's monthly expenses may include the actual 
     administrative expenses of administering a chapter 13 plan 
     for the district in which the debtor resides, up to an amount 
     of 10 percent of the projected plan payments, as determined 
     under schedules issued by the Executive Office for United 
     States Trustees.
       ``(IV) In addition, the debtor's monthly expenses may 
     include the actual expenses for each dependent child less 
     than 18 years of age, not to exceed $1,500 per year per 
     child, to attend a private or public elementary or secondary 
     school if the debtor provides documentation of such expenses 
     and a detailed explanation of why such expenses are 
     reasonable and necessary, and why such expenses are not 
     already accounted for in the National Standards, Local 
     Standards, or Other Necessary Expenses referred to in 
     subclause (I)
       ``(V) In addition, the debtor's monthly expenses may 
     include an allowance for housing and utilities, in excess of 
     the allowance specified by the Local Standards for housing 
     and utilities issued by the Internal Revenue Service, based 
     on the actual expenses for home energy costs if the debtor 
     provides documentation of such actual expenses and 
     demonstrates that such actual expenses are reasonable and 
     necessary.
       ``(iii) The debtor's average monthly payments on account of 
     secured debts shall be calculated as the sum of--
       ``(I) the total of all amounts scheduled as contractually 
     due to secured creditors in each month of the 60 months 
     following the date of the petition; and
       ``(II) any additional payments to secured creditors 
     necessary for the debtor, in filing a plan under chapter 13 
     of this title, to maintain possession of the debtor's primary 
     residence, motor vehicle, or other property necessary for the 
     support of the debtor and the debtor's dependents, that 
     serves as collateral for secured debts;
     divided by 60.
       ``(iv) The debtor's expenses for payment of all priority 
     claims (including priority child support and alimony claims) 
     shall be calculated as the total amount of debts entitled to 
     priority, divided by 60.
       ``(B)(i) In any proceeding brought under this subsection, 
     the presumption of abuse may only be rebutted by 
     demonstrating special circumstances that justify additional 
     expenses or adjustments of current monthly income for which 
     there is no reasonable alternative.
       ``(ii) In order to establish special circumstances, the 
     debtor shall be required to itemize each additional expense 
     or adjustment of income and to provide--
       ``(I) documentation for such expense or adjustment to 
     income; and
       ``(II) a detailed explanation of the special circumstances 
     that make such expenses or adjustment to income necessary and 
     reasonable.
       ``(iii) The debtor shall attest under oath to the accuracy 
     of any information provided to demonstrate that additional 
     expenses or adjustments to income are required.
       ``(iv) The presumption of abuse may only be rebutted if the 
     additional expenses or adjustments to income referred to in 
     clause (i) cause the product of the debtor's current monthly 
     income reduced by the amounts determined under clauses (ii), 
     (iii), and (iv) of subparagraph (A) when multiplied by 60 to 
     be less than the lesser of--
       ``(I) 25 percent of the debtor's nonpriority unsecured 
     claims, or $6,000, whichever is greater; or
       ``(II) $10,000.
       ``(C) As part of the schedule of current income and 
     expenditures required under section 521, the debtor shall 
     include a statement of the debtor's current monthly income, 
     and the calculations that determine whether a presumption 
     arises under subparagraph (A)(i), that shows how each such 
     amount is calculated.
       ``(3) In considering under paragraph (1) whether the 
     granting of relief would be an abuse of the provisions of 
     this chapter in a case in which the presumption in 
     subparagraph (A)(i) of such paragraph does not apply or has 
     been rebutted, the court shall consider--
       ``(A) whether the debtor filed the petition in bad faith; 
     or
       ``(B) the totality of the circumstances (including whether 
     the debtor seeks to reject a personal services contract and 
     the financial need for such rejection as sought by the 
     debtor) of the debtor's financial situation demonstrates 
     abuse.
       ``(4)(A) The court, on its own initiative or on the motion 
     of a party in interest, in accordance with the procedures 
     described in rule 9011 of the Federal Rules of Bankruptcy 
     Procedure, may order the attorney for the debtor to reimburse 
     the trustee for all reasonable costs in prosecuting a motion 
     filed under section 707(b), including reasonable attorneys' 
     fees, if--
       ``(i) a trustee files a motion for dismissal or conversion 
     under this subsection; and
       ``(ii) the court--
       ``(I) grants such motion; and
       ``(II) finds that the action of the attorney for the debtor 
     in filing under this chapter violated rule 9011 of the 
     Federal Rules of Bankruptcy Procedure.
       ``(B) If the court finds that the attorney for the debtor 
     violated rule 9011 of the Federal Rules of Bankruptcy 
     Procedure, the court, on its own initiative or on the motion 
     of a party in interest, in accordance with such procedures, 
     may order--
       ``(i) the assessment of an appropriate civil penalty 
     against the attorney for the debtor; and
       ``(ii) the payment of such civil penalty to the trustee, 
     the United States trustee, or the bankruptcy administrator.
       ``(C) In the case of a petition, pleading, or written 
     motion, the signature of an attorney

[[Page H5707]]

     shall constitute a certification that the attorney has--
       ``(i) performed a reasonable investigation into the 
     circumstances that gave rise to the petition, pleading, or 
     written motion; and
       ``(ii) determined that the petition, pleading, or written 
     motion--
       ``(I) is well grounded in fact; and
       ``(II) is warranted by existing law or a good faith 
     argument for the extension, modification, or reversal of 
     existing law and does not constitute an abuse under paragraph 
     (1).
       ``(D) The signature of an attorney on the petition shall 
     constitute a certification that the attorney has no knowledge 
     after an inquiry that the information in the schedules filed 
     with such petition is incorrect.
       ``(5)(A) Except as provided in subparagraph (B) and subject 
     to paragraph (6), the court, on its own initiative or on the 
     motion of a party in interest, in accordance with the 
     procedures described in rule 9011 of the Federal Rules of 
     Bankruptcy Procedure, may award a debtor all reasonable costs 
     (including reasonable attorneys' fees) in contesting a motion 
     filed by a party in interest (other than a trustee, United 
     States trustee, or bankruptcy administrator) under this 
     subsection if--
       ``(i) the court does not grant the motion; and
       ``(ii) the court finds that--
       ``(I) the position of the party that filed the motion 
     violated rule 9011 of the Federal Rules of Bankruptcy 
     Procedure; or
       ``(II) the attorney (if any) who filed the motion did not 
     comply with the requirements of clauses (i) and (ii) of 
     paragraph (4)(C), and the motion was made solely for the 
     purpose of coercing a debtor into waiving a right guaranteed 
     to the debtor under this title.
       ``(B) A small business that has a claim of an aggregate 
     amount less than $1,000 shall not be subject to subparagraph 
     (A)(ii)(I).
       ``(C) For purposes of this paragraph--
       ``(i) the term `small business' means an unincorporated 
     business, partnership, corporation, association, or 
     organization that--
       ``(I) has fewer than 25 full-time employees as determined 
     on the date on which the motion is filed; and
       ``(II) is engaged in commercial or business activity; and
       ``(ii) the number of employees of a wholly owned subsidiary 
     of a corporation includes the employees of--
       ``(I) a parent corporation; and
       ``(II) any other subsidiary corporation of the parent 
     corporation.
       ``(6) Only the judge, United States trustee, or bankruptcy 
     administrator may file a motion under section 707(b), if the 
     current monthly income of the debtor, or in a joint case, the 
     debtor and the debtor's spouse, as of the date of the order 
     for relief, when multiplied by 12, is equal to or less than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(B) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(C) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4.
       ``(7)(A) No judge, United States trustee, trustee, 
     bankruptcy administrator, or other party in interest may file 
     a motion under paragraph (2) if the current monthly income of 
     the debtor and the debtor's spouse combined, as of the date 
     of the order for relief when multiplied by 12, is equal to or 
     less than--
       ``(i) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(ii) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(iii) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4.
       ``(B) In a case that is not a joint case, current monthly 
     income of the debtor's spouse shall not be considered for 
     purposes of subparagraph (A) if--
       ``(i)(I) the debtor and the debtor's spouse are separated 
     under applicable nonbankruptcy law; or
       ``(II) the debtor and the debtor's spouse are living 
     separate and apart, other than for the purpose of evading 
     subparagraph (A); and
       ``(ii) the debtor files a statement under penalty of 
     perjury--
       ``(I) specifying that the debtor meets the requirement of 
     subclause (I) or (II) of clause (i); and
       ``(II) disclosing the aggregate, or best estimate of the 
     aggregate, amount of any cash or money payments received from 
     the debtor's spouse attributed to the debtor's current 
     monthly income.''.
       (b) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting after paragraph (10) the 
     following:
       ``(10A) `current monthly income'--
       ``(A) means the average monthly income from all sources 
     that the debtor receives (or in a joint case the debtor and 
     the debtor's spouse receive) without regard to whether such 
     income is taxable income, derived during the 6-month period 
     ending on--
       ``(i) the last day of the calendar month immediately 
     preceding the date of the commencement of the case if the 
     debtor files the schedule of current income required by 
     section 521(a)(1)(B)(ii); or
       ``(ii) the date on which current income is determined by 
     the court for purposes of this title if the debtor does not 
     file the schedule of current income required by section 
     521(a)(1)(B)(ii); and
       ``(B) includes any amount paid by any entity other than the 
     debtor (or in a joint case the debtor and the debtor's 
     spouse), on a regular basis for the household expenses of the 
     debtor or the debtor's dependents (and in a joint case the 
     debtor's spouse if not otherwise a dependent), but excludes 
     benefits received under the Social Security Act, payments to 
     victims of war crimes or crimes against humanity on account 
     of their status as victims of such crimes, and payments to 
     victims of international terrorism (as defined in section 
     2331 of title 18) or domestic terrorism (as defined in 
     section 2331 of title 18) on account of their status as 
     victims of such terrorism;''.
       (c) United States Trustee and Bankruptcy Administrator 
     Duties.--Section 704 of title 11, United States Code, is 
     amended--
       (1) by inserting ``(a)'' before ``The trustee shall--''; 
     and
       (2) by adding at the end the following:
       ``(b)(1) With respect to a debtor who is an individual in a 
     case under this chapter--
       ``(A) the United States trustee or bankruptcy administrator 
     shall review all materials filed by the debtor and, not later 
     than 10 days after the date of the first meeting of 
     creditors, file with the court a statement as to whether the 
     debtor's case would be presumed to be an abuse under section 
     707(b); and
       ``(B) not later than 5 days after receiving a statement 
     under subparagraph (A), the court shall provide a copy of the 
     statement to all creditors.
       ``(2) The United States trustee or bankruptcy administrator 
     shall, not later than 30 days after the date of filing a 
     statement under paragraph (1), either file a motion to 
     dismiss or convert under section 707(b) or file a statement 
     setting forth the reasons the United States trustee or 
     bankruptcy administrator does not believe that such a motion 
     would be appropriate, if the United States trustee or 
     bankruptcy administrator determines that the debtor's case 
     should be presumed to be an abuse under section 707(b) and 
     the product of the debtor's current monthly income, 
     multiplied by 12 is not less than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner; or
       ``(B) in the case of a debtor in a household of 2 or more 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals .''.
       (d) Notice.--Section 342 of title 11, United States Code, 
     is amended by adding at the end the following:
       ``(d) In a case under chapter 7 of this title in which the 
     debtor is an individual and in which the presumption of abuse 
     is triggered under section 707(b), the clerk shall give 
     written notice to all creditors not later than 10 days after 
     the date of the filing of the petition that the presumption 
     of abuse has been triggered.''.
       (e) Nonlimitation of Information.--Nothing in this title 
     shall limit the ability of a creditor to provide information 
     to a judge (except for information communicated ex parte, 
     unless otherwise permitted by applicable law), United States 
     trustee, bankruptcy administrator or trustee.
       (f) Dismissal for Certain Crimes.--Section 707 of title 11, 
     United States Code, is amended by adding at the end the 
     following:
       ``(c)(1) In this subsection--
       ``(A) the term `crime of violence' has the meaning given 
     such term in section 16 of title 18; and
       ``(B) the term `drug trafficking crime' has the meaning 
     given such term in section 924(c)(2) of title 18.
       ``(2) Except as provided in paragraph (3), after notice and 
     a hearing, the court, on a motion by the victim of a crime of 
     violence or a drug trafficking crime, may when it is in the 
     best interest of the victim dismiss a voluntary case filed 
     under this chapter by a debtor who is an individual if such 
     individual was convicted of such crime.
       ``(3) The court may not dismiss a case under paragraph (2) 
     if the debtor establishes by a preponderance of the evidence 
     that the filing of a case under this chapter is necessary to 
     satisfy a claim for a domestic support obligation.''.
       (g) Confirmation of Plan.--Section 1325(a) of title 11, 
     United States Code, is amended--
       (1) in paragraph (5), by striking ``and'' at the end;
       (2) in paragraph (6), by striking the period and inserting 
     a semicolon; and
       (3) by inserting after paragraph (6) the following:
       ``(7) the action of the debtor in filing the petition was 
     in good faith;''.
       (h) Applicability of Means Test to Chapter 13.--Section 
     1325(b) of title 11, United States Code, is amended--
       (1) in paragraph (1)(B), by inserting ``to unsecured 
     creditors'' after ``to make payments''; and
       (2) by striking paragraph (2) and inserting the following:
       ``(2) For purposes of this subsection, the term `disposable 
     income' means current monthly income received by the debtor 
     (other than child support payments, foster care payments, or 
     disability payments for a dependent child made in accordance 
     with applicable nonbankruptcy law to the extent reasonably 
     necessary to be expended for such child) less amounts 
     reasonably necessary to be expended--
       ``(A) for the maintenance or support of the debtor or a 
     dependent of the debtor or for a domestic support obligation 
     that first becomes payable after the date the petition is 
     filed and for charitable contributions (that meet the 
     definition of `charitable contribution' under section 
     548(d)(3) to a qualified religious or charitable entity or 
     organization (as defined in section 548(d)(4)) in an amount 
     not to exceed 15 percent of gross income of the debtor for 
     the year in which the contributions are made; and

[[Page H5708]]

       ``(B) if the debtor is engaged in business, for the payment 
     of expenditures necessary for the continuation, preservation, 
     and operation of such business.
       ``(3) Amounts reasonably necessary to be expended under 
     paragraph (2) shall be determined in accordance with 
     subparagraphs (A) and (B) of section 707(b)(2), if the debtor 
     has current monthly income, when multiplied by 12, greater 
     than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(B) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(C) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4.''.
       (i) Special Allowance for Health Insurance.--Section 
     1329(a) of title 11, United States Code, is amended--
       (1) in paragraph (2) by striking ``or'' at the end;
       (2) in paragraph (3) by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(4) reduce amounts to be paid under the plan by the 
     actual amount expended by the debtor to purchase health 
     insurance for the debtor (and for any dependent of the debtor 
     if such dependent does not otherwise have health insurance 
     coverage) if the debtor documents the cost of such insurance 
     and demonstrates that--
       ``(A) such expenses are reasonable and necessary;
       ``(B)(i) if the debtor previously paid for health 
     insurance, the amount is not materially larger than the cost 
     the debtor previously paid or the cost necessary to maintain 
     the lapsed policy; or
       ``(ii) if the debtor did not have health insurance, the 
     amount is not materially larger than the reasonable cost that 
     would be incurred by a debtor who purchases health insurance, 
     who has similar income, expenses, age, and health status, and 
     who lives in the same geographical location with the same 
     number of dependents who do not otherwise have health 
     insurance coverage; and
       ``(C) the amount is not otherwise allowed for purposes of 
     determining disposable income under section 1325(b) of this 
     title;
     and upon request of any party in interest, files proof that a 
     health insurance policy was purchased.''.
       (j) Adjustment of Dollar Amounts.--Section 104(b) of title 
     11, United States Code, is amended by striking ``and 
     523(a)(2)(C)'' each place it appears and inserting 
     ``523(a)(2)(C), 707(b), and 1325(b)(3)''.
       (k) Definition of `Median Family Income'.--Section 101 of 
     title 11, United States Code, is amended by inserting after 
     paragraph (39) the following:
       ``(39A) `median family income' means for any year--
       ``(A) the median family income both calculated and reported 
     by the Bureau of the Census in the then most recent year; and
       ``(B) if not so calculated and reported in the then current 
     year, adjusted annually after such most recent year until the 
     next year in which median family income is both calculated 
     and reported by the Bureau of the Census, to reflect the 
     percentage change in the Consumer Price Index for All Urban 
     Consumers during the period of years occurring after such 
     most recent year and before such current year;''.
       (k) Clerical Amendment.--The table of sections for chapter 
     7 of title 11, United States Code, is amended by striking the 
     item relating to section 707 and inserting the following:

``707. Dismissal of a case or conversion to a case under chapter 11 or 
              13.''.

     SEC. 103. SENSE OF CONGRESS AND STUDY.

       (a) Sense of Congress.--It is the sense of Congress that 
     the Secretary of the Treasury has the authority to alter the 
     Internal Revenue Service standards established to set 
     guidelines for repayment plans as needed to accommodate their 
     use under section 707(b) of title 11, United States Code.
       (b) Study.--
       (1) In general.--Not later than 2 years after the date of 
     enactment of this Act, the Director of the Executive Office 
     for United States Trustees shall submit a report to the 
     Committee on the Judiciary of the Senate and the Committee on 
     the Judiciary of the House of Representatives containing the 
     findings of the Director regarding the utilization of 
     Internal Revenue Service standards for determining--
       (A) the current monthly expenses of a debtor under section 
     707(b) of title 11, United States Code; and
       (B) the impact that the application of such standards has 
     had on debtors and on the bankruptcy courts.
       (2) Recommendation.--The report under paragraph (1) may 
     include recommendations for amendments to title 11, United 
     States Code, that are consistent with the findings of the 
     Director under paragraph (1).

     SEC. 104. NOTICE OF ALTERNATIVES.

       Section 342(b) of title 11, United States Code, is amended 
     to read as follows:
       ``(b) Before the commencement of a case under this title by 
     an individual whose debts are primarily consumer debts, the 
     clerk shall give to such individual written notice 
     containing--
       ``(1) a brief description of--
       ``(A) chapters 7, 11, 12, and 13 and the general purpose, 
     benefits, and costs of proceeding under each of those 
     chapters; and
       ``(B) the types of services available from credit 
     counseling agencies; and
       ``(2) statements specifying that--
       ``(A) a person who knowingly and fraudulently conceals 
     assets or makes a false oath or statement under penalty of 
     perjury in connection with a bankruptcy case shall be subject 
     to fine, imprisonment, or both; and
       ``(B) all information supplied by a debtor in connection 
     with a bankruptcy case is subject to examination by the 
     Attorney General.''.

     SEC. 105. DEBTOR FINANCIAL MANAGEMENT TRAINING TEST PROGRAM.

       (a) Development of Financial Management and Training 
     Curriculum and Materials.--The Director of the Executive 
     Office for United States Trustees (in this section referred 
     to as the ``Director'') shall consult with a wide range of 
     individuals who are experts in the field of debtor education, 
     including trustees who serve in cases under chapter 13 of 
     title 11, United States Code, and who operate financial 
     management education programs for debtors, and shall develop 
     a financial management training curriculum and materials that 
     can be used to educate debtors who are individuals on how to 
     better manage their finances.
       (b) Test.--
       (1) Selection of districts.--The Director shall select 6 
     judicial districts of the United States in which to test the 
     effectiveness of the financial management training curriculum 
     and materials developed under subsection (a).
       (2) Use.--For an 18-month period beginning not later than 
     270 days after the date of enactment of this Act, such 
     curriculum and materials shall be, for the 6 judicial 
     districts selected under paragraph (1), used as the 
     instructional course concerning personal financial management 
     for purposes of section 111 of title 11, United States Code.
       (c) Evaluation.--
       (1) In general.--During the 18-month period referred to in 
     subsection (b), the Director shall evaluate the effectiveness 
     of--
       (A) the financial management training curriculum and 
     materials developed under subsection (a); and
       (B) a sample of existing consumer education programs such 
     as those described in the Report of the National Bankruptcy 
     Review Commission (October 20, 1997) that are representative 
     of consumer education programs carried out by the credit 
     industry, by trustees serving under chapter 13 of title 11, 
     United States Code, and by consumer counseling groups.
       (2) Report.--Not later than 3 months after concluding such 
     evaluation, the Director shall submit a report to the Speaker 
     of the House of Representatives and the President pro tempore 
     of the Senate, for referral to the appropriate committees of 
     the Congress, containing the findings of the Director 
     regarding the effectiveness of such curriculum, such 
     materials, and such programs and their costs.

     SEC. 106. CREDIT COUNSELING.

       (a) Who May Be a Debtor.--Section 109 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(h)(1) Subject to paragraphs (2) and (3), and 
     notwithstanding any other provision of this section, an 
     individual may not be a debtor under this title unless that 
     individual has, during the 180-day period preceding the date 
     of filing of the petition of that individual, received from 
     an approved nonprofit budget and credit counseling agency 
     described in section 111(a) an individual or group briefing 
     (including a briefing conducted by telephone or on the 
     Internet) that outlined the opportunities for available 
     credit counseling and assisted that individual in performing 
     a related budget analysis.
       ``(2)(A) Paragraph (1) shall not apply with respect to a 
     debtor who resides in a district for which the United States 
     trustee or bankruptcy administrator of the bankruptcy court 
     of that district determines that the approved nonprofit 
     budget and credit counseling agencies for that district are 
     not reasonably able to provide adequate services to the 
     additional individuals who would otherwise seek credit 
     counseling from that agency by reason of the requirements of 
     paragraph (1).
       ``(B) Each United States trustee or bankruptcy 
     administrator that makes a determination described in 
     subparagraph (A) shall review that determination not later 
     than 1 year after the date of that determination, and not 
     less frequently than every year thereafter. Notwithstanding 
     the preceding sentence, a nonprofit budget and credit 
     counseling agency may be disapproved by the United States 
     trustee or bankruptcy administrator at any time.
       ``(3)(A) Subject to subparagraph (B), the requirements of 
     paragraph (1) shall not apply with respect to a debtor who 
     submits to the court a certification that--
       ``(i) describes exigent circumstances that merit a waiver 
     of the requirements of paragraph (1);
       ``(ii) states that the debtor requested credit counseling 
     services from an approved nonprofit budget and credit 
     counseling agency, but was unable to obtain the services 
     referred to in paragraph (1) during the 5-day period 
     beginning on the date on which the debtor made that request; 
     and
       ``(iii) is satisfactory to the court.
       ``(B) With respect to a debtor, an exemption under 
     subparagraph (A) shall cease to apply to that debtor on the 
     date on which the debtor meets the requirements of paragraph 
     (1), but in no case may the exemption apply to that debtor 
     after the date that is 30 days after the debtor files a 
     petition, except that the court, for cause, may order an 
     additional 15 days.''.
       (b) Chapter 7 Discharge.--Section 727(a) of title 11, 
     United States Code, is amended--
       (1) in paragraph (9), by striking ``or'' at the end;
       (2) in paragraph (10), by striking the period and inserting 
     ``; or''; and
       (3) by adding at the end the following:
       ``(11) after the filing of the petition, the debtor failed 
     to complete an instructional course concerning personal 
     financial management described in section 111, except that 
     this paragraph shall not apply with respect to a debtor

[[Page H5709]]

     who resides in a district for which the United States trustee 
     or bankruptcy administrator of such district determines that 
     the approved instructional courses are not adequate to 
     service the additional individuals required to complete such 
     instructional courses under this section (Each United States 
     trustee or bankruptcy administrator who makes a determination 
     described in this paragraph shall review such determination 
     not later than 1 year after the date of such determination, 
     and not less frequently than annually thereafter.).''.
       (c) Chapter 13 Discharge.--Section 1328 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(g)(1) The court shall not grant a discharge under this 
     section to a debtor unless after filing a petition the debtor 
     has completed an instructional course concerning personal 
     financial management described in section 111.
       ``(2) Paragraph (1) shall not apply with respect to a 
     debtor who resides in a district for which the United States 
     trustee or bankruptcy administrator of such district 
     determines that the approved instructional courses are not 
     adequate to service the additional individuals who would be 
     required to complete such instructional course by reason of 
     the requirements of this section.
       ``(3) Each United States trustee or bankruptcy 
     administrator who makes a determination described in 
     paragraph (2) shall review such determination not later than 
     1 year after the date of such determination, and not less 
     frequently than annually thereafter.''.
       (c) Chapter 13 Discharge.--Section 1328 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(g) The court shall not grant a discharge under this 
     section to a debtor, unless after filing a petition the 
     debtor has completed an instructional course concerning 
     personal financial management described in section 111.
       ``(h) Subsection (g) shall not apply with respect to a 
     debtor who resides in a district for which the United States 
     trustee or bankruptcy administrator of the bankruptcy court 
     of that district determines that the approved instructional 
     courses are not adequate to service the additional 
     individuals who would be required to complete the 
     instructional course by reason of the requirements of this 
     section.
       ``(i) Each United States trustee or bankruptcy 
     administrator that makes a determination described in 
     subsection (h) shall review that determination not later than 
     1 year after the date of that determination, and not less 
     frequently than every year thereafter.''.
       (d) Debtor's Duties.--Section 521 of title 11, United 
     States Code, is amended--
       (1) by inserting ``(a)'' before ``The debtor shall--''; and
       (2) by adding at the end the following:
       ``(b) In addition to the requirements under subsection (a), 
     a debtor who is an individual shall file with the court--
       ``(1) a certificate from the approved nonprofit budget and 
     credit counseling agency that provided the debtor services 
     under section 109(h) describing the services provided to the 
     debtor; and
       ``(2) a copy of the debt repayment plan, if any, developed 
     under section 109(h) through the approved nonprofit budget 
     and credit counseling agency referred to in paragraph (1).''.
       (e) General Provisions.--
       (1) In general.--Chapter 1 of title 11, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 111. Credit counseling agencies; financial management 
       instructional courses

       ``(a) The clerk shall maintain a publicly available list 
     of--
       ``(1) credit counseling agencies that provide 1 or more 
     programs described in section 109(h) currently approved by 
     the United States trustee or the bankruptcy administrator for 
     the district, as applicable; and
       ``(2) instructional courses concerning personal financial 
     management currently approved by the United States trustee or 
     the bankruptcy administrator for the district, as applicable.
       ``(b) The United States trustee or bankruptcy administrator 
     shall only approve a credit counseling agency or 
     instructional course concerning personal financial management 
     as follows:
       ``(1) The United States trustee or bankruptcy administrator 
     shall have thoroughly reviewed the qualifications of the 
     credit counseling agency or of the provider of the 
     instructional course under the standards set forth in this 
     section, and the programs or instructional courses which will 
     be offered by such agency or provider, and may require an 
     agency or provider of an instructional course which has 
     sought approval to provide information with respect to such 
     review.
       ``(2) The United States trustee or bankruptcy administrator 
     shall have determined that the credit counseling agency or 
     instructional course fully satisfies the applicable standards 
     set forth in this section.
       ``(3) When an agency or instructional course is initially 
     approved, such approval shall be for a probationary period 
     not to exceed 6 months. An agency or instructional course is 
     initially approved if it did not appear on the approved list 
     for the district under subsection (a) immediately prior to 
     approval.
       ``(4) At the conclusion of the probationary period under 
     paragraph (3), the United States trustee or bankruptcy 
     administrator may only approve for an additional 1-year 
     period, and for successive 1-year periods thereafter, any 
     agency or instructional course which has demonstrated during 
     the probationary or subsequent period that such agency or 
     instructional course--
       ``(A) has met the standards set forth under this section 
     during such period; and
       ``(B) can satisfy such standards in the future.
       ``(5) Not later than 30 days after any final decision under 
     paragraph (4), that occurs either after the expiration of the 
     initial probationary period, or after any 2-year period 
     thereafter, an interested person may seek judicial review of 
     such decision in the appropriate district court of the United 
     States.
       ``(c)(1) The United States trustee or bankruptcy 
     administrator shall only approve a credit counseling agency 
     that demonstrates that it will provide qualified counselors, 
     maintain adequate provision for safekeeping and payment of 
     client funds, provide adequate counseling with respect to 
     client credit problems, and deal responsibly and effectively 
     with other matters as relate to the quality, effectiveness, 
     and financial security of such programs.
       ``(2) To be approved by the United States trustee or 
     bankruptcy administrator, a credit counseling agency shall, 
     at a minimum--
       ``(A) be a nonprofit budget and credit counseling agency, 
     the majority of the board of directors of which--
       ``(i) are not employed by the agency; and
       ``(ii) will not directly or indirectly benefit financially 
     from the outcome of a credit counseling session;
       ``(B) if a fee is charged for counseling services, charge a 
     reasonable fee, and provide services without regard to 
     ability to pay the fee;
       ``(C) provide for safekeeping and payment of client funds, 
     including an annual audit of the trust accounts and 
     appropriate employee bonding;
       ``(D) provide full disclosures to clients, including 
     funding sources, counselor qualifications, possible impact on 
     credit reports, and any costs of such program that will be 
     paid by the debtor and how such costs will be paid;
       ``(E) provide adequate counseling with respect to client 
     credit problems that includes an analysis of their current 
     situation, what brought them to that financial status, and 
     how they can develop a plan to handle the problem without 
     incurring negative amortization of their debts;
       ``(F) provide trained counselors who receive no commissions 
     or bonuses based on the counseling session outcome, and who 
     have adequate experience, and have been adequately trained to 
     provide counseling services to individuals in financial 
     difficulty, including the matters described in subparagraph 
     (E);
       ``(G) demonstrate adequate experience and background in 
     providing credit counseling; and
       ``(H) have adequate financial resources to provide 
     continuing support services for budgeting plans over the life 
     of any repayment plan.
       ``(d) The United States trustee or bankruptcy administrator 
     shall only approve an instructional course concerning 
     personal financial management--
       ``(1) for an initial probationary period under subsection 
     (b)(3) if the course will provide at a minimum--
       ``(A) trained personnel with adequate experience and 
     training in providing effective instruction and services;
       ``(B) learning materials and teaching methodologies 
     designed to assist debtors in understanding personal 
     financial management and that are consistent with stated 
     objectives directly related to the goals of such 
     instructional course;
       ``(C) adequate facilities situated in reasonably convenient 
     locations at which such instructional course is offered, 
     except that such facilities may include the provision of such 
     instructional course or program by telephone or through the 
     Internet, if such instructional course or program is 
     effective; and
       ``(D) the preparation and retention of reasonable records 
     (which shall include the debtor's bankruptcy case number) to 
     permit evaluation of the effectiveness of such instructional 
     course or program, including any evaluation of satisfaction 
     of instructional course or program requirements for each 
     debtor attending such instructional course or program, which 
     shall be available for inspection and evaluation by the 
     Executive Office for United States Trustees, the United 
     States trustee, bankruptcy administrator, or chief bankruptcy 
     judge for the district in which such instructional course or 
     program is offered; and
       ``(2) for any 1-year period if the provider thereof has 
     demonstrated that the course meets the standards of paragraph 
     (1) and, in addition--
       ``(A) has been effective in assisting a substantial number 
     of debtors to understand personal financial management; and
       ``(B) is otherwise likely to increase substantially debtor 
     understanding of personal financial management.
       ``(e) The district court may, at any time, investigate the 
     qualifications of a credit counseling agency referred to in 
     subsection (a), and request production of documents to ensure 
     the integrity and effectiveness of such credit counseling 
     agencies. The district court may, at any time, remove from 
     the approved list under subsection (a) a credit counseling 
     agency upon finding such agency does not meet the 
     qualifications of subsection (b).
       ``(f) The United States trustee or bankruptcy administrator 
     shall notify the clerk that a credit counseling agency or an 
     instructional course is no longer approved, in which case the 
     clerk shall remove it from the list maintained under 
     subsection (a).
       ``(g)(1) No credit counseling agency may provide to a 
     credit reporting agency information concerning whether a 
     debtor who has received or sought instruction concerning 
     personal financial management from the credit counseling 
     agency.
       ``(2) A credit counseling agency that willfully or 
     negligently fails to comply with any requirement under this 
     title with respect to a debtor shall be liable for damages in 
     an amount equal to the sum of--
       ``(A) any actual damages sustained by the debtor as a 
     result of the violation; and
       ``(B) any court costs or reasonable attorneys' fees (as 
     determined by the court) incurred in an action to recover 
     those damages.''.

[[Page H5710]]

       (2) Clerical amendment.--The table of sections for chapter 
     1 of title 11, United States Code, is amended by adding at 
     the end the following:

``111. Credit counseling agencies; financial management instructional 
              courses.''.
       (f) Limitation.--Section 362 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(i) If a case commenced under chapter 7, 11, or 13 is 
     dismissed due to the creation of a debt repayment plan, for 
     purposes of subsection (c)(3), any subsequent case commenced 
     by the debtor under any such chapter shall not be presumed to 
     be filed not in good faith.
       ``(j) On request of a party in interest, the court shall 
     issue an order under subsection (c) confirming that the 
     automatic stay has been terminated.''.

     SEC. 107. SCHEDULES OF REASONABLE AND NECESSARY EXPENSES.

       For purposes of section 707(b) of title 11, United States 
     Code, as amended by this Act, the Director of the Executive 
     Office for United States Trustees shall, not later than 180 
     days after the date of enactment of this Act, issue schedules 
     of reasonable and necessary administrative expenses of 
     administering a chapter 13 plan for each judicial district of 
     the United States.
                 TITLE II--ENHANCED CONSUMER PROTECTION
          Subtitle A--Penalties for Abusive Creditor Practices

     SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLUTION.

       (a) Reduction of Claim.--Section 502 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(k)(1) The court, on the motion of the debtor and after a 
     hearing, may reduce a claim filed under this section based in 
     whole on an unsecured consumer debt by not more than 20 
     percent of the claim, if--
       ``(A) the claim was filed by a creditor who unreasonably 
     refused to negotiate a reasonable alternative repayment 
     schedule proposed by an approved credit counseling agency 
     described in section 111 acting on behalf of the debtor;
       ``(B) the offer of the debtor under subparagraph (A)--
       ``(i) was made at least 60 days before the filing of the 
     petition; and
       ``(ii) provided for payment of at least 60 percent of the 
     amount of the debt over a period not to exceed the repayment 
     period of the loan, or a reasonable extension thereof; and
       ``(C) no part of the debt under the alternative repayment 
     schedule is nondischargeable.
       ``(2) The debtor shall have the burden of proving, by clear 
     and convincing evidence, that--
       ``(A) the creditor unreasonably refused to consider the 
     debtor's proposal; and
       ``(B) the proposed alternative repayment schedule was made 
     prior to expiration of the 60-day period specified in 
     paragraph (1)(B)(i).''.
       (b) Limitation on Avoidability.--Section 547 of title 11, 
     United States Code, is amended by adding at the end the 
     following:
       ``(h) The trustee may not avoid a transfer if such transfer 
     was made as a part of an alternative repayment plan between 
     the debtor and any creditor of the debtor created by an 
     approved credit counseling agency.''.

     SEC. 202. EFFECT OF DISCHARGE.

       Section 524 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(i) The willful failure of a creditor to credit payments 
     received under a plan confirmed under this title, unless the 
     order confirming the plan is revoked, the plan is in default, 
     or the creditor has not received payments required to be made 
     under the plan in the manner required by the plan (including 
     crediting the amounts required under the plan), shall 
     constitute a violation of an injunction under subsection 
     (a)(2) if the act of the creditor to collect and failure to 
     credit payments in the manner required by the plan caused 
     material injury to the debtor.
       ``(j) Subsection (a)(2) does not operate as an injunction 
     against an act by a creditor that is the holder of a secured 
     claim, if--
       ``(1) such creditor retains a security interest in real 
     property that is the principal residence of the debtor;
       ``(2) such act is in the ordinary course of business 
     between the creditor and the debtor; and
       ``(3) such act is limited to seeking or obtaining periodic 
     payments associated with a valid security interest in lieu of 
     pursuit of in rem relief to enforce the lien.''.

     SEC. 203. DISCOURAGING ABUSE OF REAFFIRMATION PRACTICES.

       (a) In General.--Section 524 of title 11, United States 
     Code, as amended section 202, is amended--
       (1) in subsection (c), by striking paragraph (2) and 
     inserting the following:
       ``(2) the debtor received the disclosures described in 
     subsection (k) at or before the time at which the debtor 
     signed the agreement;''; and
       (2) by adding at the end the following:
       ``(k)(1) The disclosures required under subsection (c)(2) 
     shall consist of the disclosure statement described in 
     paragraph (3), completed as required in that paragraph, 
     together with the agreement, statement, declaration, motion 
     and order described, respectively, in paragraphs (4) through 
     (8), and shall be the only disclosures required in connection 
     with the reaffirmation.
       ``(2) Disclosures made under paragraph (1) shall be made 
     clearly and conspicuously and in writing. The terms `Amount 
     Reaffirmed' and `Annual Percentage Rate' shall be disclosed 
     more conspicuously than other terms, data or information 
     provided in connection with this disclosure, except that the 
     phrases `Before agreeing to reaffirm a debt, review these 
     important disclosures' and `Summary of Reaffirmation 
     Agreement' may be equally conspicuous. Disclosures may be 
     made in a different order and may use terminology different 
     from that set forth in paragraphs (2) through (8), except 
     that the terms `Amount Reaffirmed' and `Annual Percentage 
     Rate' must be used where indicated.
       ``(3) The disclosure statement required under this 
     paragraph shall consist of the following:
       ``(A) The statement: `Part A: Before agreeing to reaffirm a 
     debt, review these important disclosures:';
       ``(B) Under the heading `Summary of Reaffirmation 
     Agreement', the statement: `This Summary is made pursuant to 
     the requirements of the Bankruptcy Code';
       ``(C) The `Amount Reaffirmed', using that term, which shall 
     be--
       ``(i) the total amount which the debtor agrees to reaffirm, 
     and
       ``(ii) the total of any other fees or cost accrued as of 
     the date of the disclosure statement.
       ``(D) In conjunction with the disclosure of the `Amount 
     Reaffirmed', the statements--
       ``(i) `The amount of debt you have agreed to reaffirm'; and
       ``(ii) `Your credit agreement may obligate you to pay 
     additional amounts which may come due after the date of this 
     disclosure. Consult your credit agreement.'.
       ``(E) The `Annual Percentage Rate', using that term, which 
     shall be disclosed as--
       ``(i) if, at the time the petition is filed, the debt is an 
     extension of credit under an open end credit plan, as the 
     terms `credit' and `open end credit plan' are defined in 
     section 103 of the Truth in Lending Act, then--
       ``(I) the annual percentage rate determined under 
     paragraphs (5) and (6) of section 127(b) of the Truth in 
     Lending Act, as applicable, as disclosed to the debtor in the 
     most recent periodic statement prior to the agreement or, if 
     no such periodic statement has been given to the debtor 
     during the prior 6 months, the annual percentage rate as it 
     would have been so disclosed at the time the disclosure 
     statement is given to the debtor, or to the extent this 
     annual percentage rate is not readily available or not 
     applicable, then
       ``(II) the simple interest rate applicable to the amount 
     reaffirmed as of the date the disclosure statement is given 
     to the debtor, or if different simple interest rates apply to 
     different balances, the simple interest rate applicable to 
     each such balance, identifying the amount of each such 
     balance included in the amount reaffirmed, or
       ``(III) if the entity making the disclosure elects, to 
     disclose the annual percentage rate under subclause (I) and 
     the simple interest rate under subclause (II);
       ``(ii) if, at the time the petition is filed, the debt is 
     an extension of credit other than under an open end credit 
     plan, as the terms `credit' and `open end credit plan' are 
     defined in section 103 of the Truth in Lending Act, then--
       ``(I) the annual percentage rate under section 128(a)(4) of 
     the Truth in Lending Act, as disclosed to the debtor in the 
     most recent disclosure statement given to the debtor prior to 
     the reaffirmation agreement with respect to the debt, or, if 
     no such disclosure statement was given to the debtor, the 
     annual percentage rate as it would have been so disclosed at 
     the time the disclosure statement is given to the debtor, or 
     to the extent this annual percentage rate is not readily 
     available or not applicable, then
       ``(II) the simple interest rate applicable to the amount 
     reaffirmed as of the date the disclosure statement is given 
     to the debtor, or if different simple interest rates apply to 
     different balances, the simple interest rate applicable to 
     each such balance, identifying the amount of such balance 
     included in the amount reaffirmed, or
       ``(III) if the entity making the disclosure elects, to 
     disclose the annual percentage rate under (I) and the simple 
     interest rate under (II).
       ``(F) If the underlying debt transaction was disclosed as a 
     variable rate transaction on the most recent disclosure given 
     under the Truth in Lending Act, by stating `The interest rate 
     on your loan may be a variable interest rate which changes 
     from time to time, so that the annual percentage rate 
     disclosed here may be higher or lower.'.
       ``(G) If the debt is secured by a security interest which 
     has not been waived in whole or in part or determined to be 
     void by a final order of the court at the time of the 
     disclosure, by disclosing that a security interest or lien in 
     goods or property is asserted over some or all of the 
     obligations the debtor is reaffirming and listing the items 
     and their original purchase price that are subject to the 
     asserted security interest, or if not a purchase-money 
     security interest then listing by items or types and the 
     original amount of the loan.
       ``(H) At the election of the creditor, a statement of the 
     repayment schedule using 1 or a combination of the 
     following--
       ``(i) by making the statement: `Your first payment in the 
     amount of $______ is due on ______ but the future payment 
     amount may be different. Consult your reaffirmation or credit 
     agreement, as applicable.', and stating the amount of the 
     first payment and the due date of that payment in the places 
     provided;
       ``(ii) by making the statement: `Your payment schedule will 
     be:', and describing the repayment schedule with the number, 
     amount and due dates or period of payments scheduled to repay 
     the obligations reaffirmed to the extent then known by the 
     disclosing party; or
       ``(iii) by describing the debtor's repayment obligations 
     with reasonable specificity to the extent then known by the 
     disclosing party.
       ``(I) The following statement: `Note: When this disclosure 
     refers to what a creditor ``may'' do, it does not use the 
     word ``may'' to give the creditor specific permission. The 
     word ``may'' is used to tell you what might occur if the law 
     permits the creditor to take the action. If you have 
     questions about your reaffirmation or what the law requires, 
     talk to the attorney who helped you negotiate this agreement. 
     If you don't have

[[Page H5711]]

     an attorney helping you, the judge will explain the effect of 
     your reaffirmation when the reaffirmation hearing is held.'.
       ``(J)(i) The following additional statements:
       `` `Reaffirming a debt is a serious financial decision. The 
     law requires you to take certain steps to make sure the 
     decision is in your best interest. If these steps are not 
     completed, the reaffirmation agreement is not effective, even 
     though you have signed it.
       `` `1. Read the disclosures in this Part A carefully. 
     Consider the decision to reaffirm carefully. Then, if you 
     want to reaffirm, sign the reaffirmation agreement in Part B 
     (or you may use a separate agreement you and your creditor 
     agree on).
       `` `2. Complete and sign Part D and be sure you can afford 
     to make the payments you are agreeing to make and have 
     received a copy of the disclosure statement and a completed 
     and signed reaffirmation agreement.
       `` `3. If you were represented by an attorney during the 
     negotiation of the reaffirmation agreement, the attorney must 
     have signed the certification in Part C.
       `` `4. If you were not represented by an attorney during 
     the negotiation of the reaffirmation agreement, you must have 
     completed and signed Part E.
       `` `5. The original of this disclosure must be filed with 
     the court by you or your creditor. If a separate 
     reaffirmation agreement (other than the one in Part B) has 
     been signed, it must be attached.
       `` `6. If you were represented by an attorney during the 
     negotiation of the reaffirmation agreement, your 
     reaffirmation agreement becomes effective upon filing with 
     the court unless the reaffirmation is presumed to be an undue 
     hardship as explained in Part D.
       `` `7. If you were not represented by an attorney during 
     the negotiation of the reaffirmation agreement, it will not 
     be effective unless the court approves it. The court will 
     notify you of the hearing on your reaffirmation agreement. 
     You must attend this hearing in bankruptcy court where the 
     judge will review your agreement. The bankruptcy court must 
     approve the agreement as consistent with your best interests, 
     except that no court approval is required if the agreement is 
     for a consumer debt secured by a mortgage, deed of trust, 
     security deed or other lien on your real property, like your 
     home.
       `` `Your right to rescind a reaffirmation. You may rescind 
     (cancel) your reaffirmation at any time before the bankruptcy 
     court enters a discharge order or within 60 days after the 
     agreement is filed with the court, whichever is longer. To 
     rescind or cancel, you must notify the creditor that the 
     agreement is canceled.
       `` `What are your obligations if you reaffirm the debt? A 
     reaffirmed debt remains your personal legal obligation. It is 
     not discharged in your bankruptcy. That means that if you 
     default on your reaffirmed debt after your bankruptcy is 
     over, your creditor may be able to take your property or your 
     wages. Otherwise, your obligations will be determined by the 
     reaffirmation agreement which may have changed the terms of 
     the original agreement. For example, if you are reaffirming 
     an open end credit agreement, the creditor may be permitted 
     by that agreement or applicable law to change the terms of 
     the agreement in the future under certain conditions.
       `` `Are you required to enter into a reaffirmation 
     agreement by any law? No, you are not required to reaffirm a 
     debt by any law. Only agree to reaffirm a debt if it is in 
     your best interest. Be sure you can afford the payments you 
     agree to make.
       `` `What if your creditor has a security interest or lien? 
     Your bankruptcy discharge does not eliminate any lien on your 
     property. A ``lien'' is often referred to as a security 
     interest, deed of trust, mortgage or security deed. Even if 
     you do not reaffirm and your personal liability on the debt 
     is discharged, because of the lien your creditor may still 
     have the right to take the security property if you do not 
     pay the debt or default on it. If the lien is on an item of 
     personal property that is exempt under your State's law or 
     that the trustee has abandoned, you may be able to redeem the 
     item rather than reaffirm the debt. To redeem, you make a 
     single payment to the creditor equal to the current value of 
     the security property, as agreed by the parties or determined 
     by the court.'.
       ``(ii) In the case of a reaffirmation under subsection 
     (m)(2), numbered paragraph 6 in the disclosures required by 
     clause (i) of this subparagraph shall read as follows:
       `` `6. If you were represented by an attorney during the 
     negotiation of the reaffirmation agreement, your 
     reaffirmation agreement becomes effective upon filing with 
     the court.'.
       ``(4) The form of reaffirmation agreement required under 
     this paragraph shall consist of the following:
       `` `Part B: Reaffirmation Agreement. I/we agree to reaffirm 
     the obligations arising under the credit agreement described 
     below.
       `` `Brief description of credit agreement:
       `` `Description of any changes to the credit agreement made 
     as part of this reaffirmation agreement:
       `` `Signature:          Date:
       `` `Borrower:
       `` `Co-borrower, if also reaffirming:
       `` `Accepted by creditor:
       `` `Date of creditor acceptance:'.
       ``(5)(A) The declaration shall consist of the following:
       `` `Part C: Certification by Debtor's Attorney (If Any).
       `` `I hereby certify that (1) this agreement represents a 
     fully informed and voluntary agreement by the debtor(s); (2) 
     this agreement does not impose an undue hardship on the 
     debtor or any dependent of the debtor; and (3) I have fully 
     advised the debtor of the legal effect and consequences of 
     this agreement and any default under this agreement.
       `` `Signature of Debtor's Attorney:    Date:'.
       ``(B) In the case of reaffirmations in which a presumption 
     of undue hardship has been established, the certification 
     shall state that in the opinion of the attorney, the debtor 
     is able to make the payment.
       ``(C) In the case of a reaffirmation agreement under 
     subsection (m)(2), subparagraph (B) is not applicable.
       ``(6)(A) The statement in support of reaffirmation 
     agreement, which the debtor shall sign and date prior to 
     filing with the court, shall consist of the following:
       `` `Part D: Debtor's Statement in Support of Reaffirmation 
     Agreement.
       `` `1. I believe this agreement will not impose an undue 
     hardship on my dependents or me. I can afford to make the 
     payments on the reaffirmed debt because my monthly income 
     (take home pay plus any other income received) is $______, 
     and my actual current monthly expenses including monthly 
     payments on post-bankruptcy debt and other reaffirmation 
     agreements total $______, leaving $______ to make the 
     required payments on this reaffirmed debt. I understand that 
     if my income less my monthly expenses does not leave enough 
     to make the payments, this reaffirmation agreement is 
     presumed to be an undue hardship on me and must be reviewed 
     by the court. However, this presumption may be overcome if I 
     explain to the satisfaction of the court how I can afford to 
     make the payments here: ______.
       `` `2. I received a copy of the Reaffirmation Disclosure 
     Statement in Part A and a completed and signed reaffirmation 
     agreement.'.
       ``(B) Where the debtor is represented by an attorney and is 
     reaffirming a debt owed to a creditor defined in section 
     19(b)(1)(A)(iv) of the Federal Reserve Act, the statement of 
     support of the reaffirmation agreement, which the debtor 
     shall sign and date prior to filing with the court, shall 
     consist of the following:
       `` `I believe this agreement is in my financial interest. I 
     can afford to make the payments on the reaffirmed debt. I 
     received a copy of the Reaffirmation Disclosure Statement in 
     Part A and a completed and signed reaffirmation agreement.'.
       ``(7) The motion, which may be used if approval of the 
     agreement by the court is required in order for it to be 
     effective and shall be signed and dated by the moving party, 
     shall consist of the following:
       `` `Part E: Motion for Court Approval (To be completed only 
     where debtor is not represented by an attorney.). I (we), the 
     debtor, affirm the following to be true and correct:
       `` `I am not represented by an attorney in connection with 
     this reaffirmation agreement.
       `` `I believe this agreement is in my best interest based 
     on the income and expenses I have disclosed in my Statement 
     in Support of this reaffirmation agreement above, and because 
     (provide any additional relevant reasons the court should 
     consider):
       `` `Therefore, I ask the court for an order approving this 
     reaffirmation agreement.'.
       ``(8) The court order, which may be used to approve a 
     reaffirmation, shall consist of the following:
       `` `Court Order: The court grants the debtor's motion and 
     approves the reaffirmation agreement described above.'.
       ``(l) Notwithstanding any other provision of this title the 
     following shall apply:
       ``(1) A creditor may accept payments from a debtor before 
     and after the filing of a reaffirmation agreement with the 
     court.
       ``(2) A creditor may accept payments from a debtor under a 
     reaffirmation agreement which the creditor believes in good 
     faith to be effective.
       ``(3) The requirements of subsections (c)(2) and (k) shall 
     be satisfied if disclosures required under those subsections 
     are given in good faith.
       ``(m)(1) Until 60 days after a reaffirmation agreement is 
     filed with the court (or such additional period as the court, 
     after notice and a hearing and for cause, orders before the 
     expiration of such period), it shall be presumed that the 
     reaffirmation agreement is an undue hardship on the debtor if 
     the debtor's monthly income less the debtor's monthly 
     expenses as shown on the debtor's completed and signed 
     statement in support of the reaffirmation agreement required 
     under subsection (k)(6)(A) is less than the scheduled 
     payments on the reaffirmed debt. This presumption shall be 
     reviewed by the court. The presumption may be rebutted in 
     writing by the debtor if the statement includes an 
     explanation which identifies additional sources of funds to 
     make the payments as agreed upon under the terms of the 
     reaffirmation agreement. If the presumption is not rebutted 
     to the satisfaction of the court, the court may disapprove 
     the agreement. No agreement shall be disapproved without 
     notice and a hearing to the debtor and creditor and such 
     hearing shall be concluded before the entry of the debtor's 
     discharge.
       ``(2) This subsection does not apply to reaffirmation 
     agreements where the creditor is a credit union, as defined 
     in section 19(b)(1)(A)(iv) of the Federal Reserve Act.''.
       (b) Law Enforcement.--
       (1) In general.--Chapter 9 of title 18, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 158. Designation of United States attorneys and agents 
       of the Federal Bureau of Investigation to address abusive 
       reaffirmations of debt and materially fraudulent statements 
       in bankruptcy schedules

       ``(a) In General.--The Attorney General of the United 
     States shall designate the individuals described in 
     subsection (b) to have primary responsibility in carrying out 
     enforcement activities in addressing violations of section 
     152 or 157 relating to abusive reaffirmations of debt. In 
     addition to addressing the violations referred to in

[[Page H5712]]

     the preceding sentence, the individuals described under 
     subsection (b) shall address violations of section 152 or 157 
     relating to materially fraudulent statements in bankruptcy 
     schedules that are intentionally false or intentionally 
     misleading.
       ``(b) United States District Attorneys and Agents of the 
     Federal Bureau of Investigation.--The individuals referred to 
     in subsection (a) are--
       ``(1) a United States attorney for each judicial district 
     of the United States; and
       ``(2) an agent of the Federal Bureau of Investigation 
     (within the meaning of section 3107) for each field office of 
     the Federal Bureau of Investigation.
       ``(c) Bankruptcy Investigations.--Each United States 
     attorney designated under this section shall, in addition to 
     any other responsibilities, have primary responsibility for 
     carrying out the duties of a United States attorney under 
     section 3057.
       ``(d) Bankruptcy Procedures.--The bankruptcy courts shall 
     establish procedures for referring any case which may contain 
     a materially fraudulent statement in a bankruptcy schedule to 
     the individuals designated under this section.''.
       (2) Clerical amendment.--The analysis for chapter 9 of 
     title 18, United States Code, is amended by adding at the end 
     the following:

``158. Designation of United States attorneys and agents of the Federal 
              Bureau of Investigation to address abusive reaffirmations 
              of debt and materially fraudulent statements in 
              bankruptcy schedules.''.

     SEC. 204. PRESERVATION OF CLAIMS AND DEFENSES UPON SALE OF 
                   PREDATORY LOANS.

       Section 363 of title 11, United States Code, is amended--
       (1) by redesignating subsection (o) as subsection (p), and
       (2) by inserting after subsection (n) the following:
       ``(o) Notwithstanding subsection (f), if a person purchases 
     any interest in a consumer credit transaction that is subject 
     to the Truth in Lending Act or any interest in a consumer 
     credit contract (as defined in section 433.1 of title 16 of 
     the Code of Federal Regulations (January 1, 2001), as amended 
     from time to time), and if such interest is purchased through 
     a sale under this section, then such person shall remain 
     subject to all claims and defenses that are related to such 
     consumer credit transaction or such consumer credit contract, 
     to the same extent as such person would be subject to such 
     claims and defenses of the consumer had such interest been 
     purchased at a sale not under this section.''.

     SEC. 205. GAO STUDY AND REPORT ON REAFFIRMATION PROCESS.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study of the reaffirmation process that 
     occurs under title 11 of the United States Code, to determine 
     the overall treatment of consumers within the context of such 
     process, and shall include in such study consideration of--
       (1) the policies and activities of creditors with respect 
     to reaffirmation; and
       (2) whether consumers are fully, fairly, and consistently 
     informed of their rights pursuant to such title.
       (b) Report to the Congress.--Not later than 18 months after 
     the date of enactment of this Act, the Comptroller General 
     shall submit to the President pro tempore of the Senate and 
     the Speaker of the House of Representatives a report on the 
     results of the study conducted under subsection (a), together 
     with recommendations for legislation (if any) to address any 
     abusive or coercive tactics found in connection with the 
     reaffirmation process that occurs under title 11 of the 
     United States Code.
                   Subtitle B--Priority Child Support

     SEC. 211. DEFINITION OF DOMESTIC SUPPORT OBLIGATION.

       Section 101 of title 11, United States Code, is amended--
       (1) by striking paragraph (12A); and
       (2) by inserting after paragraph (14) the following:
       ``(14A) `domestic support obligation' means a debt that 
     accrues before or after the entry of an order for relief 
     under this title, including interest that accrues on that 
     debt as provided under applicable nonbankruptcy law 
     notwithstanding any other provision of this title, that is--
       ``(A) owed to or recoverable by--
       ``(i) a spouse, former spouse, or child of the debtor or 
     such child's parent, legal guardian, or responsible relative; 
     or
       ``(ii) a governmental unit;
       ``(B) in the nature of alimony, maintenance, or support 
     (including assistance provided by a governmental unit) of 
     such spouse, former spouse, or child of the debtor or such 
     child's parent, without regard to whether such debt is 
     expressly so designated;
       ``(C) established or subject to establishment before or 
     after entry of an order for relief under this title, by 
     reason of applicable provisions of--
       ``(i) a separation agreement, divorce decree, or property 
     settlement agreement;
       ``(ii) an order of a court of record; or
       ``(iii) a determination made in accordance with applicable 
     nonbankruptcy law by a governmental unit; and
       ``(D) not assigned to a nongovernmental entity, unless that 
     obligation is assigned voluntarily by the spouse, former 
     spouse, child, or parent, legal guardian, or responsible 
     relative of the child for the purpose of collecting the 
     debt;''.

     SEC. 212. PRIORITIES FOR CLAIMS FOR DOMESTIC SUPPORT 
                   OBLIGATIONS.

       Section 507(a) of title 11, United States Code, is 
     amended--
       (1) by striking paragraph (7);
       (2) by redesignating paragraphs (1) through (6) as 
     paragraphs (2) through (7), respectively;
       (3) in paragraph (2), as so redesignated, by striking 
     ``First'' and inserting ``Second'';
       (4) in paragraph (3), as so redesignated, by striking 
     ``Second'' and inserting ``Third'';
       (5) in paragraph (4), as so redesignated--
       (A) by striking ``Third'' and inserting ``Fourth''; and
       (B) by striking the semicolon at the end and inserting a 
     period;
       (6) in paragraph (5), as so redesignated, by striking 
     ``Fourth'' and inserting ``Fifth'';
       (7) in paragraph (6), as so redesignated, by striking 
     ``Fifth'' and inserting ``Sixth'';
       (8) in paragraph (7), as so redesignated, by striking 
     ``Sixth'' and inserting ``Seventh''; and
       (9) by inserting before paragraph (2), as so redesignated, 
     the following:
       ``(1) First:
       ``(A) Allowed unsecured claims for domestic support 
     obligations that, as of the date of the filing of the 
     petition, are owed to or recoverable by a spouse, former 
     spouse, or child of the debtor, or the parent, legal 
     guardian, or responsible relative of such child, without 
     regard to whether the claim is filed by such person or is 
     filed by a governmental unit on behalf of that person, on the 
     condition that funds received under this paragraph by a 
     governmental unit under this title after the date of the 
     filing of the petition shall be applied and distributed in 
     accordance with applicable nonbankruptcy law.
       ``(B) Subject to claims under subparagraph (A), allowed 
     unsecured claims for domestic support obligations that, as of 
     the date the petition was filed are assigned by a spouse, 
     former spouse, child of the debtor, or such child's parent, 
     legal guardian, or responsible relative to a governmental 
     unit (unless such obligation is assigned voluntarily by the 
     spouse, former spouse, child, parent, legal guardian, or 
     responsible relative of the child for the purpose of 
     collecting the debt) or are owed directly to or recoverable 
     by a governmental unit under applicable nonbankruptcy law, on 
     the condition that funds received under this paragraph by a 
     governmental unit under this title after the date of the 
     filing of the petition be applied and distributed in 
     accordance with applicable nonbankruptcy law.
       ``(C) If a trustee is appointed or elected under section 
     701, 702, 703, 1104, 1202, or 1302, the administrative 
     expenses of the trustee allowed under paragraphs (1)(A), (2), 
     and (6) of section 503(b) shall be paid before payment of 
     claims under subparagraphs (A) and (B), to the extent that 
     the trustee administers assets that are otherwise available 
     for the payment of such claims.''.

     SEC. 213. REQUIREMENTS TO OBTAIN CONFIRMATION AND DISCHARGE 
                   IN CASES INVOLVING DOMESTIC SUPPORT 
                   OBLIGATIONS.

       Title 11, United States Code, is amended--
       (1) in section 1129(a), by adding at the end the following:
       ``(14) If the debtor is required by a judicial or 
     administrative order or statute to pay a domestic support 
     obligation, the debtor has paid all amounts payable under 
     such order or statute for such obligation that first become 
     payable after the date on which the petition is filed.'';
       (2) in section 1208(c)--
       (A) in paragraph (8), by striking ``or'' at the end;
       (B) in paragraph (9), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(10) failure of the debtor to pay any domestic support 
     obligation that first becomes payable after the date on which 
     the petition is filed.'';
       (3) in section 1222(a)--
       (A) in paragraph (2), by striking ``and'' at the end;
       (B) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(4) notwithstanding any other provision of this section, 
     a plan may provide for less than full payment of all amounts 
     owed for a claim entitled to priority under section 
     507(a)(1)(B) only if the plan provides that all of the 
     debtor's projected disposable income for a 5-year period, 
     beginning on the date that the first payment is due under the 
     plan, will be applied to make payments under the plan.'';
       (4) in section 1222(b)--
       (A) by redesignating paragraph (11) as paragraph (12); and
       (B) by inserting after paragraph (10) the following:
       ``(11) provide for the payment of interest accruing after 
     the date of the filing of the petition on unsecured claims 
     that are nondischargeable under section 1228(a), except that 
     such interest may be paid only to the extent that the debtor 
     has disposable income available to pay such interest after 
     making provision for full payment of all allowed claims;'';
       (5) in section 1225(a)--
       (A) in paragraph (5), by striking ``and'' at the end;
       (B) in paragraph (6), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(7) if the debtor is required by a judicial or 
     administrative order or statute to pay a domestic support 
     obligation, the debtor has paid all amounts payable under 
     such order for such obligation that first become payable 
     after the date on which the petition is filed.'';
       (6) in section 1228(a), in the matter preceding paragraph 
     (1), by inserting ``, and in the case of a debtor who is 
     required by a judicial or administrative order to pay a 
     domestic support obligation, after such debtor certifies that 
     all amounts payable under such order or statute that are due 
     on or before the date of the certification (including amounts 
     due before the petition was filed, but only to the extent 
     provided for by the plan) have been paid'' after ``completion 
     by the debtor of all payments under the plan'';

[[Page H5713]]

       (7) in section 1307(c)--
       (A) in paragraph (9), by striking ``or'' at the end;
       (B) in paragraph (10), by striking the period at the end 
     and inserting ``; or''; and
       (C) by adding at the end the following:
       ``(11) failure of the debtor to pay any domestic support 
     obligation that first becomes payable after the date on which 
     the petition is filed.'';
       (8) in section 1322(a)--
       (A) in paragraph (2), by striking ``and'' at the end;
       (B) in paragraph (3), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(4) notwithstanding any other provision of this section, 
     a plan may provide for less than full payment of all amounts 
     owed for a claim entitled to priority under section 
     507(a)(1)(B) only if the plan provides that all of the 
     debtor's projected disposable income for a 5-year period 
     beginning on the date that the first payment is due under the 
     plan will be applied to make payments under the plan.'';
       (9) in section 1322(b)--
       (A) in paragraph (9), by striking ``; and'' and inserting a 
     semicolon;
       (B) by redesignating paragraph (10) as paragraph (11); and
       (C) inserting after paragraph (9) the following:
       ``(10) provide for the payment of interest accruing after 
     the date of the filing of the petition on unsecured claims 
     that are nondischargeable under section 1328(a), except that 
     such interest may be paid only to the extent that the debtor 
     has disposable income available to pay such interest after 
     making provision for full payment of all allowed claims; 
     and'';
       (10) in section 1325(a), as amended by section 102, by 
     inserting after paragraph (7) the following:
       ``(8) the debtor is required by a judicial or 
     administrative order or statute to pay a domestic support 
     obligation, the debtor has paid all amounts payable under 
     such order or statute for such obligation that first becomes 
     payable after the date on which the petition is filed; and'';
       (11) in section 1328(a), in the matter preceding paragraph 
     (1), by inserting ``, and in the case of a debtor who is 
     required by a judicial or administrative order to pay a 
     domestic support obligation, after such debtor certifies that 
     all amounts payable under such order or statute that are due 
     on or before the date of the certification (including amounts 
     due before the petition was filed, but only to the extent 
     provided for by the plan) have been paid'' after ``completion 
     by the debtor of all payments under the plan''.

     SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT 
                   OBLIGATION PROCEEDINGS.

       Section 362(b) of title 11, United States Code, is amended 
     by striking paragraph (2) and inserting the following:
       ``(2) under subsection (a)--
       ``(A) of the commencement or continuation of a civil action 
     or proceeding--
       ``(i) for the establishment of paternity;
       ``(ii) for the establishment or modification of an order 
     for domestic support obligations;
       ``(iii) concerning child custody or visitation;
       ``(iv) for the dissolution of a marriage, except to the 
     extent that such proceeding seeks to determine the division 
     of property that is property of the estate; or
       ``(v) regarding domestic violence;
       ``(B) of the collection of a domestic support obligation 
     from property that is not property of the estate;
       ``(C) with respect to the withholding of income that is 
     property of the estate or property of the debtor for payment 
     of a domestic support obligation under a judicial or 
     administrative order;
       ``(D) of the withholding, suspension, or restriction of 
     drivers' licenses, professional and occupational licenses, 
     and recreational licenses under State law, as specified in 
     section 466(a)(16) of the Social Security Act;
       ``(E) of the reporting of overdue support owed by a parent 
     to any consumer reporting agency as specified in section 
     466(a)(7) of the Social Security Act;
       ``(F) of the interception of tax refunds, as specified in 
     sections 464 and 466(a)(3) of the Social Security Act or 
     under an analogous State law; or
       ``(G) of the enforcement of medical obligations as 
     specified under title IV of the Social Security Act;''.

     SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY, 
                   MAINTENANCE, AND SUPPORT.

       Section 523 of title 11, United States Code, is amended--
       (1) in subsection (a)--
       (A) by striking paragraph (5) and inserting the following:
       ``(5) for a domestic support obligation;''; and
       (B) by striking paragraph (18);
       (2) in subsection (c), by striking ``(6), or (15)'' each 
     place it appears and inserting ``or (6)''; and
       (3) in paragraph (15), as added by Public Law 103-394 (108 
     Stat. 4133)--
       (A) by inserting ``to a spouse, former spouse, or child of 
     the debtor and'' before ``not of the kind'';
       (B) by inserting ``or'' after ``court of record,''; and
       (C) by striking ``unless--'' and all that follows through 
     the end of the paragraph and inserting a semicolon.

     SEC. 216. CONTINUED LIABILITY OF PROPERTY.

       Section 522 of title 11, United States Code, is amended--
       (1) in subsection (c), by striking paragraph (1) and 
     inserting the following:
       ``(1) a debt of a kind specified in paragraph (1) or (5) of 
     section 523(a) (in which case, notwithstanding any provision 
     of applicable nonbankruptcy law to the contrary, such 
     property shall be liable for a debt of a kind specified in 
     section 523(a)(5));'';
       (2) in subsection (f)(1)(A), by striking the dash and all 
     that follows through the end of the subparagraph and 
     inserting ``of a kind that is specified in section 523(a)(5); 
     or''; and
       (3) in subsection (g)(2), by striking ``subsection (f)(2)'' 
     and inserting ``subsection (f)(1)(B)''.

     SEC. 217. PROTECTION OF DOMESTIC SUPPORT CLAIMS AGAINST 
                   PREFERENTIAL TRANSFER MOTIONS.

       Section 547(c)(7) of title 11, United States Code, is 
     amended to read as follows:
       ``(7) to the extent such transfer was a bona fide payment 
     of a debt for a domestic support obligation;''.

     SEC. 218. DISPOSABLE INCOME DEFINED.

       Section 1225(b)(2)(A) of title 11, United States Code, is 
     amended by inserting ``or for a domestic support obligation 
     that first becomes payable after the date on which the 
     petition is filed'' after ``dependent of the debtor''.

     SEC. 219. COLLECTION OF CHILD SUPPORT.

       (a) Duties of Trustee Under Chapter 7.--Section 704 of 
     title 11, United States Code, as amended by section 102, is 
     amended--
       (1) in subsection (a)--
       (A) in paragraph (8), by striking ``and'' at the end;
       (B) in paragraph (9), by striking the period and inserting 
     a semicolon; and
       (C) by adding at the end the following:
       ``(10) if with respect to the debtor there is a claim for a 
     domestic support obligation, provide the applicable notice 
     specified in subsection (c); and''; and
       (2) by adding at the end the following:
       ``(c)(1) In a case described in subsection (a)(10) to which 
     subsection (a)(10) applies, the trustee shall--
       ``(A)(i) provide written notice to the holder of the claim 
     described in subsection (a)(10) of such claim and of the 
     right of such holder to use the services of the State child 
     support enforcement agency established under sections 464 and 
     466 of the Social Security Act for the State in which such 
     holder resides, for assistance in collecting child support 
     during and after the case under this title;
       ``(ii) include in the notice provided under clause (i) the 
     address and telephone number of such State child support 
     enforcement agency; and
       ``(iii) include in the notice provided under clause (i) an 
     explanation of the rights of such holder to payment of such 
     claim under this chapter;
       ``(B)(i) provide written notice to such State child support 
     enforcement agency of such claim; and
       ``(ii) include in the notice provided under clause (i) the 
     name, address, and telephone number of such holder; and
       ``(C) at such time as the debtor is granted a discharge 
     under section 727, provide written notice to such holder and 
     to such State child support enforcement agency of--
       ``(i) the granting of the discharge;
       ``(ii) the last recent known address of the debtor;
       ``(iii) the last recent known name and address of the 
     debtor's employer; and
       ``(iv) the name of each creditor that holds a claim that--
       ``(I) is not discharged under paragraph (2), (4), or (14A) 
     of section 523(a); or
       ``(II) was reaffirmed by the debtor under section 524 (c).
       ``(2)(A) The holder of a claim described in subsection 
     (a)(10) or the State child support enforcement agency of the 
     State in which such holder resides may request from a 
     creditor described in paragraph (1)(C)(iv) the last known 
     address of the debtor.
       ``(B) Notwithstanding any other provision of law, a 
     creditor that makes a disclosure of a last known address of a 
     debtor in connection with a request made under subparagraph 
     (A) shall not be liable by reason of making such 
     disclosure.''.
       (b) Duties of Trustee Under Chapter 11.--Section 1106 of 
     title 11, United States Code, is amended--
       (1) in subsection (a)--
       (A) in paragraph (6), by striking ``and'' at the end;
       (B) in paragraph (7), by striking the period and inserting 
     ``; and''; and
       (C) by adding at the end the following:
       ``(8) if with respect to the debtor there is a claim for a 
     domestic support obligation, provide the applicable notice 
     specified in subsection (c).''; and
       (2) by adding at the end the following:
       ``(c)(1) In a case described in subsection (a)(8) to which 
     subsection (a)(8) applies, the trustee shall--
       ``(A)(i) provide written notice to the holder of the claim 
     described in subsection (a)(8) of such claim and of the right 
     of such holder to use the services of the State child support 
     enforcement agency established under sections 464 and 466 of 
     the Social Security Act for the State in which such holder 
     resides, for assistance in collecting child support during 
     and after the case under this title; and
       ``(ii) include in the notice required by clause (i) the 
     address and telephone number of such State child support 
     enforcement agency;
       ``(B)(i) provide written notice to such State child support 
     enforcement agency of such claim; and
       ``(ii) include in the notice required by clasue (i) the 
     name, address, and telephone number of such holder; and
       ``(C) at such time as the debtor is granted a discharge 
     under section 1141, provide written notice to such holder of 
     such claim and to such State child support enforcement agency 
     of--
       ``(i) the granting of the discharge;
       ``(ii) the last recent known address of the debtor;

[[Page H5714]]

       ``(iii) the last recent known name and address of the 
     debtor's employer; and
       ``(iv) the name of each creditor that holds a claim that--
       ``(I) is not discharged under paragraph (2), (3), or (14A) 
     of section 523(a); or
       ``(II) was reaffirmed by the debtor under section 524(c).
       ``(2)(A) The holder of a claim described in subsection 
     (a)(8) or the State child enforcement support agency of the 
     State in which such holder resides may request from a 
     creditor described in paragraph (1)(C)(iv) the last known 
     address of the debtor.
       ``(B) Notwithstanding any other provision of law, a 
     creditor that makes a disclosure of a last known address of a 
     debtor in connection with a request made under subparagraph 
     (A) shall not be liable by reason of making such 
     disclosure.''.
       (c) Duties of Trustee Under Chapter 12.--Section 1202 of 
     title 11, United States Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (4), by striking ``and'' at the end;
       (B) in paragraph (5), by striking the period and inserting 
     ``; and''; and
       (C) by adding at the end the following:
       ``(6) if with respect to the debtor there is a claim for a 
     domestic support obligation, provide the applicable notice 
     specified in subsection (c).''; and
       (2) by adding at the end the following:
       ``(c)(1) In a case described in subsection (b)(6) to which 
     subsection (b)(6) applies, the trustee shall--
       ``(A)(i) provide written notice to the holder of the claim 
     described in subsection (b)(6) of such claim and of the right 
     of such holder to use the services of the State child support 
     enforcement agency established under sections 464 and 466 of 
     the Social Security Act for the State in which such holder 
     resides, for assistance in collecting child support during 
     and after the case under this title; and
       ``(ii) include in the notice provided under clause (i) the 
     address and telephone number of such State child support 
     enforcement agency;
       ``(B)(i) provide written notice to such State child support 
     enforcement agency of such claim; and
       ``(ii) include in the notice provided under clause (i) the 
     name, address, and telephone number of such holder; and
       ``(C) at such time as the debtor is granted a discharge 
     under section 1228, provide written notice to such holder and 
     to such State child support enforcement agency of--
       ``(i) the granting of the discharge;
       ``(ii) the last recent known address of the debtor;
       ``(iii) the last recent known name and address of the 
     debtor's employer; and
       ``(iv) the name of each creditor that holds a claim that--
       ``(I) is not discharged under paragraph (2), (4), or (14A) 
     of section 523(a); or
       ``(II) was reaffirmed by the debtor under section 524(c).
       ``(2)(A) The holder of a claim described in subsection 
     (b)(6) or the State child support enforcement agency of the 
     State in which such holder resides may request from a 
     creditor described in paragraph (1)(C)(iv) the last known 
     address of the debtor.
       ``(B) Notwithstanding any other provision of law, a 
     creditor that makes a disclosure of a last known address of a 
     debtor in connection with a request made under subparagraph 
     (A) shall not be liable by reason of making that 
     disclosure.''.
       (d) Duties of Trustee Under Chapter 13.--Section 1302 of 
     title 11, United States Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (4), by striking ``and'' at the end;
       (B) in paragraph (5), by striking the period and inserting 
     ``; and''; and
       (C) by adding at the end the following:
       ``(6) if with respect to the debtor there is a claim for a 
     domestic support obligation, provide the applicable notice 
     specified in subsection (d).''; and
       (2) by adding at the end the following:
       ``(d)(1) In a case described in subsection (b)(6) to which 
     subsection (b)(6) applies, the trustee shall--
       ``(A)(i) provide written notice to the holder of the claim 
     described in subsection (b)(6) of such claim and of the right 
     of such holder to use the services of the State child support 
     enforcement agency established under sections 464 and 466 of 
     the Social Security Act for the State in which such holder 
     resides, for assistance in collecting child support during 
     and after the case under this title; and
       ``(ii) include in the notice provided under clause (i) the 
     address and telephone number of such State child support 
     enforcement agency;
       ``(B)(i) provide written notice to such State child support 
     enforcement agency of such claim; and
       ``(ii) include in the notice provided under clause (i) the 
     name, address, and telephone number of such holder; and
       ``(C) at such time as the debtor is granted a discharge 
     under section 1328, provide written notice to such holder and 
     to such State child support enforcement agency of--
       ``(i) the granting of the discharge;
       ``(ii) the last recent known address of the debtor;
       ``(iii) the last recent known name and address of the 
     debtor's employer; and
       ``(iv) the name of each creditor that holds a claim that--
       ``(I) is not discharged under paragraph (2) or (4) of 
     section 523(a); or
       ``(II) was reaffirmed by the debtor under section 524(c).
       ``(2)(A) The holder of a claim described in subsection 
     (b)(6) or the State child support enforcement agency of the 
     State in which such holder resides may request from a 
     creditor described in paragraph (1)(C)(iv) the last known 
     address of the debtor.
       ``(B) Notwithstanding any other provision of law, a 
     creditor that makes a disclosure of a last known address of a 
     debtor in connection with a request made under subparagraph 
     (A) shall not be liable by reason of making that 
     disclosure.''.

     SEC. 220. NONDISCHARGEABILITY OF CERTAIN EDUCATIONAL BENEFITS 
                   AND LOANS.

       Section 523(a) of title 11, United States Code, is amended 
     by striking paragraph (8) and inserting the following:
       ``(8) unless excepting such debt from discharge under this 
     paragraph would impose an undue hardship on the debtor and 
     the debtor's dependents, for--
       ``(A)(i) an educational benefit overpayment or loan made, 
     insured, or guaranteed by a governmental unit, or made under 
     any program funded in whole or in part by a governmental unit 
     or nonprofit institution; or
       ``(ii) an obligation to repay funds received as an 
     educational benefit, scholarship, or stipend; or
       ``(B) any other educational loan that is a qualified 
     education loan, as defined in section 221(d)(1) of the 
     Internal Revenue Code of 1986, incurred by a debtor who is an 
     individual;''.
                 Subtitle C--Other Consumer Protections

     SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANKRUPTCY 
                   FILINGS.

       Section 110 of title 11, United States Code, is amended--
       (1) in subsection (a)(1), by striking ``or an employee of 
     an attorney'' and inserting ``for the debtor or an employee 
     of such attorney under the direct supervision of such 
     attorney'';
       (2) in subsection (b)--
       (A) in paragraph (1), by adding at the end the following: 
     ``If a bankruptcy petition preparer is not an individual, 
     then an officer, principal, responsible person, or partner of 
     the preparer shall be required to--
       ``(A) sign the document for filing; and
       ``(B) print on the document the name and address of that 
     officer, principal, responsible person or partner.''; and
       (B) by striking paragraph (2) and inserting the following:
       ``(2)(A) Before preparing any document for filing or 
     accepting any fees from a debtor, the bankruptcy petition 
     preparer shall provide to the debtor a written notice to 
     debtors concerning bankruptcy petition preparers, which shall 
     be on an official form issued by the Judicial Conference of 
     the United States.
       ``(B) The notice under subparagraph (A)--
       ``(i) shall inform the debtor in simple language that a 
     bankruptcy petition preparer is not an attorney and may not 
     practice law or give legal advice;
       ``(ii) may contain a description of examples of legal 
     advice that a bankruptcy petition preparer is not authorized 
     to give, in addition to any advice that the preparer may not 
     give by reason of subsection (e)(2); and
       ``(iii) shall--
       ``(I) be signed by the debtor and, under penalty of 
     perjury, by the bankruptcy petition preparer; and
       ``(II) be filed with any document for filing.'';
       (3) in subsection (c)--
       (A) in paragraph (2)--
       (i) by striking ``(2) For purposes'' and inserting ``(2)(A) 
     Subject to subparagraph (B), for purposes''; and
       (ii) by adding at the end the following:
       ``(B) If a bankruptcy petition preparer is not an 
     individual, the identifying number of the bankruptcy petition 
     preparer shall be the Social Security account number of the 
     officer, principal, responsible person, or partner of the 
     preparer.''; and
       (B) by striking paragraph (3);
       (4) in subsection (d)--
       (A) by striking ``(d)(1)'' and inserting ``(d)''; and
       (B) by striking paragraph (2);
       (5) in subsection (e)--
       (A) by striking paragraph (2); and
       (B) by adding at the end the following:
       ``(2)(A) A bankruptcy petition preparer may not offer a 
     potential bankruptcy debtor any legal advice, including any 
     legal advice described in subparagraph (B).
       ``(B) The legal advice referred to in subparagraph (A) 
     includes advising the debtor--
       ``(i) whether--
       ``(I) to file a petition under this title; or
       ``(II) commencing a case under chapter 7, 11, 12, or 13 is 
     appropriate;
       ``(ii) whether the debtor's debts will be eliminated or 
     discharged in a case under this title;
       ``(iii) whether the debtor will be able to retain the 
     debtor's home, car, or other property after commencing a case 
     under this title;
       ``(iv) concerning--
       ``(I) the tax consequences of a case brought under this 
     title; or
       ``(II) the dischargeability of tax claims;
       ``(v) whether the debtor may or should promise to repay 
     debts to a creditor or enter into a reaffirmation agreement 
     with a creditor to reaffirm a debt;
       ``(vi) concerning how to characterize the nature of the 
     debtor's interests in property or the debtor's debts; or
       ``(vii) concerning bankruptcy procedures and rights.'';
       (6) in subsection (f)--
       (A) by striking ``(f)(1)'' and inserting ``(f)''; and
       (B) by striking paragraph (2);
       (7) in subsection (g)--
       (A) by striking ``(g)(1)'' and inserting ``(g)''; and
       (B) by striking paragraph (2);
       (8) in subsection (h)--

[[Page H5715]]

       (A) by redesignating paragraphs (1) through (4) as 
     paragraphs (2) through (5), respectively;
       (B) by inserting before paragraph (2), as so redesignated, 
     the following:
       ``(1) The Supreme Court may promulgate rules under section 
     2075 of title 28, or the Judicial Conference of the United 
     States may prescribe guidelines, for setting a maximum 
     allowable fee chargeable by a bankruptcy petition preparer. A 
     bankruptcy petition preparer shall notify the debtor of any 
     such maximum amount before preparing any document for filing 
     for a debtor or accepting any fee from the debtor.'';
       (C) in paragraph (2), as so redesignated--
       (i) by striking ``Within 10 days after the date of filing a 
     petition, a bankruptcy petition preparer shall file a'' and 
     inserting ``A'';
       (ii) by inserting ``by the bankruptcy petition preparer 
     shall be filed together with the petition,'' after 
     ``perjury''; and
       (iii) by adding at the end the following: ``If rules or 
     guidelines setting a maximum fee for services have been 
     promulgated or prescribed under paragraph (1), the 
     declaration under this paragraph shall include a 
     certification that the bankruptcy petition preparer complied 
     with the notification requirement under paragraph (1).'';
       (D) by striking paragraph (3), as so redesignated, and 
     inserting the following:
       ``(3)(A) The court shall disallow and order the immediate 
     turnover to the bankruptcy trustee any fee referred to in 
     paragraph (2) found to be in excess of the value of any 
     services--
       ``(i) rendered by the preparer during the 12-month period 
     immediately preceding the date of filing of the petition; or
       ``(ii) found to be in violation of any rule or guideline 
     promulgated or prescribed under paragraph (1).
       ``(B) All fees charged by a bankruptcy petition preparer 
     may be forfeited in any case in which the bankruptcy petition 
     preparer fails to comply with this subsection or subsection 
     (b), (c), (d), (e), (f), or (g).
       ``(C) An individual may exempt any funds recovered under 
     this paragraph under section 522(b).''; and
       (E) in paragraph (4), as so redesignated, by striking ``or 
     the United States trustee'' and inserting ``the United States 
     trustee, the bankruptcy administrator, or the court, on the 
     initiative of the court,'';
       (9) in subsection (i)(1), by striking the matter preceding 
     subparagraph (A) and inserting the following:
       ``(i)(1) If a bankruptcy petition preparer violates this 
     section or commits any act that the court finds to be 
     fraudulent, unfair, or deceptive, on the motion of the 
     debtor, trustee, United States trustee, or bankruptcy 
     administrator, and after the court holds a hearing with 
     respect to that violation or act, the court shall order the 
     bankruptcy petition preparer to pay to the debtor--'';
       (10) in subsection (j)--
       (A) in paragraph (2)--
       (i) in subparagraph (A)(i)(I), by striking ``a violation of 
     which subjects a person to criminal penalty'';
       (ii) in subparagraph (B)--
       (I) by striking ``or has not paid a penalty'' and inserting 
     ``has not paid a penalty''; and
       (II) by inserting ``or failed to disgorge all fees ordered 
     by the court'' after ``a penalty imposed under this 
     section,'';
       (B) by redesignating paragraph (3) as paragraph (4); and
       (C) by inserting after paragraph (2) the following:
       ``(3) The court, as part of its contempt power, may enjoin 
     a bankruptcy petition preparer that has failed to comply with 
     a previous order issued under this section. The injunction 
     under this paragraph may be issued on the motion of the 
     court, the trustee, the United States trustee, or the 
     bankruptcy administrator.''; and
       (11) by adding at the end the following:
       ``(l)(1) A bankruptcy petition preparer who fails to comply 
     with any provision of subsection (b), (c), (d), (e), (f), 
     (g), or (h) may be fined not more than $500 for each such 
     failure.
       ``(2) The court shall triple the amount of a fine assessed 
     under paragraph (1) in any case in which the court finds that 
     a bankruptcy petition preparer--
       ``(A) advised the debtor to exclude assets or income that 
     should have been included on applicable schedules;
       ``(B) advised the debtor to use a false Social Security 
     account number;
       ``(C) failed to inform the debtor that the debtor was 
     filing for relief under this title; or
       ``(D) prepared a document for filing in a manner that 
     failed to disclose the identity of the preparer.
       ``(3) The debtor, the trustee, a creditor, the United 
     States trustee, or the bankruptcy administrator may file a 
     motion for an order imposing a fine on the bankruptcy 
     petition preparer for each violation of this section.
       ``(4)(A) Fines imposed under this subsection in judicial 
     districts served by United States trustees shall be paid to 
     the United States trustee, who shall deposit an amount equal 
     to such fines in a special account of the United States 
     Trustee System Fund referred to in section 586(e)(2) of title 
     28. Amounts deposited under this subparagraph shall be 
     available to fund the enforcement of this section on a 
     national basis.
       ``(B) Fines imposed under this subsection in judicial 
     districts served by bankruptcy administrators shall be 
     deposited as offsetting receipts to the fund established 
     under section 1931 of title 28, and shall remain available 
     until expended to reimburse any appropriation for the amount 
     paid out of such appropriation for expenses of the operation 
     and maintenance of the courts of the United States.''.

     SEC. 222. SENSE OF CONGRESS.

       It is the sense of Congress that States should develop 
     curricula relating to the subject of personal finance, 
     designed for use in elementary and secondary schools.

     SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES 
                   CODE.

       Section 507(a) of title 11, United States Code, is amended 
     by inserting after paragraph (9) the following:
       ``(10) Tenth, allowed claims for death or personal injuries 
     resulting from the operation of a motor vehicle or vessel if 
     such operation was unlawful because the debtor was 
     intoxicated from using alcohol, a drug, or another 
     substance.''.

     SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.

       (a) In General.--Section 522 of title 11, United States 
     Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (2)--
       (i) in subparagraph (A), by striking ``and'' at the end;
       (ii) in subparagraph (B), by striking the period at the end 
     and inserting ``; and'';
       (iii) by adding at the end the following:
       ``(C) retirement funds to the extent that those funds are 
     in a fund or account that is exempt from taxation under 
     section 401, 403, 408, 408A, 414, 457, or 501(a) of the 
     Internal Revenue Code of 1986.''; and
       (iv) by striking ``(2)(A) any property'' and inserting:
       ``(3) Property listed in this paragraph is--
       ``(A) any property'';
       (B) by striking paragraph (1) and inserting:
       ``(2) Property listed in this paragraph is property that is 
     specified under subsection (d), unless the State law that is 
     applicable to the debtor under paragraph (3)(A) specifically 
     does not so authorize.'';
       (C) by striking ``(b) Notwithstanding'' and inserting 
     ``(b)(1) Notwithstanding'';
       (D) by striking ``paragraph (2)'' each place it appears and 
     inserting ``paragraph (3)'';
       (E) by striking ``paragraph (1)'' each place it appears and 
     inserting ``paragraph (2)'';
       (F) by striking ``Such property is--''; and
       (G) by adding at the end the following:
       ``(4) For purposes of paragraph (3)(C) and subsection 
     (d)(12), the following shall apply:
       ``(A) If the retirement funds are in a retirement fund that 
     has received a favorable determination under section 7805 of 
     the Internal Revenue Code of 1986, and that determination is 
     in effect as of the date of the commencement of the case 
     under section 301, 302, or 303 of this title, those funds 
     shall be presumed to be exempt from the estate.
       ``(B) If the retirement funds are in a retirement fund that 
     has not received a favorable determination under such section 
     7805, those funds are exempt from the estate if the debtor 
     demonstrates that--
       ``(i) no prior determination to the contrary has been made 
     by a court or the Internal Revenue Service; and
       ``(ii)(I) the retirement fund is in substantial compliance 
     with the applicable requirements of the Internal Revenue Code 
     of 1986; or
       ``(II) the retirement fund fails to be in substantial 
     compliance with the applicable requirements of the Internal 
     Revenue Code of 1986 and the debtor is not materially 
     responsible for that failure.
       ``(C) A direct transfer of retirement funds from 1 fund or 
     account that is exempt from taxation under section 401, 403, 
     408, 408A, 414, 457, or 501(a) of the Internal Revenue Code 
     of 1986, under section 401(a)(31) of the Internal Revenue 
     Code of 1986, or otherwise, shall not cease to qualify for 
     exemption under paragraph (3)(C) or subsection (d)(12) by 
     reason of that direct transfer.
       ``(D)(i) Any distribution that qualifies as an eligible 
     rollover distribution within the meaning of section 402(c) of 
     the Internal Revenue Code of 1986 or that is described in 
     clause (ii) shall not cease to qualify for exemption under 
     paragraph (3)(C) or subsection (d)(12) by reason of that 
     distribution.
       ``(ii) A distribution described in this clause is an amount 
     that--
       ``(I) has been distributed from a fund or account that is 
     exempt from taxation under section 401, 403, 408, 408A, 414, 
     457, or 501(a) of the Internal Revenue Code of 1986; and
       ``(II) to the extent allowed by law, is deposited in such a 
     fund or account not later than 60 days after the distribution 
     of that amount.''; and
       (2) in subsection (d)--
       (A) in the matter preceding paragraph (1), by striking 
     ``subsection (b)(1)'' and inserting ``subsection (b)(2)''; 
     and
       (B) by adding at the end the following:
       ``(12) Retirement funds to the extent that those funds are 
     in a fund or account that is exempt from taxation under 
     section 401, 403, 408, 408A, 414, 457, or 501(a) of the 
     Internal Revenue Code of 1986.''.
       (b) Automatic Stay.--Section 362(b) of title 11, United 
     States Code, is amended--
       (1) in paragraph (17), by striking ``or'' at the end;
       (2) in paragraph (18), by striking the period and inserting 
     a semicolon; and
       (3) by inserting after paragraph (18) the following:
       ``(19) under subsection (a), of withholding of income from 
     a debtor's wages and collection of amounts withheld, under 
     the debtor's agreement authorizing that withholding and 
     collection for the benefit of a pension, profit-sharing, 
     stock bonus, or other plan established under section 401, 
     403, 408, 408A, 414, 457, or 501(c) of the Internal Revenue 
     Code of 1986, that is sponsored by the employer of the 
     debtor, or an affiliate, successor, or predecessor of such 
     employer--
       ``(A) to the extent that the amounts withheld and collected 
     are used solely for payments relating to a loan from a plan 
     that satisfies the requirements of section 408(b)(1) of the 
     Employee Retirement Income Security Act of 1974 or is subject 
     to section 72(p) of the Internal Revenue Code of 1986; or
       ``(B) in the case of a loan from a thrift savings plan 
     described in subchapter III of chapter

[[Page H5716]]

     84 of title 5, that satisfies the requirements of section 
     8433(g) of such title;
     but this paragraph may not be construed to provide that any 
     loan made under a governmental plan under section 414(d), or 
     a contract or account under section 403(b) of the Internal 
     Revenue Code of 1986 constitutes a claim or a debt under this 
     title;''.
       (c) Exceptions To Discharge.--Section 523(a) of title 11, 
     United States Code, as amended by section 215, is amended by 
     adding at the end the following:
       ``(19) owed to a pension, profit-sharing, stock bonus, or 
     other plan established under section 401, 403, 408, 408A, 
     414, 457, or 501(c) of the Internal Revenue Code of 1986, 
     under--
       ``(A) a loan permitted under section 408(b)(1) of the 
     Employee Retirement Income Security Act of 1974, or subject 
     to section 72(p) of the Internal Revenue Code of 1986; or
       ``(B) a loan from the thrift savings plan described in 
     subchapter III of chapter 84 of title 5, that satisfies the 
     requirements of section 8433(g) of such title;
     but nothing in this paragraph may be construed to provide 
     that any loan made under a governmental plan under section 
     414(d), or a contract or account under section 403(b), of the 
     Internal Revenue Code of 1986 constitutes a claim or a debt 
     under this title.''.
       (d) Plan Contents.--Section 1322 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(f) A plan may not materially alter the terms of a loan 
     described in section 362(b)(19) and any amounts required to 
     repay such loan shall not constitute `disposable income' 
     under section 1325.''.
       (e) Asset Limitation.--
       (1) Limitation.--Section 522 of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(n) For assets in individual retirement accounts 
     described in section 408 or 408A of the Internal Revenue Code 
     of 1986, other than a simplified employee pension under 
     section 408(k) of that Code or a simple retirement account 
     under section 408(p) of that Code, the aggregate value of 
     such assets exempted under this section, without regard to 
     amounts attributable to rollover contributions under section 
     402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the 
     Internal Revenue Code of 1986, and earnings thereon, shall 
     not exceed $1,000,000 in a case filed by a debtor who is an 
     individual, except that such amount may be increased if the 
     interests of justice so require.''.
       (2) Adjustment of dollar amounts.--Paragraphs (1) and (2) 
     of section 104(b) of title 11, United States Code, are 
     amended by inserting ``522(n),'' after ``522(d),''.

     SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANKRUPTCY.

       (a) Exclusions.--Section 541 of title 11, United States 
     Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (4), by striking ``or'' at the end;
       (B) by redesignating paragraph (5) as paragraph (9); and
       (C) by inserting after paragraph (4) the following:
       ``(5) funds placed in an education individual retirement 
     account (as defined in section 530(b)(1) of the Internal 
     Revenue Code of 1986) not later than 365 days before the date 
     of filing of the petition, but--
       ``(A) only if the designated beneficiary of such account 
     was a son, daughter, stepson, stepdaughter, grandchild, or 
     step-grandchild of the debtor for the taxable year for which 
     funds were placed in such account;
       ``(B) only to the extent that such funds--
       ``(i) are not pledged or promised to any entity in 
     connection with any extension of credit; and
       ``(ii) are not excess contributions (as described in 
     section 4973(e) of the Internal Revenue Code of 1986); and
       ``(C) in the case of funds placed in all such accounts 
     having the same designated beneficiary not earlier than 720 
     days nor later than 365 days before such date, only so much 
     of such funds as does not exceed $5,000;
       ``(6) funds used to purchase a tuition credit or 
     certificate or contributed to an account in accordance with 
     section 529(b)(1)(A) of the Internal Revenue Code of 1986 
     under a qualified State tuition program (as defined in 
     section 529(b)(1) of such Code) not later than 365 days 
     before the date of filing of the petition, but--
       ``(A) only if the designated beneficiary of the amounts 
     paid or contributed to such tuition program was a son, 
     daughter, stepson, stepdaughter, grandchild, or step-
     grandchild of the debtor for the taxable year for which funds 
     were paid or contributed;
       ``(B) with respect to the aggregate amount paid or 
     contributed to such program having the same designated 
     beneficiary, only so much of such amount as does not exceed 
     the total contributions permitted under section 529(b)(7) of 
     such Code with respect to such beneficiary, as adjusted 
     beginning on the date of the filing of the petition by the 
     annual increase or decrease (rounded to the nearest tenth of 
     1 percent) in the education expenditure category of the 
     Consumer Price Index prepared by the Department of Labor; and
       ``(C) in the case of funds paid or contributed to such 
     program having the same designated beneficiary not earlier 
     than 720 days nor later than 365 days before such date, only 
     so much of such funds as does not exceed $5,000;''; and
       (2) by adding at the end the following:
       ``(e) In determining whether any of the relationships 
     specified in paragraph (5)(A) or (6)(A) of subsection (b) 
     exists, a legally adopted child of an individual (and a child 
     who is a member of an individual's household, if placed with 
     such individual by an authorized placement agency for legal 
     adoption by such individual), or a foster child of an 
     individual (if such child has as the child's principal place 
     of abode the home of the debtor and is a member of the 
     debtor's household) shall be treated as a child of such 
     individual by blood.''.
       (b) Debtor's Duties.--Section 521 of title 11, United 
     States Code, as amended by section 106, is amended by adding 
     at the end the following:
       ``(c) In addition to meeting the requirements under 
     subsection (a), a debtor shall file with the court a record 
     of any interest that a debtor has in an education individual 
     retirement account (as defined in section 530(b)(1) of the 
     Internal Revenue Code of 1986) or under a qualified State 
     tuition program (as defined in section 529(b)(1) of such 
     Code).''.

     SEC. 226. DEFINITIONS.

       (a) Definitions.--Section 101 of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (2) the following:
       ``(3) `assisted person' means any person whose debts 
     consist primarily of consumer debts and the value of whose 
     nonexempt property is less than $150,000;'';
       (2) by inserting after paragraph (4) the following:
       ``(4A) `bankruptcy assistance' means any goods or services 
     sold or otherwise provided to an assisted person with the 
     express or implied purpose of providing information, advice, 
     counsel, document preparation, or filing, or attendance at a 
     creditors' meeting or appearing in a proceeding on behalf of 
     another or providing legal representation with respect to a 
     case or proceeding under this title;''; and
       (3) by inserting after paragraph (12) the following:
       ``(12A) `debt relief agency' means any person who provides 
     any bankruptcy assistance to an assisted person in return for 
     the payment of money or other valuable consideration, or who 
     is a bankruptcy petition preparer under section 110, but does 
     not include--
       ``(A) any person that is an officer, director, employee, or 
     agent of a person who provides such assistance or of such 
     preparer;
       ``(B) a nonprofit organization which is exempt from 
     taxation under section 501(c)(3) of the Internal Revenue Code 
     of 1986;
       ``(C) a creditor of such assisted person, to the extent 
     that the creditor is assisting such assisted person to 
     restructure any debt owed by such assisted person to the 
     creditor;
       ``(D) a depository institution (as defined in section 3 of 
     the Federal Deposit Insurance Act) or any Federal credit 
     union or State credit union (as those terms are defined in 
     section 101 of the Federal Credit Union Act), or any 
     affiliate or subsidiary of such depository institution or 
     credit union; or
       ``(E) an author, publisher, distributor, or seller of works 
     subject to copyright protection under title 17, when acting 
     in such capacity.''.
       (b) Conforming Amendment.--Section 104(b) of title 11, 
     United States Code, is amended by inserting ``101(3),'' after 
     ``sections'' each place it appears.

     SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES.

       (a) Enforcement.--Subchapter II of chapter 5 of title 11, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 526. Restrictions on debt relief agencies

       ``(a) A debt relief agency shall not--
       ``(1) fail to perform any service that such agency informed 
     an assisted person or prospective assisted person it would 
     provide in connection with a case or proceeding under this 
     title;
       ``(2) make any statement, or counsel or advise any assisted 
     person or prospective assisted person to make a statement in 
     a document filed in a case or proceeding under this title, 
     that is untrue and misleading, or that upon the exercise of 
     reasonable care, should have been known by such agency to be 
     untrue or misleading;
       ``(3) misrepresent to any assisted person or prospective 
     assisted person, directly or indirectly, affirmatively or by 
     material omission, with respect to--
       ``(i) the services that such agency will provide to such 
     person; or
       ``(ii) the benefits and risks that may result if such 
     person becomes a debtor in a case under this title; or
       ``(4) advise an assisted person or prospective assisted 
     person to incur more debt in contemplation of such person 
     filing a case under this title or to pay an attorney or 
     bankruptcy petition preparer fee or charge for services 
     performed as part of preparing for or representing a debtor 
     in a case under this title.
       ``(b) Any waiver by any assisted person of any protection 
     or right provided under this section shall not be enforceable 
     against the debtor by any Federal or State court or any other 
     person, but may be enforced against a debt relief agency.
       ``(c)(1) Any contract for bankruptcy assistance between a 
     debt relief agency and an assisted person that does not 
     comply with the material requirements of this section, 
     section 527, or section 528 shall be void and may not be 
     enforced by any Federal or State court or by any other 
     person, other than such assisted person.
       ``(2) Any debt relief agency shall be liable to an assisted 
     person in the amount of any fees or charges in connection 
     with providing bankruptcy assistance to such person that such 
     debt relief agency has received, for actual damages, and for 
     reasonable attorneys' fees and costs if such agency is found, 
     after notice and a hearing, to have--
       ``(A) intentionally or negligently failed to comply with 
     any provision of this section, section 527, or section 528 
     with respect to a case or proceeding under this title for 
     such assisted person;
       ``(B) provided bankruptcy assistance to an assisted person 
     in a case or proceeding under this title that is dismissed or 
     converted to a case

[[Page H5717]]

     under another chapter of this title because of such agency's 
     intentional or negligent failure to file any required 
     document including those specified in section 521; or
       ``(C) intentionally or negligently disregarded the material 
     requirements of this title or the Federal Rules of Bankruptcy 
     Procedure applicable to such agency.
       ``(3) In addition to such other remedies as are provided 
     under State law, whenever the chief law enforcement officer 
     of a State, or an official or agency designated by a State, 
     has reason to believe that any person has violated or is 
     violating this section, the State--
       ``(A) may bring an action to enjoin such violation;
       ``(B) may bring an action on behalf of its residents to 
     recover the actual damages of assisted persons arising from 
     such violation, including any liability under paragraph (2); 
     and
       ``(C) in the case of any successful action under 
     subparagraph (A) or (B), shall be awarded the costs of the 
     action and reasonable attorney fees as determined by the 
     court.
       ``(4) The district court of the United States for any 
     district located in the State shall have concurrent 
     jurisdiction of any action under subparagraph (A) or (B) of 
     paragraph (3).
       ``(5) Notwithstanding any other provision of Federal law 
     and in addition to any other remedy provided under Federal or 
     State law, if the court, on its own motion or on the motion 
     of the United States trustee or the debtor, finds that a 
     person intentionally violated this section, or engaged in a 
     clear and consistent pattern or practice of violating this 
     section, the court may--
       ``(A) enjoin the violation of such section; or
       ``(B) impose an appropriate civil penalty against such 
     person.
       ``(d) No provision of this section, section 527, or section 
     528 shall--
       ``(1) annul, alter, affect, or exempt any person subject to 
     such sections from complying with any law of any State except 
     to the extent that such law is inconsistent with those 
     sections, and then only to the extent of the inconsistency; 
     or
       ``(2) be deemed to limit or curtail the authority or 
     ability--
       ``(A) of a State or subdivision or instrumentality thereof, 
     to determine and enforce qualifications for the practice of 
     law under the laws of that State; or
       ``(B) of a Federal court to determine and enforce the 
     qualifications for the practice of law before that court.''.
       (b) Conforming Amendment.--The table of sections for 
     chapter 5 of title 11, United States Code, is amended by 
     inserting after the item relating to section 525, the 
     following:

``526. Restrictions on debt relief agencies.''.

     SEC. 228. DISCLOSURES.

       (a) Disclosures.--Subchapter II of chapter 5 of title 11, 
     United States Code, as amended by section 227, is amended by 
     adding at the end the following:

     ``Sec. 527. Disclosures

       ``(a) A debt relief agency providing bankruptcy assistance 
     to an assisted person shall provide--
       ``(1) the written notice required under section 342(b)(1) 
     of this title; and
       ``(2) to the extent not covered in the written notice 
     described in paragraph (1), and not later than 3 business 
     days after the first date on which a debt relief agency first 
     offers to provide any bankruptcy assistance services to an 
     assisted person, a clear and conspicuous written notice 
     advising assisted persons that--
       ``(A) all information that the assisted person is required 
     to provide with a petition and thereafter during a case under 
     this title is required to be complete, accurate, and 
     truthful;
       ``(B) all assets and all liabilities are required to be 
     completely and accurately disclosed in the documents filed to 
     commence the case, and the replacement value of each asset as 
     defined in section 506 of this title must be stated in those 
     documents where requested after reasonable inquiry to 
     establish such value;
       ``(C) current monthly income, the amounts specified in 
     section 707(b)(2), and, in a case under chapter 13, 
     disposable income (determined in accordance with section 
     707(b)(2), are required to be stated after reasonable 
     inquiry; and
       ``(D) information that an assisted person provides during 
     their case may be audited pursuant to this title, and that 
     failure to provide such information may result in dismissal 
     of the case under this title or other sanction including, in 
     some instances, criminal sanctions.
       ``(b) A debt relief agency providing bankruptcy assistance 
     to an assisted person shall provide each assisted person at 
     the same time as the notices required under subsection (a)(1) 
     with the following statement, to the extent applicable, or 
     one substantially similar. The statement shall be clear and 
     conspicuous and shall be in a single document separate from 
     other documents or notices provided to the assisted person:
       `` `IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE 
     SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER.
       `` `If you decide to seek bankruptcy relief, you can 
     represent yourself, you can hire an attorney to represent 
     you, or you can get help in some localities from a bankruptcy 
     petition preparer who is not an attorney. THE LAW REQUIRES AN 
     ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A 
     WRITTEN CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY 
     PETITION PREPARER WILL DO FOR YOU AND HOW MUCH IT WILL COST. 
     Ask to see the contract before you hire anyone.
       `` `The following information helps you understand what 
     must be done in a routine bankruptcy case to help you 
     evaluate how much service you need. Although bankruptcy can 
     be complex, many cases are routine.
       `` `Before filing a bankruptcy case, either you or your 
     attorney should analyze your eligibility for different forms 
     of debt relief made available by the Bankruptcy Code and 
     which form of relief is most likely to be beneficial for you. 
     Be sure you understand the relief you can obtain and its 
     limitations. To file a bankruptcy case, documents called a 
     Petition, Schedules and Statement of Financial Affairs, as 
     well as in some cases a Statement of Intention need to be 
     prepared correctly and filed with the bankruptcy court. You 
     will have to pay a filing fee to the bankruptcy court. Once 
     your case starts, you will have to attend the required first 
     meeting of creditors where you may be questioned by a court 
     official called a `trustee' and by creditors.
       `` `If you choose to file a chapter 7 case, you may be 
     asked by a creditor to reaffirm a debt. You may want help 
     deciding whether to do so and a creditor is not permitted to 
     coerce you into reaffirming your debts.
       `` `If you choose to file a chapter 13 case in which you 
     repay your creditors what you can afford over 3 to 5 years, 
     you may also want help with preparing your chapter 13 plan 
     and with the confirmation hearing on your plan which will be 
     before a bankruptcy judge.
       `` `If you select another type of relief under the 
     Bankruptcy Code other than chapter 7 or chapter 13, you will 
     want to find out what needs to be done from someone familiar 
     with that type of relief.
       `` `Your bankruptcy case may also involve litigation. You 
     are generally permitted to represent yourself in litigation 
     in bankruptcy court, but only attorneys, not bankruptcy 
     petition preparers, can give you legal advice.'.
       ``(c) Except to the extent the debt relief agency provides 
     the required information itself after reasonably diligent 
     inquiry of the assisted person or others so as to obtain such 
     information reasonably accurately for inclusion on the 
     petition, schedules or statement of financial affairs, a debt 
     relief agency providing bankruptcy assistance to an assisted 
     person, to the extent permitted by nonbankruptcy law, shall 
     provide each assisted person at the time required for the 
     notice required under subsection (a)(1) reasonably sufficient 
     information (which shall be provided in a clear and 
     conspicuous writing) to the assisted person on how to provide 
     all the information the assisted person is required to 
     provide under this title pursuant to section 521, including--
       ``(1) how to value assets at replacement value, determine 
     current monthly income, the amounts specified in section 
     707(b)(2) and, in a chapter 13 case, how to determine 
     disposable income in accordance with section 707(b)(2) and 
     related calculations;
       ``(2) how to complete the list of creditors, including how 
     to determine what amount is owed and what address for the 
     creditor should be shown; and
       ``(3) how to determine what property is exempt and how to 
     value exempt property at replacement value as defined in 
     section 506 of this title.
       ``(d) A debt relief agency shall maintain a copy of the 
     notices required under subsection (a) of this section for 2 
     years after the date on which the notice is given the 
     assisted person.''.
       (b) Conforming Amendment.--The table of sections for 
     chapter 5 of title 11, United States Code, as amended by 
     section 227, is amended by inserting after the item relating 
     to section 526 the following:

``527. Disclosures.''.

     SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES.

       (a) Enforcement.--Subchapter II of chapter 5 of title 11, 
     United States Code, as amended by sections 227 and 228, is 
     amended by adding at the end the following:

     ``Sec. 528. Requirements for debt relief agencies

       ``(a) A debt relief agency shall--
       ``(1) not later than 5 business days after the first date 
     on which such agency provides any bankruptcy assistance 
     services to an assisted person, but prior to such assisted 
     person's petition under this title being filed, execute a 
     written contract with such assisted person that explains 
     clearly and conspicuously--
       ``(A) the services such agency will provide to such 
     assisted person; and
       ``(B) the fees or charges for such services, and the terms 
     of payment;
       ``(2) provide the assisted person with a copy of the fully 
     executed and completed contract;
       ``(3) clearly and conspicuously disclose in any 
     advertisement of bankruptcy assistance services or of the 
     benefits of bankruptcy directed to the general public 
     (whether in general media, seminars or specific mailings, 
     telephonic or electronic messages, or otherwise) that the 
     services or benefits are with respect to bankruptcy relief 
     under this title; and
       ``(4) clearly and conspicuously use the following statement 
     in such advertisement: `We are a debt relief agency. We help 
     people file for bankruptcy relief under the Bankruptcy Code.' 
     or a substantially similar statement.
       ``(b)(1) An advertisement of bankruptcy assistance services 
     or of the benefits of bankruptcy directed to the general 
     public includes--
       ``(A) descriptions of bankruptcy assistance in connection 
     with a chapter 13 plan whether or not chapter 13 is 
     specifically mentioned in such advertisement; and
       ``(B) statements such as `federally supervised repayment 
     plan' or `Federal debt restructuring help' or other similar 
     statements that could lead a reasonable consumer to believe 
     that debt counseling was being offered when in fact the 
     services were directed to providing bankruptcy assistance 
     with a chapter 13 plan or other form of bankruptcy relief 
     under this title.
       ``(2) An advertisement, directed to the general public, 
     indicating that the debt relief agency

[[Page H5718]]

     provides assistance with respect to credit defaults, mortgage 
     foreclosures, eviction proceedings, excessive debt, debt 
     collection pressure, or inability to pay any consumer debt 
     shall--
       ``(A) disclose clearly and conspicuously in such 
     advertisement that the assistance may involve bankruptcy 
     relief under this title; and
       ``(B) include the following statement: `We are a debt 
     relief agency. We help people file for bankruptcy relief 
     under the Bankruptcy Code.' or a substantially similar 
     statement.''.
       (b) Conforming Amendment.--The table of sections for 
     chapter 5 of title 11, United States Code, as amended by 
     section 227 and 228, is amended by inserting after the item 
     relating to section 527, the following:

``528. Requirements for debt relief agencies.''.

     SEC. 230. GAO STUDY.

       (a) Study.--Not later than 270 days after the date of 
     enactment of this Act, the Comptroller General of the United 
     States shall conduct a study of the feasibility, 
     effectiveness, and cost of requiring trustees appointed under 
     title 11, United States Code, or the bankruptcy courts, to 
     provide to the Office of Child Support Enforcement promptly 
     after the commencement of cases by debtors who are 
     individuals under such title, the names and social security 
     numbers of such debtors for the purposes of allowing such 
     Office to determine whether such debtors have outstanding 
     obligations for child support (as determined on the basis of 
     information in the Federal Case Registry or other national 
     database).
       (b) Report.--Not later than 300 days after the date of 
     enactment of this Act, the Comptroller General shall submit 
     to the President pro tempore of the Senate and the Speaker of 
     the House of Representatives a report containing the results 
     of the study required by subsection (a).

     SEC. 231. PROTECTION OF PERSONALLY IDENTIFIABLE INFORMATION.

       (a) Limitation.--Section 363(b)(1) of title 11, United 
     States Code, is amended by striking the period at the end and 
     inserting the following:
     ``, except that if the debtor in connection with offering a 
     product or a service discloses to an individual a policy 
     prohibiting the transfer of personally identifiable 
     information about individuals to persons that are not 
     affiliated with the debtor and if such policy is in effect on 
     the date of the commencement of the case, then the trustee 
     may not sell or lease personally identifiable information to 
     any person unless--
       ``(A) such sale or such lease is consistent with such 
     policy; or
       ``(B) after appointment of a consumer privacy ombudsman in 
     accordance with section 332, and after notice and a hearing, 
     the court approves such sale or such lease--
       ``(i) giving due consideration to the facts, circumstances, 
     and conditions of such sale or such lease; and
       ``(ii) finding that no showing was made that such sale or 
     such lease would violate applicable nonbankruptcy law.''.
       (b) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting after paragraph (41) the 
     following:
       ``(41A) `personally identifiable information' means--
       ``(A) if provided by an individual to the debtor in 
     connection with obtaining a product or a service from the 
     debtor primarily for personal, family, or household 
     purposes--
       ``(i) the first name (or initial) and last name of such 
     individual, whether given at birth or time of adoption, or 
     resulting from a lawful change of name;
       ``(ii) the geographical address of a physical place of 
     residence of such individual;
       ``(iii) an electronic address (including an e-mail address) 
     of such individual;
       ``(iv) a telephone number dedicated to contacting such 
     individual at such physical place of residence;
       ``(v) a social security account number issued to such 
     individual; or
       ``(vi) the account number of a credit card issued to such 
     individual; or
       ``(B) if identified in connection with 1 or more of the 
     items of information specified in subparagraph (A)--
       ``(i) a birth date, the number of a certificate of birth or 
     adoption, or a place of birth; or
       ``(ii) any other information concerning an identified 
     individual that, if disclosed, will result in contacting or 
     identifying such individual physically or electronically;''.

     SEC. 232. CONSUMER PRIVACY OMBUDSMAN.

       (a) Consumer Privacy Ombudsman.--Title 11 of the United 
     States Code is amended by inserting after section 331 the 
     following:

     ``Sec. 332. Consumer privacy ombudsman

       ``(a) If a hearing is required under section 363(b)(1)(B) 
     of this title, the court shall order the United States 
     trustee to appoint, not later than 5 days before the 
     commencement of the hearing, 1 disinterested person (other 
     than the United States trustee) to serve as the consumer 
     privacy ombudsman in the case and shall require that notice 
     of such hearing be timely given to such ombudsman.
       ``(b) The consumer privacy ombudsman may appear and be 
     heard at such hearing and shall provide to the court 
     information to assist the court in its consideration of the 
     facts, circumstances, and conditions of the proposed sale or 
     lease of personally identifiable information under section 
     363(b)(1)(B) of this title. Such information may include 
     presentation of--
       ``(1) the debtor's privacy policy;
       ``(2) the potential losses or gains of privacy to consumers 
     if such sale or such lease is approved by the court;
       ``(3) the potential costs or benefits to consumers if such 
     sale or such lease is approved by the court; and
       ``(4) the potential alternatives that would mitigate 
     potential privacy losses or potential costs to consumers.
       ``(c) A consumer privacy ombudsman shall not disclose any 
     personally identifiable information obtained by the ombudsman 
     under this title.''.
       (b) Compensation of Consumer Privacy Ombudsman.--Section 
     330(a)(1) of title 11, United States Code, is amended in the 
     matter preceding subparagraph (A), by inserting ``a consumer 
     privacy ombudsman appointed under section 332,'' before ``an 
     examiner''.
       (c) Conforming Amendment.--The table of sections for 
     subchapter II of chapter 3 of title 11, United States Code, 
     is amended by adding at the end the following:

``332. Consumer privacy ombudsman.''.

     SEC. 233. PROHIBITION ON DISCLOSURE OF NAME OF MINOR 
                   CHILDREN.

       (a) Prohibition.--Title 11 of the United States Code, as 
     amended by section 106, is amended by inserting after section 
     111 the following:

     ``Sec. 112. Prohibition on disclosure of name of minor 
       children

       ``The debtor may be required to provide information 
     regarding a minor child involved in matters under this title 
     but may not be required to disclose in the public records in 
     the case the name of such minor child. The debtor may be 
     required to disclose the name of such minor child in a 
     nonpublic record that is maintained by the court and made 
     available by the court for examination by the United States 
     trustee, the trustee, and the auditor (if any) appointed 
     under section 586(f) of title 28, in the case. The court, the 
     United States trustee, the trustee, and such auditor shall 
     not disclose the name of such minor child maintained in such 
     nonpublic record.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     1 of title 11, United States Code, as amended by section 106, 
     is amended by inserting after the item relating to section 
     111 the following:

``112. Prohibition on disclosure of name of minor children.''.
       (c) Conforming Amendment.--Section 107(a) of title 11, 
     United States Code, is amended by inserting ``and subject to 
     section 112 of this title'' after ``section''.
                TITLE III--DISCOURAGING BANKRUPTCY ABUSE

     SEC. 301. REINFORCEMENT OF THE FRESH START.

       Section 523(a)(17) of title 11, United States Code, is 
     amended--
       (1) by striking ``by a court'' and inserting ``on a 
     prisoner by any court'';
       (2) by striking ``section 1915(b) or (f)'' and inserting 
     ``subsection (b) or (f)(2) of section 1915''; and
       (3) by inserting ``(or a similar non-Federal law)'' after 
     ``title 28'' each place it appears.

     SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS.

       Section 362(c) of title 11, United States Code, is 
     amended--
       (1) in paragraph (1), by striking ``and'' at the end;
       (2) in paragraph (2), by striking the period at the end and 
     inserting a semicolon; and
       (3) by adding at the end the following:
       ``(3) if a single or joint case is filed by or against 
     debtor who is an individual in a case under chapter 7, 11, or 
     13, and if a single or joint case of the debtor was pending 
     within the preceding 1-year period but was dismissed, other 
     than a case refiled under a chapter other than chapter 7 
     after dismissal under section 707(b)--
       ``(A) the stay under subsection (a) with respect to any 
     action taken with respect to a debt or property securing such 
     debt or with respect to any lease shall terminate with 
     respect to the debtor on the 30th day after the filing of the 
     later case;
       ``(B) on the motion of a party in interest for continuation 
     of the automatic stay and upon notice and a hearing, the 
     court may extend the stay in particular cases as to any or 
     all creditors (subject to such conditions or limitations as 
     the court may then impose) after notice and a hearing 
     completed before the expiration of the 30-day period only if 
     the party in interest demonstrates that the filing of the 
     later case is in good faith as to the creditors to be stayed; 
     and
       ``(C) for purposes of subparagraph (B), a case is 
     presumptively filed not in good faith (but such presumption 
     may be rebutted by clear and convincing evidence to the 
     contrary)--
       ``(i) as to all creditors, if--

       ``(I) more than 1 previous case under any of chapters 7, 
     11, and 13 in which the individual was a debtor was pending 
     within the preceding 1-year period;
       ``(II) a previous case under any of chapters 7, 11, and 13 
     in which the individual was a debtor was dismissed within 
     such 1-year period, after the debtor failed to--

       ``(aa) file or amend the petition or other documents as 
     required by this title or the court without substantial 
     excuse (but mere inadvertence or negligence shall not be a 
     substantial excuse unless the dismissal was caused by the 
     negligence of the debtor's attorney);
       ``(bb) provide adequate protection as ordered by the court; 
     or
       ``(cc) perform the terms of a plan confirmed by the court; 
     or

       ``(III) there has not been a substantial change in the 
     financial or personal affairs of the debtor since the 
     dismissal of the next most previous case under chapter 7, 11, 
     or 13 or any other reason to conclude that the later case 
     will be concluded--

       ``(aa) if a case under chapter 7, with a discharge; or
       ``(bb) if a case under chapter 11 or 13, with a confirmed 
     plan that will be fully performed; and
       ``(ii) as to any creditor that commenced an action under 
     subsection (d) in a previous case in which the individual was 
     a debtor if, as of the date of dismissal of such case, that 
     action was

[[Page H5719]]

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

     SEC. 303. CURBING ABUSIVE FILINGS.

       (a) In General.--Section 362(d) of title 11, United States 
     Code, is amended--
       (1) in paragraph (2), by striking ``or'' at the end;
       (2) in paragraph (3), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(4) with respect to a stay of an act against real 
     property under subsection (a), by a creditor whose claim is 
     secured by an interest in such real estate, if the court 
     finds that the filing of the bankruptcy petition was part of 
     a scheme to delay, hinder, and defraud creditors that 
     involved either--
       ``(A) transfer of all or part ownership of, or other 
     interest in, the real property without the consent of the 
     secured creditor or court approval; or
       ``(B) multiple bankruptcy filings affecting the real 
     property.
     If recorded in compliance with applicable State laws 
     governing notices of interests or liens in real property, an 
     order entered under this subsection shall be binding in any 
     other case under this title purporting to affect the real 
     property filed not later than 2 years after the date of entry 
     of such order by the court, except that a debtor in a 
     subsequent case may move for relief from such order based 
     upon changed circumstances or for good cause shown, after 
     notice and a hearing. Any Federal, State, or local 
     governmental unit that accepts notices of interests or liens 
     in real property shall accept any certified copy of an order 
     described in this subsection for indexing and recording.''.
       (b) Automatic Stay.--Section 362(b) of title 11, United 
     States Code, as amended by section 224, is amended by 
     inserting after paragraph (19), the following:
       ``(20) under subsection (a), of any act to enforce any lien 
     against or security interest in real property following the 
     entry of an order under section 362(d)(4) as to that property 
     in any prior bankruptcy case for a period of 2 years after 
     entry of such an order, except that the debtor, in a 
     subsequent case, may move the court for relief from such 
     order based upon changed circumstances or for other good 
     cause shown, after notice and a hearing;
       ``(21) under subsection (a), of any act to enforce any lien 
     against or security interest in real property--
       ``(A) if the debtor is ineligible under section 109(g) to 
     be a debtor in a bankruptcy case; or
       ``(B) if the bankruptcy case was filed in violation of a 
     bankruptcy court order in a prior bankruptcy case prohibiting 
     the debtor from being a debtor in another bankruptcy case;''.

     SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY SECURITY.

       Title 11, United States Code, is amended--
       (1) in section 521(a), as so designated by section 106--
       (A) in paragraph (4), by striking ``, and'' at the end and 
     inserting a semicolon;
       (B) in paragraph (5), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(6) in a case under chapter 7 of this title in which the 
     debtor is an individual, not retain possession of personal 
     property as to which a creditor has an allowed claim for the 
     purchase price secured in whole or in part by an interest in 
     that personal property unless the debtor, not later than 45 
     days after the first meeting of creditors under section 
     341(a), either--
       ``(A) enters into an agreement with the creditor pursuant 
     to section 524(c) of this title with respect to the claim 
     secured by such property; or
       ``(B) redeems such property from the security interest 
     pursuant to section 722 of this title.
     If the debtor fails to so act within the 45-day period 
     referred to in paragraph (6), the stay under section 362(a) 
     of this title is terminated with respect to the personal 
     property of the estate or of the debtor which is affected, 
     such property shall no longer be property of the estate, and 
     the creditor may take whatever action as to such property as 
     is permitted by applicable nonbankruptcy law, unless the 
     court determines on the motion of the trustee filedbefore the 
     expiration of such 45-day period, and after notice and a 
     hearing, that such property is of consequential value or 
     benefit to the estate, orders appropriate adequate protection 
     of the creditor's interest, and orders the debtor to deliver 
     any collateral in the debtor's possession to the trustee.''; 
     and
       (2) in section 722, by inserting ``in full at the time of 
     redemption'' before the period at the end.

     SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE DEBTOR DOES 
                   NOT COMPLETE INTENDED SURRENDER OF CONSUMER 
                   DEBT COLLATERAL.

       Title 11, United States Code, is amended--
       (1) in section 362, as amended by section 106--
       (A) in subsection (c), by striking ``(e), and (f)'' and 
     inserting ``(e), (f), and (h)'';
       (B) by redesignating subsection (h) as subsection (k) and 
     transferring such subsection so as to insert it after 
     subjection (j) as added by section 106; and
       (C) by inserting after subsection (g) the following:
       ``(h)(1) In a case in which the debtor is an individual, 
     the stay provided by subsection (a) is terminated with 
     respect to personal property of the estate or of the debtor 
     securing in whole or in part a claim, or subject to an 
     unexpired lease, and such personal property shall no longer 
     be property of the estate if the debtor fails within the 
     applicable time set by section 521(a)(2) of this title--
       ``(A) to file timely any statement of intention required 
     under section 521(a)(2) of this title with respect to that 
     property or to indicate in that statement that the debtor 
     will either surrender the property or retain it and, if 
     retaining it, either redeem the property pursuant to section 
     722 of this title, reaffirm the debt it secures pursuant to 
     section 524(c) of this title, or assume the unexpired lease 
     pursuant to section 365(p) of this title if the trustee does 
     not do so, as applicable; and
       ``(B) to take timely the action specified in that statement 
     of intention, as it may be amended before expiration of the 
     period for taking action, unless the statement of intention 
     specifies reaffirmation and the creditor refuses to reaffirm 
     on the original contract terms.
       ``(2) Paragraph (1) does not apply if the court determines, 
     on the motion of the trustee filed before the expiration of 
     the applicable time set by section 521(a)(2), after notice 
     and a hearing, that such property is of consequential value 
     or benefit to the estate, and orders appropriate adequate 
     protection of the creditor's interest, and orders the debtor 
     to deliver any collateral in the debtor's possession to 
     the trustee. If the court does not so determine, the stay 
     provided by subsection (a) shall terminate upon the 
     conclusion of the proceeding on the motion.''; and
       (2) in section 521, as amended by sections 106 and 225--
       (A) in subsection (a)(2) by striking ``consumer'';
       (B) in subsection (a)(2)(B)--
       (i) by striking ``forty-five days after the filing of a 
     notice of intent under this section'' and inserting ``30 days 
     after the first date set for the meeting of creditors under 
     section 341(a) of this title''; and
       (ii) by striking ``forty-five day'' and inserting ``30-
     day'';
       (C) in subsection (a)(2)(C) by inserting ``, except as 
     provided in section 362(h) of this title'' before the 
     semicolon; and
       (D) by adding at the end the following:
       ``(d) If the debtor fails timely to take the action 
     specified in subsection (a)(6) of this section, or in 
     paragraphs (1) and (2) of section 362(h) of this title, with 
     respect to property which a lessor or bailor owns and has 
     leased, rented, or bailed to the debtor or as to which a 
     creditor holds a security interest not otherwise voidable 
     under section 522(f), 544, 545, 547, 548, or 549 of this 
     title, nothing in this title shall prevent or limit the 
     operation of a provision in the underlying lease or agreement 
     which has the effect of placing the debtor in default under 
     such lease or agreement by reason of the occurrence, 
     pendency, or existence of a proceeding under this title or 
     the insolvency of the debtor. Nothing in this subsection 
     shall be deemed to justify limiting such a provision in any 
     other circumstance.''.

     SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER 
                   13.

       (a) In General.--Section 1325(a)(5)(B)(i) of title 11, 
     United States Code, is amended to read as follows:
       ``(i) the plan provides that--
       ``(I) the holder of such claim retain the lien securing 
     such claim until the earlier of--

       ``(aa) the payment of the underlying debt determined under 
     nonbankruptcy law; or
       ``(bb) discharge under section 1328; and

       ``(II) if the case under this chapter is dismissed or 
     converted without completion of the plan, such lien shall 
     also be retained by such holder to the extent recognized by 
     applicable nonbankruptcy law; and''.

[[Page H5720]]

       (b) Restoring the Foundation for Secured Credit.--Section 
     1325(a) of title 11, United States Code, is amended by adding 
     at the end the following:
     ``For purposes of paragraph (5), section 506 shall not apply 
     to a claim described in that paragraph if the creditor has a 
     purchase money security interest securing the debt that is 
     the subject of the claim, the debt was incurred within the 
     910-day preceding the filing of the petition, and the 
     collateral for that debt consists of a motor vehicle (as 
     defined in section 30102 of title 49) acquired for the 
     personal use of the debtor, or if collateral for that debt 
     consists of any other thing of value, if the debt was 
     incurred during the 1-year period preceding that filing.''.
       (c) Definitions.--Section 101 of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (13) the following:
       ``(13A) `debtor's principal residence'--
       ``(A) means a residential structure, including incidental 
     property, without regard to whether that structure is 
     attached to real property; and
       ``(B) includes an individual condominium or cooperative 
     unit, a mobile or manufactured home, or trailer;''; and
       (2) by inserting after paragraph (27), the following:
       ``(27A) `incidental property' means, with respect to a 
     debtor's principal residence--
       ``(A) property commonly conveyed with a principal residence 
     in the area where the real estate is located;
       ``(B) all easements, rights, appurtenances, fixtures, 
     rents, royalties, mineral rights, oil or gas rights or 
     profits, water rights, escrow funds, or insurance proceeds; 
     and
       ``(C) all replacements or additions;''.

     SEC. 307. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.

       Section 522(b)(3) of title 11, United States Code, as so 
     designated by section 106, is amended--
       (1) in subparagraph (A)--
       (A) by striking ``180 days'' and inserting ``730 days''; 
     and
       (B) by striking ``, or for a longer portion of such 180-day 
     period than in any other place'' and inserting ``or if the 
     debtor's domicile has not been located at a single State for 
     such 730-day period, the place in which the debtor's domicile 
     was located for 180 days immediately preceding the 730-day 
     period or for a longer portion of such 180-day period than in 
     any other place''; and
       (2) by adding at the end the following:
     ``If the effect of the domiciliary requirement under 
     subparagraph (A) is to render the debtor ineligible for any 
     exemption, the debtor may elect to exempt property that is 
     specified under subsection (d).''.

     SEC. 308. REDUCTION OF HOMESTEAD EXEMPTION FOR FRAUD.

       Section 522 of title 11, United States Code, as amended by 
     section 224, is amended--
       (1) in subsection (b)(3)(A), as so designated by this Act, 
     by inserting ``subject to subsections (o) and (p),'' before 
     ``any property''; and
       (2) by adding at the end the following:
       ``(o) For purposes of subsection (b)(3)(A), and 
     notwithstanding subsection (a), the value of an interest in--
       ``(1) real or personal property that the debtor or a 
     dependent of the debtor uses as a residence;
       ``(2) a cooperative that owns property that the debtor or a 
     dependent of the debtor uses as a residence;
       ``(3) a burial plot for the debtor or a dependent of the 
     debtor; or
       ``(4) real or personal property that the debtor or a 
     dependent of the debtor claims as a homestead;
     shall be reduced to the extent that such value is 
     attributable to any portion of any property that the debtor 
     disposed of in the 10-year period ending on the date of the 
     filing of the petition with the intent to hinder, delay, or 
     defraud a creditor and that the debtor could not exempt, or 
     that portion that the debtor could not exempt, under 
     subsection (b), if on such date the debtor had held the 
     property so disposed of.''.

     SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER 13 CASES.

       (a) Stopping Abusive Conversions From Chapter 13.--Section 
     348(f)(1) of title 11, United States Code, is amended--
       (1) in subparagraph (A), by striking ``and'' at the end;
       (2) in subparagraph (B)--
       (A) by striking ``in the converted case, with allowed 
     secured claims'' and inserting ``only in a case converted to 
     a case under chapter 11 or 12, but not in a case converted to 
     a case under chapter 7, with allowed secured claims in cases 
     under chapters 11 and 12''; and
       (B) by striking the period and inserting ``; and''; and
       (3) by adding at the end the following:
       ``(C) with respect to cases converted from chapter 13--
       ``(i) the claim of any creditor holding security as of the 
     date of the petition shall continue to be secured by that 
     security unless the full amount of such claim determined 
     under applicable nonbankruptcy law has been paid in full as 
     of the date of conversion, notwithstanding any valuation or 
     determination of the amount of an allowed secured claim made 
     for the purposes of the case under chapter 13; and
       ``(ii) unless a prebankruptcy default has been fully cured 
     under the plan at the time of conversion, in any proceeding 
     under this title or otherwise, the default shall have the 
     effect given under applicable nonbankruptcy law.''.
       (b) Giving Debtors the Ability To Keep Leased Personal 
     Property by Assumption.--Section 365 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(p)(1) If a lease of personal property is rejected or not 
     timely assumed by the trustee under subsection (d), the 
     leased property is no longer property of the estate and the 
     stay under section 362(a) is automatically terminated.
       ``(2)(A) If the debtor in a case under chapter 7 is an 
     individual, the debtor may notify the creditor in writing 
     that the debtor desires to assume the lease. Upon being so 
     notified, the creditor may, at its option, notify the debtor 
     that it is willing to have the lease assumed by the debtor 
     and may condition such assumption on cure of any outstanding 
     default on terms set by the contract.
       ``(B) If, not later than 30 days after notice is provided 
     under subparagraph (A), the debtor notifies the lessor in 
     writing that the lease is assumed, the liability under the 
     lease will be assumed by the debtor and not by the estate.
       ``(C) The stay under section 362 and the injunction under 
     section 524(a)(2) shall not be violated by notification of 
     the debtor and negotiation of cure under this subsection.
       ``(3) In a case under chapter 11 in which the debtor is an 
     individual and in a case under chapter 13, if the debtor is 
     the lessee with respect to personal property and the lease is 
     not assumed in the plan confirmed by the court, the lease is 
     deemed rejected as of the conclusion of the hearing on 
     confirmation. If the lease is rejected, the stay under 
     section 362 and any stay under section 1301 is automatically 
     terminated with respect to the property subject to the 
     lease.''.
       (c) Adequate Protection of Lessors and Purchase Money 
     Secured Creditors.--
       (1) Confirmation of plan.--Section 1325(a)(5)(B) of title 
     11, United States Code, as amended by section 306, is 
     amended--
       (A) in clause (i), by striking ``and'' at the end;
       (B) in clause (ii), by striking ``or'' at the end and 
     inserting ``and''; and
       (C) by adding at the end the following:
       ``(iii) if--
       ``(I) property to be distributed pursuant to this 
     subsection is in the form of periodic payments, such payments 
     shall be in equal monthly amounts; and
       ``(II) the holder of the claim is secured by personal 
     property, the amount of such payments shall not be less than 
     an amount sufficient to provide to the holder of such claim 
     adequate protection during the period of the plan; or''.
       (2) Payments.--Section 1326(a) of title 11, United States 
     Code, is amended to read as follows:
       ``(a)(1) Unless the court orders otherwise, the debtor 
     shall commence making payments not later than 30 days after 
     the date of the filing of the plan or the order for relief, 
     whichever is earlier, in the amount--
       ``(A) proposed by the plan to the trustee;
       ``(B) scheduled in a lease of personal property directly to 
     the lessor for that portion of the obligation that becomes 
     due after the order for relief, reducing the payments under 
     subparagraph (A) by the amount so paid and providing the 
     trustee with evidence of such payment, including the amount 
     and date of payment; and
       ``(C) that provides adequate protection directly to a 
     creditor holding an allowed claim secured by personal 
     property to the extent the claim is attributable to the 
     purchase of such property by the debtor for that portion of 
     the obligation that becomes due after the order for relief, 
     reducing the payments under subparagraph (A) by the amount so 
     paid and providing the trustee with evidence of such payment, 
     including the amount and date of payment.
       ``(2) A payment made under paragraph (1)(A) shall be 
     retained by the trustee until confirmation or denial of 
     confirmation. If a plan is confirmed, the trustee shall 
     distribute any such payment in accordance with the plan as 
     soon as is practicable. If a plan is not confirmed, the 
     trustee shall return any such payments not previously paid 
     and not yet due and owing to creditors pursuant to paragraph 
     (3) to the debtor, after deducting any unpaid claim allowed 
     under section 503(b).
       ``(3) Subject to section 363, the court may, upon notice 
     and a hearing, modify, increase, or reduce the payments 
     required under this subsection pending confirmation of a 
     plan.
       ``(4) Not later than 60 days after the date of filing of a 
     case under this chapter, a debtor retaining possession of 
     personal property subject to a lease or securing a claim 
     attributable in whole or in part to the purchase price of 
     such property shall provide the lessor or secured creditor 
     reasonable evidence of the maintenance of any required 
     insurance coverage with respect to the use or ownership of 
     such property and continue to do so for so long as the debtor 
     retains possession of such property.''.

     SEC. 310. LIMITATION ON LUXURY GOODS.

       Section 523(a)(2)(C) of title 11, United States Code, is 
     amended to read as follows:
       ``(C)(i) for purposes of subparagraph (A)--
       ``(I) consumer debts owed to a single creditor and 
     aggregating more than $500 for luxury goods or services 
     incurred by an individual debtor on or within 90 days before 
     the order for relief under this title are presumed to be 
     nondischargeable; and
       ``(II) cash advances aggregating more than $750 that are 
     extensions of consumer credit under an open end credit plan 
     obtained by an individual debtor on or within 70 days before 
     the order for relief under this title, are presumed to be 
     nondischargeable; and
       ``(ii) for purposes of this subparagraph--
       ``(I) the terms `consumer', `credit', and `open end credit 
     plan' have the same meanings as in section 103 of the Truth 
     in Lending Act; and
       ``(II) the term `luxury goods or services' does not include 
     goods or services reasonably necessary for the support or 
     maintenance of the debtor or a dependent of the debtor.''.

     SEC. 311. AUTOMATIC STAY.

       (a) In general.--Section 362(b) of title 11, United States 
     Code, as amended by sections 224 and 303, is amended by 
     inserting after paragraph (21), the following:

[[Page H5721]]

       ``(22) subject to subsection (n), under subsection (a)(3), 
     of the continuation of any eviction, unlawful detainer 
     action, or similar proceeding by a lessor against a debtor 
     involving residential property in which the debtor resides as 
     a tenant under a lease or rental agreement and with respect 
     to which the lessor has obtained before the date of the 
     filing of the bankruptcy petition, a judgment for possession 
     of such property against the debtor;
       ``(23) subject to subsection (o), under subsection (a)(3), 
     of an eviction action that seeks possession of the 
     residential property in which the debtor resides as a tenant 
     under a lease or rental agreement based on endangerment of 
     such property or the illegal use of controlled substances on 
     such property, but only if the lessor files with the court, 
     and serves upon the debtor, a certification under penalty of 
     perjury that such an eviction action has been filed, or that 
     the debtor, during the 30-day period preceding the date of 
     the filing of the certification, has endangered property or 
     illegally used or allowed to be used a controlled substance 
     on the property;
       ``(24) under subsection (a), of any transfer that is not 
     avoidable under section 544 and that is not avoidable under 
     section 549;''.
       (b) Limitations.--Section 362 of title 11, United States 
     Code, as amended by sections 106 and 305, is amended by 
     adding at the end the following:
       ``(n)(1) Except as otherwise provided in this subsection, 
     subsection (b)(22) shall apply on the date that is 30 days 
     after the date on which the bankruptcy petition is filed, if 
     the debtor files with the petition and serves upon the lessor 
     a certification under penalty of perjury that--
       ``(A) under nonbankruptcy law applicable in the 
     jurisdiction, there are circumstances under which the debtor 
     would be permitted to cure the entire monetary default that 
     gave rise to the judgment for possession, after that judgment 
     for possession was entered; and
       ``(B) the debtor (or an adult dependent of the debtor) has 
     deposited with the clerk of the court, any rent that would 
     become due during the 30-day period after the filing of the 
     bankruptcy petition.
       ``(2) If, within the 30-day period after the filing of the 
     bankruptcy petition, the debtor (or an adult dependent of the 
     debtor) complies with paragraph (1) and files with the court 
     and serves upon the lessor a further certification under 
     penalty of perjury that the debtor (or an adult dependent of 
     the debtor) has cured, under nonbankrupcty law applicable in 
     the jurisdiction, the entire monetary default that gave rise 
     to the judgment under which possession is sought by the 
     lessor, subsection (b)(22) shall not apply, unless ordered to 
     apply by the court under paragraph (3).
       ``(3)(A) If the lessor files an objection to any 
     certification filed by the debtor under paragraph (1) or (2), 
     and serves such objection upon the debtor, the court shall 
     hold a hearing within 10 days after the filing and service of 
     such objection to determine if the certification filed by the 
     debtor under paragraph (1) or (2) is true.
       ``(B) If the court upholds the objection of the lessor 
     filed under subparagraph (A)--
       ``(i) subsection (b)(22) shall apply immediately and relief 
     from the stay provided under subsection (a)(3) shall not be 
     required to enable the lessor to complete the process to 
     recover full possession of the property; and
       ``(ii) the clerk of the court shall immediately serve upon 
     the lessor and the debtor a certified copy of the court's 
     order upholding the lessor's objection.
       ``(4) If a debtor, in accordance with paragraph (5), 
     indicates on the petition that there was a judgment for 
     possession of the residential rental property in which the 
     debtor resides and does not file a certification under 
     paragraph (1) or (2)--
       ``(A) subsection (b)(22) shall apply immediately upon 
     failure to file such certification, and relief from the stay 
     provided under subsection (a)(3) shall not be required to 
     enable the lessor to complete the process to recover full 
     possession of the property; and
       ``(B) the clerk of the court shall immediately serve upon 
     the lessor and the debtor a certified copy of the docket 
     indicating the absence of a filed certification and the 
     applicability of the exception to the stay under subsection 
     (b)(22).
       ``(5)(A) Where a judgment for possession of residential 
     property in which the debtor resides as a tenant under a 
     lease or rental agreement has been obtained by the lessor, 
     the debtor shall so indicate on the bankruptcy petition and 
     shall provide the name and address of the lessor that 
     obtained that pre-petition judgment on the petition and on 
     any certification filed under this subsection.
       ``(B) The form of certification filed with the petition, as 
     specified in this subsection, shall provide for the debtor to 
     certify, and the debtor shall certify--
       ``(i) whether a judgment for possession of residential 
     rental housing in which the debtor resides has been obtained 
     against the debtor before the filing of the petition; and
       ``(ii) whether the debtor is claiming under paragraph (1) 
     that under nonbankruptcy law applicable in the jurisdiction, 
     there are circumstances under which the debtor would be 
     permitted to cure the entire monetary default that gave rise 
     to the judgment for possession, after that judgment of 
     possession was entered, and has made the appropriate deposit 
     with the court.
       ``(C) The standard forms (electronic and otherwise) used in 
     a bankruptcy proceeding shall be amended to reflect the 
     requirements of this subsection.
       ``(D) The clerk of the court shall arrange for the prompt 
     transmittal of the rent deposited in accordance with 
     paragraph (1)(B) to the lessor.
       ``(o)(1) Except as otherwise provided in this subsection, 
     subsection (b)(23) shall apply on the date that is 15 days 
     after the date on which the lessor files and serves a 
     certification described in subsection (b)(23).
       ``(2)(A) If the debtor files with the court an objection to 
     the truth or legal sufficiency of the certification described 
     in subsection (b)(23) and serves such objection upon the 
     lessor, subsection (b)(23) shall not apply, unless ordered to 
     apply by the court under this subsection.
       ``(B) If the debtor files and serves the objection under 
     subparagraph (A), the court shall hold a hearing within 10 
     days after the filing and service of such objection to 
     determine if the situation giving rise to the lessor's 
     certification under paragraph (1) existed or has been 
     remedied.
       ``(C) If the debtor can demonstrate to the satisfaction of 
     the court that the situation giving rise to the lessor's 
     certification under paragraph (1) did not exist or has been 
     remedied, the stay provided under subsection (a)(3) shall 
     remain in effect until the termination of the stay under this 
     section.
       ``(D) If the debtor cannot demonstrate to the satisfaction 
     of the court that the situation giving rise to the lessor's 
     certification under paragraph (1) did not exist or has been 
     remedied--
       ``(i) relief from the stay provided under subsection (a)(3) 
     shall not be required to enable the lessor to proceed with 
     the eviction; and
       ``(ii) the clerk of the court shall immediately serve upon 
     the lessor and the debtor a certified copy of the court's 
     order upholding the lessor's certification.
       ``(3) If the debtor fails to file, within 15 days, an 
     objection under paragraph (2)(A)--
       ``(A) subsection (b)(23) shall apply immediately upon such 
     failure and relief from the stay provided under subsection 
     (a)(3) shall not be required to enable the lessor to complete 
     the process to recover full possession of the property; and
       ``(B) the clerk of the court shall immediately serve upon 
     the lessor and the debtor a certified copy of the docket 
     indicating such failure.''.

     SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY DISCHARGES.

       Title 11, United States Code, is amended--
       (1) in section 727(a)(8), by striking ``six'' and inserting 
     ``8''; and
       (2) in section 1328, by inserting after subsection (e) the 
     following:
       ``(f) Notwithstanding subsections (a) and (b), the court 
     shall not grant a discharge of all debts provided for in the 
     plan or disallowed under section 502, if the debtor has 
     received a discharge--
       ``(1) in a case filed under chapter 7, 11, or 12 of this 
     title during the 4-year period preceding the date of the 
     order for relief under this chapter, or
       ``(2) in a case filed under chapter 13 of this title during 
     the 2-year period preceding the date of such order.''.

     SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND ANTIQUES.

       (a) Definition.--Section 522(f) of title 11, United States 
     Code, is amended by adding at the end the following:
       ``(4)(A) Subject to subparagraph (B), for purposes of 
     paragraph (1)(B), the term `household goods' means--
       ``(i) clothing;
       ``(ii) furniture;
       ``(iii) appliances;
       ``(iv) 1 radio;
       ``(v) 1 television;
       ``(vi) 1 VCR;
       ``(vii) linens;
       ``(viii) china;
       ``(ix) crockery;
       ``(x) kitchenware;
       ``(xi) educational materials and educational equipment 
     primarily for the use of minor dependent children of the 
     debtor;
       ``(xii) medical equipment and supplies;
       ``(xiii) furniture exclusively for the use of minor 
     children, or elderly or disabled dependents of the debtor;
       ``(xiv) personal effects (including the toys and hobby 
     equipment of minor dependent children and wedding rings) of 
     the debtor and the dependents of the debtor; and
       ``(xv) 1 personal computer and related equipment.
       ``(B) The term `household goods' does not include--
       ``(i) works of art (unless by or of the debtor, or any 
     relative of the debtor);
       ``(ii) electronic entertainment equipment with a fair 
     market value of more than $500 in the aggregate (except 1 
     television, 1 radio, and 1 VCR);
       ``(iii) items acquired as antiques with a fair market value 
     of more than $500 in the aggregate;
       ``(iv) jewelry with a fair market value of more than $500 
     in the aggregate (except wedding rings); and
       ``(v) a computer (except as otherwise provided for in this 
     section), motor vehicle (including a tractor or lawn 
     tractor), boat, or a motorized recreational device, 
     conveyance, vehicle, watercraft, or aircraft.''.
       (b) Study.--Not later than 2 years after the date of 
     enactment of this Act, the Director of the Executive Office 
     for United States Trustees shall submit a report to the 
     Committee on the Judiciary of the Senate and the Committee on 
     the Judiciary of the House of Representatives containing its 
     findings regarding utilization of the definition of household 
     goods, as defined in section 522(f)(4) of title 11, United 
     States Code, as added by this section, with respect to the 
     avoidance of nonpossessory, nonpurchase money security 
     interests in household goods under section 522(f)(1)(B) of 
     title 11, United States Code, and the impact that section 
     522(f)(4) of that title, as added by this section, has had on 
     debtors and on the bankruptcy courts. Such report may include 
     recommendations for amendments to section 522(f)(4) of title 
     11, United States Code, consistent with the Director's 
     findings.

[[Page H5722]]

     SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE DEBTS.

       (a) In General.--Section 523(a) of title 11, United States 
     Code, is amended by inserting after paragraph (14) the 
     following:
       ``(14A) incurred to pay a tax to a governmental unit, other 
     than the United States, that would be nondischargeable under 
     paragraph (1);''.
       (b) Discharge Under Chapter 13.--Section 1328(a) of title 
     11, United States Code, is amended by striking paragraphs (1) 
     through (3) and inserting the following:
       ``(1) provided for under section 1322(b)(5);
       ``(2) of the kind specified in paragraph (2), (3), (4), 
     (5), (8), or (9) of section 523(a);
       ``(3) for restitution, or a criminal fine, included in a 
     sentence on the debtor's conviction of a crime; or
       ``(4) for restitution, or damages, awarded in a civil 
     action against the debtor as a result of willful or malicious 
     injury by the debtor that caused personal injury to an 
     individual or the death of an individual.''.

     SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7 AND 13 
                   CASES.

       (a) Notice.--Section 342 of title 11, United States Code, 
     as amended by section 102, is amended--
       (1) in subsection (c)--
       (A) by inserting ``(1)'' after ``(c)'';
       (B) by striking ``, but the failure of such notice to 
     contain such information shall not invalidate the legal 
     effect of such notice''; and
       (C) by adding at the end the following:
       ``(2)(A) If, within the 90 days before the commencement of 
     a voluntary case, a creditor supplies the debtor in at least 
     2 communications sent to the debtor with the current account 
     number of the debtor and the address at which such creditor 
     requests to receive correspondence, then any notice required 
     by this title to be sent by the debtor to such creditor shall 
     be sent to such address and shall include such account 
     number.
       (B) If a creditor would be in violation of applicable 
     nonbankruptcy law by sending any such communication within 
     such 90-day period and if such creditor supplies the debtor 
     in the last 2 communications with the current account number 
     of the debtor and the address at which such creditor requests 
     to receive correspondence, then any notice required by this 
     title to be sent by the debtor to such creditor shall be sent 
     to such address and shall include such account number; and
       (2) by adding at the end the following:
       ``(e)(1) In a case under chapter 7 or 13 of this title of a 
     debtor who is an individual, a creditor at any time may both 
     file with the court and serve on the debtor a notice of 
     address to be used to provide notice in such case to such 
     creditor.
       ``(2) Any notice in such case required to be provided to 
     such creditor by the debtor or the court later than 5 days 
     after the court and the debtor receive such creditor's notice 
     of address, shall be provided to such address.
       ``(f)(1) An entity may file with any bankruptcy court a 
     notice of address to be used by all the bankruptcy courts or 
     by particular bankruptcy courts, as so specified by such 
     entity at the time such notice is filed, to provide notice to 
     such entity in all cases under chapters 7 and 13 pending in 
     the courts with respect to which such notice is filed, in 
     which such entity is a creditor.
       ``(2) In any case filed under chapter 7 or 13, any notice 
     required to be provided by a court with respect to which a 
     notice is filed under paragraph (1), to such entity later 
     than 30 days after the filing of such notice under paragraph 
     (1) shall be provided to such address unless with respect to 
     a particular case a different address is specified in a 
     notice filed and served in accordance with subsection (e).
       ``(3) A notice filed under paragraph (1) may be withdrawn 
     by such entity.
       ``(g)(1) Notice provided to a creditor by the debtor or the 
     court other than in accordance with this section (excluding 
     this subsection) shall not be effective notice until such 
     notice is brought to the attention of such creditor. If such 
     creditor designates a person or an organizational subdivision 
     of such creditor to be responsible for receiving notices 
     under this title and establishes reasonable procedures so 
     that such notices receivable by such creditor are to be 
     delivered to such person or such subdivision, then a notice 
     provided to such creditor other than in accordance with this 
     section (excluding this subsection) shall not be considered 
     to have been brought to the attention of such creditor until 
     such notice is received by such person or such subdivision.
       ``(2) A monetary penalty may not be imposed on a creditor 
     for a violation of a stay in effect under section 362(a) of 
     this title (including a monetary penalty imposed under 
     section 362(k) of this title) or for failure to comply with 
     section 542 or 543 unless the conduct that is the basis of 
     such violation or of such failure occurs after such creditor 
     receives notice effective under this section of the order for 
     relief.''.
       (b) Debtor's Duties.--Section 521 of title 11, United 
     States Code, as amended by sections 106, 225, and 305, is 
     amended--
       (1) in subsection (a), as so designated by section 106, by 
     amending paragraph (1) to read as follows:
       ``(1) file--
       ``(A) a list of creditors; and
       ``(B) unless the court orders otherwise--
       ``(i) a schedule of assets and liabilities;
       ``(ii) a schedule of current income and current 
     expenditures;
       ``(iii) a statement of the debtor's financial affairs and, 
     if section 342(b) applies, a certificate--

       ``(I) of an attorney whose name is indicated on the 
     petition as the attorney for the debtor, or any bankruptcy 
     petition preparer signing the petition under section 
     110(b)(1), indicating that such attorney or such bankruptcy 
     petition preparer delivered to the debtor the notice required 
     by section 342(b); or
       ``(II) if no attorney is so indicated, and no bankruptcy 
     petition preparer signed the petition, of the debtor that 
     such notice was received and read by the debtor;

       ``(iv) copies of all payment advices or other evidence of 
     payment received within 60 days before the filing of the 
     petition, by the debtor from any employer of the debtor;
       ``(v) a statement of the amount of monthly net income, 
     itemized to show how the amount is calculated; and
       ``(vi) a statement disclosing any reasonably anticipated 
     increase in income or expenditures over the 12-month period 
     following the date of the filing of the petition;''; and
       (2) by adding at the end the following:
       ``(e)(1) If the debtor in a case under chapter 7 or 13 is 
     an individual and if a creditor files with the court at any 
     time a request to receive a copy of the petition, schedules, 
     and statement of financial affairs filed by the debtor, then 
     the court shall make such petition, such schedules, and such 
     statement available to such creditor.
       ``(2)(A) The debtor shall provide--
       ``(i) not later than 7 days before the date first set for 
     the first meeting of creditors, to the trustee a copy of the 
     Federal income tax return required under applicable law (or 
     at the election of the debtor, a transcript of such return) 
     for the most recent tax year ending immediately before the 
     commencement of the case and for which a Federal income tax 
     return was filed; and
       ``(ii) at the same time the debtor complies with clause 
     (i), a copy of such return (or if elected under clause (i), 
     such transcript) to any creditor that timely requests such 
     copy.
       ``(B) If the debtor fails to comply with clause (i) or (ii) 
     of subparagraph (A), the court shall dismiss the case unless 
     the debtor demonstrates that the failure to so comply is due 
     to circumstances beyond the control of the debtor.
       ``(C) If a creditor requests a copy of such tax return or 
     such transcript and if the debtor fails to provide a copy of 
     such tax return or such transcript to such creditor at the 
     time the debtor provides such tax return or such transcript 
     to the trustee, then the court shall dismiss the case unless 
     the debtor demonstrates that the failure to provide a copy of 
     such tax return or such transcript is due to circumstances 
     beyond the control of the debtor.
       ``(3) If a creditor in a case under chapter 13 files with 
     the court at any time a request to receive a copy of the plan 
     filed by the debtor, then the court shall make available to 
     such creditor a copy of such plan--
       ``(A) at a reasonable cost; and
       ``(B) not later than 5 days after such request is filed.
       ``(f) At the request of the court, the United States 
     trustee, or any party in interest in a case under chapter 7, 
     11, or 13, a debtor who is an individual shall file with the 
     court--
       ``(1) at the same time filed with the taxing authority, a 
     copy of each Federal income tax return required under 
     applicable law (or at the election of the debtor, a 
     transcript of such tax return) with respect to each tax year 
     of the debtor ending while the case is pending under such 
     chapter;
       ``(2) at the same time filed with the taxing authority, 
     each Federal income tax return required under applicable law 
     (or at the election of the debtor, a transcript of such tax 
     return) that had not been filed with such authority as of the 
     date of the commencement of the case and that was 
     subsequently filed for any tax year of the debtor ending in 
     the 3-year period ending on the date of the commencement of 
     the case;
       ``(3) a copy of each amendment to any Federal income tax 
     return or transcript filed with the court under paragraph (1) 
     or (2); and
       ``(4) in a case under chapter 13--
       ``(A) on the date that is either 90 days after the end of 
     such tax year or 1 year after the date of the commencement of 
     the case, whichever is later, if a plan is not confirmed 
     before such later date; and
       ``(B) annually after the plan is confirmed and until the 
     case is closed, not later than the date that is 45 days 
     before the anniversary of the confirmation of such plan;
     a statement, under penalty of perjury, of the income and 
     expenditures of the debtor during the tax year of the debtor 
     most recently concluded before such statement is filed under 
     this paragraph, and of the monthly income of the debtor, that 
     shows how income, expenditures, and monthly income are 
     calculated.
       ``(g)(1) A statement referred to in subsection (f)(4) shall 
     disclose--
       ``(A) the amount and sources of the income of the debtor;
       ``(B) the identity of any person responsible with the 
     debtor for the support of any dependent of the debtor; and
       ``(C) the identity of any person who contributed, and the 
     amount contributed, to the household in which the debtor 
     resides.
       ``(2) The tax returns, amendments, and statement of income 
     and expenditures described in subsections (e)(2)(A) and (f) 
     shall be available to the United States trustee (or the 
     bankruptcy administrator, if any), the trustee, and any party 
     in interest for inspection and copying, subject to the 
     requirements of subsection (h).
       ``(h)(1) Not later than 180 days after the date of the 
     enactment of the Bankruptcy Abuse Prevention and Consumer 
     Protection Act of 2002, the Director of the Administrative 
     Office of the United States Courts shall establish procedures 
     for safeguarding the confidentiality of any tax information 
     required to be provided under this section.
       ``(2) The procedures under paragraph (1) shall include 
     restrictions on creditor access to tax information that is 
     required to be provided under this section.

[[Page H5723]]

       ``(3) Not later than 540 days after the date of enactment 
     of the Bankruptcy Abuse Prevention and Consumer Protection 
     Act of 2002, the Director of the Administrative Office of the 
     United States Courts shall prepare and submit to the 
     President pro tempore of the Senate and the Speaker of the 
     House of Representatives a report that--
       ``(A) assesses the effectiveness of the procedures 
     established under paragraph (1); and
       ``(B) if appropriate, includes proposed legislation to--
       ``(i) further protect the confidentiality of tax 
     information; and
       ``(ii) provide penalties for the improper use by any person 
     of the tax information required to be provided under this 
     section.
       ``(i) If requested by the United States trustee or by the 
     trustee, the debtor shall provide--
       ``(1) a document that establishes the identity of the 
     debtor, including a driver's license, passport, or other 
     document that contains a photograph of the debtor; or
       ``(2) such other personal identifying information relating 
     to the debtor that establishes the identity of the debtor.''.

     SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHEDULES OR 
                   PROVIDE REQUIRED INFORMATION.

       Section 521 of title 11, United States Code, as amended by 
     sections 106, 225, 305, and 315, is amended by adding at the 
     end the following:
       ``(j)(1) Subject to paragraphs (2) and (4) and 
     notwithstanding section 707(a), if an individual debtor in a 
     voluntary case under chapter 7 or 13 fails to file all of the 
     information required under subsection (a)(1) within 45 days 
     after the filing of the petition commencing the case, the 
     case shall be automatically dismissed effective on the 46th 
     day after the filing of the petition.
       ``(2) Subject to paragraph (4) and with respect to a case 
     described in paragraph (1), any party in interest may request 
     the court to enter an order dismissing the case. If 
     requested, the court shall enter an order of dismissal not 
     later than 5 days after such request.
       ``(3) Subject to paragraph (4) and upon request of the 
     debtor made within 45 days after the filing of the petition 
     commencing a case described in paragraph (1), the court may 
     allow the debtor an additional period of not to exceed 45 
     days to file the information required under subsection (a)(1) 
     if the court finds justification for extending the period for 
     the filing.
       ``(4) Notwithstanding any other provision of this 
     subsection, on the motion of the trustee filed before the 
     expiration of the applicable period of time specified in 
     paragraph (1), (2), or (3), and after notice and a hearing, 
     the court may decline to dismiss the case if the court finds 
     that the debtor attempted in good faith to file all the 
     information required by subsection (a)(1)(B)(iv) and that the 
     best interests of creditors would be served by administration 
     of the case.''.

     SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON 
                   CONFIRMATION OF THE PLAN.

       Section 1324 of title 11, United States Code, is amended--
       (1) by striking ``After'' and inserting the following:
       ``(a) Except as provided in subsection (b) and after''; and
       (2) by adding at the end the following:
       ``(b) The hearing on confirmation of the plan may be held 
     not earlier than 20 days and not later than 45 days after the 
     date of the meeting of creditors under section 341(a), unless 
     the court determines that it would be in the best interests 
     of the creditors and the estate to hold such hearing at an 
     earlier date and there is no objection to such earlier 
     date.''.

     SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION IN 
                   CERTAIN CASES.

       Title 11, United States Code, is amended--
       (1) by amending section 1322(d) to read as follows:
       ``(d)(1) If the current monthly income of the debtor and 
     the debtor's spouse combined, when multiplied by 12, is not 
     less than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(B) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(C) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals, plus 
     $525 per month for each individual in excess of 4,

     the plan may not provide for payments over a period that is 
     longer than 5 years.
       ``(2) If the current monthly income of the debtor and the 
     debtor's spouse combined, when multiplied by 12, is less 
     than--
       ``(A) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 earner 
     last;
       ``(B) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(C) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals , 
     plus $525 per month for each individual in excess of 4,

     the plan may not provide for payments over a period that is 
     longer than 3 years, unless the court, for cause, approves a 
     longer period, but the court may not approve a period that is 
     longer than 5 years.'';
       (2) in section 1325(b)(1)(B), by striking ``three-year 
     period'' and inserting ``applicable commitment period''; and
       (3) in section 1325(b), as amended by section 102, by 
     adding at the end the following:
       ``(4) For purposes of this subsection, the `applicable 
     commitment period'--
       ``(A) subject to subparagraph (B), shall be--
       ``(i) 3 years; or
       ``(ii) not less than 5 years, if the current monthly income 
     of the debtor and the debtor's spouse combined, when 
     multiplied by 12, is not less than--
       ``(I) in the case of a debtor in a household of 1 person, 
     the median family income of the applicable State for 1 
     earner;
       ``(II) in the case of a debtor in a household of 2, 3, or 4 
     individuals, the highest median family income of the 
     applicable State for a family of the same number or fewer 
     individuals; or
       ``(III) in the case of a debtor in a household exceeding 4 
     individuals, the highest median family income of the 
     applicable State for a family of 4 or fewer individuals , 
     plus $525 per month for each individual in excess of 4; and
       ``(B) may be less than 3 or 5 years, whichever is 
     applicable under subparagraph (A), but only if the plan 
     provides for payment in full of all allowed unsecured claims 
     over a shorter period.''; and
       (4) in section 1329(c), by striking ``three years'' and 
     inserting ``the applicable commitment period under section 
     1325(b)(1)(B)''.

     SEC. 319. SENSE OF CONGRESS REGARDING EXPANSION OF RULE 9011 
                   OF THE FEDERAL RULES OF BANKRUPTCY PROCEDURE.

       It is the sense of Congress that rule 9011 of the Federal 
     Rules of Bankruptcy Procedure (11 U.S.C. App.) should be 
     modified to include a requirement that all documents 
     (including schedules), signed and unsigned, submitted to the 
     court or to a trustee by debtors who represent themselves and 
     debtors who are represented by attorneys be submitted only 
     after the debtors or the debtors' attorneys have made 
     reasonable inquiry to verify that the information contained 
     in such documents is--
       (1) well grounded in fact; and
       (2) warranted by existing law or a good faith argument for 
     the extension, modification, or reversal of existing law.

     SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL CASES.

       Section 362(e) of title 11, United States Code, is 
     amended--
       (1) by inserting ``(1)'' after ``(e)''; and
       (2) by adding at the end the following:
       ``(2) Notwithstanding paragraph (1), in a case under 
     chapter 7, 11, or 13 in which the debtor is an individual, 
     the stay under subsection (a) shall terminate on the date 
     that is 60 days after a request is made by a party in 
     interest under subsection (d), unless--
       ``(A) a final decision is rendered by the court during the 
     60-day period beginning on the date of the request; or
       ``(B) that 60-day period is extended--
       ``(i) by agreement of all parties in interest; or
       ``(ii) by the court for such specific period of time as the 
     court finds is required for good cause, as described in 
     findings made by the court.''.

     SEC. 321. CHAPTER 11 CASES FILED BY INDIVIDUALS.

       (a) Property of the Estate.--
       (1) In general.--Subchapter I of chapter 11 of title 11, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 1115. Property of the estate

       ``(a) In a case concerning a debtor who is an individual, 
     property of the estate includes, in addition to the property 
     specified in section 541--
       ``(1) all property of the kind specified in section 541 
     that the debtor acquires after the commencement of the case 
     but before the case is closed, dismissed, or converted to a 
     case under chapter 7, 12, or 13, whichever occurs first; and
       ``(2) earnings from services performed by the debtor after 
     the commencement of the case but before the case is closed, 
     dismissed, or converted to a case under chapter 7, 12, or 13, 
     whichever occurs first.''.
       ``(b) Except as provided in section 1104 or a confirmed 
     plan or order confirming a plan, the debtor shall remain in 
     possession of all property of the estate.''.
       (2) Clerical amendment.--The table of sections for 
     subchapter I of chapter 11 of title 11, United States Code, 
     is amended by adding at the end the following:

``1115. Property of the estate.''.
       (b) Contents of Plan.--Section 1123(a) of title 11, United 
     States Code, is amended--
       (1) in paragraph (6), by striking ``and'' at the end;
       (2) in paragraph (7), by striking the period and inserting 
     ``; and''; and
       (3) by adding at the end the following:
       ``(8) in a case in which the debtor is an individual, 
     provide for the payment to creditors under the plan of all or 
     such portion of earnings from personal services performed by 
     the debtor after the commencement of the case or other future 
     income of the debtor as is necessary for the execution of the 
     plan.''.
       (c) Confirmation of Plan.--
       (1) Requirements relating to value of property.--Section 
     1129(a) of title 11, United States Code, as amended by 
     section 213, is amended by adding at the end the following:
       ``(15) In a case in which the debtor is an individual and 
     in which the holder of an allowed unsecured claim objects to 
     the confirmation of the plan--
       ``(A) the value, as of the effective date of the plan, of 
     the property to be distributed under the plan on account of 
     such claim is not less than the amount of such claim; or
       ``(B) the value of the property to be distributed under the 
     plan is not less than the projected disposable income of the 
     debtor (as defined in section 1325(b)(2)) to be received 
     during the 5-year period beginning on the date that the first 
     payment is due under the plan, or during the period for which 
     the plan provides payments, whichever is longer.''.
       (2) Requirement relating to interests in property.--Section 
     1129(b)(2)(B)(ii) of title 11,

[[Page H5724]]

     United States Code, is amended by inserting before the period 
     at the end the following: ``, except that in a case in which 
     the debtor is an individual, the debtor may retain property 
     included in the estate under section 1115, subject to the 
     requirements of subsection (a)(14) of this section.''.
       (d) Effect of Confirmation.--Section 1141(d) of title 11, 
     United States Code, is amended--
       (1) in paragraph (2), by striking ``The confirmation of a 
     plan does not discharge an individual debtor'' and inserting 
     ``A discharge under this chapter does not discharge a debtor 
     who is an individual''; and
       (2) by adding at the end the following:
       ``(5) In a case in which the debtor is an individual--
       ``(A) unless after notice and a hearing the court orders 
     otherwise for cause, confirmation of the plan does not 
     discharge any debt provided for in the plan until the court 
     grants a discharge on completion of all payments under the 
     plan;
       ``(B) at any time after the confirmation of the plan, and 
     after notice and a hearing, the court may not grant a 
     discharge to the debtor who has not completed payments under 
     the plan unless--
       ``(i) for each allowed unsecured claim, the value, as of 
     the effective date of the plan, of property actually 
     distributed under the plan on account of that claim is not 
     less than the amount that would have been paid on such claim 
     if the estate of the debtor had been liquidated under chapter 
     7 of this title on such date; and
       ``(ii) modification of the plan under section 1127 of this 
     title is not practicable; and''.
       (e) Modification of Plan.--Section 1127 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(e) If the debtor is an individual, the plan may be 
     modified at any time after confirmation of the plan but 
     before the completion of payments under the plan, whether or 
     not the plan has been substantially consummated, upon request 
     of the debtor, the trustee, the United States trustee, or the 
     holder of an allowed unsecured claim, to--
       ``(1) increase or reduce the amount of payments on claims 
     of a particular class provided for by the plan;
       ``(2) extend or reduce the time period for such payments; 
     or
       ``(3) alter the amount of the distribution to a creditor 
     whose claim is provided for by the plan to the extent 
     necessary to take account of any payment of such claim made 
     other than under the plan.
       ``(f)(1) Sections 1121 through 1128 of this title and the 
     requirements of section 1129 of this title apply to any 
     modification under subsection (a).
       ``(2) The plan, as modified, shall become the plan only 
     after there has been disclosure under section 1125 as the 
     court may direct, notice and a hearing, and such modification 
     is approved.''.

     SEC. 322. LIMITATIONS ON HOMESTEAD EXEMPTION.

       (a) Exemptions.--Section 522 of title 11, United States 
     Code, as amended by sections 224 and 308, is amended by 
     adding at the end the following:
       ``(p)(1)Except as provided in paragraph (2) of this 
     subsection and sections 544 and 548 of this title, as a 
     result of electing under subsection (b)(3)(A) to exempt 
     property under State or local law, a debtor may not exempt 
     any amount of interest that was acquired by the debtor during 
     the 1215-day period preceding the filing of the petition 
     which exceeds in the aggregate $125,000 in value in--
       ``(A) real or personal property that the debtor or a 
     dependent of the debtor uses as a residence;
       ``(B) a cooperative that owns property that the debtor or a 
     dependent of the debtor uses as a residence;
       ``(C) a burial plot for the debtor or a dependent of the 
     debtor; or
       ``(D) real or personal property that the debtor or 
     dependent of the debtor claims as a homestead.
       ``(2)(A) The limitation under paragraph (1) shall not apply 
     to an exemption claimed under subsection (b)(3)(A) by a 
     family farmer for the principal residence of that farmer.
       ``(B) For purposes of paragraph (1), any amount of such 
     interest does not include any interest transferred from a 
     debtor's previous principal residence (which was acquired 
     prior to the beginning of such 1215-day period) into the 
     debtor's current principal residence, if the debtor's 
     previous and current residences are located in the same 
     State.
       ``(q)(1) As a result of electing under subsection (b)(3)(A) 
     to exempt property under State or local law, a debtor may not 
     exempt any amount of an interest in property described in 
     subparagraphs (A), (B), and (C) of subsection (p) which 
     exceeds in the aggregate $125,000 if--
       ``(A) the court determines, after notice and a hearing, 
     that the debtor has been convicted of a felony (as defined in 
     section 3156 of title 18), which under the circumstances, 
     demonstrates that the filing of the case was an abuse of the 
     provisions of this title; or
       ``(B) the debtor owes a debt arising from--
       ``(i) any violation of the Federal securities laws (as 
     defined in section 3(a)(47) of the Securities Exchange Act of 
     1934), any State securities laws, or any regulation or order 
     issued under Federal securities laws or State securities 
     laws;
       ``(ii) fraud, deceit, or manipulation in a fiduciary 
     capacity or in connection with the purchase or sale of any 
     security registered under section 12 or 15(d) of the 
     Securities Exchange Act of 1934 or under section 6 of the 
     Securities Act of 1933;
       ``(iii) any civil remedy under section 1964 of title 18, 
     United States Code; or
       ``(iv) any criminal act, intentional tort, or willful or 
     reckless misconduct that caused serious physical injury or 
     death to another individual in the preceding 5 years.
       ``(2) Paragraph (1) shall not apply to the extent the 
     amount of an interest in property described in subparagraphs 
     (A), (B), and (C) of subsection (p) is reasonably necessary 
     for the support of the debtor and any dependent of the 
     debtor.''.
       (b) Adjustment of Dollar Amounts.--Paragraphs (1) and (2) 
     of section 104(b) of title 11, United States Code, as amended 
     by section 224, are amended by inserting ``522(p), 522(q),'' 
     after ``522(n),''.

     SEC. 323. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICIPANT 
                   CONTRIBUTIONS AND OTHER PROPERTY FROM THE 
                   ESTATE.

       Section 541(b) of title 11, United States Code, as amended 
     by section 225, is amended by adding at the end the 
     following:
       ``(7) any amount--
       ``(A) withheld by an employer from the wages of employees 
     for payment as contributions to--
       ``(i) an employee benefit plan subject to title I of the 
     Employee Retirement Income Security Act of 1974 or under an 
     employee benefit plan which is a governmental plan under 
     section 414(d) of the Internal Revenue Code of 1986, a 
     deferred compensation plan under section 457 of the Internal 
     Revenue Code of 1986, or a tax-deferred annuity under section 
     403(b) of the Internal Revenue Code of 1986, except that such 
     amount under this clause shall not constitute disposable 
     income, as defined in section 1325(b)(2) of this title; or
       ``(ii) a health insurance plan regulated by State law 
     whether or not subject to such title; or
       ``(B) received by the employer from employees for payment 
     as contributions to--
       ``(i) an employee benefit plan subject to title I of the 
     Employee Retirement Income Security Act of 1974 or under an 
     employee benefit plan which is a governmental plan under 
     section 414(d) of the Internal Revenue Code of 1986, a 
     deferred compensation plan under section 457 of the Internal 
     Revenue Code of 1986, or a tax-deferred annuity under section 
     403(b) of the Internal Revenue Code of 1986, except that such 
     amount under this clause shall not constitute disposable 
     income, as defined in section 1325(b)(2) of this title; or
       ``(ii) a health insurance plan regulated by State law 
     whether or not subject to such title;''.

     SEC. 324. EXCLUSIVE JURISDICTION IN MATTERS INVOLVING 
                   BANKRUPTCY PROFESSIONALS.

       (a) In General.--Section 1334 of title 28, United States 
     Code, is amended--
       (1) in subsection (b), by striking ``Notwithstanding'' and 
     inserting ``Except as provided in subsection (e)(2), and 
     notwithstanding''; and
       (2) by striking subsection (e) and inserting the following:
       ``(e) The district court in which a case under title 11 is 
     commenced or is pending shall have exclusive jurisdiction--
       ``(1) of all the property, wherever located, of the debtor 
     as of the date of commencement of such case, and of property 
     of the estate; and
       ``(2) over all claims or causes of action that involve 
     construction of section 327 of title 11, United States Code, 
     or rules relating to disclosure requirements under section 
     327.''.
       (b) Applicability.--This section shall only apply to cases 
     filed after the date of enactment of this Act.

     SEC. 325. UNITED STATES TRUSTEE PROGRAM FILING FEE INCREASE.

       (a) Actions Under Chapter 7 or 13 of Title 11, United 
     States Code.--Section 1930(a) of title 28, United States 
     Code, is amended by striking paragraph (1) and inserting the 
     following:
       ``(1) For a case commenced--
       ``(A) under chapter 7 of title 11, $160; or
       ``(B) under chapter 13 of title 11, $150.''.
       (b) United States Trustee System Fund.--Section 589a(b) of 
     title 28, United States Code, is amended--
       (1) by striking paragraph (1) and inserting the following:
       ``(1)(A) 40.63 percent of the fees collected under section 
     1930(a)(1)(A) of this title in cases commenced under chapter 
     7 of title 11; and
       ``(B) 70.00 percent of the fees collected under section 
     1930(a)(1)(B) of this title in cases commenced under chapter 
     13 of title 11;'';
       (2) in paragraph (2), by striking ``one-half'' and 
     inserting ``three-fourths''; and
       (3) in paragraph (4), by striking ``one-half'' and 
     inserting ``100 percent''.
       (c) Collection and Deposit of Miscellaneous Bankruptcy 
     Fees.--Section 406(b) of the Judiciary Appropriations Act, 
     1990 (28 U.S.C. 1931 note) is amended by striking ``pursuant 
     to 28 U.S.C. section 1930(b) and 33.87 per centum of the fees 
     hereafter collected under 28 U.S.C. section 1930(a)(1) and 25 
     percent of the fees hereafter collected under 28 U.S.C. 
     section 1930(a)(3) shall be deposited as offsetting receipts 
     to the fund established under 28 U.S.C. section 1931'' and 
     inserting ``under section 1930(b) of title 28, United States 
     Code, and 31.25 percent of the fees collected under section 
     1930(a)(1)(A) of that title, 30.00 percent of the fees 
     collected under section 1930(a)(1)(B) of that title, and 25 
     percent of the fees collected under section 1930(a)(3) of 
     that title shall be deposited as offsetting receipts to the 
     fund established under section 1931 of that title''.

     SEC. 326. SHARING OF COMPENSATION.

       Section 504 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(c) This section shall not apply with respect to sharing, 
     or agreeing to share, compensation with a bona fide public 
     service attorney referral program that operates in accordance 
     with non-Federal law regulating attorney referral services 
     and with rules of professional responsibility applicable to 
     attorney acceptance of referrals.''.

     SEC. 327. FAIR VALUATION OF COLLATERAL.

       Section 506(a) of title 11, United States Code, is amended 
     by--

[[Page H5725]]

       (1) inserting ``(1)'' after ``(a)''; and
       (2) by adding at the end the following:
       ``(2) If the debtor is an individual in a case under 
     chapter 7 or 13, such value with respect to personal property 
     securing an allowed claim shall be determined based on the 
     replacement value of such property as of the date of filing 
     the petition without deduction for costs of sale or 
     marketing. With respect to property acquired for personal, 
     family, or household purposes, replacement value shall mean 
     the price a retail merchant would charge for property of that 
     kind considering the age and condition of the property at the 
     time value is determined.''.

     SEC. 328. DEFAULTS BASED ON NONMONETARY OBLIGATIONS.

       (a) Executory Contracts and Unexpired Leases.--Section 365 
     of title 11, United States Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (1)(A), by striking the semicolon at the 
     end and inserting the following: ``other than a default that 
     is a breach of a provision relating to the satisfaction of 
     any provision (other than a penalty rate or penalty 
     provision) relating to a default arising from any failure to 
     perform nonmonetary obligations under an unexpired lease of 
     real property, if it is impossible for the trustee to cure 
     such default by performing nonmonetary acts at and after the 
     time of assumption, except that if such default arises from a 
     failure to operate in accordance with a nonresidential real 
     property lease, then such default shall be cured by 
     performance at and after the time of assumption in accordance 
     with such lease, and pecuniary losses resulting from such 
     default shall be compensated in accordance with the 
     provisions of this paragraph;''; and
       (B) in paragraph (2)(D), by striking ``penalty rate or 
     provision'' and inserting ``penalty rate or penalty 
     provision'';
       (2) in subsection (c)--
       (A) in paragraph (2), by inserting ``or'' at the end;
       (B) in paragraph (3), by striking ``; or'' at the end and 
     inserting a period; and
       (C) by striking paragraph (4);
       (3) in subsection (d)--
       (A) by striking paragraphs (5) through (9); and
       (B) by redesignating paragraph (10) as paragraph (5); and
       (4) in subsection (f)(1) by striking ``; except that'' and 
     all that follows through the end of the paragraph and 
     inserting a period.
       (b) Impairment of Claims or Interests.--Section 1124(2) of 
     title 11, United States Code, is amended--
       (1) in subparagraph (A), by inserting ``or of a kind that 
     section 365(b)(2) of this title expressly does not require to 
     be cured'' before the semicolon at the end;
       (2) in subparagraph (C), by striking ``and'' at the end;
       (3) by redesignating subparagraph (D) as subparagraph (E); 
     and
       (4) by inserting after subparagraph (C) the following:
       ``(D) if such claim or such interest arises from any 
     failure to perform a nonmonetary obligation, other than a 
     default arising from failure to operate a nonresidential real 
     property lease subject to section 365(b)(1)(A), compensates 
     the holder of such claim or such interest (other than the 
     debtor or an insider) for any actual pecuniary loss incurred 
     by such holder as a result of such failure; and''.

     SEC. 329. CLARIFICATION OF POSTPETITION WAGES AND BENEFITS.

       Section 503(b)(1)(A) of title 11, United States Code, is 
     amended to read as follows:
       ``(A) the actual, necessary costs and expenses of 
     preserving the estate including--
       ``(i) wages, salaries, or commissions for services rendered 
     after the commencement of the case; and
       ``(ii) wages and benefits awarded pursuant to a judicial 
     proceeding or a proceeding of the National Labor Relations 
     Board as back pay attributable to any period of time 
     occurring after commencement of the case under this title, as 
     a result of a violation of Federal or State law by the 
     debtor, without regard to the time of the occurrence of 
     unlawful conduct on which such award is based or to whether 
     any services were rendered, if the court determines that 
     payment of wages and benefits by reason of the operation of 
     this clause will not substantially increase the probability 
     of layoff or termination of current employees, or of 
     nonpayment of domestic support obligations, during the case 
     under this title;''.

     SEC. 330. NONDISCHARGEABILITY OF DEBTS INCURRED THROUGH 
                   VIOLATIONS OF LAWS RELATING TO THE PROVISION OF 
                   LAWFUL GOODS AND SERVICES.

       (a) Debts Incurred Through Violations of Law Relating to 
     the Provision of Lawful Goods and Services.--Section 523(a) 
     of title 11, United States Code, as amended by section 224, 
     is amended--
       (1) in paragraph (18) by striking ``or'' at the end;
       (2) in paragraph (19) by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(20) that results from any judgment, order, consent 
     order, or decree entered in any Federal or State court, or 
     contained in any settlement agreement entered into by the 
     debtor (including any court-ordered damages, fine, penalty, 
     or attorney fee or cost owed by the debtor), that arises 
     from--
       ``(A) the violation by the debtor of any Federal or State 
     statutory law, including but not limited to violations of 
     title 18, that results from intentional actions of the debtor 
     that--
       ``(i) by force or threat of force or by physical 
     obstruction, intentionally injure, intimidate, or interfere 
     with or attempt to injure, intimidate or interfere with any 
     person because that person is or has been, or in order to 
     intimidate such person or any other person or any class of 
     persons from, obtaining or providing lawful goods or 
     services;
       ``(ii) by force or threat of force or by physical 
     obstruction, intentionally injure, intimidate, or interfere 
     with or attempt to injure, intimidate or interfere with any 
     person lawfully exercising or seeking to exercise the First 
     Amendment right of religious freedom at a place of religious 
     worship; or
       ``(iii) intentionally damage or destroy the property of a 
     facility, or attempt to do so, because such facility provides 
     lawful goods or services, or intentionally damage or destroy 
     the property of a place of religious worship; or
       ``(B) a violation of a court order or injunction that 
     protects access to a facility that or a person who provides 
     lawful goods or services or the provision of lawful goods or 
     services if--
       ``(i) such violation is intentional or knowing; or
       ``(ii) such violation occurs after a court has found that 
     the debtor previously violated--

       ``(I) such court order or such injunction; or
       ``(II) any other court order or injunction that protects 
     access to the same facility or the same person;

     except that nothing in this paragraph shall be construed to 
     affect any expressive conduct (including peaceful picketing, 
     peaceful prayer, or other peaceful demonstration) protected 
     from legal prohibition by the first amendment to the 
     Constitution of the United States.''.
       (b) Restitution.--Section 523(a)(13) of title 11, United 
     States Code, is amended by inserting ``or under the criminal 
     law of a State'' after ``title 18''.

     SEC. 331. DELAY OF DISCHARGE DURING PENDENCY OF CERTAIN 
                   PROCEEDINGS.

       (a) Chapter 7.--Section 727(a) of title 11, United States 
     Code, as amended by section 106, is amended--
       (1) in paragraph (10), by striking ``or'' at the end;
       (2) in paragraph (11) by striking the period at the end and 
     inserting ``; or''; and
       (3) by inserting after paragraph (11) the following:
       ``(12) the court after notice and a hearing held not more 
     than 10 days before the date of entry of the order granting 
     the discharge finds that there is reasonable cause to believe 
     that--
       ``(A) section 522(q)(1) may be applicable to the debtor; 
     and
       ``(B) there is pending any proceeding in which the debtor 
     may be found guilty of a felony of the kind described in 
     section 522(q)(1)(A) or liable for a debt of the kind 
     described in section 522(q)(1)(B); or''.
       (b) Chapter 11.--Section 1141(d) of title 11, United States 
     Code, as amended by section 321, is amended by adding at the 
     end the following:
       ``(C) unless after notice and a hearing held not more than 
     10 days before the date of entry of the order granting the 
     discharge, the court finds that there is no reasonable cause 
     to believe that--
       ``(i) section 522(q)(1) may be applicable to the debtor; 
     and
       ``(ii) there is pending any proceeding in which the debtor 
     may be found guilty of a felony of the kind described in 
     section 522(q)(1)(A) or liable for a debt of the kind 
     described in section 522(q)(1)(B).''.
       (c) Chapter 12.--Section 1228 of title 11, United States 
     Code, is amended--
       (1) in subsection (a) by striking ``As'' and inserting 
     ``Subject to subsection (d), as'',
       (2) in subsection (b) by striking ``At'' and inserting 
     ``Subject to subsection (d), at'', and
       (3) by adding at the end the following:
       ``(f) The court may not grant a discharge under this 
     chapter unless the court after notice and a hearing held not 
     more than 10 days before the date of entry of the order 
     granting the discharge finds that there is no reasonable 
     cause to believe that--
       ``(1) section 522(q)(1) may be applicable to the debtor; 
     and
       ``(2) there is pending any proceeding in which the debtor 
     may be found guilty of a felony of the kind described in 
     section 522(q)(1)(A) or liable for a debt of the kind 
     described in section 522(q)(1)(B).''.
       (d) Chapter 13.--Section 1328 of title 11, United States 
     Code, as amended by section 106, is amended--
       (1) in subsection (a) by striking ``As'' and inserting 
     ``Subject to subsection (d), as'',
       (2) in subsection (b) by striking ``At'' and inserting 
     ``Subject to subsection (d), at'', and
       (3) by adding at the end the following:
       ``(h) The court may not grant a discharge under this 
     chapter unless the court after notice and a hearing held not 
     more than 10 days before the date of entry of the order 
     granting the discharge finds that there is no reasonable 
     cause to believe that--
       ``(1) section 522(q)(1) may be applicable to the debtor; 
     and
       ``(2) there is pending any proceeding in which the debtor 
     may be found guilty of a felony of the kind described in 
     section 522(q)(1)(A) or liable for a debt of the kind 
     described in section 522(q)(1)(B).''.
       TITLE IV--GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS
           Subtitle A--General Business Bankruptcy Provisions

     SEC. 401. ADEQUATE PROTECTION FOR INVESTORS.

       (a) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting after paragraph (48) the 
     following:
       ``(48A) `securities self regulatory organization' means 
     either a securities association registered with the 
     Securities and Exchange Commission under section 15A of the 
     Securities Exchange Act of 1934 or a national securities 
     exchange

[[Page H5726]]

     registered with the Securities and Exchange Commission under 
     section 6 of the Securities Exchange Act of 1934;''.
       (b) Automatic Stay.--Section 362(b) of title 11, United 
     States Code, as amended by sections 224, 303, and 311, is 
     amended by inserting after paragraph (24) the following:
       ``(25) under subsection (a), of--
       ``(A) the commencement or continuation of an investigation 
     or action by a securities self regulatory organization to 
     enforce such organization's regulatory power;
       ``(B) the enforcement of an order or decision, other than 
     for monetary sanctions, obtained in an action by the 
     securities self regulatory organization to enforce such 
     organization's regulatory power; or
       ``(C) any act taken by the securities self regulatory 
     organization to delist, delete, or refuse to permit quotation 
     of any stock that does not meet applicable regulatory 
     requirements;''.

     SEC. 402. MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS.

       Section 341 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e) Notwithstanding subsections (a) and (b), the court, 
     on the request of a party in interest and after notice and a 
     hearing, for cause may order that the United States trustee 
     not convene a meeting of creditors or equity security holders 
     if the debtor has filed a plan as to which the debtor 
     solicited acceptances prior to the commencement of the 
     case.''.

     SEC. 403. PROTECTION OF REFINANCE OF SECURITY INTEREST.

       Subparagraphs (A), (B), and (C) of section 547(e)(2) of 
     title 11, United States Code, are each amended by striking 
     ``10'' each place it appears and inserting ``30''.

     SEC. 404. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

       (a) In General.--Section 365(d)(4) of title 11, United 
     States Code, is amended to read as follows:
       ``(4)(A) Subject to subparagraph (B), an unexpired lease of 
     nonresidential real property under which the debtor is the 
     lessee shall be deemed rejected, and the trustee shall 
     immediately surrender that nonresidential real property to 
     the lessor, if the trustee does not assume or reject the 
     unexpired lease by the earlier of--
       ``(i) the date that is 120 days after the date of the order 
     for relief; or
       ``(ii) the date of the entry of an order confirming a plan.
       ``(B)(i) The court may extend the period determined under 
     subparagraph (A), prior to the expiration of the 120-day 
     period, for 90 days on the motion of the trustee or lessor 
     for cause.
       ``(ii) If the court grants an extension under clause (i), 
     the court may grant a subsequent extension only upon prior 
     written consent of the lessor in each instance.''.
       (b) Exception.--Section 365(f)(1) of title 11, United 
     States Code, is amended by striking ``subsection'' the first 
     place it appears and inserting ``subsections (b) and''.

     SEC. 405. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES.

       (a) Appointment.--Section 1102(a) of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(4) On request of a party in interest and after notice 
     and a hearing, the court may order the United States trustee 
     to change the membership of a committee appointed under this 
     subsection, if the court determines that the change is 
     necessary to ensure adequate representation of creditors or 
     equity security holders. The court may order the United 
     States trustee to increase the number of members of a 
     committee to include a creditor that is a small business 
     concern (as described in section 3(a)(1) of the Small 
     Business Act , if the court determines that the creditor 
     holds claims (of the kind represented by the committee) the 
     aggregate amount of which, in comparison to the annual gross 
     revenue of that creditor, is disproportionately large.''.
       (b) Information.--Section 1102(b) of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(3) A committee appointed under subsection (a) shall--
       ``(A) provide access to information for creditors who--
       ``(i) hold claims of the kind represented by that 
     committee; and
       ``(ii) are not appointed to the committee;
       ``(B) solicit and receive comments from the creditors 
     described in subparagraph (A); and
       ``(C) be subject to a court order that compels any 
     additional report or disclosure to be made to the creditors 
     described in subparagraph (A).''.

     SEC. 406. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES 
                   CODE.

       Section 546 of title 11, United States Code, is amended--
       (1) by redesignating the second subsection (g) (as added by 
     section 222(a) of Public Law 103-394) as subsection (i);
       (2) in subsection (i), as so redesignated, by inserting 
     ``and subject to the prior rights of holders of security 
     interests in such goods or the proceeds of such goods'' after 
     ``consent of a creditor''; and
       (3) by adding at the end the following:
       ``(j)(1) Notwithstanding paragraphs (2) and (3) of section 
     545, the trustee may not avoid a warehouseman's lien for 
     storage, transportation, or other costs incidental to the 
     storage and handling of goods.
       ``(2) The prohibition under paragraph (1) shall be applied 
     in a manner consistent with any State statute applicable to 
     such lien that is similar to section 7-209 of the Uniform 
     Commercial Code, as in effect on the date of enactment of the 
     Bankruptcy Abuse Prevention and Consumer Protection Act of 
     2002, or any successor to such section 7-209.''.

     SEC. 407. AMENDMENTS TO SECTION 330(A) OF TITLE 11, UNITED 
                   STATES CODE.

       Section 330(a) of title 11, United States Code, is 
     amended--
       (1) in paragraph (3)--
       (A) by striking ``(A) In'' and inserting ``In''; and
       (B) by inserting ``to an examiner, trustee under chapter 
     11, or professional person'' after ``awarded''; and
       (2) by adding at the end the following:
       ``(7) In determining the amount of reasonable compensation 
     to be awarded to a trustee, the court shall treat such 
     compensation as a commission, based on section 326 of this 
     title.''.

     SEC. 408. POSTPETITION DISCLOSURE AND SOLICITATION.

       Section 1125 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(g) Notwithstanding subsection (b), an acceptance or 
     rejection of the plan may be solicited from a holder of a 
     claim or interest if such solicitation complies with 
     applicable nonbankruptcy law and if such holder was solicited 
     before the commencement of the case in a manner complying 
     with applicable nonbankruptcy law.''.

     SEC. 409. PREFERENCES.

       Section 547(c) of title 11, United States Code, is 
     amended--
       (1) by striking paragraph (2) and inserting the following:
       ``(2) to the extent that such transfer was in payment of a 
     debt incurred by the debtor in the ordinary course of 
     business or financial affairs of the debtor and the 
     transferee, and such transfer was--
       ``(A) made in the ordinary course of business or financial 
     affairs of the debtor and the transferee; or
       ``(B) made according to ordinary business terms;'';
       (2) in paragraph (8), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(9) if, in a case filed by a debtor whose debts are not 
     primarily consumer debts, the aggregate value of all property 
     that constitutes or is affected by such transfer is less than 
     $5,000.''.

     SEC. 410. VENUE OF CERTAIN PROCEEDINGS.

       Section 1409(b) of title 28, United States Code, is amended 
     by inserting ``, or a nonconsumer debt against a noninsider 
     of less than $10,000,'' after ``$5,000''.

     SEC. 411. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

       Section 1121(d) of title 11, United States Code, is 
     amended--
       (1) by striking ``On'' and inserting ``(1) Subject to 
     paragraph (2), on''; and
       (2) by adding at the end the following:
       ``(2)(A) The 120-day period specified in paragraph (1) may 
     not be extended beyond a date that is 18 months after the 
     date of the order for relief under this chapter.
       ``(B) The 180-day period specified in paragraph (1) may not 
     be extended beyond a date that is 20 months after the date of 
     the order for relief under this chapter.''.

     SEC. 412. FEES ARISING FROM CERTAIN OWNERSHIP INTERESTS.

       Section 523(a)(16) of title 11, United States Code, is 
     amended--
       (1) by striking ``dwelling'' the first place it appears;
       (2) by striking ``ownership or'' and inserting 
     ``ownership,'';
       (3) by striking ``housing'' the first place it appears; and
       (4) by striking ``but only'' and all that follows through 
     ``such period,'' and inserting ``or a lot in a homeowners 
     association, for as long as the debtor or the trustee has a 
     legal, equitable, or possessory ownership interest in such 
     unit, such corporation, or such lot,''.

     SEC. 413. CREDITOR REPRESENTATION AT FIRST MEETING OF 
                   CREDITORS.

       Section 341(c) of title 11, United States Code, is amended 
     by inserting at the end the following: ``Notwithstanding any 
     local court rule, provision of a State constitution, any 
     other Federal or State law that is not a bankruptcy law, or 
     other requirement that representation at the meeting of 
     creditors under subsection (a) be by an attorney, a creditor 
     holding a consumer debt or any representative of the creditor 
     (which may include an entity or an employee of an entity and 
     may be a representative for more than 1 creditor) shall be 
     permitted to appear at and participate in the meeting of 
     creditors in a case under chapter 7 or 13, either alone or in 
     conjunction with an attorney for the creditor. Nothing in 
     this subsection shall be construed to require any creditor to 
     be represented by an attorney at any meeting of creditors.''.

     SEC. 414. DEFINITION OF DISINTERESTED PERSON.

       Section 101(14) of title 11, United States Code, is amended 
     to read as follows:
       ``(14) `disinterested person' means a person that--
       ``(A) is not a creditor, an equity security holder, or an 
     insider;
       ``(B) is not and was not, within 2 years before the date of 
     the filing of the petition, a director, officer, or employee 
     of the debtor; and
       ``(C) does not have an interest materially adverse to the 
     interest of the estate or of any class of creditors or equity 
     security holders, by reason of any direct or indirect 
     relationship to, connection with, or interest in, the debtor, 
     or for any other reason;''.

     SEC. 415. FACTORS FOR COMPENSATION OF PROFESSIONAL PERSONS.

       Section 330(a)(3) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (D), by striking ``and'' at the end;
       (2) by redesignating subparagraph (E) as subparagraph (F); 
     and
       (3) by inserting after subparagraph (D) the following:
       ``(E) with respect to a professional person, whether the 
     person is board certified or otherwise has demonstrated skill 
     and experience in the bankruptcy field; and''.

[[Page H5727]]

     SEC. 416. APPOINTMENT OF ELECTED TRUSTEE.

       Section 1104(b) of title 11, United States Code, is 
     amended--
       (1) by inserting ``(1)'' after ``(b)''; and
       (2) by adding at the end the following:
       ``(2)(A) If an eligible, disinterested trustee is elected 
     at a meeting of creditors under paragraph (1), the United 
     States trustee shall file a report certifying that election.
       ``(B) Upon the filing of a report under subparagraph (A)--
       ``(i) the trustee elected under paragraph (1) shall be 
     considered to have been selected and appointed for purposes 
     of this section; and
       ``(ii) the service of any trustee appointed under 
     subsection (d) shall terminate.
       ``(C) The court shall resolve any dispute arising out of an 
     election described in subparagraph (A).''.

     SEC. 417. UTILITY SERVICE.

       Section 366 of title 11, United States Code, is amended--
       (1) in subsection (a), by striking ``subsection (b)'' and 
     inserting ``subsections (b) and (c)''; and
       (2) by adding at the end the following:
       ``(c)(1)(A) For purposes of this subsection, the term 
     `assurance of payment' means--
       ``(i) a cash deposit;
       ``(ii) a letter of credit;
       ``(iii) a certificate of deposit;
       ``(iv) a surety bond;
       ``(v) a prepayment of utility consumption; or
       ``(vi) another form of security that is mutually agreed on 
     between the utility and the debtor or the trustee.
     ``(B) For purposes of this subsection an administrative 
     expense priority shall not constitute an assurance of 
     payment.
       ``(2) Subject to paragraphs (3) and (4), with respect to a 
     case filed under chapter 11, a utility referred to in 
     subsection (a) may alter, refuse, or discontinue utility 
     service, if during the 30-day period beginning on the date of 
     filing of the petition, the utility does not receive from the 
     debtor or the trustee adequate assurance of payment for 
     utility service that is satisfactory to the utility.
       ``(3)(A) On request of a party in interest and after notice 
     and a hearing, the court may order modification of the amount 
     of an assurance of payment under paragraph (2).
       ``(B) In making a determination under this paragraph 
     whether an assurance of payment is adequate, the court may 
     not consider--
       ``(i) the absence of security before the date of filing of 
     the petition;
       ``(ii) the payment by the debtor of charges for utility 
     service in a timely manner before the date of filing of the 
     petition; or
       ``(iii) the availability of an administrative expense 
     priority.
       ``(4) Notwithstanding any other provision of law, with 
     respect to a case subject to this subsection, a utility may 
     recover or set off against a security deposit provided to the 
     utility by the debtor before the date of filing of the 
     petition without notice or order of the court.''.

     SEC. 418. BANKRUPTCY FEES.

       Section 1930 of title 28, United States Code, is amended--
       (1) in subsection (a), by striking ``Notwithstanding 
     section 1915 of this title, the'' and inserting ``The''; and
       (2) by adding at the end the following:
       ``(f)(1) Under the procedures prescribed by the Judicial 
     Conference of the United States, the district court or the 
     bankruptcy court may waive the filing fee in a case under 
     chapter 7 of title 11 for an individual if the court 
     determines that such individual has income less than 150 
     percent of the income official poverty line (as defined by 
     the Office of Management and Budget, and revised annually in 
     accordance with section 673(2) of the Omnibus Budget 
     Reconciliation Act of 1981) applicable to a family of the 
     size involved and is unable to pay that fee in installments. 
     For purposes of this paragraph, the term `filing fee' means 
     the filing required by subsection (a), or any other fee 
     prescribed by the Judicial Conference under subsections (b) 
     and (c) that is payable to the clerk upon the commencement of 
     a case under chapter 7.
       ``(2) The district court or the bankruptcy court may waive 
     for such debtors other fees prescribed under subsections (b) 
     and (c).
       ``(3) This subsection does not restrict the district court 
     or the bankruptcy court from waiving, in accordance with 
     Judicial Conference policy, fees prescribed under this 
     section for other debtors and creditors.''.

     SEC. 419. MORE COMPLETE INFORMATION REGARDING ASSETS OF THE 
                   ESTATE.

       (a) In General.--
       (1) Disclosure.--The Advisory Committee on Bankruptcy Rules 
     of the Judicial Conference of the United States, after 
     consideration of the views of the Director of the Executive 
     Office for United States Trustees, shall propose for adoption 
     amended Federal Rules of Bankruptcy Procedure and Official 
     Bankruptcy Forms directing debtors under chapter 11 of title 
     11, United States Code, to disclose the information described 
     in paragraph (2) by filing and serving periodic financial and 
     other reports designed to provide such information.
       (2) Information.--The information referred to in paragraph 
     (1) is the value, operations, and profitability of any 
     closely held corporation, partnership, or of any other entity 
     in which the debtor holds a substantial or controlling 
     interest.
       (b) Purpose.--The purpose of the rules and reports under 
     subsection (a) shall be to assist parties in interest taking 
     steps to ensure that the debtor's interest in any entity 
     referred to in subsection (a)(2) is used for the payment of 
     allowed claims against debtor.
            Subtitle B--Small Business Bankruptcy Provisions

     SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.

       Section 1125 of title 11, United States Code, is amended--
       (1) in subsection (a)(1), by inserting before the semicolon 
     ``and in determining whether a disclosure statement provides 
     adequate information, the court shall consider the complexity 
     of the case, the benefit of additional information to 
     creditors and other parties in interest, and the cost of 
     providing additional information''; and
       (2) by striking subsection (f), and inserting the 
     following:
       ``(f) Notwithstanding subsection (b), in a small business 
     case--
       ``(1) the court may determine that the plan itself provides 
     adequate information and that a separate disclosure statement 
     is not necessary;
       ``(2) the court may approve a disclosure statement 
     submitted on standard forms approved by the court or adopted 
     under section 2075 of title 28; and
       ``(3)(A) the court may conditionally approve a disclosure 
     statement subject to final approval after notice and a 
     hearing;
       ``(B) acceptances and rejections of a plan may be solicited 
     based on a conditionally approved disclosure statement if the 
     debtor provides adequate information to each holder of a 
     claim or interest that is solicited, but a conditionally 
     approved disclosure statement shall be mailed not later than 
     20 days before the date of the hearing on confirmation of the 
     plan; and
       ``(C) the hearing on the disclosure statement may be 
     combined with the hearing on confirmation of a plan.''.

     SEC. 432. DEFINITIONS.

       (a) Definitions.--Section 101 of title 11, United States 
     Code, is amended by striking paragraph (51C) and inserting 
     the following:
       ``(51C) `small business case' means a case filed under 
     chapter 11 of this title in which the debtor is a small 
     business debtor;
       ``(51D) `small business debtor'--
       ``(A) subject to subparagraph (B), means a person engaged 
     in commercial or business activities (including any affiliate 
     of such person that is also a debtor under this title and 
     excluding a person whose primary activity is the business of 
     owning or operating real property or activities incidental 
     thereto) that has aggregate noncontingent, liquidated secured 
     and unsecured debts as of the date of the petition or the 
     order for relief in an amount not more than $2,000,000 
     (excluding debts owed to 1 or more affiliates or insiders) 
     for a case in which the United States trustee has not 
     appointed under section 1102(a)(1) a committee of unsecured 
     creditors or where the court has determined that the 
     committee of unsecured creditors is not sufficiently active 
     and representative to provide effective oversight of the 
     debtor; and
       ``(B) does not include any member of a group of affiliated 
     debtors that has aggregate noncontingent liquidated secured 
     and unsecured debts in an amount greater than $2,000,000 
     (excluding debt owed to 1 or more affiliates or insiders);''.
       (b) Conforming Amendment.--Section 1102(a)(3) of title 11, 
     United States Code, is amended by inserting ``debtor'' after 
     ``small business''.
       (c) Adjustment of Dollar Amounts.--Section 104(b) of title 
     11, United States Code, as amended by section 226, is amended 
     by inserting ``101(51D),'' after ``101(3),'' each place it 
     appears.

     SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND PLAN.

       Within a reasonable period of time after the date of 
     enactment of this Act, the Advisory Committee on Bankruptcy 
     Rules of the Judicial Conference of the United States shall 
     propose for adoption standard form disclosure statements and 
     plans of reorganization for small business debtors (as 
     defined in section 101 of title 11, United States Code, as 
     amended by this Act), designed to achieve a practical balance 
     between--
       (1) the reasonable needs of the courts, the United States 
     trustee, creditors, and other parties in interest for 
     reasonably complete information; and
       (2) economy and simplicity for debtors.

     SEC. 434. UNIFORM NATIONAL REPORTING REQUIREMENTS.

       (a) Reporting Required.--
       (1) In general.--Chapter 3 of title 11, United States Code, 
     is amended by inserting after section 307 the following:

     ``Sec. 308. Debtor reporting requirements

       ``(a) For purposes of this section, the term 
     `profitability' means, with respect to a debtor, the amount 
     of money that the debtor has earned or lost during current 
     and recent fiscal periods.
       ``(b) A small business debtor shall file periodic financial 
     and other reports containing information including--
       ``(1) the debtor's profitability;
       ``(2) reasonable approximations of the debtor's projected 
     cash receipts and cash disbursements over a reasonable 
     period;
       ``(3) comparisons of actual cash receipts and disbursements 
     with projections in prior reports;
       ``(4)(A) whether the debtor is--
       ``(i) in compliance in all material respects with 
     postpetition requirements imposed by this title and the 
     Federal Rules of Bankruptcy Procedure; and
       ``(ii) timely filing tax returns and other required 
     government filings and paying taxes and other administrative 
     expenses when due;
       ``(B) if the debtor is not in compliance with the 
     requirements referred to in subparagraph (A)(i) or filing tax 
     returns and other required government filings and making the 
     payments referred to in subparagraph (A)(ii), what the 
     failures are and how, at what cost, and when the debtor 
     intends to remedy such failures; and
       ``(C) such other matters as are in the best interests of 
     the debtor and creditors, and in the

[[Page H5728]]

     public interest in fair and efficient procedures under 
     chapter 11 of this title.''.
       (2) Clerical amendment.--The table of sections for chapter 
     3 of title 11, United States Code, is amended by inserting 
     after the item relating to section 307 the following:

``308. Debtor reporting requirements.''.
       (b) Effective Date.--The amendments made by subsection (a) 
     shall take effect 60 days after the date on which rules are 
     prescribed under section 2075 of title 28, United States 
     Code, to establish forms to be used to comply with section 
     308 of title 11, United States Code, as added by subsection 
     (a).

     SEC. 435. UNIFORM REPORTING RULES AND FORMS FOR SMALL 
                   BUSINESS CASES.

       (a) Proposal of Rules and Forms.--The Advisory Committee on 
     Bankruptcy Rules of the Judicial Conference of the United 
     States shall propose for adoption amended Federal Rules of 
     Bankruptcy Procedure and Official Bankruptcy Forms to be used 
     by small business debtors to file periodic financial and 
     other reports containing information, including information 
     relating to--
       (1) the debtor's profitability;
       (2) the debtor's cash receipts and disbursements; and
       (3) whether the debtor is timely filing tax returns and 
     paying taxes and other administrative expenses when due.
       (b) Purpose.--The rules and forms proposed under subsection 
     (a) shall be designed to achieve a practical balance among--
       (1) the reasonable needs of the bankruptcy court, the 
     United States trustee, creditors, and other parties in 
     interest for reasonably complete information;
       (2) the small business debtor's interest that required 
     reports be easy and inexpensive to complete; and
       (3) the interest of all parties that the required reports 
     help the small business debtor to understand the small 
     business debtor's financial condition and plan the small 
     business debtor's future.

     SEC. 436. DUTIES IN SMALL BUSINESS CASES.

       (a) Duties in Chapter 11 Cases.--Subchapter I of chapter 11 
     of title 11, United States Code, as amended by section 321, 
     is amended by adding at the end the following:

     ``Sec. 1116. Duties of trustee or debtor in possession in 
       small business cases

       ``In a small business case, a trustee or the debtor in 
     possession, in addition to the duties provided in this title 
     and as otherwise required by law, shall--
       ``(1) append to the voluntary petition or, in an 
     involuntary case, file not later than 7 days after the date 
     of the order for relief--
       ``(A) its most recent balance sheet, statement of 
     operations, cash-flow statement, Federal income tax return; 
     or
       ``(B) a statement made under penalty of perjury that no 
     balance sheet, statement of operations, or cash-flow 
     statement has been prepared and no Federal tax return has 
     been filed;
       ``(2) attend, through its senior management personnel and 
     counsel, meetings scheduled by the court or the United States 
     trustee, including initial debtor interviews, scheduling 
     conferences, and meetings of creditors convened under section 
     341 unless the court waives that requirement after notice and 
     a hearing, upon a finding of extraordinary and compelling 
     circumstances;
       ``(3) timely file all schedules and statements of financial 
     affairs, unless the court, after notice and a hearing, grants 
     an extension, which shall not extend such time period to a 
     date later than 30 days after the date of the order for 
     relief, absent extraordinary and compelling circumstances;
       ``(4) file all postpetition financial and other reports 
     required by the Federal Rules of Bankruptcy Procedure or by 
     local rule of the district court;
       ``(5) subject to section 363(c)(2), maintain insurance 
     customary and appropriate to the industry;
       ``(6)(A) timely file tax returns and other required 
     government filings; and
       ``(B) subject to section 363(c)(2), timely pay all taxes 
     entitled to administrative expense priority except those 
     being contested by appropriate proceedings being diligently 
     prosecuted; and
       ``(7) allow the United States trustee, or a designated 
     representative of the United States trustee, to inspect the 
     debtor's business premises, books, and records at reasonable 
     times, after reasonable prior written notice, unless notice 
     is waived by the debtor.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     11 of title 11, United States Code, as amended by section 
     321, is amended by inserting after the item relating to 
     section 1115 the following:

``1116. Duties of trustee or debtor in possession in small business 
              cases.''.

     SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES.

       Section 1121 of title 11, United States Code, is amended by 
     striking subsection (e) and inserting the following:
       ``(e) In a small business case--
       ``(1) only the debtor may file a plan until after 180 days 
     after the date of the order for relief, unless that period 
     is--
       ``(A) extended as provided by this subsection, after notice 
     and a hearing; or
       ``(B) the court, for cause, orders otherwise;
       ``(2) the plan, and any necessary disclosure statement, 
     shall be filed not later than 300 days after the date of the 
     order for relief; and
       ``(3) the time periods specified in paragraphs (1) and (2), 
     and the time fixed in section 1129(e) within which the plan 
     shall be confirmed, may be extended only if--
       ``(A) the debtor, after providing notice to parties in 
     interest (including the United States trustee), demonstrates 
     by a preponderance of the evidence that it is more likely 
     than not that the court will confirm a plan within a 
     reasonable period of time;
       ``(B) a new deadline is imposed at the time the extension 
     is granted; and
       ``(C) the order extending time is signed before the 
     existing deadline has expired.''.

     SEC. 438. PLAN CONFIRMATION DEADLINE.

       Section 1129 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e) In a small business case, the court shall confirm a 
     plan that complies with the applicable provisions of this 
     title and that is filed in accordance with section 1121(e) 
     not later than 45 days after such plan is filed unless the 
     time for confirmation is extended in accordance with section 
     1121(e)(3).''.

     SEC. 439. DUTIES OF THE UNITED STATES TRUSTEE.

       Section 586(a) of title 28, United States Code, is 
     amended--
       (1) in paragraph (3)--
       (A) in subparagraph (G), by striking ``and'' at the end;
       (B) by redesignating subparagraph (H) as subparagraph (I); 
     and
       (C) by inserting after subparagraph (G) the following:
       ``(H) in small business cases (as defined in section 101 of 
     title 11), performing the additional duties specified in 
     title 11 pertaining to such cases; and'';
       (2) in paragraph (5), by striking ``and'' at the end;
       (3) in paragraph (6), by striking the period at the end and 
     inserting a semicolon; and
       (4) by adding at the end the following:
       ``(7) in each of such small business cases--
       ``(A) conduct an initial debtor interview as soon as 
     practicable after the entry of order for relief but before 
     the first meeting scheduled under section 341(a) of title 11, 
     at which time the United States trustee shall--
       ``(i) begin to investigate the debtor's viability;
       ``(ii) inquire about the debtor's business plan;
       ``(iii) explain the debtor's obligations to file monthly 
     operating reports and other required reports;
       ``(iv) attempt to develop an agreed scheduling order; and
       ``(v) inform the debtor of other obligations;
       ``(B) if determined to be appropriate and advisable, visit 
     the appropriate business premises of the debtor and ascertain 
     the state of the debtor's books and records and verify that 
     the debtor has filed its tax returns; and
       ``(C) review and monitor diligently the debtor's 
     activities, to identify as promptly as possible whether the 
     debtor will be unable to confirm a plan; and
       ``(8) in any case in which the United States trustee finds 
     material grounds for any relief under section 1112 of title 
     11, the United States trustee shall apply promptly after 
     making that finding to the court for relief.''.

     SEC. 440. SCHEDULING CONFERENCES.

       Section 105(d) of title 11, United States Code, is 
     amended--
       (1) in the matter preceding paragraph (1), by striking ``, 
     may''; and
       (2) by striking paragraph (1) and inserting the following:
       ``(1) shall hold such status conferences as are necessary 
     to further the expeditious and economical resolution of the 
     case; and''.

     SEC. 441. SERIAL FILER PROVISIONS.

       Section 362 of title 11, United States Code, as amended by 
     sections 106, 305, and 311, is amended--
       (1) in subsection (k), as so redesignated by section 305--
       (A) by striking ``An'' and inserting ``(1) Except as 
     provided in paragraph (2), an''; and
       (B) by adding at the end the following:
       ``(2) If such violation is based on an action taken by an 
     entity in the good faith belief that subsection (h) applies 
     to the debtor, the recovery under paragraph (1) of this 
     subsection against such entity shall be limited to actual 
     damages.''; and
       (2) by adding at the end the following:
       ``(n)(1) Except as provided in paragraph (2), subsection 
     (a) does not apply in a case in which the debtor--
       ``(A) is a debtor in a small business case pending at the 
     time the petition is filed;
       ``(B) was a debtor in a small business case that was 
     dismissed for any reason by an order that became final in the 
     2-year period ending on the date of the order for relief 
     entered with respect to the petition;
       ``(C) was a debtor in a small business case in which a plan 
     was confirmed in the 2-year period ending on the date of the 
     order for relief entered with respect to the petition; or
       ``(D) is an entity that has acquired substantially all of 
     the assets or business of a small business debtor described 
     in subparagraph (A), (B), or (C), unless such entity 
     establishes by a preponderance of the evidence that such 
     entity acquired substantially all of the assets or business 
     of such small business debtor in good faith and not for the 
     purpose of evading this paragraph.
       ``(2) Paragraph (1) does not apply--
       ``(A) to an involuntary case involving no collusion by the 
     debtor with creditors; or
       ``(B) to the filing of a petition if--
       ``(i) the debtor proves by a preponderance of the evidence 
     that the filing of that petition resulted from circumstances 
     beyond the control of the debtor not foreseeable at the time 
     the case then pending was filed; and
       ``(ii) it is more likely than not that the court will 
     confirm a feasible plan, but not a liquidating plan, within a 
     reasonable period of time.''.

     SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND 
                   APPOINTMENT OF TRUSTEE.

       (a) Expanded Grounds for Dismissal or Conversion.--Section 
     1112 of title 11, United

[[Page H5729]]

     States Code, is amended by striking subsection (b) and 
     inserting the following:
       ``(b)(1) Except as provided in paragraph (2) of this 
     subsection, subsection (c) of this section, and section 
     1104(a)(3), on request of a party in interest, and after 
     notice and a hearing, absent unusual circumstances 
     specifically identified by the court that establish that the 
     requested conversion or dismissal is not in the best 
     interests of creditors and the estate, the court shall 
     convert a case under this chapter to a case under chapter 7 
     or dismiss a case under this chapter, whichever is in the 
     best interests of creditors and the estate, if the movant 
     establishes cause.
       ``(2) The relief provided in paragraph (1) shall not be 
     granted absent unusual circumstances specifically identified 
     by the court that establish that such relief is not in the 
     best interests of creditors and the estate, if the debtor or 
     another party in interest objects and establishes that--
       ``(A) there is a reasonable likelihood that a plan will be 
     confirmed within the timeframes established in sections 
     1121(e) and 1129(e) of this title, or if such sections do not 
     apply, within a reasonable period of time; and
       ``(B) the grounds for granting such relief include an act 
     or omission of the debtor other than under paragraph (4)(A)--
       ``(i) for which there exists a reasonable justification for 
     the act or omission; and
       ``(ii) that will be cured within a reasonable period of 
     time fixed by the court.
       ``(3) The court shall commence the hearing on a motion 
     under this subsection not later than 30 days after filing of 
     the motion, and shall decide the motion not later than 15 
     days after commencement of such hearing, unless the movant 
     expressly consents to a continuance for a specific period of 
     time or compelling circumstances prevent the court from 
     meeting the time limits established by this paragraph.
       ``(4) For purposes of this subsection, the term `cause' 
     includes--
       ``(A) substantial or continuing loss to or diminution of 
     the estate and the absence of a reasonable likelihood of 
     rehabilitation;
       ``(B) gross mismanagement of the estate;
       ``(C) failure to maintain appropriate insurance that poses 
     a risk to the estate or to the public;
       ``(D) unauthorized use of cash collateral substantially 
     harmful to 1 or more creditors;
       ``(E) failure to comply with an order of the court;
       ``(F) unexcused failure to satisfy timely any filing or 
     reporting requirement established by this title or by any 
     rule applicable to a case under this chapter;
       ``(G) failure to attend the meeting of creditors convened 
     under section 341(a) or an examination ordered under rule 
     2004 of the Federal Rules of Bankruptcy Procedure without 
     good cause shown by the debtor;
       ``(H) failure timely to provide information or attend 
     meetings reasonably requested by the United States trustee or 
     the bankruptcy administrator;
       ``(I) failure timely to pay taxes owed after the date of 
     the order for relief or to file tax returns due after the 
     order for relief;
       ``(J) failure to file a disclosure statement, or to file or 
     confirm a plan, within the time fixed by this title or by 
     order of the court;
       ``(K) failure to pay any fees or charges required under 
     chapter 123 of title 28;
       ``(L) revocation of an order of confirmation under section 
     1144;
       ``(M) inability to effectuate substantial consummation of a 
     confirmed plan;
       ``(N) material default by the debtor with respect to a 
     confirmed plan;
       ``(O) termination of a confirmed plan by reason of the 
     occurrence of a condition specified in the plan; and
       ``(P) failure of the debtor to pay any domestic support 
     obligation that first becomes payable after the date on which 
     the petition is filed.
       ``(5) The court shall commence the hearing on a motion 
     under this subsection not later than 30 days after filing of 
     the motion, and shall decide the motion not later than 15 
     days after commencement of such hearing, unless the movant 
     expressly consents to a continuance for a specific period of 
     time or compelling circumstances prevent the court from 
     meeting the time limits established by this paragraph.''.
       (b) Additional Grounds for Appointment of Trustee.--Section 
     1104(a) 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) if grounds exist to convert or dismiss the case under 
     section 1112, but the court determines that the appointment 
     of a trustee or an examiner is in the best interests of 
     creditors and the estate.''.

     SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED STATES CODE, 
                   WITH RESPECT TO SMALL BUSINESSES.

       Not later than 2 years after the date of enactment of this 
     Act, the Administrator of the Small Business Administration, 
     in consultation with the Attorney General, the Director of 
     the Executive Office for United States Trustees, and the 
     Director of the Administrative Office of the United States 
     Courts, shall--
       (1) conduct a study to determine--
       (A) the internal and external factors that cause small 
     businesses, especially sole proprietorships, to become 
     debtors in cases under title 11, United States Code, and that 
     cause certain small businesses to successfully complete cases 
     under chapter 11 of such title; and
       (B) how Federal laws relating to bankruptcy may be made 
     more effective and efficient in assisting small businesses to 
     remain viable; and
       (2) submit to the President pro tempore of the Senate and 
     the Speaker of the House of Representatives a report 
     summarizing that study.

     SEC. 444. PAYMENT OF INTEREST.

       Section 362(d)(3) of title 11, United States Code, is 
     amended--
       (1) by inserting ``or 30 days after the court determines 
     that the debtor is subject to this paragraph, whichever is 
     later'' after ``90-day period)''; and
       (2) by striking subparagraph (B) and inserting the 
     following:
       ``(B) the debtor has commenced monthly payments that--
       ``(i) may, in the debtor's sole discretion, notwithstanding 
     section 363(c)(2), be made from rents or other income 
     generated before or after the commencement of the case by or 
     from the property to each creditor whose claim is secured by 
     such real estate (other than a claim secured by a judgment 
     lien or by an unmatured statutory lien); and
       ``(ii) are in an amount equal to interest at the then 
     applicable nondefault contract rate of interest on the value 
     of the creditor's interest in the real estate; or''.

     SEC. 445. PRIORITY FOR ADMINISTRATIVE EXPENSES.

       Section 503(b) of title 11, United States Code, is 
     amended--
       (1) in paragraph (5), by striking ``and'' at the end;
       (2) in paragraph (6), by striking the period at the end and 
     inserting a semicolon; and
       (3) by adding at the end the following:
       ``(7) with respect to a nonresidential real property lease 
     previously assumed under section 365, and subsequently 
     rejected, a sum equal to all monetary obligations due, 
     excluding those arising from or relating to a failure to 
     operate or a penalty provision, for the period of 2 years 
     following the later of the rejection date or the date of 
     actual turnover of the premises, without reduction or setoff 
     for any reason whatsoever except for sums actually received 
     or to be received from a nondebtor, and the claim for 
     remaining sums due for the balance of the term of the lease 
     shall be a claim under section 502(b)(6);''.

     SEC. 446. DUTIES WITH RESPECT TO A DEBTOR WHO IS A PLAN 
                   ADMINISTRATOR OF AN EMPLOYEE BENEFIT PLAN.

       (a) In General.--Section 521(a) of title 11, United States 
     Code, as amended by section 106, is amended-
       (1) in paragraph (4), by striking ``and'' at the end;
       (2) in paragraph (5), by striking the period at the end and 
     inserting ``; and''; and
       (3) by adding at the end the following:
       ``(6) unless a trustee is serving in the case, if at the 
     time of filing the debtor served as the administrator (as 
     defined in section 3 of the Employee Retirement Income 
     Security Act of 1974 of an employee benefit plan, continue to 
     perform the obligations required of the administrator.''.
       (b) Duties of Trustees.--Section 704(a) of title 11, United 
     States Code, as amended by sections 102 and 219, is amended--
       (1) in paragraph (9), by striking ``and'' at the end;
       (2) in paragraph (10), by striking the period at the end; 
     and
       (3) by adding at the end the following:
       ``(11) if, at the time of the commencement of the case, the 
     debtor served as the administrator (as defined in section 3 
     of the Employee Retirement Income Security Act of 1974) of an 
     employee benefit plan, continue to perform the obligations 
     required of the administrator; and''.
       (c) Conforming Amendment.--Section 1106(a)(1) of title 11, 
     United States Code, is amended to read as follows:
       ``(1) perform the duties of the trustee, as specified in 
     paragraphs (2), (5), (7), (8), (9), (10), and (11) of section 
     704;''.

     SEC. 447. APPOINTMENT OF COMMITTEE OF RETIRED EMPLOYEES.

       Section 1114(d) of title 11, United States Code, is 
     amended--
       (1) by striking ``appoint'' and inserting ``order the 
     appointment of'', and
       (2) by adding at the end the following: ``The United States 
     trustee shall appoint any such committee.''.
                TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS

     SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETITION.

       (a) Technical Amendment Relating to Municipalities.--
     Section 921(d) of title 11, United States Code, is amended by 
     inserting ``notwithstanding section 301(b)'' before the 
     period at the end.
       (b) Conforming Amendment.--Section 301 of title 11, United 
     States Code, is amended--
       (1) by inserting ``(a)'' before ``A voluntary''; and
       (2) by striking the last sentence and inserting the 
     following:
       ``(b) The commencement of a voluntary case under a chapter 
     of this title constitutes an order for relief under such 
     chapter.''.

     SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 9.

       Section 901(a) of title 11, United States Code, is 
     amended--
       (1) by inserting ``555, 556,'' after ``553,''; and
       (2) by inserting ``559, 560, 561, 562'' after ``557,''.
                       TITLE VI--BANKRUPTCY DATA

     SEC. 601. IMPROVED BANKRUPTCY STATISTICS.

       (a) In General.--Chapter 6 of title 28, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 159. Bankruptcy statistics

       ``(a) The clerk of the district court, or the clerk of the 
     bankruptcy court if one is certified pursuant to section 
     156(b) of this title, shall collect statistics regarding 
     debtors who are individuals with primarily consumer debts 
     seeking relief under chapters 7, 11, and 13 of title 11. 
     Those statistics shall be in a standardized format prescribed 
     by the Director of the Administrative Office of the United 
     States Courts (referred to in this section as the 
     `Director').

[[Page H5730]]

       ``(b) The Director shall--
       ``(1) compile the statistics referred to in subsection (a);
       ``(2) make the statistics available to the public; and
       ``(3) not later than June 1, 2005, and annually thereafter, 
     prepare, and submit to Congress a report concerning the 
     information collected under subsection (a) that contains an 
     analysis of the information.
       ``(c) The compilation required under subsection (b) shall--
       ``(1) be itemized, by chapter, with respect to title 11;
       ``(2) be presented in the aggregate and for each district; 
     and
       ``(3) include information concerning--
       ``(A) the total assets and total liabilities of the debtors 
     described in subsection (a), and in each category of assets 
     and liabilities, as reported in the schedules prescribed 
     pursuant to section 2075 of this title and filed by those 
     debtors;
       ``(B) the current monthly income, average income, and 
     average expenses of those debtors as reported on the 
     schedules and statements that each such debtor files under 
     sections 521 and 1322 of title 11;
       ``(C) the aggregate amount of debt discharged in cases 
     filed during the reporting period, determined as the 
     difference between the total amount of debt and obligations 
     of a debtor reported on the schedules and the amount of such 
     debt reported in categories which are predominantly 
     nondischargeable;
       ``(D) the average period of time between the filing of the 
     petition and the closing of the case for cases closed during 
     the reporting period;
       ``(E) for cases closed during the reporting period--
       ``(i) the number of cases in which a reaffirmation was 
     filed; and
       ``(ii)(I) the total number of reaffirmations filed;
       ``(II) of those cases in which a reaffirmation was filed, 
     the number of cases in which the debtor was not represented 
     by an attorney; and
       ``(III) of those cases in which a reaffirmation was filed, 
     the number of cases in which the reaffirmation was approved 
     by the court;
       ``(F) with respect to cases filed under chapter 13 of title 
     11, for the reporting period--
       ``(i)(I) the number of cases in which a final order was 
     entered determining the value of property securing a claim in 
     an amount less than the amount of the claim; and
       ``(II) the number of final orders entered determining the 
     value of property securing a claim;
       ``(ii) the number of cases dismissed, the number of cases 
     dismissed for failure to make payments under the plan, the 
     number of cases refiled after dismissal, and the number of 
     cases in which the plan was completed, separately itemized 
     with respect to the number of modifications made before 
     completion of the plan, if any; and
       ``(iii) the number of cases in which the debtor filed 
     another case during the 6-year period preceding the filing;
       ``(G) the number of cases in which creditors were fined for 
     misconduct and any amount of punitive damages awarded by the 
     court for creditor misconduct; and
       ``(H) the number of cases in which sanctions under rule 
     9011 of the Federal Rules of Bankruptcy Procedure were 
     imposed against debtor's attorney or damages awarded under 
     such Rule.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     6 of title 28, United States Code, is amended by adding at 
     the end the following:

``159. Bankruptcy statistics.''.
       (c) Effective Date.--The amendments made by this section 
     shall take effect 18 months after the date of enactment of 
     this Act.

     SEC. 602. UNIFORM RULES FOR THE COLLECTION OF BANKRUPTCY 
                   DATA.

       (a) Amendment.--Chapter 39 of title 28, United States Code, 
     is amended by adding at the end the following:

     ``Sec. 589b. Bankruptcy data

       ``(a) Rules.--The Attorney General shall, within a 
     reasonable time after the effective date of this section, 
     issue rules requiring uniform forms for (and from time to 
     time thereafter to appropriately modify and approve)--
       ``(1) final reports by trustees in cases under chapters 7, 
     12, and 13 of title 11; and
       ``(2) periodic reports by debtors in possession or trustees 
     in cases under chapter 11 of title 11.
       ``(b) Reports.--Each report referred to in subsection (a) 
     shall be designed (and the requirements as to place and 
     manner of filing shall be established) so as to facilitate 
     compilation of data and maximum possible access of the 
     public, both by physical inspection at one or more central 
     filing locations, and by electronic access through the 
     Internet or other appropriate media.
       ``(c) Required Information.--The information required to be 
     filed in the reports referred to in subsection (b) shall be 
     that which is in the best interests of debtors and creditors, 
     and in the public interest in reasonable and adequate 
     information to evaluate the efficiency and practicality of 
     the Federal bankruptcy system. In issuing rules proposing the 
     forms referred to in subsection (a), the Attorney General 
     shall strike the best achievable practical balance between--
       ``(1) the reasonable needs of the public for information 
     about the operational results of the Federal bankruptcy 
     system;
       ``(2) economy, simplicity, and lack of undue burden on 
     persons with a duty to file reports; and
       ``(3) appropriate privacy concerns and safeguards.
       ``(d) Final Reports.--The uniform forms for final reports 
     required under subsection (a) for use by trustees under 
     chapters 7, 12, and 13 of title 11 shall, in addition to such 
     other matters as are required by law or as the Attorney 
     General in the discretion of the Attorney General shall 
     propose, include with respect to a case under such title--
       ``(1) information about the length of time the case was 
     pending;
       ``(2) assets abandoned;
       ``(3) assets exempted;
       ``(4) receipts and disbursements of the estate;
       ``(5) expenses of administration, including for use under 
     section 707(b), actual costs of administering cases under 
     chapter 13 of title 11;
       ``(6) claims asserted;
       ``(7) claims allowed; and
       ``(8) distributions to claimants and claims discharged 
     without payment,
     in each case by appropriate category and, in cases under 
     chapters 12 and 13 of title 11, date of confirmation of the 
     plan, each modification thereto, and defaults by the debtor 
     in performance under the plan.
       ``(e) Periodic Reports.--The uniform forms for periodic 
     reports required under subsection (a) for use by trustees or 
     debtors in possession under chapter 11 of title 11 shall, in 
     addition to such other matters as are required by law or as 
     the Attorney General in the discretion of the Attorney 
     General shall propose, include--
       ``(1) information about the standard industry 
     classification, published by the Department of Commerce, for 
     the businesses conducted by the debtor;
       ``(2) length of time the case has been pending;
       ``(3) number of full-time employees as of the date of the 
     order for relief and at the end of each reporting period 
     since the case was filed;
       ``(4) cash receipts, cash disbursements and profitability 
     of the debtor for the most recent period and cumulatively 
     since the date of the order for relief;
       ``(5) compliance with title 11, whether or not tax returns 
     and tax payments since the date of the order for relief have 
     been timely filed and made;
       ``(6) all professional fees approved by the court in the 
     case for the most recent period and cumulatively since the 
     date of the order for relief (separately reported, for the 
     professional fees incurred by or on behalf of the debtor, 
     between those that would have been incurred absent a 
     bankruptcy case and those not); and
       ``(7) plans of reorganization filed and confirmed and, with 
     respect thereto, by class, the recoveries of the holders, 
     expressed in aggregate dollar values and, in the case of 
     claims, as a percentage of total claims of the class 
     allowed.''.
       (b) Clerical Amendment.--The table of sections for chapter 
     39 of title 28, United States Code, is amended by adding at 
     the end the following:

``589b. Bankruptcy data.''.

     SEC. 603. AUDIT PROCEDURES.

       (a) In General.--
       (1) Establishment of procedures.--The Attorney General (in 
     judicial districts served by United States trustees) and the 
     Judicial Conference of the United States (in judicial 
     districts served by bankruptcy administrators) shall 
     establish procedures to determine the accuracy, veracity, and 
     completeness of petitions, schedules, and other information 
     which the debtor is required to provide under sections 521 
     and 1322 of title 11, United States Code, and, if applicable, 
     section 111 of such title, in cases filed under chapter 7 or 
     13 of such title in which the debtor is an individual. Such 
     audits shall be in accordance with generally accepted 
     auditing standards and performed by independent certified 
     public accountants or independent licensed public 
     accountants, provided that the Attorney General and the 
     Judicial Conference, as appropriate, may develop alternative 
     auditing standards not later than 2 years after the date of 
     enactment of this Act.
       (2) Procedures.--Those procedures required by paragraph (1) 
     shall--
       (A) establish a method of selecting appropriate qualified 
     persons to contract to perform those audits;
       (B) establish a method of randomly selecting cases to be 
     audited, except that not less than 1 out of every 250 cases 
     in each Federal judicial district shall be selected for 
     audit;
       (C) require audits for schedules of income and expenses 
     which reflect greater than average variances from the 
     statistical norm of the district in which the schedules were 
     filed if those variances occur by reason of higher income or 
     higher expenses than the statistical norm of the district in 
     which the schedules were filed; and
       (D) establish procedures for providing, not less frequently 
     than annually, public information concerning the aggregate 
     results of such audits including the percentage of cases, by 
     district, in which a material misstatement of income or 
     expenditures is reported.
       (b) Amendments.--Section 586 of title 28, United States 
     Code, is amended--
       (1) in subsection (a), by striking paragraph (6) and 
     inserting the following:
       ``(6) make such reports as the Attorney General directs, 
     including the results of audits performed under section 
     603(a) of the Bankruptcy Abuse Prevention and Consumer 
     Protection Act of 2002;''; and
       (2) by adding at the end the following:
       ``(f)(1) The United States trustee for each district is 
     authorized to contract with auditors to perform audits in 
     cases designated by the United States trustee, in accordance 
     with the procedures established under section 603(a) of the 
     Bankruptcy Abuse Prevention and Consumer Protection Act of 
     2002.
       ``(2)(A) The report of each audit referred to in paragraph 
     (1) shall be filed with the court and transmitted to the 
     United States trustee. Each report shall clearly and 
     conspicuously specify any material misstatement of income or 
     expenditures or of assets identified by the person performing 
     the audit. In any case in which a material misstatement of 
     income or expenditures or of assets has been reported, the 
     clerk of the district court (or the clerk of the bankruptcy 
     court if

[[Page H5731]]

     one is certified under section 156(b) of this title) shall 
     give notice of the misstatement to the creditors in the case.
       ``(B) If a material misstatement of income or expenditures 
     or of assets is reported, the United States trustee shall--
       ``(i) report the material misstatement, if appropriate, to 
     the United States Attorney pursuant to section 3057 of title 
     18; and
       ``(ii) if advisable, take appropriate action, including but 
     not limited to commencing an adversary proceeding to revoke 
     the debtor's discharge pursuant to section 727(d) of title 
     11.''.
       (c) Amendments to Section 521 of Title 11, U.S.C.--Section 
     521(a) of title 11, United States Code, as so designated by 
     section 106, is amended in each of paragraphs (3) and (4) by 
     inserting ``or an auditor appointed under section 586(f) of 
     title 28'' after ``serving in the case''.
       (d) Amendments to Section 727 of Title 11, U.S.C.--Section 
     727(d) of title 11, United States Code, is amended--
       (1) in paragraph (2), by striking ``or'' at the end;
       (2) in paragraph (3), by striking the period at the end and 
     inserting ``; or''; and
       (3) by adding at the end the following:
       ``(4) the debtor has failed to explain satisfactorily--
       ``(A) a material misstatement in an audit referred to in 
     section 586(f) of title 28; or
       ``(B) a failure to make available for inspection all 
     necessary accounts, papers, documents, financial records, 
     files, and all other papers, things, or property belonging to 
     the debtor that are requested for an audit referred to in 
     section 586(f) of title 28.''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect 18 months after the date of enactment of 
     this Act.

     SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY OF 
                   BANKRUPTCY DATA.

       It is the sense of Congress that--
       (1) the national policy of the United States should be that 
     all data held by bankruptcy clerks in electronic form, to the 
     extent such data reflects only public records (as defined in 
     section 107 of title 11, United States Code), should be 
     released in a usable electronic form in bulk to the public, 
     subject to such appropriate privacy concerns and safeguards 
     as Congress and the Judicial Conference of the United States 
     may determine; and
       (2) there should be established a bankruptcy data system in 
     which--
       (A) a single set of data definitions and forms are used to 
     collect data nationwide; and
       (B) data for any particular bankruptcy case are aggregated 
     in the same electronic record.
                  TITLE VII--BANKRUPTCY TAX PROVISIONS

     SEC. 701. TREATMENT OF CERTAIN LIENS.

       (a) Treatment of Certain Liens.--Section 724 of title 11, 
     United States Code, is amended--
       (1) in subsection (b), in the matter preceding paragraph 
     (1), by inserting ``(other than to the extent that there is a 
     properly perfected unavoidable tax lien arising in connection 
     with an ad valorem tax on real or personal property of the 
     estate)'' after ``under this title'';
       (2) in subsection (b)(2), by inserting ``(except that such 
     expenses, other than claims for wages, salaries, or 
     commissions which arise after the filing of a petition, shall 
     be limited to expenses incurred under chapter 7 of this title 
     and shall not include expenses incurred under chapter 11 of 
     this title)'' after ``507(a)(1)''; and
       (3) by adding at the end the following:
       ``(e) Before subordinating a tax lien on real or personal 
     property of the estate, the trustee shall--
       ``(1) exhaust the unencumbered assets of the estate; and
       ``(2) in a manner consistent with section 506(c), recover 
     from property securing an allowed secured claim the 
     reasonable, necessary costs and expenses of preserving or 
     disposing of that property.
       ``(f) Notwithstanding the exclusion of ad valorem tax liens 
     under this section and subject to the requirements of 
     subsection (e), the following may be paid from property of 
     the estate which secures a tax lien, or the proceeds of such 
     property:
       ``(1) Claims for wages, salaries, and commissions that are 
     entitled to priority under section 507(a)(4).
       ``(2) Claims for contributions to an employee benefit plan 
     entitled to priority under section 507(a)(5).''.
       (b) Determination of Tax Liability.--Section 505(a)(2) of 
     title 11, United States Code, is amended--
       (1) in subparagraph (A), by striking ``or'' at the end;
       (2) in subparagraph (B), by striking the period at the end 
     and inserting ``; or''; and
       (3) by adding at the end the following:
       ``(C) the amount or legality of any amount arising in 
     connection with an ad valorem tax on real or personal 
     property of the estate, if the applicable period for 
     contesting or redetermining that amount under any law (other 
     than a bankruptcy law) has expired.''.

     SEC. 702. TREATMENT OF FUEL TAX CLAIMS.

       Section 501 of title 11, United States Code, is amended by 
     adding at the end the following:
       ``(e) A claim arising from the liability of a debtor for 
     fuel use tax assessed consistent with the requirements of 
     section 31705 of title 49 may be filed by the base 
     jurisdiction designated pursuant to the International Fuel 
     Tax Agreement (as defined in section 31701 of title 49) and, 
     if so filed, shall be allowed as a single claim.''.

     SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF TAXES.

       Section 505(b) of title 11, United States Code, is 
     amended--
       (1) in the first sentence, by inserting ``at the address 
     and in the manner designated in paragraph (1)'' after 
     ``determination of such tax'';
       (2) by striking ``(1) upon payment'' and inserting ``(A) 
     upon payment'';
       (3) by striking ``(A) such governmental unit'' and 
     inserting ``(i) such governmental unit'';
       (4) by striking ``(B) such governmental unit'' and 
     inserting ``(ii) such governmental unit'';
       (5) by striking ``(2) upon payment'' and inserting ``(B) 
     upon payment'';
       (6) by striking ``(3) upon payment'' and inserting ``(C) 
     upon payment'';
       (7) by striking ``(b)'' and inserting ``(2)''; and
       (8) by inserting before paragraph (2), as so designated, 
     the following:
       ``(b)(1)(A) The clerk shall maintain a listing under which 
     a Federal, State, or local governmental unit responsible for 
     the collection of taxes within the district may--
       ``(i) designate an address for service of requests under 
     this subsection; and
       ``(ii) describe where further information concerning 
     additional requirements for filing such requests may be 
     found.
       ``(B) If a governmental unit referred to in subparagraph 
     (A) does not designate an address and provide that address to 
     the clerk under that subparagraph, any request made under 
     this subsection may be served at the address for the filing 
     of a tax return or protest with the appropriate taxing 
     authority of that governmental unit.''.

     SEC. 704. RATE OF INTEREST ON TAX CLAIMS.

       (a) In General.--Subchapter I of chapter 5 of title 11, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 511. Rate of interest on tax claims

       ``(a) If any provision of this title requires the payment 
     of interest on a tax claim or on an administrative expense 
     tax, or the payment of interest to enable a creditor to 
     receive the present value of the allowed amount of a tax 
     claim, the rate of interest shall be the rate determined 
     under applicable nonbankruptcy law.
       ``(b) In the case of taxes paid under a confirmed plan 
     under this title, the rate of interest shall be determined as 
     of the calendar month in which the plan is confirmed.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter 1 of chapter 5 of title 11, United States Code, is 
     amended by adding at the end the following:

``511. Rate of interest on tax claims.''.

     SEC. 705. PRIORITY OF TAX CLAIMS.

       Section 507(a)(8) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (A)--
       (A) in the matter preceding clause (i), by inserting ``for 
     a taxable year ending on or before the date of the filing of 
     the petition'' after ``gross receipts'';
       (B) in clause (i), by striking ``for a taxable year ending 
     on or before the date of the filing of the petition''; and
       (C) by striking clause (ii) and inserting the following:
       ``(ii) assessed within 240 days before the date of the 
     filing of the petition, exclusive of--

       ``(I) any time during which an offer in compromise with 
     respect to that tax was pending or in effect during that 240-
     day period, plus 30 days; and
       ``(II) any time during which a stay of proceedings against 
     collections was in effect in a prior case under this title 
     during that 240-day period, plus 90 days.''; and

       (2) by adding at the end the following:
     ``An otherwise applicable time period specified in this 
     paragraph shall be suspended for any period during which a 
     governmental unit is prohibited under applicable 
     nonbankruptcy law from collecting a tax as a result of a 
     request by the debtor for a hearing and an appeal of any 
     collection action taken or proposed against the debtor, plus 
     90 days; plus any time during which the stay of proceedings 
     was in effect in a prior case under this title or during 
     which collection was precluded by the existence of 1 or more 
     confirmed plans under this title, plus 90 days.''.

     SEC. 706. PRIORITY PROPERTY TAXES INCURRED.

       Section 507(a)(8)(B) of title 11, United States Code, is 
     amended by striking ``assessed'' and inserting ``incurred''.

     SEC. 707. NO DISCHARGE OF FRAUDULENT TAXES IN CHAPTER 13.

       Section 1328(a)(2) of title 11, United States Code, as 
     amended by section 314, is amended by striking ``paragraph'' 
     and inserting ``section 507(a)(8)(C) or in paragraph (1)(B), 
     (1)(C),''.

     SEC. 708. NO DISCHARGE OF FRAUDULENT TAXES IN CHAPTER 11.

       Section 1141(d) of title 11, United States Code, as amended 
     by section 321, is amended by adding at the end the 
     following:
       ``(6) Notwithstanding paragraph (1), the confirmation of a 
     plan does not discharge a debtor that is a corporation from 
     any debt--
       ``(A) of a kind specified in paragraph (2)(A) or (2)(B) of 
     section 523(a) that is owed to a domestic governmental unit, 
     or owed to a person as the result of an action filed under 
     subchapter III of chapter 37 of title 31 or any similar State 
     statute; or
       ``(B) for a tax or customs duty with respect to which the 
     debtor--
       ``(i) made a fraudulent return; or
       ``(ii) willfully attempted in any manner to evade or to 
     defeat such tax or such customs duty.''.

     SEC. 709. STAY OF TAX PROCEEDINGS LIMITED TO PREPETITION 
                   TAXES.

       Section 362(a)(8) of title 11, United States Code, is 
     amended by striking ``the debtor'' and inserting ``a 
     corporate debtor's tax liability for a taxable period the 
     bankruptcy court may determine or concerning the tax 
     liability of a debtor who is an individual for a taxable 
     period ending before the order for relief under this title''.

     SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11 CASES.

       Section 1129(a)(9) of title 11, United States Code, is 
     amended--

[[Page H5732]]

       (1) in subparagraph (B), by striking ``and'' at the end;
       (2) in subparagraph (C), by striking ``deferred cash 
     payments,'' and all that follows through the end of the 
     subparagraph, and inserting ``regular installment payments in 
     cash--
       ``(i) of a total value, as of the effective date of the 
     plan, equal to the allowed amount of such claim;
       ``(ii) over a period ending not later than 5 years after 
     the date of the entry of the order for relief under section 
     301, 302, or 303; and
       ``(iii) in a manner not less favorable than the most 
     favored nonpriority unsecured claim provided for by the plan 
     (other than cash payments made to a class of creditors under 
     section 1122(b)); and''; and
       (3) by adding at the end the following:
       ``(D) with respect to a secured claim which would otherwise 
     meet the description of an unsecured claim of a governmental 
     unit under section 507(a)(8), but for the secured status of 
     that claim, the holder of that claim will receive on account 
     of that claim, cash payments, in the same manner and over the 
     same period, as prescribed in subparagraph (C).''.

     SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIBITED.

       Section 545(2) of title 11, United States Code, is amended 
     by inserting before the semicolon at the end the following: 
     ``, except in any case in which a purchaser is a purchaser 
     described in section 6323 of the Internal Revenue Code of 
     1986, or in any other similar provision of State or local 
     law''.

     SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSINESS.

       (a) Payment of Taxes Required.--Section 960 of title 28, 
     United States Code, is amended--
       (1) by inserting ``(a)'' before ``Any''; and
       (2) by adding at the end the following:
       ``(b) A tax under subsection (a) shall be paid on or before 
     the due date of the tax under applicable nonbankruptcy law, 
     unless--
       ``(1) the tax is a property tax secured by a lien against 
     property that is abandoned within a reasonable period of time 
     after the lien attaches by the trustee of a bankruptcy estate 
     under section 554 of title 11; or
       ``(2) payment of the tax is excused under a specific 
     provision of title 11.
       ``(c) In a case pending under chapter 7 of title 11, 
     payment of a tax may be deferred until final distribution is 
     made under section 726 of title 11, if--
       ``(1) the tax was not incurred by a trustee duly appointed 
     under chapter 7 of title 11; or
       ``(2) before the due date of the tax, an order of the court 
     makes a finding of probable insufficiency of funds of the 
     estate to pay in full the administrative expenses allowed 
     under section 503(b) of title 11 that have the same priority 
     in distribution under section 726(b) of title 11 as the 
     priority of that tax.''.
       (b) Payment of Ad Valorem Taxes Required.--Section 
     503(b)(1)(B)(i) of title 11, United States Code, is amended 
     by inserting ``whether secured or unsecured, including 
     property taxes for which liability is in rem, in personam, or 
     both,'' before ``except''.
       (c) Request for Payment of Administrative Expense Taxes 
     Eliminated.--Section 503(b)(1) of title 11, United States 
     Code, is amended--
       (1) in subparagraph (B), by striking ``and'' at the end;
       (2) in subparagraph (C), by adding ``and'' at the end; and
       (3) by adding at the end the following:
       ``(D) notwithstanding the requirements of subsection (a), a 
     governmental unit shall not be required to file a request for 
     the payment of an expense described in subparagraph (B) or 
     (C), as a condition of its being an allowed administrative 
     expense;''.
       (d) Payment of Taxes and Fees as Secured Claims.--Section 
     506 of title 11, United States Code, is amended--
       (1) in subsection (b), by inserting ``or State statute'' 
     after ``agreement''; and
       (2) in subsection (c), by inserting ``, including the 
     payment of all ad valorem property taxes with respect to the 
     property'' before the period at the end.

     SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.

       Section 726(a)(1) of title 11, United States Code, is 
     amended by striking ``before the date on which the trustee 
     commences distribution under this section;'' and inserting 
     the following: ``on or before the earlier of--
       ``(A) the date that is 10 days after the mailing to 
     creditors of the summary of the trustee's final report; or
       ``(B) the date on which the trustee commences final 
     distribution under this section;''.

     SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AUTHORITIES.

       Section 523(a) of title 11, United States Code, as amended 
     by sections 215 and 224, is amended--
       (1) in paragraph (1)(B)--
       (A) in the matter preceding clause (i), by inserting ``or 
     equivalent report or notice,'' after ``a return,'';
       (B) in clause (i), by inserting ``or given'' after 
     ``filed''; and
       (C) in clause (ii)--
       (i) by inserting ``or given'' after ``filed''; and
       (ii) by inserting ``, report, or notice'' after ``return''; 
     and
       (2) by adding at the end the following:
     ``For purposes of this subsection, the term `return' means a 
     return that satisfies the requirements of applicable 
     nonbankruptcy law (including applicable filing requirements). 
     Such term includes a return prepared pursuant to section 
     6020(a) of the Internal Revenue Code of 1986, or similar 
     State or local law, or a written stipulation to a judgment or 
     a final order entered by a nonbankruptcy tribunal, but does 
     not include a return made pursuant to section 6020(b) of the 
     Internal Revenue Code of 1986, or a similar State or local 
     law.''.

     SEC. 715. DISCHARGE OF THE ESTATE'S LIABILITY FOR UNPAID 
                   TAXES.

       Section 505(b)(2) of title 11, United States Code, as 
     amended by section 703, is amended by inserting ``the 
     estate,'' after ``misrepresentation,''.

     SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CONFIRM CHAPTER 
                   13 PLANS.

       (a) Filing of Prepetition Tax Returns Required for Plan 
     Confirmation.--Section 1325(a) of title 11, United States 
     Code, as amended by sections 102, 213, and 306, is amended by 
     inserting after paragraph (8) the following:
       ``(9) the debtor has filed all applicable Federal, State, 
     and local tax returns as required by section 1308.''.
       (b) Additional Time Permitted for Filing Tax Returns.--
       (1) In general.--Subchapter I of chapter 13 of title 11, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 1308. Filing of prepetition tax returns

       ``(a) Not later than the day before the date on which the 
     meeting of the creditors is first scheduled to be held under 
     section 341(a), if the debtor was required to file a tax 
     return under applicable nonbankruptcy law, the debtor shall 
     file with appropriate tax authorities all tax returns for all 
     taxable periods ending during the 4-year period ending on the 
     date of the filing of the petition.
       ``(b)(1) Subject to paragraph (2), if the tax returns 
     required by subsection (a) have not been filed by the date on 
     which the meeting of creditors is first scheduled to be held 
     under section 341(a), the trustee may hold open that meeting 
     for a reasonable period of time to allow the debtor an 
     additional period of time to file any unfiled returns, but 
     such additional period of time shall not extend beyond--
       ``(A) for any return that is past due as of the date of the 
     filing of the petition, the date that is 120 days after the 
     date of that meeting; or
       ``(B) for any return that is not past due as of the date of 
     the filing of the petition, the later of--
       ``(i) the date that is 120 days after the date of that 
     meeting; or
       ``(ii) the date on which the return is due under the last 
     automatic extension of time for filing that return to which 
     the debtor is entitled, and for which request is timely made, 
     in accordance with applicable nonbankruptcy law.
       ``(2) After notice and a hearing, and order entered before 
     the tolling of any applicable filing period determined under 
     this subsection, if the debtor demonstrates by a 
     preponderance of the evidence that the failure to file a 
     return as required under this subsection is attributable to 
     circumstances beyond the control of the debtor, the court may 
     extend the filing period established by the trustee under 
     this subsection for--
       ``(A) a period of not more than 30 days for returns 
     described in paragraph (1); and
       ``(B) a period not to extend after the applicable extended 
     due date for a return described in paragraph (2).
       ``(c) For purposes of this section, the term `return' 
     includes a return prepared pursuant to subsection (a) or (b) 
     of section 6020 of the Internal Revenue Code of 1986, or a 
     similar State or local law, or a written stipulation to a 
     judgment or a final order entered by a nonbankruptcy 
     tribunal.''.
       (2) Conforming amendment.--The table of sections for 
     subchapter I of chapter 13 of title 11, United States Code, 
     is amended by adding at the end the following:

``1308. Filing of prepetition tax returns.''.
       (c) Dismissal or Conversion on Failure To Comply.--Section 
     1307 of title 11, United States Code, is amended--
       (1) by redesignating subsections (e) and (f) as subsections 
     (f) and (g), respectively; and
       (2) by inserting after subsection (d) the following:
       ``(e) Upon the failure of the debtor to file a tax return 
     under section 1308, on request of a party in interest or the 
     United States trustee and after notice and a hearing, the 
     court shall dismiss a case or convert a case under this 
     chapter to a case under chapter 7 of this title, whichever is 
     in the best interest of the creditors and the estate.''.
       (d) Timely Filed Claims.--Section 502(b)(9) of title 11, 
     United States Code, is amended by inserting before the period 
     at the end the following: ``, and except that in a case under 
     chapter 13, a claim of a governmental unit for a tax with 
     respect to a return filed under section 1308 shall be timely 
     if the claim is filed on or before the date that is 60 days 
     after the date on which such return was filed as required''.
       (e) Rules for Objections to Claims and to Confirmation.--It 
     is the sense of Congress that the Advisory Committee on 
     Bankruptcy Rules of the Judicial Conference of the United 
     States should, as soon as practicable after the date of 
     enactment of this Act, propose for adoption amended Federal 
     Rules of Bankruptcy Procedure which provide that--
       (1) notwithstanding the provisions of Rule 3015(f), in 
     cases under chapter 13 of title 11, United States Code, an 
     objection to the confirmation of a plan filed by a 
     governmental unit on or before the date that is 60 days after 
     the date on which the debtor files all tax returns required 
     under sections 1308 and 1325(a)(7) of title 11, United States 
     Code, shall be treated for all purposes as if such objection 
     had been timely filed before such confirmation; and
       (2) in addition to the provisions of Rule 3007, in a case 
     under chapter 13 of title 11, United States Code, no 
     objection to a claim for a tax with respect to which a return 
     is required to be filed under section 1308 of title 11, 
     United States Code, shall be filed until such return has been 
     filed as required.

     SEC. 717. STANDARDS FOR TAX DISCLOSURE.

       Section 1125(a)(1) of title 11, United States Code, is 
     amended--

[[Page H5733]]

       (1) by inserting ``including a discussion of the potential 
     material Federal tax consequences of the plan to the debtor, 
     any successor to the debtor, and a hypothetical investor 
     typical of the holders of claims or interests in the case,'' 
     after ``records''; and
       (2) by striking ``a hypothetical reasonable investor 
     typical of holders of claims or interests'' and inserting 
     ``such a hypothetical investor''.

     SEC. 718. SETOFF OF TAX REFUNDS.

       Section 362(b) of title 11, United States Code, as amended 
     by sections 224, 303, 311, and 401, is amended by inserting 
     after paragraph (25) the following:
       ``(26) under subsection (a), of the setoff under applicable 
     nonbankruptcy law of an income tax refund, by a governmental 
     unit, with respect to a taxable period that ended before the 
     order for relief against an income tax liability for a 
     taxable period that also ended before the order for relief, 
     except that in any case in which the setoff of an income tax 
     refund is not permitted under applicable nonbankruptcy law 
     because of a pending action to determine the amount or 
     legality of a tax liability, the governmental unit may hold 
     the refund pending the resolution of the action, unless the 
     court, on the motion of the trustee and after notice and a 
     hearing, grants the taxing authority adequate protection 
     (within the meaning of section 361) for the secured claim of 
     that authority in the setoff under section 506(a);''.

     SEC. 719. SPECIAL PROVISIONS RELATED TO THE TREATMENT OF 
                   STATE AND LOCAL TAXES.

       (a) In General.--
       (1) Special provisions.--Section 346 of title 11, United 
     States Code, is amended to read as follows:

     ``Sec. 346. Special provisions related to the treatment of 
       State and local taxes

       ``(a) Whenever the Internal Revenue Code of 1986 provides 
     that a separate taxable estate or entity is created in a case 
     concerning a debtor under this title, and the income, gain, 
     loss, deductions, and credits of such estate shall be taxed 
     to or claimed by the estate, a separate taxable estate is 
     also created for purposes of any State and local law imposing 
     a tax on or measured by income and such income, gain, loss, 
     deductions, and credits shall be taxed to or claimed by the 
     estate and may not be taxed to or claimed by the debtor. The 
     preceding sentence shall not apply if the case is 
     dismissed. The trustee shall make tax returns of income 
     required under any such State or local law.
       ``(b) Whenever the Internal Revenue Code of 1986 provides 
     that no separate taxable estate shall be created in a case 
     concerning a debtor under this title, and the income, gain, 
     loss, deductions, and credits of an estate shall be taxed to 
     or claimed by the debtor, such income, gain, loss, 
     deductions, and credits shall be taxed to or claimed by the 
     debtor under a State or local law imposing a tax on or 
     measured by income and may not be taxed to or claimed by the 
     estate. The trustee shall make such tax returns of income of 
     corporations and of partnerships as are required under any 
     State or local law, but with respect to partnerships, shall 
     make said returns only to the extent such returns are also 
     required to be made under such Code. The estate shall be 
     liable for any tax imposed on such corporation or 
     partnership, but not for any tax imposed on partners or 
     members.
       ``(c) With respect to a partnership or any entity treated 
     as a partnership under a State or local law imposing a tax on 
     or measured by income that is a debtor in a case under this 
     title, any gain or loss resulting from a distribution of 
     property from such partnership, or any distributive share of 
     any income, gain, loss, deduction, or credit of a partner or 
     member that is distributed, or considered distributed, from 
     such partnership, after the commencement of the case, is 
     gain, loss, income, deduction, or credit, as the case may be, 
     of the partner or member, and if such partner or member is a 
     debtor in a case under this title, shall be subject to tax in 
     accordance with subsection (a) or (b).
       ``(d) For purposes of any State or local law imposing a tax 
     on or measured by income, the taxable period of a debtor in a 
     case under this title shall terminate only if and to the 
     extent that the taxable period of such debtor terminates 
     under the Internal Revenue Code of 1986.
       ``(e) The estate in any case described in subsection (a) 
     shall use the same accounting method as the debtor used 
     immediately before the commencement of the case, if such 
     method of accounting complies with applicable nonbankruptcy 
     tax law.
       ``(f) For purposes of any State or local law imposing a tax 
     on or measured by income, a transfer of property from the 
     debtor to the estate or from the estate to the debtor shall 
     not be treated as a disposition for purposes of any provision 
     assigning tax consequences to a disposition, except to the 
     extent that such transfer is treated as a disposition under 
     the Internal Revenue Code of 1986.
       ``(g) Whenever a tax is imposed pursuant to a State or 
     local law imposing a tax on or measured by income pursuant to 
     subsection (a) or (b), such tax shall be imposed at rates 
     generally applicable to the same types of entities under such 
     State or local law.
       ``(h) The trustee shall withhold from any payment of claims 
     for wages, salaries, commissions, dividends, interest, or 
     other payments, or collect, any amount required to be 
     withheld or collected under applicable State or local tax 
     law, and shall pay such withheld or collected amount to the 
     appropriate governmental unit at the time and in the manner 
     required by such tax law, and with the same priority as the 
     claim from which such amount was withheld or collected was 
     paid.
       ``(i)(1) To the extent that any State or local law imposing 
     a tax on or measured by income provides for the carryover of 
     any tax attribute from one taxable period to a subsequent 
     taxable period, the estate shall succeed to such tax 
     attribute in any case in which such estate is subject to tax 
     under subsection (a).
       ``(2) After such a case is closed or dismissed, the debtor 
     shall succeed to any tax attribute to which the estate 
     succeeded under paragraph (1) to the extent consistent with 
     the Internal Revenue Code of 1986.
       ``(3) The estate may carry back any loss or tax attribute 
     to a taxable period of the debtor that ended before the order 
     for relief under this title to the extent that--
       ``(A) applicable State or local tax law provides for a 
     carryback in the case of the debtor; and
       ``(B) the same or a similar tax attribute may be carried 
     back by the estate to such a taxable period of the debtor 
     under the Internal Revenue Code of 1986.
       ``(j)(1) For purposes of any State or local law imposing a 
     tax on or measured by income, income is not realized by the 
     estate, the debtor, or a successor to the debtor by reason of 
     discharge of indebtedness in a case under this title, except 
     to the extent, if any, that such income is subject to tax 
     under the Internal Revenue Code of 1986.
       ``(2) Whenever the Internal Revenue Code of 1986 provides 
     that the amount excluded from gross income in respect of the 
     discharge of indebtedness in a case under this title shall be 
     applied to reduce the tax attributes of the debtor or the 
     estate, a similar reduction shall be made under any State or 
     local law imposing a tax on or measured by income to the 
     extent such State or local law recognizes such attributes. 
     Such State or local law may also provide for the reduction of 
     other attributes to the extent that the full amount of income 
     from the discharge of indebtedness has not been applied.
       ``(k)(1) Except as provided in this section and section 
     505, the time and manner of filing tax returns and the items 
     of income, gain, loss, deduction, and credit of any taxpayer 
     shall be determined under applicable nonbankruptcy law.
       ``(2) For Federal tax purposes, the provisions of this 
     section are subject to the Internal Revenue Code of 1986 and 
     other applicable Federal nonbankruptcy law.''.
       (2) Clerical Amendment.--The table of sections for chapter 
     3 of title 11, United States Code, is amended by striking the 
     item relating to section 346 and inserting the following:

``346. Special provisions related to the treatment of State and local 
              taxes.''.
       (b) Conforming Amendments.--Title 11 of the United States 
     Code is amended--
       (1) by striking section 728;
       (2) in the table of sections for chapter 7 by striking the 
     item relating to section 728;
       (3) in section 1146--
       (A) by striking subsections (a) and (b); and
       (B) by redesignating subsections (c) and (d) as subsections 
     (a) and (b), respectively; and
       (4) in section 1231--
       (A) by striking subsections (a) and (b); and
       (B) by redesignating subsections (c) and (d) as subsections 
     (a) and (b), respectively.

     SEC. 720. DISMISSAL FOR FAILURE TO TIMELY FILE TAX RETURNS.

       Section 521 of title 11, United States Code, as amended by 
     sections 106, 225, 305, 315, and 316, is amended by adding at 
     the end the following:
       ``(k)(1) Notwithstanding any other provision of this title, 
     if the debtor fails to file a tax return that becomes due 
     after the commencement of the case or to properly obtain an 
     extension of the due date for filing such return, the taxing 
     authority may request that the court enter an order 
     converting or dismissing the case.
       ``(2) If the debtor does not file the required return or 
     obtain the extension referred to in paragraph (1) within 90 
     days after a request is filed by the taxing authority under 
     that paragraph, the court shall convert or dismiss the case, 
     whichever is in the best interests of creditors and the 
     estate.''.
           TITLE VIII--ANCILLARY AND OTHER CROSS-BORDER CASES

     SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, UNITED 
                   STATES CODE.

       (a) In General.--Title 11, United States Code, is amended 
     by inserting after chapter 13 the following:

          ``CHAPTER 15--ANCILLARY AND OTHER CROSS-BORDER CASES

``Sec.
``1501. Purpose and scope of application.

                   ``SUBCHAPTER I--GENERAL PROVISIONS

``1502. Definitions.
``1503. International obligations of the United States.
``1504. Commencement of ancillary case.
``1505. Authorization to act in a foreign country.
``1506. Public policy exception.
``1507. Additional assistance.
``1508. Interpretation.

``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE 
                                 COURT

``1509. Right of direct access.
``1510. Limited jurisdiction.
``1511. Commencement of case under section 301 or 303.
``1512. Participation of a foreign representative in a case under this 
              title.
``1513. Access of foreign creditors to a case under this title.
``1514. Notification to foreign creditors concerning a case under this 
              title.

    ``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

``1515. Application for recognition.
``1516. Presumptions concerning recognition.
``1517. Order granting recognition.
``1518. Subsequent information.
``1519. Relief that may be granted upon filing petition for 
              recognition.
``1520. Effects of recognition of a foreign main proceeding.

[[Page H5734]]

``1521. Relief that may be granted upon recognition.
``1522. Protection of creditors and other interested persons.
``1523. Actions to avoid acts detrimental to creditors.
``1524. Intervention by a foreign representative.

     ``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                            REPRESENTATIVES

``1525. Cooperation and direct communication between the court and 
              foreign courts or foreign representatives.
``1526. Cooperation and direct communication between the trustee and 
              foreign courts or foreign representatives.
``1527. Forms of cooperation.

                 ``SUBCHAPTER V--CONCURRENT PROCEEDINGS

``1528. Commencement of a case under this title after recognition of a 
              foreign main proceeding.
``1529. Coordination of a case under this title and a foreign 
              proceeding.
``1530. Coordination of more than 1 foreign proceeding.
``1531. Presumption of insolvency based on recognition of a foreign 
              main proceeding.
``1532. Rule of payment in concurrent proceedings.

     ``Sec. 1501. Purpose and scope of application

       ``(a) The purpose of this chapter is to incorporate the 
     Model Law on Cross-Border Insolvency so as to provide 
     effective mechanisms for dealing with cases of cross-border 
     insolvency with the objectives of--
       ``(1) cooperation between--
       ``(A) courts of the United States, United States trustees, 
     trustees, examiners, debtors, and debtors in possession; and
       ``(B) the courts and other competent authorities of foreign 
     countries involved in cross-border insolvency cases;
       ``(2) greater legal certainty for trade and investment;
       ``(3) fair and efficient administration of cross-border 
     insolvencies that protects the interests of all creditors, 
     and other interested entities, including the debtor;
       ``(4) protection and maximization of the value of the 
     debtor's assets; and
       ``(5) facilitation of the rescue of financially troubled 
     businesses, thereby protecting investment and preserving 
     employment.
       ``(b) This chapter applies where--
       ``(1) assistance is sought in the United States by a 
     foreign court or a foreign representative in connection with 
     a foreign proceeding;
       ``(2) assistance is sought in a foreign country in 
     connection with a case under this title;
       ``(3) a foreign proceeding and a case under this title with 
     respect to the same debtor are taking place concurrently; or
       ``(4) creditors or other interested persons in a foreign 
     country have an interest in requesting the commencement of, 
     or participating in, a case or proceeding under this title.
       ``(c) This chapter does not apply to--
       ``(1) a proceeding concerning an entity, other than a 
     foreign insurance company, identified by exclusion in section 
     109(b);
       ``(2) an individual, or to an individual and such 
     individual's spouse, who have debts within the limits 
     specified in section 109(e) and who are citizens of the 
     United States or aliens lawfully admitted for permanent 
     residence in the United States; or
       ``(3) an entity subject to a proceeding under the 
     Securities Investor Protection Act of 1970, a stockbroker 
     subject to subchapter III of chapter 7 of this title, or a 
     commodity broker subject to subchapter IV of chapter 7 of 
     this title.
       ``(d) The court may not grant relief under this chapter 
     with respect to any deposit, escrow, trust fund, or other 
     security required or permitted under any applicable State 
     insurance law or regulation for the benefit of claim holders 
     in the United States.

                   ``SUBCHAPTER I--GENERAL PROVISIONS

     ``Sec. 1502. Definitions

       ``For the purposes of this chapter, the term--
       ``(1) `debtor' means an entity that is the subject of a 
     foreign proceeding;
       ``(2) `establishment' means any place of operations where 
     the debtor carries out a nontransitory economic activity;
       ``(3) `foreign court' means a judicial or other authority 
     competent to control or supervise a foreign proceeding;
       ``(4) `foreign main proceeding' means a foreign proceeding 
     taking place in the country where the debtor has the center 
     of its main interests;
       ``(5) `foreign nonmain proceeding' means a foreign 
     proceeding, other than a foreign main proceeding, taking 
     place in a country where the debtor has an establishment;
       ``(6) `trustee' includes a trustee, a debtor in possession 
     in a case under any chapter of this title, or a debtor under 
     chapter 9 of this title;
       ``(7) `recognition' means the entry of an order granting 
     recognition of a foreign main proceeding or foreign nonmain 
     proceeding under this chapter; and
       ``(8) `within the territorial jurisdiction of the United 
     States', when used with reference to property of a debtor, 
     refers to tangible property located within the territory of 
     the United States and intangible property deemed under 
     applicable nonbankruptcy law to be located within that 
     territory, including any property subject to attachment or 
     garnishment that may properly be seized or garnished by an 
     action in a Federal or State court in the United States.

     ``Sec. 1503. International obligations of the United States

       ``To the extent that this chapter conflicts with an 
     obligation of the United States arising out of any treaty or 
     other form of agreement to which it is a party with one or 
     more other countries, the requirements of the treaty or 
     agreement prevail.

     ``Sec. 1504. Commencement of ancillary case

       ``A case under this chapter is commenced by the filing of a 
     petition for recognition of a foreign proceeding under 
     section 1515.

     ``Sec. 1505. Authorization to act in a foreign country

       ``A trustee or another entity (including an examiner) may 
     be authorized by the court to act in a foreign country on 
     behalf of an estate created under section 541. An entity 
     authorized to act under this section may act in any way 
     permitted by the applicable foreign law.

     ``Sec. 1506. Public policy exception

       ``Nothing in this chapter prevents the court from refusing 
     to take an action governed by this chapter if the action 
     would be manifestly contrary to the public policy of the 
     United States.

     ``Sec. 1507. Additional assistance

       ``(a) Subject to the specific limitations stated elsewhere 
     in this chapter the court, if recognition is granted, may 
     provide additional assistance to a foreign representative 
     under this title or under other laws of the United States.
       ``(b) In determining whether to provide additional 
     assistance under this title or under other laws of the United 
     States, the court shall consider whether such additional 
     assistance, consistent with the principles of comity, will 
     reasonably assure--
       ``(1) just treatment of all holders of claims against or 
     interests in the debtor's property;
       ``(2) protection of claim holders in the United States 
     against prejudice and inconvenience in the processing of 
     claims in such foreign proceeding;
       ``(3) prevention of preferential or fraudulent dispositions 
     of property of the debtor;
       ``(4) distribution of proceeds of the debtor's property 
     substantially in accordance with the order prescribed by this 
     title; and
       ``(5) if appropriate, the provision of an opportunity for a 
     fresh start for the individual that such foreign proceeding 
     concerns.

     ``Sec. 1508. Interpretation

       ``In interpreting this chapter, the court shall consider 
     its international origin, and the need to promote an 
     application of this chapter that is consistent with the 
     application of similar statutes adopted by foreign 
     jurisdictions.

``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE 
                                 COURT

     ``Sec. 1509. Right of direct access

       ``(a) A foreign representative may commence a case under 
     section 1504 by filing directly with the court a petition for 
     recognition of a foreign proceeding under section 1515.
       ``(b) If the court grants recognition under section 1515, 
     and subject to any limitations that the court may impose 
     consistent with the policy of this chapter--
       ``(1) the foreign representative has the capacity to sue 
     and be sued in a court in the United States;
       ``(2) the foreign representative may apply directly to a 
     court in the United States for appropriate relief in that 
     court; and
       ``(3) a court in the United States shall grant comity or 
     cooperation to the foreign representative.
       ``(c) A request for comity or cooperation by a foreign 
     representative in a court in the United States other than the 
     court which granted recognition shall be accompanied by a 
     certified copy of an order granting recognition under section 
     1517.
       ``(d) If the court denies recognition under this chapter, 
     the court may issue any appropriate order necessary to 
     prevent the foreign representative from obtaining comity or 
     cooperation from courts in the United States.
       ``(e) Whether or not the court grants recognition, and 
     subject to sections 306 and 1510, a foreign representative is 
     subject to applicable nonbankruptcy law.
       ``(f) Notwithstanding any other provision of this section, 
     the failure of a foreign representative to commence a case or 
     to obtain recognition under this chapter does not affect any 
     right the foreign representative may have to sue in a court 
     in the United States to collect or recover a claim which is 
     the property of the debtor.

     ``Sec. 1510. Limited jurisdiction

       ``The sole fact that a foreign representative files a 
     petition under section 1515 does not subject the foreign 
     representative to the jurisdiction of any court in the United 
     States for any other purpose.

     ``Sec. 1511. Commencement of case under section 301 or 303

       ``(a) Upon recognition, a foreign representative may 
     commence--
       ``(1) an involuntary case under section 303; or
       ``(2) a voluntary case under section 301 or 302, if the 
     foreign proceeding is a foreign main proceeding.
       ``(b) The petition commencing a case under subsection (a) 
     must be accompanied by a certified copy of an order granting 
     recognition. The court where the petition for recognition has 
     been filed must be advised of the foreign representative's 
     intent to commence a case under subsection (a) prior to such 
     commencement.

     ``Sec. 1512. Participation of a foreign representative in a 
       case under this title

       ``Upon recognition of a foreign proceeding, the foreign 
     representative in the recognized proceeding is entitled to 
     participate as a party in interest in a case regarding the 
     debtor under this title.

     ``Sec. 1513. Access of foreign creditors to a case under this 
       title

       ``(a) Foreign creditors have the same rights regarding the 
     commencement of, and participation in, a case under this 
     title as domestic creditors.

[[Page H5735]]

       ``(b)(1) Subsection (a) does not change or codify present 
     law as to the priority of claims under section 507 or 726 of 
     this title, except that the claim of a foreign creditor under 
     those sections shall not be given a lower priority than that 
     of general unsecured claims without priority solely because 
     the holder of such claim is a foreign creditor.
       ``(2)(A) Subsection (a) and paragraph (1) do not change or 
     codify present law as to the allowability of foreign revenue 
     claims or other foreign public law claims in a proceeding 
     under this title.
       ``(B) Allowance and priority as to a foreign tax claim or 
     other foreign public law claim shall be governed by any 
     applicable tax treaty of the United States, under the 
     conditions and circumstances specified therein.

     ``Sec. 1514. Notification to foreign creditors concerning a 
       case under this title

       ``(a) Whenever in a case under this title notice is to be 
     given to creditors generally or to any class or category of 
     creditors, such notice shall also be given to the known 
     creditors generally, or to creditors in the notified class or 
     category, that do not have addresses in the United States. 
     The court may order that appropriate steps be taken with a 
     view to notifying any creditor whose address is not yet 
     known.
       ``(b) Such notification to creditors with foreign addresses 
     described in subsection (a) shall be given individually, 
     unless the court considers that, under the circumstances, 
     some other form of notification would be more appropriate. No 
     letter or other formality is required.
       ``(c) When a notification of commencement of a case is to 
     be given to foreign creditors, the notification shall--
       ``(1) indicate the time period for filing proofs of claim 
     and specify the place for their filing;
       ``(2) indicate whether secured creditors need to file their 
     proofs of claim; and
       ``(3) contain any other information required to be included 
     in such a notification to creditors under this title and the 
     orders of the court.
       ``(d) Any rule of procedure or order of the court as to 
     notice or the filing of a claim shall provide such additional 
     time to creditors with foreign addresses as is reasonable 
     under the circumstances.

    ``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

     ``Sec. 1515. Application for recognition

       ``(a) A foreign representative applies to the court for 
     recognition of the foreign proceeding in which the foreign 
     representative has been appointed by filing a petition for 
     recognition.
       ``(b) A petition for recognition shall be accompanied by--
       ``(1) a certified copy of the decision commencing the 
     foreign proceeding and appointing the foreign representative;
       ``(2) a certificate from the foreign court affirming the 
     existence of the foreign proceeding and of the appointment of 
     the foreign representative; or
       ``(3) in the absence of evidence referred to in paragraphs 
     (1) and (2), any other evidence acceptable to the court of 
     the existence of the foreign proceeding and of the 
     appointment of the foreign representative.
       ``(c) A petition for recognition shall also be accompanied 
     by a statement identifying all foreign proceedings with 
     respect to the debtor that are known to the foreign 
     representative.
       ``(d) The documents referred to in paragraphs (1) and (2) 
     of subsection (b) shall be translated into English. The court 
     may require a translation into English of additional 
     documents.

     ``Sec. 1516. Presumptions concerning recognition

       ``(a) If the decision or certificate referred to in section 
     1515(b) indicates that the foreign proceeding is a foreign 
     proceeding and that the person or body is a foreign 
     representative, the court is entitled to so presume.
       ``(b) The court is entitled to presume that documents 
     submitted in support of the petition for recognition are 
     authentic, whether or not they have been legalized.
       ``(c) In the absence of evidence to the contrary, the 
     debtor's registered office, or habitual residence in the case 
     of an individual, is presumed to be the center of the 
     debtor's main interests.

     ``Sec. 1517. Order granting recognition

       ``(a) Subject to section 1506, after notice and a hearing, 
     an order recognizing a foreign proceeding shall be entered 
     if--
       ``(1) the foreign proceeding for which recognition is 
     sought is a foreign main proceeding or foreign nonmain 
     proceeding within the meaning of section 1502;
       ``(2) the foreign representative applying for recognition 
     is a person or body; and
       ``(3) the petition meets the requirements of section 1515.
       ``(b) The foreign proceeding shall be recognized--
       ``(1) as a foreign main proceeding if it is taking place in 
     the country where the debtor has the center of its main 
     interests; or
       ``(2) as a foreign nonmain proceeding if the debtor has an 
     establishment within the meaning of section 1502 in the 
     foreign country where the proceeding is pending.
       ``(c) A petition for recognition of a foreign proceeding 
     shall be decided upon at the earliest possible time. Entry of 
     an order recognizing a foreign proceeding constitutes 
     recognition under this chapter.
       ``(d) The provisions of this subchapter do not prevent 
     modification or termination of recognition if it is shown 
     that the grounds for granting it were fully or partially 
     lacking or have ceased to exist, but in considering such 
     action the court shall give due weight to possible prejudice 
     to parties that have relied upon the order granting 
     recognition. The case under this chapter may be closed in the 
     manner prescribed under section 350.

     ``Sec. 1518. Subsequent information

       ``From the time of filing the petition for recognition of 
     the foreign proceeding, the foreign representative shall file 
     with the court promptly a notice of change of status 
     concerning--
       ``(1) any substantial change in the status of the foreign 
     proceeding or the status of the foreign representative's 
     appointment; and
       ``(2) any other foreign proceeding regarding the debtor 
     that becomes known to the foreign representative.

     ``Sec. 1519. Relief that may be granted upon filing petition 
       for recognition

       ``(a) From the time of filing a petition for recognition 
     until the court rules on the petition, the court may, at the 
     request of the foreign representative, where relief is 
     urgently needed to protect the assets of the debtor or the 
     interests of the creditors, grant relief of a provisional 
     nature, including--
       ``(1) staying execution against the debtor's assets;
       ``(2) entrusting the administration or realization of all 
     or part of the debtor's assets located in the United States 
     to the foreign representative or another person authorized by 
     the court, including an examiner, in order to protect and 
     preserve the value of assets that, by their nature or because 
     of other circumstances, are perishable, susceptible to 
     devaluation or otherwise in jeopardy; and
       ``(3) any relief referred to in paragraph (3), (4), or (7) 
     of section 1521(a).
       ``(b) Unless extended under section 1521(a)(6), the relief 
     granted under this section terminates when the petition for 
     recognition is granted.
       ``(c) It is a ground for denial of relief under this 
     section that such relief would interfere with the 
     administration of a foreign main proceeding.
       ``(d) The court may not enjoin a police or regulatory act 
     of a governmental unit, including a criminal action or 
     proceeding, under this section.
       ``(e) The standards, procedures, and limitations applicable 
     to an injunction shall apply to relief under this section.
       ``(f) The exercise of rights not subject to the stay 
     arising under section 362(a) pursuant to paragraph (6), (7), 
     (17), or (27) of section 362(b) or pursuant to section 362(n) 
     shall not be stayed by any order of a court or administrative 
     agency in any proceeding under this chapter.

     ``Sec. 1520. Effects of recognition of a foreign main 
       proceeding

       ``(a) Upon recognition of a foreign proceeding that is a 
     foreign main proceeding--
       ``(1) sections 361 and 362 apply with respect to the debtor 
     and that property of the debtor that is within the 
     territorial jurisdiction of the United States;
       ``(2) sections 363, 549, and 552 of this title apply to a 
     transfer of an interest of the debtor in property that is 
     within the territorial jurisdiction of the United States to 
     the same extent that the sections would apply to property of 
     an estate;
       ``(3) unless the court orders otherwise, the foreign 
     representative may operate the debtor's business and may 
     exercise the rights and powers of a trustee under and to the 
     extent provided by sections 363 and 552; and
       ``(4) section 552 applies to property of the debtor that is 
     within the territorial jurisdiction of the United States.
       ``(b) Subsection (a) does not affect the right to commence 
     an individual action or proceeding in a foreign country to 
     the extent necessary to preserve a claim against the debtor.
       ``(c) Subsection (a) does not affect the right of a foreign 
     representative or an entity to file a petition commencing a 
     case under this title or the right of any party to file 
     claims or take other proper actions in such a case.

     ``Sec. 1521. Relief that may be granted upon recognition

       ``(a) Upon recognition of a foreign proceeding, whether 
     main or nonmain, where necessary to effectuate the purpose of 
     this chapter and to protect the assets of the debtor or the 
     interests of the creditors, the court may, at the request of 
     the foreign representative, grant any appropriate relief, 
     including--
       ``(1) staying the commencement or continuation of an 
     individual action or proceeding concerning the debtor's 
     assets, rights, obligations or liabilities to the extent they 
     have not been stayed under section 1520(a);
       ``(2) staying execution against the debtor's assets to the 
     extent it has not been stayed under section 1520(a);
       ``(3) suspending the right to transfer, encumber or 
     otherwise dispose of any assets of the debtor to the extent 
     this right has not been suspended under section 1520(a);
       ``(4) providing for the examination of witnesses, the 
     taking of evidence or the delivery of information concerning 
     the debtor's assets, affairs, rights, obligations or 
     liabilities;
       ``(5) entrusting the administration or realization of all 
     or part of the debtor's assets within the territorial 
     jurisdiction of the United States to the foreign 
     representative or another person, including an examiner, 
     authorized by the court;
       ``(6) extending relief granted under section 1519(a); and
       ``(7) granting any additional relief that may be available 
     to a trustee, except for relief available under sections 522, 
     544, 545, 547, 548, 550, and 724(a).
       ``(b) Upon recognition of a foreign proceeding, whether 
     main or nonmain, the court may, at the request of the foreign 
     representative, entrust the distribution of all or part of 
     the debtor's assets located in the United States to the 
     foreign representative or another person, including an 
     examiner, authorized by the court, provided that the court is 
     satisfied that the interests of creditors in the United 
     States are sufficiently protected.
       ``(c) In granting relief under this section to a 
     representative of a foreign nonmain proceeding,

[[Page H5736]]

     the court must be satisfied that the relief relates to assets 
     that, under the law of the United States, should be 
     administered in the foreign nonmain proceeding or concerns 
     information required in that proceeding.
       ``(d) The court may not enjoin a police or regulatory act 
     of a governmental unit, including a criminal action or 
     proceeding, under this section.
       ``(e) The standards, procedures, and limitations applicable 
     to an injunction shall apply to relief under paragraphs (1), 
     (2), (3), and (6) of subsection (a).
       ``(f) The exercise of rights not subject to the stay 
     arising under section 362(a) pursuant to paragraph (6), (7), 
     (17), or (27) of section 362(b) or pursuant to section 362(n) 
     shall not be stayed by any order of a court or administrative 
     agency in any proceeding under this chapter.

     ``Sec. 1522. Protection of creditors and other interested 
       persons

       ``(a) The court may grant relief under section 1519 or 
     1521, or may modify or terminate relief under subsection (c), 
     only if the interests of the creditors and other interested 
     entities, including the debtor, are sufficiently protected.
       ``(b) The court may subject relief granted under section 
     1519 or 1521, or the operation of the debtor's business under 
     section 1520(a)(3) of this title, to conditions it considers 
     appropriate, including the giving of security or the filing 
     of a bond.
       ``(c) The court may, at the request of the foreign 
     representative or an entity affected by relief granted under 
     section 1519 or 1521, or at its own motion, modify or 
     terminate such relief.
       ``(d) Section 1104(d) shall apply to the appointment of an 
     examiner under this chapter. Any examiner shall comply with 
     the qualification requirements imposed on a trustee by 
     section 322.

     ``Sec. 1523. Actions to avoid acts detrimental to creditors

       ``(a) Upon recognition of a foreign proceeding, the foreign 
     representative has standing in a case concerning the debtor 
     pending under another chapter of this title to initiate 
     actions under sections 522, 544, 545, 547, 548, 550, 553, and 
     724(a).
       ``(b) When the foreign proceeding is a foreign nonmain 
     proceeding, the court must be satisfied that an action under 
     subsection (a) relates to assets that, under United States 
     law, should be administered in the foreign nonmain 
     proceeding.

     ``Sec. 1524. Intervention by a foreign representative

       ``Upon recognition of a foreign proceeding, the foreign 
     representative may intervene in any proceedings in a State or 
     Federal court in the United States in which the debtor is a 
     party.

     ``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                            REPRESENTATIVES

     ``Sec. 1525. Cooperation and direct communication between the 
       court and foreign courts or foreign representatives

       ``(a) Consistent with section 1501, the court shall 
     cooperate to the maximum extent possible with foreign courts 
     or foreign representatives, either directly or through the 
     trustee.
       ``(b) The court is entitled to communicate directly with, 
     or to request information or assistance directly from, 
     foreign courts or foreign representatives, subject to the 
     rights of parties in interest to notice and participation.

     ``Sec. 1526. Cooperation and direct communication between the 
       trustee and foreign courts or foreign representatives

       ``(a) Consistent with section 1501, the trustee or other 
     person, including an examiner, authorized by the court, 
     shall, subject to the supervision of the court, cooperate to 
     the maximum extent possible with foreign courts or foreign 
     representatives.
       ``(b) The trustee or other person, including an examiner, 
     authorized by the court is entitled, subject to the 
     supervision of the court, to communicate directly with 
     foreign courts or foreign representatives.

     ``Sec. 1527. Forms of cooperation

       ``Cooperation referred to in sections 1525 and 1526 may be 
     implemented by any appropriate means, including--
       ``(1) appointment of a person or body, including an 
     examiner, to act at the direction of the court;
       ``(2) communication of information by any means considered 
     appropriate by the court;
       ``(3) coordination of the administration and supervision of 
     the debtor's assets and affairs;
       ``(4) approval or implementation of agreements concerning 
     the coordination of proceedings; and
       ``(5) coordination of concurrent proceedings regarding the 
     same debtor.

                 ``SUBCHAPTER V--CONCURRENT PROCEEDINGS

     ``Sec. 1528. Commencement of a case under this title after 
       recognition of a foreign main proceeding

       ``After recognition of a foreign main proceeding, a case 
     under another chapter of this title may be commenced only if 
     the debtor has assets in the United States. The effects of 
     such case shall be restricted to the assets of the debtor 
     that are within the territorial jurisdiction of the United 
     States and, to the extent necessary to implement cooperation 
     and coordination under sections 1525, 1526, and 1527, to 
     other assets of the debtor that are within the jurisdiction 
     of the court under sections 541(a) of this title, and 1334(e) 
     of title 28, to the extent that such other assets are not 
     subject to the jurisdiction and control of a foreign 
     proceeding that has been recognized under this chapter.

     ``Sec. 1529. Coordination of a case under this title and a 
       foreign proceeding

       ``If a foreign proceeding and a case under another chapter 
     of this title are taking place concurrently regarding the 
     same debtor, the court shall seek cooperation and 
     coordination under sections 1525, 1526, and 1527, and the 
     following shall apply:
       ``(1) If the case in the United States is taking place at 
     the time the petition for recognition of the foreign 
     proceeding is filed--
       ``(A) any relief granted under section 1519 or 1521 must be 
     consistent with the relief granted in the case in the United 
     States; and
       ``(B) even if the foreign proceeding is recognized as a 
     foreign main proceeding, section 1520 does not apply.
       ``(2) If a case in the United States under this title 
     commences after recognition, or after the filing of the 
     petition for recognition, of the foreign proceeding--
       ``(A) any relief in effect under section 1519 or 1521 shall 
     be reviewed by the court and shall be modified or terminated 
     if inconsistent with the case in the United States; and
       ``(B) if the foreign proceeding is a foreign main 
     proceeding, the stay and suspension referred to in section 
     1520(a) shall be modified or terminated if inconsistent with 
     the relief granted in the case in the United States.
       ``(3) In granting, extending, or modifying relief granted 
     to a representative of a foreign nonmain proceeding, the 
     court must be satisfied that the relief relates to assets 
     that, under the laws of the United States, should be 
     administered in the foreign nonmain proceeding or concerns 
     information required in that proceeding.
       ``(4) In achieving cooperation and coordination under 
     sections 1528 and 1529, the court may grant any of the relief 
     authorized under section 305.

     ``Sec. 1530. Coordination of more than 1 foreign proceeding

       ``In matters referred to in section 1501, with respect to 
     more than 1 foreign proceeding regarding the debtor, the 
     court shall seek cooperation and coordination under sections 
     1525, 1526, and 1527, and the following shall apply:
       ``(1) Any relief granted under section 1519 or 1521 to a 
     representative of a foreign nonmain proceeding after 
     recognition of a foreign main proceeding must be consistent 
     with the foreign main proceeding.
       ``(2) If a foreign main proceeding is recognized after 
     recognition, or after the filing of a petition for 
     recognition, of a foreign nonmain proceeding, any relief in 
     effect under section 1519 or 1521 shall be reviewed by the 
     court and shall be modified or terminated if inconsistent 
     with the foreign main proceeding.
       ``(3) If, after recognition of a foreign nonmain 
     proceeding, another foreign nonmain proceeding is recognized, 
     the court shall grant, modify, or terminate relief for the 
     purpose of facilitating coordination of the proceedings.

     ``Sec. 1531. Presumption of insolvency based on recognition 
       of a foreign main proceeding

       ``In the absence of evidence to the contrary, recognition 
     of a foreign main proceeding is, for the purpose of 
     commencing a proceeding under section 303, proof that the 
     debtor is generally not paying its debts as such debts become 
     due.

     ``Sec. 1532. Rule of payment in concurrent proceedings

       ``Without prejudice to secured claims or rights in rem, a 
     creditor who has received payment with respect to its claim 
     in a foreign proceeding pursuant to a law relating to 
     insolvency may not receive a payment for the same claim in a 
     case under any other chapter of this title regarding the 
     debtor, so long as the payment to other creditors of the same 
     class is proportionately less than the payment the creditor 
     has already received.''.
       (b) Clerical Amendment.--The table of chapters for title 
     11, United States Code, is amended by inserting after the 
     item relating to chapter 13 the following:

``15. Ancillary and Other Cross-Border Cases................1501''.....

     SEC. 802. OTHER AMENDMENTS TO TITLES 11 AND 28, UNITED STATES 
                   CODE.

       (a) Applicability of Chapters.--Section 103 of title 11, 
     United States Code, is amended--
       (1) in subsection (a), by inserting before the period the 
     following: ``, and this chapter, sections 307, 362(n), 555 
     through 557, and 559 through 562 apply in a case under 
     chapter 15''; and
       (2) by adding at the end the following:
       ``(k) Chapter 15 applies only in a case under such chapter, 
     except that--
       ``(1) sections 1505, 1513, and 1514 apply in all cases 
     under this title; and
       ``(2) section 1509 applies whether or not a case under this 
     title is pending.''.
       (b) Definitions.--Section 101 of title 11, United States 
     Code, is amended by striking paragraphs (23) and (24) and 
     inserting the following:
       ``(23) `foreign proceeding' means a collective judicial or 
     administrative proceeding in a foreign country, including an 
     interim proceeding, under a law relating to insolvency or 
     adjustment of debt in which proceeding the assets and affairs 
     of the debtor are subject to control or supervision by a 
     foreign court, for the purpose of reorganization or 
     liquidation;
       ``(24) `foreign representative' means a person or body, 
     including a person or body appointed on an interim basis, 
     authorized in a foreign proceeding to administer the 
     reorganization or the liquidation of the debtor's assets or 
     affairs or to act as a representative of the foreign 
     proceeding;''.
       (c) Amendments to Title 28, United States Code.--
       (1) Procedures.--Section 157(b)(2) of title 28, United 
     States Code, is amended--
       (A) in subparagraph (N), by striking ``and'' at the end;
       (B) in subparagraph (O), by striking the period at the end 
     and inserting ``; and''; and
       (C) by adding at the end the following:

[[Page H5737]]

       ``(P) recognition of foreign proceedings and other matters 
     under chapter 15 of title 11.''.
       (2) Bankruptcy cases and proceedings.--Section 1334(c) of 
     title 28, United States Code, is amended by striking 
     ``Nothing in'' and inserting ``Except with respect to a case 
     under chapter 15 of title 11, nothing in''.
       (3) Duties of trustees.--Section 586(a)(3) of title 28, 
     United States Code, is amended by striking ``or 13'' and 
     inserting ``13, or 15''.
       (4) Venue of cases ancillary to foreign proceedings.--
     Section 1410 of title 28, United States Code, is amended to 
     read as follows:

     ``Sec. 1410. Venue of cases ancillary to foreign proceedings

       ``A case under chapter 15 of title 11 may be commenced in 
     the district court of the United States for the district--
       ``(1) in which the debtor has its principal place of 
     business or principal assets in the United States;
       ``(2) if the debtor does not have a place of business or 
     assets in the United States, in which there is pending 
     against the debtor an action or proceeding in a Federal or 
     State court; or
       ``(3) in a case other than those specified in paragraph (1) 
     or (2), in which venue will be consistent with the interests 
     of justice and the convenience of the parties, having regard 
     to the relief sought by the foreign representative.''.
       (d) Other Sections of Title 11.--Title 11 of the United 
     States Code is amended--
       (1) in section 109(b), by striking paragraph (3) and 
     inserting the following:
       ``(3)(A) a foreign insurance company, engaged in such 
     business in the United States; or
       ``(B) a foreign bank, savings bank, cooperative bank, 
     savings and loan association, building and loan association, 
     or credit union, that has a branch or agency (as defined in 
     section 1(b) of the International Banking Act of 1978 in the 
     United States.'';
       (2) in section 303, by striking subsection (k);
       (3) by striking section 304;
       (4) in the table of sections for chapter 3 by striking the 
     item relating to section 304;
       (5) in section 306 by striking ``, 304,'' each place it 
     appears;
       (6) in section 305(a) by striking paragraph (2) and 
     inserting the following:
       ``(2)(A) a petition under section 1515 of this title for 
     recognition of a foreign proceeding has been granted; and
       ``(B) the purposes of chapter 15 of this title would be 
     best served by such dismissal or suspension.''; and
       (7) in section 508--
       (A) by striking subsection (a); and
       (B) in subsection (b), by striking ``(b)''.
                TITLE IX--FINANCIAL CONTRACT PROVISIONS

     SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR 
                   RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS.

       (a) Definition of Qualified Financial Contract.--Section 
     11(e)(8)(D) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(8)(D)) is amended--
       (1) by striking ``subsection--'' and inserting 
     ``subsection, the following definitions shall apply:''; and
       (2) in clause (i), by inserting ``, resolution, or order'' 
     after ``any similar agreement that the Corporation determines 
     by regulation''.
       (b) Definition of Securities Contract.--Section 
     11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(ii)) is amended to read as follows:
       ``(ii) Securities contract.--The term `securities 
     contract'--

       ``(I) means a contract for the purchase, sale, or loan of a 
     security, a certificate of deposit, a mortgage loan, or any 
     interest in a mortgage loan, a group or index of securities, 
     certificates of deposit, or mortgage loans or interests 
     therein (including any interest therein or based on the value 
     thereof) or any option on any of the foregoing, including any 
     option to purchase or sell any such security, certificate of 
     deposit, mortgage loan, interest, group or index, or option, 
     and including any repurchase or reverse repurchase 
     transaction on any such security, certificate of deposit, 
     mortgage loan, interest, group or index, or option;
       ``(II) does not include any purchase, sale, or repurchase 
     obligation under a participation in a commercial mortgage 
     loan unless the Corporation determines by regulation, 
     resolution, or order to include any such agreement within the 
     meaning of such term;
       ``(III) means any option entered into on a national 
     securities exchange relating to foreign currencies;
       ``(IV) means the guarantee by or to any securities clearing 
     agency of any settlement of cash, securities, certificates of 
     deposit, mortgage loans or interests therein, group or index 
     of securities, certificates of deposit, or mortgage loans or 
     interests therein (including any interest therein or based on 
     the value thereof) or option on any of the foregoing, 
     including any option to purchase or sell any such security, 
     certificate of deposit, mortgage loan, interest, group or 
     index, or option;
       ``(V) means any margin loan;
       ``(VI) means any other agreement or transaction that is 
     similar to any agreement or transaction referred to in this 
     clause;
       ``(VII) means any combination of the agreements or 
     transactions referred to in this clause;

       ``(VIII) means any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(IX) means a master agreement that provides for an 
     agreement or transaction referred to in subclause (I), (III), 
     (IV), (V), (VI), (VII), or (VIII), together with all 
     supplements to any such master agreement, without regard to 
     whether the master agreement provides for an agreement or 
     transaction that is not a securities contract under this 
     clause, except that the master agreement shall be considered 
     to be a securities contract under this clause only with 
     respect to each agreement or transaction under the master 
     agreement that is referred to in subclause (I), (III), (IV), 
     (V), (VI), (VII), or (VIII); and

       ``(X) means any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in this clause, including any guarantee or 
     reimbursement obligation in connection with any agreement or 
     transaction referred to in this clause.''.

       (c) Definition of Commodity Contract.--Section 
     11(e)(8)(D)(iii) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(iii)) is amended to read as follows:
       ``(iii) Commodity contract.--The term `commodity contract' 
     means--

       ``(I) with respect to a futures commission merchant, a 
     contract for the purchase or sale of a commodity for future 
     delivery on, or subject to the rules of, a contract market or 
     board of trade;
       ``(II) with respect to a foreign futures commission 
     merchant, a foreign future;
       ``(III) with respect to a leverage transaction merchant, a 
     leverage transaction;
       ``(IV) with respect to a clearing organization, a contract 
     for the purchase or sale of a commodity for future delivery 
     on, or subject to the rules of, a contract market or board of 
     trade that is cleared by such clearing organization, or 
     commodity option traded on, or subject to the rules of, a 
     contract market or board of trade that is cleared by such 
     clearing organization;
       ``(V) with respect to a commodity options dealer, a 
     commodity option;
       ``(VI) any other agreement or transaction that is similar 
     to any agreement or transaction referred to in this clause;
       ``(VII) any combination of the agreements or transactions 
     referred to in this clause;
       ``(VIII) any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(IX) a master agreement that provides for an agreement or 
     transaction referred to in subclause (I), (II), (III), (IV), 
     (V), (VI), (VII), or (VIII), together with all supplements to 
     any such master agreement, without regard to whether the 
     master agreement provides for an agreement or transaction 
     that is not a commodity contract under this clause, except 
     that the master agreement shall be considered to be a 
     commodity contract under this clause only with respect to 
     each agreement or transaction under the master agreement that 
     is referred to in subclause (I), (II), (III), (IV), (V), 
     (VI), (VII), or (VIII); or
       ``(X) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in this clause, including any guarantee or reimbursement 
     obligation in connection with any agreement or transaction 
     referred to in this clause.''.

       (d) Definition of Forward Contract.--Section 
     11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(iv)) is amended to read as follows:
       ``(iv) Forward contract.--The term `forward contract' 
     means--

       ``(I) a contract (other than a commodity contract) for the 
     purchase, sale, or transfer of a commodity or any similar 
     good, article, service, right, or interest which is presently 
     or in the future becomes the subject of dealing in the 
     forward contract trade, or product or byproduct thereof, with 
     a maturity date more than 2 days after the date the contract 
     is entered into, including, a repurchase transaction, reverse 
     repurchase transaction, consignment, lease, swap, hedge 
     transaction, deposit, loan, option, allocated transaction, 
     unallocated transaction, or any other similar agreement;
       ``(II) any combination of agreements or transactions 
     referred to in subclauses (I) and (III);
       ``(III) any option to enter into any agreement or 
     transaction referred to in subclause (I) or (II);
       ``(IV) a master agreement that provides for an agreement or 
     transaction referred to in subclauses (I), (II), or (III), 
     together with all supplements to any such master agreement, 
     without regard to whether the master agreement provides for 
     an agreement or transaction that is not a forward contract 
     under this clause, except that the master agreement shall be 
     considered to be a forward contract under this clause only 
     with respect to each agreement or transaction under the 
     master agreement that is referred to in subclause (I), (II), 
     or (III); or
       ``(V) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in subclause (I), (II), (III), or (IV), including any 
     guarantee or reimbursement obligation in connection with any 
     agreement or transaction referred to in any such 
     subclause.''.

       (e) Definition of Repurchase Agreement.--Section 
     11(e)(8)(D)(v) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)(D)(v)) is amended to read as follows:
       ``(v) Repurchase agreement.--The term `repurchase 
     agreement' (which definition also applies to a reverse 
     repurchase agreement)--

       ``(I) means an agreement, including related terms, which 
     provides for the transfer of one or more certificates of 
     deposit, mortgage-related securities (as such term is defined 
     in the Securities Exchange Act of 1934), mortgage loans, 
     interests in mortgage-related securities or mortgage loans, 
     eligible bankers' acceptances, qualified foreign government 
     securities or securities that are direct obligations of, or 
     that are fully guaranteed by, the United States or any agency 
     of the United States against the transfer of funds by the 
     transferee of such certificates of deposit, eligible bankers' 
     acceptances, securities, mortgage loans, or interests with a 
     simultaneous agreement by such transferee to transfer to the 
     transferor thereof certificates of deposit, eligible bankers' 
     acceptances, securities, mortgage loans, or interests as 
     described above, at a date

[[Page H5738]]

     certain not later than 1 year after such transfers or on 
     demand, against the transfer of funds, or any other similar 
     agreement;
       ``(II) does not include any repurchase obligation under a 
     participation in a commercial mortgage loan unless the 
     Corporation determines by regulation, resolution, or order to 
     include any such participation within the meaning of such 
     term;

       ``(III) means any combination of agreements or transactions 
     referred to in subclauses (I) and (IV);
       ``(IV) means any option to enter into any agreement or 
     transaction referred to in subclause (I) or (III);
       ``(V) means a master agreement that provides for an 
     agreement or transaction referred to in subclause (I), (III), 
     or (IV), together with all supplements to any such master 
     agreement, without regard to whether the master agreement 
     provides for an agreement or transaction that is not a 
     repurchase agreement under this clause, except that the 
     master agreement shall be considered to be a repurchase 
     agreement under this subclause only with respect to each 
     agreement or transaction under the master agreement that is 
     referred to in subclause (I), (III), or (IV); and
       ``(VI) means any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in subclause (I), (III), (IV), or (V), including 
     any guarantee or reimbursement obligation in connection with 
     any agreement or transaction referred to in any such 
     subclause.

     For purposes of this clause, the term `qualified foreign 
     government security' means a security that is a direct 
     obligation of, or that is fully guaranteed by, the central 
     government of a member of the Organization for Economic 
     Cooperation and Development (as determined by regulation 
     or order adopted by the appropriate Federal banking 
     authority).''.
       (f) Definition of Swap Agreement.--Section 11(e)(8)(D)(vi) 
     of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(8)(D)(vi)) is amended to read as follows:
       ``(vi) Swap agreement.--The term `swap agreement' means--

       ``(I) any agreement, including the terms and conditions 
     incorporated by reference in any such agreement, which is an 
     interest rate swap, option, future, or forward agreement, 
     including a rate floor, rate cap, rate collar, cross-currency 
     rate swap, and basis swap; a spot, same day-tomorrow, 
     tomorrow-next, forward, or other foreign exchange or precious 
     metals agreement; a currency swap, option, future, or forward 
     agreement; an equity index or equity swap, option, future, or 
     forward agreement; a debt index or debt swap, option, future, 
     or forward agreement; a total return, credit spread or credit 
     swap, option, future, or forward agreement; a commodity index 
     or commodity swap, option, future, or forward agreement; or a 
     weather swap, weather derivative, or weather option;
       ``(II) any agreement or transaction that is similar to any 
     other agreement or transaction referred to in this clause and 
     that is of a type that has been, is presently, or in the 
     future becomes, the subject of recurrent dealings in the swap 
     markets (including terms and conditions incorporated by 
     reference in such agreement) and that is a forward, swap, 
     future, or option on one or more rates, currencies, 
     commodities, equity securities or other equity instruments, 
     debt securities or other debt instruments, quantitative 
     measures associated with an occurrence, extent of an 
     occurrence, or contingency associated with a financial, 
     commercial, or economic consequence, or economic or financial 
     indices or measures of economic or financial risk or value;
       ``(III) any combination of agreements or transactions 
     referred to in this clause;
       ``(IV) any option to enter into any agreement or 
     transaction referred to in this clause;
       ``(V) a master agreement that provides for an agreement or 
     transaction referred to in subclause (I), (II), (III), or 
     (IV), together with all supplements to any such master 
     agreement, without regard to whether the master agreement 
     contains an agreement or transaction that is not a swap 
     agreement under this clause, except that the master agreement 
     shall be considered to be a swap agreement under this clause 
     only with respect to each agreement or transaction under the 
     master agreement that is referred to in subclause (I), (II), 
     (III), or (IV); and
       ``(VI) any security agreement or arrangement or other 
     credit enhancement related to any agreements or transactions 
     referred to in subclause (I), (II), (III), (IV), or (V), 
     including any guarantee or reimbursement obligation in 
     connection with any agreement or transaction referred to in 
     any such subclause.

     Such term is applicable for purposes of this subsection only 
     and shall not be construed or applied so as to challenge or 
     affect the characterization, definition, or treatment of any 
     swap agreement under any other statute, regulation, or rule, 
     including the Securities Act of 1933, the Securities Exchange 
     Act of 1934, the Public Utility Holding Company Act of 1935, 
     the Trust Indenture Act of 1939, the Investment Company Act 
     of 1940, the Investment Advisers Act of 1940, the Securities 
     Investor Protection Act of 1970, the Commodity Exchange Act, 
     the Gramm-Leach-Bliley Act, and the Legal Certainty for Bank 
     Products Act of 2000.''.
       (g) Definition of Transfer.--Section 11(e)(8)(D)(viii) of 
     the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(8)(D)(viii)) is amended to read as follows:
       ``(viii) Transfer.--The term `transfer' means every mode, 
     direct or indirect, absolute or conditional, voluntary or 
     involuntary, of disposing of or parting with property or with 
     an interest in property, including retention of title as a 
     security interest and foreclosure of the depository 
     institution's equity of redemption.''.
       (h) Treatment of Qualified Financial Contracts.--Section 
     11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(8)) is amended--
       (1) in subparagraph (A)--
       (A) by striking ``paragraph (10)'' and inserting 
     ``paragraphs (9) and (10)'';
       (B) in clause (i), by striking ``to cause the termination 
     or liquidation'' and inserting ``such person has to cause the 
     termination, liquidation, or acceleration''; and
       (C) by striking clause (ii) and inserting the following:
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement related to one or 
     more qualified financial contracts described in clause 
     (i);''; and
       (2) in subparagraph (E), by striking clause (ii) and 
     inserting the following:
       ``(ii) any right under any security agreement or 
     arrangement or other credit enhancement related to one or 
     more qualified financial contracts described in clause 
     (i);''.
       (i) Avoidance of Transfers.--Section 11(e)(8)(C)(i) of the 
     Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)(C)(i)) is 
     amended by inserting ``section 5242 of the Revised Statutes 
     of the United States or any other Federal or State law 
     relating to the avoidance of preferential or fraudulent 
     transfers,'' before ``the Corporation''.

     SEC. 902. AUTHORITY OF THE CORPORATION WITH RESPECT TO FAILED 
                   AND FAILING INSTITUTIONS.

       (a) In General.--Section 11(e)(8) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(e)(8)) is amended--
       (1) in subparagraph (E), by striking ``other than paragraph 
     (12) of this subsection, subsection (d)(9)'' and inserting 
     ``other than subsections (d)(9) and (e)(10)''; and
       (2) by adding at the end the following new subparagraphs:
       ``(F) Clarification.--No provision of law shall be 
     construed as limiting the right or power of the Corporation, 
     or authorizing any court or agency to limit or delay, in any 
     manner, the right or power of the Corporation to transfer any 
     qualified financial contract in accordance with paragraphs 
     (9) and (10) of this subsection or to disaffirm or repudiate 
     any such contract in accordance with subsection (e)(1) of 
     this section.
       ``(G) Walkaway clauses not effective.--
       ``(i) In general.--Notwithstanding the provisions of 
     subparagraphs (A) and (E), and sections 403 and 404 of the 
     Federal Deposit Insurance Corporation Improvement Act of 
     1991, no walkaway clause shall be enforceable in a qualified 
     financial contract of an insured depository institution in 
     default.
       ``(ii) Walkaway clause defined.--For purposes of this 
     subparagraph, the term `walkaway clause' means a provision in 
     a qualified financial contract that, after calculation of a 
     value of a party's position or an amount due to or from 1 of 
     the parties in accordance with its terms upon termination, 
     liquidation, or acceleration of the qualified financial 
     contract, either does not create a payment obligation of a 
     party or extinguishes a payment obligation of a party in 
     whole or in part solely because of such party's status as a 
     nondefaulting party.''.
       (b) Technical and Conforming Amendment.--Section 
     11(e)(12)(A) of the Federal Deposit Insurance Act (12 U.S.C. 
     1821(e)(12)(A)) is amended by inserting ``or the exercise of 
     rights or powers by'' after ``the appointment of''.

     SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED 
                   FINANCIAL CONTRACTS.

       (a) Transfers of Qualified Financial Contracts to Financial 
     Institutions.--Section 11(e)(9) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(e)(9)) is amended to read as 
     follows:
       ``(9) Transfer of qualified financial contracts.--
       ``(A) In general.--In making any transfer of assets or 
     liabilities of a depository institution in default which 
     includes any qualified financial contract, the conservator or 
     receiver for such depository institution shall either--
       ``(i) transfer to one financial institution, other than a 
     financial institution for which a conservator, receiver, 
     trustee in bankruptcy, or other legal custodian has been 
     appointed or which is otherwise the subject of a bankruptcy 
     or insolvency proceeding--

       ``(I) all qualified financial contracts between any person 
     or any affiliate of such person and the depository 
     institution in default;
       ``(II) all claims of such person or any affiliate of such 
     person against such depository institution under any such 
     contract (other than any claim which, under the terms of any 
     such contract, is subordinated to the claims of general 
     unsecured creditors of such institution);
       ``(III) all claims of such depository institution against 
     such person or any affiliate of such person under any such 
     contract; and
       ``(IV) all property securing or any other credit 
     enhancement for any contract described in subclause (I) or 
     any claim described in subclause (II) or (III) under any such 
     contract; or

       ``(ii) transfer none of the qualified financial contracts, 
     claims, property or other credit enhancement referred to in 
     clause (i) (with respect to such person and any affiliate of 
     such person).
       ``(B) Transfer to foreign bank, foreign financial 
     institution, or branch or agency of a foreign bank or 
     financial institution.--In transferring any qualified 
     financial contracts and related claims and property under 
     subparagraph (A)(i), the conservator or receiver for the 
     depository institution shall not make such transfer to a 
     foreign bank, financial institution organized under the laws 
     of a foreign country, or a branch or agency of a foreign bank 
     or financial institution unless, under the law applicable to 
     such bank, financial institution, branch or agency, to the 
     qualified financial contracts, and to any netting contract, 
     any security agreement or arrangement or other credit 
     enhancement related to one or more qualified financial 
     contracts, the contractual rights of the parties

[[Page H5739]]

     to such qualified financial contracts, netting contracts, 
     security agreements or arrangements, or other credit 
     enhancements are enforceable substantially to the same extent 
     as permitted under this section.
       ``(C) Transfer of contracts subject to the rules of a 
     clearing organization.--In the event that a conservator or 
     receiver transfers any qualified financial contract and 
     related claims, property, and credit enhancements pursuant to 
     subparagraph (A)(i) and such contract is cleared by or 
     subject to the rules of a clearing organization, the clearing 
     organization shall not be required to accept the transferee 
     as a member by virtue of the transfer.
       ``(D) Definitions.--For purposes of this paragraph, the 
     term `financial institution' means a broker or dealer, a 
     depository institution, a futures commission merchant, or any 
     other institution, as determined by the Corporation by 
     regulation to be a financial institution, and the term 
     `clearing organization' has the same meaning as in section 
     402 of the Federal Deposit Insurance Corporation Improvement 
     Act of 1991.''.
       (b) Notice to Qualified Financial Contract 
     Counterparties.--Section 11(e)(10)(A) of the Federal Deposit 
     Insurance Act (12 U.S.C. 1821(e)(10)(A)) is amended in the 
     material immediately following clause (ii) by striking ``the 
     conservator'' and all that follows through the period and 
     inserting the following: ``the conservator or receiver shall 
     notify any person who is a party to any such contract of such 
     transfer by 5:00 p.m. (eastern time) on the business day 
     following the date of the appointment of the receiver in the 
     case of a receivership, or the business day following such 
     transfer in the case of a conservatorship.''.
       (c) Rights Against Receiver and Treatment of Bridge 
     Banks.--Section 11(e)(10) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1821(e)(10)) is amended--
       (1) by redesignating subparagraph (B) as subparagraph (D); 
     and
       (2) by inserting after subparagraph (A) the following new 
     subparagraphs:
       ``(B) Certain rights not enforceable.--
       ``(i) Receivership.--A person who is a party to a qualified 
     financial contract with an insured depository institution may 
     not exercise any right that such person has to terminate, 
     liquidate, or net such contract under paragraph (8)(A) of 
     this subsection or section 403 or 404 of the Federal Deposit 
     Insurance Corporation Improvement Act of 1991, solely by 
     reason of or incidental to the appointment of a receiver for 
     the depository institution (or the insolvency or financial 
     condition of the depository institution for which the 
     receiver has been appointed)--

       ``(I) until 5:00 p.m. (eastern time) on the business day 
     following the date of the appointment of the receiver; or
       ``(II) after the person has received notice that the 
     contract has been transferred pursuant to paragraph (9)(A).

       ``(ii) Conservatorship.--A person who is a party to a 
     qualified financial contract with an insured depository 
     institution may not exercise any right that such person has 
     to terminate, liquidate, or net such contract under paragraph 
     (8)(E) of this subsection or section 403 or 404 of the 
     Federal Deposit Insurance Corporation Improvement Act of 
     1991, solely by reason of or incidental to the appointment of 
     a conservator for the depository institution (or the 
     insolvency or financial condition of the depository 
     institution for which the conservator has been appointed).
       ``(iii) Notice.--For purposes of this paragraph, the 
     Corporation as receiver or conservator of an insured 
     depository institution shall be deemed to have notified a 
     person who is a party to a qualified financial contract with 
     such depository institution if the Corporation has taken 
     steps reasonably calculated to provide notice to such person 
     by the time specified in subparagraph (A).
       ``(C) Treatment of bridge banks.--The following 
     institutions shall not be considered to be a financial 
     institution for which a conservator, receiver, trustee in 
     bankruptcy, or other legal custodian has been appointed or 
     which is otherwise the subject of a bankruptcy or insolvency 
     proceeding for purposes of paragraph (9):
       ``(i) A bridge bank.
       ``(ii) A depository institution organized by the 
     Corporation, for which a conservator is appointed either--

       ``(I) immediately upon the organization of the institution; 
     or
       ``(II) at the time of a purchase and assumption transaction 
     between the depository institution and the Corporation as 
     receiver for a depository institution in default.''.

     SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION 
                   OF QUALIFIED FINANCIAL CONTRACTS.

       Section 11(e) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)) is amended--
       (1) by redesignating paragraphs (11) through (15) as 
     paragraphs (12) through (16), respectively;
       (2) by inserting after paragraph (10) the following new 
     paragraph:
       ``(11) Disaffirmance or repudiation of qualified financial 
     contracts.--In exercising the rights of disaffirmance or 
     repudiation of a conservator or receiver with respect to any 
     qualified financial contract to which an insured depository 
     institution is a party, the conservator or receiver for such 
     institution shall either--
       ``(A) disaffirm or repudiate all qualified financial 
     contracts between--
       ``(i) any person or any affiliate of such person; and
       ``(ii) the depository institution in default; or
       ``(B) disaffirm or repudiate none of the qualified 
     financial contracts referred to in subparagraph (A) (with 
     respect to such person or any affiliate of such person).''; 
     and
       (3) by adding at the end the following new paragraph:
       ``(17) Savings clause.--The meanings of terms used in this 
     subsection are applicable for purposes of this subsection 
     only, and shall not be construed or applied so as to 
     challenge or affect the characterization, definition, or 
     treatment of any similar terms under any other statute, 
     regulation, or rule, including the Gramm-Leach-Bliley Act, 
     the Legal Certainty for Bank Products Act of 2000, the 
     securities laws (as that term is defined in section 3(a)(47) 
     of the Securities Exchange Act of 1934), and the Commodity 
     Exchange Act.''.

     SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

       Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance 
     Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to read as 
     follows:
       ``(vii) Treatment of master agreement as one agreement.--
     Any master agreement for any contract or agreement described 
     in any preceding clause of this subparagraph (or any master 
     agreement for such master agreement or agreements), together 
     with all supplements to such master agreement, shall be 
     treated as a single agreement and a single qualified 
     financial contract. If a master agreement contains provisions 
     relating to agreements or transactions that are not 
     themselves qualified financial contracts, the master 
     agreement shall be deemed to be a qualified financial 
     contract only with respect to those transactions that are 
     themselves qualified financial contracts.''.

     SEC. 906. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT 
                   ACT OF 1991.

       (a) Definitions.--Section 402 of the Federal Deposit 
     Insurance Corporation Improvement Act of 1991 (12 U.S.C. 
     4402) is amended--
       (1) in paragraph (2)--
       (A) in subparagraph (A)(ii), by inserting before the 
     semicolon ``, or is exempt from such registration by order of 
     the Securities and Exchange Commission''; and
       (B) in subparagraph (B), by inserting before the period ``, 
     that has been granted an exemption under section 4(c)(1) of 
     the Commodity Exchange Act, or that is a multilateral 
     clearing organization (as defined in section 408 of this 
     Act)'';
       (2) in paragraph (6)--
       (A) by redesignating subparagraphs (B) through (D) as 
     subparagraphs (C) through (E), respectively;
       (B) by inserting after subparagraph (A) the following new 
     subparagraph:
       ``(B) an uninsured national bank or an uninsured State bank 
     that is a member of the Federal Reserve System, if the 
     national bank or State member bank is not eligible to make 
     application to become an insured bank under section 5 of the 
     Federal Deposit Insurance Act;''; and
       (C) by amending subparagraph (C), so redesignated, to read 
     as follows:
       ``(C) a branch or agency of a foreign bank, a foreign bank 
     and any branch or agency of the foreign bank, or the foreign 
     bank that established the branch or agency, as those terms 
     are defined in section 1(b) of the International Banking Act 
     of 1978;'';
       (3) in paragraph (11), by inserting before the period ``and 
     any other clearing organization with which such clearing 
     organization has a netting contract'';
       (4) by amending paragraph (14)(A)(i) to read as follows:
       ``(i) means a contract or agreement between 2 or more 
     financial institutions, clearing organizations, or members 
     that provides for netting present or future payment 
     obligations or payment entitlements (including liquidation or 
     close out values relating to such obligations or 
     entitlements) among the parties to the agreement; and''; and
       (5) by adding at the end the following new paragraph:
       ``(15) Payment.--The term `payment' means a payment of 
     United States dollars, another currency, or a composite 
     currency, and a noncash delivery, including a payment or 
     delivery to liquidate an unmatured obligation.''.
       (b) Enforceability of Bilateral Netting Contracts.--Section 
     403 of the Federal Deposit Insurance Corporation Improvement 
     Act of 1991 (12 U.S.C. 4403) is amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) General Rule.--Notwithstanding any other provision of 
     State or Federal law (other than paragraphs (8)(E), (8)(F), 
     and (10)(B) of section 11(e) of the Federal Deposit Insurance 
     Act or any order authorized under section 5(b)(2) of the 
     Securities Investor Protection Act of 1970), the covered 
     contractual payment obligations and the covered contractual 
     payment entitlements between any 2 financial institutions 
     shall be netted in accordance with, and subject to the 
     conditions of, the terms of any applicable netting contract 
     (except as provided in section 561(b)(2) of title 11, United 
     States Code).''; and
       (2) by adding at the end the following new subsection:
       ``(f) Enforceability of Security Agreements.--The 
     provisions of any security agreement or arrangement or other 
     credit enhancement related to one or more netting contracts 
     between any 2 financial institutions shall be enforceable in 
     accordance with their terms (except as provided in section 
     561(b)(2) of title 11, United States Code), and shall not be 
     stayed, avoided, or otherwise limited by any State or Federal 
     law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
     section 11(e) of the Federal Deposit Insurance Act and 
     section 5(b)(2) of the Securities Investor Protection Act of 
     1970).''.
       (c) Enforceability of Clearing Organization Netting 
     Contracts.--Section 404 of the Federal Deposit Insurance 
     Corporation Improvement Act of 1991 (12 U.S.C. 4404) is 
     amended--
       (1) by striking subsection (a) and inserting the following:
       ``(a) General Rule.--Notwithstanding any other provision of 
     State or Federal law (other

[[Page H5740]]

     than paragraphs (8)(E), (8)(F), and (10)(B) of section 11(e) 
     of the Federal Deposit Insurance Act and any order authorized 
     under section 5(b)(2) of the Securities Investor Protection 
     Act of 1970), the covered contractual payment obligations and 
     the covered contractual payment entitlements of a member of a 
     clearing organization to and from all other members of a 
     clearing organization shall be netted in accordance with and 
     subject to the conditions of any applicable netting contract 
     (except as provided in section 561(b)(2) of title 11, United 
     States Code).''; and
       (2) by adding at the end the following new subsection:
       ``(h) Enforceability of Security Agreements.--The 
     provisions of any security agreement or arrangement or other 
     credit enhancement related to one or more netting contracts 
     between any 2 members of a clearing organization shall be 
     enforceable in accordance with their terms (except as 
     provided in section 561(b)(2) of title 11, United States 
     Code), and shall not be stayed, avoided, or otherwise limited 
     by any State or Federal law (other than paragraphs (8)(E), 
     (8)(F), and (10)(B) of section 11(e) of the Federal Deposit 
     Insurance Act and section 5(b)(2) of the Securities Investor 
     Protection Act of 1970).''.
       (d) Enforceability of Contracts With Uninsured National 
     Banks, Uninsured Federal Branches and Agencies, Certain 
     Uninsured State Member Banks, and Edge Act Corporations.--The 
     Federal Deposit Insurance Corporation Improvement Act of 1991 
     (12 U.S.C. 4401 et seq.) is amended--
       (1) by redesignating section 407 as section 407A; and
       (2) by inserting after section 406 the following new 
     section:

     ``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL 
                   BANKS, UNINSURED FEDERAL BRANCHES AND AGENCIES, 
                   CERTAIN UNINSURED STATE MEMBER BANKS, AND EDGE 
                   ACT CORPORATIONS.

       ``(a) In General.--Notwithstanding any other provision of 
     law, paragraphs (8), (9), (10), and (11) of section 11(e) of 
     the Federal Deposit Insurance Act shall apply to an uninsured 
     national bank or uninsured Federal branch or Federal agency, 
     a corporation chartered under section 25A of the Federal 
     Reserve Act, or an uninsured State member bank which 
     operates, or operates as, a multilateral clearing 
     organization pursuant to section 409 of this Act, except that 
     for such purpose--
       ``(1) any reference to the `Corporation as receiver' or 
     `the receiver or the Corporation' shall refer to the receiver 
     appointed by the Comptroller of the Currency in the case of 
     an uninsured national bank or uninsured Federal branch or 
     agency, or to the receiver appointed by the Board of 
     Governors of the Federal Reserve System in the case of a 
     corporation chartered under section 25A of the Federal 
     Reserve Act or an uninsured State member bank;
       ``(2) any reference to the `Corporation' (other than in 
     section 11(e)(8)(D) of such Act), the `Corporation, whether 
     acting as such or as conservator or receiver', a `receiver', 
     or a `conservator' shall refer to the receiver or conservator 
     appointed by the Comptroller of the Currency in the case of 
     an uninsured national bank or uninsured Federal branch or 
     agency, or to the receiver or conservator appointed by the 
     Board of Governors of the Federal Reserve System in the case 
     of a corporation chartered under section 25A of the Federal 
     Reserve Act or an uninsured State member bank; and
       ``(3) any reference to an `insured depository institution' 
     or `depository institution' shall refer to an uninsured 
     national bank, an uninsured Federal branch or Federal agency, 
     a corporation chartered under section 25A of the Federal 
     Reserve Act, or an uninsured State member bank which 
     operates, or operates as, a multilateral clearing 
     organization pursuant to section 409 of this Act.
       ``(b) Liability.--The liability of a receiver or 
     conservator of an uninsured national bank, uninsured Federal 
     branch or agency, a corporation chartered under section 25A 
     of the Federal Reserve Act, or an uninsured State member bank 
     which operates, or operates as, a multilateral clearing 
     organization pursuant to section 409 of this Act, shall be 
     determined in the same manner and subject to the same 
     limitations that apply to receivers and conservators of 
     insured depository institutions under section 11(e) of the 
     Federal Deposit Insurance Act.
       ``(c) Regulatory Authority.--
       ``(1) In general.--The Comptroller of the Currency in the 
     case of an uninsured national bank or uninsured Federal 
     branch or agency and the Board of Governors of the Federal 
     Reserve System in the case of a corporation chartered under 
     section 25A of the Federal Reserve Act, or an uninsured State 
     member bank that operates, or operates as, a multilateral 
     clearing organization pursuant to section 409 of this Act, in 
     consultation with the Federal Deposit Insurance Corporation, 
     may each promulgate regulations solely to implement this 
     section.
       ``(2) Specific requirement.--In promulgating regulations, 
     limited solely to implementing paragraphs (8), (9), (10), and 
     (11) of section 11(e) of the Federal Deposit Insurance Act, 
     the Comptroller of the Currency and the Board of Governors of 
     the Federal Reserve System each shall ensure that the 
     regulations generally are consistent with the regulations and 
     policies of the Federal Deposit Insurance Corporation adopted 
     pursuant to the Federal Deposit Insurance Act.
       ``(d) Definitions.--For purposes of this section, the terms 
     `Federal branch', `Federal agency', and `foreign bank' have 
     the same meanings as in section 1(b) of the International 
     Banking Act of 1978.''.

     SEC. 907. BANKRUPTCY LAW AMENDMENTS.

       (a) Definitions of Forward Contract, Repurchase Agreement, 
     Securities Clearing Agency, Swap Agreement, Commodity 
     Contract, and Securities Contract.--Title 11, United States 
     Code, is amended--
       (1) in section 101--
       (A) in paragraph (25)--
       (i) by striking ``means a contract'' and inserting 
     ``means--
       ``(A) a contract'';
       (ii) by striking ``, or any combination thereof or option 
     thereon;'' and inserting ``, or any other similar 
     agreement;''; and
       (iii) by adding at the end the following:
       ``(B) any combination of agreements or transactions 
     referred to in subparagraphs (A) and (C);
       ``(C) any option to enter into an agreement or transaction 
     referred to in subparagraph (A) or (B);
       ``(D) a master agreement that provides for an agreement or 
     transaction referred to in subparagraph (A), (B), or (C), 
     together with all supplements to any such master agreement, 
     without regard to whether such master agreement provides for 
     an agreement or transaction that is not a forward contract 
     under this paragraph, except that such master agreement shall 
     be considered to be a forward contract under this paragraph 
     only with respect to each agreement or transaction under such 
     master agreement that is referred to in subparagraph (A), 
     (B), or (C); or
       ``(E) any security agreement or arrangement, or other 
     credit enhancement related to any agreement or transaction 
     referred to in subparagraph (A), (B), (C), or (D), including 
     any guarantee or reimbursement obligation by or to a forward 
     contract merchant or financial participant in connection with 
     any agreement or transaction referred to in any such 
     subparagraph, but not to exceed the damages in connection 
     with any such agreement or transaction, measured in 
     accordance with section 562 of this title;'';
       (B) in paragraph (46), by striking ``on any day during the 
     period beginning 90 days before the date of'' and inserting 
     ``at any time before'';
       (C) by amending paragraph (47) to read as follows:
       ``(47) `repurchase agreement' (which definition also 
     applies to a reverse repurchase agreement)--
       ``(A) means--
       ``(i) an agreement, including related terms, which provides 
     for the transfer of one or more certificates of deposit, 
     mortgage related securities (as defined in section 3 of the 
     Securities Exchange Act of 1934), mortgage loans, interests 
     in mortgage related securities or mortgage loans, eligible 
     bankers' acceptances, qualified foreign government securities 
     (defined as a security that is a direct obligation of, or 
     that is fully guaranteed by, the central government of a 
     member of the Organization for Economic Cooperation and 
     Development), or securities that are direct obligations of, 
     or that are fully guaranteed by, the United States or any 
     agency of the United States against the transfer of funds by 
     the transferee of such certificates of deposit, eligible 
     bankers' acceptances, securities, mortgage loans, or 
     interests, with a simultaneous agreement by such transferee 
     to transfer to the transferor thereof certificates of 
     deposit, eligible bankers' acceptance, securities, mortgage 
     loans, or interests of the kind described in this clause, at 
     a date certain not later than 1 year after such transfer or 
     on demand, against the transfer of funds;
       ``(ii) any combination of agreements or transactions 
     referred to in clauses (i) and (iii);
       ``(iii) an option to enter into an agreement or transaction 
     referred to in clause (i) or (ii);
       ``(iv) a master agreement that provides for an agreement or 
     transaction referred to in clause (i), (ii), or (iii), 
     together with all supplements to any such master agreement, 
     without regard to whether such master agreement provides for 
     an agreement or transaction that is not a repurchase 
     agreement under this paragraph, except that such master 
     agreement shall be considered to be a repurchase agreement 
     under this paragraph only with respect to each agreement or 
     transaction under the master agreement that is referred to in 
     clause (i), (ii), or (iii); or
       ``(v) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in clause (i), (ii), (iii), or (iv), including any 
     guarantee or reimbursement obligation by or to a repo 
     participant or financial participant in connection with any 
     agreement or transaction referred to in any such clause, but 
     not to exceed the damages in connection with any such 
     agreement or transaction, measured in accordance with section 
     562 of this title; and
       ``(B) does not include a repurchase obligation under a 
     participation in a commercial mortgage loan;'';
       (D) in paragraph (48), by inserting ``, or exempt from such 
     registration under such section pursuant to an order of the 
     Securities and Exchange Commission,'' after ``1934''; and
       (E) by amending paragraph (53B) to read as follows:
       ``(53B) `swap agreement'--
       ``(A) means--
       ``(i) any agreement, including the terms and conditions 
     incorporated by reference in such agreement, which is--

       ``(I) an interest rate swap, option, future, or forward 
     agreement, including a rate floor, rate cap, rate collar, 
     cross-currency rate swap, and basis swap;
       ``(II) a spot, same day-tomorrow, tomorrow-next, forward, 
     or other foreign exchange or precious metals agreement;
       ``(III) a currency swap, option, future, or forward 
     agreement;
       ``(IV) an equity index or equity swap, option, future, or 
     forward agreement;

       ``(V) a debt index or debt swap, option, future, or forward 
     agreement;
       ``(VI) a total return, credit spread or credit swap, 
     option, future, or forward agreement;
       ``(VII) a commodity index or a commodity swap, option, 
     future, or forward agreement; or

[[Page H5741]]

       ``(VIII) a weather swap, weather derivative, or weather 
     option;

       ``(ii) any agreement or transaction that is similar to any 
     other agreement or transaction referred to in this paragraph 
     and that--

       ``(I) is of a type that has been, is presently, or in the 
     future becomes, the subject of recurrent dealings in the swap 
     markets (including terms and conditions incorporated by 
     reference therein); and
       ``(II) is a forward, swap, future, or option on one or more 
     rates, currencies, commodities, equity securities, or other 
     equity instruments, debt securities or other debt 
     instruments, quantitative measures associated with an 
     occurrence, extent of an occurrence, or contingency 
     associated with a financial, commercial, or economic 
     consequence, or economic or financial indices or measures of 
     economic or financial risk or value;

       ``(iii) any combination of agreements or transactions 
     referred to in this subparagraph;
       ``(iv) any option to enter into an agreement or transaction 
     referred to in this subparagraph;
       ``(v) a master agreement that provides for an agreement or 
     transaction referred to in clause (i), (ii), (iii), or (iv), 
     together with all supplements to any such master agreement, 
     and without regard to whether the master agreement contains 
     an agreement or transaction that is not a swap agreement 
     under this paragraph, except that the master agreement shall 
     be considered to be a swap agreement under this paragraph 
     only with respect to each agreement or transaction under the 
     master agreement that is referred to in clause (i), (ii), 
     (iii), or (iv); or
       ``(vi) any security agreement or arrangement or other 
     credit enhancement related to any agreements or transactions 
     referred to in clause (i) through (v), including any 
     guarantee or reimbursement obligation by or to a swap 
     participant or financial participant in connection with any 
     agreement or transaction referred to in any such clause, but 
     not to exceed the damages in connection with any such 
     agreement or transaction, measured in accordance with section 
     562 of this title; and
       ``(B) is applicable for purposes of this title only, and 
     shall not be construed or applied so as to challenge or 
     affect the characterization, definition, or treatment of any 
     swap agreement under any other statute, regulation, or rule, 
     including the Securities Act of 1933, the Securities Exchange 
     Act of 1934, the Public Utility Holding Company Act of 1935, 
     the Trust Indenture Act of 1939, the Investment Company Act 
     of 1940, the Investment Advisers Act of 1940, the Securities 
     Investor Protection Act of 1970, the Commodity Exchange Act, 
     the Gramm-Leach-Bliley Act, and the Legal Certainty for Bank 
     Products Act of 2000;'';
       (2) in section 741(7), by striking paragraph (7) and 
     inserting the following:
       ``(7) `securities contract'--
       ``(A) means--
       ``(i) a contract for the purchase, sale, or loan of a 
     security, a certificate of deposit, a mortgage loan or any 
     interest in a mortgage loan, a group or index of securities, 
     certificates of deposit, or mortgage loans or interests 
     therein (including an interest therein or based on the value 
     thereof), or option on any of the foregoing, including an 
     option to purchase or sell any such security, certificate of 
     deposit, mortgage loan, interest, group or index, or option, 
     and including any repurchase or reverse repurchase 
     transaction on any such security, certificate of deposit, 
     mortgage loan, interest, group or index, or option;
       ``(ii) any option entered into on a national securities 
     exchange relating to foreign currencies;
       ``(iii) the guarantee by or to any securities clearing 
     agency of a settlement of cash, securities, certificates of 
     deposit, mortgage loans or interests therein, group or index 
     of securities, or mortgage loans or interests therein 
     (including any interest therein or based on the value 
     thereof), or option on any of the foregoing, including an 
     option to purchase or sell any such security, certificate of 
     deposit, mortgage loan, interest, group or index, or option;
       ``(iv) any margin loan;
       ``(v) any other agreement or transaction that is similar to 
     an agreement or transaction referred to in this subparagraph;
       ``(vi) any combination of the agreements or transactions 
     referred to in this subparagraph;
       ``(vii) any option to enter into any agreement or 
     transaction referred to in this subparagraph;
       ``(viii) a master agreement that provides for an agreement 
     or transaction referred to in clause (i), (ii), (iii), (iv), 
     (v), (vi), or (vii), together with all supplements to any 
     such master agreement, without regard to whether the master 
     agreement provides for an agreement or transaction that is 
     not a securities contract under this subparagraph, except 
     that such master agreement shall be considered to be a 
     securities contract under this subparagraph only with respect 
     to each agreement or transaction under such master agreement 
     that is referred to in clause (i), (ii), (iii), (iv), (v), 
     (vi), or (vii); or
       ``(ix) any security agreement or arrangement or other 
     credit enhancement related to any agreement or transaction 
     referred to in this subparagraph, including any guarantee or 
     reimbursement obligation by or to a stockbroker, securities 
     clearing agency, financial institution, or financial 
     participant in connection with any agreement or transaction 
     referred to in this subparagraph, but not to exceed the 
     damages in connection with any such agreement or transaction, 
     measured in accordance with section 562 of this title; and
       ``(B) does not include any purchase, sale, or repurchase 
     obligation under a participation in a commercial mortgage 
     loan;''; and
       (3) in section 761(4)--
       (A) by striking ``or'' at the end of subparagraph (D); and
       (B) by adding at the end the following:
       ``(F) any other agreement or transaction that is similar to 
     an agreement or transaction referred to in this paragraph;
       ``(G) any combination of the agreements or transactions 
     referred to in this paragraph;
       ``(H) any option to enter into an agreement or transaction 
     referred to in this paragraph;
       ``(I) a master agreement that provides for an agreement or 
     transaction referred to in subparagraph (A), (B), (C), (D), 
     (E), (F), (G), or (H), together with all supplements to such 
     master agreement, without regard to whether the master 
     agreement provides for an agreement or transaction that is 
     not a commodity contract under this paragraph, except that 
     the master agreement shall be considered to be a commodity 
     contract under this paragraph only with respect to each 
     agreement or transaction under the master agreement that is 
     referred to in subparagraph (A), (B), (C), (D), (E), (F), 
     (G), or (H); or
       ``(J) any security agreement or arrangement or other credit 
     enhancement related to any agreement or transaction referred 
     to in this paragraph, including any guarantee or 
     reimbursement obligation by or to a commodity broker or 
     financial participant in connection with any agreement or 
     transaction referred to in this paragraph, but not to exceed 
     the damages in connection with any such agreement or 
     transaction, measured in accordance with section 562 of this 
     title;''.
       (b) Definitions of Financial Institution, Financial 
     Participant, and Forward Contract Merchant.--Section 101 of 
     title 11, United States Code, is amended--
       (1) by striking paragraph (22) and inserting the following:
       ``(22) `financial institution' means--
       ``(A) a Federal reserve bank, or an entity (domestic or 
     foreign) that is a commercial or savings bank, industrial 
     savings bank, savings and loan association, trust company, or 
     receiver or conservator for such entity and, when any such 
     Federal reserve bank, receiver, conservator or entity is 
     acting as agent or custodian for a customer in connection 
     with a securities contract (as defined in section 741) such 
     customer; or
       ``(B) in connection with a securities contract (as defined 
     in section 741) an investment company registered under the 
     Investment Company Act of 1940;'';
       (2) by inserting after paragraph (22) the following:
       ``(22A) `financial participant' means--
       ``(A) an entity that, at the time it enters into a 
     securities contract, commodity contract, swap agreement, 
     repurchase agreement, or forward contract, or at the time of 
     the filing of the petition, has one or more agreements or 
     transactions described in paragraph (1), (2), (3), (4), (5), 
     or (6) of section 561(a) with the debtor or any other entity 
     (other than an affiliate) of a total gross dollar value of 
     not less than $1,000,000,000 in notional or actual principal 
     amount outstanding on any day during the previous 15-month 
     period, or has gross mark-to-market positions of not less 
     than $100,000,000 (aggregated across counterparties) in one 
     or more such agreements or transactions with the debtor or 
     any other entity (other than an affiliate) on any day during 
     the previous 15-month period; or
       ``(B) a clearing organization (as defined in section 402 of 
     the Federal Deposit Insurance Corporation Improvement Act of 
     1991);''; and
       (3) by striking paragraph (26) and inserting the following:
       ``(26) `forward contract merchant' means a Federal reserve 
     bank, or an entity the business of which consists in whole or 
     in part of entering into forward contracts as or with 
     merchants in a commodity (as defined in section 761) or any 
     similar good, article, service, right, or interest which is 
     presently or in the future becomes the subject of dealing in 
     the forward contract trade;''.
       (c) Definition of Master Netting Agreement and Master 
     Netting Agreement Participant.--Section 101 of title 11, 
     United States Code, is amended by inserting after paragraph 
     (38) the following new paragraphs:
       ``(38A) `master netting agreement'--
       ``(A) means an agreement providing for the exercise of 
     rights, including rights of netting, setoff, liquidation, 
     termination, acceleration, or close out, under or in 
     connection with one or more contracts that are described in 
     any one or more of paragraphs (1) through (5) of section 
     561(a), or any security agreement or arrangement or other 
     credit enhancement related to one or more of the foregoing, 
     including any guarantee or reimbursement obligation related 
     to 1 or more of the foregoing; and
       ``(B) if the agreement contains provisions relating to 
     agreements or transactions that are not contracts described 
     in paragraphs (1) through (5) of section 561(a), shall be 
     deemed to be a master netting agreement only with respect to 
     those agreements or transactions that are described in any 
     one or more of paragraphs (1) through (5) of section 561(a);
       ``(38B) `master netting agreement participant' means an 
     entity that, at any time before the filing of the petition, 
     is a party to an outstanding master netting agreement with 
     the debtor;''.
       (d) Swap Agreements, Securities Contracts, Commodity 
     Contracts, Forward Contracts, Repurchase Agreements, and 
     Master Netting Agreements Under the Automatic-Stay.--
       (1) In general.--Section 362(b) of title 11, United States 
     Code, as amended by sections 224, 303, 311, 401, and 718, is 
     amended--
       (A) in paragraph (6), by inserting 
     ``, pledged to, under the control of,'' after ``held by'';
       (B) in paragraph (7), by inserting 
     ``, pledged to, under the control of,'' after ``held by'';
       (C) by striking paragraph (17) and inserting the following:
       ``(17) under subsection (a), of the setoff by a swap 
     participant or financial participant of a mutual debt and 
     claim under or in connection with one or more swap agreements 
     that constitutes the setoff of a claim against the debtor for 
     any payment or other transfer of property due from the debtor 
     under or in connection with

[[Page H5742]]

     any swap agreement against any payment due to the debtor from 
     the swap participant or financial participant under or in 
     connection with any swap agreement or against cash, 
     securities, or other property held by, pledged to, under the 
     control of, or due from such swap participant or financial 
     participant to margin, guarantee, secure, or settle any swap 
     agreement;''; and
       (D) by inserting after paragraph (26) the following:
       ``(27) under subsection (a), of the setoff by a master 
     netting agreement participant of a mutual debt and claim 
     under or in connection with one or more master netting 
     agreements or any contract or agreement subject to such 
     agreements that constitutes the setoff of a claim against the 
     debtor for any payment or other transfer of property due from 
     the debtor under or in connection with such agreements or any 
     contract or agreement subject to such agreements against any 
     payment due to the debtor from such master netting agreement 
     participant under or in connection with such agreements or 
     any contract or agreement subject to such agreements or 
     against cash, securities, or other property held by, pledged 
     to, under the control of, or due from such master netting 
     agreement participant to margin, guarantee, secure, or settle 
     such agreements or any contract or agreement subject to such 
     agreements, to the extent that such participant is eligible 
     to exercise such offset rights under paragraph (6), (7), or 
     (17) for each individual contract covered by the master 
     netting agreement in issue.''.
       (2) Limitation.--Section 362 of title 11, United States 
     Code, as amended by sections 106, 305, 311, and 441, is 
     amended by adding at the end the following:
       ``(o) The exercise of rights not subject to the stay 
     arising under subsection (a) pursuant to paragraph (6), (7), 
     (17), or (27) of subsection (b) shall not be stayed by any 
     order of a court or administrative agency in any proceeding 
     under this title.''.
       (e) Limitation of Avoidance Powers Under Master Netting 
     Agreement.--Section 546 of title 11, United States Code, is 
     amended--
       (1) in subsection (g) (as added by section 103 of Public 
     Law 101-311)--
       (A) by striking ``under a swap agreement'';
       (B) by striking ``in connection with a swap agreement'' and 
     inserting ``under or in connection with any swap agreement''; 
     and
       (C) by inserting ``or financial participant'' after ``swap 
     participant'' each place such term appears; and
       (2) by adding at the end the following:
       ``(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), 
     and 548(b) the trustee may not avoid a transfer made by or to 
     a master netting agreement participant under or in connection 
     with any master netting agreement or any individual contract 
     covered thereby that is made before the commencement of the 
     case, except under section 548(a)(1)(A) and except to the 
     extent that the trustee could otherwise avoid such a transfer 
     made under an individual contract covered by such master 
     netting agreement.''.
       (f) Fraudulent Transfers of Master Netting Agreements.--
     Section 548(d)(2) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (C), by striking ``and'' at the end;
       (2) in subparagraph (D), by striking the period and 
     inserting ``; and''; and
       (3) by adding at the end the following new subparagraph:
       ``(E) a master netting agreement participant that receives 
     a transfer in connection with a master netting agreement or 
     any individual contract covered thereby takes for value to 
     the extent of such transfer, except that, with respect to a 
     transfer under any individual contract covered thereby, to 
     the extent that such master netting agreement participant 
     otherwise did not take (or is otherwise not deemed to have 
     taken) such transfer for value.''.
       (g) Termination or Acceleration of Securities Contracts.--
     Section 555 of title 11, United States Code, is amended--
       (1) by amending the section heading to read as follows:

     ``Sec. 555. Contractual right to liquidate, terminate, or 
       accelerate a securities contract'';

     and
       (2) in the first sentence, by striking ``liquidation'' and 
     inserting ``liquidation, termination, or acceleration''.
       (h) Termination or Acceleration of Commodities or Forward 
     Contracts.--Section 556 of title 11, United States Code, is 
     amended--
       (1) by amending the section heading to read as follows:

     ``Sec. 556. Contractual right to liquidate, terminate, or 
       accelerate a commodities contract or forward contract'';

       (2) in the first sentence, by striking ``liquidation'' and 
     inserting ``liquidation, termination, or acceleration''; and
       (3) in the second sentence, by striking ``As used'' and all 
     that follows through ``right,'' and inserting ``As used in 
     this section, the term `contractual right' includes a right 
     set forth in a rule or bylaw of a derivatives clearing 
     organization (as defined in the Commodity Exchange Act), a 
     multilateral clearing organization (as defined in the Federal 
     Deposit Insurance Corporation Improvement Act of 1991), a 
     national securities exchange, a national securities 
     association, a securities clearing agency, a contract market 
     designated under the Commodity Exchange Act, a derivatives 
     transaction execution facility registered under the Commodity 
     Exchange Act, or a board of trade (as defined in the 
     Commodity Exchange Act) or in a resolution of the governing 
     board thereof and a right,''.
       (i) Termination or Acceleration of Repurchase Agreements.--
     Section 559 of title 11, United States Code, is amended--
       (1) by amending the section heading to read as follows:

     ``Sec. 559. Contractual right to liquidate, terminate, or 
       accelerate a repurchase agreement'';

       (2) in the first sentence, by striking ``liquidation'' and 
     inserting ``liquidation, termination, or acceleration''; and
       (3) in the third sentence, by striking ``As used'' and all 
     that follows through ``right,'' and inserting ``As used in 
     this section, the term `contractual right' includes a right 
     set forth in a rule or bylaw of a derivatives clearing 
     organization (as defined in the Commodity Exchange Act), a 
     multilateral clearing organization (as defined in the Federal 
     Deposit Insurance Corporation Improvement Act of 1991), a 
     national securities exchange, a national securities 
     association, a securities clearing agency, a contract market 
     designated under the Commodity Exchange Act, a derivatives 
     transaction execution facility registered under the Commodity 
     Exchange Act, or a board of trade (as defined in the 
     Commodity Exchange Act) or in a resolution of the governing 
     board thereof and a right,''.
       (j) Liquidation, Termination, or Acceleration of Swap 
     Agreements.--Section 560 of title 11, United States Code, is 
     amended--
       (1) by amending the section heading to read as follows:

     ``Sec. 560. Contractual right to liquidate, terminate, or 
       accelerate a swap agreement'';

       (2) in the first sentence, by striking ``termination of a 
     swap agreement'' and inserting ``liquidation, termination, or 
     acceleration of one or more swap agreements'';
       (3) by striking ``in connection with any swap agreement'' 
     and inserting ``in connection with the termination, 
     liquidation, or acceleration of one or more swap 
     agreements''; and
       (4) in the second sentence, by striking ``As used'' and all 
     that follows through ``right,'' and inserting ``As used in 
     this section, the term `contractual right' includes a right 
     set forth in a rule or bylaw of a derivatives clearing 
     organization (as defined in the Commodity Exchange Act), a 
     multilateral clearing organization (as defined in the Federal 
     Deposit Insurance Corporation Improvement Act of 1991), a 
     national securities exchange, a national securities 
     association, a securities clearing agency, a contract market 
     designated under the Commodity Exchange Act, a derivatives 
     transaction execution facility registered under the Commodity 
     Exchange Act, or a board of trade (as defined in the 
     Commodity Exchange Act) or in a resolution of the governing 
     board thereof and a right,''.
       (k) Liquidation, Termination, Acceleration, or Offset Under 
     a Master Netting Agreement and Across Contracts.--
       (1) In general.--Title 11, United States Code, is amended 
     by inserting after section 560 the following:

     ``Sec. 561. Contractual right to terminate, liquidate, 
       accelerate, or offset under a master netting agreement and 
       across contracts; proceedings under chapter 15

       ``(a) Subject to subsection (b), the exercise of any 
     contractual right, because of a condition of the kind 
     specified in section 365(e)(1), to cause the termination, 
     liquidation, or acceleration of or to offset or net 
     termination values, payment amounts, or other transfer 
     obligations arising under or in connection with one or more 
     (or the termination, liquidation, or acceleration of one or 
     more)--
       ``(1) securities contracts, as defined in section 741(7);
       ``(2) commodity contracts, as defined in section 761(4);
       ``(3) forward contracts;
       ``(4) repurchase agreements;
       ``(5) swap agreements; or
       ``(6) master netting agreements,
     shall not be stayed, avoided, or otherwise limited by 
     operation of any provision of this title or by any order of a 
     court or administrative agency in any proceeding under this 
     title.
       ``(b)(1) A party may exercise a contractual right described 
     in subsection (a) to terminate, liquidate, or accelerate only 
     to the extent that such party could exercise such a right 
     under section 555, 556, 559, or 560 for each individual 
     contract covered by the master netting agreement in issue.
       ``(2) If a debtor is a commodity broker subject to 
     subchapter IV of chapter 7--
       ``(A) a party may not net or offset an obligation to the 
     debtor arising under, or in connection with, a commodity 
     contract traded on or subject to the rules of a contract 
     market designated under the Commodity Exchange Act or a 
     derivatives transaction execution facility registered under 
     the Commodity Exchange Act against any claim arising under, 
     or in connection with, other instruments, contracts, or 
     agreements listed in subsection (a) except to the extent that 
     the party has positive net equity in the commodity accounts 
     at the debtor, as calculated under such subchapter; and
       ``(B) another commodity broker may not net or offset an 
     obligation to the debtor arising under, or in connection 
     with, a commodity contract entered into or held on behalf of 
     a customer of the debtor and traded on or subject to the 
     rules of a contract market designated under the Commodity 
     Exchange Act or a derivatives transaction execution facility 
     registered under the Commodity Exchange Act against any claim 
     arising under, or in connection with, other instruments, 
     contracts, or agreements listed in subsection (a).
       ``(3) No provision of subparagraph (A) or (B) of paragraph 
     (2) shall prohibit the offset of claims and obligations that 
     arise under--
       ``(A) a cross-margining agreement or similar arrangement 
     that has been approved by the Commodity Futures Trading 
     Commission or submitted to the Commodity Futures Trading 
     Commission under paragraph (1) or (2) of section 5c(c) of the 
     Commodity Exchange Act and has

[[Page H5743]]

     not been abrogated or rendered ineffective by the Commodity 
     Futures Trading Commission; or
       ``(B) any other netting agreement between a clearing 
     organization (as defined in section 761) and another entity 
     that has been approved by the Commodity Futures Trading 
     Commission.
       ``(c) As used in this section, the term `contractual right' 
     includes a right set forth in a rule or bylaw of a 
     derivatives clearing organization (as defined in the 
     Commodity Exchange Act), a multilateral clearing organization 
     (as defined in the Federal Deposit Insurance Corporation 
     Improvement Act of 1991), a national securities exchange, a 
     national securities association, a securities clearing 
     agency, a contract market designated under the Commodity 
     Exchange Act, a derivatives transaction execution facility 
     registered under the Commodity Exchange Act, or a board of 
     trade (as defined in the Commodity Exchange Act) or in a 
     resolution of the governing board thereof, and a right, 
     whether or not evidenced in writing, arising under common 
     law, under law merchant, or by reason of normal business 
     practice.
       ``(d) Any provisions of this title relating to securities 
     contracts, commodity contracts, forward contracts, repurchase 
     agreements, swap agreements, or master netting agreements 
     shall apply in a case under chapter 15, so that enforcement 
     of contractual provisions of such contracts and agreements in 
     accordance with their terms will not be stayed or otherwise 
     limited by operation of any provision of this title or by 
     order of a court in any case under this title, and to limit 
     avoidance powers to the same extent as in a proceeding under 
     chapter 7 or 11 of this title (such enforcement not to be 
     limited based on the presence or absence of assets of the 
     debtor in the United States).''.
       (2) Conforming amendment.--The table of sections for 
     chapter 5 of title 11, United States Code, is amended by 
     inserting after the item relating to section 560 the 
     following:

``561. Contractual right to terminate, liquidate, accelerate, or offset 
              under a master netting agreement and across contracts; 
              proceedings under chapter 15.''.
       (l) Commodity Broker Liquidations.--Title 11, United States 
     Code, is amended by inserting after section 766 the 
     following:

     ``Sec. 767. Commodity broker liquidation and forward contract 
       merchants, commodity brokers, stockbrokers, financial 
       institutions, financial participants, securities clearing 
       agencies, swap participants, repo participants, and master 
       netting agreement participants

       ``Notwithstanding any other provision of this title, the 
     exercise of rights by a forward contract merchant, commodity 
     broker, stockbroker, financial institution, financial 
     participant, securities clearing agency, swap participant, 
     repo participant, or master netting agreement participant 
     under this title shall not affect the priority of any 
     unsecured claim it may have after the exercise of such 
     rights.''.
       (m) Stockbroker Liquidations.--Title 11, United States 
     Code, is amended by inserting after section 752 the 
     following:

     ``Sec. 753. Stockbroker liquidation and forward contract 
       merchants, commodity brokers, stockbrokers, financial 
       institutions, financial participants, securities clearing 
       agencies, swap participants, repo participants, and master 
       netting agreement participants

       ``Notwithstanding any other provision of this title, the 
     exercise of rights by a forward contract merchant, commodity 
     broker, stockbroker, financial institution, securities 
     clearing agency, swap participant, repo participant, 
     financial participant, or master netting agreement 
     participant under this title shall not affect the priority of 
     any unsecured claim it may have after the exercise of such 
     rights.''.
       (n) Setoff.--Section 553 of title 11, United States Code, 
     is amended--
       (1) in subsection (a)(2)(B)(ii), by inserting before the 
     semicolon the following: ``(except for a setoff of a kind 
     described in section 362(b)(6), 362(b)(7), 362(b)(17), 
     362(b)(27), 555, 556, 559, 560, or 561)'';
       (2) in subsection (a)(3)(C), by inserting before the period 
     the following: ``(except for a setoff of a kind described in 
     section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 
     556, 559, 560, or 561 of this title)''; and
       (3) in subsection (b)(1), by striking ``362(b)(14),'' and 
     inserting ``362(b)(17), 362(b)(27), 555, 556, 559, 560, 
     561,''.
       (o) Securities Contracts, Commodity Contracts, and Forward 
     Contracts.--Title 11, United States Code, is amended--
       (1) in section 362(b)(6), by striking ``financial 
     institutions,'' each place such term appears and inserting 
     ``financial institution, financial participant,'';
       (2) in sections 362(b)(7) and 546(f), by inserting ``or 
     financial participant'' after ``repo participant'' each place 
     such term appears;
       (3) in section 546(e), by inserting ``financial 
     participant,'' after ``financial institution,'';
       (4) in section 548(d)(2)(B), by inserting ``financial 
     participant,'' after ``financial institution,'';
       (5) in section 548(d)(2)(C), by inserting ``or financial 
     participant'' after ``repo participant'';
       (6) in section 548(d)(2)(D), by inserting ``or financial 
     participant'' after ``swap participant'';
       (7) in section 555--
       (A) by inserting ``financial participant,'' after 
     ``financial institution,''; and
       (B) by striking the second sentence and inserting the 
     following: ``As used in this section, the term `contractual 
     right' includes a right set forth in a rule or bylaw of a 
     derivatives clearing organization (as defined in the 
     Commodity Exchange Act), a multilateral clearing organization 
     (as defined in the Federal Deposit Insurance Corporation 
     Improvement Act of 1991), a national securities exchange, a 
     national securities association, a securities clearing 
     agency, a contract market designated under the Commodity 
     Exchange Act, a derivatives transaction execution facility 
     registered under the Commodity Exchange Act, or a board of 
     trade (as defined in the Commodity Exchange Act), or in a 
     resolution of the governing board thereof, and a right, 
     whether or not in writing, arising under common law, under 
     law merchant, or by reason of normal business practice'';
       (8) in section 556, by inserting ``, financial 
     participant,'' after ``commodity broker'';
       (9) in section 559, by inserting ``or financial 
     participant'' after ``repo participant'' each place such term 
     appears; and
       (10) in section 560, by inserting ``or financial 
     participant'' after ``swap participant''.
       (p) Conforming Amendments.--Title 11, United States Code, 
     is amended--
       (1) in the table of sections for chapter 5--
       (A) by amending the items relating to sections 555 and 556 
     to read as follows:

``555. Contractual right to liquidate, terminate, or accelerate a 
              securities contract.
``556. Contractual right to liquidate, terminate, or accelerate a 
              commodities contract or forward contract.'';
     and
       (B) by amending the items relating to sections 559 and 560 
     to read as follows:

``559. Contractual right to liquidate, terminate, or accelerate a 
              repurchase agreement.
``560. Contractual right to liquidate, terminate, or accelerate a swap 
              agreement.'';
     and
       (2) in the table of sections for chapter 7--
       (A) by inserting after the item relating to section 766 the 
     following:

``767. Commodity broker liquidation and forward contract merchants, 
              commodity brokers, stockbrokers, financial institutions, 
              financial participants, securities clearing agencies, 
              swap participants, repo participants, and master netting 
              agreement participants.'';
     and
       (B) by inserting after the item relating to section 752 the 
     following:

``753. Stockbroker liquidation and forward contract merchants, 
              commodity brokers, stockbrokers, financial institutions, 
              financial participants, securities clearing agencies, 
              swap participants, repo participants, and master netting 
              agreement participants.''.

     SEC. 908. RECORDKEEPING REQUIREMENTS.

       Section 11(e)(8) of the Federal Deposit Insurance Act (12 
     U.S.C. 1821(e)(8)) is amended by adding at the end the 
     following new subparagraph:
       ``(H) Recordkeeping requirements.--The Corporation, in 
     consultation with the appropriate Federal banking agencies, 
     may prescribe regulations requiring more detailed 
     recordkeeping by any insured depository institution with 
     respect to qualified financial contracts (including market 
     valuations) only if such insured depository institution is in 
     a troubled condition (as such term is defined by the 
     Corporation pursuant to section 32).''.

     SEC. 909. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION 
                   REQUIREMENT.

       Section 13(e)(2) of the Federal Deposit Insurance Act (12 
     U.S.C. 1823(e)(2)) is amended to read as follows:
       ``(2) Exemptions from contemporaneous execution 
     requirement.--An agreement to provide for the lawful 
     collateralization of--
       ``(A) deposits of, or other credit extension by, a Federal, 
     State, or local governmental entity, or of any depositor 
     referred to in section 11(a)(2), including an agreement to 
     provide collateral in lieu of a surety bond;
       ``(B) bankruptcy estate funds pursuant to section 345(b)(2) 
     of title 11, United States Code;
       ``(C) extensions of credit, including any overdraft, from a 
     Federal reserve bank or Federal home loan bank; or
       ``(D) one or more qualified financial contracts, as defined 
     in section 11(e)(8)(D),
     shall not be deemed invalid pursuant to paragraph (1)(B) 
     solely because such agreement was not executed 
     contemporaneously with the acquisition of the collateral or 
     because of pledges, delivery, or substitution of the 
     collateral made in accordance with such agreement.''.

     SEC. 910. DAMAGE MEASURE.

       (a) In General.--Title 11, United States Code, is amended--
       (1) by inserting after section 561, as added by section 
     907, the following:

     ``Sec. 562. Timing of damage measurement in connection with 
       swap agreements, securities contracts, forward contracts, 
       commodity contracts, repurchase agreements, and master 
       netting agreements

       ``(a) If the trustee rejects a swap agreement, securities 
     contract (as defined in section 741), forward contract, 
     commodity contract (as defined in section 761), repurchase 
     agreement, or master netting agreement pursuant to section 
     365(a), or if a forward contract merchant, stockbroker, 
     financial institution, securities clearing agency, repo 
     participant, financial participant, master netting agreement 
     participant, or swap participant liquidates, terminates, or 
     accelerates such contract or agreement, damages shall be 
     measured as of the earlier of--
       ``(1) the date of such rejection; or
       ``(2) the date or dates of such liquidation, termination, 
     or acceleration.
       ``(b) If there are not any commercially reasonable 
     determinants of value as of any date referred to in paragraph 
     (1) or (2) of subsection

[[Page H5744]]

     (a), damages shall be measured as of the earliest subsequent 
     date or dates on which there are commercially reasonable 
     determinants of value.
       ``(c) For the purposes of subsection (b), if damages are 
     not measured as of the date or dates of rejection, 
     liquidation, termination, or acceleration, and the forward 
     contract merchant, stockbroker, financial institution, 
     securities clearing agency, repo participant, financial 
     participant, master netting agreement participant, or swap 
     participant or the trustee objects to the timing of the 
     measurement of damages--
       ``(1) the trustee, in the case of an objection by a forward 
     contract merchant, stockbroker, financial institution, 
     securities clearing agency, repo participant, financial 
     participant, master netting agreement participant, or swap 
     participant; or
       ``(2) the forward contract merchant, stockbroker, financial 
     institution, securities clearing agency, repo participant, 
     financial participant, master netting agreement participant, 
     or swap participant, in the case of an objection by the 
     trustee,
     has the burden of proving that there were no commercially 
     reasonable determinants of value as of such date or dates.''; 
     and
       (2) in the table of sections for chapter 5, by inserting 
     after the item relating to section 561 (as added by section 
     907) the following new item:

``562. Timing of damage measure in connection with swap agreements, 
              securities contracts, forward contracts, commodity 
              contracts, repurchase agreements, or master netting 
              agreements.''.
       (b) Claims Arising From Rejection.--Section 502(g) of title 
     11, United States Code, is amended--
       (1) by inserting ``(1)'' after ``(g)''; and
       (2) by adding at the end the following:
       ``(2) A claim for damages calculated in accordance with 
     section 562 of this title shall be allowed under subsection 
     (a), (b), or (c), or disallowed under subsection (d) or (e), 
     as if such claim had arisen before the date of the filing of 
     the petition.''.

     SEC. 911. SIPC STAY.

       Section 5(b)(2) of the Securities Investor Protection Act 
     of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding at the 
     end the following new subparagraph:
       ``(C) Exception from stay.--
       ``(i) Notwithstanding section 362 of title 11, United 
     States Code, neither the filing of an application under 
     subsection (a)(3) nor any order or decree obtained by SIPC 
     from the court shall operate as a stay of any contractual 
     rights of a creditor to liquidate, terminate, or accelerate a 
     securities contract, commodity contract, forward contract, 
     repurchase agreement, swap agreement, or master netting 
     agreement, as those terms are defined in sections 101, 741, 
     and 761 of title 11, United States Code, to offset or net 
     termination values, payment amounts, or other transfer 
     obligations arising under or in connection with one or more 
     of such contracts or agreements, or to foreclose on any cash 
     collateral pledged by the debtor, whether or not with respect 
     to one or more of such contracts or agreements.
       ``(ii) Notwithstanding clause (i), such application, order, 
     or decree may operate as a stay of the foreclosure on, or 
     disposition of, securities collateral pledged by the debtor, 
     whether or not with respect to one or more of such contracts 
     or agreements, securities sold by the debtor under a 
     repurchase agreement, or securities lent under a securities 
     lending agreement.
       ``(iii) As used in this subparagraph, the term `contractual 
     right' includes a right set forth in a rule or bylaw of a 
     national securities exchange, a national securities 
     association, or a securities clearing agency, a right set 
     forth in a bylaw of a clearing organization or contract 
     market or in a resolution of the governing board thereof, and 
     a right, whether or not in writing, arising under common law, 
     under law merchant, or by reason of normal business 
     practice.''.
       TITLE X--PROTECTION OF FAMILY FARMERS AND FAMILY FISHERMEN

     SEC. 1001. PERMANENT REENACTMENT OF CHAPTER 12.

       (a) Reenactment.--
       (1) In general.--Chapter 12 of title 11, United States 
     Code, as reenacted by section 149 of division C of the 
     Omnibus Consolidated and Emergency Supplemental 
     Appropriations Act, 1999 (Public Law 105-277), is hereby 
     reenacted, and as here reenacted is amended by this Act.
       (2) Effective date.--Subsection (a) shall take effect on 
     the date of the enactment of this Act.
       (b) Conforming Amendment.--Section 302 of the Bankruptcy 
     Judges, United States Trustees, and Family Farmer Bankruptcy 
     Act of 1986 (28 U.S.C. 581 note) is amended by striking 
     subsection (f).

     SEC. 1002. DEBT LIMIT INCREASE.

       Section 104(b) of title 11, United States Code, as amended 
     by section 226, is amended by inserting ``101(18),'' after 
     ``101(3),'' each place it appears.

     SEC. 1003. CERTAIN CLAIMS OWED TO GOVERNMENTAL UNITS.

       (a) Contents of Plan.--Section 1222(a)(2) of title 11, 
     United States Code, is amended to read as follows:
       ``(2) provide for the full payment, in deferred cash 
     payments, of all claims entitled to priority under section 
     507, unless--
       ``(A) the claim is a claim owed to a governmental unit that 
     arises as a result of the sale, transfer, exchange, or other 
     disposition of any farm asset used in the debtor's farming 
     operation, in which case the claim shall be treated as an 
     unsecured claim that is not entitled to priority under 
     section 507, but the debt shall be treated in such manner 
     only if the debtor receives a discharge; or
       ``(B) the holder of a particular claim agrees to a 
     different treatment of that claim;''.
       (b) Special Notice Provisions.--Section 1231(b) of title 
     11, United States Code, as so designated by section 719, is 
     amended by striking ``a State or local governmental unit'' 
     and inserting ``any governmental unit''.
       (c) Effective Date; Application of Amendments.--This 
     section and the amendments made by this section shall take 
     effect on the date of the enactment of this Act and shall not 
     apply with respect to cases commenced under title 11 of the 
     United States Code before such date.

     SEC. 1004. DEFINITION OF FAMILY FARMER.

       Section 101(18) of title 11, United States Code, is 
     amended--
       (1) in subparagraph (A)--
       (A) by striking ``$1,500,000'' and inserting 
     ``$3,237,000''; and
       (B) by striking ``80'' and inserting ``50''; and
       (2) in subparagraph (B)(ii)--
       (A) by striking ``$1,500,000'' and inserting 
     ``$3,237,000''; and
       (B) by striking ``80'' and inserting ``50''.

     SEC. 1005. ELIMINATION OF REQUIREMENT THAT FAMILY FARMER AND 
                   SPOUSE RECEIVE OVER 50 PERCENT OF INCOME FROM 
                   FARMING OPERATION IN YEAR PRIOR TO BANKRUPTCY.

       Section 101(18)(A) of title 11, United States Code, is 
     amended by striking ``for the taxable year preceding the 
     taxable year'' and inserting the following:
     ``for--
       ``(i) the taxable year preceding; or
       ``(ii) each of the 2d and 3d taxable years preceding;
     the taxable year''.

     SEC. 1006. PROHIBITION OF RETROACTIVE ASSESSMENT OF 
                   DISPOSABLE INCOME.

       (a) Confirmation of Plan.--Section 1225(b)(1) of title 11, 
     United States Code, is amended--
       (1) in subparagraph (A) by striking ``or'' at the end;
       (2) in subparagraph (B) by striking the period at the end 
     and inserting ``; or''; and
       (3) by adding at the end the following:
       ``(C) the value of the property to be distributed under the 
     plan in the 3-year period, or such longer period as the court 
     may approve under section 1222(c), beginning on the date that 
     the first distribution is due under the plan is not less than 
     the debtor's projected disposable income for such period.''.
       (b) Modification of Plan.--Section 1229 of title 11, United 
     States Code, is amended by adding at the end the following:
       ``(d) A plan may not be modified under this section--
       ``(1) to increase the amount of any payment due before the 
     plan as modified becomes the plan;
       ``(2) by anyone except the debtor, based on an increase in 
     the debtor's disposable income, to increase the amount of 
     payments to unsecured creditors required for a particular 
     month so that the aggregate of such payments exceeds the 
     debtor's disposable income for such month; or
       ``(3) in the last year of the plan by anyone except the 
     debtor, to require payments that would leave the debtor with 
     insufficient funds to carry on the farming operation after 
     the plan is completed.''.

     SEC. 1007. FAMILY FISHERMEN.

       (a) Definitions.--Section 101 of title 11, United States 
     Code, is amended--
       (1) by inserting after paragraph (7) the following:
       ``(7A) `commercial fishing operation' means--
       ``(A) the catching or harvesting of fish, shrimp, lobsters, 
     urchins, seaweed, shellfish, or other aquatic species or 
     products of such species; or
       ``(B) for purposes of section 109 and chapter 12, 
     aquaculture activities consisting of raising for market any 
     species or product described in subparagraph (A);
       ``(7B) `commercial fishing vessel' means a vessel used by a 
     family fisherman to carry out a commercial fishing 
     operation;''; and
       (2) by inserting after paragraph (19) the following:
       ``(19A) `family fisherman' means--
       ``(A) an individual or individual and spouse engaged in a 
     commercial fishing operation--
       ``(i) whose aggregate debts do not exceed $1,500,000 and 
     not less than 80 percent of whose aggregate noncontingent, 
     liquidated debts (excluding a debt for the principal 
     residence of such individual or such individual and spouse, 
     unless such debt arises out of a commercial fishing 
     operation), on the date the case is filed, arise out of a 
     commercial fishing operation owned or operated by such 
     individual or such individual and spouse; and
       ``(ii) who receive from such commercial fishing operation 
     more than 50 percent of such individual's or such 
     individual's and spouse's gross income for the taxable year 
     preceding the taxable year in which the case concerning such 
     individual or such individual and spouse was filed; or
       ``(B) a corporation or partnership--
       ``(i) in which more than 50 percent of the outstanding 
     stock or equity is held by--

       ``(I) 1 family that conducts the commercial fishing 
     operation; or
       ``(II) 1 family and the relatives of the members of such 
     family, and such family or such relatives conduct the 
     commercial fishing operation; and

       ``(ii)(I) more than 80 percent of the value of its assets 
     consists of assets related to the commercial fishing 
     operation;
       ``(II) its aggregate debts do not exceed $1,500,000 and not 
     less than 80 percent of its aggregate noncontingent, 
     liquidated debts (excluding a debt for 1 dwelling which is 
     owned by such corporation or partnership and which a 
     shareholder or partner maintains as a principal residence, 
     unless such debt arises out of a commercial fishing 
     operation), on the date the case

[[Page H5745]]

     is filed, arise out of a commercial fishing operation owned 
     or operated by such corporation or such partnership; and
       ``(III) if such corporation issues stock, such stock is not 
     publicly traded;
       ``(19B) `family fisherman with regular annual income' means 
     a family fisherman whose annual income is sufficiently stable 
     and regular to enable such family fisherman to make payments 
     under a plan under chapter 12 of this title;''.
       (b) Who May Be a Debtor.--Section 109(f) of title 11, 
     United States Code, is amended by inserting ``or family 
     fisherman'' after ``family farmer''.
       (c)  Chapter 12.--Chapter 12 of title 11, United States 
     Code, is amended--
       (1) in the chapter heading, by inserting ``OR FISHERMAN'' 
     after ``FAMILY FARMER'';
       (2) in section 1203, by inserting ``or commercial fishing 
     operation'' after ``farm''; and
       (3) in section 1206, by striking ``if the property is 
     farmland or farm equipment'' and inserting ``if the property 
     is farmland, farm equipment, or property used to carry out a 
     commercial fishing operation (including a commercial fishing 
     vessel)''.
       (d) Clerical Amendment.--In the table of chapters for title 
     11, United States Code, the item relating to chapter 12, is 
     amended to read as follows:

``12. Adjustments of Debts of a Family Farmer or Family Fisherman with 
    Regular Annual Income...................................1201''.....

       (e) Applicability.--Nothing in this section shall change, 
     affect, or amend the Fishery Conservation and Management Act 
     of 1976 (16 U.S.C. 1801, et seq.).
              TITLE XI--HEALTH CARE AND EMPLOYEE BENEFITS

     SEC. 1101. DEFINITIONS.

       (a) Health Care Business Defined.--Section 101 of title 11, 
     United States Code, as amended by section 306, is amended--
       (1) by redesignating paragraph (27A) as paragraph (27B); 
     and
       (2) by inserting after paragraph (27) the following:
       ``(27A) `health care business'--
       ``(A) means any public or private entity (without regard to 
     whether that entity is organized for profit or not for 
     profit) that is primarily engaged in offering to the general 
     public facilities and services for--
       ``(i) the diagnosis or treatment of injury, deformity, or 
     disease; and
       ``(ii) surgical, drug treatment, psychiatric, or obstetric 
     care; and
       ``(B) includes--
       ``(i) any--

       ``(I) general or specialized hospital;
       ``(II) ancillary ambulatory, emergency, or surgical 
     treatment facility;
       ``(III) hospice;
       ``(IV) home health agency; and
       ``(V) other health care institution that is similar to an 
     entity referred to in subclause (I), (II), (III), or (IV); 
     and

       ``(ii) any long-term care facility, including any--

       ``(I) skilled nursing facility;
       ``(II) intermediate care facility;
       ``(III) assisted living facility;
       ``(IV) home for the aged;
       ``(V) domiciliary care facility; and
       ``(VI) health care institution that is related to a 
     facility referred to in subclause (I), (II), (III), (IV), or 
     (V), if that institution is primarily engaged in offering 
     room, board, laundry, or personal assistance with activities 
     of daily living and incidentals to activities of daily 
     living;''.

       (b) Patient and Patient Records Defined.--Section 101 of 
     title 11, United States Code, is amended by inserting after 
     paragraph (40) the following:
       ``(40A) `patient' means any person who obtains or receives 
     services from a health care business;
       ``(40B) `patient records' means any written document 
     relating to a patient or a record recorded in a magnetic, 
     optical, or other form of electronic medium;''.
       (c) Rule of Construction.--The amendments made by 
     subsection (a) of this section shall not affect the 
     interpretation of section 109(b) of title 11, United States 
     Code.

     SEC. 1102. DISPOSAL OF PATIENT RECORDS.

       (a) In General.--Subchapter III of chapter 3 of title 11, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 351. Disposal of patient records

       ``If a health care business commences a case under chapter 
     7, 9, or 11, and the trustee does not have a sufficient 
     amount of funds to pay for the storage of patient records in 
     the manner required under applicable Federal or State law, 
     the following requirements shall apply:
       ``(1) The trustee shall--
       ``(A) promptly publish notice, in 1 or more appropriate 
     newspapers, that if patient records are not claimed by the 
     patient or an insurance provider (if applicable law permits 
     the insurance provider to make that claim) by the date that 
     is 365 days after the date of that notification, the trustee 
     will destroy the patient records; and
       ``(B) during the first 180 days of the 365-day period 
     described in subparagraph (A), promptly attempt to notify 
     directly each patient that is the subject of the patient 
     records and appropriate insurance carrier concerning the 
     patient records by mailing to the most recent known address 
     of that patient, or a family member or contact person for 
     that patient, and to the appropriate insurance carrier an 
     appropriate notice regarding the claiming or disposing of 
     patient records.
       ``(2) If, after providing the notification under paragraph 
     (1), patient records are not claimed during the 365-day 
     period described under that paragraph, the trustee shall 
     mail, by certified mail, at the end of such 365-day period a 
     written request to each appropriate Federal agency to request 
     permission from that agency to deposit the patient records 
     with that agency, except that no Federal agency is required 
     to accept patient records under this paragraph.
       ``(3) If, following the 365-day period described in 
     paragraph (2) and after providing the notification under 
     paragraph (1), patient records are not claimed by a patient 
     or insurance provider, or request is not granted by a Federal 
     agency to deposit such records with that agency, the trustee 
     shall destroy those records by--
       ``(A) if the records are written, shredding or burning the 
     records; or
       ``(B) if the records are magnetic, optical, or other 
     electronic records, by otherwise destroying those records so 
     that those records cannot be retrieved.''.
       (b) Clerical Amendment.--The table of sections for 
     subchapter III of chapter 3 of title 11, United States Code, 
     is amended by adding at the end the following:

``351. Disposal of patient records.''.

     SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS OF CLOSING 
                   A HEALTH CARE BUSINESS AND OTHER ADMINISTRATIVE 
                   EXPENSES.

       Section 503(b) of title 11, United States Code, as amended 
     by section 445, is amended by adding at the end the 
     following:
       ``(8) the actual, necessary costs and expenses of closing a 
     health care business incurred by a trustee or by a Federal 
     agency (as defined in section 551(1) of title 5) or a 
     department or agency of a State or political subdivision 
     thereof, including any cost or expense incurred--
       ``(A) in disposing of patient records in accordance with 
     section 351; or
       ``(B) in connection with transferring patients from the 
     health care business that is in the process of being closed 
     to another health care business; and''.

     SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PATIENT 
                   ADVOCATE.

       (a) Ombudsman To Act as Patient Advocate.--
       (1) Appointment of ombudsman.--Title 11, United States 
     Code, as amended by section 232, is amended by inserting 
     after section 332 the following:

     ``Sec. 333. Appointment of patient care ombudsman

       ``(a)(1) If the debtor in a case under chapter 7, 9, or 11 
     is a health care business, the court shall order, not later 
     than 30 days after the commencement of the case, the 
     appointment of an ombudsman to monitor the quality of patient 
     care and to represent the interests of the patients of the 
     health care business unless the court finds that the 
     appointment of such ombudsman is not necessary for the 
     protection of patients under the specific facts of the case.
       ``(2)(A) If the court orders the appointment of an 
     ombudsman under paragraph (1), the United States trustee 
     shall appoint 1 disinterested person (other than the United 
     States trustee) to serve as such ombudsman.
       ``(B) If the debtor is a health care business that provides 
     long-term care, then the United States trustee may appoint 
     the State Long-Term Care Ombudsman appointed under the Older 
     Americans Act of 1965 for the State in which the case is 
     pending to serve as the ombudsman required by paragraph (1).
       ``(C) If the United States trustee does not appoint a State 
     Long-Term Care Ombudsman under subparagraph (B), the court 
     shall notify the State Long-Term Care Ombudsman appointed 
     under the Older Americans Act of 1965 for the State in which 
     the case is pending, of the name and address of the person 
     who is appointed under subparagraph (A).
       ``(b) An ombudsman appointed under subsection (a) shall--
       ``(1) monitor the quality of patient care provided to 
     patients of the debtor, to the extent necessary under the 
     circumstances, including interviewing patients and 
     physicians;
       ``(2) not later than 60 days after the date of appointment, 
     and not less frequently than at 60-day intervals thereafter, 
     report to the court, at a hearing or in writing, regarding 
     the quality of patient care provided to patients of the 
     debtor; and
       ``(3) if such ombudsman determines that the quality of 
     patient care provided to patients of the debtor is declining 
     significantly or is otherwise being materially compromised, 
     file with the court a motion or a written report, with notice 
     to the parties in interest immediately upon making such 
     determination.
       ``(c)(1) An ombudsman appointed under subsection (a) shall 
     maintain any information obtained by such ombudsman under 
     this section that relates to patients (including information 
     relating to patient records) as confidential information. 
     Such ombudsman may not review confidential patient records 
     unless the court approves such review in advance and imposes 
     restrictions on such ombudsman to protect the confidentiality 
     of such records.
       ``(2) An ombudsman appointed under subsection (a)(2)(B) 
     shall have access to patient records consistent with 
     authority of such ombudsman under the Older Americans Act of 
     1965 and under non-Federal laws governing the State Long-Term 
     Care Ombudsman program.''.
       (2) Clerical amendment.--The table of sections for 
     subchapter II of chapter 3 of title 11, United States Code, 
     as amended by section 232, is amended by adding at the end 
     the following:

``333. Appointment of ombudsman.''.

       (b) Compensation of Ombudsman.--Section 330(a)(1) of title 
     11, United States Code, is amended--
       (1) in the matter preceding subparagraph (A), by inserting 
     ``an ombudsman appointed under section 333, or'' before ``a 
     professional person''; and

[[Page H5746]]

       (2) in subparagraph (A), by inserting ``ombudsman,'' before 
     ``professional person''.

     SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO TRANSFER 
                   PATIENTS.

       (a) In General.--Section 704(a) of title 11, United States 
     Code, as amended by sections 102, 219, and 446, is amended by 
     adding at the end the following:
       ``(12) use all reasonable and best efforts to transfer 
     patients from a health care business that is in the process 
     of being closed to an appropriate health care business that--
       ``(A) is in the vicinity of the health care business that 
     is closing;
       ``(B) provides the patient with services that are 
     substantially similar to those provided by the health care 
     business that is in the process of being closed; and
       ``(C) maintains a reasonable quality of care.''.
       (b) Conforming Amendment.--Section 1106(a)(1) of title 11, 
     United States Code, as amended by section 446, is amended by 
     striking ``and (11)'' and inserting ``(11), and (12)''.

     SEC. 1106. EXCLUSION FROM PROGRAM PARTICIPATION NOT SUBJECT 
                   TO AUTOMATIC STAY.

       Section 362(b) of title 11, United States Code, is amended 
     by inserting after paragraph (27), as amended by sections 
     224, 303, 311, 401, 718, and 907, the following:
       ``(28) under subsection (a), of the exclusion by the 
     Secretary of Health and Human Services of the debtor from 
     participation in the medicare program or any other Federal 
     health care program (as defined in section 1128B(f) of the 
     Social Security Act pursuant to title XI of such Act or title 
     XVIII of such Act.''.
                    TITLE XII--TECHNICAL AMENDMENTS

     SEC. 1201. DEFINITIONS.

       Section 101 of title 11, United States Code, as 
     hereinbefore amended by this Act, is amended--
       (1) by striking ``In this title--'' and inserting ``In this 
     title the following definitions shall apply:'';
       (2) in each paragraph, by inserting ``The term'' after the 
     paragraph designation;
       (3) in paragraph (35)(B), by striking ``paragraphs (21B) 
     and (33)(A)'' and inserting ``paragraphs (23) and (35)'';
       (4) in each of paragraphs (35A), (38), and (54A), by 
     striking ``; and'' at the end and inserting a period;
       (5) in paragraph (51B)--
       (A) by inserting ``who is not a family farmer'' after 
     ``debtor'' the first place it appears; and
       (B) by striking ``thereto having aggregate'' and all that 
     follows through the end of the paragraph and inserting a 
     semicolon;
       (6) by striking paragraph (54) and inserting the following:
       ``(54) The term `transfer' means--
       ``(A) the creation of a lien;
       ``(B) the retention of title as a security interest;
       ``(C) the foreclosure of a debtor's equity of redemption; 
     or
       ``(D) each mode, direct or indirect, absolute or 
     conditional, voluntary or involuntary, of disposing of or 
     parting with--
       ``(i) property; or
       ``(ii) an interest in property;'';
       (7) by indenting the left margin of paragraph (54A) 2 ems 
     to the right; and
       (8) in each of paragraphs (1) through (35), in each of 
     paragraphs (36), (37), (38A), (38B) and (39A), and in each of 
     paragraphs (40) through (55), by striking the semicolon at 
     the end and inserting a period.

     SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.

       Section 104 of title 11, United States Code, is amended by 
     inserting ``522(f)(3),'' after ``522(d),'' each place it 
     appears.

     SEC. 1203. EXTENSION OF TIME.

       Section 108(c)(2) of title 11, United States Code, is 
     amended by striking ``922'' and all that follows through 
     ``or'', and inserting ``922, 1201, or''.

     SEC. 1204. TECHNICAL AMENDMENTS.

       Title 11, United States Code, is amended--
       (1) in section 109(b)(2), by striking ``subsection (c) or 
     (d) of''; and
       (2) in section 552(b)(1), by striking ``product'' each 
     place it appears and inserting ``products''.

     SEC. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR 
                   FRAUDULENTLY PREPARE BANKRUPTCY PETITIONS.

       Section 110(j)(4) of title 11, United States Code, as so 
     redesignated by section 221, is amended by striking 
     ``attorney's'' and inserting ``attorneys' ''.

     SEC. 1206. LIMITATION ON COMPENSATION OF PROFESSIONAL 
                   PERSONS.

       Section 328(a) of title 11, United States Code, is amended 
     by inserting ``on a fixed or percentage fee basis,'' after 
     ``hourly basis,''.

     SEC. 1207. EFFECT OF CONVERSION.

       Section 348(f)(2) of title 11, United States Code, is 
     amended by inserting ``of the estate'' after ``property'' the 
     first place it appears.

     SEC. 1208. ALLOWANCE OF ADMINISTRATIVE EXPENSES.

       Section 503(b)(4) of title 11, United States Code, is 
     amended by inserting ``subparagraph (A), (B), (C), (D), or 
     (E) of'' before ``paragraph (3)''.

     SEC. 1209. EXCEPTIONS TO DISCHARGE.

       Section 523, and of title 11, United States Code, as 
     amended by sections 215 and 314, is amended--
       (1) by transferring paragraph (15), as added by section 
     304(e) of Public Law 103-394 (108 Stat. 4133), so as to 
     insert such paragraph after subsection (a)(14A);
       (2) in subsection (a)(9), by striking ``motor vehicle'' and 
     inserting ``motor vehicle, vessel, or aircraft''; and
       (3) in subsection (e), by striking ``a insured'' and 
     inserting ``an insured''.

     SEC. 1210. EFFECT OF DISCHARGE.

       Section 524(a)(3) of title 11, United States Code, is 
     amended by striking ``section 523'' and all that follows 
     through ``or that'' and inserting ``section 523, 1228(a)(1), 
     or 1328(a)(1), or that''.

     SEC. 1211. PROTECTION AGAINST DISCRIMINATORY TREATMENT.

       Section 525(c) of title 11, United States Code, is 
     amended--
       (1) in paragraph (1), by inserting ``student'' before 
     ``grant'' the second place it appears; and
       (2) in paragraph (2), by striking ``the program operated 
     under part B, D, or E of'' and inserting ``any program 
     operated under''.

     SEC. 1212. PROPERTY OF THE ESTATE.

       Section 541(b)(4)(B)(ii) of title 11, United States Code, 
     is amended by inserting ``365 or'' before ``542''.

     SEC. 1213. PREFERENCES.

       (a) In General.--Section 547 of title 11, United States 
     Code, as amended by section 201, is amended--
       (1) in subsection (b), by striking ``subsection (c)'' and 
     inserting ``subsections (c) and (i)''; and
       (2) by adding at the end the following:
       ``(i) If the trustee avoids under subsection (b) a transfer 
     made between 90 days and 1 year before the date of the filing 
     of the petition, by the debtor to an entity that is not an 
     insider for the benefit of a creditor that is an insider, 
     such transfer shall be considered to be avoided under this 
     section only with respect to the creditor that is an 
     insider.''.
       (b) Applicability.--The amendments made by this section 
     shall apply to any case that is pending or commenced on or 
     after the date of enactment of this Act.

     SEC. 1214. POSTPETITION TRANSACTIONS.

       Section 549(c) of title 11, United States Code, is 
     amended--
       (1) by inserting ``an interest in'' after ``transfer of'' 
     each place it appears;
       (2) by striking ``such property'' and inserting ``such real 
     property''; and
       (3) by striking ``the interest'' and inserting ``such 
     interest''.

     SEC. 1215. DISPOSITION OF PROPERTY OF THE ESTATE.

       Section 726(b) of title 11, United States Code, is amended 
     by striking ``1009,''.

     SEC. 1216. GENERAL PROVISIONS.

       Section 901(a) of title 11, United States Code, is amended 
     by inserting ``1123(d),'' after ``1123(b),''.

     SEC. 1217. ABANDONMENT OF RAILROAD LINE.

       Section 1170(e)(1) of title 11, United States Code, is 
     amended by striking ``section 11347'' and inserting ``section 
     11326(a)''.

     SEC. 1218. CONTENTS OF PLAN.

       Section 1172(c)(1) of title 11, United States Code, is 
     amended by striking ``section 11347'' and inserting ``section 
     11326(a)''.

     SEC. 1219. BANKRUPTCY CASES AND PROCEEDINGS.

       Section 1334(d) of title 28, United States Code, is 
     amended--
       (1) by striking ``made under this subsection'' and 
     inserting ``made under subsection (c)''; and
       (2) by striking ``This subsection'' and inserting 
     ``Subsection (c) and this subsection''.

     SEC. 1220. KNOWING DISREGARD OF BANKRUPTCY LAW OR RULE.

       Section 156(a) of title 18, United States Code, is 
     amended--
       (1) in the first undesignated paragraph--
       (A) by inserting ``(1) the term'' before `` `bankruptcy''; 
     and
       (B) by striking the period at the end and inserting ``; 
     and''; and
       (2) in the second undesignated paragraph--
       (A) by inserting ``(2) the term'' before `` `document''; 
     and
       (B) by striking ``this title'' and inserting ``title 11''.

     SEC. 1221. TRANSFERS MADE BY NONPROFIT CHARITABLE 
                   CORPORATIONS.

       (a) Sale of Property of Estate.--Section 363(d) of title 
     11, United States Code, is amended by striking ``only'' and 
     all that follows through the end of the subsection and 
     inserting ``only--
       ``(1) in accordance with applicable nonbankruptcy law that 
     governs the transfer of property by a corporation or trust 
     that is not a moneyed, business, or commercial corporation or 
     trust; and
       ``(2) to the extent not inconsistent with any relief 
     granted under subsection (c), (d), (e), or (f) of section 
     362.''.
       (b) Confirmation of Plan for Reorganization.--Section 
     1129(a) of title 11, United States Code, as amended by 
     sections 213, 321, and 331, is amended by adding at the end 
     the following:
       ``(17) All transfers of property of the plan shall be made 
     in accordance with any applicable provisions of nonbankruptcy 
     law that govern the transfer of property by a corporation or 
     trust that is not a moneyed, business, or commercial 
     corporation or trust.''.
       (c) Transfer of Property.--Section 541 of title 11, United 
     States Code, as amended by section 225, is amended by adding 
     at the end the following:
       ``(f) Notwithstanding any other provision of this title, 
     property that is held by a debtor that is a corporation 
     described in section 501(c)(3) of the Internal Revenue Code 
     of 1986 and exempt from tax under section 501(a) of such Code 
     may be transferred to an entity that is not such a 
     corporation, but only under the same conditions as would 
     apply if the debtor had not filed a case under this title.''.
       (d) Applicability.--The amendments made by this section 
     shall apply to a case pending under title 11, United States 
     Code, on the date of enactment of this Act, or filed under 
     that title on or after that date of enactment, except that 
     the court shall not confirm a plan under chapter 11 of title 
     11, United States Code, without considering whether this 
     section would substantially affect the rights of a party in 
     interest who first acquired rights with respect to the debtor 
     after the date of the petition. The parties who may appear 
     and be heard in a proceeding under this

[[Page H5747]]

     section include the attorney general of the State in which 
     the debtor is incorporated, was formed, or does business.
       (e) Rule of Construction.--Nothing in this section shall be 
     construed to require the court in which a case under chapter 
     11 of title 11, United States Code, is pending to remand or 
     refer any proceeding, issue, or controversy to any other 
     court or to require the approval of any other court for the 
     transfer of property.

     SEC. 1222. PROTECTION OF VALID PURCHASE MONEY SECURITY 
                   INTERESTS.

       Section 547(c)(3)(B) of title 11, United States Code, is 
     amended by striking ``20'' and inserting ``30''.

     SEC. 1223. BANKRUPTCY JUDGESHIPS.

       (a) Short Title.--This section may be cited as the 
     ``Bankruptcy Judgeship Act of 2002''.
       (b) Temporary Judgeships.--
       (1) Appointments.--The following bankruptcy judges shall be 
     appointed in the manner prescribed in section 152(a)(1) of 
     title 28, United States Code, for the appointment of 
     bankruptcy judges provided for in section 152(a)(2) of such 
     title:
       (A) One additional bankruptcy judge for the eastern 
     district of California.
       (B) Three additional bankruptcy judges for the central 
     district of California.
       (C) Four additional bankruptcy judges for the district of 
     Delaware.
       (D) Two additional bankruptcy judges for the southern 
     district of Florida.
       (E) One additional bankruptcy judge for the southern 
     district of Georgia.
       (F) Three additional bankruptcy judges for the district of 
     Maryland.
       (G) One additional bankruptcy judge for the eastern 
     district of Michigan.
       (H) One additional bankruptcy judge for the southern 
     district of Mississippi.
       (I) One additional bankruptcy judge for the district of New 
     Jersey.
       (J) One additional bankruptcy judge for the eastern 
     district of New York.
       (K) One additional bankruptcy judge for the northern 
     district of New York.
       (L) One additional bankruptcy judge for the southern 
     district of New York.
       (M) One additional bankruptcy judge for the eastern 
     district of North Carolina.
       (N) One additional bankruptcy judge for the eastern 
     district of Pennsylvania.
       (O) One additional bankruptcy judge for the middle district 
     of Pennsylvania.
       (P) One additional bankruptcy judge for the district of 
     Puerto Rico.
       (Q) One additional bankruptcy judge for the western 
     district of Tennessee.
       (R) One additional bankruptcy judge for the eastern 
     district of Virginia.
       (S) One additional bankruptcy judge for the district of 
     South Carolina.
       (T) One additional bankruptcy judge for the district of 
     Nevada.
       (2) Vacancies.--
       (A) Districts with single appointments.--Except as provided 
     in subparagraphs (B), (C), (D), and (E), the first vacancy 
     occurring in the office of bankruptcy judge in each of the 
     judicial districts set forth in paragraph (1)--
       (i) occurring 5 years or more after the appointment date of 
     the bankruptcy judge appointed under paragraph (1) to such 
     office; and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (B) Central district of california.--The 1st, 2d, and 3d 
     vacancies in the office of bankruptcy judge in the central 
     district of California--
       (i) occurring 5 years or more after the respective 1st, 2d, 
     and 3d appointment dates of the bankruptcy judges appointed 
     under paragraph (1)(B); and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (C) District of delaware.--The 1st, 2d, 3d, and 4th 
     vacancies in the office of bankruptcy judge in the district 
     of Delaware--
       (i) occurring 5 years or more after the respective 1st, 2d, 
     3d, and 4th appointment dates of the bankruptcy judges 
     appointed under paragraph (1)(F); and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (D) Southern district of florida.--The 1st and 2d vacancies 
     in the office of bankruptcy judge in the southern district of 
     Florida--
       (i) occurring 5 years or more after the respective 1st and 
     2d appointment dates of the bankruptcy judges appointed under 
     paragraph (1)(D); and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (E) District of maryland.--The 1st, 2d, and 3d vacancies in 
     the office of bankruptcy judge in the district of Maryland--
       (i) occurring 5 years or more after the respective 1st, 2d, 
     and 3d appointment dates of the bankruptcy judges appointed 
     under paragraph (1)(F); and
       (ii) resulting from the death, retirement, resignation, or 
     removal of a bankruptcy judge;
     shall not be filled.
       (c) Extensions.--
       (1) In general.--The temporary office of bankruptcy judges 
     authorized for the northern district of Alabama, the district 
     of Delaware, the district of Puerto Rico, and the eastern 
     district of Tennessee under paragraphs (1), (3), (7), and (9) 
     of section 3(a) of the Bankruptcy Judgeship Act of 1992 (28 
     U.S.C. 152 note) are extended until the first vacancy 
     occurring in the office of a bankruptcy judge in the 
     applicable district resulting from the death, retirement, 
     resignation, or removal of a bankruptcy judge and occurring 5 
     years after the date of the enactment of this Act.
       (2) Applicability of other provisions.--All other 
     provisions of section 3 of the Bankruptcy Judgeship Act of 
     1992 (28 U.S.C. 152 note) remain applicable to the temporary 
     office of bankrupcy judges referred to in this subsection.
       (d) Technical Amendments.--Section 152(a) of title 28, 
     United States Code, is amended--
       (1) in paragraph (1), by striking the first sentence and 
     inserting the following: ``Each bankruptcy judge to be 
     appointed for a judicial district, as provided in paragraph 
     (2), shall be appointed by the court of appeals of the United 
     States for the circuit in which such district is located.''; 
     and
       (2) in paragraph (2)--
       (A) in the item relating to the middle district of Georgia, 
     by striking ``2'' and inserting ``3''; and
       (B) in the collective item relating to the middle and 
     southern districts of Georgia, by striking ``Middle and 
     Southern . . . . . . 1''.
       (e) Effective Date.--The amendments made by this section 
     shall take effect on the date of the enactment of this Act.

     SEC. 1224. COMPENSATING TRUSTEES.

       Section 1326 of title 11, United States Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (1), by striking ``and'';
       (B) in paragraph (2), by striking the period at the end and 
     inserting ``; and''; and
       (C) by adding at the end the following:
       ``(3) if a chapter 7 trustee has been allowed compensation 
     due to the conversion or dismissal of the debtor's prior case 
     pursuant to section 707(b), and some portion of that 
     compensation remains unpaid in a case converted to this 
     chapter or in the case dismissed under section 707(b) and 
     refiled under this chapter, the amount of any such unpaid 
     compensation, which shall be paid monthly--
       ``(A) by prorating such amount over the remaining duration 
     of the plan; and
       ``(B) by monthly payments not to exceed the greater of--
       ``(i) $25; or
       ``(ii) the amount payable to unsecured nonpriority 
     creditors, as provided by the plan, multiplied by 5 percent, 
     and the result divided by the number of months in the 
     plan.''; and
       (2) by adding at the end the following:
       ``(d) Notwithstanding any other provision of this title--
       ``(1) compensation referred to in subsection (b)(3) is 
     payable and may be collected by the trustee under that 
     paragraph, even if such amount has been discharged in a prior 
     proceeding under this title; and
       ``(2) such compensation is payable in a case under this 
     chapter only to the extent permitted by subsection (b)(3).''.

     SEC. 1225. AMENDMENT TO SECTION 362 OF TITLE 11, UNITED 
                   STATES CODE.

       Section 362(b)(18) of title 11, United States Code, is 
     amended to read as follows:
       ``(18) under subsection (a) of the creation or perfection 
     of a statutory lien for an ad valorem property tax, or a 
     special tax or special assessment on real property whether or 
     not ad valorem, imposed by a governmental unit, if such tax 
     or assessment comes due after the filing of the petition;''.

     SEC. 1226. JUDICIAL EDUCATION.

       The Director of the Federal Judicial Center, in 
     consultation with the Director of the Executive Office for 
     United States Trustees, shall develop materials and conduct 
     such training as may be useful to courts in implementing this 
     Act and the amendments made by this Act, including the 
     requirements relating to the means test and reaffirmations 
     under section 707(b) of title 11, United States Code, as 
     amended by this Act.

     SEC. 1227. RECLAMATION.

       (a) Rights and Powers of the Trustee.--Section 546(c) of 
     title 11, United States Code, is amended to read as follows:
       ``(c)(1) Except as provided in subsection (d) of this 
     section and subsection (c) of section 507, and subject to the 
     prior rights of holders of security interests in such goods 
     or the proceeds thereof, the rights and powers of the trustee 
     under sections 544(a), 545, 547, and 549 are subject to the 
     right of a seller of goods that has sold goods to the debtor, 
     in the ordinary course of such seller's business, to reclaim 
     such goods if the debtor has received such goods while 
     insolvent, within 45 days before the date of the commencement 
     of a case under this title, but such seller may not reclaim 
     such goods unless such seller demands in writing reclamation 
     of such goods--
       ``(A) not later than 45 days after the date of receipt of 
     such goods by the debtor; or
       ``(B) not later than 20 days after the date of commencement 
     of the case, if the 45-day period expires after the 
     commencement of the case.
       ``(2) If a seller of goods fails to provide notice in the 
     manner described in paragraph (1), the seller still may 
     assert the rights contained in section 503(b)(9).''.
       (b) Administrative Expenses.--Section 503(b) of title 11, 
     United States Code, as amended by sections 445 and 1103, is 
     amended by adding at the end the following:
       ``(9) the value of any goods received by the debtor within 
     20 days before the date of commencement of a case under this 
     title in which the goods have been sold to the debtor in the 
     ordinary course of such debtor's business.''.

     SEC. 1228. PROVIDING REQUESTED TAX DOCUMENTS TO THE COURT.

       (a) Chapter 7 Cases.--The court shall not grant a discharge 
     in the case of an individual seeking bankruptcy under chapter 
     7 of title 11, United States Code, unless requested tax 
     documents have been provided to the court.
       (b) Chapter 11 and Chapter 13 Cases.--The court shall not 
     confirm a plan of reorganization in the case of an individual 
     under chapter 11 or 13 of title 11, United States Code, 
     unless requested tax documents have been filed with the 
     court.

[[Page H5748]]

       (c) Document Retention.--The court shall destroy documents 
     submitted in support of a bankruptcy claim not sooner than 3 
     years after the date of the conclusion of a bankruptcy case 
     filed by an individual under chapter 7, 11, or 13 of title 
     11, United States Code. In the event of a pending audit or 
     enforcement action, the court may extend the time for 
     destruction of such requested tax documents.

     SEC. 1229. ENCOURAGING CREDITWORTHINESS.

       (a) Sense of the Congress.--It is the sense of the Congress 
     that--
       (1) certain lenders may sometimes offer credit to consumers 
     indiscriminately, without taking steps to ensure that 
     consumers are capable of repaying the resulting debt, and in 
     a manner which may encourage certain consumers to accumulate 
     additional debt; and
       (2) resulting consumer debt may increasingly be a major 
     contributing factor to consumer insolvency.
       (b) Study Required.--The Board of Governors of the Federal 
     Reserve System (hereafter in this section referred to as the 
     ``Board'') shall conduct a study of--
       (1) consumer credit industry practices of soliciting and 
     extending credit--
       (A) indiscriminately;
       (B) without taking steps to ensure that consumers are 
     capable of repaying the resulting debt; and
       (C) in a manner that encourages consumers to accumulate 
     additional debt; and
       (2) the effects of such practices on consumer debt and 
     insolvency.
       (c) Report and Regulations.--Not later than 12 months after 
     the date of enactment of this Act, the Board--
       (1) shall make public a report on its findings with respect 
     to the indiscriminate solicitation and extension of credit by 
     the credit industry;
       (2) may issue regulations that would require additional 
     disclosures to consumers; and
       (3) may take any other actions, consistent with its 
     existing statutory authority, that the Board finds necessary 
     to ensure responsible industrywide practices and to prevent 
     resulting consumer debt and insolvency.

     SEC. 1230. PROPERTY NO LONGER SUBJECT TO REDEMPTION.

       Section 541(b) of title 11, United States Code, as amended 
     by sections 225 and 323, is amended by adding at the end the 
     following:
       ``(8) subject to subchapter III of chapter 5, any interest 
     of the debtor in property where the debtor pledged or sold 
     tangible personal property (other than securities or written 
     or printed evidences of indebtedness or title) as collateral 
     for a loan or advance of money given by a person licensed 
     under law to make such loans or advances, where--
       ``(A) the tangible personal property is in the possession 
     of the pledgee or transferee;
       ``(B) the debtor has no obligation to repay the money, 
     redeem the collateral, or buy back the property at a 
     stipulated price; and
       ``(C) neither the debtor nor the trustee have exercised any 
     right to redeem provided under the contract or State law, in 
     a timely manner as provided under State law and section 
     108(b) of this title; or''.

     SEC. 1231. TRUSTEES.

       (a) Suspension and Termination of Panel Trustees and 
     Standing Trustees.--Section 586(d) of title 28, United States 
     Code, is amended--
       (1) by inserting ``(1)'' after ``(d)''; and
       (2) by adding at the end the following:
       ``(2) A trustee whose appointment under subsection (a)(1) 
     or under subsection (b) is terminated or who ceases to be 
     assigned to cases filed under title 11, United States Code, 
     may obtain judicial review of the final agency decision by 
     commencing an action in the district court of the United 
     States for the district for which the panel to which the 
     trustee is appointed under subsection (a)(1), or in the 
     district court of the United States for the district in which 
     the trustee is appointed under subsection (b) resides, after 
     first exhausting all available administrative remedies, which 
     if the trustee so elects, shall also include an 
     administrative hearing on the record. Unless the trustee 
     elects to have an administrative hearing on the record, the 
     trustee shall be deemed to have exhausted all administrative 
     remedies for purposes of this paragraph if the agency fails 
     to make a final agency decision within 90 days after the 
     trustee requests administrative remedies. The Attorney 
     General shall prescribe procedures to implement this 
     paragraph. The decision of the agency shall be affirmed by 
     the district court unless it is unreasonable and without 
     cause based on the administrative record before the 
     agency.''.
       (b) Expenses of Standing Trustees.--Section 586(e) of title 
     28, United States Code, is amended by adding at the end the 
     following:
       ``(3) After first exhausting all available administrative 
     remedies, an individual appointed under subsection (b) may 
     obtain judicial review of final agency action to deny a claim 
     of actual, necessary expenses under this subsection by 
     commencing an action in the district court of the United 
     States for the district where the individual resides. The 
     decision of the agency shall be affirmed by the district 
     court unless it is unreasonable and without cause based upon 
     the administrative record before the agency.
       ``(4) The Attorney General shall prescribe procedures to 
     implement this subsection.''.

     SEC. 1232. BANKRUPTCY FORMS.

       Section 2075 of title 28, United States Code, is amended by 
     adding at the end the following:
     ``The bankruptcy rules promulgated under this section shall 
     prescribe a form for the statement required under section 
     707(b)(2)(C) of title 11 and may provide general rules on the 
     content of such statement.''.

     SEC. 1233. DIRECT APPEALS OF BANKRUPTCY MATTERS TO COURTS OF 
                   APPEALS.

       (a) Appeals.--Section 158 of title 28, United States Code, 
     is amended--
       (1) in subsection (c)(1), by striking ``Subject to 
     subsection (b),'' and inserting ``Subject to subsections (b) 
     and (d)(2),''; and
       (2) in subsection (d)--
       (A) by inserting ``(1)'' after ``(d)''; and
       (B) by adding at the end the following:
       ``(2)(A) The appropriate court of appeals shall have 
     jurisdiction of appeals described in the first sentence of 
     subsection (a) if the bankruptcy court, the district court, 
     or the bankruptcy appellate panel involved, acting on its own 
     motion or on the request of a party to the judgment, order, 
     or decree described in such first sentence, or all the 
     appellants and appellees (if any) acting jointly, certify 
     that--
       ``(i) the judgment, order, or decree involves a question of 
     law as to which there is no controlling decision of the court 
     of appeals for the circuit or of the Supreme Court of the 
     United States, or involves a matter of public importance;
       ``(ii) the judgment, order, or decree involves a question 
     of law requiring resolution of conflicting decisions; or
       ``(iii) an immediate appeal from the judgment, order, or 
     decree may materially advance the progress of the case or 
     proceeding in which the appeal is taken;
     and if the court of appeals authorizes the direct appeal of 
     the judgment, order, or decree.
       ``(B) If the bankruptcy court, the district court, or the 
     bankruptcy appellate panel--
       ``(i) on its own motion or on the request of a party, 
     determines that a circumstance specified in clause (i), (ii), 
     or (iii) of subparagraph (A) exists; or
       ``(ii) receives a request made by a majority of the 
     appellants and a majority of appellees (if any) to make the 
     certification described in subparagraph (A);
     then the bankruptcy court, the district court, or the 
     bankruptcy appellate panel shall make the certification 
     described in subparagraph (A).
       ``(C) The parties may supplement the certification with a 
     short statement of the basis for the certification.
       ``(D) An appeal under this paragraph does not stay any 
     proceeding of the bankruptcy court, the district court, or 
     the bankruptcy appellate panel from which the appeal is 
     taken, unless the respective bankruptcy court, district 
     court, or bankruptcy appellate panel, or the court of appeals 
     in which the appeal in pending, issues a stay of such 
     proceeding pending the appeal.
       ``(E) Any request under subparagraph (B) for certification 
     shall be made not later than 60 days after the entry of the 
     judgment, order, or decree.''.
       (b) Procedural Rules.--
       (1) Temporary application.--A provision of this subsection 
     shall apply to appeals under section 158(d)(2) of title 28, 
     United States Code, until a rule of practice and procedure 
     relating to such provision and such appeals is promulgated or 
     amended under chapter 131 of such title.
       (2) Certification.--A district court, a bankruptcy court, 
     or a bankruptcy appellate panel may make a certification 
     under section 158(d)(2) of title 28, United States Code, only 
     with respect to matters pending in the respective bankruptcy 
     court, district court, or bankruptcy appellate panel.
       (3) Procedure.--Subject to any other provision of this 
     subsection, an appeal authorized by the court of appeals 
     under section 158(d)(2)(A) of title 28, United States Code, 
     shall be taken in the manner prescribed in subdivisions 
     (a)(1), (b), (c), and (d) of rule 5 of the Federal Rules of 
     Appellate Procedure. For purposes of subdivision (a)(1) of 
     rule 5--
       (A) a reference in such subdivision to a district court 
     shall be deemed to include a reference to a bankruptcy court 
     and a bankruptcy appellate panel, as appropriate;
       (B) a reference in such subdivision to the parties 
     requesting permission to appeal to be served with the 
     petition shall be deemed to include a reference to the 
     parties to the judgment, order, or decree from which the 
     appeal is taken.
       (4) Filing of petition with attachment.--A petition 
     requesting permission to appeal, that is based on a 
     certification made under subparagraph (A) or (B) of section 
     158(d)(2) shall--
       (A) be filed with the circuit clerk not later than 10 days 
     after the certification is entered on the docket of the 
     bankruptcy court, the district court, or the bankruptcy 
     appellate panel from which the appeal is taken; and
       (B) have attached a copy of such certification.
       (5) References in rule 5.--For purposes of rule 5 of the 
     Federal Rules of Appellate Procedure--
       (A) a reference in such rule to a district court shall be 
     deemed to include a reference to a bankruptcy court and to a 
     bankruptcy appellate panel; and
       (B) a reference in such rule to a district clerk shall be 
     deemed to include a reference to a clerk of a bankruptcy 
     court and to a clerk of a bankruptcy appellate panel.
       (6) Application of rules.--The Federal Rules of Appellate 
     Procedure shall apply in the courts of appeals with respect 
     to appeals authorized under section 158(d)(2)(A), to the 
     extent relevant and as if such appeals were taken from final 
     judgments, orders, or decrees of the district courts or 
     bankruptcy appellate panels exercising appellate jurisdiction 
     under subsection (a) or (b) of section 158 of title 28, 
     United States Code.

     SEC. 1234. INVOLUNTARY CASES.

       (a) Amendments.--Section 303 of title 11, United States 
     Code, is amended--
       (1) in subsection (b)(1), by--
       (A) inserting ``as to liability or amount'' after ``bona 
     fide dispute''; and
       (B) striking ``if such claims'' and inserting ``if such 
     noncontingent, undisputed claims''; and
       (2) in subsection (h)(1), by inserting ``as to liability or 
     amount'' before the semicolon at the end.

[[Page H5749]]

       (b) Effective Date; Application of Amendments.--This 
     section and the amendments made by this section shall take 
     effect on the date of the enactment of this Act and shall not 
     apply with respect to cases commenced under title 11 of the 
     United States Code before such date.

     SEC. 1235. FEDERAL ELECTION LAW FINES AND PENALTIES AS 
                   NONDISCHARGEABLE DEBT.

       Section 523(a) of title 11, United States Code, as amended 
     by section 314, is amended by inserting after paragraph (14A) 
     the following:
       ``(14B) incurred to pay fines or penalties imposed under 
     Federal election law;''.
                 TITLE XIII--CONSUMER CREDIT DISCLOSURE

     SEC. 1301. ENHANCED DISCLOSURES UNDER AN OPEN END CREDIT 
                   PLAN.

       (a) Minimum Payment Disclosures.--Section 127(b) of the 
     Truth in Lending Act (15 U.S.C. 1637(b)) is amended by adding 
     at the end the following:
       ``(11)(A) In the case of an open end credit plan that 
     requires a minimum monthly payment of not more than 4 percent 
     of the balance on which finance charges are accruing, the 
     following statement, located on the front of the billing 
     statement, disclosed clearly and conspicuously: `Minimum 
     Payment Warning: Making only the minimum payment will 
     increase the interest you pay and the time it takes to repay 
     your balance. For example, making only the typical 2 % 
     minimum monthly payment on a balance of $1,000 at an interest 
     rate of 17 % would take 88 months to repay the balance in 
     full. For an estimate of the time it would take to repay your 
     balance, making only minimum payments, call this toll-free 
     number: ____________.' (the blank space to be filled in by 
     the creditor).
       ``(B) In the case of an open end credit plan that requires 
     a minimum monthly payment of more than 4 percent of the 
     balance on which finance charges are accruing, the following 
     statement, in a prominent location on the front of the 
     billing statement, disclosed clearly and conspicuously: 
     `Minimum Payment Warning: Making only the required minimum 
     payment will increase the interest you pay and the time it 
     takes to repay your balance. Making a typical 5% minimum 
     monthly payment on a balance of $300 at an interest rate 
     of 17% would take 24 months to repay the balance in full. 
     For an estimate of the time it would take to repay your 
     balance, making only minimum monthly payments, call this 
     toll-free number: ____________.' (the blank space to be 
     filled in by the creditor).
       ``(C) Notwithstanding subparagraphs (A) and (B), in the 
     case of a creditor with respect to which compliance with this 
     title is enforced by the Federal Trade Commission, the 
     following statement, in a prominent location on the front of 
     the billing statement, disclosed clearly and conspicuously: 
     `Minimum Payment Warning: Making only the required minimum 
     payment will increase the interest you pay and the time it 
     takes to repay your balance. For example, making only the 
     typical 5% minimum monthly payment on a balance of $300 at an 
     interest rate of 17% would take 24 months to repay the 
     balance in full. For an estimate of the time it would take to 
     repay your balance, making only minimum monthly payments, 
     call the Federal Trade Commission at this toll-free number: 
     ____________.' (the blank space to be filled in by the 
     creditor). A creditor who is subject to this subparagraph 
     shall not be subject to subparagraph (A) or (B).
       ``(D) Notwithstanding subparagraph (A), (B), or (C), in 
     complying with any such subparagraph, a creditor may 
     substitute an example based on an interest rate that is 
     greater than 17 percent. Any creditor that is subject to 
     subparagraph (B) may elect to provide the disclosure required 
     under subparagraph (A) in lieu of the disclosure required 
     under subparagraph (B).
       ``(E) The Board shall, by rule, periodically recalculate, 
     as necessary, the interest rate and repayment period under 
     subparagraphs (A), (B), and (C).
       ``(F)(i) The toll-free telephone number disclosed by a 
     creditor or the Federal Trade Commission under subparagraph 
     (A), (B), or (G), as appropriate, may be a toll-free 
     telephone number established and maintained by the creditor 
     or the Federal Trade Commission, as appropriate, or may be a 
     toll-free telephone number established and maintained by a 
     third party for use by the creditor or multiple creditors or 
     the Federal Trade Commission, as appropriate. The toll-free 
     telephone number may connect consumers to an automated device 
     through which consumers may obtain information described in 
     subparagraph (A), (B), or (C), by inputting information using 
     a touch-tone telephone or similar device, if consumers whose 
     telephones are not equipped to use such automated device are 
     provided the opportunity to be connected to an individual 
     from whom the information described in subparagraph (A), (B), 
     or (C), as applicable, may be obtained. A person that 
     receives a request for information described in subparagraph 
     (A), (B), or (C) from an obligor through the toll-free 
     telephone number disclosed under subparagraph (A), (B), or 
     (C), as applicable, shall disclose in response to such 
     request only the information set forth in the table 
     promulgated by the Board under subparagraph (H)(i).
       ``(ii)(I) The Board shall establish and maintain for a 
     period not to exceed 24 months following the effective date 
     of the Bankruptcy Abuse Prevention and Consumer Protection 
     Act of 2002, a toll-free telephone number, or provide a toll-
     free telephone number established and maintained by a third 
     party, for use by creditors that are depository institutions 
     (as defined in section 3 of the Federal Deposit Insurance 
     Act), including a Federal credit union or State credit union 
     (as defined in section 101 of the Federal Credit Union Act, 
     with total assets not exceeding $250,000,000. The toll-free 
     telephone number may connect consumers to an automated device 
     through which consumers may obtain information described in 
     subparagraph (A) or (B), as applicable, by inputting 
     information using a touch-tone telephone or similar device, 
     if consumers whose telephones are not equipped to use such 
     automated device are provided the opportunity to be connected 
     to an individual from whom the information described in 
     subparagraph (A) or (B), as applicable, may be obtained. A 
     person that receives a request for information described in 
     subparagraph (A) or (B) from an obligor through the toll-free 
     telephone number disclosed under subparagraph (A) or (B), as 
     applicable, shall disclose in response to such request only 
     the information set forth in the table promulgated by the 
     Board under subparagraph (H)(i). The dollar amount contained 
     in this subclause shall be adjusted according to an indexing 
     mechanism established by the Board.
       ``(II) Not later than 6 months prior to the expiration of 
     the 24-month period referenced in subclause (I), the Board 
     shall submit to the Committee on Banking, Housing, and Urban 
     Affairs of the Senate and the Committee on Financial Services 
     of the House of Representatives a report on the program 
     described in subclause (I).
       ``(G) The Federal Trade Commission shall establish and 
     maintain a toll-free number for the purpose of providing to 
     consumers the information required to be disclosed under 
     subparagraph (C).
       ``(H) The Board shall--
       ``(i) establish a detailed table illustrating the 
     approximate number of months that it would take to repay an 
     outstanding balance if a consumer pays only the required 
     minimum monthly payments and if no other advances are made, 
     which table shall clearly present standardized information to 
     be used to disclose the information required to be disclosed 
     under subparagraph (A), (B), or (C), as applicable;
       ``(ii) establish the table required under clause (i) by 
     assuming--
       ``(I) a significant number of different annual percentage 
     rates;
       ``(II) a significant number of different account balances;
       ``(III) a significant number of different minimum payment 
     amounts; and
       ``(IV) that only minimum monthly payments are made and no 
     additional extensions of credit are obtained; and
       ``(iii) promulgate regulations that provide instructional 
     guidance regarding the manner in which the information 
     contained in the table established under clause (i) should be 
     used in responding to the request of an obligor for any 
     information required to be disclosed under subparagraph (A), 
     (B), or (C).
       ``(I) The disclosure requirements of this paragraph do not 
     apply to any charge card account, the primary purpose of 
     which is to require payment of charges in full each month.
       ``(J) A creditor that maintains a toll-free telephone 
     number for the purpose of providing customers with the actual 
     number of months that it will take to repay the customer's 
     outstanding balance is not subject to the requirements of 
     subparagraph (A) or (B).
       ``(K) A creditor that maintains a toll-free telephone 
     number for the purpose of providing customers with the actual 
     number of months that it will take to repay an outstanding 
     balance shall include the following statement on each billing 
     statement: `Making only the minimum payment will increase the 
     interest you pay and the time it takes to repay your balance. 
     For more information, call this toll-free number: ________.' 
     (the blank space to be filled in by the creditor).''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board of Governors of the Federal 
     Reserve System (hereafter in this title referred to as the 
     ``Board'') shall promulgate regulations implementing the 
     requirements of section 127(b)(11) of the Truth in Lending 
     Act, as added by subsection (a) of this section.
       (2) Effective date.--Section 127(b)(11) of the Truth in 
     Lending Act, as added by subsection (a) of this section, and 
     the regulations issued under paragraph (1) of this subsection 
     shall not take effect until the later of--
       (A) 18 months after the date of enactment of this Act; or
       (B) 12 months after the publication of such final 
     regulations by the Board.
       (c) Study of Financial Disclosures.--
       (1) In general.--The Board may conduct a study to determine 
     the types of information available to potential borrowers 
     from consumer credit lending institutions regarding factors 
     qualifying potential borrowers for credit, repayment 
     requirements, and the consequences of default.
       (2) Factors for consideration.--In conducting a study under 
     paragraph (1), the Board should, in consultation with the 
     other Federal banking agencies (as defined in section 3 of 
     the Federal Deposit Insurance Act), the National Credit Union 
     Administration, and the Federal Trade Commission, consider 
     the extent to which--
       (A) consumers, in establishing new credit arrangements, are 
     aware of their existing payment obligations, the need to 
     consider those obligations in deciding to take on new credit, 
     and how taking on excessive credit can result in financial 
     difficulty;
       (B) minimum periodic payment features offered in connection 
     with open end credit plans impact consumer default rates;
       (C) consumers make only the required minimum payment under 
     open end credit plans;
       (D) consumers are aware that making only required minimum 
     payments will increase the cost and repayment period of an 
     open end credit obligation; and
       (E) the availability of low minimum payment options is a 
     cause of consumers experiencing financial difficulty.
       (3) Report to congress.--Findings of the Board in 
     connection with any study conducted

[[Page H5750]]

     under this subsection shall be submitted to Congress. Such 
     report shall also include recommendations for legislative 
     initiatives, if any, of the Board, based on its findings.

     SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED 
                   BY A DWELLING.

       (a) Open End Credit Extensions.--
       (1) Credit applications.--Section 127A(a)(13) of the Truth 
     in Lending Act (15 U.S.C. 1637a(a)(13)) is amended--
       (A) by striking ``consultation of tax adviser.--A statement 
     that the'' and inserting the following: ``tax 
     deductibility.--A statement that--
       ``(A) the''; and
       (B) by striking the period at the end and inserting the 
     following: ``; and
       ``(B) in any case in which the extension of credit exceeds 
     the fair market value (as defined under the Internal Revenue 
     Code of 1986) of the dwelling, the interest on the portion of 
     the credit extension that is greater than the fair market 
     value of the dwelling is not tax deductible for Federal 
     income tax purposes.''.
       (2) Credit advertisements.--Section 147(b) of the Truth in 
     Lending Act (15 U.S.C. 1665b(b)) is amended--
       (A) by striking ``If any'' and inserting the following:
       ``(1) In general.--If any''; and
       (B) by adding at the end the following:
       ``(2) Credit in excess of fair market value.--Each 
     advertisement described in subsection (a) that relates to an 
     extension of credit that may exceed the fair market value of 
     the dwelling, and which advertisement is disseminated in 
     paper form to the public or through the Internet, as opposed 
     to by radio or television, shall include a clear and 
     conspicuous statement that--
       ``(A) the interest on the portion of the credit extension 
     that is greater than the fair market value of the dwelling is 
     not tax deductible for Federal income tax purposes; and
       ``(B) the consumer should consult a tax adviser for further 
     information regarding the deductibility of interest and 
     charges.''.
       (b) Non-Open End Credit Extensions.--
       (1) Credit applications.--Section 128 of the Truth in 
     Lending Act (15 U.S.C. 1638) is amended--
       (A) in subsection (a), by adding at the end the following:
       ``(15) In the case of a consumer credit transaction that is 
     secured by the principal dwelling of the consumer, in which 
     the extension of credit may exceed the fair market value of 
     the dwelling, a clear and conspicuous statement that--
       ``(A) the interest on the portion of the credit extension 
     that is greater than the fair market value of the dwelling is 
     not tax deductible for Federal income tax purposes; and
       ``(B) the consumer should consult a tax adviser for further 
     information regarding the deductibility of interest and 
     charges.''; and
       (B) in subsection (b), by adding at the end the following:
       ``(3) In the case of a credit transaction described in 
     paragraph (15) of subsection (a), disclosures required by 
     that paragraph shall be made to the consumer at the time of 
     application for such extension of credit.''.
       (2) Credit advertisements.--Section 144 of the Truth in 
     Lending Act (15 U.S.C. 1664) is amended by adding at the end 
     the following:
       ``(e) Each advertisement to which this section applies that 
     relates to a consumer credit transaction that is secured by 
     the principal dwelling of a consumer in which the extension 
     of credit may exceed the fair market value of the dwelling, 
     and which advertisement is disseminated in paper form to the 
     public or through the Internet, as opposed to by radio or 
     television, shall clearly and conspicuously state that--
       ``(1) the interest on the portion of the credit extension 
     that is greater than the fair market value of the dwelling is 
     not tax deductible for Federal income tax purposes; and
       ``(2) the consumer should consult a tax adviser for further 
     information regarding the deductibility of interest and 
     charges.''.
       (c) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the amendments made by this section.
       (2) Effective date.--Regulations issued under paragraph (1) 
     shall not take effect until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1303. DISCLOSURES RELATED TO ``INTRODUCTORY RATES''.

       (a) Introductory Rate Disclosures.--Section 127(c) of the 
     Truth in Lending Act (15 U.S.C. 1637(c)) is amended by adding 
     at the end the following:
       ``(6) Additional notice concerning `introductory rates'.--
       ``(A) In general.--Except as provided in subparagraph (B), 
     an application or solicitation to open a credit card account 
     and all promotional materials accompanying such application 
     or solicitation for which a disclosure is required under 
     paragraph (1), and that offers a temporary annual percentage 
     rate of interest, shall--
       ``(i) use the term `introductory' in immediate proximity to 
     each listing of the temporary annual percentage rate 
     applicable to such account, which term shall appear clearly 
     and conspicuously;
       ``(ii) if the annual percentage rate of interest that will 
     apply after the end of the temporary rate period will be a 
     fixed rate, state in a clear and conspicuous manner in a 
     prominent location closely proximate to the first listing of 
     the temporary annual percentage rate (other than a listing of 
     the temporary annual percentage rate in the tabular format 
     described in section 122(c)), the time period in which the 
     introductory period will end and the annual percentage rate 
     that will apply after the end of the introductory period; and
       ``(iii) if the annual percentage rate that will apply after 
     the end of the temporary rate period will vary in accordance 
     with an index, state in a clear and conspicuous manner in a 
     prominent location closely proximate to the first listing of 
     the temporary annual percentage rate (other than a listing in 
     the tabular format prescribed by section 122(c)), the time 
     period in which the introductory period will end and the rate 
     that will apply after that, based on an annual percentage 
     rate that was in effect within 60 days before the date of 
     mailing the application or solicitation.
       ``(B) Exception.--Clauses (ii) and (iii) of subparagraph 
     (A) do not apply with respect to any listing of a temporary 
     annual percentage rate on an envelope or other enclosure in 
     which an application or solicitation to open a credit card 
     account is mailed.
       ``(C) Conditions for introductory rates.--An application or 
     solicitation to open a credit card account for which a 
     disclosure is required under paragraph (1), and that offers a 
     temporary annual percentage rate of interest shall, if that 
     rate of interest is revocable under any circumstance or upon 
     any event, clearly and conspicuously disclose, in a prominent 
     manner on or with such application or solicitation--
       ``(i) a general description of the circumstances that may 
     result in the revocation of the temporary annual percentage 
     rate; and
       ``(ii) if the annual percentage rate that will apply upon 
     the revocation of the temporary annual percentage rate--

       ``(I) will be a fixed rate, the annual percentage rate that 
     will apply upon the revocation of the temporary annual 
     percentage rate; or
       ``(II) will vary in accordance with an index, the rate that 
     will apply after the temporary rate, based on an annual 
     percentage rate that was in effect within 60 days before the 
     date of mailing the application or solicitation.

       ``(D) Definitions.--In this paragraph--
       ``(i) the terms `temporary annual percentage rate of 
     interest' and `temporary annual percentage rate' mean any 
     rate of interest applicable to a credit card account for an 
     introductory period of less than 1 year, if that rate is less 
     than an annual percentage rate that was in effect within 60 
     days before the date of mailing the application or 
     solicitation; and
       ``(ii) the term `introductory period' means the maximum 
     time period for which the temporary annual percentage rate 
     may be applicable.
       ``(E) Relation to other disclosure requirements.--Nothing 
     in this paragraph may be construed to supersede subsection 
     (a) of section 122, or any disclosure required by paragraph 
     (1) or any other provision of this subsection.''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the requirements of section 127(c)(6) of the 
     Truth in Lending Act, as added by this section.
       (2) Effective date.--Section 127(c)(6) of the Truth in 
     Lending Act, as added by this section, and regulations issued 
     under paragraph (1) of this subsection shall not take effect 
     until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS.

       (a) Internet-Based Solicitations.--Section 127(c) of the 
     Truth in Lending Act (15 U.S.C. 1637(c)) is amended by adding 
     at the end the following:
       ``(7) Internet-based solicitations.--
       ``(A) In general.--In any solicitation to open a credit 
     card account for any person under an open end consumer credit 
     plan using the Internet or other interactive computer 
     service, the person making the solicitation shall clearly and 
     conspicuously disclose--
       ``(i) the information described in subparagraphs (A) and 
     (B) of paragraph (1); and
       ``(ii) the information described in paragraph (6).
       ``(B) Form of disclosure.--The disclosures required by 
     subparagraph (A) shall be--
       ``(i) readily accessible to consumers in close proximity to 
     the solicitation to open a credit card account; and
       ``(ii) updated regularly to reflect the current policies, 
     terms, and fee amounts applicable to the credit card account.
       ``(C) Definitions.--For purposes of this paragraph--
       ``(i) the term `Internet' means the international computer 
     network of both Federal and non-Federal interoperable packet 
     switched data networks; and
       ``(ii) the term `interactive computer service' means any 
     information service, system, or access software provider that 
     provides or enables computer access by multiple users to a 
     computer server, including specifically a service or system 
     that provides access to the Internet and such systems 
     operated or services offered by libraries or educational 
     institutions.''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the requirements of section 127(c)(7) of the 
     Truth in Lending Act, as added by this section.
       (2) Effective date.--The amendment made by subsection (a) 
     and the regulations issued under paragraph (1) of this 
     subsection shall not take effect until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT DEADLINES AND 
                   PENALTIES.

       (a) Disclosures Related to Late Payment Deadlines and 
     Penalties.--Section 127(b) of

[[Page H5751]]

     the Truth in Lending Act (15 U.S.C. 1637(b)) is amended by 
     adding at the end the following:
       ``(12) If a late payment fee is to be imposed due to the 
     failure of the obligor to make payment on or before a 
     required payment due date, the following shall be stated 
     clearly and conspicuously on the billing statement:
       ``(A) The date on which that payment is due or, if 
     different, the earliest date on which a late payment fee may 
     be charged.
       ``(B) The amount of the late payment fee to be imposed if 
     payment is made after such date.''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the requirements of section 127(b)(12) of the 
     Truth in Lending Act, as added by this section.
       (2) Effective date.--The amendment made by subsection (a) 
     and regulations issued under paragraph (1) of this subsection 
     shall not take effect until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO 
                   INCUR FINANCE CHARGES.

       (a) Prohibition on Certain Actions for Failure To Incur 
     Finance Charges.--Section 127 of the Truth in Lending Act (15 
     U.S.C. 1637) is amended by adding at the end the following:
       ``(h) Prohibition on Certain Actions for Failure To Incur 
     Finance Charges.--A creditor of an account under an open end 
     consumer credit plan may not terminate an account prior to 
     its expiration date solely because the consumer has not 
     incurred finance charges on the account. Nothing in this 
     subsection shall prohibit a creditor from terminating an 
     account for inactivity in 3 or more consecutive months.''.
       (b) Regulatory Implementation.--
       (1) In general.--The Board shall promulgate regulations 
     implementing the requirements of section 127(h) of the Truth 
     in Lending Act, as added by this section.
       (2) Effective date.--The amendment made by subsection (a) 
     and regulations issued under paragraph (1) of this subsection 
     shall not take effect until the later of--
       (A) 12 months after the date of enactment of this Act; or
       (B) 12 months after the date of publication of such final 
     regulations by the Board.

     SEC. 1307. DUAL USE DEBIT CARD.

       (a) Report.--The Board may conduct a study of, and present 
     to Congress a report containing its analysis of, consumer 
     protections under existing law to limit the liability of 
     consumers for unauthorized use of a debit card or similar 
     access device. Such report, if submitted, shall include 
     recommendations for legislative initiatives, if any, of the 
     Board, based on its findings.
       (b) Considerations.--In preparing a report under subsection 
     (a), the Board may include--
       (1) the extent to which section 909 of the Electronic Fund 
     Transfer Act (15 U.S.C. 1693g), as in effect at the time of 
     the report, and the implementing regulations promulgated by 
     the Board to carry out that section provide adequate 
     unauthorized use liability protection for consumers;
       (2) the extent to which any voluntary industry rules have 
     enhanced or may enhance the level of protection afforded 
     consumers in connection with such unauthorized use liability; 
     and
       (3) whether amendments to the Electronic Fund Transfer Act 
     (15 U.S.C. 1693 et seq.), or revisions to regulations 
     promulgated by the Board to carry out that Act, are necessary 
     to further address adequate protection for consumers 
     concerning unauthorized use liability.

     SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO 
                   DEPENDENT STUDENTS.

       (a) Study.--
       (1) In general.--The Board shall conduct a study regarding 
     the impact that the extension of credit described in 
     paragraph (2) has on the rate of bankruptcy cases filed under 
     title 11, United States Code.
       (2) Extension of credit.--The extension of credit described 
     in this paragraph is the extension of credit to individuals 
     who are--
       (A) claimed as dependents for purposes of the Internal 
     Revenue Code of 1986; and
       (B) enrolled within 1 year of successfully completing all 
     required secondary education requirements and on a full-time 
     basis, in postsecondary educational institutions.
       (b) Report.--Not later than 1 year after the date of 
     enactment of this Act, the Board shall submit to the Senate 
     and the House of Representatives a report summarizing the 
     results of the study conducted under subsection (a).

     SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS.

       (a) Regulations.--Not later than 6 months after the date of 
     enactment of this Act, the Board, in consultation with the 
     other Federal banking agencies (as defined in section 3 of 
     the Federal Deposit Insurance Act), the National Credit Union 
     Administration Board, and the Federal Trade Commission, shall 
     promulgate regulations to provide guidance regarding the 
     meaning of the term ``clear and conspicuous'', as used in 
     subparagraphs (A), (B), and (C) of section 127(b)(11) and 
     clauses (ii) and (iii) of section 127(c)(6)(A) of the Truth 
     in Lending Act.
       (b) Examples.--Regulations promulgated under subsection (a) 
     shall include examples of clear and conspicuous model 
     disclosures for the purposes of disclosures required by the 
     provisions of the Truth in Lending Act referred to in 
     subsection (a).
       (c) Standards.--In promulgating regulations under this 
     section, the Board shall ensure that the clear and 
     conspicuous standard required for disclosures made under the 
     provisions of the Truth in Lending Act referred to in 
     subsection (a) can be implemented in a manner which results 
     in disclosures which are reasonably understandable and 
     designed to call attention to the nature and significance of 
     the information in the notice.
      TITLE XIV--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

     SEC. 1401. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

       (a) Effective Date.--Except as otherwise provided in this 
     Act, this Act and the amendments made by this Act shall take 
     effect 180 days after the date of enactment of this Act.
       (b) Application of Amendments.--
       (1) In general.--Except as otherwise provided in this Act 
     and paragraph (2), the amendments made by this Act shall not 
     apply with respect to cases commenced under title 11, United 
     States Code, before the effective date of this Act.
       (2) Limitations on homestead exemption.--The amendments 
     made by sections 308 and 322 shall apply with respect to 
     cases commenced under title 11, United States Code, on or 
     after the date of the enactment of this Act.
       And the Senate agree to the same.

     From the Committee on the Judiciary, for consideration of the 
     House bill and the Senate amendment, and modifications 
     committed to conference:
     F. James Sensenbrenner,
     Henry J. Hyde,
     George W. Gekas,
     Lamar Smith,
     Steve Chabot,
     Bob Barr,
     Rick Boucher,
     From the Committee on Financial Services, for consideration 
     of secs. 901-906, 907A-909, 911, and 1301-1309 of the House 
     bill, and secs. 901-906, 907A-909, 911, 913-4, and title XIII 
     of the Senate amendment, and modifications committed to 
     conference:
     Michael G. Oxley,
     Spencer Bachus,
     From the Committee on Energy and Commerce, for consideration 
     of title XIV of the Senate amendment, and modifications 
     committed to conference:
     Billy Tauzin,
     Joe Barton,
     From the Committee on Education and the Workforce, for 
     consideration of sec. 1403 of the Senate amendment, and 
     modifications committed to conference:
     John Boehner,
     Michael N. Castle,
                                Managers on the Part of the House.

     Patrick Leahy,
     Joe Biden,
     Charles Schumer,
     Orrin Hatch,
     Chuck Grassley,
     Jon Kyl,
     Mike DeWine,
     Jeff Sessions,
     Mitch McConnell,
                               Managers on the Part of the Senate.

       JOINT EXPLANATORY STATEMENT OF THE COMMITTEE OF CONFERENCE

       The managers on the part of the House and the Senate at the 
     conference on the disagreeing votes of the two Houses on the 
     amendment of the Senate to the bill, H.R. 333, the Bankruptcy 
     Abuse Prevention and Consumer Protection Act of 2002, submit 
     the following joint statement to the House and the Senate in 
     explanation of the effect of the action agreed upon by the 
     managers and recommended in the accompanying conference 
     report:
       The Senate amendment struck all of the House bill after the 
     enacting clause and inserted a substitute text.
       The House recedes from its disagreement to the amendment of 
     the Senate with an amendment that is a substitute for the 
     House bill and the Senate amendment. The differences between 
     the House bill, the Senate amendment, and the substitute 
     agreed to in conference are noted below, except for clerical 
     corrections, conforming changes made necessary by agreements 
     reached by the conferees, and minor drafting and clerical 
     changes.
     Sec. 1. Short Title; References; Table of Contents
       The short title of this measure is the Bankruptcy Abuse 
     Prevention and Consumer Protection Act of 2002.

                     Title 1-Needs-Based Bankruptcy

     Sec. 101. Conversion
       Section 101 is identical to section 101 of the House bill 
     and the Senate amendment. Under current law, section 706(c) 
     of the Bankruptcy Code provides that a court may not convert 
     a chapter 7 case unless the debtor requests such conversion. 
     Section 101 of the conference report amends this provision to 
     allow a chapter 7 case to be converted to a case under 
     chapter 12 or chapter 13 on request or consent of the debtor.
     Sec. 102. Dismissal or Conversion
       Section 102 of the conference report reflects a compromise 
     between section 102 of the House bill and the Senate 
     amendment, although many of the components of this provision 
     are derived from identical counterparts in the House bill and 
     the Senate amendment.
       This provision implements the conference report's principal 
     consumer bankruptcy reforms: needs-based debt relief. Under 
     section 707(b) of the Bankruptcy Code, a chapter 7 case filed 
     by a debtor who is an individual may be dismissed for 
     substantial abuse only on motion of the court or the United 
     States Trustee. It specifically prohibits such dismissal at 
     the suggestion of any party in interest.

[[Page H5752]]

       Section 102 of the conference report revises current law in 
     several significant respects. First, it amends section 707(b) 
     of the Bankruptcy Code to permit--in addition to the court 
     and the United States trustee--a trustee, bankruptcy 
     administrator, or a party in interest to seek dismissal or 
     conversion of a chapter 7 case to one under chapter 11 or 13 
     on consent of the debtor, under certain circumstances. In 
     addition, section 102 of the conference report changes the 
     current standard for dismissal from ``substantial abuse'' to 
     ``abuse''. Section 102 of the conference report further 
     amends Bankruptcy Code section 707(b) to mandate a 
     presumption of abuse if the debtor's current monthly income 
     (reduced by certain specified amounts) when multiplied by 60 
     is not less than the lesser of 25 percent of the debtor's 
     nonpriority unsecured claims or $6,000 (whichever is 
     greater), or $10,000.
       To determine whether the presumption of abuse applies under 
     section 707(b) of the Bankruptcy Code, section 102(a) of the 
     conference report specifies certain monthly expense amounts 
     that are to be deducted from the debtor's ``current monthly 
     income'' (a defined term). The House bill and the Senate 
     amendment contain similar, but not identical provisions with 
     respect to these expenses. Section 102(a) incorporates those 
     provisions that are identical in both bills. These include 
     the following expense items:
       the applicable monthly expenses for the debtor as well as 
     for the debtor's dependents and spouse in a joint case (if 
     the spouse is not otherwise a dependent) specified under the 
     Internal Revenue Service's National Standards (with provision 
     for an additional 5 percent for food and clothing if the 
     debtor can demonstrate that such additional amount is 
     reasonable and necessary) and the IRS Local Standards;
       the actual monthly expenses for the debtor, the debtor's 
     dependents, and the debtor's spouse in a joint case (if the 
     spouse is not otherwise a dependent) for the categories 
     specified by the Internal Revenue Service as Other Necessary 
     Expenses;
       reasonably necessary expenses incurred to maintain the 
     safety of the debtor and the debtor's family from family 
     violence as specified in section 309 of the Family Violence 
     Prevention and Services Act or other applicable federal law, 
     with provision for the confidentiality of these expenses;
       the debtor's average monthly payments on account of secured 
     debts and priority claims as explained below; and
       if the debtor is eligible to be a debtor under chapter 13, 
     the actual administrative expenses of administering a chapter 
     13 plan for the district in which the debtor resides, up to 
     10 percent of projected plan payments, as determined under 
     schedules issued by the Executive Office for United States 
     Trustees.
       With respect to secured debts, Section 102(a)(2)(C) of the 
     conference report specifies that the debtor's average monthly 
     payments on account of secured debts is calculated as the sum 
     of the following divided by 60: (1) all amounts scheduled as 
     contractually due to secured creditors for each month of the 
     60-month period following filing of the case; and (2) any 
     additional payments necessary, in filing a plan under chapter 
     13, to maintain possession of the debtor's primary residence, 
     motor vehicle or other property necessary for the support of 
     the debtor and the debtor's dependents, that serves as 
     collateral for secured debts. This provision is identical to 
     section 102(a)(2)(C) of the House bill and the Senate 
     amendment.
       With respect to priority claims, section 102(a)(2)(C) of 
     the conference report specifies that the debtor's expenses 
     for payment of such claims (including child support and 
     alimony claims) is calculated as the total of such debts 
     divided by 60. This provision is identical to section 
     102(a)(2)(C) of the House bill and the Senate amendment.
       Although the House bill and the Senate amendment contain 
     identical provisions permitting a debtor, if applicable, to 
     deduct from current monthly income the continuation of actual 
     expenses paid by the debtor that are reasonable and necessary 
     for the care and support of an elderly, chronically ill, or 
     disabled household member or member of the debtor's immediate 
     family (providing such individual is unable to pay for these 
     expenses), the bills differ with respect to their respective 
     definitions of ``immediate family''. The conference report 
     adopts the Senate amendment's position that the term 
     includes, in addition to other specified entities, the 
     debtor's children and grandchildren.
       Likewise, both the House bill and the Senate amendment 
     permit the debtor to deduct the actual expenses for each 
     dependent child of a debtor to attend a private or public 
     elementary or secondary school of up to $1,500 per child if 
     the debtor: (1) documents such expenses, and (2) provides a 
     detailed explanation of why such expenses are reasonable and 
     necessary. The conference report adopts the Senate 
     amendment's additional requirement that the debtor explain 
     why such expenses are not already accounted for under any of 
     the Internal Revenue Service National and Local Standards, 
     and Other Expenses categories as identified in section 
     707(b)(2)(I), as amended.
       In addition, the conference report adopts the Senate 
     amendment provision permitting a debtor to claim additional 
     housing and utilities allowances based on the debtor's actual 
     home energy expenses if the debtor documents such expenses 
     and demonstrates that they are reasonable and necessary. The 
     House bill has no comparable provision.
       While the conference report replaces the current law's 
     presumption in favor of granting relief requested by a 
     chapter 7 debtor with a presumption of abuse (if applicable 
     under the income and expense analysis previously described), 
     this presumption may be rebutted only under certain 
     circumstances. Section 102(a)(2)(C) of the conference report 
     amends Bankruptcy Code section 707(b) to provide that the 
     presumption of abuse may be rebutted only if: (1) the debtor 
     demonstrates special circumstances that justify additional 
     expenses or adjustments of current monthly income for which 
     there is no reasonable alternative; and (2) the additional 
     expenses or adjustments cause the product of the debtor's 
     current monthly income (reduced by the specified expenses) 
     when multiplied by 60 to be less than the lesser of 25 
     percent of the debtor's nonpriority unsecured claims, or 
     $6,000 (whichever is greater); or $10,000. In addition, the 
     debtor must itemize and document each additional expense or 
     income adjustment as well as provide a detailed explanation 
     of the special circumstances that make such expense or 
     adjustment necessary and reasonable. In addition, the debtor 
     must attest under oath to the accuracy of any information 
     provided to demonstrate that such additional expense or 
     adjustment is required. This provision is identical to 
     section 102(a)(2)(C) of the House bill and the Senate 
     amendment.
       To implement these needs-based reforms, the conference 
     report, in section 102(a)(2)(C), requires the debtor to file, 
     as part of the schedules of current income and current 
     expenditures, a statement of current monthly income. This 
     statement must show: (1) the calculations that determine 
     whether a presumption of abuse arises under section 707(b) 
     (as amended), and (2) how each amount is calculated. This 
     provision is identical to section 102(a)(2)(C) of the House 
     bill and the Senate amendment.
       In a case where the presumption of abuse does not apply or 
     has been rebutted, section 102(a)(2)(C) of the conference 
     report amends Bankruptcy Code section 707(b) to require a 
     court to consider whether: (1) the debtor filed the chapter 7 
     case in bad faith; or (2) the totality of the circumstances 
     of the debtor's financial situation demonstrates abuse, 
     including whether the debtor wants to reject a personal 
     services contract and the debtor's financial need for such 
     rejection. This provision is identical to section 
     102(a)(2)(C) of the House bill and the Senate amendment.
       Under section 102(a)(2)(C) of the conference report, a 
     court may on its own initiative or on motion of a party in 
     interest in accordance with rule 9011 of the Federal Rules of 
     Bankruptcy Procedure, order a debtor's attorney to reimburse 
     the trustee for all reasonable costs incurred in prosecuting 
     a section 707(b) motion if: (1) a trustee files such motion; 
     (2) the motion is granted; and (3) the court finds that the 
     action of the debtor's attorney in filing the case under 
     chapter 7 violated rule 9011. If the court determines that 
     the debtor's attorney violated rule 9011, it may on its own 
     initiative or on motion of a party in interest in accordance 
     with such rule, order the assessment of an appropriate civil 
     penalty against debtor's counsel and the payment of such 
     penalty to the trustee, United States trustee, or bankruptcy 
     administrator. This provision represents a compromise among 
     House and Senate conferees. It differs from its antecedents 
     in section 102(a)(2)(C) of the House bill and the Senate 
     amendment in that it changes the mandatory standard to a 
     discretionary standard and clarifies that a motion for costs 
     or the imposition of a civil penalty must be made by a party 
     in interest or by the court itself in accordance with rule 
     9011.
       Section 102(a)(2)(C) of the conference report provides that 
     the signature of an attorney on a petition, pleading or 
     written motion shall constitute a certification that the 
     attorney has: (1) performed a reasonable investigation into 
     the circumstances that gave rise to such document; and (2) 
     determined that such document is well-grounded in fact and 
     warranted by existing law or a good faith argument for the 
     extension, modification, or reversal of existing law and does 
     not constitute an abuse under section 707(b)(1). In addition, 
     such attorney's signature on the petition shall constitute a 
     certification that the attorney has no knowledge after an 
     inquiry that the information in the schedules filed with the 
     petition is incorrect. This provision is identical to section 
     102(a)(2)(C) of the House bill and the Senate amendment.
       Section 102(a)(2)(C) of the conference report amends 
     section 707(b) of the Bankruptcy Code to permit a court on 
     its own initiative or a party in interest in accordance with 
     rule 9011 of the Federal Rules of Bankruptcy Procedure to 
     award reasonable costs (including reasonable attorneys' fees) 
     in contesting a motion filed by a party in interest (other 
     than a trustee, United States trustee or bankruptcy 
     administrator) if the court: (i) does not grant the section 
     707(b) motion; and (ii) finds that either the movant violated 
     rule 9011, or the attorney (if any) who filed the motion did 
     not comply with subparagraph (4)(C) and the section 707(b) 
     motion was made solely for the purpose of coercing a debtor 
     into waiving a right guaranteed under the Bankruptcy Code to 
     such debtor. An exception applies with respect to a movant 
     that is a ``small business'' with a claim in an aggregate 
     amount of less than $1,000. A small business, for purposes of 
     this provision, is defined as an unincorporated business, 
     partnership, corporation, association or organization with 
     less than 25 full-time employees that is engaged in 
     commercial or business activity. The number of employees

[[Page H5753]]

     of a wholly owned subsidiary includes the employees of the 
     parent and any other subsidiary corporation of the parent. 
     Section 102(a)(2)(C) represents a compromise among House and 
     Senate conferees. It differs from its antecedents in section 
     102(a)(2)(C) of the House bill and the Senate amendment in 
     that it changes the mandatory standard to a discretionary 
     standard and clarifies that the motion for costs must be made 
     by a party in interest or by the court. The use of the 
     phraseology in this provision, ``in accordance with rule 
     9011 of the Federal Rules of Bankruptcy Procedure'', is 
     intended to indicate that the procedures for the motion of 
     a party in interest or a court acting on its own 
     initiative are the procedures outlined in rule 9011(c).
       The conference report includes two ``safe harbors'' with 
     respect to its needs-based reforms. Section 102(a)(2)(C) of 
     the conference report amends Bankruptcy Code section 707(b) 
     to allow only a judge, United States trustee, or bankruptcy 
     administrator to file a section 707(b) motion (based on the 
     debtor's ability to repay, bad faith, or the totality of the 
     circumstances) if the chapter 7 debtor's current monthly 
     income (or in a joint case, the income of the debtor and the 
     debtor's spouse) falls below the state median family income 
     for a family of equal or lesser size (adjusted for larger 
     sized families), or the state median family income for one 
     earner in the case of a one-person household. This provision 
     is substantively identical to section 102(a)(2)(C) of the 
     House bill and the Senate amendment.
       The conference report's second safe harbor only pertains to 
     a motion under section 707(b)(2), that is, a motion to 
     dismiss based on a debtor's ability to repay. Section 
     102(a)(2)(C) represents a compromise between the House and 
     the Senate positions. The House provision prohibits a judge, 
     United States trustee, trustee, bankruptcy administrator or 
     other party in interest from filing such motion if the 
     debtor's income falls below the state median family income 
     for a family of equal or lesser size (adjusted for larger 
     sized families), or the state median family income for one 
     earner in the case of a one-person household. The Senate 
     amendment takes into consideration the spouse's income only 
     in a joint case.
       Section 102(a)(2)(C) of the conference report does not 
     consider the nonfiling spouse's income if the debtor and the 
     debtor's spouse are separated under applicable nonbankruptcy 
     law, or the debtor and the debtor's spouse are living 
     separate and apart, other than for the purpose of evading 
     section 707(b)(2). The debtor must file a statement under 
     penalty of perjury specifying that he or she meets one of 
     these criteria. In addition, the statement must disclose the 
     aggregate (or best estimate) of the amount of any cash or 
     money payments received from the debtor's spouse attributed 
     to the debtor's current monthly income.
       Section 102(b) of the conference report amends section 101 
     of the Bankruptcy Code to define ``current monthly income'' 
     as the average monthly income that the debtor receives (or in 
     a joint case, the debtor and debtor's spouse receive) from 
     all sources, without regard to whether it is taxable income, 
     in a specified six-month period preceding the filing of the 
     bankruptcy case. The conference report adopts the Senate 
     amendment's provision specifying that the six-month period is 
     determined as ending on the last day of the calendar month 
     immediately preceding the filing of the bankruptcy case, if 
     the debtor files the statement of current income required by 
     Bankruptcy Code section 521. If the debtor does not file such 
     schedule, the court determines the date on which current 
     income is calculated.
       The term, ``current monthly income'', pursuant to section 
     102(b) of the conference report, includes any amount paid by 
     any entity other than the debtor (or, in a joint case, the 
     debtor and the debtor's spouse if not otherwise a dependent) 
     on a regular basis for the household expenses of the debtor 
     or the debtor's dependents (and, the debtor's spouse in a 
     joint case, if not otherwise a dependent). It excludes Social 
     Security Act benefits and payments to victims of war crimes 
     or crimes against humanity on account of their status as 
     victims of such crimes. In addition, the conference report 
     provides that current monthly income does not include 
     payments to victims of international or domestic terrorism as 
     defined in section 2331 of title 18 of the United States Code 
     on account of their status as victims of such terrorism. This 
     provision with respect to victims of terrorism reflects a 
     compromise among the conferees. It has no counterpart in 
     either the House bill or the Senate amendment.
       Section 102(c) of the conference report is substantively 
     similar in part to its House and the Senate counterparts. The 
     provision amends section 704 of the Bankruptcy Code to 
     require the United States trustee or bankruptcy administrator 
     in a chapter 7 case where the debtor is an individual to: (1) 
     review all materials filed by the debtor; and (2) file a 
     statement with the court (within 10 days following the 
     meeting of creditors held pursuant to section 341 of the 
     Bankruptcy Code) as to whether or not the debtor's case 
     should be presumed to be an abuse under section 707(b). The 
     court must provide a copy of such statement to all creditors 
     within 5 days after its filing. Within 30 days of the filing 
     of such statement, the United States trustee or bankruptcy 
     administrator must file either: (1) a motion under section 
     707(b); or (2) a statement setting forth the reasons why such 
     motion is not appropriate in any case where the debtor's 
     filing should be presumed to be an abuse and the debtor's 
     current monthly income exceeds certain thresholds. Section 
     102(c) of the conference report does not include a provision 
     contained in the House bill and Senate amendment that permits 
     a United States trustee or bankruptcy administrator to 
     decline to file a section 707(b)(2) motion (pertaining to the 
     debtor's ability to repay) under certain circumstances.
       In a chapter 7 case where the presumption of abuse applies 
     under section 707(b), section 102(d) of the conference report 
     amends Bankruptcy Code section 342 to require the clerk to 
     provide written notice to all creditors within ten days after 
     commencement of the case stating that the presumption of 
     abuse applies in such case. This provision is substantively 
     identical to section 102(d) of the House bill and the Senate 
     amendment.
       Section 102(e) of the conference report provides that 
     nothing in the Bankruptcy Code limits the ability of a 
     creditor to give information to a judge (except for 
     information communicated ex parte, unless otherwise permitted 
     by applicable law), United States trustee, bankruptcy 
     administrator, or trustee. This provision is substantively 
     identical to section 102(e) of the House bill and the Senate 
     amendment.
       Section 102(f) of the conference report adds a provision to 
     Bankruptcy Code section 707 to permit the court to dismiss a 
     chapter 7 case filed by a debtor who is an individual on 
     motion by a victim of a crime of violence (as defined in 
     section 16 of title 18 of the United States Code) or a drug 
     trafficking crime (as defined in section 924(c)(2) of title 
     18 of the United States Code). The case may be dismissed if 
     the debtor was convicted of such crime and dismissal is in 
     the best interest of the victims, unless the debtor 
     establishes by a preponderance of the evidence that the 
     filing of the case is necessary to satisfy a claim for a 
     domestic support obligation. This provision is substantively 
     identical to section 102(f) of the House bill and the Senate 
     amendment.
       Section 102(g) of the conference report amends section 
     1325(a) of the Bankruptcy Code to require the court, as a 
     condition of confirming a chapter 13 plan, to find that the 
     debtor's action in filing the case was in good faith. This 
     provision is substantively identical to section 102(g) of the 
     House bill and the Senate amendment.
       Section 102(h) of the conference report amends section 
     1325(b)(1) of the Bankruptcy Code to specify that the court 
     must find, in confirming a chapter 13 plan to which there has 
     been an objection, that the debtor's disposable income will 
     be paid to unsecured creditors. It also amends section 
     1325(b)(2)'s definition of disposable income. As defined 
     under this provision, the term means income received by 
     the debtor (other than child support payments, foster care 
     payments, or certain disability payments for a dependent 
     child) less amounts reasonably necessary to be expended 
     for: (1) the maintenance or support of the debtor or the 
     debtor's dependent; (2) a domestic support obligation that 
     first becomes due after the case is filed; (3) charitable 
     contributions (as defined in section 548(d)(3)) to a 
     qualified religious or charitable entity or organization 
     (as defined in section 548(d)(4)) in an amount that does 
     not exceed 15 percent of the debtor's gross income for the 
     year in which the contributions are made; and (4) if the 
     debtor is engaged in business, the payment of expenditures 
     necessary for the continuation, preservation, and 
     operation of the business. As amended, section 1325(b)(3) 
     provides that the amounts reasonably necessary to be 
     expended under section 1325(b)(2) are determined in 
     accordance with section 707(b)(2)(A) and (B) if the 
     debtor's income exceeds certain monetary thresholds. This 
     provision is substantively identical to section 102(h) of 
     the House bill and the Senate amendment.
       Section 102(i) of the conference report adopts the Senate's 
     position in section 102(i) of the Senate amendment, which has 
     no counterpart in the House bill. Section 102(i) amends 
     Bankruptcy Code section 1329(a) to require the amounts paid 
     under a confirmed chapter 13 plan to be reduced by the actual 
     amount expended by the debtor to purchase health insurance 
     for the debtor and the debtor's dependents (if those 
     dependents do not otherwise have such insurance) if the 
     debtor documents the cost of such insurance and demonstrates 
     such expense is reasonable and necessary, and the amount is 
     not otherwise allowed for purposes of determining disposable 
     income under section 1325(b). If the debtor previously paid 
     for health insurance, the debtor must demonstrate that the 
     amount is not materially greater than the amount the debtor 
     previously paid. If the debtor did not previously have such 
     insurance, the amount is not materially larger than the 
     reasonable cost that would be incurred by a debtor having 
     similar characteristics. Upon request of any party in 
     interest, the debtor must file proof that a health insurance 
     policy was purchased.
       Section 102(j) of the conference report represents a 
     compromise between the House and Senate conferees and has no 
     antecedent in either the House bill or Senate amendment. The 
     provision amends section 104 of the Bankruptcy Code to 
     provide for the periodic adjustment of monetary amounts 
     specified in sections 707(b) and 1325(b)(3) of the Bankruptcy 
     Code, as amended by this Act.
       Section 102(k) adds to section 101 of the Bankruptcy Code a 
     definition of ``median family income.'' This provision 
     represents a compromise between the House and Senate

[[Page H5754]]

     conferees and has no antecedent in either the House bill or 
     Senate amendment.
     Sec. 103. Sense of Congress and study
       Section 103(a) of the conference report expresses the sense 
     of Congress that the Secretary of the Treasury has the 
     authority to alter the Internal Revenue Service expense 
     standards to set guidelines for repayment plans as needed to 
     accommodate their use under section 707(b) of the Bankruptcy 
     Code, as amended. Section 103(b) requires the Executive 
     Office for United States Trustees to submit a report within 2 
     years from the date of the Act's enactment regarding the 
     utilization of the Internal Revenue Service guidelines for 
     determining the current monthly expenses of a debtor under 
     section 707(b) and the impact that the application of these 
     standards has had on debtors and the bankruptcy courts. The 
     report may include recommendations for amendments to the 
     Bankruptcy Code that are consistent with the report's 
     findings. This provision is substantially identical to 
     section 103 of the House bill and the Senate amendment.
     Sec. 104. Notice of alternatives
       Section 104 of the conference report amends section 342(b) 
     of the Bankruptcy Code to require the clerk, before the 
     commencement of a bankruptcy case by an individual whose 
     debts are primarily consumer debts, to supply such individual 
     with a written notice containing: (1) a brief description of 
     chapters 7, 11, 12, and 13 and the general purpose, benefits, 
     and costs of proceeding under each of these chapters; (2) the 
     types of services available from credit counseling agencies; 
     (3) a statement advising that a person who knowingly and 
     fraudulently conceals assets or makes a false oath or 
     statement under penalty of perjury in connection with a 
     bankruptcy case shall be subject to fine, imprisonment, or 
     both; and (4) a statement warning that all information 
     supplied by a debtor in connection with the case is subject 
     to examination by the Attorney General. This provision is 
     substantially identical to section 104 of the House bill and 
     the Senate amendment.
     Sec. 105. Debtor financial management training test program
       Section 105 of the conference report requires the Director 
     of the Executive Office for United States Trustees to: (1) 
     consult with a wide range of debtor education experts who 
     operate financial management education programs; and (2) 
     develop a financial management training curriculum and 
     materials that can be used to teach individual debtors how to 
     manage their finances better. The Director must select six 
     judicial districts to test the effectiveness of the financial 
     management training curriculum and materials for an 18-month 
     period beginning not later than 270 days after the Act's 
     enactment date. For these six districts, the curricula and 
     materials must be used as the instructional personal 
     financial management course required under Bankruptcy Code 
     section 111. Over the period of the study, the Director must 
     evaluate the effectiveness of: (1) the curriculum and 
     materials; and (2) a sample of existing consumer education 
     programs (such as those described in the Report of the 
     National Bankruptcy Review Commission) that are 
     representative of consumer education programs sponsored by 
     the credit industry, chapter 13 trustees, and consumer 
     counseling groups. Not later than three months after 
     concluding such evaluation, the Director must submit to 
     Congress a report with findings regarding the effectiveness 
     and cost of the curricula, materials, and programs. This 
     provision is substantially identical to section 105 of the 
     House bill and the Senate amendment.
     Sec. 106. Credit counseling
       Section 106(a) of the conference report amends section 109 
     of the Bankruptcy Code to require an individual--as a 
     condition of eligibility for bankruptcy relief--to receive 
     credit counseling within the 180-day period preceding the 
     filing of a bankruptcy case by such individual. The credit 
     counseling must be provided by an approved nonprofit budget 
     and credit counseling agency consisting of either an 
     individual or group briefing (which may be conducted 
     telephonically or via the Internet) that outlined 
     opportunities for available credit counseling and assisted 
     the individual in performing a budget analysis. This 
     requirement does not apply to a debtor who resides in a 
     district where the United States trustee or bankruptcy 
     administrator has determined that approved nonprofit budget 
     and credit counseling agencies in that district are 
     not reasonably able to provide adequate services to such 
     individuals. Although such determination must be reviewed 
     annually, the United States trustee or bankruptcy 
     administrator may disapprove a nonprofit budget and credit 
     counseling agency at any time.
       A debtor may be temporarily exempted from this requirement 
     if he or she submits to the court a certification that: (1) 
     describes exigent circumstances meriting a waiver of this 
     requirement; (2) states that the debtor requested credit 
     counseling services from an approved nonprofit budget and 
     credit counseling agency, but was unable to obtain such 
     services within the five-day period beginning on the date the 
     debtor made the request; and (3) is satisfactory to the 
     court. This exemption terminates when the debtor meets the 
     requirements for credit counseling participation, but not 
     longer than 30 days after the case is filed, unless the 
     court, for cause, extends this period up to an additional 15 
     days. This provision is substantively identical to section 
     106(a) of the House bill and the Senate amendment.
       Section 106(b) of the conference report amends section 
     727(a) of the Bankruptcy Code to deny a discharge to a 
     chapter 7 debtor who fails to complete a personal financial 
     management instructional course. This provision, however, 
     does not apply if the debtor resides in a district where the 
     United States trustee or bankruptcy administrator has 
     determined that the approved instructional courses in that 
     district are not adequate. Such determination must be 
     reviewed annually by the United States trustee or bankruptcy 
     administrator. This provision is substantively identical to 
     section 106(b) of the House bill and the Senate amendment.
       Section 106(c) of the conference report amends section 1328 
     of the Bankruptcy Code to deny a discharge to a chapter 13 
     debtor who fails to complete a personal financial management 
     instructional course. This requirement does not apply if the 
     debtor resides in a district where the United States trustee 
     or bankruptcy administrator has determined that the approved 
     instructional courses in that district are not adequate. Such 
     determination must be reviewed annually by the United States 
     trustee or bankruptcy administrator. This provision is 
     substantively identical to section 106(c) of the House bill 
     and the Senate amendment.
       Section 106(d) of the conference report amends section 521 
     of the Bankruptcy Code to require a debtor who is an 
     individual to file with the court: (1) a certificate from an 
     approved nonprofit budget and credit counseling agency 
     describing the services it provided the debtor pursuant to 
     section 109(h); and (2) a copy of the repayment plan, if any, 
     that was developed by the agency pursuant to section 109(h). 
     This provision is substantively identical to section 106(d) 
     of the House bill and the Senate amendment.
       Section 106(e) of the conference report is substantively 
     identical to section 106(e) of the House bill and the Senate 
     amendment. It adds section 111 to the Bankruptcy Code 
     requiring the clerk to maintain a publically available list 
     of approved: (1) credit counseling agencies that provide the 
     services described in section 109(h) of the Bankruptcy Code; 
     and (2) personal financial management instructional courses. 
     Section 106(e) further provides that the United States 
     trustee or bankruptcy administrator may only approve an 
     agency or course provider under this provision pursuant to 
     certain specified criteria. If such agency or provider course 
     is approved, the approval may only be for a probationary 
     period of up to six months. At the conclusion of the 
     probationary period, the United States trustee or bankruptcy 
     administrator may only approve such agency or instructional 
     course for an additional one-year period and, thereafter for 
     successive one-year periods, which has demonstrated during 
     such period that it met the standards set forth in this 
     provision and can satisfy such standards in the future.
       Within 30 days after any final decision occurring after the 
     expiration of the initial probationary period or after any 
     subsequent two-year period, an interested person may seek 
     judicial review of such decision in the appropriate United 
     States district court. In addition, the district court, at 
     any time, may investigate the qualifications of a credit 
     counseling agency and request the production of documents to 
     ensure the agency's integrity and effectiveness. The district 
     court may remove a credit counseling agency that does not 
     meet the specified qualifications from the approved list. The 
     United States trustee or bankruptcy administrator must notify 
     the clerk that a credit counseling agency or instructional 
     course is no longer approved and the clerk must remove such 
     entity from the approved list.
       Section 106(e) prohibits a credit counseling agency from 
     providing information to a credit reporting agency as to 
     whether an individual debtor has received or sought personal 
     financial management instruction. A credit counseling agency 
     that willfully or negligently fails to comply with any 
     requirement under the Bankruptcy Code with respect to a 
     debtor shall be liable to the debtor for damages in an amount 
     equal to: (1) actual damages sustained by the debtor as a 
     result of the violation; and (2) any court costs or 
     reasonable attorneys' fees incurred in an action to recover 
     such damages.
       Section 106(f) of the conference report amends section 362 
     of the Bankruptcy Code to provide that if a chapter 7, 11, or 
     13 case is dismissed due to the creation of a debt repayment 
     plan, the presumption that a case was not filed in good faith 
     under section 362(c)(3) shall not apply to any subsequent 
     bankruptcy case commenced by the debtor. It also provides 
     that the court, on request of a party in interest, must issue 
     an order under section 362(c) confirming that the automatic 
     stay has terminated. This provision is substantively 
     identical to section 106(f) of the House bill and the Senate 
     amendment.
     Sec. 107. Schedules of reasonable and necessary expenses
       For purposes of section 707(b) of the Bankruptcy Code, 
     section 107 of the conference report requires the Director of 
     the Executive Office for United States Trustees to issue 
     schedules of reasonable and necessary administrative expenses 
     (including reasonable attorneys' fees) relating to the 
     administration of a chapter 13 plan for each judicial 
     district not later than 180 days after the date of enactment 
     of the Act. This provision is substantively identical to 
     section 107 of the House bill and the Senate amendment.

[[Page H5755]]

                 Title II--Enhanced Consumer Protection


          subtitle a--penalties for abusive creditor practices

     Sec. 201. Promotion of alternative dispute resolution
       Section 201 of the conference report is substantively 
     identical to section 201 of the House bill and the Senate 
     amendment. Subsection (a) amends section 502 of the 
     Bankruptcy Code to permit the court, after a hearing on 
     motion of the debtor, to reduce a claim based in whole on an 
     unsecured consumer debt by up to 20 percent if: (1) the claim 
     was filed by a creditor who unreasonably refused to negotiate 
     a reasonable alternative repayment schedule proposed by an 
     approved credit counseling agency on behalf of the debtor; 
     (2) the debtor's offer was made at least 60 days before the 
     filing of the case; (3) the offer provided for payment of at 
     least 60 percent of the debt over a period not exceeding the 
     loan's repayment period or a reasonable extension thereof; 
     and (4) no part of the debt is nondischargeable. The debtor 
     has the burden of proving by clear and convincing evidence 
     that: (1) the creditor unreasonably refused to consider 
     the debtor's proposal; and (2) the proposed alternative 
     repayment schedule was made prior to the expiration of the 
     60-day period. Section 201(b) amends section 547 of the 
     Bankruptcy Code to prohibit the avoidance as a 
     preferential transfer a payment by a debtor to a creditor 
     pursuant to an alternative repayment plan created by an 
     approved credit counseling agency.
     Sec. 202. Effect of discharge
       Section 202 of the conference report amends section 524 of 
     the Bankruptcy Code in two respects. First, it provides that 
     the willful failure of a creditor to credit payments received 
     under a confirmed chapter 11, 12, or 13 plan constitutes a 
     violation of the discharge injunction if the creditor's 
     action to collect and failure to credit payments in the 
     manner required by the plan caused material injury to the 
     debtor. This provision does not apply if the order confirming 
     the plan is revoked, the plan is in default, or the creditor 
     has not received payments required to be made under the plan 
     in the manner prescribed by the plan. Second, section 202 
     amends section 524 of the Bankruptcy Code to provide that the 
     discharge injunction does not apply to a creditor having a 
     claim secured by an interest in real property that is the 
     debtor's principal residence if the creditor communicates 
     with the debtor in the ordinary course of business between 
     the creditor and the debtor and such communication is limited 
     to seeking or obtaining periodic payments associated with a 
     valid security interest in lieu of the pursuit of in rem 
     relief to enforce the lien. Section 202 is substantively 
     identical to section 202 of the House bill and the Senate 
     amendment.
     Sec. 203. Discouraging abuse of reaffirmation practices
       Section 203 of the conference report effectuates a 
     comprehensive overhaul of the law applicable to reaffirmation 
     agreements. It is substantively identical to section 203 of 
     the House bill and the Senate amendment.
       Section 203(a) amends section 524 of the Bankruptcy Code to 
     mandate that certain specified disclosures be provided to a 
     debtor at or before the time he or she signs a reaffirmation 
     agreement. These specified disclosures, which are the only 
     disclosures required in connection with a reaffirmation 
     agreement, must be in writing and be made clearly and 
     conspicuously. In addition, the disclosure must include 
     certain advisories and explanations. At the election of the 
     creditor, the disclosure statement may include a repayment 
     schedule. If the debtor is represented by counsel, section 
     203(a) mandates that the attorney file a certification 
     stating that the agreement represents a fully informed and 
     voluntary agreement by the debtor, that the agreement does 
     not impose an undue hardship on the debtor or any dependent 
     of the debtor, and that the attorney fully advised the debtor 
     of the legal effect and consequences of such agreement as 
     well as of any default thereunder. In those instances where 
     the presumption of undue hardship applies, the attorney must 
     also certify that the debtor is able to make the payments 
     required under the reaffirmation agreement. Further, the 
     debtor must submit a statement setting forth the debtor's 
     monthly income and actual current monthly expenditures. If 
     the debtor is represented by counsel and the debt being 
     reaffirmed is owed to a credit union, a modified version of 
     this statement may be used.
       Notwithstanding any other provision of the Bankruptcy Code, 
     section 203(a) permits a creditor to accept payments from a 
     debtor: (1) before and after the filing of a reaffirmation 
     agreement with the court; or (2) pursuant to a reaffirmation 
     agreement that the creditor believes in good faith to be 
     effective. It further provides that the requirements 
     specified in subsections (c)(2) and (k) of section 524 are 
     satisfied if the disclosures required by these provisions are 
     given in good faith.
       Where the amount of the scheduled payments due on the 
     reaffirmed debt (as disclosed in the debtor's statement) 
     exceeds the debtor's available income, it is presumed for 60 
     days from the date on which the reaffirmation agreement is 
     filed with the court that the agreement presents an undue 
     hardship. The court must review such presumption, which can 
     be rebutted by the debtor by a written statement explaining 
     the additional sources of funds that would enable the debtor 
     to make the required payments on the reaffirmed debt. If the 
     presumption is not rebutted to the satisfaction of the court, 
     the court may disapprove the reaffirmation agreement. No 
     reaffirmation agreement may be disapproved without notice and 
     hearing to the debtor and creditor. The hearing must be 
     concluded before the entry of the debtor's discharge. The 
     requirements set forth in this paragraph do not apply to 
     reaffirmation agreements if the creditor is a credit union, 
     as defined.
       Section 203(b) amends title 18 of the United States Code to 
     require the Attorney General to designate a United States 
     Attorney for each judicial district and to appoint a Federal 
     Bureau of Investigation agent for each field office to have 
     primary law enforcement responsibilities for violations of 
     sections 152 and 157 of title 18 with respect to abusive 
     reaffirmation agreements and materially fraudulent statements 
     in bankruptcy schedules that are intentionally false or 
     misleading. In addition, section 203(b) provides that the 
     designated United States Attorney has primary responsibility 
     with respect to bankruptcy investigations under section 3057 
     of title 18. Section 203(b) further provides that the 
     bankruptcy courts must establish procedures for referring any 
     case in which a materially fraudulent bankruptcy schedule has 
     been filed.
     Sec. 204. Preservation of claims and defenses upon sale of 
         predatory loans
       Section 204 of the conference report adds a provision to 
     section 363 of the Bankruptcy Code with respect to sales of 
     any interest in a consumer transaction that is subject to the 
     Truth in Lending Act or any interest in a consumer credit 
     contract (as defined in section 433.1 of title 16 of the Code 
     of Federal Regulations). It provides that the purchaser of 
     such interest through a bankruptcy sale under section 363 
     remains subject to all claims and defenses that are related 
     to such assets to the same extent as that person would be 
     subject to if the sale was not conducted under section 363. 
     Section 204 of the conference report is derived from section 
     204 of the Senate amendment. There is no counterpart to this 
     provision in the House bill.
     Sec. 205. GAO Study on reaffirmation process
       Section 205 of the conference report directs the 
     Comptroller General of the United States to report to 
     Congress on how consumers are treated in connection with the 
     reaffirmation agreement process. This report must include: 
     (1) the policies and activities of creditors with respect to 
     reaffirmation agreements; and (2) whether such consumers are 
     fully, fairly, and consistently informed of their rights 
     under the Bankruptcy Code. The report, which must be 
     completed not later than 18 months after the date of 
     enactment of this Act, may include recommendations for 
     legislation to address any abusive or coercive tactics found 
     in connection with the reaffirmation process. Section 205 is 
     derived from section 205 of the Senate amendment. There is no 
     counterpart to this provision in the House bill.


                   SUBTITLE B--PRIORITY CHILD SUPPORT

     Sec. 211. Definition of domestic support obligation
       Section 211 of the conference report amends section 101 of 
     the Bankruptcy Code to define a domestic support obligation 
     as a debt that accrues pre- or postpetition (including 
     interest that accrues pursuant to applicable nonbankruptcy 
     law) and is owed to or recoverable by: (1) a spouse, former 
     spouse, or child of the debtor, or such child's parent, legal 
     guardian, or responsible relative; or (2) a governmental 
     unit. To qualify as a domestic support obligation, the debt 
     must be in the nature of alimony, maintenance, or support 
     (including assistance provided by a governmental unit), 
     without regard to whether such debt is expressly so 
     designated. It must be established or subject to 
     establishment either pre- or postpetition pursuant to: (1) a 
     separation agreement, divorce decree, or property settlement 
     agreement; (2) an order of a court of record; or (3) a 
     determination made in accordance with applicable 
     nonbankruptcy law by a governmental unit. It does not apply 
     to a debt assigned to a nongovernmental entity, unless it was 
     assigned voluntarily by the spouse, former spouse, child, or 
     parent solely for the purpose of collecting the debt. Section 
     211 is identical to section 211 of the House bill and the 
     Senate amendment.
     Sec. 212. Priorities for claims for domestic support 
         obligations
       Section 212 of the conference report amends section 507(a) 
     of the Bankruptcy Code to accord first priority in payment to 
     allowed unsecured claims for domestic support obligations 
     that, as of the petition date, are owed to or recoverable by 
     a spouse, former spouse, or child of the debtor, or the 
     parent, legal guardian, or responsible relative of such 
     child, without regard to whether such claim is filed by the 
     claimant or by a governmental unit on behalf of such 
     claimant, on the condition that funds received by such unit 
     under this provision be applied and distributed in accordance 
     with nonbankruptcy law. Subject to these claims, section 212 
     accords the same payment priority to allowed unsecured claims 
     for domestic support obligations that, as of the petition 
     date, were assigned by a spouse, former spouse, child of the 
     debtor, or such child's parent, legal guardian, or 
     responsible relative to a governmental unit (unless the 
     claimant assigned the claim voluntarily for the purpose of 
     collecting the debt), or are owed directly

[[Page H5756]]

     to or recoverable by a governmental unit under applicable 
     nonbankruptcy law, on the condition that funds received by 
     such unit under this provision be applied and distributed in 
     accordance with nonbankruptcy law. Where a trustee 
     administers assets that may be available for payment of 
     domestic support obligations under section 507(a)(1) (as 
     amended), administrative expenses of the trustee allowed 
     under section 503(b)(1)(A), (2) and (6) of the Bankruptcy 
     Code must be paid before such claims to the extent the 
     trustee administers assets that are otherwise available for 
     the payment of these claims. Section 212 is similar to 
     section 212 of the House bill and the Senate amendment. The 
     principal difference is the conference report's provision for 
     the payment of trustee administrative expenses.
     Sec. 213. Requirements to obtain confirmation and discharge 
         in cases involving domestic support obligations
       Section 213 is substantively identical to section 213 of 
     the House bill and the Senate amendment. With respect to 
     chapter 11 cases, section 213(1) adds a condition for 
     confirmation of a plan. It amends section 1129(a) of the 
     Bankruptcy Code to provide that if a chapter 11 debtor is 
     required by judicial or administrative order or statute to 
     pay a domestic support obligation, then the debtor must pay 
     all amounts payable under such order or statute that became 
     payable postpetition as a prerequisite for confirmation.
       With respect to chapter 12 cases, section 213(2) of the 
     conference report amends section 1208(c) of the Bankruptcy 
     Code to provide that the failure of a debtor to pay any 
     domestic support obligation that first becomes payable 
     postpetition is cause for conversion or dismissal of the 
     case. Section 213(3) amends Bankruptcy Code section 1222(a) 
     to permit a chapter 12 debtor to propose a plan that provides 
     for less than full payment of all amounts owed for a claim 
     entitled to priority under Bankruptcy Code section 
     507(a)(1)(B) if all of the debtor's projected disposable 
     income for a five-year period is applied to make payments 
     under the plan. Section 213(4) of the conference report 
     amends Bankruptcy Code section 1222(b) to permit a chapter 12 
     debtor to propose a plan that pays postpetition interest on 
     claims that are nondischargeable under Section 1228(a), but 
     only to the extent that the debtor has disposable income 
     available to pay such interest after payment of all allowed 
     claims in full. Section 213(5) amends Bankruptcy Code section 
     1225(a) to provide that if a chapter 12 debtor is required by 
     judicial or administrative order or statute to pay a domestic 
     support obligation, then the debtor must pay such obligations 
     pursuant to such order or statute that became payable 
     postpetition as a condition of confirmation. Section 213(6) 
     amends section Bankruptcy Code section 1228(a) to condition 
     the granting of a chapter 12 discharge upon the debtor's 
     payment of certain postpetition domestic support obligations.
       With respect to chapter 13 cases, section 213(7) of the 
     conference report amends Bankruptcy Code section 1307(c) to 
     provide that the failure of a debtor to pay any domestic 
     support obligation that first becomes payable postpetition is 
     cause for conversion or dismissal of the debtor's case. 
     Section 213(8) amends Bankruptcy Code section 1322(a) to 
     permit a chapter 13 debtor to propose a plan that pays less 
     than the full amount of a claim entitled to priority under 
     Bankruptcy Code section 507(a)(1)(B) if the plan provides 
     that all of the debtor's projected disposable income over a 
     five-year period will be applied to make payments under the 
     plan. Section 213(9) amends Bankruptcy Code section 1322(b) 
     to permit a chapter 13 debtor to propose a plan that pays 
     postpetition interest on nondischargeable debts under section 
     1328(a), but only to the extent that the debtor has 
     disposable income available to pay such interest after 
     payment in full of all allowed claims. Section 213(10) amends 
     Bankruptcy Code section 1325(a) to provide that if a chapter 
     13 debtor is required by judicial or administrative order or 
     statute to pay a domestic support obligation, then the debtor 
     must pay all such obligations pursuant to such order or 
     statute that became payable postpetition as a condition of 
     confirmation. Section 213(11) amends Bankruptcy Code section 
     1328(a) to condition the granting of a chapter 13 discharge 
     on the debtor's payment of certain postpetition domestic 
     support obligations.
     Sec. 214. Exceptions to automatic stay in domestic support 
         proceedings
       Under current law, section 362(b)(2) of the Bankruptcy Code 
     excepts from the automatic stay the commencement or 
     continuation of an action or proceeding: (1) for the 
     establishment of paternity; or (2) the establishment or 
     modification of an order for alimony, maintenance or support. 
     It also permits the collection of such obligations from 
     property that is not property of the estate. Section 214 
     makes several revisions to Bankruptcy Code section 
     362(b)(2). First, it replaces the reference to ``alimony, 
     maintenance or support'' with ``domestic support 
     obligations''. Second, it adds to section 362(b)(2) 
     actions or proceedings concerning: (1) child custody or 
     visitation; (2) the dissolution of a marriage (except to 
     the extent such proceeding seeks division of property that 
     is property of the estate); and (3) domestic violence. 
     Third, it permits the withholding of income that is 
     property of the estate or property of the debtor for 
     payment of a domestic support obligation under a judicial 
     or administrative order as well as the withholding, 
     suspension, or restriction of a driver's license, or a 
     professional, occupational or recreational license under 
     state law, pursuant to section 466(a)(16) of the Social 
     Security Act. Fourth, it authorizes the reporting of 
     overdue support owed by a parent to any consumer reporting 
     agency pursuant to section 466(a)(7) of the Social 
     Security Act. Fifth, it permits the interception of tax 
     refunds as authorized by sections 464 and 466(a)(3) of the 
     Social Security Act or analogous state law. Sixth, it 
     allows medical obligations, as specified under title IV of 
     the Social Security Act, to be enforced notwithstanding 
     the automatic stay. Section 214 is substantively identical 
     to section 214 of the House bill and the Senate amendment.
     Sec. 215. Nondischargeability of certain debts for alimony, 
         maintenance, and support
       Section 215 of the conference report amends Bankruptcy Code 
     section 523(a)(5) to provide that a ``domestic support 
     obligation'' (as defined in section 211 of the conference 
     report) is nondischargeable and eliminates Bankruptcy Code 
     section 523(a)(18). Section 215(2) amends Bankruptcy Code 
     section 523(c) to delete the reference to section 523(a)(15) 
     in that provision. Section 215(3) amends section 523(a)(15) 
     to provide that obligations to a spouse, former spouse, or a 
     child of the debtor (not otherwise described in section 
     523(a)(5)) incurred in connection with a divorce or 
     separation or related action are nondischargeable 
     irrespective of the debtor's inability to pay such debts. 
     Section 215 is substantively identical to section 215 of the 
     House bill and the Senate amendment.
     Sec. 216. Continued liability of property
       Section 216(1) of the conference report amends section 
     522(c) of the Bankruptcy Code to make exempt property liable 
     for nondischargeable domestic support obligations 
     notwithstanding any contrary provision of applicable 
     nonbankruptcy law. Section 216(2) and (3) make conforming 
     amendments to sections 522(f)(1)(A) and 522(g)(2) of the 
     Bankruptcy Code. Section 216 is substantively identical to 
     section 216 of the House bill and the Senate amendment.
     Sec. 217. Protection of domestic support claims against 
         preferential transfer motions
       Section 217 of the conference report makes a conforming 
     amendment to Bankruptcy Code section 547(c)(7) to provide 
     that a bona fide payment of a debt for a domestic support 
     obligation may not be avoided as a preferential transfer. 
     This provision is substantively identical to section 217 of 
     the House bill and the Senate amendment.
     Sec. 218. Disposable income defined
       Section 218 of the conference report amends section 
     1225(b)(2)(A) of the Bankruptcy Code to provide that 
     disposable income in a chapter 12 case does not include 
     payments for postpetition domestic support obligations. This 
     provision is substantively identical to section 218 of the 
     House bill. Its Senate counterpart included a duplicative 
     amendment to section 1325(b)(2)(A) of the Bankruptcy Code 
     that therefore was deleted from section 218 of the conference 
     report.
     Sec. 219. Collection of child support
       Section 219 amends sections 704, 1106, 1202, and 1302 of 
     the Bankruptcy Code to require trustees in chapter 7, 11, 12, 
     and 13 cases to provide certain types of notices to child 
     support claimants and governmental enforcement agencies. This 
     provision is substantively derived from section 219 of the 
     House bill and the Senate amendment. In addition to including 
     a provision from the Senate amendment requiring chapter 12 
     trustees to give notice of the claim to the claimant, section 
     219 extends this requirement to chapter 7, 11 and 13 trustees 
     as well. In addition, the conference report conforms internal 
     statutory cross references to Bankruptcy Code section 
     523(a)(14A) and deletes the reference to Bankruptcy Code 
     section 523(a)(14) with respect to chapter 13, as this 
     provision is inapplicable to that chapter.
       Section 219(a) requires a chapter 7 trustee to provide 
     written notice to a domestic support claimant of the right to 
     use the services of a state child support enforcement agency 
     established under sections 464 and 466 of the Social Security 
     Act in the state where the claimant resides for assistance in 
     collecting child support during and after the bankruptcy 
     case. The notice must include the agency's address and 
     telephone number as well as explain the claimant's right to 
     payment under the applicable chapter of the Bankruptcy Code. 
     In addition, the trustee must provide written notice to the 
     claimant and the agency of such claim and include the 
     name, address, and telephone number of the child support 
     claimant. At the time the debtor is granted a discharge, 
     the trustee must notify both the child support claimant 
     and the agency that the debtor was granted a discharge as 
     well as supply them with the debtor's last known address, 
     the last known name and address of the debtor's employer, 
     and the name of each creditor holding a debt that is not 
     discharged under section 523(a)(2), (4) or (14A) or 
     holding a debt that was reaffirmed pursuant to Bankruptcy 
     Code section 524. A claimant or agency may request the 
     debtor's last known address from a creditor holding a debt 
     that is not discharged under section 523(a)(2), (4) or 
     (14A) or that is reaffirmed pursuant to section 524 of the 
     Bankruptcy Code. A creditor who discloses such 
     information, however, is not liable to the debtor or any 
     other person by reason of such disclosure. Subsections 
     (b), (c), and (d)

[[Page H5757]]

     of section 219 of the conference report impose comparable 
     requirements for chapter 11, 12, and 13 trustees.
     Sec. 220. Nondischargeability of certain educational benefits 
         and loans
       Section 220 of the conference report amends section 
     523(a)(8) of the Bankruptcy Code to provide that a debt for a 
     qualified education loan (as defined in section 221(e)(1) of 
     the Internal Revenue Code) is nondischargeable, unless 
     excepting such debt from discharge would impose an undue 
     hardship on the debtor and the debtor's dependents. This 
     provision is substantively identical to section 220 of the 
     House bill and the Senate amendment.


                 SUBTITLE C--OTHER CONSUMER PROTECTIONS

     Sec. 221. Amendments to discourage abusive bankruptcy filings
       Section 221 of the conference report is substantively 
     identical to section 221 of the House bill and the Senate 
     amendment. It makes a series of amendments to section 110 of 
     the Bankruptcy Code. First, section 221 clarifies that the 
     definition of a bankruptcy petition preparer does not include 
     an attorney for a debtor or an employee of an attorney under 
     the direct supervision of such attorney. Second, it amends 
     subsections (b) and (c) of section 110 to provide that if a 
     bankruptcy petition preparer is not an individual, then an 
     officer, principal, responsible person, or partner of the 
     preparer must sign certain documents filed in connection with 
     the bankruptcy case as well as state the person's name and 
     address on such documents. Third, it requires a bankruptcy 
     petition preparer to give the debtor written notice (as 
     prescribed by the Judicial Conference of the United States) 
     explaining that the preparer is not an attorney and may not 
     practice law or give legal advice. The notice may include 
     examples of legal advice that a preparer may not provide. 
     Such notice must be signed by the preparer under penalty of 
     perjury and the debtor and be filed with any document for 
     filing. Fourth, the petition preparer is prohibited from 
     giving legal advice, including with respect to certain 
     specified items. Fifth, it permits the Supreme Court to 
     promulgate rules or the Judicial Conference of the United 
     States to issue guidelines for setting the maximum fees that 
     a bankruptcy petition preparer may charge for services. 
     Sixth, section 221 requires the preparer to notify the debtor 
     of such maximum fees. Seventh, it specifies that the 
     bankruptcy petition preparer must certify that it complied 
     with this notification requirement. Eighth, it requires the 
     court to order the turnover of any fees in excess of the 
     value of the services rendered by the preparer within the 12-
     month period preceding the bankruptcy filing. Ninth, section 
     221 provides that all fees charged by a preparer may be 
     forfeited if the preparer fails to comply with certain 
     requirements specified in Bankruptcy Code section 110, as 
     amended by this provision. Tenth, it allows a debtor to 
     exempt fees recovered under this provision pursuant to 
     Bankruptcy Code section 522(b). Eleventh, it specifically 
     authorizes the court to enjoin a bankruptcy petition preparer 
     who has violated a court order issued under section 110. 
     Twelfth, it generally revises section 110's penalty 
     provisions and specifies that such penalties are to be paid 
     to a special fund of the United States trustee for the 
     purpose of funding the enforcement of section 110 on a 
     national basis. With respect to Bankruptcy Administrator 
     districts, the funds are to be deposited as offsetting 
     receipts pursuant to section 1931 of title 28 of the United 
     States Code.
     Sec. 222. Sense of Congress
       Section 222 of the conference report expresses the sense of 
     Congress that the states should develop personal finance 
     curricula for use in elementary and secondary schools. This 
     provision is substantively identical to section 222 of the 
     House bill and the Senate amendment.
     Sec. 223. Additional amendments to title 11, United States 
         Code
       Section 223 of the conference report amends section 507(a) 
     of the Bankruptcy Code to accord a tenth-level priority to 
     claims for death or personal injuries resulting from the 
     debtor's operation of a motor vehicle or vessel while 
     intoxicated. This provision is substantively identical to 
     section 223 of the House bill and the Senate amendment.
     Sec. 224. Protection of retirement savings in bankruptcy
       Section 224 of the conference report is substantively 
     identical to section 224 of the House bill and the Senate 
     amendment. Subsection (a) amends section 522 of the 
     Bankruptcy Code to permit a debtor to exempt certain 
     retirement funds to the extent those monies are in a fund or 
     account that is exempt from taxation under section 401, 403, 
     408, 408A, 414, 457, or 501(a) of the Internal Revenue Code 
     and that have received a favorable determination pursuant to 
     Internal Revenue Code section 7805 that is in effect as of 
     the date of the commencement of the case. If the retirement 
     monies are in a retirement fund that has not received a 
     favorable determination, those monies are exempt if the 
     debtor demonstrates that no prior unfavorable determination 
     has been made by a court or the Internal Revenue Service, and 
     the retirement fund is in substantial compliance with the 
     applicable requirements of the Internal Revenue Code. If the 
     retirement fund fails to be in substantial compliance with 
     applicable requirements of the Internal Revenue Code, the 
     debtor may claim the retirement funds as exempt if he or she 
     is not materially responsible for such failure. This section 
     also applies to certain direct transfers and rollover 
     distributions. In addition, this provision ensures that the 
     specified retirement funds are exempt under state as well as 
     federal law.
       Section 224(b) amends section 362(b) of the Bankruptcy Code 
     to except from the automatic stay the withholding of income 
     from a debtor's wages pursuant to an agreement authorizing 
     such withholding for the benefit of a pension, profit-
     sharing, stock bonus, or other employer-sponsored plan 
     established under Internal Revenue Code section 401, 403, 
     408, 408A, 414, 457, or 501(c) to the extent that the amounts 
     withheld are used solely to repay a loan from a plan as 
     authorized by section 408(b)(1) of the Employee Retirement 
     Income Security Act of 1974 or subject to Internal Revenue 
     Code section 72(p) or with respect to a loan from certain 
     thrift savings plans. Section 224(b) further provides that 
     this exception may not be used to cause any loan made 
     under a governmental plan under section 414(d) or a 
     contract or account under section 403(b) of the Internal 
     Revenue Code to be construed to be a claim or debt within 
     the meaning of the Bankruptcy Code.
       Section 224(c) amends Bankruptcy Code section 523(a) to 
     except from discharge any amount owed by the debtor to a 
     pension, profit-sharing, stock bonus, or other plan 
     established under Internal Revenue Code section 401, 403, 
     408, 408A, 414, 457, or 501(c) under a loan authorized under 
     section 408(b)(1) of the Employee Retirement Income Security 
     Act of 1974 or subject to Internal Revenue Code section 72(p) 
     or with respect to a loan from certain thrift savings plans. 
     Section 224(c) further provides that this exception to 
     discharge may not be used to cause any loan made under a 
     governmental plan under section 414(d) or a contract or 
     account under section 403(b) of the Internal Revenue Code to 
     be construed to be a claim or debt within the meaning of the 
     Bankruptcy Code.
       Section 224(d) amends Bankruptcy Code section 1322 to 
     provide that a chapter 13 plan may not materially alter the 
     terms of a loan described in section 362(b)(19) and that any 
     amounts required to repay such loan shall not constitute 
     ``disposable income'' under section 1325 of the Bankruptcy 
     Code.
       Section 224(e) amends section 522 of the Bankruptcy Code to 
     impose a $1 million cap (periodically adjusted pursuant to 
     section 104 of the Bankruptcy Code to reflect changes in the 
     Consumer Price Index) on the value of the debtor's interest 
     in an individual retirement account established under either 
     section 408 or 408A of the Internal Revenue Code (other than 
     a simplified employee pension account under section 408(k) or 
     a simple retirement account under section 408(p) of the 
     Internal Revenue Code) that a debtor may claim as exempt 
     property. This limit applies without regard to amounts 
     attributable to rollover contributions made pursuant to 
     section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), or 403(b)(8) 
     of the Internal Revenue Code and earnings thereon. The cap 
     may be increased if required in the interest of justice.
     Sec. 225. Protection of education savings in Bankruptcy
       Section 225 of the conference report is substantively 
     identical to section 225 of the House bill and the Senate 
     amendment. Subsection (a) amends section 541 of the 
     Bankruptcy Code to provide that funds placed not later than 
     365 days before the filing of the bankruptcy case in a 
     education individual retirement account are not property of 
     the estate if certain criteria are met. First, the designated 
     beneficiary of such account must be a child, stepchild, 
     grandchild or step-grandchild of the debtor for the taxable 
     year during which funds were placed in the account. A legally 
     adopted child or a foster child, under certain circumstances, 
     may also qualify as a designated beneficiary. Second, such 
     funds may not be pledged or promised to an entity in 
     connection with any extension of credit and they may not be 
     excess contributions (as described in section 4973(e) of the 
     Internal Revenue Code). Funds deposited between 720 days and 
     365 days before the filing date are protected to the extent 
     they do not exceed $5,000. Similar criteria apply with 
     respect to funds used to purchase a tuition credit or 
     certificate or to funds contributed to a qualified state 
     tuition plan under section 529(b)(1)(A) of the Internal 
     Revenue Code. Section 225(b) amends Bankruptcy Code section 
     521 to require a debtor to file with the court a record of 
     any interest that the debtor has in an education individual 
     retirement account or qualified state tuition program.
     Sec. 226. Definitions
       Section 226 of the conference report is substantively 
     identical to section 226 of the House bill and the Senate 
     amendment. Subsection (a) amends section 101 of the 
     Bankruptcy Code to add certain definitions with respect to 
     debt relief agencies. Section 226(a)(1) defines an ``assisted 
     person'' as a person whose debts consist primarily of 
     consumer debts and whose nonexempt assets are less than 
     $150,000. Section 226(a)(2) defines ``bankruptcy assistance'' 
     as any goods or services sold or otherwise provided with the 
     express or implied purpose of giving information, advice, or 
     counsel; preparing documents for filing; or attending a 
     meeting of creditors pursuant to section 341; appearing in a 
     proceeding on behalf of a person; or providing legal 
     representation in a case or proceeding under the Bankruptcy 
     Code. Section 226(a)(3) defines a ``debt relief agency'' as 
     any person (including a bankruptcy petition preparer) who 
     provides bankruptcy assistance

[[Page H5758]]

     to an assisted person in return for the payment of money or 
     other valuable consideration. The definition specifically 
     excludes certain entities. First, it does not apply to a 
     nonprofit organization exemption from taxation under section 
     501(c)(3) of the Internal Revenue Code. Second, it is 
     inapplicable to a creditor who assisted such person to the 
     extent the assistance pertained to the restructuring of any 
     debt owed by the person to the creditor. Third, the 
     definition does not apply to a depository institution (as 
     defined in section 3 of the Federal Deposit Insurance Act), 
     or any federal or state credit union (as defined in section 
     101 of the Federal Credit Union Act), as well as any 
     affiliate or subsidiary of such depository institution or 
     credit union. Fourth, an author, publisher, distributor, or 
     seller of works subject to copyright protection under title 
     17 of the United States Code when acting in such capacity are 
     not within the ambit of this definition. Section 226(b) 
     amends section 104(B)(1) of the Bankruptcy Code to permit the 
     monetary amount set forth in the definition of an ``assisted 
     person'' to be automatically adjusted to reflect the change 
     in the Consumer Price Index.
     Sec. 227. Restrictions on debt relief agencies
       Section 227 of the conference report is substantively 
     identical to section 227 of the House bill and the Senate 
     amendment. This provision creates a new provision in the 
     Bankruptcy Code intended to proscribe certain activities of a 
     debt relief agency. It prohibits such agency from: (1) 
     failing to perform any service that it informed an assisted 
     person it would provide; (2) advising an assisted person to 
     make an untrue and misleading statement (or that upon the 
     exercise of reasonable case, should have been known to be 
     untrue or misleading) in a document filed in a bankruptcy 
     case; (3) misrepresenting the services it provides and the 
     benefits that an assisted person may receive as a result of 
     bankruptcy; and (4) advising an assisted person or 
     prospective assisted person to incur additional debt in 
     contemplation of filing for bankruptcy relief or for the 
     purpose of paying fees for services rendered by an attorney 
     or petition preparer in connection with the bankruptcy case. 
     Any waiver by an assisted person of the protections under 
     this provision are unenforceable, except against a debt 
     relief agency.
       In addition, section 227 imposes penalties for the 
     violation of section 526, 527 or 528 of the Bankruptcy Code. 
     First, any contract between a debt relief agency and an 
     assisted person that does not comply with these provisions is 
     void and may not be enforced by any state or federal court or 
     by any person, except an assisted person. Second, a debt 
     relief agency is liable to an assisted person, under certain 
     circumstances, for any fees or charges paid by such person to 
     the agency, actual damages, and reasonable attorneys' fees 
     and costs. The chief law enforcement officer of a state who 
     has reason to believe that a person has violated or is 
     violating section 526 may seek to have such violation 
     enjoined and recover actual damages. Third, section 227 
     provides that the United States district court has 
     concurrent jurisdiction of certain actions under section 
     526. Fourth, section 227 provides that sections 526, 527 
     and 528 preempt inconsistent state law. In addition, it 
     provides that these provisions do not limit or curtail the 
     authority of a federal court, a state, or a subdivision or 
     instrumentality of a state, to determine and enforce 
     qualifications for the practice of law before the federal 
     court or under the laws of that state.
     Sec. 228. Disclosures
       Section 228 of the conference report requires a debt relief 
     agency to provide certain specified written notices to an 
     assisted person. These include the notice required under 
     section 342(b)(1) (as amended by this Act) as well as a 
     notice advising that: (1) all information the assisted person 
     provides in connection with the case must be complete, 
     accurate and truthful; (2) all assets and liabilities must be 
     completely and accurately disclosed in the documents filed to 
     commence the case, including the replacement value of each 
     asset (if required) after reasonable inquiry to establish 
     such value; (3) current monthly income, monthly expenses and, 
     in a chapter 13 case, disposable income, must be stated after 
     reasonable inquiry; and (4) the information an assisted 
     person provides may be audited and that the failure to 
     provide such information may result in dismissal of the case 
     or other sanction including, in some instances, criminal 
     sanctions. In addition, the agency must supply certain 
     specified advisories and explanations regarding the 
     bankruptcy process. Further, this provision requires the 
     agency to advise an assisted person (to the extent permitted 
     under nonbankruptcy law) concerning asset valuation, the 
     calculation of disposable income, and the determination of 
     exempt property. Section 228 of the conference report is 
     substantively identical to section 228 of the House bill and 
     the Senate amendment.
     Sec. 229. Requirements for debt relief agencies
       Section 229 adds a new provision to the Bankruptcy Code 
     requiring a debt relief agency--not later than five business 
     days after the first date on which it provides any bankruptcy 
     assistance services to an assisted person (but prior to such 
     assisted person's bankruptcy petition being filed)--to 
     execute a written contract with the assisted person. The 
     contract must specify clearly and conspicuously the services 
     the agency will provide, the basis on which fees will be 
     charged for such services, and the terms of payment. The 
     assisted person must be given a copy of the fully executed 
     and completed contract in a form the person can retain. The 
     debt relief agency must include certain specified mandatory 
     statements in any advertisement of bankruptcy assistance 
     services or regarding the benefits of bankruptcy that is 
     directed to the general public whether through the general 
     media, seminars, specific mailings, telephonic or electronic 
     messages, or otherwise. Section 229 of the conference report 
     is substantively identical to section 229 of the House bill 
     and the Senate amendment.
     Sec. 230. GAO study
       Section 230 of the conference report directs the 
     Comptroller General of the United States to study and prepare 
     a report on the feasibility, efficacy and cost of requiring 
     trustees to supply certain specified information about a 
     debtor's bankruptcy case to the Office of Child Support 
     Enforcement for the purpose of determining whether a debtor 
     has outstanding child support obligations. This provision is 
     substantively identical to section 230 of the House bill and 
     the Senate amendment.
     Sec. 231. Protection of personally identifiable information
       Section 231 of the conference report largely reflects 
     section 231 of the Senate amendment. It differs from its 
     Senate antecedent in that it clarifies that it applies to 
     personally identifiable information and does not preempt 
     applicable nonbankruptcy law. In addition, the provision 
     specifies that court approval must be preceded by the 
     appointment of a privacy ombudsman to effectuate the intent 
     of this provision. There is no counterpart to Section 231 in 
     the House bill.
       Subsection (a) amends Bankruptcy Code section 363(b)(1) to 
     provide that if a debtor, in connection with offering a 
     product or service, discloses to an individual a policy 
     prohibiting the transfer of personally identifiable 
     information to persons unaffiliated with the debtor, and the 
     policy is in effect at the time of the bankruptcy filing, 
     then the trustee may not sell or lease such information 
     unless either of the following conditions is satisfied: (1) 
     the sale is consistent with such policy; or (2) the court, 
     after appointment of a consumer privacy ombudsman (pursuant 
     to section 332 of the Bankruptcy Code, as amended) and notice 
     and hearing, the court approves the sale or lease upon due 
     consideration of the facts, circumstances, and conditions of 
     the sale or lease.
       Section 231(b) amends Bankruptcy Code section 101 to add a 
     definition of ``personally identifiable information.'' The 
     term applies to information provided by an individual to the 
     debtor in connection with obtaining a product or service from 
     the debtor primarily for personal, family, or household 
     purposes. It includes the individual's: (1) first name or 
     initial and last name (whether given at birth or adoption or 
     legally changed); (2) physical home address; (3) electronic 
     address, including an e-mail address; (4) home telephone 
     number; (5) Social Security number; or (vi) credit card 
     account number. The term also includes information if it is 
     identified in connection with the above items: (1) an 
     individual's birth date, birth or adoption certificate 
     number, or place of birth; or (2) any other information 
     concerning an identified individual that, if disclosed, will 
     result in the physical or electronic contacting or 
     identification of that person.
     Sec. 232. Consumer privacy ombudsman
       Section 232 implements the preceding provision of the 
     conference report with respect to the appointment and 
     responsibilities of a consumer privacy ombudsman. It provides 
     that if a hearing is required under section 363(b)(1)(B) (as 
     amended), the court must order the United States trustee to 
     appoint a disinterested person to serve as the consumer 
     privacy ombudsman and to provide timely notice of the hearing 
     to such person. It permits the ombudsman to appear and be 
     heard at such hearing. The ombudsman must provide the court 
     with information to assist its consideration of the facts, 
     circumstances and conditions of the proposed sale or lease of 
     personally identifiable information. The information may 
     include a presentation of the debtor's privacy policy, 
     potential losses or gains of privacy to consumers if the sale 
     or lease is approved, potential costs or benefits to 
     consumers if the sale or lease is approved, and possible 
     alternatives that would mitigate potential privacy losses or 
     costs to consumers. Section 232 prohibits the ombudsman from 
     disclosing any personally identifiable information obtained 
     in the case by such individual. In addition, the provision 
     amends Bankruptcy Code section 330(a)(1) to permit an 
     ombudsman to be compensated.
       This provision largely reflects section 232 of the Senate 
     amendment. There is no counterpart to section 232 in the 
     House bill. The conference report redrafts the Senate 
     provision to be an amendment to the Bankruptcy Code rather 
     than freestanding text, deletes the 30-day provision as being 
     deemed to be unnecessary; restructures the provision to 
     better integrate its components; and clarifies that the court 
     must direct the United States trustee to appoint the 
     ombudsman, rather than the court making such appointment 
     itself.
     Sec. 233. Prohibition on disclosure of name of minor children
       Section 233 of the conference report adds a new provision 
     to the Bankruptcy Code (section 112) specifying that a debtor 
     may be required to provide information regarding his or her 
     minor child in connection with the

[[Page H5759]]

     bankruptcy case, but such debtor may not be required to 
     disclose in the public records the child's name. It provides, 
     however, that the debtor may be required to disclose this 
     information in a nonpublic record maintained by the court, 
     which must be available for inspection by the United States 
     trustee, trustee or an auditor, if any. Section 233 prohibits 
     the court, United States trustee, trustee, or auditor from 
     disclosing such minor child's name. Section 233 of the 
     conference report generally reflects section 233 of the 
     Senate amendment. The conference report clarifies that the 
     prohibition against disclosure pertains to the minor child's 
     name. Section 231 of the House bill is similar, but does not 
     include the provision giving the court, United States 
     trustee, trustee or audit access to the proscribed 
     information.

                Title III--Discouraging Bankruptcy Abuse

     Sec. 301. Reinforcement of the fresh start
       Section 301 of the conference report makes a clarifying 
     amendment to section 523(a)(17) of the Bankruptcy Code 
     concerning the dischargeability of court fees incurred by 
     prisoners. Section 523(a)(17) was added to the Bankruptcy 
     Code by the Omnibus Consolidated Rescissions and 
     Appropriations Act of 1996 \1\ to except from discharge the 
     filing fees and related costs and expenses assessed by a 
     court in a civil case or appeal. As the result of a drafting 
     error, however, this provision might be construed to apply to 
     filing fees, costs or expenses incurred by any debtor, not 
     solely by those who are prisoners. The amendment eliminates 
     this ambiguity and makes other conforming changes to narrow 
     its application in accordance with its original intent. This 
     provision is substantively identical to section 301 of the 
     House bill and the Senate amendment.
---------------------------------------------------------------------------
     \1\ Pub. L. No. 104-134, Section 804(b)(1996).
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     Sec. 302. Discouraging bad faith repeat filings
       Section 302 of the conference report amends section 362(c) 
     of the Bankruptcy Code to terminate the automatic stay within 
     30 days in a chapter 7, 11, or 13 case filed by or against an 
     individual if such individual was a debtor in a previously 
     dismissed case pending within the preceding one-year period. 
     The provision does not apply to a case refiled under a 
     chapter other than chapter 7 after dismissal of the prior 
     chapter 7 case pursuant to section 707(b) of the Bankruptcy 
     Code. Upon motion of a party in interest, the court may 
     continue the automatic stay after notice and a hearing 
     completed prior to the expiration of the 30-day period if 
     such party demonstrates that the latter case was filed in 
     good faith as to the creditors who are stayed by the filing. 
     For purposes of this provision, a case is presumptively not 
     filed in good faith as to all creditors (but such presumption 
     may be rebutted by clear and convincing evidence) if: (1) 
     more than one bankruptcy case under chapter 7, 11 or 13 was 
     previously filed by the debtor within the preceding one-year 
     period; (2) the prior chapter 7, 11, or 13 case was dismissed 
     within the preceding year for the debtor's failure to (a) 
     file or amend without substantial excuse a document required 
     under the Bankruptcy Code or the court, (b) provide adequate 
     protection ordered by the court, or (c) perform the terms of 
     a confirmed plan; or (3) there has been no substantial change 
     in the debtor's financial or personal affairs since the 
     dismissal of the prior case, or there is no reason to 
     conclude that the pending case will conclude either with a 
     discharge (if a chapter 7 case) or confirmation (if a chapter 
     11 or 13 case). In addition, section 302 provides that a case 
     is presumptively deemed not to be filed in good faith as to 
     any creditor who obtained relief from the automatic stay in 
     the prior case or sought such relief in the prior case and 
     such action was pending at the time of the prior case's 
     dismissal. The presumption may be rebutted by clear and 
     convincing evidence. A similar presumption applies if two or 
     more bankruptcy cases were pending in the one-year preceding 
     the filing of the pending case. Section 302 is substantively 
     identical to section 302 of the House bill and the Senate 
     amendment.
     Sec. 303. Curbing abusive filings
       Section 303 of the conference report is intended to reduce 
     abusive filings. This provision is substantively identical to 
     section 303 of the House bill and the Senate amendment. 
     Subsection (a) amends Bankruptcy Code section 362(d) to add a 
     new ground for relief from the automatic stay. Under this 
     provision, cause for relief from the automatic stay may be 
     established for a creditor whose claim is secured by an 
     interest in real property, if the court finds that the filing 
     of the bankruptcy case was part of a scheme to delay, hinder 
     and defraud creditors that involved either: (i) a transfer of 
     all or part of an ownership interest in real property without 
     such creditor's consent or without court approval; or (ii) 
     multiple bankruptcy filings affecting the real property. If 
     recorded in compliance with applicable state law governing 
     notice of an interest in or a lien on real property, an order 
     entered under this provision is binding in any other 
     bankruptcy case for two years from the date of entry of such 
     order. A debtor in a subsequent case may move for relief 
     based upon changed circumstances or for good cause shown 
     after notice and a hearing. Section 303(a) further provides 
     that any federal, state or local governmental unit that 
     accepts a notice of interest or a lien in real property, must 
     accept a certified copy of an order entered under this 
     provision.
       Section 303(b) amends Bankruptcy Code section 362(b) to 
     except from the automatic stay an act to enforce any lien 
     against or security interest in real property within two 
     years following the entry of an order entered under section 
     362(d)(4). A debtor, in a subsequent case, may move for 
     relief from such order based upon changed circumstances or 
     for other good cause shown after notice and a hearing. 
     Section 303(b) also provides that the automatic stay does not 
     apply in a case where the debtor: (1) is ineligible to be a 
     debtor in a bankruptcy case pursuant to section 109(g) of the 
     Bankruptcy Code; or (2) filed the bankruptcy case in 
     violation of an order issued in a prior bankruptcy case 
     prohibiting the debtor from being a debtor in a subsequent 
     bankruptcy case.
     Sec. 304. Debtor retention of personal property security
       Section 304 is substantively identical to section 304 of 
     the House bill and Senate amendment. Section 304(1) of the 
     conference report amends section 521(a) of the Bankruptcy 
     Code to provide that an individual who is a chapter 7 debtor 
     may not retain possession of personal property securing, in 
     whole or in part, a purchase money security interest unless 
     the debtor, within 45 days after the first meeting of 
     creditors, enters into a reaffirmation agreement with the 
     creditor, or redeems the property. If the debtor fails to so 
     act within the prescribed period, the property is not subject 
     to the automatic stay and is no longer property of the 
     estate. An exception applies if the court: (1) determines on 
     motion of the trustee filed before the expiration of the 45-
     day period that the property has consequential value or would 
     benefit the bankruptcy estate; (2) orders adequate protection 
     of the creditor's interest; and (iii) directs the debtor to 
     deliver any collateral in the debtor's possession. Section 
     304(2) amends section 722 to clarify that a chapter 7 debtor 
     must pay the redemption value in full at the time of 
     redemption.
     Sec. 305. Relief from the automatic stay when the debtor does 
         not complete intended surrender of consumer debt 
         collateral
       Section 305 of the conference report is substantively 
     identical to section 305 of the House bill and the Senate 
     amendment. Subsection (1) amends Bankruptcy Code section 362 
     to terminate the automatic stay with respect to personal 
     property of the estate or of the debtor in a chapter 7, 11, 
     or 13 case (where the debtor is an individual) that secures a 
     claim (in whole or in part) or is subject to an unexpired 
     lease if the debtor fails to: (1) file timely a statement of 
     intention as required by section 521(a)(2) of the Bankruptcy 
     Code with respect to such property; or (2) indicate in such 
     statement whether the property will be surrendered or 
     retained, and if retained, whether the debtor will redeem the 
     property or reaffirm the debt, or assume an unexpired lease, 
     if the trustee does not. Likewise, the automatic stay is 
     terminated if the debtor fails to take the action specified 
     in the statement of intention in a timely manner, unless the 
     statement specifies reaffirmation and the creditor refuses to 
     enter into the reaffirmation agreement on the original 
     contract terms. In addition to terminating the automatic 
     stay, this provision renders such property no longer property 
     of the estate. An exception pertains where the court 
     determines, on the motion of the trustee made prior to the 
     expiration of the applicable time period under section 
     521(a)(2), and after notice and a hearing, that such property 
     is of consequential value or benefit to the estate, orders 
     adequate protection of the creditor's interest, and directs 
     the debtor to deliver any collateral in the debtor's 
     possession.
       Section 305(2) amends section 521 of the Bankruptcy Code to 
     make the requirement to file a statement of intention 
     applicable to all secured debts, not just secured consumer 
     debts. In addition, it requires the debtor to effectuate his 
     or her stated intention within 30 days from the first date 
     set for the meeting of creditors. If the debtor fails to 
     timely undertake certain specified actions with respect to 
     property that a lessor or bailor owns and has leased, rented 
     or bailed to the debtor or in which a creditor has a security 
     interest (not otherwise avoidable under section 522(f), 544, 
     545, 547, 548 or 549 of the Bankruptcy Code), then nothing in 
     the Bankruptcy Code shall prevent or limit the operation of a 
     provision in a lease or agreement that places the debtor in 
     default by reason of the debtor's bankruptcy or insolvency.
     Sec. 306. Giving secured creditors fair treatment in chapter 
         13
       Section 306 of the conference report is substantively 
     identical to section 306 of the House bill and Senate 
     amendment, except as noted below. Subsection (a) amends 
     Bankruptcy Code section 1325(a)(5)(B)(i) to require--as a 
     condition of confirmation--that a chapter 13 plan provide 
     that a secured creditor retain its lien until the earlier 
     of when the underlying debt is paid or the debtor receives 
     a discharge. If the case is dismissed or converted prior 
     to completion of the plan, the secured creditor is 
     entitled to retain its lien to the extent recognized under 
     applicable nonbankruptcy law.
       Section 306(b) adds a new paragraph to section 1325(a) of 
     the Bankruptcy Code specifying that Bankruptcy Code section 
     506 does not apply to a debt incurred within the two and one-
     half year period preceding the filing of the bankruptcy case 
     if the debt is secured by a purchase money security interest 
     in a motor vehicle acquired for the personal use of the 
     debtor. Where the collateral consists

[[Page H5760]]

     of any other type of property having value, section 306(b) 
     provides that section 506 of the Bankruptcy Code does not 
     apply if the debt was incurred during the one-year period 
     preceding the filing of the bankruptcy case. The 910-day 
     period set forth in Section 306(b) of the conference report 
     represents a compromise between the House bill and Senate 
     amendment. Section 306(b) of the House bill provided for a 
     five-year period, while its Senate counterpart specified a 
     three-year period.
       Section 306(c)(1) amends section 101 of the Bankruptcy Code 
     to define the term ``debtor's principal residence'' as a 
     residential structure (including incidental property) without 
     regard to whether or not such structure is attached to real 
     property. The term includes an individual condominium or 
     cooperative unit as well as a mobile or manufactured home, 
     and a trailer.
       Section 306(c)(2) amends section 101 of the Bankruptcy Code 
     to define the term ``incidental property'' as property 
     commonly conveyed with a principal residence in the area 
     where the real property is located. The term includes all 
     easements, rights, appurtenances, fixtures, rents, royalties, 
     mineral rights, oil or gas rights or profits, water rights, 
     escrow funds, and insurance proceeds. Further, the term 
     encompasses all replacements and additions.
     Sec. 307. Domiciliary requirements for exemptions
       Section 307 of the conference report is substantively 
     identical to section 307 of the House bill and the Senate 
     amendment. This provision amends section 522(b)(2)(A) of the 
     Bankruptcy Code to extend the time that a debtor must be 
     domiciled in a state from 180 days to 730 days before he or 
     she may claim that state's exemptions. If the debtor's 
     domicile has not been located in a single state for the 730-
     day period, then the state where the debtor was domiciled in 
     the 180-day period preceding the 730-day period (or the 
     longer portion of such 180-day period) controls. If the 
     effect of this provision is to render the debtor ineligible 
     for any exemption, the debtor may elect to exempt property of 
     the kind described in the federal exemption notwithstanding 
     state opt out.
     Sec. 308. Reduction of homestead exemption for fraud
       Section 308 amends section 522 of the Bankruptcy Code to 
     reduce the value of a debtor's interest in the following 
     property that may be claimed as exempt under certain 
     circumstances: (i) real or personal property that the debtor 
     or a dependent of the debtor uses as a residence, (ii) a 
     cooperative that owns property that the debtor or a dependent 
     of the debtor uses as a residence, (iii) a burial plot, or 
     (iv) real or personal property that the debtor or dependent 
     of the debtor claims as a homestead. Where nonexempt property 
     is converted to the above-specified exempt property within 
     the ten-year period preceding the filing of the bankruptcy 
     case, the exemption must be reduced to the extent such value 
     was acquired with the intent to hinder, delay or defraud a 
     creditor. Section 308 represents a compromise between the 
     House and Senate positions on the issue of homestead 
     exemptions. In section 308 of the House bill, the reachback 
     period is seven years. Section 308 of the Senate amendment 
     imposes a flat $125,000 homestead cap, which does not apply 
     to an exemption claimed by a family farmer for the farmer's 
     principal residence.
     Sec. 309. Protecting secured creditors in chapter 13 cases
       Section 309 of the conference report is substantively 
     identical to section 309 of the House bill and the Senate 
     amendment. Section 309(a) amends Bankruptcy Code section 
     348(f)(1)(B) to provide that valuations of property and 
     allowed secured claims in a chapter 13 case only apply if the 
     case is subsequently converted to one under chapter 11 or 12. 
     If the chapter 13 case is converted to one under chapter 7, 
     then the creditor holding security as of the petition date 
     shall continue to be secured unless its claim was paid in 
     full as of the conversion date. In addition, unless a 
     prebankruptcy default has been fully cured at the time of 
     conversion, then the default in any bankruptcy proceeding 
     shall have the effect given under applicable nonbankruptcy 
     law.
       Section 309(b) amends section 365 of the Bankruptcy Code to 
     provide that if a lease of personal property is rejected or 
     not assumed by the trustee in a timely manner, such property 
     is no longer property of the estate and the automatic stay 
     under section 362 with respect to such property is 
     terminated. With regard to a chapter 7 case in which the 
     debtor is an individual, the debtor may notify the creditor 
     in writing of his or her desire to assume the lease. Upon 
     being so notified, the creditor may, at its option, inform 
     the debtor that it is willing to have the lease assumed and 
     condition such assumption on cure of any outstanding default 
     on terms set by the contract. If within 30 days after such 
     notice the debtor gives written notice to the lessor that the 
     lease is assumed, the debtor (not the bankruptcy estate) 
     assumes the liability under the lease. Section 309(b) 
     provides that the automatic stay of section 362 and the 
     discharge injunction of section 524 are not violated if the 
     creditor notifies the debtor and negotiates a cure under 
     section 365(p)(2) (as amended). In a chapter 11 or 13 case 
     where the debtor is an individual lessee with respect to a 
     personal property lease and the lease is not assumed in the 
     confirmed plan, the lease is deemed rejected as of the 
     conclusion of the confirmation hearing. If the lease is 
     rejected, the automatic stay under section 362 as well as the 
     chapter 13 codebtor stay under section 1301 are automatically 
     terminated with respect to such property.
       Section 309(c)(1) amends Bankruptcy Code section 
     1325(a)(5)(B) to require that periodic payments pursuant to a 
     chapter 13 plan with respect to a secured claim be made in 
     equal monthly installments. Where the claim is secured by 
     personal property, the amount of such payments shall not be 
     less than the amount sufficient to provide adequate 
     protection to the holder of such claim. Section 309(c)(2) 
     amends section 1326(a) of the Bankruptcy Code to require a 
     chapter 13 debtor to commence making payments within 30 days 
     after the filing of the plan or the order for relief, 
     whichever is earlier. The amount of such payment must be the 
     amount which is proposed in the plan, scheduled in a personal 
     property lease for that portion of the obligation that 
     becomes due postpetition (which amount shall reduce the 
     payment required to be made to such lessor pursuant to the 
     plan), and which provides adequate protection directly to a 
     creditor holding an allowed claim secured by personal 
     property to the extent the claim is attributable to the 
     purchase of such property (which amount shall reduce the 
     payment required to be made to such secured creditor pursuant 
     to the plan). Payments made pursuant to a plan must be 
     retained by the chapter 13 trustee until confirmation or 
     denial of confirmation. Section 309(c)(2) provides that if 
     the plan is confirmed, the trustee must distribute 
     payments received from the debtor as soon as practicable 
     in accordance with the plan. If the plan is not confirmed, 
     the trustee must return to the debtor payments not yet due 
     and owing to creditors. Pending confirmation and subject 
     to section 363, the court, after notice and a hearing, may 
     modify the payments required under this provision. Section 
     309(c)(2) requires the debtor, within 60 days following 
     the filing of the bankruptcy case, to provide reasonable 
     evidence of any required insurance coverage with respect 
     to the use or ownership of leased personal property or 
     property securing, in whole or in part, a purchase money 
     security interest.
     Sec. 310. Limitation on luxury goods
       Section 310 amends section 523(a)(2)(C) of the Bankruptcy 
     Code. Under current law, consumer debts owed to a single 
     creditor that, in the aggregate, exceed $1,075 for luxury 
     goods or services incurred within 60 days before the 
     commencement of the case are presumed to be nondischargeable. 
     As amended, the presumption applies if the aggregate amount 
     of consumer debts for luxury goods or services is more than 
     $500 for luxury goods or services incurred by an individual 
     debtor within 90 days before the order for relief. With 
     respect to cash advances, current law provides that cash 
     advances aggregating more than $1,075 that are extensions of 
     consumer credit under an open-end credit plan obtained by an 
     individual debtor within 60 days before the case is filed are 
     presumed to be nondischargeable. As amended, section 
     523(a)(2)(C) presumes that cash advances aggregating more 
     than $750 and that are incurred within 70 days are 
     nondischargeable. The term, ``luxury goods or services,'' 
     does not include goods or services reasonably necessary for 
     the support or maintenance of the debtor or a dependent of 
     the debtor. In addition, ``an extension of consumer credit 
     under an open-end credit plan'' has the same meaning as this 
     term has under the Consumer Credit Protection Act. With 
     respect to the aggregate amount fixed for luxury goods and 
     services under this provision, section 310 of the conference 
     report reflects a compromise between the House bill, which 
     has a $250 threshold, and the Senate amendment, which has a 
     $750 threshold.
     Sec. 311. Automatic stay
       Section 311 of the conference report amends section 362(b) 
     of the Bankruptcy Code to except from the automatic stay a 
     judgment of eviction with respect to a residential leasehold. 
     It represents a compromise between House and Senate 
     conferees.
       The House bill excepts the following proceedings from the 
     automatic stay: (1) the continuation of any eviction, 
     unlawful detainer action, or similar proceeding by a lessor 
     against a debtor involving residential real property where 
     the debtor resides as a tenant under a rental agreement; (2) 
     the commencement of any eviction, unlawful detainer action, 
     or similar proceeding by a lessor against a debtor involving 
     residential real property where the debtor resides as a 
     tenant under a rental agreement that has terminated pursuant 
     to the lease agreement or applicable State law; and (3) an 
     eviction action based on endangerment to property or person, 
     or the use of illegal drugs. With respect to granting relief 
     from the automatic stay to residential leaseholds, the Senate 
     provision permits an eviction proceeding to continue or to be 
     commenced if: (1) the debtor failed to make a rental payment 
     that first becomes due under the unexpired term of a rental 
     agreement or lease or a tenancy under applicable state or 
     local rent control law, after the bankruptcy case was filed 
     or during the ten-day period preceding the date of the filing 
     of the petition, providing the lessor files with the court a 
     certification that the debtor has not made the rent payment; 
     or (2) the debtor has a month-to-month tenancy (or a shorter 
     term) other than under applicable state or local rent control 
     law where timely payments are made pursuant to

[[Page H5761]]

     clause (1) if the lessor files with the court a certification 
     that the requirements of this clause have been met. In 
     addition, the Senate provision permits the commencement or 
     continuation of any eviction, unlawful detainer action or 
     similar proceeding by a lessor if during the two-year period 
     preceding the date of the filing of the petition, the lessee-
     debtor or another occupant of the premises: (1) filed a 
     bankruptcy case during this period; and (2) failed to make 
     any rental payment that first became due under applicable 
     nonbankruptcy law after the filing of the prior case. 
     Further, the Senate amendment permits an eviction action to 
     proceed to the extent the proceeding seeks possession based 
     on endangerment of property or the illegal use of controlled 
     substances on that property, if the lessor files with the 
     court a certification that such an eviction has been filed or 
     the debtor has endangered the property or illegally used or 
     allowed to be used a controlled substance on such property 
     during the 30-day period preceding the date of the filing of 
     the certification. The Senate amendment specifies certain 
     procedural requirements with respect to certain of these 
     proceedings.
       It is the intent of section 311 of the conference report to 
     create an exception to the automatic stay of section 
     362(a)(3) to permit the recovery of possession by rental 
     housing providers of their property in certain circumstances 
     where a judgment for possession has been obtained against a 
     debtor/resident before the filing of the petition for 
     bankruptcy. At the same time, the section provides tenants a 
     reasonable amount of time after filing the petition to cure 
     the default giving rise to the judgment for possession as 
     long as there are circumstances in which applicable non-
     bankruptcy law allows a default to be cured after a judgment 
     has been obtained. It is also the intent of this section to 
     permit eviction actions based on illegal use of controlled 
     substances or endangering property to continue or to be 
     commenced after the filing of the petition, in certain 
     circumstances.
       Where non-bankruptcy law applicable in the jurisdiction 
     does not permit a tenant to cure a monetary default after the 
     judgment for possession has been obtained, the automatic stay 
     of section 362(a)(3) does not operate to limit action by a 
     rental housing provider to proceed with, or a marshal, 
     sheriff, or similar local officer to execute, the judgment 
     for possession. Where the debtor claims that applicable law 
     permits a tenant to cure after the judgment for possession 
     has been obtained, the automatic stay operates only where the 
     debtor files a certification with the bankruptcy petition 
     asserting that applicable law permits such action and that 
     the debtor or an adult dependent of the debtor has paid to 
     the court all rent that will come due during the 30 days 
     following the filing of the petition. If, within thirty days 
     following the filing of the petition, the debtor or an adult 
     dependent of the debtor certifies that the entire monetary 
     default that gave rise to the judgment for possession has 
     been cured, the automatic stay remains in effect.
       If a lessor has filed or wishes to file an eviction action 
     based on the use of illegal controlled substances or property 
     endangerment, the section allows the lessor in certain cases 
     to file a certification of such circumstance with the court 
     and obtain an exception to the stay.
       For both the judgment based on monetary default and the 
     controlled substance or endangerment exceptions, the section 
     provides an opportunity for challenge by either the lessor 
     or the tenant to certifications filed by the other party 
     and a timely hearing for the court to resolve any disputed 
     facts and rule on the factual or legal sufficiency of the 
     certifications. Where the court finds for the lessor, the 
     clerk shall immediately serve upon the parties a copy of 
     the court's order confirming that an exception to the 
     automatic stay is applicable. Where the court finds for 
     the tenant, the stay shall remain in effect. It is the 
     intent of this section that the clerk's certified copy of 
     the docket or order shall be sufficient evidence that the 
     exception under paragraph 22 or paragraph 23 is applicable 
     for a marshal, sheriff, or similar local officer to 
     proceed immediately to execute the judgment for possession 
     if applicable law otherwise permits such action, or for an 
     eviction action for use of illegal controlled substances 
     or property endangerment to proceed. This section does not 
     provide any new right to either landlords or tenants 
     relating to evictions or defenses to eviction under 
     otherwise applicable law.
     Sec. 312. Extension of period between bankruptcy discharges
       Section 312 of the conference report amends section 
     727(a)(8) of the Bankruptcy Code to extend the period before 
     which a chapter 7 debtor may receive a subsequent chapter 7 
     discharge from six to 8 years. It also amends section 1328 to 
     prohibit the issuance of a discharge in a subsequent chapter 
     13 case if the debtor received a discharge in a prior chapter 
     7, 11, or 12 case within four years preceding the filing of 
     the subsequent chapter 13 case. This represents a compromise 
     between the House bill, which sets forth a five-year period 
     with respect to any case, and the Senate amendment, which 
     sets forth a three-year period with respect to a prior 
     chapter 7, 11, or 12 case. With respect to the extension of 
     the time period between subsequent chapter 13 discharges, the 
     conference report adopts the two-year period set forth in 
     section 312 of the Senate amendment, but excludes the 
     provision permitting the court to shorten this period if the 
     debtor demonstrates extreme hardship.
     Sec. 313. Definition of household goods and antiques
       Section 313 represents a compromise among the House and 
     Senate conferees. This provision is substantively similar to 
     section 313 of the House bill and the Senate amendment. 
     Subsection (a) amends section 522(f) of the Bankruptcy Code 
     to codify a modified version of the Federal Trade 
     Commission's definition of ``household goods'' for purposes 
     of the avoidance of a nonpossessory, nonpurchase money lien 
     in such property. It also specifies various items that are 
     expressly not household goods. Section 313(b) requires the 
     Director of the Executive Office for United States Trustees 
     to prepare a report containing findings with respect to the 
     use of this definition. The report may include 
     recommendations for amendments to the definition of 
     ``household goods'' as codified in section 522(f)(4). Section 
     313 of the conference report differs from its counterparts in 
     the House bill and Senate amendment in three respects: (1) it 
     specifies a monetary threshold for the exclusions pertaining 
     to electronic entertainment equipment, antiques, and jewelry; 
     (2) it eliminates the restriction in the House bill and 
     Senate amendment pertaining to a personal computer; and (3) 
     and specifies that works of art are not household goods, 
     unless by or of the debtor or by any relative of the debtor.
     Sec. 314. Debt incurred to pay nondischargeable debts
       Section 314 is substantively identical to section 314 of 
     the House bill and Senate amendment. Subsection (a) amends 
     section 523(a) of the Bankruptcy Code to make a debt incurred 
     to pay a nondischargeable tax owed to a governmental unit 
     (other than a tax owed to the United States) 
     nondischargeable. Section 314(b) amends section 1328(a) of 
     the Bankruptcy Code to make the following additional debts 
     nondischargeable in a chapter 13 case: (1) debts for money, 
     property, services, or extensions of credit obtained through 
     fraud or by a false statement in writing under section 
     523(a)(2)(A) and (B) of the Bankruptcy Code; (2) consumer 
     debts owed to a single creditor that aggregate to more than 
     $500 for luxury goods or services incurred by an individual 
     debtor within 90 days before the filing of the bankruptcy 
     case, and cash advances aggregating more than $750 that are 
     extensions of consumer credit obtained by a debtor under an 
     open-end credit plan within 70 days before the order for 
     relief under section 523(a)(2)(C) (as amended); (3) pursuant 
     to section 523(a)(3) of the Bankruptcy Code, debts that 
     require timely request for a dischargeability determination, 
     if the creditor lacks notice or does not have actual 
     knowledge of the case in time to make such request; (4) debts 
     resulting from fraud or defalcation by the debtor acting as a 
     fiduciary under section 523(a)(4) of the Bankruptcy Code; and 
     (5) debts for restitution or damages, awarded in a civil 
     action against the debtor as a result of willful or malicious 
     conduct by the debtor that caused personal injury to an 
     individual or the death of an individual.
     Sec. 315. Giving creditors fair notice in chapters 7 and 13 
         cases
       Section 315 of the conference report amends several 
     provisions of the Bankruptcy Code. Subsection (a) amends 
     Bankruptcy Code section 342(c) to delete the provision 
     specifying that the failure of a notice to include certain 
     information required to be given by a debtor to a creditor 
     does not invalidate the notice's legal effect. It adds a 
     provision requiring a debtor to send any notice he or she 
     must provide under the Bankruptcy Code to the address stated 
     by the creditor and to include in such notice the current 
     account number, if within 90 days prior to the date that the 
     debtor filed for bankruptcy relief the creditor in at least 
     two communications sent to the debtor set forth such address 
     and account number. If the creditor would be in violation of 
     applicable nonbankruptcy law by sending any such 
     communication during this time period, then the debtor must 
     send the notice to the address provided by the creditor 
     stated in the last two communications containing the 
     creditor's address and such notice shall include the current 
     account number. Section 315(a) also permits a creditor in a 
     chapter 7 or 13 case (where the debtor is an individual) to 
     file with the court and serve on the debtor the address to be 
     used to notify such creditor in that case. Five days after 
     receipt of such notice, the court and the debtor, 
     respectively, must use the address so specified to provide 
     notice to such creditor. In addition, section 315(a) 
     specifies that if an entity files a notice with the court 
     stating an address to be used generally by all bankruptcy 
     courts for chapter 7 and 13 cases, or by particular 
     bankruptcy courts, as specified by such entity. This address 
     must be used by the court to supply notice in such cases 
     within 30 days following the filing of such notice where the 
     entity is a creditor. Notice given other than as provided in 
     section 342 is not effective until it has been brought to the 
     creditor's attention. If the creditor has designated a person 
     or organizational subdivision to be responsible for receiving 
     notices concerning bankruptcy cases and has established 
     reasonable procedures so that these notices will be delivered 
     to such person or subdivision, a notice will not be deemed to 
     have been received by the creditor until it has been received 
     by such person or subdivision. This provision also prohibits 
     the imposition of any monetary penalty for violation of the 
     automatic 

[[Page H5762]]

     stay or for the failure to comply with the Bankruptcy Code 
     sections 542 and 543 unless the creditor has received 
     effective notice under section 342. Section 315(a) of the 
     conference report is substantively identical to section 
     315(a) of the House bill and Senate amendment.
       Section 315(b) amends section 521 to specify additional 
     duties of a debtor. This provision requires the debtor to 
     file a certificate executed by the debtor's attorney or 
     bankruptcy petition preparer stating that the attorney or 
     preparer supplied the debtor with the notice required under 
     Bankruptcy Code section 342(b). If the debtor is not 
     represented by counsel and did not use the services of a 
     bankruptcy petition preparer, then the debtor must sign a 
     certificate stating that he or she obtained and read such 
     notice. In addition, the debtor must file: (1) copies of all 
     payment advices or other evidence of payment, if any, from 
     any employer within 60 days preceding the bankruptcy filing; 
     (2) a statement of the amount of monthly net income, itemized 
     to show how such amount is calculated; and (3) a statement 
     disclosing any reasonably anticipated increase in income or 
     expenditures in the 12-month period following the date of 
     filing. Upon request of a creditor, section 315(b) of the 
     conference report requires the court to make the petition, 
     schedules, and statement of financial affairs of an 
     individual who is a chapter 7 or 13 debtor available to such 
     creditor.
       In addition, section 315(b) requires such debtor to provide 
     the trustee not later than seven days before the date first 
     set for the meeting of creditors a copy of his or her Federal 
     income tax return or transcript (at the election of the 
     debtor) for the latest taxable period ending prior to the 
     filing of the bankruptcy case for which a tax return was 
     filed. Should the debtor fail to comply with this 
     requirement, the case must be dismissed unless the debtor 
     demonstrates that such failure was due to circumstances 
     beyond the debtor's control. In addition, the debtor must 
     file copies of any amendments to such tax returns. Upon 
     request, the debtor must provide a copy of the tax return or 
     transcript to the requesting creditor at the time the debtor 
     supplies the return or transcript to the trustee. Should the 
     debtor fail to comply with this requirement, the case must be 
     dismissed unless the debtor demonstrates that such failure is 
     due to circumstances beyond the debtor's control. A creditor 
     in a chapter 13 case may, at any time, file a notice with the 
     court requesting a copy of the plan. The court must supply a 
     copy of the chapter 13 plan at a reasonable cost not later 
     than 5 days after such request. This provision represents a 
     compromise between section 315(b) of the House bill and the 
     Senate amendment. The House bill was not limited to Federal 
     tax returns and did not consistently include transcripts as 
     an alternative. In addition, the conference report clarifies 
     that this provision applies to Federal income tax returns.
       During the pendency of a chapter 7, 11 or 13 case, the 
     debtor must file with the court, at the request of the judge, 
     United States trustee, or any party in interest, at the time 
     filed with the taxing authority, copies of any Federal income 
     tax returns (or transcripts thereof) that were not filed for 
     the three-year period preceding the date on which the order 
     for relief was entered. In addition, the debtor must file 
     copies of any amendments to such tax returns.
       In a chapter 13 case, the debtor must file a statement, 
     under penalty of perjury, of income and expenditures in the 
     preceding tax year and monthly income showing how the amounts 
     were calculated. The statement must be filed on the date that 
     is the later of 90 days after the close of the debtor's tax 
     year or one year after the order for relief, unless a plan 
     has been confirmed. Thereafter, the statement must be filed 
     on or before the date that is 45 days before the anniversary 
     date of the plan's confirmation, until the case is closed. 
     The statement must disclose the amount and sources of the 
     debtor's income, the identity of any persons responsible with 
     the debtor for the support of the debtor's dependents, the 
     identity of any persons who contributed to the debtor's 
     household expenses, and the amount of any such contributions.
       Section 315(b)(2) mandates that the tax returns, amendments 
     thereto, and the statement of income and expenditures of an 
     individual who is a chapter 7 or chapter 13 debtor be made 
     available to the United States trustee or bankruptcy 
     administrator, the trustee, and any party in interest for 
     inspection and copying, subject to procedures established by 
     the Director of the Administrative Office for United States 
     Courts within 180 days from the date of enactment of this 
     Act. The procedures must safeguard the confidentiality of any 
     tax information required under this provision and include 
     restrictions on creditor access to such information. In 
     addition, the Director must, within 540 days from the Act's 
     enactment date, prepare and submit to Congress a report that 
     assesses the effectiveness of such procedures and, if 
     appropriate, includes recommendations for legislation to 
     further protect the confidentiality of such tax information 
     and to impose penalties for its improper use. If requested by 
     the United States trustee or trustee, the debtor must provide 
     a document establishing the debtor's identity, which may 
     include a driver's license, passport, or other document 
     containing a photograph of the debtor, and such other 
     personal identifying information relating to the debtor. 
     Section 315(b) is substantively similar to section 315(b) of 
     the House bill and the Senate amendment. The conference 
     report makes technical and clarifying revisions.
     Sec. 316. Dismissal for failure to timely file schedules or 
         provide required information
       Section 316 of the conference report is similar to section 
     316 of the House bill and the Senate amendment. This 
     provision amends section 521 of the Bankruptcy Code to 
     provide that if an individual debtor in a voluntary chapter 7 
     or chapter 13 case fails to file all of the information 
     required under section 521(a)(1) within 45 days of the date 
     on which the case is filed, the case must be automatically 
     dismissed, effective on the 46th day. The 45-day period may 
     be extended for an additional 45-day period providing the 
     debtor requests such extension prior to the expiration of the 
     original 45-day period and the court finds justification for 
     such extension. Upon request of a party in interest, the 
     court must enter an order of dismissal within 5 days of such 
     request. Section 316 of the conference report, unlike its 
     House and Senate antecedents, provides that a court may 
     decline to dismiss the case if: (1) the trustee files a 
     motion before the stated time periods; (2) the court finds, 
     after notice and a hearing, that the debtor in good faith 
     attempted to file all the information required under section 
     521(a)(1)(B)(iv); and (3) the court finds that the best 
     interests of creditors would be served by continued 
     administration of the case.
     Sec. 317. Adequate time to prepare for hearing on 
         confirmation of the plan
       Section 317 of the conference report is similar to section 
     317 of the House bill and the Senate amendment. This 
     provision amends section 1324 of the Bankruptcy Code to 
     require the chapter 13 confirmation hearing to be held not 
     earlier than 20 days following the first date set for the 
     meeting of creditors and not later than 45 days from this 
     date, unless the court determines that it would be in the 
     best interests of creditor and the estate to hold such 
     hearing at an earlier date and there is no objection to such 
     earlier date. The House and Senate antecedents to section 317 
     of the conference report do not include this exception.
     Sec. 318. Chapter 13 plans to have a 5-year duration in 
         certain cases
       Section 318 of the conference report is substantially 
     identical to section 318 of the House bill and the Senate 
     amendment. Subsection (1) amends Bankruptcy Code sections 
     1322(d) and 1325(b) to specify that a chapter 13 plan may not 
     provide for payments over a period that is not less than five 
     years if the current monthly income of the debtor and the 
     debtor's spouse combined exceeds certain monetary thresholds.
       If the current monthly income of the debtor and the 
     debtor's spouse fall below these thresholds, then the 
     duration of the plan may not be longer than three years, 
     unless the court, for cause, approves a longer period up to 
     five years. The applicable commitment period may be less if 
     the plan provides for payment in full of all allowed 
     unsecured claims over a shorter period. Section 318(2), (3), 
     and (4) make conforming amendments to sections 1325(b) and 
     1329(c) of the Bankruptcy Code.
     Sec. 319. Sense of Congress regarding expansion of rule 9011 
         of the Federal Rules of Bankruptcy Procedure
       Section 319 of the conference report expresses a sense of 
     the Congress that Federal Rule of Bankruptcy Procedure 9011 
     be modified to require that any document, whether signed or 
     unsigned, including schedules, supplied to the court or the 
     trustee by a debtor may be submitted only after the debtor or 
     the debtor's attorney has made reasonable inquiry to verify 
     that the information contained in such documents is well-
     grounded in fact and warranted by existing law or a good 
     faith argument for the extension, modification, or reversal 
     of existing law. Section 319 of the conference report is 
     substantially identical to section 319 of the House bill and 
     the Senate amendment.
     Sec. 320. Prompt relief from stay in individual cases
       Section 320 of the conference report is substantively 
     identical to section 320 of the House bill and the Senate 
     amendment. This provision amends section 362(e) of the 
     Bankruptcy Code to terminate the automatic stay in a chapter 
     7, 11, or 13 case of an individual debtor within 60 days 
     following a request for relief from the stay, unless the 
     bankruptcy court renders a final decision prior to the 
     expiration of the 60-day time period, such period is extended 
     pursuant to agreement of all parties in interest, or a 
     specific extension of time is required for good cause as 
     described in findings made by the court.
     Sec. 321. Chapter 11 cases filed by individuals
       Section 321(a) of the conference report creates a new 
     provision under chapter 11 of the Bankruptcy Code specifying 
     that property of the estate of an individual debtor includes, 
     in addition to that identified in section 541 of the 
     Bankruptcy Code, all property of the kind described in 
     section 541 that the debtor acquires after commencement of 
     the case, but before the case is closed, dismissed or 
     converted to a case under chapter 7, 12, or 13 (whichever 
     occurs first). In addition, it includes earnings from 
     services performed by the debtor after commencement of the 
     case, but before the case is closed, dismissed or converted 
     to a case under chapter 7, 12, or 13. Except as provided in 
     section 1104 of the Bankruptcy Code or the order confirming a 
     chapter 11 plan, section 321(a) provides that

[[Page H5763]]

     the debtor remains in possession of all property of the 
     estate. Section 321(a) is substantively identical to section 
     321(a) of the House bill and the Senate amendment.
       Section 321(b) amends Bankruptcy Code section 1123 to 
     require the chapter 11 plan of an individual debtor to 
     provide for the payment to creditors of all or such portion 
     of the debtor's earnings from personal services performed 
     after commencement of the case or other future income that is 
     necessary for the plan's execution. This provision is 
     substantively identical to section 321(b) of the House bill 
     and the Senate amendment.
       Section 321(c) amends Bankruptcy Code section 1129(a) to 
     include an additional requirement for confirmation in a 
     chapter 11 case of an individual debtor upon objection to 
     confirmation by a holder of an allowed unsecured claim. In 
     such instance, the value of property to be distributed under 
     the plan (1) on account of such claim, as of the plan's 
     effective date, must not be less than the amount of such 
     claim; or (2) is not less than the debtor's projected 
     disposable income (as defined in section 1325(b)(2)) to be 
     received during the 5-year period beginning on the date that 
     the first payment is due under the plan or during the plan's 
     term, whichever is longer. Section 321(c) also amends section 
     1129(b)(2)(B)(ii) of the Bankruptcy Code to provide that an 
     individual chapter 11 debtor may retain property included in 
     the estate under section 1115 (as added by the Act), subject 
     to section 1129(a)(14). This provision is substantively 
     identical to section 321(c) of the House bill and the Senate 
     amendment.
       Section 321(d)(1) of the conference report reflects the 
     Senate position represented in section 321(d) of the Senate 
     amendment, which amends Bankruptcy Code section 1141(d) to 
     provide that a discharge under chapter 11 does not discharge 
     a debtor who is an individual from any debt excepted from 
     discharge under Bankruptcy Code section 523. The House bill 
     provides that a chapter 11 debtor, including a corporation, 
     is not discharged from any debt excepted from discharge under 
     section 523.
       Section 321(d)(2) of the conference report provides that in 
     a chapter 11 individual debtor is not discharged until all 
     plan payments have been made. The court may grant a hardship 
     discharge if the value of property actually distributed under 
     the plan--as of the plan's effective date--is not less than 
     the amount that would have been available for distribution if 
     the case was liquidated under chapter 7 on such date, and 
     modification of the plan is not practicable. This provision 
     is substantively identical to its counterparts in the House 
     bill and Senate amendment.
       Section 321(e) of the conference report amends section 1127 
     to permit a plan in a chapter 11 case of an individual debtor 
     to be modified postconfirmation for the purpose of increasing 
     or reducing the amount of payments, extending or reducing the 
     time period for such payments, or altering the amount of 
     distribution to a creditor whose claim is provided for by the 
     plan. Such modification may be made at any time on request of 
     the debtor, trustee, United States trustee, or holder of an 
     allowed unsecured claim, if the plan has not been 
     substantially consummated.
       Section 321(f) specifies that sections 1121 through 1129 
     apply to such modification. In addition, it provides that the 
     modified plan shall become the confirmed plan only if: (a) 
     there has been disclosure pursuant to section 1125 (as the 
     court directs); (b) notice and a hearing; and (c) such 
     modification is approved. Subsections (e) and (f) of section 
     321 of the conference report are substantively identical to 
     their counterparts in the House bill and the Senate 
     amendment.
     Sec. 322. Limitations on homestead exemption
       Section 322(a) amends section 522 of the Bankruptcy Code to 
     impose an aggregate monetary limitation of $125,000, subject 
     to Bankruptcy Code sections 544 and 548, on the value of 
     property that the debtor may claim as exempt under State 
     or local law pursuant to section 522(b)(3)(A) under 
     certain circumstances. The monetary cap applies if the 
     debtor acquired such property within the 1215-day period 
     preceding the filing of the petition and the property 
     consists of any of the following: (a) real or personal 
     property of the debtor or that a dependent of the debtor 
     uses as a residence; (b) an interest in a cooperative that 
     owns property, which the debtor or the debtor's dependent 
     uses as a residence; (c) a burial plot for the debtor or 
     the debtor's dependent; or (d) real or personal property 
     that the debtor or dependent of the debtor claims as a 
     homestead. This limitation does not apply to a principal 
     residence claimed as exempt by a family farmer. In 
     addition, the limitation does not apply to any interest 
     transferred from a debtor's principal residence (which was 
     acquired prior to the beginning of the specified time 
     period) to the debtor's current principal residence, if 
     both the previous and current residences are located in 
     the same State.
       Section 322(a) further amends section 522 to add a 
     provision that does not allow a debtor to exempt any amount 
     of an interest in property described in the preceding 
     paragraph in excess of $125,000 if any of the following 
     applies:
       (a) the court determines, after notice and a hearing, that 
     the debtor has been convicted of a felony (as defined in 
     section 3156 of title 18), which under the circumstances, 
     demonstrates that the filing of the case was an abuse of the 
     provisions of the Bankruptcy Code; or
       (b) the debtor owes a debt arising from:
       (A) any violation of the federal securities laws defined in 
     section 3(a)(47) of the Securities and Exchange Act of 1934, 
     any state securities laws, or any regulation or order issued 
     under Federal securities laws or state securities laws;
       (B) fraud, deceit, or manipulation in a fiduciary capacity 
     or in connection with the purchase or sale of any security 
     registered under section 12 or 15(d) of the Securities 
     Exchange Act of 1934, or under section 6 of the Securities 
     Act of 1933;
       (C) any civil remedy under section 1964 of title 18 of the 
     United States Code; or
       (D) any criminal act, intentional tort, or willful or 
     reckless misconduct that caused serious physical injury or 
     death to another individual in the preceding five years.

     The conferees intend that the language in section 522(q)(1) 
     be liberally construed to encompass misconduct that rises 
     above mere negligence under applicable state law. An 
     exception to the monetary limit applies to the extent the 
     value of the homestead property is reasonably necessary for 
     the support of the debtor and any dependent of the debtor.
       Section 322(b) makes the monetary limitation set forth in 
     section 322(a) subject to automatic adjustment pursuant to 
     section 104 of the Bankruptcy Code.
       This provision is substantively different from its House 
     and Senate counterparts. Section 322 of the House bill 
     imposes an aggregate $100,000 homestead cap, which applies if 
     the debtor acquired such property within the two-year period 
     preceding the filing of the petition and the property 
     consists. As with section 322 of the conference report, the 
     House provision includes the exception for a family farmer 
     and the transfer of an interest in a principal residence of 
     the debtor from a prior principal residence of the debtor 
     acquired prior to the beginning of the two-year period. 
     Section 308 of the Senate amendment, on the other hand, 
     imposes a flat $125,000 cap on a homestead exemption.
     Sec. 323. Excluding employee benefit plan participant 
         contributions and other property from the estate
       Section 323 of the conference report is substantively 
     identical to section 323 of the House bill and section 322 of 
     the Senate amendment. It amends section 541(b) of the 
     Bankruptcy Code to exclude as property of the estate funds 
     withheld or received by an employer from its employees' wages 
     for payment as contributions to specified employee retirement 
     plans, deferred compensation plans, and tax-deferred 
     annuities. Such contributions do not constitute disposable 
     income as defined in section 1325(b)(2) of the Bankruptcy 
     Code. Section 323 also excludes as property of the estate 
     funds withheld by an employer from the wages of its employees 
     for payment as contributions to health insurance plans 
     regulated by State law.
     Sec. 324. Exclusive jurisdiction in matters involving 
         bankruptcy professionals
       Section 324 of the conference report amends section 1334 of 
     title 28 of the United State Code to give a district court 
     exclusive jurisdiction of all claims or causes of action 
     involving the construction of section 327 of the Bankruptcy 
     Code or rules relating to disclosure requirements under such 
     provision. This provision is substantively identical to 
     section 324 of the House bill and section 323 of the Senate 
     amendment.
     Sec. 325. United States trustee program filing fee increase
       Section 325 of the conference report is substantively 
     identical to section 325 of the House bill and section 324 of 
     the Senate amendment. Section 325(a) amends section 1930(a) 
     of title 28 of the United States Code to increase the filing 
     fees for chapter 7 and chapter 13 cases respectively to $160 
     and $150. Subsections 325(b) and (c) amend section 589a of 
     title 28 of the United States Code and section 406(b) of the 
     Judiciary Appropriations Act of 1990 to increase the 
     percentage of the fees collected under section 1930 of title 
     28 of the United States Code that are paid to the United 
     States Trustee System Fund.
     Sec. 326. Sharing of compensation
       Section 326 amends Bankruptcy Code section 504 to create a 
     limited exception to the prohibition against fee sharing. The 
     provision allows the sharing of compensation with bona fide 
     public service attorney referral programs that operate in 
     accordance with non-federal law regulating attorney referral 
     services and with rules of professional responsibility 
     applicable to attorney acceptance of referrals. This 
     provision is substantively identical to section 326 of the 
     House bill and section 325 of the Senate amendment.
     Sec. 327. Fair valuation of collateral
       Section 327 of the conference report amends section 506(a) 
     of the Bankruptcy Code to provide that the value of an 
     allowed claim secured by personal property that is an 
     asset in an individual debtor's chapter 7 or 13 case is 
     determined based on the replacement value of such property 
     as of the filing date of the bankruptcy case without 
     deduction for selling or marketing costs. With respect to 
     property acquired for personal, family, or household 
     purposes, replacement value is the price a retail merchant 
     would charge for property of that kind considering the age 
     and condition of the property at the time its value is 
     determined. This provision is identical to section 327 of 
     the House bill and section 326 of the Senate amendment.
     Sec. 328. Defaults based on nonmonetary obligations
       Section 328 is substantively identical to section 328 of 
     the House bill and section 327 of the Senate amendment. 
     Subsection (a)(1)

[[Page H5764]]

     amends section 365(b) to provide that a trustee does not have 
     to cure a default that is a breach of a provision (other than 
     a penalty rate or penalty provision) relating to a default 
     arising from any failure to perform a nonmonetary obligation 
     under an unexpired lease of real property, if it is 
     impossible for the trustee to cure the default by performing 
     such nonmonetary act at and after the time of assumption. If 
     the default arises from a failure to operate in accordance 
     with a nonresidential real property lease, the default must 
     be cured by performance at and after the time of assumption 
     in accordance with the lease. Pecuniary losses resulting from 
     such default must be compensated pursuant to section 
     365(b)(1). In addition, section 328(a)(1) amends section 
     365(b)(2)(D) to clarify that it applies to penalty 
     provisions. Section 328(a)(2) through (4) make technical 
     revisions to section 365(c), (d) and (f) by deleting language 
     that is no longer effective pursuant to the Rail Safety 
     Enforcement and Review Act.\2\
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     \2\ Pub. L. No. 102-365, 106 Stat. 972 (1992).
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       Section 328(b) amends section 1124(2)(A) of the Bankruptcy 
     Code to clarify that a claim is not impaired if section 
     365(b)(2) (as amended by this Act) expressly does not require 
     a default with respect to such claim to be cured. In 
     addition, it provides that any claim or interest that arises 
     from the failure to perform a nonmonetary obligation (other 
     than a default arising from the failure to operate a 
     nonresidential real property lease subject to section 
     365(b)(1)(A)), is impaired unless the holder of such claim or 
     interest (other than the debtor or an insider) is compensated 
     for any actual pecuniary loss incurred by the holder as a 
     result of such failure.
     Sec. 329. Clarification of postpetition wages and benefits
       Section 329 amends Bankruptcy Code section 503(b)(1)(A) to 
     accord administrative expense status to certain back pay 
     awards. This provision applies to a back pay award 
     attributable to any period of time occurring postpetition as 
     a result of a violation of Federal or state law by the debtor 
     pursuant to an action brought in a court or before the 
     National Labor Relations Board, providing the bankruptcy 
     court determines that the award will not substantially 
     increase the probability of layoff or termination of current 
     employees or of nonpayment of domestic support obligations. 
     Section 329 of the conference report substantively reflects 
     the Senate position as represented in section 329 of the 
     Senate amendment. The conference report clarifies the 
     provision with respect to the timing of the unlawful conduct. 
     There is no counterpart to this provision in the House bill.
     Sec. 330. Nondischargeability of debts incurred through 
         violations of laws relating to the provision of lawful 
         goods and services
       Section 330(a) amends Bankruptcy Code section 523(a) to 
     prohibit the discharge of a debt that results from any 
     judgment, order, consent order, or decree entered in any 
     Federal or State court, or contained in any settlement 
     agreement entered into by the debtor (including any court-
     ordered damages, fine, penalty, or attorney fee or cost owed 
     by the debtor), that arises from:
       (a) the violation by the debtor of any Federal or State 
     statutory law, including but not limited to violations of 
     title 18 of the United States Code, that results from 
     intentional actions of the debtor that--
       (i) by force or threat of force or by physical obstruction, 
     intentionally injure, intimidate, or interfere with or 
     attempt to injure, intimidate or interfere with any person 
     because that person is or has been, or in order to intimidate 
     such person or any other person or class of persons from 
     obtaining or providing lawful goods or services;
       (ii) by force of threat of force or by physical 
     obstruction, intentionally injure, intimidate, or interfere 
     with or attempt to injure, intimidate, or interfere with any 
     person lawfully exercising or seeking to exercise the First 
     Amendment right of religious freedom at a place of religious 
     worship; or
       (iii) intentionally damage or destroy the property of a 
     facility, or attempt to do so, because such facility provides 
     lawful goods or services, or intentionally damage or destroy 
     the property of a place of religious worship; or
       (b) a violation of a court order or injunction that 
     protects access to a facility that or a person who provides 
     lawful goods or services or the provision of lawful goods or 
     services if such violation--
       (i) is intentional or knowing; or
       (ii) occurs after a court has found that the debtor 
     previously violated such court order or injunction, or any 
     other court order or injunction that protects access to the 
     same facility or the same person.

     The provision specifies that it shall not be construed to 
     affect any expressive conduct, including peaceful picketing, 
     peaceful prayer, or other peaceful demonstration, protected 
     from legal prohibition by the First Amendment to the 
     Constitution of the United States.
       Section 330(b) amends section 523(a)(13) of the Bankruptcy 
     Code to make a debt for a criminal restitution order entered 
     pursuant to state criminal law nondischargeable.
     Sec. 331. Delay of discharge during pendency of certain 
         proceedings
       Section 330 amends section 727(a) of the Bankruptcy Code to 
     require the court to withhold the entry of a debtor's 
     discharge order if the court, after notice and a hearing, 
     finds that there is reasonable cause to believe that there is 
     pending a proceeding in which the debtor may be found guilty 
     of a felony of the kind described in section 522(q)(1) or 
     liable for a debt of the kind described in section 522(q)(2). 
     There is no counterpart to this provision in either the House 
     bill or Senate amendment.

       Title IV--General and Small Business Bankruptcy Provisions


           SUBTITLE A--GENERAL BUSINESS BANKRUPTCY PROVISIONS

     Sec. 401. Adequate protection for investors
       Section 401 is substantively identical to Section 401 of 
     the House bill and Senate amendment. SubSection (a) amends 
     section 101 of the Bankruptcy Code to define ``securities 
     self regulatory organization'' as a Securities association or 
     national securities exchange registered with the Securities 
     and Exchange Commission. Section 401(b) amends section 362 of 
     the Bankruptcy Code to except from the automatic stay certain 
     enforcement actions by a Securities self regulatory 
     organization.
     Sec. 402. Meetings of creditors and equity security holders
       Section 402 amends Section 341 of the Bankruptcy Code to 
     permit a court, on request of a party in interest and after 
     notice and a hearing, to order the United States trustee not 
     to convene a meeting of creditors or equity Security holders 
     if a debtor has filed a plan for which the debtor solicited 
     acceptances prior to the commencement of the case. This 
     provision is substantively identical to Section 402 of the 
     House bill and the Senate amendment.
     Sec. 403. Protection of refinance of security interest
       Section 403 amends Section 547(e)(2) of the Bankruptcy Code 
     to increase the perfection period from ten to 30 days for the 
     purpose of determining whether a transfer is an avoidable 
     preference. This provision is substantively identical to 
     Section 403 of the House bill and the Senate amendment.
     Sec. 404. Executory contracts and unexpired leases
       Section 404 is identical to Section 404 of the House bill 
     and the Senate amendment. SubSection (a) amends Section 
     365(d)(4) of the Bankruptcy Code to establish a firm, bright 
     line deadline by which an unexpired lease of nonresidential 
     real property must be assumed or rejected. If such lease is 
     not assumed or rejected by such deadline, then such lease 
     shall be deemed rejected, and the trustee shall immediately 
     surrender such property to the lessor. Section 404(a) permits 
     a bankruptcy trustee to assume or reject a lease on a date 
     which is the earlier of the date of confirmation of a plan or 
     the date which is 120 days after the date of the order for 
     relief. A further extension of time may be granted, within 
     the 120 day period, for an additional 90 days, for cause, 
     upon motion of the trustee or lessor. Any subsequent 
     extension can only be granted by the judge upon the prior 
     written consent of the lessor: either by the lessor's motion 
     for an extension, or by a motion of the trustee, provided 
     that the trustee has the prior written approval of the 
     lessor. This provision is designed to remove the bankruptcy 
     judge's discretion to grant extensions of the time for the 
     retail debtor to decide whether to assume or reject a lease 
     after a maximum possible period of 210 days from the time of 
     entry of the order of relief. Beyond that maximum period, 
     there is no authority in the judge to grant further time 
     unless the lessor has agreed in writing to the extension.
       Section 404(b) amends Section 365(f)(1) to assure that 
     Section 365(f) does not override any part of Section 365(b). 
     Thus, Section 404(b) makes a trustee's authority to assign an 
     executory contract or unexpired lease subject not only to 
     Section 365(c), but also to Section 365(b), which is given 
     full effect. Therefore, for example, assumption or assignment 
     of a lease of real property in a shopping center must be 
     subject to the provisions of the lease, such as use clauses.
     Sec. 405. Creditors and equity security holders committees
       Section 405 is substantively identical to Section 405 of 
     the House bill and the Senate amendment. SubSection (a) 
     amends Section 1102(a)(2) of the Bankruptcy Code to permit, 
     after notice and a hearing, a court, on its own motion or on 
     motion of a party in interest, to order a change in a 
     committee's membership to ensure adequate representation of 
     creditors or equity Security holders in a chapter 11 case. It 
     specifies that the court may direct the United States trustee 
     to increase the membership of a committee for the purpose of 
     including a small business concern if the court determines 
     that such creditor's claim is of the kind represented by the 
     committee and that, in the aggregate, is disproportionately 
     large when compared to the creditor's annual gross revenue. 
     Section 405(b) requires the committee to give creditors 
     having claims of the kind represented by the committee access 
     to information. In addition, the committee must solicit and 
     receive comments from these creditors and, pursuant to court 
     order, make additional reports or disclosures available to 
     them.
     Sec. 406. Amendment to section 546 of title 11, United States 
         Code
       Section 406 reflects the Senate position as represented in 
     Section 406 of the Senate amendment. The provision corrects 
     an erroneous subsection designation in section 546 of the 
     Bankruptcy Code. It redesignates the

[[Page H5765]]

     second subsection (g) as subsection (i). In addition, section 
     406 amends section 546(i) (as redesignated) to subject that 
     provision to the prior rights of security interest holders. 
     The House bill did not include this provision. Further, 
     section 406 adds a new provision to section 546 that 
     prohibits a trustee from avoiding a warehouse lien for 
     storage, transportation, or other costs incidental to the 
     storage and handling of goods. It specifies that this 
     prohibition must be applied in a manner consistent with any 
     applicable state statute that is similar to Section 7-209 of 
     the Uniform Commercial Code.
     Sec. 407. Amendments to section 330(a) of title 11, United 
         States Code
       Section 407 amends Section 330(a)(3) of the Bankruptcy Code 
     to clarify that this provision applies to examiners, chapter 
     11 trustees, and professional persons. This section also 
     amends section 330(a) to add a provision that requires a 
     court, in determining the amount of reasonable compensation 
     to award to a trustee, to treat such compensation as a 
     commission pursuant to section 326 of the Bankruptcy Code. 
     Section 407 is substantively identical to section 407 of the 
     House bill and the Senate amendment.
     Sec. 408. Postpetition disclosure and solicitation
       Section 408 amends section 1125 of the Bankruptcy Code to 
     permit an acceptance or rejection of a chapter 11 plan to be 
     solicited from the holder of a claim or interest if the 
     holder was solicited before the commencement of the case in a 
     manner that complied with applicable nonbankruptcy law. 
     Section 408 is substantively identical to section 408 of the 
     House bill and the Senate amendment.
     Sec. 409. Preferences
       Section 409 amends section 547(c)(2) of the Bankruptcy Code 
     to provide that a trustee may not avoid a transfer to the 
     extent such transfer was in payment of a debt incurred by 
     the debtor in the ordinary course of the business or 
     financial affairs of the debtor and the transferee and 
     such transfer was made either: (1) in the ordinary course 
     of the debtor's and the transferee's financial affairs or 
     business; or (2) in accordance with ordinary business 
     terms. Present law requires the recipient of a 
     preferential transfer to establish both of these grounds 
     in order to sustain a defense to a preferential transfer 
     proceeding. In a case in which the debts are not primarily 
     consumer debts, Section 409 provides that a transfer may 
     not be avoided if the aggregate amount of all property 
     constituting or affected by the transfer is less than 
     $5,000. This provision is substantively identical to 
     Section 409 of the House bill and the Senate amendment.
     Sec. 410. Venue of certain proceedings
       Section 410 amends Section 1409(b) of title 28 of the 
     United States Code to provide that a preferential transfer 
     action in the amount of $10,000 or less pertaining to a 
     nonconsumer debt against a noninsider defendant must be filed 
     in the district where such defendant resides. This amount is 
     presently fixed at $1,000. This provision is substantively 
     identical to Section 410 of the House bill and the Senate 
     amendment.
     Sec. 411. Period for filing plan under chapter 11
       Section 411 amends Section 1121(d) of the Bankruptcy Code 
     to mandate that a chapter 11 debtor's exclusive period for 
     filing a plan may not be extended beyond a date that is 18 
     months after the order for relief. In addition, it provides 
     that the debtor's exclusive period for obtaining acceptances 
     of the plan may not be extended beyond 20 months after the 
     order for relief. This provision is substantively identical 
     to Section 411 of the House bill and the Senate amendment.
     Sec. 412. Fees arising from certain ownership interests
       Section 412 amends Section 523(a)(16) of the Bankruptcy 
     Code to broaden the protections accorded to community 
     associations with respect to fees or assessments arising from 
     the debtor's interest in a condominium, cooperative, or 
     homeowners' association. Irrespective of whether or not the 
     debtor physically occupies such property, fees or assessments 
     that accrue during the period the debtor or the trustee has a 
     legal, equitable, or possessory ownership interest in such 
     property are nondischargeable. This provision is 
     substantively identical to Section 412 of the House bill and 
     the Senate amendment.
     Sec. 413. Creditor representation at first meeting of 
         creditors
       Section 413 amends Section 341(c) of the Bankruptcy Code to 
     permit a creditor holding a consumer debt or any 
     representative of such creditor, notwithstanding any local 
     court rule, provision of a State constitution, or any other 
     Federal or state nonbankruptcy law, to appear and participate 
     at the meeting of creditors in chapter 7 and chapter 13 cases 
     either alone or in conjunction with an attorney. In addition, 
     the provision clarifies that it cannot be construed to 
     require a creditor to be represented by counsel at any 
     meeting of creditors. This provision is substantively 
     identical to Section 413 of the House bill and the Senate 
     amendment.
     Sec. 414. Definition of disinterested person
       Section 414 amends Section 101(14) of the Bankruptcy Code 
     to eliminate the requirement that an investment banker be a 
     disinterested person. This provision is substantively 
     identical to Section 414 of the House bill and the Senate 
     amendment.
     Sec. 415. Factors for compensation of professional persons
       Section 415 amends Section 330(a)(3) of the Bankruptcy Code 
     to permit the court to consider, in awarding compensation to 
     a professional person, whether such person is board certified 
     or otherwise has demonstrated skill and experience in the 
     practice of bankruptcy law. This provision is substantively 
     identical to Section 415 of the House bill and the Senate 
     amendment.
     Sec. 416. Appointment of elected trustee
       Section 416 of the conference report is substantively 
     identical to Section 416 of the House bill and the Senate 
     amendment. This provision amends Section 1104(b) of the 
     Bankruptcy Code to clarify the procedure for the election of 
     a trustee in a chapter 11 case. Section 1104(b) permits 
     creditors to elect an eligible, disinterested person to serve 
     as the trustee in the case, provided certain conditions are 
     met. Section 416 amends this provision to require the United 
     States trustee to file a report certifying the election of a 
     chapter 11 trustee. Upon the filing of the report, the 
     elected trustee is deemed to be selected and appointed for 
     purposes of Section 1104 and the service of any prior trustee 
     appointed in the case is terminated. Section 416 also 
     clarifies that the court shall resolve any dispute arising 
     out of a chapter 11 trustee election.
     Sec. 417. Utility service
       Section 417 amends Section 366 of the Bankruptcy Code to 
     provide that assurance of payment, for purposes of this 
     provision, includes a cash deposit, letter of credit, 
     certificate of deposit, surety bond, prepayment of utility 
     consumption, or other form of Security that is mutually 
     agreed upon by the debtor or trustee and the utility. It also 
     specifies that an administrative expense priority does not 
     constitute an assurance of payment. With respect to chapter 
     11 cases, Section 417 permits a utility to alter, refuse or 
     discontinue service if it does not receive adequate assurance 
     of payment that is satisfactory to the utility within 30 days 
     of the filing of the petition. The court, upon request of a 
     party in interest, may modify the amount of this payment 
     after notice and a hearing. In determining the adequacy of 
     such payment, a court may not consider: (i) the absence of 
     Security before the case was filed; (ii) the debtor's timely 
     payment of utility service charges before the case was filed; 
     or (iii) the availability of an administrative expense 
     priority. Notwithstanding any other provision of law, Section 
     417 permits a utility to recover or set off against a 
     Security deposit provided prepetition by the debtor to the 
     utility without notice or court order. This provision is 
     substantively identical to Section 417 of the House bill and 
     the Senate amendment.
     Sec. 418. Bankruptcy fees
       Section 418 of the conference report amends Section 1930 of 
     title 28 of the United States Code to permit a district court 
     or a bankruptcy court, pursuant to procedures prescribed by 
     the Judicial Conference of the United States, to waive the 
     chapter 7 filing fee for an individual and certain other fees 
     under subSections (b) and (c) of Section 1930 if such 
     individual's income is less than 150 percent of the official 
     poverty level (as defined by the Office of Management 
     and Budget) and the individual is unable to pay such fee 
     in installments. Section 418 also clarifies that Section 
     1930, as amended, does not prevent a district or 
     bankruptcy court from waiving other fees for creditors and 
     debtors, if in accordance with Judicial Conference policy. 
     This provision is substantively identical to Section 418 
     of the House bill and the Senate amendment.
     Sec. 419. More complete information regarding assets of the 
         estate
       Section 419 of the conference report is substantively 
     identical to Section 419 of the House bill and the Senate 
     amendment. This provision requires the Advisory Committee on 
     Bankruptcy Rules, after consideration of the views of the 
     Director of the Executive Office for United States Trustees, 
     to propose official rules and forms directing chapter 11 
     debtors to disclose information concerning the value, 
     operations, and profitability of any closely held 
     corporation, partnership, or other entity in which the debtor 
     holds a substantial or controlling interest. Section 419 is 
     intended to ensure that the debtor's interest in any of these 
     entities is used for the payment of allowed claims against 
     debtor.


           SUBTITLE B--SMALL BUSINESS BANKRUPTCY PROVISIONS.

     Sec. 431. Flexible rules for disclosure statement and plan
       Section 431 of the conference report amends Section 1125 of 
     the Bankruptcy Code to streamline the disclosure statement 
     process and to provide for more flexibility. This provision 
     is substantively identical to Section 431 of the House bill 
     and the Senate amendment. Section 431(1) amends Section 
     1125(a)(1) of the Bankruptcy Code to require a bankruptcy 
     court, in determining whether a disclosure statement supplies 
     adequate information, to consider the complexity of the case, 
     the benefit of additional information to creditors and other 
     parties in interest, and the cost of providing such 
     additional information. With regard to a small business case, 
     section 431(2) amends Section 1125(f) to permit the court to 
     dispense with a disclosure statement if the plan itself 
     supplies adequate information. In addition, it provides that 
     the court may approve a disclosure statement submitted on 
     standard forms approved by the court or adopted under Section 
     2075 of title 28 of the United States Code.

[[Page H5766]]

     Further, Section 431(2) provides that the court may 
     conditionally approve a disclosure statement, subject to 
     final approval after notice and a hearing, and allow the 
     debtor to solicit acceptances of the plan based on such 
     disclosure statement. The hearing on the disclosure statement 
     may be combined with the confirmation hearing.
     Sec. 432. Definitions
       Section 432 of the conference report is substantively 
     similar to section 431 of the House bill and the Senate 
     amendment. This provision amends Section 101 of the 
     Bankruptcy Code to define a ``small business case'' as a 
     chapter 11 case in which the debtor is a small business 
     debtor. Section 432, in turn, defines a ``small business 
     debtor'' as a person engaged in commercial or business 
     activities (including an affiliate of such person that is 
     also a debtor, but excluding a person whose primary activity 
     is the business of owning or operating real property or 
     activities incidental thereto) having aggregate 
     noncontingent, liquidated secured and unsecured debts of not 
     more than $2 million (excluding debts owed to affiliates or 
     insiders of the debtor) as of the date of the petition or the 
     order for relief. This monetary definition is a compromise. 
     The House and Senate antecedents specified a $3 million 
     definitional limit. This definition applies only in a case 
     where the United States trustee has not appointed a 
     creditors' committee or where the court has determined that 
     the committee of unsecured creditors is not sufficiently 
     active and representative to provide effective oversight of 
     the debtor. It does not apply to any member of a group of 
     affiliated debtors that has aggregate noncontingent, 
     liquidated secured and unsecured debts in excess of $2 
     million (excluding debts owed to one or more affiliates or 
     insiders). The conference report also requires this monetary 
     figure to be periodically adjusted for inflation pursuant to 
     section 104 of the Bankruptcy Code.
     Sec. 433. Standard form disclosure statement and plan
       Section 433 of the conference report directs the Advisory 
     Committee on Bankruptcy Rules of the Judicial Conference of 
     the United States to propose for adoption standard form 
     disclosure statements and reorganization plans for small 
     business debtors. The provision directs that the forms be 
     designed to achieve a practical balance between the needs of 
     the court, case administrators, and other parties in interest 
     to have reasonably complete information as well as the 
     debtor's need for economy and simplicity. This provision is 
     substantively identical to section 433 of the House bill and 
     the Senate amendment.
     Sec. 434. Uniform national reporting requirements
       Section 434 of the conference report is substantively 
     identical to section 434 of the House bill and the Senate 
     amendment. SubSection (a) adds a new provision to the 
     Bankruptcy Code mandating additional reporting requirements 
     for small business debtors. It requires a small business 
     debtor to file periodic financial reports and other documents 
     containing the following information with respect to the 
     debtor's business operations: (i) profitability; (ii) 
     reasonable approximations of projected cash receipts and 
     disbursements; (iii) comparisons of actual cash receipts and 
     disbursements with projections in prior reports; (iv) whether 
     the debtor is complying with postpetition requirements 
     pursuant to the Bankruptcy Code and Federal Rules of 
     Bankruptcy Procedure; (v) whether the debtor is timely filing 
     tax returns and other government filings; and (vi) whether 
     the debtor is paying taxes and other administrative expenses 
     when due. In addition, the debtor must report on such other 
     matters that are in the best interests of the debtor and the 
     creditors and in the public interest. If the debtor is not in 
     compliance with any postpetition requirements pursuant to the 
     Bankruptcy Code and Federal Rules of Bankruptcy Procedure, or 
     is not filing tax returns or other required governmental 
     filings, paying taxes and other administrative expenses when 
     due, the debtor must report: (a) what the failures are, (b) 
     how they will be cured; (c) the cost of their cure; and (d) 
     when they will be cured. Section 434(b) specifies that the 
     effective date of this provision is 60 days after the date on 
     which the rules required under this provision are 
     promulgated.
     Sec. 435. Uniform reporting rules and forms for small 
         business cases
       Section 435 of the conference report is substantively 
     identical to Section 435 of the House bill and the Senate 
     amendment. Subsection (a) mandates that the Advisory 
     Committee on Bankruptcy Rules of the Judicial Conference of 
     the United States propose official rules and forms with 
     respect to the periodic financial reports and other 
     information that a small business debtor must file concerning 
     its profitability, cash receipts and disbursements, filing 
     of its tax returns, and payment of its taxes and other 
     administrative expenses.
       Section 435(b) requires the rules and forms to achieve a 
     practical balance between the need for reasonably complete 
     information by the bankruptcy court, United States trustee, 
     creditors and other parties in interest, and the small 
     business debtor's interest in having such forms be easy and 
     inexpensive to complete. The forms should also be designed to 
     help the small business debtor better understand its 
     financial condition and plan its future.
     Sec. 436. Duties in small business cases
       Section 436 of the conference report is substantively 
     identical to section 436 of the House bill and the Senate 
     amendment. Intended to implement greater administrative 
     oversight and controls over small business chapter 11 cases, 
     the provision requires a chapter 11 trustee or debtor to:
       (1) file with a voluntary petition (or in an involuntary 
     case, within seven days from the date of the order for 
     relief) the debtor's most recent financial statements 
     (including a balance sheet, statement of operations, cash 
     flow statement, and Federal income tax return) or a statement 
     explaining why such information is not available;
       (2) attend, through its senior management personnel and 
     counsel, meetings scheduled by the bankruptcy court or the 
     United States trustee (including the initial debtor interview 
     and meeting of creditors pursuant to section 341 of the 
     Bankruptcy Code), unless the court waives this requirement 
     after notice and a hearing upon a finding of extraordinary 
     and compelling circumstances;
       (3) timely file all requisite schedules and the statement 
     of financial affairs, unless the court, after notice and a 
     hearing, grants an extension of up to 30 days from the order 
     of relief, absent extraordinary and compelling circumstances;
       (4) file all postpetition financial and other reports 
     required by the Federal Rules of Bankruptcy Procedure or by 
     local rule of the district court;
       (5) maintain insurance that is customary and appropriate 
     for the industry, subject to section 363(c)(2);
       (6) timely file tax returns and other required government 
     filings;
       (7) timely pay all administrative expense taxes (except for 
     certain contested claims), subject to section 363(c)(2); and
       (8) permit the United States trustee to inspect the 
     debtor's business premises, books, and records at reasonable 
     hours after appropriate prior written notice, unless notice 
     is waived by the debtor.
     Sec. 437. Plan filing and confirmation deadlines
       Section 437 of the conference report amends section 1121(e) 
     of the Bankruptcy Code with respect to the period of time 
     within which a small business debtor must file and confirm a 
     plan of reorganization. This provision is substantively 
     identical to section 437 of the House bill and the Senate 
     amendment. It provides that a small business debtor's 
     exclusive period to file a plan is 180 days from the date of 
     the order for relief, unless the period is extended after 
     notice and a hearing, or the court, for cause, orders 
     otherwise. It further provides that a small business debtor 
     must file a plan and any disclosure statement not later than 
     300 days after the order for relief. These time periods and 
     the time fixed in section 1129(e) may be extended only if (a) 
     the debtor, after providing notice to parties in interest, 
     demonstrates by a preponderance of the evidence that it is 
     more likely than not that the court will confirm a plan 
     within a reasonable period of time; (b) a new deadline is 
     imposed at the time the extension is granted; and (c) the 
     order granting such extension is signed before the expiration 
     of the existing deadline.
     Sec. 438. Plan confirmation deadline
       Section 438 of the conference report amends Bankruptcy Code 
     section 1129 to require the court to confirm a plan not later 
     than 45 days after it is filed if the plan complies with the 
     applicable provisions of the Bankruptcy Code, unless this 
     period is extended pursuant to section 1121(e)(3). This 
     provision is a compromise between section 438 of the House 
     bill and the Senate amendment. The conference report 
     clarifies that the plan must otherwise comply with applicable 
     provisions of the Bankruptcy Code and includes a cross-
     reference to section 1121(e)(3), as added by section 437 of 
     this Act. The House provision specifies that a plan in a 
     small business case must be confirmed not later than 175 days 
     from the date of the order for relief, unless this period is 
     extended pursuant to section 1121(e)(3). The Senate amendment 
     requires the plan to be confirmed within 45 days from the 
     date on which a plan is filed, subject to extension pursuant 
     to certain specified criteria.
     Sec. 439. Duties of the United States trustee
       Section 439 of the conference report is substantively 
     identical to section 439 of the House bill and the Senate 
     amendment. This provision amends section 586(a) of title 28 
     of the United States Code to require the United States 
     trustee to perform the following additional duties with 
     respect to small business debtors:
       (1) conduct an initial debtor interview before the meeting 
     of creditors for the purpose of (a) investigating the 
     debtor's viability, (b) inquiring about the debtor's business 
     plan, (c) explaining the debtor's obligation to file monthly 
     operating reports, (d) attempting to obtain an agreed 
     scheduling order setting various time frames (such as the 
     date for filing a plan and effecting confirmation), and (e) 
     informing the debtor of other obligations;
       (2) if determined to be appropriate and advisable, inspect 
     the debtor's business premises for the purpose of reviewing 
     the debtor's books and records and verifying that the debtor 
     has filed its tax returns;
       (3) review and monitor diligently the debtor's activities 
     to determine as promptly as possible whether the debtor will 
     be unable to confirm a plan; and
       (4) promptly apply to the court for relief in any case in 
     which the United States trustee finds material grounds for 
     dismissal or conversion of the case.

[[Page H5767]]

     Sec. 440. Scheduling conferences
       Section 440 amends section 105(d) of the Bankruptcy Code to 
     mandate that a bankruptcy court hold status conferences as 
     are necessary to further the expeditious and economical 
     resolution of a bankruptcy case. This provision is identical 
     to section 440 of the House bill and the Senate amendment.
     Sec. 441. Serial filer provisions
       Section 441 of the conference report is substantively 
     similar to section 441 of the House bill and the Senate 
     amendment. Subsection (1) amends section 362 of the 
     Bankruptcy Code to provide that a court may award only actual 
     damages for a violation of the automatic stay committed by an 
     entity in the good faith belief that subsection (h) of 
     section 362 (as added by this Act) applies to the debtor. 
     Section 441(2) adds a new subsection to section 362 of the 
     Bankruptcy Code specifying that the automatic stay does not 
     apply where the chapter 11 debtor: (1) is a debtor in a small 
     business case pending at the time the subsequent case is 
     filed; (2) was a debtor in a small business case dismissed 
     for any reason pursuant to an order that became final in the 
     two-year period ending on the date of the order for relief 
     entered in the pending case; (3) was a debtor in small 
     business case in which a plan was confirmed in the two-year 
     period ending on the date of the order for relief entered in 
     the pending case; or (4) is an entity that has acquired 
     substantially all of the assets or business of a small 
     business debtor described in the preceding paragraphs, unless 
     such entity establishes by a preponderance of the evidence 
     that it acquired the assets or business in good faith and not 
     for the purpose of evading this provision. This exception was 
     added to the conference report as a compromise.
       An exception to this provision applies to a chapter 11 case 
     that is commenced involuntarily and involves no collusion 
     between the debtor and the petitioning creditors. Also, it 
     does not apply if the debtor proves by a preponderance of the 
     evidence that: (1) the filing of the subsequent case resulted 
     from circumstances beyond the debtor's control and which were 
     not foreseeable at the time the prior case was filed; and (2) 
     it is more likely than not that the court will confirm a 
     feasible plan of reorganization (but not a liquidating plan) 
     within a reasonable time.
     Sec. 442. Expanded grounds for dismissal or conversion and 
         appointment of trustee
       Section 442 largely reflects the Senate position as 
     represented in section 442 of the Senate amendment. 
     Subsection (a) amends section 1112(b) of the Bankruptcy Code 
     to mandate that the court convert or dismiss a chapter 11 
     case, whichever is in the best interests of creditors and the 
     estate, if the movant establishes cause, absent unusual 
     circumstances. In this regard, the court must specify the 
     circumstances that support the court's finding that 
     conversion or dismissal is not in the best interests of 
     creditors and the estate. This exception was added to the 
     conference report as a compromise.
       In addition, the provision specifies an exception to the 
     provision's mandatory requirement applies if: (1) the debtor 
     or a party in interest objects and establishes that there is 
     a reasonable likelihood that a plan will be confirmed within 
     the time period set forth in section 1121(e) and 1129(e), or 
     if these provisions are inapplicable, within a reasonable 
     period of time; (2) the grounds for granting such relief 
     include an act or omission of the debtor for which there 
     exists a reasonable justification for such act or omission; 
     and (3) such act or omission will be cured within a 
     reasonable period of time.
       The court must commence the hearing on a section 1112(b) 
     motion within 30 days of its filing and decide the motion not 
     later than 15 days after commencement of the hearing unless 
     the movant expressly consents to a continuance for a 
     specified period of time or compelling circumstances prevent 
     the court from meeting these time limits. Section 442 
     provides that the term ``cause'' under section 1112(b), as 
     amended by this provision, includes the following:
       (1) substantial or continuing loss to or diminution of the 
     estate and the absence of a reasonable likelihood of 
     rehabilitation;
       (2) gross mismanagement of the estate;
       (3) failure to maintain appropriate insurance that poses a 
     material risk to the estate or the public;
       (4) unauthorized use of cash collateral that is harmful to 
     one or more creditors;
       (5) failure to comply with a court order;
       (6) unexcused failure to timely satisfy any filing or 
     reporting requirement under the Bankruptcy Code or applicable 
     rule;
       (7) failure to attend the section 341 meeting of creditors 
     or an examination pursuant to Rule 2004 of the Federal Rules 
     of Bankruptcy Procedure, without good cause shown by the 
     debtor;
       (8) failure to timely provide information or to attend 
     meetings reasonably requested by the United States trustee or 
     bankruptcy administrator;
       (9) failure to timely pay taxes owed after the order for 
     relief or to file tax returns due postpetition;
       (10) failure to file a disclosure statement or to confirm a 
     plan within the time fixed by the Bankruptcy Code or pursuant 
     to court order;
       (11) failure to pay any requisite fees or charges under 
     chapter 123 of title 28 of the United States Code;
       (12) revocation of a confirmation order;
       (13) inability to effectuate substantial consummation of a 
     confirmed plan;
       (14) material default by the debtor with respect to a 
     confirmed plan;
       (15) termination of a plan by reason of the occurrence of a 
     condition specified in the plan; and
       (16) the debtor's failure to pay any domestic support 
     obligation that first becomes payable postpetition

     This definition of the term ``cause'' represents a compromise 
     between the House and Senate conferees.
       Section 442(b) creates additional grounds for the 
     appointment of a chapter 11 trustee under section 1104(a). It 
     provides that should the bankruptcy court determine cause 
     exists to convert or dismiss a chapter 11 case, it may 
     appoint a trustee or examiner if in the best interests of 
     creditors and the bankruptcy estate. Section 442 of the 
     conference report represents a compromise between the 
     House and Senate conferees. Under the House version of 
     this provision, the standard for the exception is a plan 
     with a reasonable possibility of being confirmed will be 
     filed within a reasonable period of time. The standard 
     under the Senate amendment is reasonable likelihood that a 
     plan will be confirmed within specified time frames 
     established in sections 1121(e) and 1129(e), or within a 
     reasonable period of time in those cases where sections 
     1121(e) or 1129(e) do not apply.
     Sec. 443. Study of operation of title 11, United States Code, 
         with respect to small businesses
       Section 443 of the conference report is substantively 
     identical to section 443 of the House bill and the Senate 
     amendment. This provision directs the Administrator of the 
     Small Business Administration, in consultation with the 
     Attorney General, the Director of the Executive Office for 
     United States Trustees, and the Director of the 
     Administrative Office of the United States Courts, to conduct 
     a study to determine: (i) the internal and external factors 
     that cause small businesses (particularly sole 
     proprietorships) to seek bankruptcy relief and the factors 
     that cause small businesses to successfully complete their 
     chapter 11 cases; and (ii) how the bankruptcy laws may be 
     made more effective and efficient in assisting small business 
     to remain viable.
     Sec. 444. Payment of interest
       Section 444 of the conference report is substantively 
     identical to section 444 of the House bill and the Senate 
     amendment. Subsection (1) amends section 362(d)(3) of the 
     Bankruptcy Code to require a court to grant relief from the 
     automatic stay within 30 days after it determines that a 
     single asset real estate debtor is subject to this provision. 
     Section 444(2) amends section 362(d)(3)(B) to specify that 
     relief from the automatic stay shall be granted unless the 
     single asset real estate debtor has commenced making monthly 
     payments to each creditor secured by the debtor's real 
     property (other than a claim secured by a judgment lien or 
     unmatured statutory lien) in an amount equal to the interest 
     at the then applicable nondefault contract rate of interest 
     on the value of the creditor's interest in the real estate. 
     It allows a debtor in its sole discretion to make the 
     requisite interest payments out of rents or other proceeds 
     generated by the real property, notwithstanding section 
     363(c)(2).
     Sec. 445. Priority for administrative expenses
       Section 445 of the conference report is substantively 
     identical to section 445 of the House bill and the Senate 
     amendment. The provision amends section 503(b) of the 
     Bankruptcy Code to add a new administrative expense priority 
     for a nonresidential real property lease that is assumed 
     under section 365 and then subsequently rejected. The amount 
     of the priority is the sum of all monetary obligations due 
     under the lease (excluding penalties and obligations arising 
     from or relating to a failure to operate) for the two-year 
     period following the rejection date or actual turnover of the 
     premises (whichever is later), without reduction or setoff 
     for any reason, except for sums actually received or to be 
     received from a nondebtor. Any remaining sums due for the 
     balance of the term of the lease are treated as a claim under 
     section 502(b)(6) of the Bankruptcy Code.
     Sec. 446. Duties with respect to a debtor who is a plan 
         administrator of an employee benefit plan
       Section 446 of the conference report reflects the Senate 
     position as represented in section 420 of the Senate 
     amendment. There is no counterpart to this provision in the 
     House bill. Subsection (a) amends Bankruptcy Code section 
     521(a) to require a debtor, unless a trustee is serving in 
     the case, to serve as the administrator (as defined in the 
     Employee Retirement Income Security Act) of an employee 
     benefit plan if the debtor served in such capacity at the 
     time the case was filed. Section 446(b) amends Bankruptcy 
     Code section 704 to require the chapter 7 trustee to perform 
     the obligations of such administrator in a case where the 
     debtor was required to perform such obligations. Section 
     446(c) amends Bankruptcy Code section 1106(a) to require a 
     chapter 11 trustee to perform these obligations.
     Sec. 447. Appointment of committee of retired employees
       This provision amends section 1114(d) of the Bankruptcy 
     Code to clarify that it is the responsibility of the United 
     States trustee to appoint members to a committee of retired 
     employees. There is no antecedent to this provision in either 
     the House bill or the Senate amendment.

[[Page H5768]]

                Title V--Municipal Bankruptcy Provisions

     Sec. 501. Petition and proceedings related to petition
       Section 501 amends sections 921(d) and 301 of the 
     Bankruptcy Code to clarify that the court must enter the 
     order for relief in a chapter 9 case. This provision is 
     substantively identical to section 501 of the House bill and 
     the Senate amendment.
     Sec. 502. Applicability of other sections to chapter 9
       Section 502 of the conference report is substantively 
     identical to section 502 of the House bill and the Senate 
     amendment. This provision amends section 901 of the 
     Bankruptcy Code to make the following sections applicable to 
     chapter 9 cases:
       (1) section 555 (contractual right to liquidate, terminate 
     or accelerate a securities contract);
       (2) section 556 (contractual right to liquidate, terminate 
     or accelerate a commodities or forward contract);
       (3) section 559 (contractual right to liquidate, terminate 
     or accelerate a repurchase agreement);
       (4) section 560 (contractual right to liquidate, terminate 
     or accelerate a swap agreement);
       (5) section 561 (contractual right to liquidate, terminate, 
     accelerate, or offset under a master netting agreement and 
     across contracts); and
       (6) section 562 (damage measure in connection with swap 
     agreements, securities contracts, forward contracts, 
     commodity contracts, repurchase agreements, or master netting 
     agreement).

                       Title VI--Bankruptcy Data

     Sec. 601. Improved bankruptcy statistics
       Section 601 of the conference report is substantively 
     similar to section 601 of the House bill and the Senate 
     amendment. In recognition of the delayed effective date of 
     this Act, section 601 extends the date by which the report 
     described herein must be submitted.
       This provision amends chapter 6 of title 28 of the United 
     States Code to require the clerk for each district (or the 
     bankruptcy court clerk if one has been certified pursuant to 
     section 156(b) of title 28 of the United States Code) to 
     collect certain statistics for chapter 7, 11, and 13 cases in 
     a standardized format prescribed by the Director of the 
     Administrative Office of the United States Courts and to make 
     this information available to the public. Not later than June 
     1, 2005, the Director must submit a report to Congress 
     concerning the statistical information collected and then 
     must report annually thereafter. The statistics must be 
     itemized by chapter of the Bankruptcy Code and be presented 
     in the aggregate for each district. The specific categories 
     of information that must be gathered include the following:
       (1) scheduled total assets and liabilities of debtors who 
     are individuals with primarily consumer debts under chapters 
     7, 11 and 13 by category;
       (2) such debtors' current monthly income, average income, 
     and average expenses;
       (3) the aggregate amount of debts discharged during the 
     reporting period based on the difference between the total 
     amount of scheduled debts and by categories that are 
     predominantly nondischargeable;
       (4) the average time between the filing of the bankruptcy 
     case and the closing of the case;
       (5) the number of cases in which reaffirmation agreements 
     were filed, the total number of reaffirmation agreements 
     filed, the number of cases in which the debtor was pro se and 
     a reaffirmation agreement was filed, and the number of cases 
     in which the reaffirmation agreement was approved by the 
     court;
       (6) for chapter 13 cases, information on the number of (a) 
     orders determining the value of secured property in an amount 
     less than the amount of the secured claim, (b) final orders 
     that determined the value of property securing a claim, (c) 
     cases dismissed, (d) cases dismissed for failure to make 
     payments under the plan, (e) cases refiled after dismissal, 
     (f) cases in which the plan was completed (separately 
     itemized with respect to the number of modifications made 
     before completion of the plan, and (g) cases in which the 
     debtor had previously sought bankruptcy relief within the six 
     years preceding the filing of the present case;
       (7) the number of cases in which creditors were fined for 
     misconduct and the amount of any punitive damages awarded for 
     creditor misconduct; and
       (8) the number of cases in which sanctions under rule 9011 
     of the Federal Rules of Bankruptcy Procedure were imposed 
     against a debtor's counsel and the damages awarded under this 
     rule.
     Section 601 provides that the amendments in this provision 
     take effect 18 months after the date of enactment of this 
     Act.
     Sec. 602. Uniform rules for the collection of bankruptcy data
       Section 602 of the conference report is substantively 
     identical to section 602 of the House bill and the Senate 
     amendment. It amends chapter 39 of title 28 of the United 
     States Code to add a provision requiring the Attorney General 
     to promulgate rules mandating the establishment of uniform 
     forms for final reports in chapter 7, 12 and 13 cases and 
     periodic reports in chapter 11 cases. This provision also 
     specifies that these reports be designed to facilitate 
     compilation of data and to provide maximum public access by 
     physical inspection at one or more central filing locations 
     and by electronic access through the Internet or other 
     appropriate media. The information should enable an 
     evaluation of the efficiency and practicality of the Federal 
     bankruptcy system. In issuing rules, the Attorney General 
     must consider: (1) the reasonable needs of the public for 
     information about the Federal bankruptcy system; (2) the 
     economy, simplicity, and lack of undue burden on persons 
     obligated to file the reports; and (3) appropriate privacy 
     concerns and safeguards. Section 602 provides that final 
     reports by trustees in chapter 7, 12, and 13 cases include 
     the following information: (1) the length of time the case 
     was pending; (2) assets abandoned; (3) assets exempted; (4) 
     receipts and disbursements of the estate; (5) administrative 
     expenses, including those associated with section 707(b) of 
     the Bankruptcy Code, and the actual costs of administering 
     chapter 13 cases; (6) claims asserted; (7) claims allowed; 
     and (8) distributions to claimants and claims discharged 
     without payment. With regard to chapter 11 cases, section 602 
     provides that periodic reports include the following 
     information regarding:
       (1) the standard industry classification for businesses 
     conducted by the debtor, as published by the Department of 
     Commerce;
       (2) the length of time that the case was pending;
       (3) the number of full-time employees as of the date of the 
     order for relief and at the end of each reporting period;
       (4) cash receipts, cash disbursements, and profitability of 
     the debtor for the most recent period and cumulatively from 
     the date of the order for relief;
       (5) the debtor's compliance with the Bankruptcy Code, 
     including whether tax returns have been filed and taxes have 
     been paid;
       (6) professional fees approved by the court for the most 
     recent period and cumulatively from the date of the order for 
     relief; and
       (7) plans filed and confirmed, including the aggregate 
     recoveries of holders by class and as a percentage of total 
     claims of an allowed class.
     Sec. 603. Audit procedures
       Section 603 is substantively identical to section 603 of 
     the House bill and the Senate amendment. Subsection (a)(1) 
     requires the Attorney General (for judicial districts served 
     by United States trustees) and the Judicial Conference of the 
     United States (for judicial districts served by bankruptcy 
     administrators) to establish procedures to determine the 
     accuracy, veracity, and completeness of petitions, schedules 
     and other information filed by debtors pursuant to sections 
     111, 521 and 1322 of the Bankruptcy Code. Section 603(a)(1) 
     requires the audits to be conducted in accordance with 
     generally accepted auditing standards and performed by 
     independent certified public accountants or independent 
     licensed public accountants. It permits the Attorney General 
     and the Judicial Conference to develop alternative auditing 
     standards not later than two years after the date of 
     enactment of this Act. Section 603(a)(2) requires these 
     procedures to: (1) establish a method of selecting 
     appropriate qualified contractors to perform these audits; 
     (2) establish a method of randomly selecting cases for audit, 
     and that a minimum of at least one case out of every 250 
     cases be selected for audit; (3) require audits in cases 
     where the schedules of income and expenses reflect greater 
     than average variances from the statistical norm for the 
     district if they occur by reason of higher income or higher 
     expenses than the statistical norm in which the schedules 
     were filed; and (4) require the aggregate results of such 
     audits, including the percentage of cases by district in 
     which a material misstatement of income or expenditures is 
     reported, to be made available to the public on an annual 
     basis.
       Section 603(b) amends section 586 of title 28 of the United 
     States Code to require the United States trustee to submit 
     reports as directed by the Attorney General, including the 
     results of audits performed under section 603(a). In 
     addition, it authorizes the United States trustee to contract 
     with auditors to perform the audits specified in this 
     provision. Further, it requires the report of each audit to 
     be filed with the court and transmitted to the United States 
     trustee. The report must specify material misstatements of 
     income, expenditures or assets. In a case where a material 
     misstatement has been reported, the clerk must provide notice 
     of such misstatement to creditors and the United States 
     trustee must report it to the United States Attorney, if 
     appropriate, for possible criminal prosecution. If advisable, 
     the United States trustee must also take appropriate action, 
     such as revoking the debtor's discharge.
       Section 603(c) amends section 521 of the Bankruptcy Code to 
     make it a duty of the debtor to cooperate with an auditor. 
     Section 603(d) amends section 727 of the Bankruptcy Code to 
     add, as a ground for revocation of a chapter 7 discharge the 
     debtor's failure to: (a) satisfactorily explain a material 
     misstatement discovered as the result of an audit pursuant to 
     this provision; or (b) make available for inspection all 
     necessary documents or property belonging to the debtor that 
     are requested in connection with such audit. Section 603(e) 
     provides that the amendments made by this provision take 
     effect 18 months after the Act's date of enactment.
     Sec. 604. Sense of Congress regarding availability of 
         bankruptcy data
       Section 604 expresses a sense of the Congress that it is a 
     national policy of the United States that all data collected 
     by bankruptcy clerks in electronic form (to the extent such 
     data relates to public records pursuant to section 107 of the 
     Bankruptcy Code) should be made available to the public

[[Page H5769]]

     in a useable electronic form in bulk, subject to appropriate 
     privacy concerns and safeguards as determined by the Judicial 
     Conference of the United States. It also states that a 
     uniform bankruptcy data system should be established that 
     uses a single set of data definitions and forms to collect 
     such data and that data for any particular bankruptcy case 
     should be aggregated in electronic format. This provision is 
     substantively identical to section 604 of the House bill and 
     the Senate amendment.

                  Title VII--Bankruptcy Tax Provisions

     Sec. 701. Treatment of certain tax liens
       Section 701 of the conference report is substantively 
     identical to section 701 of the House bill and the Senate 
     amendment. Subsection (a) makes several amendments to section 
     724 of the Bankruptcy Code to provide greater protection for 
     holders of ad valorem tax liens on real or personal property 
     of the estate. Many school boards obtain liens on real 
     property to ensure collection of unpaid ad valorem taxes. 
     Under current law, local governments are sometimes unable to 
     collect these taxes despite the presence of a lien because 
     they may be subordinated to certain claims and expenses as a 
     result of section 724. Section 701(a) is intended to protect 
     the holders of these tax liens from, among other things, 
     erosion of their claims' status by expenses incurred under 
     chapter 11 of the Bankruptcy Code. Pursuant to section 
     701(a), subordination of ad valorem tax liens is still 
     possible under section 724(b), but limited to the payment of: 
     (1) claims incurred under chapter 7 for wages, salaries, or 
     commissions (but not expenses incurred under chapter 11); (2) 
     claims for wages, salaries, and commissions entitled to 
     priority under section 507(a)(4); and (3) claims for 
     contributions to employee benefit plans entitled to priority 
     under section 507(a)(5). Before a tax lien on real or 
     personal property may be subordinated pursuant to section 
     724, the chapter 7 trustee must exhaust all other 
     unencumbered estate assets and, consistent with section 506, 
     recover reasonably necessary costs and expenses of preserving 
     or disposing of such property. Section 701(b) amends section 
     505(a)(2) of the Bankruptcy Code to prevent a bankruptcy 
     court from determining the amount or legality of an ad 
     valorem tax on real or personal property if the applicable 
     period for contesting or redetermining the amount of the 
     claim under nonbankruptcy law has expired.
     Sec. 702. Treatment of fuel tax claims
       Section 702 is substantively identical to section 702 of 
     the House bill and the Senate amendment. The provision amends 
     section 501 of the Bankruptcy Code to simplify the process 
     for filing of claims by states for certain fuel taxes. Rather 
     than requiring each state to file a claim for these taxes (as 
     is the case under current law), section 702 permits the 
     designated ``base jurisdiction'' under the International Fuel 
     Tax Agreement to file a claim on behalf of all states, which 
     would then be allowed as a single claim.
     Sec. 703. Notice of request for a determination of taxes
       Under current law, a trustee or debtor in possession may 
     request a governmental unit to determine administrative tax 
     liabilities in order to receive a discharge of those 
     liabilities. There are no requirements as to the content or 
     form of such notice to the government. Section 703 of the 
     conference report amends section 505(b) of the Bankruptcy 
     Code to require the clerk of each district to maintain a list 
     of addresses designated by governmental units for service 
     of section 505 requests. In addition, the list may also 
     include information concerning filing requirements 
     specified by such governmental units. If a governmental 
     entity does not designate an address and provide that 
     address to the bankruptcy court clerk, any request made 
     under section 505(b) of the Bankruptcy Code may be served 
     at the address of the appropriate taxing authority of that 
     governmental unit. This provision is substantively 
     identical to section 703 of the House bill and the Senate 
     amendment.
     Sec. 704. Rate of interest on tax claims
       Under current law, there is no uniform rate of interest 
     applicable to tax claims. As a result, varying standards have 
     been used to determine the applicable rate. Section 704 of 
     the conference report amends the Bankruptcy Code to add 
     section 511 for the purpose of simplifying the interest rate 
     calculation. It provides that for all tax claims (federal, 
     state, and local), including administrative expense taxes, 
     the interest rate shall be determined in accordance with 
     applicable nonbankruptcy law. With respect to taxes paid 
     under a confirmed plan, the rate of interest is determined as 
     of the calendar month in which the plan is confirmed. This 
     provision is substantively identical to section 704 of the 
     House bill and the Senate amendment.
     Sec. 705. Priority of tax claims
       Under current law, a tax claim is entitled to be treated as 
     a priority claim if it arises within certain specified time 
     periods. In the case of income taxes, a priority arises, 
     among other time periods, if the tax return was due within 3 
     years of the filing of the bankruptcy petition or if the 
     assessment of the tax was made within 240 days of the filing 
     of the petition. The 240-day period is tolled during the time 
     that an offer in compromise is pending (plus 30 days). Though 
     the statute is silent, most courts have also held that the 3-
     year and 240-day time periods are tolled during the pendency 
     of a previous bankruptcy case. Section 705 amends section 
     507(a)(8) of the Bankruptcy Code to codify the rule tolling 
     priority periods during the pendency of a previous bankruptcy 
     case during that 240-day period together with an additional 
     90 days. It also includes tolling provisions to adjust for 
     the collection due process rights provided by the Internal 
     Revenue Service Restructuring and Reform Act of 1998. During 
     any period in which the government is prohibited from 
     collecting a tax as a result of a request by the debtor for a 
     hearing and an appeal of any collection action taken against 
     the debtor, the priority is tolled, plus 90 days. Also, 
     during any time in which there was a stay of proceedings in a 
     prior bankruptcy case or collection of an income tax was 
     precluded by a confirmed bankruptcy plan, the priority is 
     tolled, plus 90 days. This provision is substantively 
     identical to section 705 of the House bill and the Senate 
     amendment.
     Sec. 706. Priority property taxes incurred
       Under current law, many provisions of the Bankruptcy Code 
     are keyed to the word ``assessed.'' While this term has an 
     accepted meaning in the federal system, it is not used in 
     many state and local statutes and has created some confusion. 
     To eliminate this problem with respect to real property 
     taxes, section 706 amends section 507(a)(8)(B) of the 
     Bankruptcy Code by replacing the word ``assessed'' with 
     ``incurred''. This provision is substantively identical to 
     section 706 of the House bill and the Senate amendment.
     Sec. 707. No discharge of fraudulent taxes in chapter 13
       Under current law, a debtor's ability to discharge tax 
     debts varies depending on whether the debtor is in chapter 7 
     or chapter 13. In a chapter 7 case, taxes from a return due 
     within 3 years of the petition date, taxes assessed within 
     240 days, or taxes related to an unfiled return or false 
     return are not dischargeable. Chapter 13, on the other hand, 
     allows these obligations to be discharged. Section 707 of the 
     conference report amends Bankruptcy Code section 1328(a)(2) 
     to prohibit the discharge of tax claims described in section 
     523(a)(1)(B) and (C) as well as claims for a tax required to 
     be collected or withheld and for which the debtor is liable 
     in whatever capacity pursuant to section 507(a)(8)(C). This 
     provision is substantively identical to section 707 of the 
     House bill and the Senate amendment.
     Sec. 708. No discharge of fraudulent taxes in chapter 11
       Section 708 of the conference report largely reflects the 
     Senate position as represented in section 708 of the Senate 
     amendment. Under current law, the confirmation of a chapter 
     11 plan discharges a corporate debtor from most debts. 
     Section 708 amends section 1141(d) of the Bankruptcy Code to 
     except from discharge in corporate chapter 11 case a debt 
     specified in subsections 523(a)(2)(A) and (B) of the 
     Bankruptcy Code owed to a domestic governmental unit. In 
     addition, it excepts from discharge a debt owed to a person 
     as the result of an action filed under subchapter III of 
     chapter 37 of title 31 of the United States Code or any 
     similar state statute. In contrast, the House renders any 
     debt under section 523(a)(2) nondischargeable in a corporate 
     chapter 11 case. Like the House provision and its Senate 
     counterpart, however, section 708 excepts from discharge a 
     debt for a tax or customs duty with respect to which the 
     debtor made a fraudulent tax return or willfully attempted in 
     any manner to evade or defeat such tax.
     Sec. 709. Stay of tax proceedings limited to prepetition 
         taxes
       Under current law, the filing of a petition for relief 
     under the Bankruptcy Code activates an automatic stay that 
     enjoins the commencement or continuation of a case in the 
     federal tax court. This rule was arguably extended in Halpern 
     v. Commissioner,\3\ which held that the tax court did not 
     have jurisdiction to hear a case involving a postpetition 
     year. To address this issue, section 709 of the conference 
     report amends section 362(a)(8) of the Bankruptcy Code to 
     specify that the automatic stay is limited to an individual 
     debtor's prepetition taxes (taxes incurred before entering 
     bankruptcy). The amendment clarifies that the automatic stay 
     does not apply to an individual debtor's postpetition taxes. 
     In addition, section 709 allows the bankruptcy court to 
     determine whether the automatic stay applies to the 
     postpetition tax liabilities of a corporate debtor. This 
     provision is substantively identical to section 709 of the 
     House bill and the Senate amendment.
---------------------------------------------------------------------------
     \3\ 96 T.C. 895 (1991).
---------------------------------------------------------------------------
     Sec. 710. Periodic payment of taxes in chapter 11 cases
       Section 710 of the conference report amends section 
     1129(a)(9) of the Bankruptcy Code to provide that the allowed 
     amount of priority tax claims (as of the plan's effective 
     date) must be paid in regular cash installments within five 
     years from the entry of the order for relief. The manner of 
     payment may not be less favorable than that accorded the 
     most favored nonpriority unsecured class of claims under 
     section 1122(b). In addition, it requires the same payment 
     treatment to be accorded to secured section 507(a)(8) 
     claims of a governmental unit. This provision is 
     substantively identical to section 710 of the House bill 
     and the Senate amendment.

[[Page H5770]]

     Sec. 711. Avoidance of statutory liens prohibited
       The Internal Revenue Code gives special protections to 
     certain purchasers of securities and motor vehicles 
     notwithstanding the existence of a filed tax lien. Section 
     711 of the conference report amends section 545(2) of the 
     Bankruptcy Code to prevent that provision's special 
     protections from being used to avoid an otherwise valid lien. 
     Specifically, it prevents the avoidance of unperfected liens 
     against a bona fide purchaser, if the purchaser qualifies as 
     such under section 6323 of the Internal Revenue Code or a 
     similar provision under state or local law. Section 711 is 
     substantively identical to section 711 of the House bill and 
     the Senate amendment.
     Sec. 712. Payment of taxes in the conduct of business
       Although current law generally requires trustees and 
     receivers to pay taxes in the ordinary course of the debtor's 
     business, the payment of administrative expenses must first 
     be authorized by the court. Section 712(a) of the conference 
     report amends section 960 of title 28 of the United States 
     Code to clarify that postpetition taxes in the ordinary 
     course of business must be paid on or before when such tax is 
     due under applicable nonbankruptcy law, with certain 
     exceptions. This requirement does not apply if the obligation 
     is a property tax secured by a lien against property that is 
     abandoned under section 554 within a reasonable time after 
     the lien attaches. In addition, the requirement does not 
     pertain where the payment is excused under the Bankruptcy 
     Code. With respect to chapter 7 cases, section 712(a) 
     provides that the payment of a tax claim may be deferred 
     until final distribution pursuant to section 726 if the tax 
     was not incurred by a chapter 7 trustee or if the court, 
     prior to the due date of the tax, finds that the estate has 
     insufficient funds to pay all administrative expenses in 
     full. Section 712(b) amends section 503(b)(1)(B)(i) of the 
     Bankruptcy Code to clarify that this provision applies to 
     secured as well as unsecured tax claims, including property 
     taxes based on liability that is in rem, in personam or both. 
     Section 712(c) amends section 503(b)(1) to exempt a 
     governmental unit from the requirement to file a request for 
     payment of an administrative expense. Section 712(d)(1) 
     amends section 506(b) to provide that to the extent that an 
     allowed claim is oversecured, the holder is entitled to 
     interest and any reasonable fees, costs, or charges provided 
     for under state law. Section 712(d)(2), in turn, amends 
     section 506(c) to permit a trustee to recover from a secured 
     creditor the payment of all ad valorem property taxes. 
     Section 712 of the conference report is substantively 
     identical to section 712 of the House bill and the Senate 
     amendment.
     Sec. 713. Tardily filed priority tax claims
       Section 713 of the conference report is substantively 
     identical to section 713 of the House bill and the Senate 
     amendment. This provision amends section 726(a)(1) of the 
     Bankruptcy Code to require a claim under section 507 that is 
     not timely filed pursuant to section 501 to be entitled to a 
     distribution if such claim is filed the earlier of the date 
     that is ten days following the mailing to creditors of the 
     summary of the trustee's final report or before the trustee 
     commences final distribution.
     Sec. 714. Income tax returns prepared by tax authorities
       Section 714 of the conference report is substantively 
     identical to section 714 of the House bill and the Senate 
     amendment. This provision amends section 523(a) of the 
     Bankruptcy Code to provide that a return filed on behalf of a 
     taxpayer who has provided information sufficient to complete 
     a return constitutes filing a return (and the debt can be 
     discharged), but that a return filed on behalf of a taxpayer 
     based on information the Secretary obtains through testimony 
     or otherwise does not constitute filing a return (and the 
     debt cannot be discharged).
     Sec. 715. Discharge of the estate's liability for unpaid 
         taxes
       Under the Bankruptcy Code, a trustee or debtor in 
     possession may request a prompt audit to determine 
     postpetition tax liabilities. If the government does not make 
     a determination or request an extension of time to audit, 
     then the trustee or debtor in possession's determination of 
     taxes will be final. Several court cases have held that while 
     this protects the debtor and the trustee, it does not 
     necessarily protect the estate. Section 715 of the conference 
     report amends section 505(b) of the Bankruptcy Code to 
     clarify that the estate is also protected if the government 
     does not request an audit of the debtor's tax returns. 
     Therefore, if the government does not make a determination of 
     postpetition tax liabilities or request extension of time to 
     audit, then the estate's liability for unpaid taxes is 
     discharged. This provision is substantively identical to 
     section 715 of the House bill and the Senate amendment.
     Sec. 716. Requirement to file tax returns to confirm chapter 
         13 plans
       Under current law, a debtor may enjoy the benefits of 
     chapter 13 even if delinquent in the filing of tax returns. 
     Section 716 of the conference report responds to this 
     problem. This provision is substantively identical to section 
     716 of the House bill and the Senate amendment. Subsection 
     (a) amends section 1325(a) of the Bankruptcy Code to require 
     a chapter 13 debtor file all applicable Federal, state, and 
     local tax returns as a condition of confirmation as required 
     by section 1308 (as added by section 716(b)). Section 716(b) 
     adds section 1308 to chapter 13. This provision requires a 
     chapter 13 debtor to be current on the filing of tax returns 
     for the four-year period preceding the filing of the case. If 
     the returns are not filed by the date on which the meeting of 
     creditors is first scheduled, the trustee may hold open that 
     meeting for a reasonable period of time to allow the debtor 
     to file any unfiled returns. The additional period of time 
     may not extend beyond 120 days after the date of the meeting 
     of the creditors or beyond the date on which the return is 
     due under the last automatic extension of time for filing. 
     The debtor, however, may obtain an extension of time from the 
     court if the debtor demonstrates by a preponderance of the 
     evidence that the failure to file was attributable to 
     circumstances beyond the debtor's control.
       Section 716(c) amends section 1307 of the Bankruptcy Code 
     to provide that if a chapter 13 debtor fails to file a tax 
     return as required by section 1308, the court must dismiss 
     the case or convert it to one under chapter 7 (whichever is 
     in the best interests of creditors and the estate) on request 
     of a party in interest or the United States trustee after 
     notice and a hearing.
       Section 716(d) amends section 502(b)(9) of the Bankruptcy 
     Code to provide that in a chapter 13 case, a governmental 
     unit's tax claim based on a return filed under section 1308 
     shall be deemed to be timely filed if the claim is filed 
     within 60 days from the date on which such return is filed. 
     Section 716(e) states the sense of the Congress that the 
     Advisory Committee on Bankruptcy Rules of the Judicial 
     Conference of the United States should propose for 
     adoption official rules with respect an objection by a 
     governmental unit to confirmation of a chapter 13 plan 
     when such claim pertains to a tax return filed pursuant to 
     section 1308.
     Sec. 717. Standards for tax disclosure
       Before creditors and stockholders may be solicited to vote 
     on a chapter 11 plan, the plan proponent must file a 
     disclosure statement that provides adequate information to 
     holders of claims and interests so they can make a decision 
     as to whether or not to vote in favor of the plan. As the tax 
     consequences of a plan can have a significant impact on the 
     debtor's reorganization prospects, section 717 amends section 
     1125(a) of the Bankruptcy Code to require that a chapter 11 
     disclosure statement discuss the plan's potential material 
     Federal tax consequences to the debtor, any successor to the 
     debtor, and to a hypothetical investor that is representative 
     of the claimants and interest holders in the case. This 
     provision is substantively identical to section 717 of the 
     House bill and the Senate amendment.
     Sec. 718. Setoff of tax refunds
       Under current law, the filing of a bankruptcy petition 
     automatically stays the setoff of a prepetition tax refund 
     against a prepetition tax obligation unless the bankruptcy 
     court approves the setoff. Interest and penalties that may 
     continue to accrue may also be nondischargeable pursuant to 
     section 523(a)(1) of the Bankruptcy Code and cause individual 
     debtors undue hardship. Section 718 of the conference report 
     amends section 362(b) of the Bankruptcy Code to create an 
     exception to the automatic stay whereby such setoff could 
     occur without court order unless it would not be permitted 
     under applicable nonbankruptcy law because of a pending 
     action to determine the amount or legality of the tax 
     liability. In that circumstance, the governmental authority 
     may hold the refund pending resolution of the action, unless 
     the court, on motion of the trustee and after notice and a 
     hearing, grants the taxing authority adequate protection 
     pursuant to section 361. Section 718 is substantively 
     identical to section 718 of the House bill and the Senate 
     amendment.
     Sec. 719. Special provisions related to the treatment of 
         state and local taxes
       Section 719 of the conference report is substantively 
     identical to section 719 of the House bill and the Senate 
     amendment. This provision conforms state and local income tax 
     administrative issues to the Internal Revenue Code. For 
     example, under federal law, a bankruptcy petitioner filing on 
     March 5 has two tax years--January 1 to March 4, and March 5 
     to December 31. Under the Bankruptcy Code, however, state and 
     local tax years are divided differently--January 1 to March 
     5, and March 6 to December 31. Section 719 requires the 
     states to follow the federal convention. It conforms state 
     and local tax administration to the Internal Revenue Code in 
     the following areas: division of tax liabilities and 
     responsibilities between the estate and the debtor, tax 
     consequences with respect to partnerships and transfers of 
     property, and the taxable period of a debtor. Section 719 
     does not conform state and local tax rates to federal tax 
     rates.
     Sec. 720. Dismissal for failure to timely file tax returns
       Under existing law, there is no definitive rule with 
     respect to whether a bankruptcy court may dismiss a 
     bankruptcy case if the debtor fails to file returns for taxes 
     incurred postpetition. Section 720 of the conference report 
     amends section 521 of the Bankruptcy Code to allow a taxing 
     authority to request that the court dismiss or convert a 
     bankruptcy case if the debtor fails to file a postpetition 
     tax return or obtain an extension. If the debtor does not 
     file the required return or obtain the extension within 90 
     days from the time of the request by the taxing authority to 
     file the return, the court must

[[Page H5771]]

     convert or dismiss the case, whichever is in the best 
     interest of creditors and the estate. Section 720 is 
     substantively identical to section 720 of the House bill and 
     the Senate amendment.

           Title VIII--Ancillary and Other Cross-Border Cases

       Title VIII of the conference report adds a new chapter to 
     the Bankruptcy Code for transnational bankruptcy cases. It 
     incorporates the Model Law on Cross-Border Insolvency to 
     encourage cooperation between the United States and foreign 
     countries with respect to transnational insolvency cases. 
     Title VIII is intended to provide greater legal certainty for 
     trade and investment as well as to provide for the fair and 
     efficient administration of cross-border insolvencies, which 
     protects the interests of creditors and other interested 
     parties, including the debtor. In addition, it serves to 
     protect and maximize the value of the debtor's assets. Title 
     VIII is substantially identical to title VIII of the House 
     bill and the Senate amendment.
     Sec. 801. Amendment to add chapter 15 to title 11, United 
         States Code
       Section 801 introduces chapter 15 to the Bankruptcy Code, 
     which is the Model Law on Cross-Border Insolvency (``Model 
     Law'') promulgated by the United Nations Commission on 
     International Trade Law (``UNCITRAL'') at its Thirtieth 
     Session on May 12-30, 1997.\4\ Cases brought under chapter 15 
     are intended to be ancillary to cases brought in a debtor's 
     home country, unless a full United States bankruptcy case is 
     brought under another chapter. Even if a full case is 
     brought, the court may decide under section 305 to stay or 
     dismiss the United States case under the other chapter and 
     limit the United States' role to an ancillary case under this 
     chapter.\5\ If the full case is not dismissed, it will be 
     subject to the provisions of this chapter governing 
     cooperation, communication and coordination with the foreign 
     courts and representatives. In any case, an order granting 
     recognition is required as a prerequisite to the use of 
     sections 301 and 303 by a foreign representative.
---------------------------------------------------------------------------
     \4\ The text of the Model Law and the Report of UNCITRAL on 
     its adoption are found at U.N. G.A., 52d Sess., Supp. No. 17 
     (A/52/17) (``Report''). That Report and the Guide to 
     Enactment of the UNCITRAL Model Law on Cross-Border 
     Insolvency, U.N. Gen. Ass., UNCITRAL 30th Sess. U.N. Doc. A/
     CN.9/442 (1997) (``Guide''), which was discussed in the 
     negotiations leading to the Model Law and published by 
     UNCITRAL as an aid to enacting countries, should be consulted 
     for guidance as to the meaning and purpose of its provisions. 
     The development of the provisions in the negotiations at 
     UNCITRAL, in which the United States was an active 
     participant, is recounted in the interim reports of the 
     Working Group that are cited in the Report.
     \5\ See section 1529 and commentary.
---------------------------------------------------------------------------
       Sec. 1501. Purpose and scope of application
       Section 1501 combines the Preamble to the Model Law 
     (subsection (1)) with its article 1 (subsections (2) and 
     (3)).\6\ It largely tracks the language of the Model Law with 
     appropriate United States references. However, it adds in 
     subsection (3) an exclusion of certain natural persons who 
     may be considered ordinary consumers. Although the consumer 
     exclusion is not in the text of the Model Law, the 
     discussions at UNCITRAL recognized that such exclusion would 
     be necessary in countries like the United States where there 
     are special provisions for consumer debtors in the insolvency 
     laws.\7\
---------------------------------------------------------------------------
     \6\ Guide at 16-19.
     \7\ See id. at 18, para. 60; 19 para. 66.
---------------------------------------------------------------------------
       The reference to section 109(e) essentially defines 
     ``consumer debtors'' for purposes of the exclusion by 
     incorporating the debt limitations of that section, but not 
     its requirement of regular income. The exclusion adds a 
     requirement that the debtor or debtor couple be citizens or 
     long-term legal residents of the United States. This ensures 
     that residents of other countries will not be able to 
     manipulate this exclusion to avoid recognition of foreign 
     proceedings in their home countries or elsewhere.
       The first exclusion in subsection (c) constitutes, for the 
     United States, the exclusion provided in article 1, 
     subsection (2), of the Model Law.\8\ Foreign representatives 
     of foreign proceedings which are excluded from the scope of 
     chapter 15 may seek comity from courts other than the 
     bankruptcy court since the limitations of section 1509(b)(2) 
     and (3) would not apply to them.
---------------------------------------------------------------------------
     \8\ Id. at 17.
---------------------------------------------------------------------------
       The reference to section 109(b) interpolates into chapter 
     15 the entities governed by specialized insolvency regimes 
     under United States law which are currently excluded from 
     liquidation proceedings under title 11. Section 1501 contains 
     an exception to the section 109(b) exclusions so that foreign 
     proceedings of foreign insurance companies are eligible for 
     recognition and relief under chapter 15 as they had been 
     under section 304. However, section 1501(d) has the effect of 
     leaving to State regulation any deposit, escrow, trust fund 
     or the like posted by a foreign insurer under State law.
       Sec. 1502. Definitions
       ``Debtor'' is given a special definition for this chapter. 
     This definition does not come from the Model Law, but is 
     necessary to eliminate the need to refer repeatedly to ``the 
     same debtor as in the foreign proceeding.'' With certain 
     exceptions, the term ``person'' used in the Model Law has 
     been replaced with ``entity,'' which is defined broadly in 
     section 101(15) to include natural persons and various legal 
     entities, thus matching the intended breadth of the term 
     ``person'' in the Model Law. The exceptions include contexts 
     in which a natural person is intended and those in which the 
     Model Law language already refers to both persons and 
     entities other than persons. The definition of ``trustee'' 
     for this chapter ensures that debtors in possession and 
     debtors, as well as trustees, are included in the term.\9\
---------------------------------------------------------------------------
     \9\ See section 1505.
---------------------------------------------------------------------------
       The definition of ``within the territorial jurisdiction of 
     the United States'' in subsection (7) is not taken from the 
     Model Law. It has been added because the United States, like 
     some other countries, asserts insolvency jurisdiction over 
     property outside its territorial limits under appropriate 
     circumstances. Thus a limiting phrase is useful where the 
     Model Law and this chapter intend to refer only to property 
     within the territory of the enacting state. In addition, a 
     definition of ``recognition'' supplements the Model Law 
     definitions and merely simplifies drafting of various other 
     sections of chapter 15.
       Two key definitions of ``foreign proceeding'' and ``foreign 
     representative,'' are found in sections 101(23) and (24), 
     which have been amended consistent with Model Law article 
     2.\10\ The definitions of ``establishment,'' ``foreign 
     court,'' ``foreign main proceeding,'' and ``foreign non-main 
     proceeding'' have been taken from Model Law article 2, with 
     only minor language variations necessary to comport with 
     United States terminology. Additionally, defined terms have 
     been placed in alphabetical order.\11\ In order to be 
     recognized as a foreign non-main proceeding, the debtor must 
     at least have an establishment in that foreign country.\12\
---------------------------------------------------------------------------
     \10\ Guide at 19-21, para.para. 67-68.
     \11\ See Guide at 19, (Model Law) 21 para. 75 (concerning 
     establishment); 21 para. 74 (concerning foreign court); 21 
     para.para. 72, 73 and 75 (concerning foreign main and non-
     main proceedings).
     \12\ See id. at 21, para. 75.
---------------------------------------------------------------------------
       Sec. 1503. International obligations of the United States
       This section is taken exactly from the Model Law with only 
     minor adaptations of terminology.\13\ Although this section 
     makes an international obligation prevail over chapter 15, 
     the courts will attempt to read the Model Law and the 
     international obligation so as not to conflict, especially if 
     the international obligation addresses a subject matter less 
     directly related than the Model Law to a case before the 
     court.
---------------------------------------------------------------------------
     \13\ See id. at 22, Art. 3.
---------------------------------------------------------------------------
       Sec. 1504. Commencement of ancillary case
       Article 4 of the Model Law is designed for designation of 
     the competent court which will exercise jurisdiction under 
     the Model Law. In United States law, section 1334(a) of title 
     28 gives exclusive jurisdiction to the district courts in a 
     ``case'' under this title.\14\ Therefore, since the competent 
     court has been determined in title 28, this section instead 
     provides that a petition for recognition commences a 
     ``case,'' an approach that also invokes a number of other 
     useful procedural provisions. In addition, a new subsection 
     (P) to section 157 of title 28 makes cases under this chapter 
     part of the core jurisdiction of bankruptcy courts if 
     referred by the district courts, thus completing the 
     designation of the competent court. Finally, the particular 
     bankruptcy court that will rule on the petition is determined 
     pursuant to a revised section 1410 of title 28 governing 
     venue and transfer.\15\
---------------------------------------------------------------------------
     \14\ See id. at 23, Art. 4.
     \15\ New section 1410 of title 28 provides as follows:
     A case under chapter 15 of title 11 may be commenced in the 
     district court for the district--
     (1) in which the debtor has its principal place of business 
     or principal assets in the United States;
     (2) if the debtor does not have a place of business or assets 
     in the United States, in which there is pending against the 
     debtor an action or proceeding or enforcement of judgment in 
     a Federal or State court; or
     (3) in a case other than those specified in paragraph (1) or 
     (2), in which venue will be consistent with the interests of 
     justice and the convenience of the parties having regard to 
     the relief sought by the foreign representative.
---------------------------------------------------------------------------
       The title ``ancillary'' in this section and in the title of 
     this chapter emphasizes the United States policy in favor of 
     a general rule that countries other than the home country 
     of the debtor, where a main proceeding would be brought, 
     should usually act through ancillary proceedings in aid of 
     the main proceedings, in preference to a system of full 
     bankruptcies (often called ``secondary'' proceedings) in 
     each state where assets are found. Under the Model Law, 
     notwithstanding the recognition of a foreign main 
     proceeding, full bankruptcy cases are permitted in each 
     country (see sections 1528 and 1529). In the United 
     States, the court will have the power to suspend or 
     dismiss such cases where appropriate under section 305.
       Sec. 1505. Authorization to act in a foreign country
       The language in this section varies from the wording of 
     article 5 of the Model Law as necessary to comport with 
     United States law and terminology. The slight alteration to 
     the language in the last sentence is meant to emphasize that 
     the identification of the trustee or other entity entitled to 
     act is under United States law, while the scope of actions 
     that may be taken by the trustee or other entity under 
     foreign law is limited by the foreign law.\16\
---------------------------------------------------------------------------
     \16\ See Guide at 24.
---------------------------------------------------------------------------
       The related amendment to section 586(a)(3) of title 28 
     makes acting pursuant to authorization under this section an 
     additional power of a trustee or debtor in possession.

[[Page H5772]]

     While the Model Law automatically authorizes an administrator 
     to act abroad, this section requires all trustees and debtors 
     to obtain court approval before acting abroad. That 
     requirement is a change from the language of the Model Law, 
     but one that is purely internal to United States law.\17\ Its 
     main purpose is to ensure that the court has knowledge and 
     control of possibly expensive activities, but it will have 
     the collateral benefit of providing further assurance to 
     foreign courts that the United States debtor or 
     representative is under judicial authority and supervision. 
     This requirement means that the first-day orders in 
     reorganization cases should include authorization to act 
     under this section where appropriate.
---------------------------------------------------------------------------
     \17\ See id. at 24, Art. 5.
---------------------------------------------------------------------------
       This section also contemplates the designation of an 
     examiner or other natural person to act for the estate in one 
     or more foreign countries where appropriate. One instance 
     might be a case in which the designated person had a special 
     expertise relevant to that assignment. Another might be where 
     the foreign court would be more comfortable with a designated 
     person than with an entity like a debtor in possession. 
     Either are to be recognized under the Model Law.\18\
---------------------------------------------------------------------------
     \18\ See id. at 23-24, para. 82.
---------------------------------------------------------------------------
       Sec. 1506. Public policy exception
       This provision follows the Model Law article 5 exactly, is 
     standard in UNCITRAL texts, and has been narrowly interpreted 
     on a consistent basis in courts around the world. The word 
     ``manifestly'' in international usage restricts the public 
     policy exception to the most fundamental policies of the 
     United States.\19\
---------------------------------------------------------------------------
     \19\ See id. at 25.
---------------------------------------------------------------------------
       Sec. 1507. Additional assistance
       Subsection (1) follows the language of Model Law article 
     7.\20\ Subsection (2) makes the authority for additional 
     relief (beyond that permitted under sections 1519-1521, 
     below) subject to the conditions for relief heretofore 
     specified in United States law under section 304, which is 
     repealed. This section is intended to permit the further 
     development of international cooperation begun under section 
     304, but is not to be the basis for denying or limiting 
     relief otherwise available under this chapter. The additional 
     assistance is made conditional upon the court's consideration 
     of the factors set forth in the current subsection 304(c) in 
     a context of a reasonable balancing of interests following 
     current case law. The references to ``estate'' in section 304 
     have been changed to refer to the debtor's property, because 
     many foreign systems do not create an estate in insolvency 
     proceedings of the sort recognized under this chapter. 
     Although the case law construing section 304 makes it clear 
     that comity is the central consideration, its physical 
     placement as one of six factors in subsection (c) of section 
     304 is misleading, since those factors are essentially 
     elements of the grounds for granting comity. Therefore, in 
     subsection (2) of this section, comity is raised to the 
     introductory language to make it clear that it is the central 
     concept to be addressed.\21\
---------------------------------------------------------------------------
     \20\ Id. at 26.
     \21\ Id.
---------------------------------------------------------------------------
       Sec. 1508. Interpretation
       This provision follows conceptually Model Law article 8 and 
     is a standard one in recent UNCITRAL treaties and model laws. 
     Changes to the language were made to express the concepts 
     more clearly in United States vernacular.\22\ Interpretation 
     of this chapter on a uniform basis will be aided by reference 
     to the Guide and the Reports cited therein, which explain the 
     reasons for the terms used and often cite their origins as 
     well. Uniform interpretation will also be aided by reference 
     to CLOUT, the UNCITRAL Case Law On Uniform Texts, which is a 
     service of UNCITRAL. CLOUT receives reports from national 
     reporters all over the world concerning court decisions 
     interpreting treaties, model laws, and other text promulgated 
     by UNCITRAL. Not only are these sources persuasive, but they 
     advance the crucial goal of uniformity of interpretation. To 
     the extent that the United States courts rely on these 
     sources, their decisions will more likely be regarded as 
     persuasive elsewhere.
---------------------------------------------------------------------------
     \22\ Id. at 26, para. 91.
---------------------------------------------------------------------------
       Sec. 1509. Right of direct access
       This section implements the purpose of article 9 of the 
     Model Law, enabling a foreign representative to commence a 
     case under this chapter by filing a petition directly with 
     the court without preliminary formalities that may delay or 
     prevent relief. It varies the language to fit United States 
     procedural requirements and it imposes recognition of the 
     foreign proceeding as a condition to further rights and 
     duties of the foreign representative. If recognition is 
     granted, the foreign representative will have full capacity 
     under United States law (subsection (b)(1)), may request such 
     relief in a state or federal court other than the bankruptcy 
     court (subsection (b)(2)), and may be granted comity or 
     cooperation by such non-bankruptcy court (subsection (b)(3) 
     and (c)). Subsections (b)(2), (b)(3), and (c) make it clear 
     that chapter 15 is intended to be the exclusive door to 
     ancillary assistance to foreign proceedings. The goal is 
     to concentrate control of these questions in one court. 
     That goal is important in a federal system like that of 
     the United States with many different courts, state and 
     federal, that may have pending actions involving the 
     debtor or the debtor's property. This section, therefore, 
     completes for the United States the work of article 4 of 
     the Model Law (``competent court'') as well as article 
     9.\23\
---------------------------------------------------------------------------
     \23\ See id. at 23, Art. 4, para.para.79-83; 27 Art. 9, 
     para.93.
---------------------------------------------------------------------------
       Although a petition under current section 304 is the proper 
     method for achieving deference by a United States court to a 
     foreign insolvency under present law, some cases in state and 
     federal courts under current law have granted comity 
     suspension or dismissal of cases involving foreign 
     proceedings without requiring a section 304 petition or even 
     referring to the requirements of that section. Even if the 
     result is correct in a particular case, the procedure is 
     undesirable, because there is room for abuse of comity. 
     Parties would be free to avoid the requirements of this 
     chapter and the expert scrutiny of the bankruptcy court by 
     applying directly to a state or federal court unfamiliar with 
     the statutory requirements. Such an application could be made 
     after denial of a petition under this chapter. This section 
     concentrates the recognition and deference process in one 
     United States court, ensures against abuse, and empowers a 
     court that will be fully informed of the current status of 
     all foreign proceedings involving the debtor.\24\
---------------------------------------------------------------------------
     \24\ See id. at 27, Art. 9; 34-35, Art. 15 and para.para.116-
     119; 39-40, Art. 18, para.para.133-134; see also sections 
     1515(3), 1518.
---------------------------------------------------------------------------
       Subsection (d) has been added to ensure that a foreign 
     representative cannot seek relief in courts in the United 
     States after being denied recognition by the court under this 
     chapter. Subsection (e) makes activities in the United States 
     by a foreign representative subject to applicable United 
     States law, just as 28 U.S.C. section 959 does for a domestic 
     trustee in bankruptcy.\25\ Subsection (f) provides a limited 
     exception to the prior recognition requirement so that 
     collection of a claim which is property of the debtor, for 
     example an account receivable, by a foreign representative 
     may proceed without commencement of a case or recognition 
     under this chapter.
---------------------------------------------------------------------------
     \25\ Id. at 27, para.93.
---------------------------------------------------------------------------
       Sec. 1510. Limited jurisdiction
       Section 1510, article 10 of the Model Law, is modeled on 
     section 306 of the Bankruptcy Code. Although the language 
     referring to conditional relief in section 306 is not 
     included, the court has the power under section 1522 to 
     attach appropriate conditions to any relief it may grant. 
     Nevertheless, the authority in section 1522 is not intended 
     to permit the imposition of jurisdiction over the foreign 
     representative beyond the boundaries of the case under this 
     chapter and any related actions the foreign representative 
     may take, such as commencing a case under another chapter of 
     this title.
       Sec. 1511. Commencement of Case Under Section 301 or 303
       This section reflects the intent of article 11 of the Model 
     Law, but adds language that conforms to United States law or 
     that is otherwise necessary in the United States given its 
     many bankruptcy court districts and the importance of full 
     information and coordination among them.\26\ Article 11 does 
     not distinguish between voluntary and involuntary 
     proceedings, but seems to have implicitly assumed an 
     involuntary proceeding.\27\ Subsection 1(a)(2) goes farther 
     and permits a voluntary filing, with its much simpler 
     requirements, if the foreign proceeding that has been 
     recognized is a main proceeding.
---------------------------------------------------------------------------
     \26\ See id. at 28, Art. 11.
     \27\ Id. at 38, para.para.97-99.
---------------------------------------------------------------------------
       Sec. 1512. Participation of a foreign representative in a 
           case under this title
       This section tracks article 12 of the Model Law with a 
     slight alteration to tie into United States procedural 
     terminology.\28\ The effect of this section is to make the 
     recognized foreign representative a party in interest in any 
     pending or later commenced United States bankruptcy case.\29\ 
     Throughout this chapter, the word ``case'' has been 
     substituted for the word ``proceeding'' in the Model Law when 
     referring to cases under the United States Bankruptcy Code, 
     to conform to United States usage.
---------------------------------------------------------------------------
     \28\ Id. at 29, Art. 12.
     \29\ Id. at 29, para.para.10-102.
---------------------------------------------------------------------------
       Sec. 1513. Access of foreign creditors to a case under this 
           title
       This section mandates nondiscriminatory or ``national'' 
     treatment for foreign creditors, except as provided in 
     subsection (b) and section 1514. It follows the intent of 
     Model Law article 13, but the language required alteration to 
     fit into the Bankruptcy Code.\30\ The law as to priority for 
     foreign claims that fit within a class given priority 
     treatment under section 507 (for example, foreign employees 
     or spouses) is unsettled. This section permits the continued 
     development of case law on that subject and its general 
     principle of national treatment should be an important factor 
     to be considered. At a minimum, under this section, foreign 
     claims must receive the treatment given to general unsecured 
     claims without priority, unless they are in a class of claims 
     in which domestic creditors would also be subordinated.\31\ 
     The Model Law allows for an exception to the policy of 
     nondiscrimination as to foreign revenue and other public law 
     claims.\32\ Such claims (such as tax and Social Security 
     claims) have been traditionally denied enforcement in the 
     United States, inside and outside of bankruptcy. The 
     Bankruptcy Code

[[Page H5773]]

     is silent on this point, so the rule is purely a matter of 
     traditional case law. It is not clear if this policy should 
     be maintained or modified, so this section leaves this 
     question to developing case law. It also allows the 
     Department of the Treasury to negotiate reciprocal 
     arrangements with our tax treaty partners in this regard, 
     although it does not mandate any restriction of the evolution 
     of case law pending such negotiations.
---------------------------------------------------------------------------
     \30\ Id. at 30, para.103.
     \31\ See id. at 30, para.104.
     \32\ See id. at 31, para.105.
---------------------------------------------------------------------------
       Sec. 1514. Notification of foreign creditors concerning a 
           case under title 11
       This section ensures that foreign creditors receive proper 
     notice of cases in the United States.\33\ As a ``foreign 
     creditor'' is not a defined term, foreign addresses are used 
     as the distinguishing factor. The Federal Rules of Bankruptcy 
     Procedure (``Rules'') should be amended to conform to the 
     requirements of this section, including a special form for 
     initial notice to such creditors. In particular, the Rules 
     must provide additional time for such creditors to file 
     proofs of claim where appropriate and require the court to 
     make specific orders in that regard in proper circumstances. 
     The notice must specify that secured claims must be asserted, 
     because in many countries such claims are not affected by an 
     insolvency proceeding and need not be filed.\34\ If a foreign 
     creditor has made an appropriate request for notice, it will 
     receive notices in every instance where notices would be sent 
     to other creditors who have made such requests. Subsection 
     (d) replaces the reference to ``a reasonable time period'' in 
     Model Law article 14(3)(a).\35\ It makes clear that the 
     Rules, local rules, and court orders must make appropriate 
     adjustments in time periods and bar dates so that foreign 
     creditors have a reasonable time within which to receive 
     notice or take an action.
---------------------------------------------------------------------------
     \33\ See Model Law, Art. 14; Guide at 31-32, para.para.106-
     109.
     \34\ Guide at 33, para.111.
     \35\ Id. at 31, Art. 14(3)(a).
---------------------------------------------------------------------------
       Sec. 1515. Application for recognition of a foreign 
           proceeding
       This section follows article 15 of the Model Law with minor 
     changes.\36\ The Rules will require amendment to provide 
     forms for some or all of the documents mentioned in this 
     section, to make necessary additions to Rules 1000 and 2002 
     to facilitate appropriate notices of the hearing on the 
     petition for recognition, and to require filing of lists of 
     creditors and other interested persons who should receive 
     notices. Throughout the Model Law, the question of notice 
     procedure is left to the law of the enacting state.\37\
---------------------------------------------------------------------------
     \36\ Id. at 33.
     \37\ See id. at 36, para.121.
---------------------------------------------------------------------------
       Sec. 1516. Presumptions concerning recognition
       This section follows article 16 of the Model Law with minor 
     changes.\38\ Although sections 1515 and 1516 are designed to 
     make recognition as simple and expedient as possible, the 
     court may hear proof on any element stated. The ultimate 
     burden as to each element is on the foreign representative, 
     although the court is entitled to shift the burden to the 
     extent indicated in section 1516. The word ``proof'' in 
     subsection (3) has been changed to ``evidence'' to make it 
     clearer using United States terminology that the ultimate 
     burden is on the foreign representative.\39\ ``Registered 
     office'' is the term used in the Model Law to refer to the 
     place of incorporation or the equivalent for an entity that 
     is not a natural person.\40\ The presumption that the place 
     of the registered office is also the center of the debtor's 
     main interest is included for speed and convenience of proof 
     where there is no serious controversy.
---------------------------------------------------------------------------
     \38\ Id. at 36
     \39\ Id. at 36, Art. 16(3).
     \40\ Id.
---------------------------------------------------------------------------
       Sec. 1517. Order granting recognition
       This section closely tracks article 17 of the Model Law, 
     with a few exceptions.\41\ The decision to grant recognition 
     is not dependent upon any findings about the nature of the 
     foreign proceedings of the sort previously mandated by 
     section 304(c) of the Bankruptcy Code. The requirements of 
     this section, which incorporates the definitions in section 
     1502 and sections 101(23) and (24), are all that must be 
     fulfilled to attain recognition. Reciprocity was specifically 
     suggested as a requirement for recognition on more than one 
     occasion in the negotiations that resulted in the Model Law. 
     It was rejected by overwhelming consensus each time. The 
     United States was one of the leading countries opposing the 
     inclusion of a reciprocity requirement.\42\ In this regard, 
     the Model Law conforms to section 304, which has no such 
     requirement.
---------------------------------------------------------------------------
     \41\ Id. at 37.
     \42\ Report of the working group on Insolvency Law on the 
     work of its Twentieth Session (Vienna, 7-18 October 1996), at 
     6, para.para.16-20.
---------------------------------------------------------------------------
       The drafters of the Model Law understood that only a main 
     proceeding or a non-main proceeding meeting the standards of 
     section 1502 (that is, one brought where the debtor has an 
     establishment) were entitled to recognition under this 
     section. The Model Law has been slightly modified to make 
     this point clear by referring to the section 1502 definition 
     of main and non-main proceedings, as well as to the general 
     definition of a foreign proceeding in section 101(23). A 
     petition under section 1515 must show that proceeding is a 
     main or a qualifying non-main proceeding in order to obtain 
     recognition under this section.
       Consistent with the position of various civil law 
     representatives in the drafting of the Model Law, recognition 
     creates a status with the effects set forth in section 1520, 
     so those effects are not viewed as orders to be modified, as 
     are orders granting relief under sections 1519 and 1521. 
     Subsection (4) states the grounds for modifying or 
     terminating recognition. On the other hand, the effects of 
     recognition (found in section 1520 and including an automatic 
     stay) are subject to modification under section 362(d), made 
     applicable by section 1520(2), which permits relief from the 
     automatic stay of section 1520 for cause.
       Paragraph 1(d) of section 17 of the Model Law has been 
     omitted as an unnecessary requirement for United States 
     purposes, because a petition submitted to the wrong court 
     will be dismissed or transferred under other provisions of 
     United States law.\43\ The reference to section 350 refers to 
     the routine closing of a case that has been completed and 
     will invoke requirements including a final report from the 
     foreign representative in such form as the Rules may provide 
     or a court may order.\44\
---------------------------------------------------------------------------
     \43\ Guide at 37, Art. 17(1)(d).
     \44\ Id.
---------------------------------------------------------------------------
       Sec. 1518. Subsequent information
       This section follows the Model Law, except to eliminate the 
     word ``same'', which is rendered unnecessary by the 
     definition of ``debtor'' in section 1502, and to provide for 
     a formal document to be filed with the court.\45\ Judges in 
     several jurisdictions, including the United States, have 
     reported a need for a requirement of complete and candid 
     reports to the court of all proceedings, worldwide, involving 
     the debtor. This section will ensure that such information is 
     provided to the court on a timely basis. Any failure to 
     comply with this section will be subject to the sanctions 
     available to the court for violations of the statute. The 
     section leaves to the Rules the form of the required notice 
     and related questions of notice to parties in interest, the 
     time for filing, and the like.
---------------------------------------------------------------------------
     \45\ Id. at 39-40, para.para.133, 134.
---------------------------------------------------------------------------
       Sec. 1519. Relief may be granted upon petition for 
           recognition of a foreign proceeding
       This section generally follows article 19 of the Model 
     Law.\46\ The bankruptcy court will have jurisdiction to grant 
     emergency relief under Rule 7065 pending a hearing on the 
     petition for recognition. This section does not expand or 
     reduce the scope of section 105 as determined by cases under 
     section 105 nor does it modify the sweep of sections 555 to 
     560. Subsection (d) precludes injunctive relief against 
     police and regulatory action under section 1519, leaving 
     section 105 as the only avenue for such relief. Subsection 
     (e) makes clear that this section contemplates injunctive 
     relief and that such relief is subject to specific rules and 
     a body of jurisprudence. Subsection (f) was added to 
     complement amendments to the Bankruptcy Code provisions 
     dealing with financial contracts.
---------------------------------------------------------------------------
     \46\ Id. at 40.
---------------------------------------------------------------------------
       Sec. 1520. Effects of recognition of a foreign main 
           proceeding
       In general, this chapter sets forth all the relief that is 
     available as a matter of right based upon recognition 
     hereunder, although additional assistance may be provided 
     under section 1507 and this chapter have no effect on any 
     relief currently available under section 105. The stay 
     created by article 20 of the Model Law is imported to chapter 
     15 from existing provisions of the Code. Subsection (a)(1) 
     combines subsections 1(a) and (b) of article 20 of the Model 
     Law, because section 362 imposes the restrictions required by 
     those two subsections as well as additional restrictions.\47\
---------------------------------------------------------------------------
     \47\ Id. at 42, Art. 20 1(a), (b).
---------------------------------------------------------------------------
       Subsections (a)(2) and (4) apply the Bankruptcy Code 
     sections that impose the restrictions called for by 
     subsection 1(c) of the Model Law. In both cases, the 
     provisions are broader and more complete than those 
     contemplated by the Model Law, but include all the restraints 
     the Model Law provisions would impose.\48\ As the foreign 
     proceeding may or may not create an ``estate'' similar to 
     that created in cases under this title, the restraints are 
     applicable to actions against the debtor under section 362(a) 
     and with respect to the property of the debtor under the 
     remaining sections. The only property covered by this section 
     is property within the territorial jurisdiction of the United 
     States as defined in section 1502. To achieve effects on 
     property of the debtor which is not within the territorial 
     jurisdiction of the United States, the foreign representative 
     would have to commence a case under another chapter of this 
     title.
---------------------------------------------------------------------------
     \48\ Id. at 42, 45.
---------------------------------------------------------------------------
       By applying sections 361 and 362, subsection (a) makes 
     applicable the United States exceptions and limitations to 
     the restraints imposed on creditors, debtors, and other in a 
     case under this title, as stated in article 20(2) of the 
     Model Law.\49\ It also introduces the concept of adequate 
     protection provided in sections 362 and 363. These exceptions 
     and limitations include those set forth in sections 362(b), 
     (c) and (d). As a result, the court has the power to 
     terminate the stay pursuant to section 362(d), for cause, 
     including a failure of adequate protection.\50\
---------------------------------------------------------------------------
     \49\ Id. at 42, Art. 20(2); 44, para.para. 148, 150.
     \50\ Id. at 42, Art. 20(3); 44-45, para.para. 151 152.
---------------------------------------------------------------------------
       Subsection (a)(2), by its reference to sections 363 and 552 
     adds to the powers of a foreign representative of a foreign 
     main proceeding an automatic right to operate the debtor's 
     business and exercise the power of a

[[Page H5774]]

     trustee under sections 363 and 542, unless the court orders 
     otherwise. A foreign representative of a foreign main 
     proceeding may need to continue a business operation to 
     maintain value and granting that authority automatically will 
     eliminate the risk of delay. If the court is uncomfortable 
     about this authority in a particular situation, it can 
     ``order otherwise'' as part of the order granting 
     recognition.
       Two special exceptions to the automatic stay are embodied 
     in subsections (b) and (c). To preserve a claim in certain 
     foreign countries, it may be necessary to commence an action. 
     Subsection (b) permits the commencement of such an action, 
     but would not allow for its further prosecution. Subsection 
     (c) provides that there is no stay of the commencement of a 
     full United States bankruptcy case. This essentially provides 
     an escape hatch through which any entity, including the 
     foreign representative, can flee into a full case. The full 
     case, however, will remain subject to subchapters IV and V on 
     cooperation and coordination of proceedings and to section 
     305 providing for stay or dismissal. Section 108 of the 
     Bankruptcy Code provides the tolling protection intended by 
     Model Law article 20(3), so no exception is necessary for 
     claims that might be extinguished under United States 
     law.\51\
---------------------------------------------------------------------------
     \51\ Id.
---------------------------------------------------------------------------
       Sec. 1521. Relief that may be granted upon recognition of a 
           foreign proceeding
       This section follows article 21 of the Model Law, with 
     detailed changes to conform to United States law.\52\ The 
     exceptions in subsection (a)(7) relate to avoiding powers. 
     The foreign representative's status as to such powers is 
     governed by section 1523 below. The avoiding power in section 
     549 and the exceptions to that power are covered by section 
     1520(a)(2). The word ``adequately'' in the Model Law, 
     articles 21(2) and 22(1), has been changed to 
     ``sufficiently'' in sections 1521(b) and 1522(a) to avoid 
     confusion with a very specialized legal term in United States 
     bankruptcy, ``adequate protection.'' \53\ Subsection (c) is 
     designed to limit relief to assets having some direct 
     connection with a non-main proceeding, for example where they 
     were part of an operating division in the jurisdiction of the 
     non-main proceeding when they were fraudulently conveyed and 
     then brought to the United States.\54\ Subsections (d), (e) 
     and (f) are identical to those same subsections of section 
     1519. This section does not expand or reduce the scope of 
     relief currently available in ancillary cases under sections 
     105 and 304 nor does it modify the sweep of sections 555 
     through 560.
---------------------------------------------------------------------------
     \52\ Id. at 45-46, Art. 21.
     \53\ Id. at 46, Art. 21(2); 47, Art. 22(1).
     \54\ See id. at 46-47, para.para. 158, 160.
---------------------------------------------------------------------------
       Sec. 1522. Protection of creditors and other interested 
           persons.
       This section follows article 22 of the Model Law with 
     changes for United States usage and references to relevant 
     Bankruptcy Code sections.\55\ It gives the bankruptcy court 
     broad latitude to mold relief to meet specific circumstances, 
     including appropriate responses if it is shown that the 
     foreign proceeding is seriously and unjustifiably injuring 
     United States creditors. For a response to a showing that the 
     conditions necessary to recognition did not actually exist or 
     have ceased to exist, see section 1517. Concerning the change 
     of ``adequately'' in the Model Law to ``sufficiently'' in 
     this section, see section 1521. Subsection (d) is new and 
     simply makes clear that an examiner appointed in a case under 
     chapter 15 shall be subject to certain duties and bonding 
     requirements based on those imposed on trustees and examiners 
     under other chapters of this title.
---------------------------------------------------------------------------
     \55\ Id. at 47.
---------------------------------------------------------------------------
       Sec. 1523. Actions to avoid acts detrimental to creditors
       This section follows article 23 of the Model Law, with 
     wording to fit it within procedure under this title.\56\ It 
     confers standing on a recognized foreign representative to 
     assert an avoidance action but only in a pending case under 
     another chapter of this title. The Model Law is not clear 
     about whether it would grant standing in a recognized foreign 
     proceeding if no full case were pending. This limitation 
     reflects concerns raised by the United States delegation 
     during the UNCITRAL debates that a simple grant of standing 
     to bring avoidance actions neglects to address very difficult 
     choice of law and forum issues. This limited grant of 
     standing in section 1523 does not create or establish any 
     legal right of avoidance nor does it create or imply any 
     legal rules with respect to the choice of applicable law as 
     to the avoidance of any transfer of obligation.\57\ The 
     courts will determine the nature and extent of any such 
     action and what national law may be applicable to such 
     action.
---------------------------------------------------------------------------
     \56\ Id. at 48-49
     \57\ See id. at 49, para. 166.
---------------------------------------------------------------------------
       Sec. 1524. Intervention by a foreign representative
       The wording is the same as the Model Law, except for a few 
     clarifying words.\58\ This section gives the foreign 
     representative whose foreign proceeding has been recognized 
     the right to intervene in United States cases, state or 
     federal, where the debtor is a party. Recognition being an 
     act under federal bankruptcy law, it must take effect in 
     state as well as federal courts. This section does not 
     require substituting the foreign representative for the 
     debtor, although that result may be appropriate in some 
     circumstances.
---------------------------------------------------------------------------
     \58\ Id. at 49.
---------------------------------------------------------------------------
       Sec. 1525. Cooperation and direct communication between the 
           court and foreign courts or foreign representatives
       The wording of this provision is nearly identical to that 
     of the Model Law.\59\ The right of courts to communicate with 
     other courts in worldwide insolvency cases is of central 
     importance. This section authorizes courts to do so. This 
     right must be exercised, however, with due regard to the 
     rights of the parties. Guidelines for such communications are 
     left to the federal rules of bankruptcy procedure.
---------------------------------------------------------------------------
     \59\ Id. at 50.
---------------------------------------------------------------------------
       Sec. 1526 Cooperation and direct communication between the 
           trustee and foreign courts or foreign representatives
       This section closely tracks the Model Law.\60\ The language 
     in Model Law article 26 concerning the trustee's function was 
     eliminated as unnecessary because it is always implied under 
     United States law. The section authorizes the trustee, 
     including a debtor in possession, to cooperate with other 
     proceedings. Subsection (3) is not taken from the Model Law 
     but is added so that any examiner appointed under this 
     chapter will be designated by the United States Trustee and 
     will be bonded.
---------------------------------------------------------------------------
     \60\ Id. at 51.
---------------------------------------------------------------------------
       Sec. 1527. Forms of cooperation
       This section is identical to the Model Law.\61\ United 
     States bankruptcy courts already engage in most of the forms 
     of cooperation described here, but they now have explicit 
     statutory authorization for acts like the approval of 
     protocols of the sort used in cases.\62\
---------------------------------------------------------------------------
     \61\ Guide at 51, 53.
     \62\ See e.g., In re Maxwell Communication Corp., 93 F.2d 
     1036 (2d Cir. 1996).
---------------------------------------------------------------------------
       Sec. 1528. Commencement of a case under title 11 after 
           recognition of a foreign main proceeding
       This section follows the Model Law, with specifics of 
     United States law replacing the general clause at the end of 
     the section to cover assets normally included within the 
     jurisdiction of the United States courts in bankruptcy cases, 
     except where assets are subject to the jurisdiction of 
     another recognized proceeding.\63\ In a full bankruptcy case, 
     the United States bankruptcy court generally has jurisdiction 
     over assets outside the United States. Here that jurisdiction 
     is limited where those assets are controlled by another 
     recognized proceeding, if it is a main proceeding.
---------------------------------------------------------------------------
     \63\ Guide at 54-55.
---------------------------------------------------------------------------
       The court may use section 305 of this title to dismiss, 
     stay, or limit a case as necessary to promote cooperation and 
     coordination in a cross-border case. In addition, although 
     the jurisdictional limitation applies only to United States 
     bankruptcy cases commenced after recognition of a foreign 
     proceeding, the court has ample authority under the next 
     section and section 305 to exercise its discretion to 
     dismiss, stay, or limit a United States case filed after a 
     petition for recognition of a foreign main proceeding has 
     been filed but before it has been approved, if recognition is 
     ultimately granted.
       Sec. 1529. Coordination of a case under title 11 and a 
           foreign proceeding
       This section follows the Model Law almost exactly, but 
     subsection (4) adds a reference to section 305 to make it 
     clear the bankruptcy court may continue to use that section, 
     as under present law, to dismiss or suspend a United States 
     case as part of coordination and cooperation with foreign 
     proceedings.\64\ This provision is consistent with United 
     States policy to act ancillary to a foreign main proceeding 
     whenever possible.
---------------------------------------------------------------------------
     \64\ Id. at 55-56.
---------------------------------------------------------------------------
       Sec. 1530. Coordination of more than one foreign proceeding
       This section follows exactly article 30 of the Model 
     Law.\65\ It ensures that a foreign main proceeding will be 
     given primacy in the United States, consistent with the 
     overall approach of the United States favoring assistance to 
     foreign main proceedings.
---------------------------------------------------------------------------
     \65\ Id. at 57.
---------------------------------------------------------------------------
       Sec. 1531. Presumption of insolvency based on recognition 
           of a foreign main proceeding
       This section follows the Model Law exactly, inserting a 
     reference to the standard for an involuntary case under this 
     title.\66\ Where an insolvency proceeding has begun in the 
     home country of the debtor, and in the absence of contrary 
     evidence, the foreign representative should not have to make 
     a new showing that the debtor is in the sort of financial 
     distress requiring a collective judicial remedy. The word 
     ``proof'' in this provision here means ``presumption.'' The 
     presumption does not arise for any purpose outside this 
     section.
---------------------------------------------------------------------------
     \66\ Id. at 58.
---------------------------------------------------------------------------
       Sec. 1532. Rule of payment in concurrent proceeding
       This section follows the Model Law exactly and is very 
     similar to prior section 508(a), which is repealed. The Model 
     Law language is somewhat clearer and broader than the 
     equivalent language of prior section 508(a).\67\
---------------------------------------------------------------------------
     \67\ Id. at 59.
---------------------------------------------------------------------------
     Sec. 802. Other amendments to titles 11 and 28, United States 
         Code
       Section 802(a) amends section 103 of the Bankruptcy Code to 
     clarify the provisions of the Code that apply to chapter 15 
     and to specify which portions of chapter 15 apply in

[[Page H5775]]

     cases under other chapters of title 11. Section 802(b) amends 
     the Bankruptcy Code's definitions of foreign proceeding and 
     foreign representative in section 101. The new definitions 
     are nearly identical to those contained in the Model Law but 
     add to the phrase ``under a law relating to insolvency'' the 
     words ``or debt adjustment.'' This addition emphasizes that 
     the scope of the Model Law and chapter 15 is not limited to 
     proceedings involving only debtors which are technically 
     insolvent, but broadly includes all proceedings involving 
     debtors in severe financial distress, so long as those 
     proceedings also meet the other criteria of section 
     101(24).\68\
---------------------------------------------------------------------------
     \68\ Id. at 51-52, 71.
---------------------------------------------------------------------------
       Section 802(c) amends section 157(b)(2) of title 28 to 
     provide that proceedings under chapter 15 will be core 
     proceedings while other amendments to title 28 provide that 
     the United States trustee's standing extends to cases under 
     chapter 15 and that the United States trustee's duties 
     include acting in chapter 15 cases. Although the United 
     States will continue to assert worldwide jurisdiction over 
     property of a domestic or foreign debtor in a full bankruptcy 
     case under chapters 7 and 13 of this title, subject to 
     deference to foreign proceedings under chapter 15 and section 
     305, the situation is different in a case commenced under 
     chapter 15. There the United States is acting solely in an 
     ancillary position, so jurisdiction over property is limited 
     to that stated in chapter 15.
       Section 802(d) amends section 109 of the Bankruptcy Code to 
     permit recognition of foreign proceedings involving foreign 
     insurance companies and involving foreign banks which do not 
     have a branch or agency in the United States (as defined in 
     12 U.S.C. 3101). While a foreign bank not subject to United 
     States regulation will be eligible for chapter 15 as a 
     consequence of the amendment to section 109, section 303 
     prohibits the commencement of a full involuntary case against 
     such a foreign bank unless the bank is a debtor in a foreign 
     proceeding.
       While section 304 is repealed and replaced by chapter 15, 
     access to the jurisprudence which developed under section 304 
     is preserved in the context of new section 1507. On deciding 
     whether to grant the additional assistance contemplated by 
     section 1507, the court must consider the same factors 
     specified in former section 304. The venue provisions for 
     cases ancillary to foreign proceedings have been amended to 
     provide a hierarchy of choices beginning with principal place 
     of business in the United States, if any. If there is no 
     principal place of business in the United States, but there 
     is litigation against a debtor, then the district in which 
     the litigation is pending would be the appropriate venue. In 
     any other case, venue must be determined with reference to 
     the interests of justice and the convenience of the parties.

                Title IX--Financial Contract Provisions

     Sec. 901. Treatment of certain agreements by conservators or 
         receivers of insured depository institutions
       Subsections (a) through (f) of section 901 of the 
     conference report amend the Federal Deposit Insurance Act's 
     (FDIA) definitions of ``qualified financial contract,'' 
     ``securities contract,'' ``commodity contract,'' ``forward 
     contract,'' ``repurchase agreement'' and ``swap agreement'' 
     to make them consistent with the definitions in the 
     Bankruptcy Code and to reflect the enactment of the Commodity 
     Futures Modernization Act of 2000 (CFMA). It is intended that 
     the legislative history and case law surrounding those terms, 
     to the date of this amendment, be incorporated into the 
     legislative history of the FDIA.
       Subsection (b) amends the definition of ``securities 
     contract'' expressly to encompass margin loans, to clarify 
     the coverage of securities options and to clarify the 
     coverage of repurchase and reverse repurchase transactions. 
     The reference in subsection (b) to a ``guarantee by or to any 
     securities clearing agency'' is intended to cover other 
     arrangements, such as novation, that have an effect similar 
     to a guarantee. The reference to a ``loan'' of a security in 
     the definition is intended to apply to loans of securities, 
     whether or not for a ``permitted purpose'' under margin 
     regulations. The reference to ``repurchase and reverse 
     repurchase transactions'' is intended to eliminate any 
     inquiry under the qualified financial contract provisions of 
     the FDIA as to whether a repurchase or reverse repurchase 
     transaction is a purchase and sale transaction or a secured 
     financing. Repurchase and reverse repurchase transactions 
     meeting certain criteria are already covered under the 
     definition of ``repurchase agreement'' in the FDIA (and a 
     regulation of the Federal Deposit Insurance Corporation 
     (FDIC)). Repurchase and reverse repurchase transactions on 
     all securities (including, for example, equity securities, 
     asset-backed securities, corporate bonds and commercial 
     paper) are included under the definition of ``securities 
     contract''.
       Subsection (b) also specifies that purchase, sale and 
     repurchase obligations under a participation in a commercial 
     mortgage loan do not constitute ``securities contracts.'' 
     While a contract for the purchase, sale or repurchase of a 
     participation may constitute a ``securities contract,'' the 
     purchase, sale or repurchase obligation embedded in a 
     participation agreement does not make that agreement a 
     ``securities contract.''
       A number of terms used in the qualified financial contract 
     provisions, but not defined therein, are intended to have the 
     meanings set forth in the analogous provisions of the 
     Bankruptcy Code or Federal Deposit Insurance Corporation 
     Improvement Act (``FDICIA''), such as, for example, 
     ``securities clearing agency''. The term ``person,'' however, 
     is not intended to be so interpreted. Instead, ``person'' is 
     intended to have the meaning set forth in section 1 of title 
     1 of the United States Code.
       Section 901(b) reflects the Senate position as represented 
     in section 901(b) of the Senate amendment. The House version 
     of this provision did not include the clarification that the 
     definition applies to mortgage loans. The conference report 
     also includes the Senate amendment's clarification of the 
     reference to guarantee or reimbursement obligation.
       Section 901(c) amends the definition of ``commodity 
     contract'' in section 11(e)(8)(D)(iii) of the Federal Deposit 
     Insurance Act. It reflects the Senate position as represented 
     in section 901(c) of the Senate amendment, which includes the 
     Senate amendment's clarification of the reference to 
     guarantee or reimbursement obligation. Section 901(d) amends 
     section 11(e)(8)(D)(iv) of the Federal Deposit Insurance Act 
     with respect to its definition of a ``forward contract''. It 
     reflects the Senate position as represented in section 901(d) 
     of the Senate amendment, which includes the Senate 
     amendment's clarification of the reference to guarantee or 
     reimbursement obligation.
       Subsection (e) amends the definition of ``repurchase 
     agreement'' to codify the substance of the FDIC's 1995 
     regulation defining repurchase agreement to include those on 
     qualified foreign government securities.\69\ The term 
     ``qualified foreign government securities'' is defined to 
     include those that are direct obligations of, or fully 
     guaranteed by, central governments of members of the 
     Organization for Economic Cooperation and Development (OECD). 
     Subsection (e) reflects developments in the repurchase 
     agreement markets, which increasingly use foreign government 
     securities as the underlying asset. The securities are 
     limited to those issued by or guaranteed by full members of 
     the OECD, as well as countries that have concluded special 
     lending arrangements with the International Monetary Fund 
     associated with the Fund's General Arrangements to Borrow.
---------------------------------------------------------------------------
     \69\ See 12 C.F.R. Sec. 360.5.
---------------------------------------------------------------------------
       Subsection (e) also amends the definition of ``repurchase 
     agreement'' to include those on mortgage-related securities, 
     mortgage loans and interests therein, and expressly to 
     include principal and interest-only U.S. government and 
     agency securities as securities that can be the subject of a 
     ``repurchase agreement.'' The reference in the definition to 
     United States government- and agency-issued or fully 
     guaranteed securities is intended to include obligations 
     issued or guaranteed by Fannie Mae and the Federal Home Loan 
     Mortgage Corporation (Freddie Mac) as well as all obligations 
     eligible for purchase by Federal Reserve banks under the 
     similar language of section 14(b) of the Federal Reserve Act. 
     This amendment is not intended to affect the status of repos 
     involving securities or commodities as securities contracts, 
     commodity contracts, or forward contracts, and their 
     consequent eligibility for similar treatment under the 
     qualified financial contract provisions. In particular, an 
     agreement for the sale and repurchase of a security would 
     continue to be a securities contract as defined in the FDIA, 
     even if not a ``repurchase agreement'' as defined in the 
     FDIA. Similarly, an agreement for the sale and repurchase of 
     a commodity, even though not a ``repurchase agreement'' as 
     defined in the FDIA, would continue to be a forward contract 
     for purposes of the FDIA.
       Subsection (e), like subsection (b) for ``securities 
     contracts,'' specifies that repurchase obligations under a 
     participation in a commercial mortgage loan do not make the 
     participation agreement a ``repurchase agreement.'' Such 
     repurchase obligations embedded in participations in 
     commercial loans (such as recourse obligations) do not 
     constitute a ``repurchase agreement.'' A repurchase agreement 
     involving the transfer of participations in commercial 
     mortgage loans with a simultaneous agreement to repurchase 
     the participation on demand or at a date certain one year or 
     less after such transfer, however, would constitute a 
     ``repurchase agreement'' as well as a ``securities 
     contract''. Section 901(e) reflects the Senate position as 
     represented in section 901(e) of the Senate amendment. The 
     House version of this provision did not include the 
     clarification that the definition applies to mortgage loans. 
     The conference report also includes the Senate amendment's 
     clarification of the reference to guarantee or reimbursement 
     obligation.
       Section 901(f) of the conference report amends the 
     definition of ``swap agreement'' to include an ``interest 
     rate swap, option, future, or forward agreement, including a 
     rate floor, rate cap, rate collar, cross-currency rate swap, 
     and basis swap; a spot, same day-tomorrow, tomorrow-next, 
     forward, or other foreign exchange or precious metals 
     agreement; a currency swap, option, future, or forward 
     agreement; an equity index or equity swap, option, future, or 
     forward agreement; a debt index or debt swap, option, future, 
     or forward agreement; a total return, credit spread or credit 
     swap, option, future, or forward agreement; a commodity index 
     or commodity swap, option, future, or forward agreement; or a 
     weather swap, weather derivative, or weather option.'' As 
     amended, the definition of ``swap agreement'' will update the 
     statutory definition and achieve

[[Page H5776]]

     contractual netting across economically similar transactions.
       The definition of ``swap agreement'' originally was 
     intended to provide sufficient flexibility to avoid the need 
     to amend the definition as the nature and uses of swap 
     transactions matured. To that end, the phrase ``or any other 
     similar agreement'' was included in the definition. (The 
     phrase ``or any similar agreement'' has been added to the 
     definitions of ``forward contract,'' ``commodity contract,'' 
     ``repurchase agreement'' and ``securities contract'' for the 
     same reason.) To clarify this, subsection (f) expands the 
     definition of ``swap agreement'' to include ``any agreement 
     or transaction that is similar to any other agreement or 
     transaction referred to in [section 11(e)(8)(D)(vi) of the 
     FDIA] and is of a type that has been, is presently, or in the 
     future becomes, the subject of recurrent dealings in the swap 
     markets . . . and that is a forward, swap, future, or option 
     on one or more rates, currencies, commodities, equity 
     securities or other equity instruments, debt securities or 
     other debt instruments, quantitative measures associated with 
     an occurrence, extent of an occurrence, or contingency 
     associated with a financial, commercial, or economic 
     consequence, or economic or financial indices or measures of 
     economic or financial risk or value.''
       The definition of ``swap agreement,'' however, should not 
     be interpreted to permit parties to document non-swaps as 
     swap transactions. Traditional commercial arrangements, such 
     as supply agreements, or other non-financial market 
     transactions, such as commercial, residential or consumer 
     loans, cannot be treated as ``swaps'' under either the FDIA 
     or the Bankruptcy Code simply because the parties purport to 
     document or label the transactions as ``swap agreements.'' In 
     addition, these definitions apply only for purposes of the 
     FDIA and the Bankruptcy Code. These definitions, and the 
     characterization of a certain transaction as a ``swap 
     agreement,'' are not intended to affect the characterization, 
     definition, or treatment of any instruments under any other 
     statute, regulation, or rule including, but not limited to, 
     the statutes, regulations or rules enumerated in subsection 
     (f). Similarly, Section 17 and a new paragraph of Section 
     11(e) of the FDIA provide that the definitions of 
     ``securities contract,'' ``repurchase agreement,'' ``forward 
     contract,'' and ``commodity contract,'' and the 
     characterization of certain transactions as such a contract 
     or agreement, are not intended to affect the 
     characterization, definition, or treatment of any instruments 
     under any other statute, regulation, or rule including, 
     but not limited to, the statutes, regulations or rules 
     enumerated in subsection (f).
       The definition also includes any security agreement or 
     arrangement, or other credit enhancement, related to a swap 
     agreement, including any guarantee or reimbursement 
     obligation related to a swap agreement. This ensures that any 
     such agreement, arrangement or enhancement is itself deemed 
     to be a swap agreement, and therefore eligible for treatment 
     as such for purposes of termination, liquidation, 
     acceleration, offset and netting under the FDIA and the 
     Bankruptcy Code. Similar changes are made in the definitions 
     of ``forward contract,'' ``commodity contract,'' ``repurchase 
     agreement'' and ``securities contract.''
       The use of the term ``forward'' in the definition of ``swap 
     agreement'' is not intended to refer only to transactions 
     that fall within the definition of ``forward contract.'' 
     Instead, a ``forward'' transaction could be a ``swap 
     agreement'' even if not a ``forward contract.''
       Section 901(f) reflects the Senate position as reflected in 
     section 901(f) of the Senate amendment. The Senate amendment 
     clarifies that the definition pertains to an agreement or 
     transaction is ``of a type that'' has been, presently, or in 
     the future becomes, the subject of recurrent dealings in the 
     swap markets. The House version did not include this 
     clarification. Section 901(f) also eliminates the reference 
     in the House provision to regulations promulgated by the 
     Securities and Exchange Commission (SEC) or the Commodity 
     Futures Trading Commission (CFTC).
       Section 901(g) of the conference report is substantively 
     identical to section 901(g) of the House bill and the Senate 
     amendment. It amends the FDIA by adding a definition for 
     ``transfer,'' which is a key term used in the FDIA, to ensure 
     that it is broadly construed to encompass dispositions of 
     property or interests in property. The definition tracks that 
     in section 101 of the Bankruptcy Code.
       Section 901(h) makes clarifying technical changes to 
     conform the receivership and conservatorship provisions of 
     the FDIA. It also clarifies that the FDIA expressly protects 
     rights under security agreements, arrangements or other 
     credit enhancements related to one or more qualified 
     financial contracts (QFCs). An example of a security 
     arrangement is a right of setoff, and examples of other 
     credit enhancements are letters of credit, guarantees, 
     reimbursement obligations and other similar agreements. 
     Section 901(h) is substantively identical to section 901(h) 
     of the House bill and Senate amendment.
       Section 901(i) of the conference report clarifies that no 
     provision of Federal or state law relating to the avoidance 
     of preferential or fraudulent transfers (including the anti-
     preference provision of the National Bank Act) can be invoked 
     to avoid a transfer made in connection with any QFC of an 
     insured depository institution in conservatorship or 
     receivership, absent actual fraudulent intent on the part of 
     the transferee. Section 901(i) is substantively identical to 
     section 901(i) of the House bill and Senate amendment.
     Sec. 902. Authority of the corporation with respect to failed 
         and failing institutions
       Section 902 of the conference report provides that no 
     provision of law, including FDICIA, shall be construed to 
     limit the power of the FDIC to transfer or to repudiate any 
     QFC in accordance with its powers under the FDIA. As 
     discussed below, there has been some uncertainty regarding 
     whether or not FDICIA limits the authority of the FDIC to 
     transfer or to repudiate QFCs of an insolvent financial 
     institution. Section 902, as well as other provisions in the 
     Act, clarify that FDICIA does not limit the transfer powers 
     of the FDIC with respect to QFCs. Section 902 denies 
     enforcement to ``walkaway'' clauses in QFCs. A walkaway 
     clause is defined as a provision that, after calculation of a 
     value of a party's position or an amount due to or from one 
     of the parties upon termination, liquidation or acceleration 
     of the QFC, either does not create a payment obligation of a 
     party or extinguishes a payment obligation of a party in 
     whole or in part solely because of such party's status as a 
     non-defaulting party. Section 902 is substantively identical 
     to section 902 of the House bill and Senate amendment.
     Sec. 903. Amendments relating to transfers of qualified 
         financial contracts
       Section 903 of the conference report amends the FDIA to 
     expand the transfer authority of the FDIC to permit transfers 
     of QFCs to ``financial institutions'' as defined in FDICIA or 
     in regulations. This provision is substantively identical to 
     section 903(a) of the House bill and the Senate amendment. It 
     will allow the FDIC to transfer QFCs to a non-depository 
     financial institution, provided the institution is not 
     subject to bankruptcy or insolvency proceedings.
       The new FDIA provision specifies that when the FDIC 
     transfers QFCs that are cleared on or subject to the rules of 
     a particular clearing organization, the transfer will not 
     require the clearing organization to accept the transferee as 
     a member of the organization. This provision gives the FDIC 
     flexibility in resolving QFCs cleared on or subject to the 
     rules of a clearing organization, while preserving the 
     ability of such organizations to enforce appropriate risk 
     reducing membership requirements. The amendment does not 
     require the clearing organization to accept for clearing any 
     QFCs from the transferee, except on the terms and conditions 
     applicable to other parties permitted to clear through that 
     clearing organization. ``Clearing organization'' is defined 
     to mean a ``clearing organization'' within the meaning of 
     FDICIA (as amended both by the CFMA and by Section 906 of the 
     Act).
       The new FDIA provision also permits transfers to an 
     eligible financial institution that is a non-U.S. person, or 
     the branch or agency of a non-U.S. person or a U.S. financial 
     institution that is not an FDIC-insured institution if, 
     following the transfer, the contractual rights of the parties 
     would be enforceable substantially to the same extent as 
     under the FDIA. It is expected that the FDIC would not 
     transfer QFCs to such a financial institution if there were 
     an impending change of law that would impair the 
     enforceability of the parties' contractual rights.
       Section 903(b) amends the notification requirements 
     following a transfer of the QFCs of a failed depository 
     institution to require the FDIC to notify any party to a 
     transferred QFC of such transfer by 5:00 p.m. (Eastern Time) 
     on the business day following the date of the appointment of 
     the FDIC acting as receiver or following the date of such 
     transfer by the FDIC acting as a conservator. This amendment 
     is consistent with the policy statement on QFCs issued by the 
     FDIC on December 12, 1989. Section 903(b) is substantively 
     identical to section 903(b) of the House bill and the Senate 
     amendment.
       Section 903(c) amends the FDIA to clarify the relationship 
     between the FDIA and FDICIA. It is substantively identical to 
     section 903(c) of the House bill and the Senate amendment. 
     There has been some uncertainty whether FDICIA permits 
     counterparties to terminate or liquidate a QFC before the 
     expiration of the time period provided by the FDIA during 
     which the FDIC may repudiate or transfer a QFC in a 
     conservatorship or receivership. Subsection (c) provides that 
     a party may not terminate a QFC based solely on the 
     appointment of the FDIC as receiver until 5:00 p.m. 
     (Eastern Time) on the business day following the 
     appointment of the receiver or after the person has 
     received notice of a transfer under FDIA section 11(d)(9), 
     or based solely on the appointment of the FDIC as 
     conservator, notwithstanding the provisions of FDICIA. 
     This provides the FDIC with an opportunity to undertake an 
     orderly resolution of the insured depository institution.
       Section 903(c) also prohibits the enforcement of rights of 
     termination or liquidation that arise solely because of the 
     insolvency of the institution or are based on the ``financial 
     condition'' of the depository institution in receivership or 
     conservatorship. For example, termination based on a cross-
     default provision in a QFC that is triggered upon a default 
     under another contract could be rendered ineffective if such 
     other default was caused by an acceleration of amounts due 
     under that other contract, and such acceleration was based 
     solely on the appointment of a conservator or receiver for 
     that depository institution. Similarly, a provision in a

[[Page H5777]]

     QFC permitting termination of the QFC based solely on a 
     downgraded credit rating of a party will not be enforceable 
     in an FDIC receivership or conservatorship because the 
     provision is based solely on the financial condition of the 
     depository institution in default. However, any payment, 
     delivery or other performance-based default, or breach of a 
     representation or covenant putting in question the 
     enforceability of the agreement, will not be deemed to be 
     based solely on financial condition for purposes of this 
     provision. The amendment is not intended to prevent 
     counterparties from taking all actions permitted and 
     recovering all damages authorized upon repudiation of any QFC 
     by a conservator or receiver, or from taking actions based 
     upon a receivership or other financial condition-triggered 
     default in the absence of a transfer (as contemplated in 
     Section 11(e)(10) of the FDIA). The amendment allows the FDIC 
     to meet its obligation to provide notice to parties to 
     transferred QFCs by taking steps reasonably calculated to 
     provide notice to such parties by the required time. This is 
     consistent with the existing policy statement on QFCs issued 
     by the FDIC on December 12, 1989.
       Finally, the amendment permits the FDIC to transfer QFCs of 
     a failed depository institution to a bridge bank or a 
     depository institution organized by the FDIC for which a 
     conservator is appointed either (i) immediately upon the 
     organization of such institution or (ii) at the time of a 
     purchase and assumption transaction between the FDIC and the 
     institution. This provision clarifies that such institutions 
     are not to be considered financial institutions that are 
     ineligible to receive such transfers under FDIA section 
     11(e)(9). This is consistent with the existing policy 
     statement on QFCs issued by the FDIC on December 12, 1989.
     Sec. 904. Amendments relating to disaffirmance or repudiation 
         of qualified financial contracts
       Section 904 of the conference report limits the 
     disaffirmance and repudiation authority of the FDIC with 
     respect to QFCs so that such authority is consistent with the 
     FDIC's transfer authority under FDIA section 11(e)(9). This 
     ensures that no disaffirmance, repudiation or transfer 
     authority of the FDIC may be exercised to ``cherry-pick'' or 
     otherwise treat independently all the QFCs between a 
     depository institution in default and a person or any 
     affiliate of such person. The FDIC has announced that its 
     policy is not to repudiate or disaffirm QFCs selectively. 
     This unified treatment is fundamental to the reduction of 
     systemic risk. Section 904 reflects the Senate position as 
     represented in section 904 of the Senate amendment. The House 
     version of section 904 did not include the savings clause 
     provision.
     Sec. 905. Clarifying amendment relating to master agreements
       Section 905 of the conference report specifies that a 
     master agreement for one or more securities contracts, 
     commodity contracts, forward contracts, repurchase agreements 
     or swap agreements will be treated as a single QFC under the 
     FDIA (but only to the extent the underlying agreements are 
     themselves QFCs). This provision ensures that cross-product 
     netting pursuant to a master agreement, or pursuant to an 
     umbrella agreement for separate master agreements between the 
     same parties, each of which is used to document one or more 
     qualified financial contracts, will be enforceable under the 
     FDIA. Cross-product netting permits a wide variety of 
     financial transactions between two parties to be netted, 
     thereby maximizing the present and potential future risk-
     reducing benefits of the netting arrangement between the 
     parties. Express recognition of the enforceability of such 
     cross-product master agreements furthers the policy of 
     increasing legal certainty and reducing systemic risks in the 
     case of an insolvency of a large financial participant. 
     Section 905 is substantively identical to section 905 of the 
     House bill and the Senate amendment.
     Sec. 906. federal deposit insurance corporation improvement 
         act of 1991
       Section 906(a) of the conference report is substantively 
     identical to section 906(a) of the House bill and the Senate 
     amendment. Subsection (a)(1) amends the definition of 
     ``clearing organization'' to include clearinghouses that are 
     subject to exemptions pursuant to orders of the Securities 
     and Exchange Commission or the Commodity Futures Trading 
     Commission and to include multilateral clearing organizations 
     (the definition of which was added to FDICIA by the CFMA).
       FDICIA provides that a netting arrangement will be enforced 
     pursuant to its terms, notwithstanding the failure of a party 
     to the agreement. The current netting provisions of FDICIA, 
     however, limit this protection to ``financial institutions,'' 
     which include depository institutions. Section 906(a)(2) 
     amends the FDICIA definition of covered institutions to 
     include (i) uninsured national and State member banks, 
     irrespective of their eligibility for deposit insurance and 
     (ii) foreign banks (including the foreign bank and its 
     branches or agencies as a combined group, or only the foreign 
     bank parent of a branch or agency). The latter change will 
     extend the protections of FDICIA to ensure that U.S. 
     financial organizations participating in netting agreements 
     with foreign banks are covered by the Act, thereby enhancing 
     the safety and soundness of these arrangements. It is 
     intended that a non-defaulting foreign bank and its branches 
     and agencies be considered to be a single financial 
     institution for purposes of the bilateral netting provisions 
     of FDICIA (except to the extent that the non-defaulting 
     foreign bank and its branches and agencies on the one hand, 
     and the defaulting financial institution, on the other, have 
     entered into agreements that clearly evidence an intention 
     that the non-defaulting foreign bank and its branches and 
     agencies be treated as separate financial institutions for 
     purposes of the bilateral netting provisions of FDICIA).
       Subsection (a)(3) amends the FDICIA to provide that, for 
     purposes of FDICIA, two or more clearing organizations that 
     enter into a netting contract are considered ``members'' of 
     each other. This assures the enforceability of netting 
     arrangements involving two or more clearing organizations and 
     a member common to all such organizations, thus reducing 
     systemic risk in the event of the failure of such a 
     member. Under the current FDICIA provisions, the 
     enforceability of such arrangements depends on a case-by-
     case determination that clearing organizations could be 
     regarded as members of each other for purposes of FDICIA.
       Section 906(a)(4) of the conference report amends the 
     FDICIA definition of netting contract and the general rules 
     applicable to netting contracts. The current FDICIA 
     provisions require that the netting agreement must be 
     governed by the law of the United States or a State to 
     receive the protections of FDICIA. Many of these agreements, 
     however, particularly netting arrangements covering positions 
     taken in foreign exchange dealings, are governed by the laws 
     of a foreign country. This subsection broadens the definition 
     of ``netting contract'' to include those agreements governed 
     by foreign law, and preserves the FDICIA requirement that a 
     netting contract not be invalid under, or precluded by, 
     Federal law.
       Section 906(b) and (c) of the conference report are 
     substantively identical to their counterparts in section 906 
     of the House bill and the Senate amendment. These provisions 
     establish two exceptions to FDICIA's protection of the 
     enforceability of the provisions of netting contracts between 
     financial institutions and among clearing organization 
     members. First, the termination provisions of netting 
     contracts will not be enforceable based solely on (i) the 
     appointment of a conservator for an insolvent depository 
     institution under the FDIA or (ii) the appointment of a 
     receiver for such institution under the FDIA, if such 
     receiver transfers or repudiates QFCs in accordance with the 
     FDIA and gives notice of a transfer by 5:00 p.m. on the 
     business day following the appointment of a receiver. This 
     change is made to confirm the FDIC's flexibility to transfer 
     or repudiate the QFCs of an insolvent depository institution 
     in accordance with the terms of the FDIA. This modification 
     also provides important legal certainty regarding the 
     treatment of QFCs under the FDIA, because the current 
     relationship between the FDIA and FDICIA is unclear.
       The second exception provides that FDICIA does not override 
     a stay order under SIPA with respect to foreclosure on 
     securities (but not cash) collateral of a debtor (section 911 
     of the conference report makes a conforming change to SIPA). 
     There is also an exception relating to insolvent commodity 
     brokers. Subsections (b) and (c) also clarify that a security 
     agreement or other credit enhancement related to a netting 
     contract is enforceable to the same extent as the underlying 
     netting contract.
       Section 906(d) of the conference report adds a new section 
     407 to FDICIA. This new section provides that, 
     notwithstanding any other law, QFCs with uninsured national 
     banks, uninsured Federal branches or agencies, or Edge Act 
     corporations, or uninsured State member banks that operate, 
     or operate as, a multilateral clearing organization and that 
     are placed in receivership or conservatorship will be treated 
     in the same manner as if the contract were with an insured 
     national bank or insured Federal branch for which a receiver 
     or conservator was appointed. This provision will ensure that 
     parties to QFCs with these institutions will have the same 
     rights and obligations as parties entering into the same 
     agreements with insured depository institutions. The new 
     section also specifically limits the powers of a receiver or 
     conservator for such an institution to those contained in 12 
     U.S.C. Sec. Sec. 1821(e)(8), (9), (10), and (11), which 
     address QFCs.
       While the amendment would apply the same rules to such 
     institutions that apply to insured institutions, the 
     provision would not change the rules that apply to insured 
     institutions. Nothing in this section would amend the 
     International Banking Act, the Federal Deposit Insurance Act, 
     the National Bank Act, or other statutory provisions with 
     respect to receiverships of insured national banks or Federal 
     branches.
       Section 906(d) reflects the Senate position in Section 
     906(d) of the Senate amendment. It does not include the 
     reference in the House provision concerning a receiver of an 
     uninsured national bank, or Federal branch or agency. The 
     conference report also eliminates the reference to the Board 
     of Governors of the Federal Reserve System in the case of a 
     corporation chartered under section 25A of the Federal 
     Reserve Act.
     Sec. 907. Bankruptcy law amendments
       Section 907 of the conference report makes a series of 
     amendments to the Bankruptcy Code. Subsection (a)(1) amends 
     the Bankruptcy Code definitions of ``repurchase

[[Page H5778]]

     agreement'' and ``swap agreement'' to conform with the 
     amendments to the FDIA contained in sections 2(e) and 2(f) of 
     the Act.
       In connection with the definition of ``repurchase 
     agreement,'' the term ``qualified foreign government 
     securities'' is defined to include securities that are direct 
     obligations of, or fully guaranteed by, central governments 
     of members of the Organization for Economic Cooperation and 
     Development (OECD). This language reflects developments in 
     the repurchase agreement markets, which increasingly use 
     foreign government securities as the underlying asset. The 
     securities are limited to those issued by or guaranteed by 
     full members of the OECD, as well as countries that have 
     concluded special lending arrangements with the International 
     Monetary Fund associated with the Fund's General Arrangements 
     to Borrow. The term ``stockbroker,'' as defined in Bankruptcy 
     Code section 101(53A), is intended to include within its 
     scope an ``OTC derivatives dealer'', as that term is defined 
     in Rule 3b-12 of the Securities Exchange Act of 1934, as 
     amended, which is the new class of broker-dealer created by 
     the Securities and Exchange Commission in 1999 to engage in 
     over-the-counter derivatives transactions that are 
     securities.
       Subsection (a)(1) also amends the definition of 
     ``repurchase agreement'' to include those on mortgage-related 
     securities, mortgage loans and interests therein, and 
     expressly to include principal and interest-only U.S. 
     government and agency securities as securities that can be 
     the subject of a ``repurchase agreement.'' The reference in 
     the definition to United States government- and agency-issued 
     or fully guaranteed securities is intended to include 
     obligations issued or guaranteed by Fannie Mae and the 
     Federal Home Loan Mortgage Corporation (Freddie Mac) as well 
     as all obligations eligible for purchase by Federal Reserve 
     banks under the similar language of section 14(b) of the 
     Federal Reserve Act.
       This amendment is not intended to affect the status of 
     repos involving securities or commodities as securities 
     contracts, commodity contracts, or forward contracts, and 
     their consequent eligibility for similar treatment under 
     other provisions of the Bankruptcy Code. In particular, an 
     agreement for the sale and repurchase of a security would 
     continue to be a securities contract as defined in the 
     Bankruptcy Code and thus also would be subject to the 
     Bankruptcy Code provisions pertaining to securities 
     contracts, even if not a ``repurchase agreement'' as defined 
     in the Bankruptcy Code. Similarly, an agreement for the sale 
     and repurchase of a commodity, even though not a ``repurchase 
     agreement'' as defined in the Bankruptcy Code, would continue 
     to be a forward contract for purposes of the Bankruptcy 
     Code and would be subject to the Bankruptcy Code 
     provisions pertaining to forward contracts.
       Subsection (a)(1) specifies that repurchase obligations 
     under a participation in a commercial mortgage loan do not 
     make the participation agreement a ``repurchase agreement.'' 
     Such repurchase obligations embedded in participations in 
     commercial loans (such as recourse obligations) do not 
     constitute a ``repurchase agreement.'' However, a repurchase 
     agreement involving the transfer of participations in 
     commercial mortgage loans with a simultaneous agreement to 
     repurchase the participation on demand or at a date certain 
     one year or less after such transfer would constitute a 
     ``repurchase agreement'' (as well as a ``securities 
     contract'').
       The definition of ``swap agreement'' is amended to include 
     an ``interest rate swap, option, future, or forward 
     agreement, including a rate floor, rate cap, rate collar, 
     cross-currency rate swap, and basis swap; a spot, same day-
     tomorrow, tomorrow-next, forward, or other foreign exchange 
     or precious metals agreement; a currency swap, option, 
     future, or forward agreement; an equity index or equity swap, 
     option, future, or forward agreement; a debt index or debt 
     swap, option, future, or forward agreement; a total return, 
     credit spread or credit swap, option, future, or forward 
     agreement; a commodity index or commodity swap, option, 
     future, or forward agreement; or a weather swap, weather 
     derivative, or weather option.'' As amended, the definition 
     of ``swap agreement'' will update the statutory definition 
     and achieve contractual netting across economically similar 
     transactions.
       The definition of ``swap agreement'' originally was 
     intended to provide sufficient flexibility to avoid the need 
     to amend the definition as the nature and uses of swap 
     transactions matured. To that end, the phrase ``or any other 
     similar agreement'' was included in the definition. (The 
     phrase ``or any similar agreement'' has been added to the 
     definitions of ``forward contract,'' ``commodity contract,'' 
     ``repurchase agreement,'' and ``securities contract'' for the 
     same reason.) To clarify this, subsection (a)(1) expands the 
     definition of ``swap agreement'' to include ``any agreement 
     or transaction that is similar to any other agreement or 
     transaction referred to in [Section 101(53B) of the 
     Bankruptcy Code] and that is of a type that has been, is 
     presently, or in the future becomes, the subject of recurrent 
     dealings in the swap markets? and [that] is a forward, swap, 
     future, or option on one or more rates, currencies, 
     commodities, equity securities or other equity instruments, 
     debt securities or other debt instruments, quantitative 
     measures associated with an occurrence, extent of an 
     occurrence, or contingency associated with a financial, 
     commercial, or economic consequence, or economic or financial 
     indices or measures of economic or financial risk or value.''
       The definition of ``swap agreement'' in this subsection 
     should not be interpreted to permit parties to document non-
     swaps as swap transactions. Traditional commercial 
     arrangements, such as supply agreements, or other non-
     financial market transactions, such as commercial, 
     residential or consumer loans, cannot be treated as ``swaps'' 
     under either the FDIA or the Bankruptcy Code because the 
     parties purport to document or label the transactions as 
     ``swap agreements.'' These definitions, and the 
     characterization of a certain transaction as a ``swap 
     agreement,'' are not intended to affect the characterization, 
     definition, or treatment of any instruments under any other 
     statute, regulation, or rule including, but not limited to, 
     the statutes, regulations or rules enumerated in subsection 
     (a)(1)(C). The definition also includes any security 
     agreement or arrangement, or other credit enhancement, 
     related to a swap agreement, including any guarantee or 
     reimbursement obligation related to a swap agreement. This 
     ensures that any such agreement, arrangement or enhancement 
     is itself deemed to be a swap agreement, and therefore 
     eligible for treatment as such for purposes of termination, 
     liquidation, acceleration, offset and netting under the 
     Bankruptcy Code and the FDIA. Similar changes are made in the 
     definitions of ``forward contract,'' ``commodity contract,'' 
     ``repurchase agreement,'' and ``securities contract.'' An 
     example of a security arrangement is a right of setoff; 
     examples of other credit enhancements are letters of credit 
     and other similar agreements. A security agreement or 
     arrangement or guarantee or reimbursement obligation related 
     to a ``swap agreement,'' ``forward contract,'' ``commodity 
     contract,'' ``repurchase agreement'' or ``securities 
     contract'' will be such an agreement or contract only to the 
     extent of the damages in connection with such agreement 
     measured in accordance with Section 562 of the Bankruptcy 
     Code (added by the Act). This limitation does not affect, 
     however, the other provisions of the Bankruptcy Code 
     (including Section 362(b)) relating to security arrangements 
     in connection with agreements or contracts that otherwise 
     qualify as ``swap agreements,'' ``forward contracts,'' 
     ``commodity contracts,'' ``repurchase agreements'' or 
     ``securities contracts.''
       The use of the term ``forward'' in the definition of ``swap 
     agreement'' is not intended to refer only to transactions 
     that fall within the definition of ``forward contract.'' 
     Instead, a ``forward'' transaction could be a ``swap 
     agreement'' even if not a ``forward contract.''
       Subsections (a)(2) and (a)(3) amend the Bankruptcy Code 
     definitions of ``securities contract'' and ``commodity 
     contract,'' respectively, to conform them to the definitions 
     in the FDIA.
       Subsection (a)(2), like the amendments to the FDIA, amends 
     the definition of ``securities contract'' expressly to 
     encompass margin loans, to clarify the coverage of securities 
     options and to clarify the coverage of repurchase and reverse 
     repurchase transactions. The reference in subsection (b) to a 
     ``guarantee'' by or to a ``securities clearing agency'' is 
     intended to cover other arrangements, such as novation, that 
     have an effect similar to a guarantee. The reference to a 
     ``loan'' of a security in the definition is intended to apply 
     to loans of securities, whether or not for a ``permitted 
     purpose'' under margin regulations. The reference to 
     ``repurchase and reverse repurchase transactions'' is 
     intended to eliminate any inquiry under section 555 and 
     related provisions as to whether a repurchase or reverse 
     repurchase transaction is a purchase and sale transaction or 
     a secured financing. Repurchase and reverse repurchase 
     transactions meeting certain criteria are already covered 
     under the definition of ``repurchase agreement'' in the 
     Bankruptcy Code. Repurchase and reverse repurchase 
     transactions on all securities (including, for example, 
     equity securities, asset-backed securities, corporate bonds 
     and commercial paper) are included under the definition of 
     ``securities contract''. A repurchase or reverse repurchase 
     transaction which is a ``securities contract'' but not a 
     ``repurchase agreement'' would thus be subject to the 
     ``counterparty limitations'' contained in section 555 of the 
     Bankruptcy Code (i.e., only stockbrokers, financial 
     institutions, securities clearing agencies and financial 
     participants can avail themselves of section 555 and related 
     provisions).
       Subsection (a)(2) also specifies that purchase, sale and 
     repurchase obligations under a participation in a commercial 
     mortgage loan do not constitute ``securities contracts.'' 
     While a contract for the purchase, sale or repurchase of a 
     participation may constitute a ``securities contract,'' the 
     purchase, sale or repurchase obligation embedded in a 
     participation agreement does not make that agreement a 
     ``securities contract.''
       Section 907(a) reflects the Senate position as represented 
     in section 907(a) of the Senate amendment. The House version 
     of this provision did not include the clarification that 
     the definition applies to mortgage loans. The conference 
     report also includes the Senate amendment's clarification 
     of the reference to guarantee or reimbursement obligation.
       Section 907(b) amends the Bankruptcy Code definitions of 
     ``financial institution'' and ``forward contract merchant.'' 
     It is substantively identical to section 907(b) of the House 
     bill and the Senate amendment. The

[[Page H5779]]

     definition for ``financial institution'' includes Federal 
     Reserve Banks and the receivers or conservators of insolvent 
     depository institutions. With respect to securities 
     contracts, the definition of ``financial institution'' 
     expressly includes investment companies registered under the 
     Investment Company Act of 1940.
       Subsection (b) also adds a new definition of ``financial 
     participant'' to limit the potential impact of insolvencies 
     upon other major market participants. This definition will 
     allow such market participants to close-out and net 
     agreements with insolvent entities under sections 362(b)(6), 
     555, and 556 even if the creditor could not qualify as, for 
     example, a commodity broker. Sections 362(b)(6), 555 and 556 
     preserve the limitations of the right to close-out and net 
     such contracts, in most cases, to entities who qualify under 
     the Bankruptcy Code's counterparty limitations. However, 
     where the counterparty has transactions with a total gross 
     dollar value of at least $1 billion in notional or actual 
     principal amount outstanding on any day during the previous 
     15-month period, or has gross mark-to-market positions of at 
     least $100 million (aggregated across counterparties) in one 
     or more agreements or transactions on any day during the 
     previous 15-month period, sections 362(b)(6), 555 and 556 and 
     corresponding amendments would permit it to exercise netting 
     and related rights irrespective of its inability otherwise to 
     satisfy those counterparty limitations. This change will help 
     prevent systemic impact upon the markets from a single 
     failure, and is derived from threshold tests contained in 
     Regulation EE promulgated by the Federal Reserve Board in 
     implementing the netting provisions of the Federal Deposit 
     Insurance Corporation Improvement Act. It is intended that 
     the 15-month period be measured with reference to the 15 
     months preceding the filing of a petition by or against the 
     debtor.
       ``Financial participant'' is also defined to include 
     ``clearing organizations'' within the meaning of FDICIA (as 
     amended by the CFMA and Section 906 of the Act). This 
     amendment, together with the inclusion of ``financial 
     participants'' as eligible counterparties in connection with 
     ``commodity contracts,'' ``forward contracts'' and 
     ``securities contracts'' and the amendments made in other 
     Sections of the Act to include ``financial participants'' as 
     counterparties eligible for the protections in respect of 
     ``swap agreements'' and ``repurchase agreements'', take into 
     account the CFMA and will allow clearing organizations to 
     benefit from the protections of all of the provisions of the 
     Bankruptcy Code relating to these contracts and agreements. 
     This will further the goal of promoting the clearing of 
     derivatives and other transactions as a way to reduce 
     systemic risk. The definition of ``financial participant'' 
     (as with the other provisions of the Bankruptcy Code relating 
     to ``securities contracts,'' ``forward contracts,'' 
     ``commodity contracts,'' ``repurchase agreements'' and ``swap 
     agreements'') is not mutually exclusive, i.e., an entity that 
     qualifies as a ``financial participant'' could also be a 
     ``swap participant,'' ``repo participant,'' ``forward 
     contract merchant,'' ``commodity broker,'' ``stockbroker,'' 
     ``securities clearing agency'' and/or ``financial 
     institution.''
       Section 907(c) of the conference report adds to the 
     Bankruptcy Code new definitions for the terms ``master 
     netting agreement'' and ``master netting agreement 
     participant.'' The definition of ``master netting agreement'' 
     is designed to protect the termination and close-out netting 
     provisions of cross-product master agreements between 
     parties. Such an agreement may be used (i) to document a wide 
     variety of securities contracts, commodity contracts, forward 
     contracts, repurchase agreements and swap agreements or (ii) 
     as an umbrella agreement for separate master agreements 
     between the same parties, each of which is used to document a 
     discrete type of transaction. The definition includes 
     security agreements or arrangements or other credit 
     enhancements related to one or more such agreements and 
     clarifies that a master netting agreement will be treated as 
     such even if it documents transactions that are not within 
     the enumerated categories of qualifying transactions (but the 
     provisions of the Bankruptcy Code relating to master netting 
     agreements and the other categories of transactions will not 
     apply to such other transactions). A ``master netting 
     agreement participant'' is any entity that is a party to an 
     outstanding master netting agreement with a debtor before the 
     filing of a bankruptcy petition. Section 907(c) is 
     substantively identical to section 907(c) of the House bill 
     and the Senate amendment.
       Subsection (d) amends section 362(b) of the Bankruptcy Code 
     to protect enforcement, free from the automatic stay, of 
     setoff or netting provisions in swap agreements and in master 
     netting agreements and security agreements or arrangements 
     related to one or more swap agreements or master netting 
     agreements. This provision parallels the other provisions of 
     the Bankruptcy Code that protect netting provisions of 
     securities contracts, commodity contracts, forward contracts, 
     and repurchase agreements. Because the relevant definitions 
     include related security agreements, the references to 
     ``setoff'' in these provisions, as well as in section 
     362(b)(6) and (7) of the Bankruptcy Code, are intended to 
     refer also to rights to foreclose on, and to set off against 
     obligations to return, collateral securing swap agreements, 
     master netting agreements, repurchase agreements, securities 
     contracts, commodity contracts, or forward contracts. 
     Collateral may be pledged to cover the cost of replacing the 
     defaulted transactions in the relevant market, as well as 
     other costs and expenses incurred or estimated to be incurred 
     for the purpose of hedging or reducing the risks arising out 
     of such termination. Enforcement of these agreements and 
     arrangements free from the automatic stay is consistent with 
     the policy goal of minimizing systemic risk.
       Subsection (d) also clarifies that the provisions 
     protecting setoff and foreclosure in relation to securities 
     contracts, commodity contracts, forward contracts, repurchase 
     agreements, swap agreements, and master netting agreements 
     free from the automatic stay apply to collateral pledged by 
     the debtor but that cannot technically be ``held by'' the 
     creditor, such as receivables and book-entry securities, and 
     to collateral that has been repledged by the creditor and 
     securities re-sold pursuant to repurchase agreements. Section 
     907(d) is substantively identical to section 907(d) of the 
     House bill and the Senate amendment.
       Subsections (e) and (f) of section 907 of the conference 
     report amend sections 546 and 548(d) of the Bankruptcy Code 
     to provide that transfers made under or in connection with a 
     master netting agreement may not be avoided by a trustee 
     except where such transfer is made with actual intent to 
     hinder, delay or defraud and not taken in good faith. This 
     amendment provides the same protections for a transfer made 
     under, or in connection with, a master netting agreement as 
     currently is provided for margin payments, settlement 
     payments and other transfers received by commodity brokers, 
     forward contract merchants, stockbrokers, financial 
     institutions, securities clearing agencies, repo 
     participants, and swap participants under sections 546 and 
     548(d), except to the extent the trustee could otherwise 
     avoid such a transfer made under an individual contract 
     covered by such master netting agreement. Subsections (e) 
     and (f) are substantively identical to section 907(f) of 
     the House bill and the Senate amendment.
       Subsections (g), (h), (i), and (j) of section 907 clarify 
     that the provisions of the Bankruptcy Code that protect (i) 
     rights of liquidation under securities contracts, commodity 
     contracts, forward contracts and repurchase agreements also 
     protect rights of termination or acceleration under such 
     contracts, and (ii) rights to terminate under swap agreements 
     also protect rights of liquidation and acceleration. These 
     provisions are substantively similar to their counterparts in 
     section 907 of the House bill and Senate amendment.
       Section 907(k) of the conference report represents the 
     Senate position as reflected in section 907(k) of the Senate 
     amendment. It adds a new section 561 to the Bankruptcy Code 
     to protect the contractual right of a master netting 
     agreement participant to enforce any rights of termination, 
     liquidation, acceleration, offset or netting under a master 
     netting agreement. Such rights include rights arising (i) 
     from the rules of a derivatives clearing organization, 
     multilateral clearing organization, securities clearing 
     agency, securities exchange, securities association, contract 
     market, derivatives transaction execution facility or board 
     of trade, (ii) under common law, law merchant or (iii) by 
     reason of normal business practice. This reflects the 
     enactment of the CFMA and the current treatment of rights 
     under swap agreements under section 560 of the Bankruptcy 
     Code. Similar changes to reflect the enactment of the CFMA 
     have been made to the definition of ``contractual right'' for 
     purposes of Sections 555, 556, 559 and 560 of the Bankruptcy 
     Code.
       Subsections (b)(2)(A) and (b)(2)(B) of new Section 561 
     limit the exercise of contractual rights to net or to offset 
     obligations where the debtor is a commodity broker and one 
     leg of the obligations sought to be netted relates to 
     commodity contracts traded on or subject to the rules of a 
     contract market designated under the Commodity Exchange Act 
     or a derivatives transaction execution facility registered 
     under the Commodity Exchange Act. Under subsection (b)(2)(A) 
     netting or offsetting is not permitted in these circumstances 
     if the party seeking to net or to offset has no positive net 
     equity in the commodity accounts at the debtor. Subsection 
     (b)(2)(B) applies only if the debtor is a commodity broker, 
     acting on behalf of its own customer, and is in turn a 
     customer of another commodity broker. In that case, the 
     latter commodity broker may not net or offset obligations 
     under such commodity contracts with other claims against its 
     customer, the debtor. Subsections (b)(2)(A) and (b)(2)(B) 
     limit the depletion of assets available for distribution to 
     customers of commodity brokers. Subsection (b)(2)(C) provides 
     an exception to subsections (b)(2)(A) and (b)(2)(B) for 
     cross-margining and other similar arrangements approved by, 
     or submitted to and not rendered ineffective by, the 
     Commodity Futures Trading Commission, as well as certain 
     other netting arrangements.
       For the purposes of Bankruptcy Code sections 555, 556, 559, 
     560 and 561, it is intended that the normal business practice 
     in the event of a default of a party based on bankruptcy or 
     insolvency is to terminate, liquidate or accelerate 
     securities contracts, commodity contracts, forward contracts, 
     repurchase agreements, swap agreements and master netting 
     agreements with the bankrupt or insolvent party. The 
     protection of netting and offset rights in sections 560 and 
     561 is in addition to the protections afforded

[[Page H5780]]

     in sections 362(b)(6), (b)(7), (b)(17) and (b)(28) of the 
     Bankruptcy Code.
       Under the Act, the termination, liquidation or acceleration 
     rights of a master netting agreement participant are subject 
     to limitations contained in other provisions of the 
     Bankruptcy Code relating to securities contracts and 
     repurchase agreements. In particular, if a securities 
     contract or repurchase agreement is documented under a master 
     netting agreement, a party's termination, liquidation and 
     acceleration rights would be subject to the provisions of the 
     Bankruptcy Code relating to orders authorized under the 
     provisions of SIPA or any statute administered by the SEC. In 
     addition, the netting rights of a party to a master netting 
     agreement would be subject to any contractual terms between 
     the parties limiting or waiving netting or set off rights. 
     Similarly, a waiver by a bank or a counterparty of netting or 
     set off rights in connection with QFCs would be enforceable 
     under the FDIA.
       New Section 561 of the Bankruptcy Code clarifies that the 
     provisions of the Bankruptcy Code related to securities 
     contracts, commodity contracts, forward contracts, repurchase 
     agreements, swap agreements and master netting agreements 
     apply in a proceeding ancillary to a foreign insolvency 
     proceeding under new section 304 of the Bankruptcy Code.
       Subsections (l) and (m) of section 907 of the conference 
     report clarify that the exercise of termination and netting 
     rights will not otherwise affect the priority of the 
     creditor's claim after the exercise of netting, foreclosure 
     and related rights. These provisions are substantively 
     identical to there counterparts in the House bill and the 
     Senate amendment.
       Subsection (n) amends section 553 of the Bankruptcy Code to 
     clarify that the acquisition by a creditor of setoff rights 
     in connection with swap agreements, repurchase agreements, 
     securities contracts, forward contracts, commodity contracts 
     and master netting agreements cannot be avoided as a 
     preference. This subsection also adds setoff of the kinds 
     described in sections 555, 556, 559, 560, and 561 of the 
     Bankruptcy Code to the types of setoff excepted from section 
     553(b). This provision generally represents the Senate's 
     position as represented in Section 907(n) of the Senate 
     amendment.
       Section 907(o), as well as other subsections of the Act, 
     adds references to ``financial participant'' in all the 
     provisions of the Bankruptcy Code relating to securities, 
     forward and commodity contracts and repurchase and swap 
     agreements. This provision generally represents the Senate's 
     position as represented in Section 907(o) of the Senate 
     amendment.
     Sec. 908. Recordkeeping requirements
       Section 908 of the conference report amends section 
     11(e)(8) of the Federal Deposit Insurance Act to explicitly 
     authorize the FDIC, in consultation with appropriate Federal 
     banking agencies, to prescribe regulations on recordkeeping 
     by any insured depository institution with respect to QFCs 
     only if the insured financial institution is in a troubled 
     condition (as such term is defined in the FDIA). Section 908 
     reflects the Senate position in section 908 of the Senate 
     amendment, which includes clarifying references to insured 
     depository institution and institutions in troubled 
     condition.
     Sec. 909. Exemptions from contemporaneous execution 
         requirement
       Section 909 of the conference report amends FDIA section 
     13(e)(2) to provide that an agreement for the 
     collateralization of governmental deposits, bankruptcy estate 
     funds, Federal Reserve Bank or Federal Home Loan Bank 
     extensions of credit or one or more QFCs shall not be deemed 
     invalid solely because such agreement was not entered into 
     contemporaneously with the acquisition of the collateral or 
     because of pledges, delivery or substitution of the 
     collateral made in accordance with such agreement.
       The amendment codifies portions of policy statements issued 
     by the FDIC regarding the application of section 13(e), which 
     codifies the ``D'Oench Duhme'' doctrine. With respect to 
     QFCs, this codification recognizes that QFCs often are 
     subject to collateral and other security arrangements that 
     may require posting and return of collateral on an ongoing 
     basis based on the mark-to-market values of the 
     collateralized transactions. The codification of only 
     portions of the existing FDIC policy statements on these and 
     related issues should not give rise to any negative 
     implication regarding the continued validity of these policy 
     statements. Section 909 is substantively identical to section 
     909 of the House bill and the Senate amendment.
     Sec. 910. Damage measure
       Section 910 of the conference report adds a new section 562 
     to the Bankruptcy Code providing that damages under any swap 
     agreement, securities contract, forward contract, commodity 
     contract, repurchase agreement or master netting agreement 
     will be calculated as of the earlier of (i) the date of 
     rejection of such agreement by a trustee or (ii) the date or 
     dates of liquidation, termination or acceleration of such 
     contract or agreement. Section 910 reflects the Senate's 
     position as represented in section 910 of the Senate 
     amendment.
       Section 562 provides an exception to the rules in (i) and 
     (ii) if there are no commercially reasonable determinants of 
     value as of such date or dates, in which case damages are to 
     be measured as of the earliest subsequent date or dates on 
     which there are commercially reasonable determinants of 
     value. Although it is expected that in most circumstances 
     damages would be measured as of the date or dates of either 
     rejection or liquidation, termination or acceleration, in 
     certain unusual circumstances, such as dysfunctional markets 
     or liquidation of very large portfolios, there may be no 
     commercially reasonable determinants of value for liquidating 
     any such agreements or contracts or for liquidating all such 
     agreements and contracts in a large portfolio on a single 
     day.
       The party determining damages is given limited discretion 
     to determine the dates as of which damages are to be 
     measured. Its actions are circumscribed unless there are no 
     ``commercially reasonable'' determinants of value for it to 
     measure damages on the date or dates of either rejection or 
     liquidation, termination or acceleration. The references to 
     ``commercially reasonable'' are intended to reflect existing 
     state law standards relating to a creditor's actions in 
     determining damages. New section 562 provides that if damages 
     are not measured as of either the date of rejection or the 
     date or dates of liquidation, termination or acceleration and 
     the other party challenges the timing of the measurement of 
     damages by the party determining the damages, that party has 
     the burden of proving the absence of any commercially 
     reasonable determinants of value.
       New section 562 is not intended to have any impact on the 
     determination under the Bankruptcy Code of the timing of 
     damages for contracts and agreements other than those 
     specified in section 562. Also, section 562 does not apply to 
     proceedings under the FDIA, and it is not intended that 
     Section 562 have any impact on the interpretation of the 
     provisions of the FDIA relating to timing of damages in 
     respect of QFCs or other contracts.
     Sec. 911. SIPC stay
       Section 911 of the conference report amends SIPA to provide 
     that an order or decree issued pursuant to SIPA shall not 
     operate as a stay of any right of liquidation, termination, 
     acceleration, offset or netting under one or more securities 
     contracts, commodity contracts, forward contracts, repurchase 
     agreements, swap agreements or master netting agreements (as 
     defined in the Bankruptcy Code and including rights of 
     foreclosure on collateral), except that such order or decree 
     may stay any right to foreclose on or dispose of securities 
     (but not cash) collateral pledged by the debtor or sold by 
     the debtor under a repurchase agreement or lent by the debtor 
     under a securities lending agreement. A corresponding 
     amendment to FDICIA is made by section 906. A creditor that 
     was stayed in exercising rights against such securities would 
     be entitled to post-insolvency interest to the extent of the 
     value of such securities. Section 911 is substantively 
     identical to section 911 of the House bill and the Senate 
     amendment.

                 Title X--Protection of Family Farmers

     Sec. 1001. Permanent reenactment of chapter 12
       Chapter 12 is a specialized form of bankruptcy relief 
     available only to a ``family farmer with regular annual 
     income,'' \70\ a defined term.\71\ This form of bankruptcy 
     relief permits eligible family farmers, under the supervision 
     of a bankruptcy trustee,\72\ to reorganize their debts 
     pursuant to a repayment plan.\73\ The special attributes of 
     chapter 12 make it better suited to meet the particularized 
     needs of family farmers in financial distress than other 
     forms of bankruptcy relief, such as chapter 11 \74\ and 
     chapter 13.\75\
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     \70\ 11 U.S.C. Sec. 109(f).
     \71\ 11 U.S.C. Sec. 101(19).
     \72\ 11 U.S.C. Sec. 1202.
     \73\ 11 U.S.C. Sec. 1222.
     \74\ For example, chapter 12 is typically less complex and 
     expensive than chapter 11, a form of bankruptcy relief 
     generally utilized to effectuate large corporate 
     reorganizations.
     \75\ Chapter 13, a form of bankruptcy relief for individuals 
     seeking to reorganize their debts, limits its eligibility to 
     debtors with debts in lower amounts than permitted for 
     eligibility purposes under chapter 12. Cf. 11 U.S.C. 
     Sec. Sec. 109(e), 101(18).
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       Chapter 12 was enacted on a temporary seven-year basis as 
     part of the Bankruptcy Judges, United States Trustees, and 
     Family Farmer Bankruptcy Act of 1986 \76\ in response to the 
     farm financial crisis of the early- to mid-1980's.\77\ It was 
     subsequently reenacted and extended on several occasions. The 
     most recent extension, authorized as part of the Farm 
     Security and Rural Investment Act of 2002, provides that 
     chapter remains in effect until December 31, 2002.\78\
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     \76\ Pub. L. No. 99-554, Sec. 255, 100 Stat. 3088, 3105 
     (1986).
     \77\ See U.S. Dept. of Agriculture, Info. Bull. No. 724-09, 
     Issues in Agricultural and Rural Finance: Do Farmers Need a 
     Separate Chapter in the Bankruptcy Code? (Oct. 1997). As one 
     of the principal proponents of this legislation explained:
     ``I doubt there will be anything that we do that will have 
     such an immediate impact in the grassroots of our country 
     with respect to the situation that exists in most of the 
     heartland, and that is in the agricultural sector * * *
     ``You know, William Jennings Bryan in his famous speech, the 
     Cross of Gold, almost 60 years ago [sic], stated these words: 
     ``Destroy our cities and they will spring up again as if by 
     magic; but destroy our farms, and the grass will grow in 
     every city in our country.''
     ``This legislation will hopefully stem the tide that we have 
     seen so recently in the massive bankruptcies in the family 
     farm area.''
     132 Cong. Rec. 28,147 (1986) (statement of Rep. Mike Synar 
     (D-Okla.)).
     \78\ Pub. L. No. 107-171, Sec. 10814 (2002).
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       Section 1001(a) of the conference report reenacts chapter 
     12 of the Bankruptcy Code and provides that such reenactment 
     takes effect as of the date of enactment. Section

[[Page H5781]]

     1001(b) makes a conforming amendment to section 302 of the 
     Bankruptcy Judges, United States Trustees, and Family Farmer 
     Bankruptcy Act of 1986. As a result of this provision, 
     chapter 12 becomes a permanent form of relief under the 
     Bankruptcy Code. Section 1001 is substantively identical to 
     section 1001 of the House bill and the Senate amendment.
     Sec. 1002. Debt limit increase
       Section 1002 of the conference report amends section 104(b) 
     of the Bankruptcy Code to provide for periodic adjustments 
     for inflation of the debt eligibility limit for family 
     farmers. This provision represents a compromise between 
     section 1002 of the House bill and the Senate amendment. The 
     Senate version required the adjustment to become effective as 
     of April 1, 2001 or 60 days after the date of enactment of 
     this Act. The House provision allows for a prospective 
     effective date of April 1, 2004.
     Sec. 1003. Certain claims owed to governmental units
       Section 1003 of the conference report is substantively 
     identical to section 1003 of the House bill and the Senate 
     amendment. Subsection (a) amends section 1222(a) of the 
     Bankruptcy Code to add an exception with respect to payments 
     to a governmental unit for a debt entitled to priority under 
     section 507 if such debt arises from the sale, transfer, 
     exchange, or other disposition of an asset used in the 
     debtor's farming operation, but only if the debtor receives a 
     discharge. Section 1003(b) amends section 1231(b) of the 
     Bankruptcy Code to have it apply to any governmental unit. 
     Subsection (c) provides that section 1003 becomes effective 
     on the date of enactment of this Act and applies to cases 
     commenced after such effective date.
     Sec. 1004. Definition of family farmer
       Section 1004 of the conference report amends the definition 
     of ``family farmer'' in section 101(18) of the Bankruptcy 
     Code to increase the debt eligibility limit from $1,500,000 
     to $3,237,000. It also reduces the percentage of the farmer's 
     liabilities that must arise out of the debtor's farming 
     operation for eligibility purposes from 80 percent to 50 
     percent. Section 1004 represents a compromise. It takes into 
     consideration the adjustment that went into effect on April 
     1, 2001 pursuant to Bankruptcy Code section 104. There is no 
     counterpart to this provision in the House bill.
     Sec. 1005. Elimination of requirement that family farmer and 
         spouse receive over 50 percent of income from farming 
         operation in year prior to bankruptcy
       Section 1005 of the conference report amends the Bankruptcy 
     Code's definition of ``family farmer'' with respect to the 
     determination of the farmer's income. Current law provides 
     that a debtor, in order to be eligible to be a family farmer, 
     must derive a specified percentage of his or her income from 
     farming activities for the taxable year preceding the 
     commencement of the bankruptcy case. Section 1005 adjusts the 
     threshold percentage to be met during either: (1) the taxable 
     year preceding the filing of the bankruptcy case; or (2) the 
     taxable year in the second and third taxable years preceding 
     the filing of the bankruptcy case. Section 1005 represents a 
     compromise between the House bill and Senate amendment. The 
     Senate provision sets the determination period as at least 
     one of the three years preceding the filing of the bankruptcy 
     case. There is no counterpart to this provision in the House 
     bill.
     Sec. 1006. Prohibition of retroactive assessment of 
         disposable income
       Section 1006 of the conference report amends the Bankruptcy 
     Code in two respects concerning chapter 12 plans. Section 
     1006(a) amends Bankruptcy Code section 1225(b) to permit the 
     court to confirm a plan even if the distribution proposed 
     under the plan equals or exceeds the debtor's projected 
     disposable income for that period, providing the plan 
     otherwise satisfies the requirements for confirmation. 
     Section 1006(b) amends Bankruptcy Code section 1229 to 
     restrict the bases for modifying a confirmed chapter 12 plan. 
     Specifically, Section 1006(b) to provide that a confirmed 
     chapter 12 plan may not be modified to increase the amount of 
     payments due prior to the date of the order modifying the 
     confirmation of the plan. Where the modification is based on 
     an increase in the debtor's disposable income, the plan may 
     not be modified to require payments to unsecured creditors in 
     any particular month in an amount greater than the debtor's 
     disposable income for that month, unless the debtor proposes 
     such a modification. Section 1006(b) further provides that a 
     modification of a plan shall not require payments that would 
     leave the debtor with insufficient funds to carry on the 
     farming operation after the plan is completed, unless the 
     debtor proposes such a modification. Section 1006 of the 
     conference report reflects the Senate position as represented 
     in section 1006 of the Senate amendment. There is no 
     counterpart to this provision in the House bill.
     Sec. 1007. Family fishermen
       Section 1007 of the conference report is a compromise 
     between the House and Senate. Subsection (a) of the 
     conference report amends Bankruptcy Code section 101 to add 
     definitions of ``commercial fishing operation,'' ``commercial 
     fishing vessel,'' ``family fisherman'' and ``family fisherman 
     with regular annual income''. The definition of ``commercial 
     fishing operation'' includes the catching or harvesting of 
     fish, shrimp, lobsters, urchins, seaweed, shellfish, or other 
     aquatic species or products. The term ``commercial fishing 
     vessel'' is defined as a vessel used by a fisher to ``carry 
     out a commercial fishing operation''. The term ``family 
     fisherman'' is defined as an individual engaged in a 
     commercial fishing operation, with an aggregate debt limit of 
     $1.5 million. The definition specifies that at least 80 
     percent of those debts must be derived from a commercial 
     fishing operation. The percentage of income that must be 
     derived from such operation is specified to be more than 50 
     percent of the individual's gross income for the taxable year 
     preceding the taxable year in which the case was filed. 
     Similar provisions are included for corporations and 
     partnerships. The term ``family fisherman with regular annual 
     income'' is defined as a family fisherman whose annual income 
     is sufficiently stable and regular to enable such person to 
     make payments under a chapter 12 plan. Section 1007(b) amends 
     Bankruptcy Code section 109 to provide that a family 
     fisherman is eligible to be a debtor under chapter 12.
       Section 1007(c) amends the heading of chapter 12 to include 
     a reference to family fisherman and makes conforming 
     revisions to Sections 1203 and 1206. The conference report 
     does not include a provision in the Senate amendment, which 
     requires certain maritime liens to be treated as unsecured 
     claims. It also does not include provisions in the Senate 
     amendment concerning the codebtor stay.

              Title XI--Health Care and Employee Benefits

     Sec. 1101. Definitions
       Section 1101 of the conference report is substantively 
     identical to section 1101 of the House bill and the Senate 
     amendment. Subsection (a) amends section 101 of the 
     Bankruptcy Code to add a definition of ``health care 
     business''. The definition includes any public or private 
     entity (without regard to whether that entity is for or not 
     for profit) that is primarily engaged in offering to the 
     general public facilities and services for diagnosis or 
     treatment of injury, deformity or disease; and surgical, drug 
     treatment, psychiatric or obstetric care. It also includes 
     the following entities: (1) a general or specialized 
     hospital; (2) an ancillary ambulatory, emergency, or surgical 
     treatment facility; (3) a hospice; (d) a home health agency; 
     (e) other health care institution that is similar to an 
     entity referred to in (a) through (d); and other long-term 
     care facility. These include a skilled nursing facility, 
     intermediate care facility; assisted living facility, home 
     for the aged, domiciliary care facility, and health care 
     institution that is related to an aforementioned facility. 
     Section 1101(b) amends Bankruptcy Code section 101 to add a 
     definition of ``patient''. The term means any person who 
     obtains or receives services from a health care business. 
     Section 1101(c) amends section 101 of the Bankruptcy Code to 
     add a definition of ``patient records''. The term means any 
     written document relating to a patient or record recorded in 
     a magnetic, optical, or other form of electronic medium. 
     Section 1101(d) specifies that the amendments effected by new 
     section 101(27A) do not affect the interpretation of section 
     109(b).
     Sec. 1102. Disposal of patient records
       Section 1102 of the conference report is substantively 
     identical to section 1102 of the House bill and the Senate 
     amendment. It adds a provision to the Bankruptcy Code 
     specifying requirements for the disposal of patient records 
     in a chapter 7, 9, or 11 case of a health care business where 
     the trustee lacks sufficient funds to pay for the storage of 
     such records in accordance with applicable Federal or state 
     law. The requirements chiefly consist of providing notice to 
     the affected patients and specifying the method of disposal 
     for unclaimed records. They are intended to protect the 
     privacy and confidentiality of a patient's medical records 
     when they are in the custody of a health care business in 
     bankruptcy. The provision specifies the following 
     requirements:
       (1) The trustee shall: (a) publish notice in one or more 
     appropriate newspapers stating that if the records are not 
     claimed by the patient or an insurance provider (if permitted 
     under applicable law) within 90 days of the date of such 
     notice, then the trustee will destroy such records; and (b) 
     during such 90-day period, attempt to directly notify by mail 
     each patient and appropriate insurance carrier of the 
     claiming or disposing of such records.
       (2) If after providing such notice patient records are not 
     claimed within the specified period, the trustee shall, upon 
     the expiration of such period, send a request by certified 
     mail to each appropriate federal agency to request permission 
     from such agency to deposit the records with the agency.
       (3) If after providing the notice under 1 and 2 above, 
     patient records are not claimed, the trustee shall destroy 
     such records as follows: (a) by shredding or burning, if the 
     records are written; or (b) by destroying the records so that 
     their information cannot be retrieved, if the records are 
     magnetic, optical or electronic.
       It is anticipated that if the estate of the debtor lacks 
     the funds to pay for the costs and expenses related to the 
     above, the trustee may recover such costs and expenses under 
     section 506(c) of the Bankruptcy Code.
     Sec. 1103. Administrative expense claim for costs of closing 
         a health care business and other administrative expenses
       Section 1103 of the conference report is substantively 
     identical to section 1103 of the

[[Page H5782]]

     House bill and the Senate amendment. It amends section 503(b) 
     of the Bankruptcy Code to provide that the actual, necessary 
     costs and expenses of closing a health care business 
     (including the disposal of patient records or transferral of 
     patients) incurred by a trustee, Federal agency, or a 
     department or agency of a State are allowed administrative 
     expenses. The conference report does not include a 
     duplicative and unrelated provision in the House bill and 
     Senate amendment pertaining to nonresidential real property 
     leases.
     Sec. 1104. Appointment of ombudsman to act as patient 
         advocate
       Section 1104 of the conference report adds a provision to 
     the Bankruptcy Code requiring the court to order the 
     appointment of an ombudsman to monitor the quality of patient 
     care within 30 days after commencement of a chapter 7, 9, or 
     11 health care business bankruptcy case, unless the court 
     finds that such appointment is not necessary for the 
     protection of patients under the specific facts of the case. 
     The ombudsman must be a disinterested person. If the health 
     care business is a long-term care facility, a person who is 
     serving as a State Long-Term Care Ombudsman of the Older 
     Americans Act of 1965 may be appointed as the ombudsman in 
     such case. The ombudsman must: (1) monitor the quality of 
     patient care to the extent necessary under the circumstances, 
     including interviewing patients and physicians; (2) report to 
     the court, not less than 60 days from the date of appointment 
     and then every 60 days thereafter, at a hearing or in writing 
     regarding the quality of patient care at the health care 
     business involved; and (3) notify the court by motion or 
     written report (with notice to appropriate parties in 
     interest) if the ombudsman determines that the quality of 
     patient care is declining significantly or is otherwise being 
     materially compromised. The provision requires the ombudsman 
     to maintain any information obtained that relates to patients 
     (including patient records) as confidential. Section 1104(b) 
     amends section 330(a)(1) of the Bankruptcy Code to authorize 
     the payment of reasonable compensation to an ombudsman. 
     Section 1104 reflects the Senate position as represented in 
     section 1104 of the Senate amendment. The conference report 
     includes the Senate's provision with respect to a case where 
     the United States trustee does not appoint a State Long-Term 
     Care Ombudsman. The House bill did not include this 
     provision.
     Sec. 1105. Debtor in possession; duty of trustee to transfer 
         patients
       Section 1105 of the conference report is identical to 
     section 1105 of the House bill and the Senate amendment. This 
     provision amends section 704(a) of the Bankruptcy Code to 
     require a chapter 7 trustee, chapter 11 trustee, and chapter 
     11 debtor in possession to use all reasonable and best 
     efforts to transfer patients from a health care business 
     that is in the process of being closed to an appropriate 
     health care business. The transferee health care business 
     should be in the vicinity of the transferor health care 
     business, provide the patient with services that are 
     substantially similar to those provided by the transferor 
     health care business, and maintain a reasonable quality of 
     care.
     Sec. 1106. Exclusion from program participation not subject 
         to automatic stay
       Section 1106 amends section 362(b) of the Bankruptcy Code 
     to except from the automatic stay the exclusion by the 
     Secretary of Health and Human Services of a debtor from 
     participation in the medicare program or other specified 
     Federal health care programs. This provision is substantively 
     identical to section 1106 of the House bill and the Senate 
     amendment.

                    Title XII--Technical Amendments

     Sec. 1201. Definitions
       Section 1201 of the conference report is substantively 
     identical to section 1201 of the House bill and the Senate 
     amendment. This provision amends the definitions contained in 
     section 101 of the Bankruptcy Code. Paragraphs (1), (2), (4), 
     and (7) of section 1201 make technical changes to section 101 
     to convert each definition into a sentence (thereby 
     facilitating future amendments to the separate paragraphs) 
     and to redesignate the definitions in correct and completely 
     numerical sequence. Paragraph (3) of section 1101 makes 
     necessary and conforming amendments to cross references to 
     the newly redesignated definitions.
       Paragraph (5) of section 1201 concerns single asset real 
     estate debtors. A single asset real estate chapter 11 case 
     presents special concerns. As the name implies, the principal 
     asset in this type of case consists of some form of real 
     estate, such as undeveloped land. Typically, the form of 
     ownership of a single asset real estate debtor is a 
     corporation or limited partnership. The largest creditor in a 
     single asset real estate case is typically the secured lender 
     who advanced the funds to the debtor to acquire the real 
     property. Often, a single asset real estate debtor resorts to 
     filing for bankruptcy relief for the sole purpose of staying 
     an impending foreclosure proceeding or sale commenced by the 
     secured lender. Foreclosure actions are filed when the debtor 
     lacks sufficient cash flow to service the debt and maintain 
     the property. Taxing authorities may also have liens against 
     the property. Based on the nature of its principal asset, a 
     single asset real estate debtor often has few, if any, 
     unsecured creditors. If unsecured creditors exist, they may 
     have only nominal claims against the single asset real estate 
     debtor. Depending on the nature and ownership of any business 
     operating on the debtor's real property, the debtor may have 
     few, if any, employees. Accordingly, there may be little 
     interest on behalf of unsecured creditors in a single asset 
     real estate case to serve on a creditors' committee.
       In 1994, the Bankruptcy Code was amended to accord special 
     treatment for single asset real estate debtors. It defined 
     this type of debtor as a bankruptcy estate comprised of a 
     single piece of real property or project, other than 
     residential real property with fewer than four residential 
     units. The property or project must generate substantially 
     all of the debtor's gross income. A debtor that conducts 
     substantial business on the property beyond that relating to 
     its operation is excluded from this definition. In addition, 
     the definition fixed a monetary cap. To qualify as a single 
     asset real estate debtor, the debtor could not have 
     noncontingent, liquidated secured debts in excess of $4 
     million. Subparagraph (5)(A) amends the definition of 
     ``single asset real estate'' to exclude family farmers from 
     this definition. Paragraph (5)(B) amends section 101(51B) of 
     the Bankruptcy Code to eliminate the $4 million debt 
     limitation on single asset real estate. The present $4 
     million cap prevents the use of the expedited relief 
     procedure in many commercial property reorganizations, and 
     effectively provides an opportunity for a number of debtors 
     to abusively file for bankruptcy in order to obtain the 
     protection of the automatic stay against their creditors. As 
     a result of this amendment, creditors in more cases will be 
     able to obtain the expedited relief from the automatic stay 
     which is made available under section 362(d)(3) of the 
     Bankruptcy Code.
       Paragraph (6) of section 1201, together with section 1214, 
     respond to a 1997 Ninth Circuit case, in which two purchase 
     money lenders (without knowledge that the debtor had recently 
     filed an undisclosed chapter 11 case that was subsequently 
     converted to chapter 7), funded the debtor's acquisition of 
     an apartment complex and recorded their purchase-money deed 
     of trust immediately following recordation of the deed to the 
     debtors. Specifically, it amends the definition of 
     ``transfer'' in section 101(54) of the Bankruptcy Code to 
     include the ``creation of a lien.'' This amendment gives 
     expression to a widely held understanding since the enactment 
     of the Bankruptcy Reform Act of 1978, that is, a transfer 
     includes the creation of a lien.
     Sec. 1202. Adjustment of dollar amounts
       Section 1202 of the conference report is substantively 
     identical to section 1202 of the House bill and the Senate 
     amendment. This provision corrects an omission in section 
     104(b) of the Bankruptcy Code to include a reference to 
     section 522(f)(3).
     Sec. 1203. Extension of time
       Section 1203 of the conference report makes a technical 
     amendment to correct a reference error described in amendment 
     notes contained in the United States Code. As specified in 
     the amendment note relating to subsection (c)(2) of section 
     108 of the Bankruptcy Code, the amendment made by section 
     257(b)(2)(B) of Public Law 99-554 could not be executed as 
     stated. This provision is substantively identical to section 
     1203 of the House bill and the Senate amendment.
     Sec. 1204. Technical amendments
       Section 1204 of the conference report is identical to 
     section 1204 of the House bill and the Senate amendment. This 
     provision makes technical amendments to Bankruptcy Code 
     sections 109(b)(2) (to strike an statutory cross reference), 
     541(b)(2) (to add ``or'' to the end of this provision), and 
     522(b)(1) (to replace ``product'' with ``products''). Section 
     1204 is substantively identical to section 1204 of the House 
     bill and the Senate amendment.
     Sec. 1205. Penalty for persons who negligently or 
         fraudulently prepare bankruptcy petitions
       Section 1205 of the conference report amends section 
     110(j)(4) of the Bankruptcy Code to change the reference to 
     attorneys from the singular possessive to the plural 
     possessive. This provision is substantively identical to 
     section 1205 of the House bill and the Senate amendment.
     Sec. 1206. Limitation on compensation of professional persons
       Section 328(a) of the Bankruptcy Code provides that a 
     trustee or a creditors' and equity security holders' 
     committee may, with court approval, obtain the services of a 
     professional person on any reasonable terms and conditions of 
     employment, including on a retainer, on an hourly basis, or 
     on a contingent fee basis. Section 1206 of the conference 
     report amends section 328(a) to include compensation ``on a 
     fixed or percentage fee basis'' in addition to the other 
     specified forms of reimbursement. This provision is 
     substantively identical to section 1206 of the House bill and 
     the Senate amendment.
     Sec. 1207. Effect of conversion
       Section 1207 of the conference report makes a technical 
     correction in section 348(f)(2) of the Bankruptcy Code to 
     clarify that the first reference to property, like the 
     subsequent reference to property, is a reference to property 
     of the estate. This provision is substantively identical to 
     section 1207 of the House bill and the Senate amendment.
     Sec. 1208. Allowance of administrative expenses
       Section 1208 of the conference report amends section 
     503(b)(4) of the Bankruptcy Code to limit the types of 
     compensable professional services rendered by an attorney or

[[Page H5783]]

     accountant that can qualify as administrative expenses in a 
     bankruptcy case. Expenses for attorneys or accountants 
     incurred by individual members of creditors' or equity 
     security holders' committees are not recoverable, but 
     expenses incurred for such professional services incurred by 
     such committees themselves would be. This provision is 
     substantively identical to section 1208 of the House bill and 
     the Senate amendment.
     Sec. 1209. Exceptions to discharge
       Section 1209 of the conference report is substantively 
     identical to section 1209 of the House bill and the Senate 
     amendment. This provision amends section 523(a) of the 
     Bankruptcy Code to correct a technical error in the placement 
     of paragraph (15), which was added to section 523 by section 
     304(e)(1) of the Bankruptcy Reform Act of 1994. Section 1209 
     also amends section 523(a)(9), which makes nondischargeable 
     any debt resulting from death or personal injury arising from 
     the debtor's unlawful operation of a motor vehicle while 
     intoxicated, to add ``watercraft, or aircraft'' after ``motor 
     vehicle.'' Neither additional term should be defined or 
     included as a ``motor vehicle'' in section 523(a)(9) and each 
     is intended to comprise unpowered as well as motor-powered 
     craft. Congress previously made the policy judgment that the 
     equities of persons injured by drunk drivers outweigh the 
     responsible debtor's interest in a fresh start, and here 
     clarifies that the policy applies not only on land but also 
     on the water and in the air. Viewed from a practical 
     standpoint, this provision closes a loophole that gives 
     intoxicated watercraft and aircraft operators preferred 
     treatment over intoxicated motor vehicle drivers and denies 
     victims of alcohol and drug related boat and plane accidents 
     the same rights accorded to automobile accident victims under 
     current law. Finally, this section corrects a grammatical 
     error in section 523(e).
     Sec. 1210. Effect of discharge
       Section 1210 of the conference report makes technical 
     amendments to correct errors in section 524(a)(3) of the 
     Bankruptcy Code caused by section 257(o)(2) of Public Law 99-
     554 and section 501(d)(14)(A) of Public Law 103-394.\79\ This 
     provision is substantively identical to section 1210 of the 
     House bill and the Senate amendment.
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     \79\ For a description of these errors, see the appropriate 
     footnote and amendment notes in the United States Code.
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     Sec. 1211. Protection against discriminatory treatment
       Section 1211 of the conference report is substantively 
     identical to section 1211 of the House bill and the Senate 
     amendment. This provision conforms a reference to its 
     antecedent reference in section 525(c) of the Bankruptcy 
     Code. The omission of ``student'' before ``grant'' in the 
     second place it appears in section 525(c) made possible the 
     interpretation that a broader limitation on lender discretion 
     was intended, so that no loan could be denied because of a 
     prior bankruptcy if the lending institution was in the 
     business of making student loans. Section 1211 is intended to 
     make clear that lenders involved in making government 
     guaranteed or insured student loans are not barred by this 
     Bankruptcy Code provision from denying other types of loans 
     based on an applicant's bankruptcy history; only student 
     loans and grants, therefore, cannot be denied under section 
     525(c) because of a prior bankruptcy.
     Sec. 1212. Property of the estate
       Production payments are royalties tied to the production of 
     a certain volume or value of oil or gas, determined without 
     regard to production costs. They typically would be paid by 
     an oil or gas operator to the owner of the underlying 
     property on which the oil or gas is found. Under section 
     541(b)(4)(B)(ii) of the Bankruptcy Code, added by the 
     Bankruptcy Reform Act of provided they could be included only 
     by virtue of section 542 of the Bankruptcy Code, which 
     relates generally to the obligation of those holding property 
     which belongs in the estate to turn it over to the trustee. 
     Section 1212 of the conference report adds to this proviso a 
     reference to section 365 of the Bankruptcy Code, which 
     authorizes the trustee to assume or reject an executory 
     contract or unexpired lease. It thereby clarifies the 
     original Congressional intent to generally exclude production 
     payments from the debtor's estate. This provision is 
     substantively identical to section 1212 of the House bill and 
     the Senate amendment.
     Sec. 1213. Preferences
       Section 547 of the Bankruptcy Code authorizes a trustee to 
     avoid a preferential payment made to a creditor by a debtor 
     within 90 days of filing, whether the creditor is an insider 
     or an outsider. To address the concern that a corporate 
     insider (such as an officer or director who is a creditor of 
     his or her own corporation has an unfair advantage over 
     outside creditors, section 547 also authorizes a trustee to 
     avoid a preferential payment made to an insider creditor 
     between 90 days and one year before filing. Several recent 
     cases, including DePrizio,\80\ allowed the trustee to 
     ``reach-back'' and avoid a transfer to a noninsider creditor 
     which fell within the 90-day to one-year time frame if an 
     insider benefitted from the transfer in some way. This had 
     the effect of discouraging lenders from obtaining loan 
     guarantees, lest transfers to the lender be vulnerable to 
     recapture by reason of the debtor's insider relationship with 
     the loan guarantor. Section 202 of the Bankruptcy Reform Act 
     of 1994 addressed the DePrizio problem by inserting a new 
     section 550(c) into the Bankruptcy Code to prevent avoidance 
     or recovery from a noninsider creditor during the 90-day to 
     one-year period even though the transfer to the noninsider 
     benefitted an insider creditor. The 1994 amendments, however, 
     failed to make a corresponding amendment to section 547, 
     which deals with the avoidance of preferential transfers. As 
     a result, a trustee could still utilize section 547 to avoid 
     a preferential lien given to a noninsider bank, more than 90 
     days but less than one year before bankruptcy, if the 
     transfer benefitted an insider guarantor of the debtor's 
     debt. Accordingly, section 1213 of the conference report 
     makes a perfecting amendment to section 547 to provide that 
     if the trustee avoids a transfer given by the debtor to a 
     noninsider for the benefit of an insider creditor between 90 
     days and one year before filing, that avoidance is valid only 
     with respect to the insider creditor. Thus both the previous 
     amendment to section 550 and the perfecting amendment to 
     section 547 protect the noninsider from the avoiding powers 
     of the trustee exercised with respect to transfers made 
     during the 90-day to one year pre-filing period. This 
     provision is intended to apply to any case, including any 
     adversary proceeding, that is pending or commenced on or 
     after the date of enactment of this Act. Section 1213 is 
     substantively identical to section 1213 of the House bill and 
     the Senate amendment.
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     \80\ Levit v. Ingersoll Rand Fin. Corp., 874 F.2d 1186 (7th 
     Cir. 1989); see, e.g., Ray v. City Bank and Trust Co. (In re 
     C-L Cartage Co.), 899 F.2d 1490 (6th Cir. 1990); 
     Manufacturers Hanover Leasing Corp. v. Lowrey (In re Robinson 
     Bros. Drilling, Inc.), 892 F.2d 850 (10th Cir. 1989).
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     Sec. 1214. Postpetition transactions
       Section 1214 of the conference report amends section 549(c) 
     of the Bankruptcy Code to clarify its application to an 
     interest in real property. This amendment should be construed 
     in conjunction with section 1201 of the Act. This provision 
     is substantively identical to section 1214 of the House bill 
     and the Senate amendment.
     Sec. 1215. Disposition of property of the estate
       Section 1215 of the conference report amends section 726(b) 
     of the Bankruptcy Code to strike an erroneous reference. This 
     provision is substantively identical to section 1215 of the 
     House bill and the Senate amendment.
     Sec. 1216. General provisions
       Section 1216 of the conference report amends section 901(a) 
     of the Bankruptcy Code to correct an omission in a list of 
     sections applicable to cases under chapter 9 of title 11 of 
     the United States Code. This provision is substantively 
     identical to section 1216 of the House bill and the Senate 
     amendment.
     Sec. 1217. Abandonment of railroad line
       Section 1217 of the conference report amends section 
     1170(e)(1) of the Bankruptcy Code to reflect the fact that 
     section 11347 of title 49 of the United States Code was 
     repealed by section 102(a) of Public Law 104-88 and that 
     provisions comparable to section 11347 appear in section 
     11326(a) of title 49 of the United States Code. This 
     provision is substantively identical to section 1217 of the 
     House bill and the Senate amendment.
     Sec. 1218. Contents of plan
       Section 1218 of the conference report amends section 
     1172(c)(1) of the Bankruptcy Code to reflect the fact that 
     section 11347 of title 49 of the United States Code was 
     repealed by section 102(a) of Public Law 104-88 and that 
     provisions comparable to section 11347 appear in section 
     11326(a) of title 49 of the United States Code. This 
     provision is substantively identical to section 1218 of the 
     House bill and the Senate amendment.
     Sec. 1219. Bankruptcy cases and proceedings
       Section 1219 of the conference report amends section 
     1334(d) of title 28 of the United States Code to make 
     clarifying references.\81\ This provision is substantively 
     identical to section 1220 of the House bill and section 1219 
     of the Senate amendment.
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     \81\ For a description of the errors, see the appropriate 
     footnote and amendment notes in the United States Code.
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     Sec. 1220. Knowing disregard of bankruptcy law or rule
       Section 1220 of the conference report amends section 156(a) 
     of title 18 of the United States Code to make stylistic 
     changes and correct a reference to the Bankruptcy Code. This 
     provision is substantively identical to section 1221 of the 
     House bill and section 1220 of the Senate amendment.
     Sec. 1221. Transfers made by nonprofit charitable 
         corporations
       Section 1221 of the conference report amends section 363(d) 
     of the Bankruptcy Code to restrict the authority of a trustee 
     to use, sale, or lease property by a nonprofit corporation or 
     trust. First, the use, sell or lease must be in accordance 
     with applicable nonbankruptcy law and to the extent it is not 
     inconsistent with any relief granted under certain specified 
     provisions of section 362 of the Bankruptcy Code concerning 
     the applicability of the automatic stay. Second, section 1221 
     imposes similar restrictions with regard to plan confirmation 
     requirements for chapter 11 cases. Third, it amends section 
     541 of the Bankruptcy Code to provide that any property of a 
     bankruptcy estate in which the debtor is a nonprofit 
     corporation (as described in certain provisions

[[Page H5784]]

     of the Internal Revenue Code) may not be transferred to an 
     entity that is not a corporation, but only under the same 
     conditions that would apply if the debtor was not in 
     bankruptcy. The amendments made by this section apply to 
     cases pending on the date of enactment or to cases filed 
     after such date. Section 1221 provides that a court may not 
     confirm a plan without considering whether this provision 
     would substantially affect the rights of a party in interest 
     who first acquired rights with respect to the debtor 
     postpetition. Nothing in this provision may be construed to 
     require the court to remand or refer any proceeding, issue, 
     or controversy to any other court or to require the approval 
     of any other court for the transfer of property. This 
     provision is substantively identical to section 1222 of the 
     House bill and section 1221 of the Senate amendment.
     Sec. 1222. Protection of valid purchase money security 
         interests
       Section 1222 of the conference report extends the 
     applicable perfection period for a Security interest in 
     property of the debtor in section 547(c)(3)(B) of the 
     Bankruptcy Code from 20 to 30 days. This provision is 
     substantively identical to section 1223 of the House bill and 
     section 1222 of the Senate amendment.
     Sec. 1223. Bankruptcy judgeships
       The substantial increase in bankruptcy case filings clearly 
     creates a need for additional bankruptcy judgeships. In the 
     105th Congress, the House responded to this need by passing 
     H.R. 1596, which would have created additional permanent and 
     temporary bankruptcy judgeships and extended an existing 
     temporary position. Section 1223 generally incorporates H.R. 
     1596 as it passed the House with provisions extending four 
     existing temporary judgeships. Moreover, it includes the 
     Senate amendment's provision for additional bankruptcy 
     judgeships for the districts of South Carolina, Nevada, and 
     Delaware. In addition, section 1223 of the conference report 
     provides that the extension periods for the temporary 
     judgeships in the Northern District of Alabama, the Western 
     District of Tennessee, and the Districts of Delaware and 
     Puerto Rico begin from the date of enactment of this Act. The 
     conference report authorizes two judgeships for the District 
     of Delaware in addition to the two provided for in the House 
     bill and the Senate amendment for a total of four judgeships 
     for that District.
     Sec. 1224. Compensating trustees
       Section 1224 of the conference report amends section 1326 
     of the Bankruptcy Code to provide that if a chapter 7 trustee 
     has been allowed compensation as a result of the conversion 
     or dismissal of the debtor's prior case pursuant to section 
     707(b) and some portion of that compensation remains unpaid, 
     the amount of any such unpaid compensation must be repaid in 
     the debtor's subsequent chapter 13 case. This payment must be 
     prorated over the term of the plan and paid on a monthly 
     basis. The amount of the monthly payment may not exceed the 
     greater of $25 or the amount payable to unsecured nonpriority 
     creditors as provided by the plan, multiplied by five percent 
     and the result divided by the number of months of the plan. 
     This provision is substantively identical to section 1225 of 
     the House bill and section 1224 of the Senate amendment.
     Sec. 1225. Amendment to section 362 of title 11, United 
         States Code
       Section 1225 of the conference report amends section 362(b) 
     of the Bankruptcy Code to except from the automatic stay the 
     creation or perfection of a statutory lien for an ad valorem 
     property tax or for a special tax or special assessment on 
     real property (whether or not ad valorem) that is imposed by 
     a governmental unit, if such tax or assessment becomes due 
     after the filing of the petition. This provision is 
     substantively identical to section 1226 of the House bill and 
     section 1225 of the Senate amendment.
     Sec. 1226. Judicial education
       Section 1226 of the conference report requires the Director 
     of the Federal Judicial Center, in consultation with the 
     Director of the Executive Office for United States Trustees, 
     to develop materials and conduct training as may be useful to 
     the courts in implementing this Act, including the needs-
     based reforms under section 707(b) (as amended by this Act) 
     and amendments pertaining to reaffirmation agreements. This 
     provision is substantively identical to section 1227 of the 
     House bill and section 1226 of the Senate amendment.
     Sec. 1227. Reclamation
       Section 1227 of the conference report amends section 546(c) 
     of the Bankruptcy Code to provide that the rights of a 
     trustee under sections 544(a), 545, 547, and 549 are subject 
     to the rights of a seller of goods to reclaim goods sold in 
     the ordinary course of business to the debtor if: (1) the 
     debtor received these goods while insolvent not later than 45 
     days prior to the commencement of the case, and (2) written 
     demand for reclamation of the goods is made not later than 45 
     days after receipt of such goods by the debtor or not later 
     than 20 days after the commencement of the case, if the 45-
     day period expires after the commencement of the case. If the 
     seller fails to provide notice in the manner provided in this 
     provision, the seller may still assert the rights set forth 
     in section 503(b)(7) of the Bankruptcy Code. Section 1227(b) 
     amends Bankruptcy Code section 503(b) to provide that the 
     value of any goods received by a debtor not later than within 
     20 days prior to the commencement of a bankruptcy case in 
     which the goods have been sold to the debtor in the ordinary 
     course of the debtor's business is an allowed administrative 
     expense.
       Section 1227 of the conference report reflects section 1227 
     of the Senate amendment, which clarifies when certain 
     specified time frames begin. Section 1228 of the House bill 
     did not include this clarification.
     Sec. 1228. Providing requested tax documents to the court
       Section 1228 of the conference report is substantively 
     identical to section 1229 of the House bill and section 1228 
     of the Senate amendment. Subsection (a) provides that the 
     court may not grant a discharge to an individual in a case 
     under chapter 7 unless requested tax documents have been 
     provided to the court. Section 1228(b) similarly provides 
     that the court may not confirm a chapter 11 or 13 plan 
     unless requested tax documents have been filed with the 
     court. Section 1228(c) directs the court to destroy 
     documents submitted in support of a bankruptcy claim not 
     sooner than three years after the date of the conclusion 
     of a bankruptcy case filed by an individual debtor under 
     chapter 7, 11, or 13. In the event of a pending audit or 
     enforcement action, the court may extend the time for 
     destruction of such requested tax documents.
     Sec. 1229. Encouraging creditworthiness
       Section 1229 of the conference report is substantively 
     identical to section 1230 of the House bill and section 1229 
     of the Senate amendment. Subsection (a) expresses the sense 
     of the Congress that lenders may sometimes offer credit to 
     consumers indiscriminately and that resulting consumer debt 
     may be a major contributing factor leading to consumer 
     insolvency. Section 1229(b) directs the Board of Governors of 
     the Federal Reserve to study certain consumer credit industry 
     solicitation and credit granting practices as well as the 
     effect of such practices on consumer debt and insolvency. The 
     specified practices involve the solicitation and extension of 
     credit on an indiscriminate basis that encourages consumers 
     to accumulate additional debt and where the lender fails to 
     ensure that the consumer borrower is capable of repaying the 
     debt. Section 1229(c) requires the study described in 
     subsection (b) to be prepared within 12 months from the date 
     of the Act's enactment. This provision authorizes the Board 
     to issue regulations requiring additional disclosures to 
     consumers and permits it to undertake any other actions 
     consistent with its statutory authority, which are necessary 
     to ensure responsible industry practices and to prevent 
     resulting consumer debt and insolvency.
     Sec. 1230. Property no longer subject to redemption
       Section 1230 of the conference report is substantively 
     identical to section 1231 of the House bill and section 1230 
     of the Senate amendment. This provision amends section 541(b) 
     of the Bankruptcy Code to provide that, under certain 
     circumstances, an interest of the debtor in tangible personal 
     property (other than securities, or written or printed 
     evidences of indebtedness or title) that the debtor pledged 
     or sold as collateral for a loan or advance of money given by 
     a person licensed under law to make such loan or advance is 
     not property of the estate. Subject to subchapter III of 
     chapter 5 of the Bankruptcy Code, the provision applies where 
     (a) the property is in the possession of the pledgee or 
     transferee; (b) the debtor has no obligation to repay the 
     money, redeem the collateral, or buy back the property at a 
     stipulated price; and (c) neither the debtor nor the trustee 
     have exercised any right to redeem provided under the 
     contract or State law in a timely manner as provided under 
     State law and section 108(b) of the Bankruptcy Code.
     Sec. 1231. Trustees
       Section 1231 of the conference report is substantively 
     identical to section 1232 of the House bill and section 1231 
     of the Senate amendment. The provision establishes a series 
     of procedural protections for chapter 7 and chapter 13 
     trustees concerning final agency decisions relating to 
     trustee appointments and future case assignments. Section 
     1231(a) amends section 586(d) of title 28 of the United 
     States Code to allow a chapter 7 or chapter 13 trustee to 
     obtain judicial review of such decisions by commencing an 
     action in the United States district court after the trustee 
     exhausts all available administrative remedies. Unless the 
     trustee elects an administrative hearing on the record, the 
     trustee is deemed to have exhausted all administrative 
     remedies under this provision if the agency fails to make a 
     final agency decision within 90 days after the trustee 
     requests an administrative remedy. The provision requires the 
     Attorney General to promulgate procedures to implement this 
     provision. It further provides that the agency's decision 
     must be affirmed by the district court unless it is 
     unreasonable and without cause based on the administrative 
     record before the agency.
       Section 1231(b) amends section 586(e) of title 28 of the 
     United States Code to permit a chapter 13 trustee to obtain 
     judicial review of certain final agency actions relating to 
     claims for actual, necessary expenses under section 586(e). 
     The trustee may commence an action in the United States 
     district court where the trustee resides. The agency's 
     decision must be affirmed by the district court unless it is 
     unreasonable and without cause based on the administrative 
     record before

[[Page H5785]]

     the agency. It directs the Attorney General to prescribe 
     procedures to implement this provision.
     Sec. 1232. Bankruptcy forms
       Section 1232 of the conference report is substantively 
     identical to section 1233 of the House bill and section 1232 
     of the Senate amendment. This provision amends section 2075 
     of title 28 of the United States Code to require the 
     bankruptcy rules promulgated under this provision to 
     prescribe a form for the statement specified under section 
     707(b)(2)(C) of the Bankruptcy Code and to provide general 
     rules on the content of such statement.
     Sec. 1233. Direct appeals of bankruptcy matters to courts of 
         appeals
       Under current law, appeals from decisions rendered by the 
     bankruptcy court are either heard by the district court or a 
     bankruptcy appellate panel. In addition to the time and cost 
     factors attendant to the present appellate system, decisions 
     rendered by a district court as well as a bankruptcy 
     appellate panel are generally not binding and lack stare 
     decisis value.
       To address these problems, section 1233 of the conference 
     report amends section 158(d) of title 28 to establish a 
     procedure to facilitate appeals of certain decisions, 
     judgments, orders and decrees of the bankruptcy courts to the 
     circuit courts of appeals by means of a two-step 
     certification process. The first step is a certification by 
     the bankruptcy court, district court, or bankruptcy appellate 
     panel (acting on its own motion or on the request of a party, 
     or the appellants and appellees acting jointly). Such 
     certification must be issued by the lower court if: (1) the 
     bankruptcy court, district court, or bankruptcy appellate 
     panel determines that one or more of certain specified 
     standards are met; or (2) a majority in number of the 
     appellants and a majority in number of the appellees request 
     certification and represent that one or more of the standards 
     are met. The second step is authorization by the circuit 
     court of appeals. Jurisdiction for the direct appeal would 
     exist in the circuit court of appeals only if the court of 
     appeals authorizes the direct appeal.
       This procedure is intended to be used to settle unresolved 
     questions of law where there is a need to establish clear 
     binding precedent at the court of appeals level, where the 
     matter is one of public importance, where there is a need to 
     resolve conflicting decisions on a question of law, or where 
     an immediate appeal may materially advance the progress of 
     the case or proceeding. The courts of appeals are encouraged 
     to authorize direct appeals in these circumstances. 
     While fact-intensive issues may occasionally offer grounds 
     for certification even when binding precedent already 
     exists on the general legal issue in question, it is 
     anticipated that this procedure will rarely be used in 
     that circumstance or in an attempt to bring to the circuit 
     courts of appeals matters that can appropriately be 
     resolved initially by district court judges or bankruptcy 
     appellate panels.
       Section 1233 reflects a compromise between the House and 
     Senate conferees. The House provision amends section 158(d) 
     of title 28 of the United States Code to deem a judgment, 
     decision, order, or decree of a bankruptcy judge to be a 
     judgment, decision, order, or decree of the district court 
     entered 31 days after an appeal of such judgment, decision, 
     order or decree is filed with the district court, unless: (1) 
     the district court issues a decision on the appeal within 30 
     days after such appeal is filed or enters an order extending 
     the 30-day period for cause upon motion of a party or by the 
     court sua sponte; or (2) all parties to the appeal file 
     written consent that the district court may retain such 
     appeal until it enters a decision. Section 1233 of the Senate 
     amendment, on the other hand, allows a court of appeals to 
     hear an appeal of a bankruptcy court order only if the 
     bankruptcy court, district court, bankruptcy appellate panel, 
     or the parties jointly certify: (1) the appeal concerns a 
     substantial question of law, question of law requiring 
     resolution of conflicting decisions, or a matter of public 
     importance; and (2) an immediate appeal may materially 
     advance the progress of the case or proceeding. It further 
     provides that an appeal under this provision does not stay 
     proceedings in the court from which the order or decree 
     originated, unless the originating court or the court of 
     appeals orders such a stay.
     Sec. 1234. Involuntary cases
       Section 1234 of the conference report amends the Bankruptcy 
     Code's criteria for commencing an involuntary bankruptcy 
     case. Current law renders a creditor ineligible if its claim 
     is contingent as to liability or the subject of a bona fide 
     dispute. This provision amends section 303(b)(1) to specify 
     that a creditor would be ineligible to file an involuntary 
     petition if the creditor's claim was the subject of a bona 
     fide dispute as to liability or amount. It further provides 
     that the claims needed to meet the monetary threshold must be 
     undisputed. The provision makes a conforming revision to 
     section 303(h)(1). Section 1234 becomes effective on the date 
     of enactment of this Act and applies to cases commenced after 
     such date. This provision represents the Senate position as 
     reflected in section 1235 of the Senate amendment. There is 
     no counterpart to section 1234 of the conference report in 
     the House bill.
     Sec. 1235. Federal election law fines and penalties as 
         nondischargeable debt
       Section 1235 of the conference report amends section 523(a) 
     of the Bankruptcy Code to make debts incurred to pay fines or 
     penalties imposed under Federal election law 
     nondischargeable. This provision represents the Senate's 
     position as reflected in section 1236 of the Senate 
     amendment. There is no counterpart to this provision in the 
     House bill.

                 Title XIII--Consumer Credit Disclosure

     Sec. 1301. Enhanced disclosures under an open end credit plan
       Section 1301 of the conference report is substantively 
     identical to section 1301 of the House bill and Senate 
     amendment. Subsection (a) amends section 127(b) of the Truth 
     in Lending Act to mandate the inclusion of certain specified 
     disclosures in billing statements with respect to various 
     open end credit plans. In general, these statements must 
     contain an example of the time it would take to repay a 
     stated balance at a specified interest rate. In addition, 
     they must warn the borrower that making only the minimum 
     payment will increase the amount of interest that must be 
     paid and the time it takes to repay the balance. Further, a 
     toll-free telephone number must be provided where the 
     borrower can obtain an estimate of the time it would take to 
     repay the balance if only minimum payments are made. With 
     respect to a creditor whose compliance with title 15 of the 
     United States Code is enforced by the Federal Trade 
     Commission (FTC), the billing statement must advise the 
     borrower to contact the FTC at a toll-free telephone number 
     to obtain an estimate of the time it would take to repay the 
     borrower's balance. Section 1301(a) permits the creditor to 
     substitute an example based on a higher interest rate. As 
     necessary, the provision requires the Board of Governors of 
     the Federal Reserve System (``Board''), to periodically 
     recalculate by rule the interest rate and repayment periods 
     specified in Section 1301(a). With respect to the toll-free 
     telephone number, section 1301(a) permits a third party to 
     establish and maintain it. Under certain circumstances, the 
     toll-free number may connect callers to an automated device.
       For a period not to exceed 24 months from the effective 
     date of the Act, the Board is required to establish and 
     maintain a toll-free telephone number (or provide a toll-free 
     telephone number established and maintained by a third party) 
     for use by creditors that are depository institutions (as 
     defined in section 3 of the Federal Deposit Insurance Act), 
     including a Federal or State credit union (as defined in 
     section 101 of the Federal Credit Union Act), with total 
     assets not exceeding $250 million. Not later than six months 
     prior to the expiration of the 24-month period, the Board 
     must submit a report on this program to the Committee on 
     Banking, Housing, and Urban Affairs of the Senate, and the 
     Committee on Banking and Financial Services of the House of 
     Representatives. In addition, section 1301(a) requires the 
     Board to establish a detailed table illustrating the 
     approximate number of months that it would take to repay an 
     outstanding balance if a consumer pays only the required 
     minimum monthly payments and if no other advances are made. 
     The table should reflect a significant number of different 
     annual percentage rates, and account balances, minimum 
     payment amounts. The Board must also promulgate regulations 
     providing instructional guidance regarding the manner in 
     which the information contained in the tables should be used 
     to respond to a request by an obligor under this provision. 
     Section 1301(a) provides that the disclosure requirements of 
     this provision are inapplicable to any charge card account 
     where the primary purpose of which is to require payment of 
     charges in full each month.
       Section 1301(b)(1) requires the Federal Reserve Board to 
     promulgate regulations implementing section 1301(a)'s 
     amendments to section 127. Section 1301(b)(2) specifies that 
     the effective date of the amendments under subsection (a) and 
     the regulations required under this provision shall not take 
     effect until the later of 18 months after the date of 
     enactment of this Act or 12 months after the publication of 
     final regulations by the Board.
       Section 1301(c) authorizes the Federal Reserve Board to 
     conduct a study to determine the types of information 
     available to potential borrowers from consumer credit lending 
     institutions regarding factors qualifying potential borrowers 
     for credit, repayment requirements, and the consequences of 
     default. The provision specifies the factors that should be 
     considered. The study's findings must be submitted to 
     Congress and include recommendations for 
     legislative initiatives, based on the Board's findings.
     Sec. 1302. Enhanced disclosure for credit extensions secured 
         by a dwelling
       Section 1302 of the conference report is identical to 
     section 1302 of the House bill and the Senate amendment. 
     Subsection (a)(1) amends section 127A(a)(13) of the Truth in 
     Lending Act to require a statement in any case in which the 
     extension of credit exceeds the fair market value of a 
     dwelling specifying that the interest on the portion of the 
     credit extension that is greater than the fair market value 
     of the dwelling is not tax deductible for Federal income tax 
     purposes. Section 1302(a)(2) amends section 147(b) of the 
     Truth in Lending Act to require an advertisement relating to 
     an extension of credit that may exceed the fair market value 
     of a dwelling and such advertisement is disseminated in paper 
     form to the public or

[[Page H5786]]

     through the Internet (as opposed to dissemination by radio or 
     television) to include a specified statement. The statement 
     must disclose that the interest on the portion of the credit 
     extension that is greater than the fair market value of the 
     dwelling is not tax deductible for Federal income tax 
     purposes and that the consumer should consult a tax advisor 
     for further information regarding the deductibility of 
     interest and charges.
       With respect to non-open end credit extensions, section 
     1302(b)(1) amends section 128 of the Truth in Lending Act to 
     require that a consumer receive a specified statement at the 
     time he or she applies for credit with respect to a consumer 
     credit transaction secured by the consumer's principal 
     dwelling and where the credit extension may exceed the fair 
     market value of the dwelling must contain a specified 
     statement. The statement must disclose that the interest on 
     the portion of the credit extension that exceeds the 
     dwelling's fair market value is not tax deductible for 
     Federal income tax purposes and that the consumer should 
     consult a tax advisor for further information regarding the 
     deductibility of interest and charges. Section 1302(b)(2) 
     requires certain advertisements disseminated in paper form to 
     the public or through the Internet that relate to a consumer 
     credit transaction secured by a consumer's principal dwelling 
     where the extension of credit may exceed the dwelling's fair 
     market value to contain specified statements. These 
     statements advise that the interest on the portion of the 
     credit extension that is greater than the fair market value 
     of the dwelling is not tax deductible for Federal income tax 
     purposes and that the consumer should consult a tax advisor 
     for further information regarding the deductibility of 
     interest and charges.
       Section 1302(c)(1) requires the Federal Reserve Board to 
     promulgate regulations implementing the amendments 
     effectuated by this provision. Section 1302(c)(2) provides 
     that these regulations shall not take effect until the later 
     of 12 months following the Act's enactment date or 12 months 
     after the date of publication of such final regulations by 
     the Board.
     Sec. 1303. Disclosures related to ``introductory rates''
       Section 1303 of the conference report is substantively 
     identical to section 1303 of the House bill and the Senate 
     amendment. Subsection (a) amends section 127(c) of the Truth 
     in Lending Act by adding a provision to add further 
     requirements for applications, solicitations and related 
     materials that are subject to section 127(c)(1). With respect 
     to an application or solicitation to open a credit card 
     account and all promotional materials accompanying such 
     application or solicitation involving an ``introductory 
     rate'' offer, such materials must do the following if they 
     offer a temporary annual percentage rate of interest:
       (16) the term ``introductory'' in immediate proximity to 
     each listing of the temporary annual percentage interest rate 
     applicable to such account;
       (17) if the annual percentage interest rate that will apply 
     after the end of the temporary rate period will be a fixed 
     rate, the time period in which the introductory period will 
     end and the annual percentage rate that will apply after the 
     end of the introductory period must be clearly and 
     conspicuously stated in a prominent location closely 
     proximate to the first listing of the temporary annual 
     percentage rate;
       (18) if the annual percentage rate that will apply after 
     the end of the temporary rate period will vary in accordance 
     with an index, the time period in which the introductory 
     period will end and the rate that will apply after that, 
     based on an annual percentage rate that was in effect 60 days 
     before the date of mailing of the application or solicitation 
     must be clearly and conspicuously stated in a prominent 
     location closely proximate to the first listing of the 
     temporary annual percentage rate.
       The second and third provisions described above do not 
     apply to any listing of a temporary annual percentage rate on 
     an envelope or other enclosure in which an application or 
     solicitation to open a credit card account is mailed. With 
     respect to an application or solicitation to open a credit 
     card account for which disclosure is required pursuant to 
     section 127(c)(1) of the Truth in Lending Act, section 
     1303(a) specifies that certain statements be made if the rate 
     of interest is revocable under any circumstance or upon any 
     event. The statements must clearly and conspicuously appear 
     in a prominent manner on or with the application or 
     solicitation. The disclosures include a general description 
     of the circumstances that may result in the revocation of the 
     temporary annual percentage rate and an explanation of the 
     type of interest rate that will apply upon revocation of the 
     temporary rate.
       To implement this provision, section 1303(b) amends section 
     127(c) of the Truth in Lending Act to define various relevant 
     terms and requires the Board to promulgate regulations. The 
     provision does not become effective until the earlier of 12 
     months after the Act's enactment date or 12 months after the 
     date of publication of such final regulations.
     Sec. 1304. Internet-based credit card solicitations
       Section 1304 of the conference report is substantively 
     identical to section 1304 of the House bill and the Senate 
     amendment. Subsection (a) amends section 127(c) of the Truth 
     in Lending Act to require any solicitation to open a credit 
     card account for an open end consumer credit plan through the 
     Internet or other interactive computer service to clearly and 
     conspicuously include the disclosures required under section 
     127(c)(1)(A) and (B). It also specifies that the disclosure 
     required pursuant to section 127(c)(1)(A) be readily 
     accessible to consumers in close proximity to the 
     solicitation and be updated regularly to reflect current 
     policies, terms, and fee amounts applicable to the credit 
     card account. Section 1304(a) defines terms relevant to the 
     Internet.
       Section 1304(b) requires the Federal Reserve Board to 
     promulgate regulations implementing this provision. It also 
     provides that the amendments effectuated by section 1304 do 
     not take effect until the later of 12 months after the 
     Act's enactment date or 12 months after the date of 
     publication of such regulations.
     Sec. 1305. Disclosures related to late payment deadlines and 
         penalties
       Section 1305 of the conference report is substantively 
     identical to section 1305 of the House bill and the Senate 
     amendment. Subsection (a) amends section 127(b) of the Truth 
     in Lending Act to provide that if a late payment fee is to be 
     imposed due to the obligor's failure to make payment on or 
     before a required payment due date, the billing statement 
     must specify the date on which that payment is due (or if 
     different the earliest date on which a late payment fee may 
     be charged) and the amount of the late payment fee to be 
     imposed if payment is made after such date.
       Section 1305(b) requires the Federal Reserve Board to 
     promulgate regulations implementing this provision. The 
     amendments effectuated by this provision and the regulations 
     promulgated thereunder shall not take effect until the later 
     of 12 months after the Act's enactment date or 12 months 
     after the date of publication of the regulations.
     Sec. 1306. Prohibition on certain actions for failure to 
         incur finance charges
       Section 1306 of the conference report is substantively 
     identical to section 1306 of the House bill and the Senate 
     amendment. Subsection (a) amends section 127 of the Truth in 
     Lending Act to add a provision prohibiting a creditor of an 
     open end consumer credit plan from terminating an account 
     prior to its expiration date solely because the consumer has 
     not incurred finance charges on the account. The provision 
     does not prevent the creditor from terminating such account 
     for inactivity for three or more consecutive months.
       Section 1306(b) requires the Federal Reserve Board to 
     promulgate regulations implementing the amendments 
     effectuated by section 1306(a) and provides that they do not 
     become effective until the later of 12 months after the Act's 
     enactment date or 12 months after the date of publication of 
     such final regulations.
     Sec. 1307. Dual use debit card
       Section 1307 of the conference report is substantively 
     identical to section 1307 of the House bill and the Senate 
     amendment. Subsection (a) provides that the Federal Reserve 
     Board may conduct a study and submit a report to Congress 
     containing its analysis of consumer protections under 
     existing law to limit the liability of consumers for 
     unauthorized use of a debit card or similar access device. 
     The report must include recommendations for legislative 
     initiatives, if any, based on its findings.
       Section 1307(b) provides that the Federal Reserve Board, in 
     preparing its report, may include analysis of section 909 of 
     the Electronic Fund Transfer Act to the extent this provision 
     is in effect at the time of the report and the implementing 
     regulations. In addition, the analysis may pertain to whether 
     any voluntary industry rules have enhanced or may enhance the 
     level of protection afforded consumers in connection with 
     such unauthorized use liability and whether amendments to the 
     Electronic Fund Transfer Act or implementing regulations are 
     necessary to further address adequate protection for 
     consumers concerning unauthorized use liability.
     Sec. 1308. Study of bankruptcy impact of credit extended to 
         dependent students
       Section 1308 of the conference report is substantively 
     identical to section 1308 of the House bill and the Senate 
     amendment. This provision directs the Board of Governors of 
     the Federal Reserve to study the impact that the extension of 
     credit to dependents (defined under the Internal Revenue Code 
     of 1986) who are enrolled in postsecondary educational 
     institutions has on the rate of bankruptcy cases filed. The 
     report must be submitted to the Senate and House of 
     Representatives no later than one year from the Act's 
     enactment date.
     Sec. 1309. Clarification of clear and conspicuous
       Section 1309 of the conference report is substantively 
     identical to section 1309 of the House bill and the Senate 
     amendment. Subsection (a) requires the Board (in consultation 
     with other Federal banking agencies, the National Credit 
     Union Administration Board, and the Federal Trade Commission) 
     to promulgate regulations not later than six months after the 
     Act's enactment date to provide guidance on the meaning of 
     the term ``clear and conspicuous'' as it is used in section 
     127(b)(11)(A), (B) and (C) and section 127(c)(6)(A)(ii) and 
     (iii) of the Truth in Lending Act.
       Section 1309(b) provides that regulations promulgated under 
     section 1309(a) shall include examples of clear and 
     conspicuous model disclosures for the purpose of disclosures 
     required under the Truth in Lending Act provisions set forth 
     therein.

[[Page H5787]]

       Section 1309(c) requires the Federal Reserve Board, in 
     promulgating regulations under this provision, to ensure that 
     the clear and conspicuous standard required for disclosures 
     made under the Truth in Lending Act provisions set forth in 
     section 1309(a) can be implemented in a manner that results 
     in disclosures which are reasonably understandable and 
     designed to call attention to the nature and significance of 
     the information in the notice.

      Title XIV--General Effective Date; Application of Amendments

     Sec. 1401. Effective date; application of amendments
       Section 1401 of the conference report is identical to 
     section 1401 of the House bill and section 1501 of the Senate 
     amendment. Subsection (a) states that the Act shall take 
     effect 180 days after the date of enactment, unless otherwise 
     specified in this Act. Section 1401(b) provides that the 
     amendments made by this Act shall not apply to cases 
     commenced under the Bankruptcy Code before the Act's 
     effective date, unless otherwise specified in this Act. The 
     provision specifies that the amendments made by sections 308 
     and 322 shall apply to cases commenced on or after the date 
     of enactment of this Act.

     From the Committee on the Judiciary, for consideration of the 
     House bill and the Senate amendment, and modifications 
     committed to conference:
     F. James Sensenbrenner,
     Henry J. Hyde,
     George W. Gekas,
     Lamar Smith,
     Steve Chabot,
     Bob Barr,
     Rick Boucher,
     From the Committee on Financial Services, for consideration 
     of secs. 901-906, 907A-909, 911, and 1301-1309 of the House 
     bill, and secs. 901-906, 907A-909, 911, 913-4, and title XIII 
     of the Senate amendment, and modifications committed to 
     conference:
     Michael G. Oxley,
     Spencer Bachus,
     From the Committee on Energy and Commerce, for consideration 
     of title XIV of the Senate amendment, and modifications 
     committed to conference:
     Billy Tauzin,
     Joe Barton,
     From the Committee on Education and the Workforce, for 
     consideration of sec. 1403 of the Senate amendment, and 
     modifications committed to conference:
     John Boehner,
     Michael N. Castle,
                                Managers on the Part of the House.

     Patrick Leahy,
     Joe Biden,
     Charles Schumer,
     Orrin Hatch,
     Chuck Grassley,
     Jon Kyl,
     Mike DeWine,
     Jeff Sessions,
     Mitch McConnell,
     Managers on the Part of the Senate.

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