[Congressional Record Volume 159, Number 181 (Thursday, December 19, 2013)]
[Senate]
[Pages S9058-S9061]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. CORNYN (for himself and Mr. Toomey):
  S. 1861. A bill to save taxpayer money and end bailouts of financial 
institutions by providing for a process to allow financial institutions 
to go bankrupt; to the Committee on the Judiciary.
  Mr. CORNYN. Mr. President, I ask unanimous consent that the text of 
the bill be printed in the Record.
  There being no objection, the text of the bill was ordered to be 
printed in the Record, as follows:

                                S. 1861

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

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Taxpayer Protection and 
     Responsible Resolution Act''.

     SEC. 2. REPEAL OF TITLE II OF DODD-FRANK WALL STREET REFORM 
                   AND CONSUMER PROTECTION ACT.

       (a) In General.--Title II of the Dodd-Frank Wall Street 
     Reform and Consumer Protection Act (Public Law 111-203) is 
     repealed and any Federal law amended by such title shall, on 
     and after the date of enactment of this Act, be effective as 
     if title II of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act had not been enacted.
       (b) Conforming Amendments.--
       (1) Dodd-frank wall street reform and consumer protection 
     act.--The Dodd-Frank Wall Street Reform and Consumer 
     Protection Act is amended--
       (A) in the table of contents, by striking all items 
     relating to title II;
       (B) in section 165(d)(6), by striking ``, a receiver 
     appointed under title II,'';
       (C) in section 716(g), by striking ``or a covered financial 
     company under title II'';
       (D) in section 1105(e)(5), by striking ``amount of any 
     securities issued under that chapter 31 for such purpose 
     shall be treated in the same manner as securities issued 
     under section 208(n)(5)(E)'' and inserting ``issuances of 
     such securities under that chapter 31 for such purpose shall 
     by treated as public debt transactions of the United States, 
     and the proceeds from the sale of any obligations acquired by 
     the Secretary under this paragraph shall be deposited into 
     the Treasury of the United States as miscellaneous 
     receipts''; and
       (E) in section 1106(c)(2)(A)--
       (i) in clause (i), by inserting ``, other than a covered 
     financial corporation (as defined in section 101(9A) of title 
     11, United States Code),'' after ``company''; and
       (ii) in clause (ii), by inserting ``, other than a covered 
     financial corporation (as defined in section 101(9A) of title 
     11, United States Code),'' after ``company''.
       (2) Federal deposit insurance act.--Section 10(b)(3)(A) of 
     the Federal Deposit Insurance Act (12 U.S.C. 1820(b)(3)(A)) 
     is amended by striking ``, or of such nonbank financial 
     company supervised by the Board of Governors or bank holding 
     company described in section 165(a) of the Financial 
     Stability Act of 2010, for the purpose of implementing its 
     authority to provide for orderly liquidation of any such 
     company under title II of that Act''.
       (3) Federal reserve act.--Section 13(3) of the Federal 
     Reserve Act (12 U.S.C. 343(3)) is amended--
       (A) in subparagraph (B)--
       (i) in clause (ii), by striking ``, resolution under title 
     II of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act, or'' and inserting ``or is subject to 
     resolution under''; and
       (ii) in clause (iii), by striking ``, resolution under 
     title II of the Dodd-Frank Wall Street Reform and Consumer 
     Protection Act, or'' and inserting ``or resolution under''; 
     and
       (B) by striking subparagraph (E).

     SEC. 3. GENERAL PROVISIONS RELATING TO COVERED FINANCIAL 
                   CORPORATIONS.

       (a) Definition.--Section 101 of title 11, United States 
     Code, is amended by inserting the following after paragraph 
     (9):
       ``(9A) The term `covered financial corporation' means any 
     corporation incorporated or organized under any Federal or 
     State law, other than a stockbroker, a commodity broker, or 
     an entity of the kind specified in paragraph (2) or (3) of 
     section 109(b), that is--
       ``(A) a bank holding company, as that term is defined in 
     section 2(a) of the Bank Holding Company Act of 1956 (12 
     U.S.C. 1841(a)); or
       ``(B) predominantly engaged in activities that the Board of 
     Governors of the Federal Reserve System has determined are 
     financial in nature or incidental to such financial activity 
     for purposes of section 4(k) of the Bank Holding Company Act 
     of 1956 (12 U.S.C. 1843(k)).''.
       (b) Applicability of Chapters.--Section 103 of title 11, 
     United States Code, is amended--
       (1) in subsection (a)--
       (A) by striking ``section 1161'' and inserting ``sections 
     1161 and 1401''; and
       (B) by striking ``or 13'' and inserting ``13, or 14''; and
       (2) by adding at the end the following:
       ``(l) Chapter 14 of this title applies only in a case under 
     this title concerning a covered financial corporation.
       ``(m) Except as otherwise provided in chapter 14 of this 
     title, chapter 11 of this title applies in a case under 
     chapter 14 of this title.''.
       (c) Who May Be a Debtor.--Section 109 of title 11, United 
     States Code, is amended--
       (1) in subsection (b)--
       (A) in paragraph (2), by striking ``or'' at the end;
       (B) in paragraph (3)(B), by striking the period at the end 
     and inserting ``; or'';
       (C) by adding at the end the following:
       ``(4) a covered financial corporation.''; and
       (2) by adding at the end the following:
       ``(i) An entity may be a debtor under chapter 14 of this 
     title only if the entity is a covered financial 
     corporation.''.

     SEC. 4. LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A 
                   COVERED FINANCIAL CORPORATION.

       (a) In General.--Title 11, United States Code, is amended 
     by inserting before chapter 15 the following:

  ``CHAPTER 14--LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A 
                     COVERED FINANCIAL CORPORATION

``Sec.
``1401. Inapplicability of other sections.
``1402. Definitions for this chapter.
``1403. Commencement of a case concerning a covered financial 
              corporation.
``1404. Regulators.
``1405. Special trustee and bridge company.
``1406. Special transfer of property of the estate.
``1407. Automatic stay; assumed debt.
``1408. Treatment of qualified financial contracts and affiliate 
              contracts.
``1409. Licenses, permits, and registrations.
``1410. Exemption from securities laws.
``1411. Inapplicability of certain avoiding powers.

     ``Sec. 1401. Inapplicability of other sections

       ``Sections 321(c) and 322(b) do not apply in a case under 
     this chapter.

     ``Sec. 1402. Definitions for this chapter

       ``In this chapter, the following definitions shall apply:
       ``(1) The term `Board' means the Board of Governors of the 
     Federal Reserve System.
       ``(2) The term `bridge company' means a newly-formed 
     corporation the equity securities of which are transferred to 
     a special trustee under section 1405(a).
       ``(3) The term `capital structure debt' means debt, other 
     than a qualified financial contract, of the debtor for 
     borrowed money with an original maturity of at least 1 year.
       ``(4) The term `contractual right' means a contractual 
     right as defined in section 555, 556, 559, or 560.
       ``(5) The term `qualified financial contract' means any 
     contract of a kind specified in paragraph (25), (38A), (47), 
     or (53B) of section

[[Page S9059]]

     101, section 741(7), or paragraph (4), (5), (11), or (13) of 
     section 761.

     ``Sec. 1403. Commencement of a case concerning a covered 
       financial corporation

       ``(a) A case under this chapter may be commenced by the 
     filing of a petition with the bankruptcy court--
       ``(1) under section 301; or
       ``(2) by the Board, only if--
       ``(A) the Board certifies in the petition that it has 
     determined that--
       ``(i) the covered financial corporation--

       ``(I) has incurred losses that will deplete all or 
     substantially all of the capital of the covered financial 
     corporation, and there is no reasonable prospect for the 
     covered financial corporation to avoid such depletion;
       ``(II) is insolvent;
       ``(III) is not paying or is unable to pay the debts of the 
     covered financial corporation (other than debts subject to a 
     bona fide dispute as to liability or amount) as they become 
     due; or
       ``(IV) is likely to be in a financial condition specified 
     in subclause (I), (II), or (III) sufficiently soon such that 
     the immediate commencement of a case under this chapter 
     concerning the covered financial corporation is necessary to 
     prevent imminent substantial harm to financial stability in 
     the United States; and

       ``(ii) the commencement of a case under this chapter 
     concerning the covered financial corporation and the effect 
     of a transfer under section 1406 is necessary to prevent 
     imminent substantial harm to financial stability in the 
     United States; and
       ``(B) the bankruptcy court determines, after a hearing 
     described in subsection (b), that the Board has shown by a 
     preponderance of the evidence that the requirements under 
     subparagraph (A) have been satisfied.
       ``(b)(1) A hearing described in this subsection is a 
     hearing held not later than 12 hours after the Board makes a 
     certification under subsection (a)(2)(A), with notice only 
     to--
       ``(A) the covered financial corporation;
       ``(B) the Federal Deposit Insurance Corporation; and
       ``(C) the Secretary of the Treasury.
       ``(2) Only the Board and the entities listed in paragraph 
     (1) may attend or participate in a hearing described in this 
     subsection. Transcripts of such hearing shall be sealed until 
     the end of the case.
       ``(c)(1) The covered financial corporation may file an 
     appeal in the district court of a determination made by the 
     bankruptcy court under subsection (a)(2)(B) not later than 12 
     hours after the bankruptcy court makes such determination, 
     with notice only to the entities listed in subsection (b)(1) 
     and the Board.
       ``(2) The district judge specified under section 298(c)(1) 
     of title 28 for the judicial circuit in which the case is 
     pending shall hear the appeal under paragraph (1) and review 
     within 12 hours the determination of the bankruptcy court 
     under subsection (a)(2)(B) for abuse of discretion.
       ``(d)(1) The commencement of a case under subsection (a)(1) 
     constitutes an order for relief under this chapter.
       ``(2) In a case commenced under subsection (a)(2), the 
     bankruptcy court shall immediately order relief under this 
     chapter if--
       ``(A) the bankruptcy court makes a determination under 
     subsection (a)(2)(B) that the requirements of subsection 
     (a)(2)(A) have been satisfied; and
       ``(B)(i) the period for appeal under subsection (c)(1) has 
     passed without an appeal having been filed; or
       ``(ii) the district court affirms the determination of the 
     bankruptcy court under subsection (c)(2).
       ``(3) Notwithstanding paragraph (2), the bankruptcy court 
     shall order relief in a case commenced under subsection 
     (a)(2) if the debtor consents to the order.

     ``Sec. 1404. Regulators

       ``(a) The Board may raise and may appear and be heard on 
     any issue in any case or proceeding under this title relevant 
     to the regulation of the debtor by the Board or to financial 
     stability in the United States.
       ``(b) The Federal Deposit Insurance Corporation may raise 
     and may appear and be heard on any issue in any case or 
     proceeding under this title in connection with a transfer 
     under section 1406.

     ``Sec. 1405. Special trustee and bridge company

       ``(a) On request of the trustee or the Board, the court may 
     order the trustee to appoint 1 special trustee and transfer 
     to the special trustee all of the equity securities in a 
     corporation to hold in trust for the sole benefit of the 
     estate, if--
       ``(1) the corporation does not have any property, executory 
     contracts, unexpired leases, or debts, other than any 
     property acquired or executory contracts, unexpired leases, 
     or debts assumed when acting as a transferee of a transfer 
     under section 1406;
       ``(2) the equity securities of the corporation are property 
     of the estate; and
       ``(3) the court approves--
       ``(A) the trust agreement governing the special trustee;
       ``(B) the governing documents of the corporation; and
       ``(C) the identity of--
       ``(i) the special trustee; and
       ``(ii) the directors and senior officers of the 
     corporation.
       ``(b) The trust agreement governing the special trustee 
     shall provide--
       ``(1) for the payment of the costs and expenses of the 
     special trustee from the assets of the trust and not from the 
     property of the estate;
       ``(2) that the special trustee provide--
       ``(A) periodic reporting to the estate; and
       ``(B) information about the bridge company as reasonably 
     requested by a party in interest to prepare a disclosure 
     statement for a plan providing for distribution of any 
     securities of the bridge company, if such information is 
     necessary to prepare such disclosure statement;
       ``(3) that the special trustee provide notice to and 
     consult with parties in interest in the case in connection 
     with--
       ``(A) any change in a director or senior officer of the 
     bridge company;
       ``(B) any modification to the governing documents of the 
     bridge company; and
       ``(C) any major corporate action of the bridge company, 
     including--
       ``(i) recapitalization;
       ``(ii) a liquidity borrowing;
       ``(iii) termination of an intercompany debt or guarantee;
       ``(iv) a transfer of a substantial portion of the assets of 
     the bridge company; or
       ``(v) the issuance or sale of any securities of the bridge 
     company;
       ``(4) that the proceeds of the sale of any equity 
     securities of the bridge company by the special trustee be 
     held in trust for the benefit of or transferred to the 
     estate; and
       ``(5) that the property held in trust by the special 
     trustee is subject to distribution in accordance with the 
     plan and subsection (c).
       ``(c) The special trustee shall distribute the assets held 
     in trust in accordance with the plan on the effective date of 
     the plan, after which time the office of the special trustee 
     shall terminate, except as may be necessary to wind up and 
     conclude the business and financial affairs of the trust.
       ``(d) After a transfer under section 1406, the special 
     trustee shall be subject only to applicable nonbankruptcy 
     law, and the actions and conduct of the special trustee shall 
     no longer be subject to approval by the court in the case 
     under this chapter.

     ``Sec. 1406. Special transfer of property of the estate

       ``(a) On request of the trustee or the Board, and after 
     notice and hearing and not less than 24 hours after the 
     commencement of the case, the court may order a transfer 
     under this section of property of the estate to a bridge 
     company. Except as provided under this section, the 
     provisions of section 363 shall apply to a transfer under 
     this section.
       ``(b) Unless the court orders otherwise, notice of a 
     request for an order under subsection (a) shall consist of 
     electronic or telephonic notice of not less than 24 hours 
     to--
       ``(1) the debtor;
       ``(2) the trustee;
       ``(3) the holders of the 20 largest secured claims against 
     the debtor;
       ``(4) the holders of the 20 largest unsecured claims 
     against the debtor;
       ``(5) the Board;
       ``(6) the Federal Deposit Insurance Corporation;
       ``(7) the Secretary of the Treasury;
       ``(8) the United States trustee; and
       ``(9) each primary financial regulatory agency, as defined 
     in section 2(12) of the Dodd-Frank Wall Street Reform and 
     Consumer Protection Act (12 U.S.C. 5301(12)), with respect to 
     any affiliate that is proposed to be transferred under this 
     section.
       ``(c) The court may not order a transfer under this section 
     unless the court determines, based upon a preponderance of 
     the evidence, that--
       ``(1) the transfer under this section is necessary to 
     prevent imminent substantial harm to financial stability in 
     the United States;
       ``(2) the proposed transfer does not provide for the 
     assumption of any capital structure debt by the bridge 
     company;
       ``(3) the proposed transfer provides for the transfer of 
     any accounts of depositors of the debtor that are insured by 
     the Federal Deposit Insurance Company to the bridge company; 
     and
       ``(4) the Board certifies to the court that the Board has 
     determined that the bridge company provides adequate 
     assurance of future performance of any executory contract or 
     unexpired leased assumed and assigned to the bridge company, 
     and of payment of any debt assumed by the bridge company, in 
     the transfer under this section.

     ``Sec. 1407. Automatic stay; assumed debt

       ``(a)(1) A petition filed under section 301 or 1403 
     operates as a stay, applicable to all entities, of the 
     termination or modification of any debt, contract, lease, or 
     agreement described in paragraph (2), or of any right or 
     obligation under any such debt, contract, lease or agreement, 
     solely because of--
       ``(A) a default by the debtor under any such debt, 
     contract, lease, or agreement; or
       ``(B) a provision in such debt, contract, lease, or 
     agreement or in applicable nonbankruptcy law that is 
     conditioned on--
       ``(i) the insolvency or financial condition of the debtor 
     at any time before the closing of the case;
       ``(ii) the commencement of a case under this title 
     concerning the debtor;
       ``(iii) the appointment of or taking possession by a 
     trustee in a case under this title concerning the debtor or 
     by a custodian before the commencement of the case; or
       ``(iv) a credit rating agency rating, or absence or 
     withdrawal of a credit rating agency rating--
       ``(I) of the debtor at any time after the commencement of 
     the case;

[[Page S9060]]

       ``(II) of an affiliate during the 48 hours after the 
     commencement of the case; or
       ``(III) while the special trustee is a direct or indirect 
     beneficial holder of more than 50 percent of the equity 
     securities of the bridge company--

       ``(aa) of the bridge company; or
       ``(bb) of an affiliate, if all of the direct or indirect 
     interests in the affiliate that are property of the estate 
     are transferred under section 1406.

       ``(2) A debt, contract, lease, or agreement described in 
     this paragraph is--
       ``(A) any debt (other than capital structure debt), 
     executory contract (other than a qualified financial 
     contract), or unexpired lease of the debtor;
       ``(B) any agreement under which the debtor issued or is 
     obligated for debt (other than capital structure debt);
       ``(C) any debt, executory contract (other than a qualified 
     financial contract), or unexpired lease of an affiliate; or
       ``(D) any agreement under which an affiliate issued or is 
     obligated for debt.
       ``(3) The stay under this subsection terminates--
       ``(A) as to the debtor, upon the earliest of--
       ``(i) 48 hours after the commencement of the case;
       ``(ii) assumption of the debt, contract, or lease under an 
     order authorizing a transfer under section 1406; or
       ``(iii) a determination by the court not to order a 
     transfer under section 1406; and
       ``(B) as to an affiliate, upon the earliest of--
       ``(i) entry of an order authorizing a transfer under 
     section 1406 in which the direct or indirect interests in the 
     affiliate that are property of the estate are not transferred 
     under section 1406;
       ``(ii) a determination by the court not to order a transfer 
     under section 1406; or
       ``(iii) 48 hours after the commencement of the case, if the 
     court has not ordered a transfer under section 1406.
       ``(4) Sections 362(d), 362(e), 362(f), and 362(g) apply to 
     a stay under this subsection.
       ``(b) A debt, executory contract (other than a qualified 
     financial contract), or unexpired lease of the debtor, or an 
     agreement under which the debtor has issued or is obligated 
     for any debt, may be assumed by a bridge company in a 
     transfer under section 1406 notwithstanding any provision in 
     an agreement or in applicable nonbankruptcy law that--
       ``(1) prohibits, restricts, or conditions the assignment of 
     the debt, contract, lease, or agreement; or
       ``(2) terminates or modifies, or permits a party other than 
     the debtor to terminate or modify, the debt, contract, lease, 
     or agreement on account of--
       ``(A) the assignment of the debt, contract, lease, or 
     agreement; or
       ``(B) a change in control of any party to the debt, 
     contract, lease, or agreement.
       ``(c)(1) A debt, contract, lease, or agreement of the kind 
     described in subsection (a)(2)(A) or (a)(2)(B) may not be 
     terminated or modified, and any right or obligation under 
     such debt, contract, lease, or agreement may not be 
     terminated or modified, as to the bridge company solely 
     because of a provision in the debt, contract, lease, or 
     agreement or in applicable nonbankruptcy law--
       ``(A) of the kind described in subsection (a)(1)(B) as 
     applied to the debtor;
       ``(B) that prohibits, restricts, or conditions the 
     assignment of the debt, contract, lease, or agreement; or
       ``(C) that terminates or modifies, or permits a party other 
     than the debtor to terminate or modify, the debt, contract, 
     lease or agreement, on account of--
       ``(i) the assignment of the debt, contract, lease, or 
     agreement; or
       ``(ii) a change in control of any party to the debt, 
     contract, lease, or agreement.
       ``(2) If there has been a default by the debtor of a 
     provision other than the kind described in paragraph (1) in a 
     debt, contract, lease or agreement of the kind described in 
     subsection (a)(2)(A) or (a)(2)(B), the bridge company may 
     assume such debt, contract, lease, or agreement only if the 
     bridge company--
       ``(A) cures, or provides adequate assurance to the court in 
     connection with a transfer under section 1406 that the bridge 
     company will promptly cure, the default;
       ``(B) compensates, or provides adequate assurance to the 
     court in connection with a transfer under section 1406 that 
     the bridge company will promptly compensate, a party other 
     than the debtor to the debt, contract, lease, or agreement, 
     for any actual pecuniary loss to the party resulting from the 
     default; and
       ``(C) provides adequate assurance to the court in 
     connection with a transfer under section 1406 of future 
     performance under the debt, contract, lease, or agreement.

     ``Sec. 1408. Treatment of qualified financial contracts and 
       affiliate contracts

       ``(a) Notwithstanding sections 362(b)(6), 362(b)(7), 
     362(b)(17), 362(b)(27), 555, 556, 559, 560, and 561, a 
     petition filed under section 301 or 1403 operates as a stay, 
     during the period specified in section 1407(a)(3)(A), 
     applicable to all entities, of the exercise of a contractual 
     right--
       ``(1) to cause the liquidation or termination of a 
     qualified financial contract of the debtor or an affiliate; 
     or
       ``(2) to offset or net out any termination value, payment 
     amount, or other transfer obligation arising under or in 
     connection with a qualified financial contract of the debtor 
     or an affiliate; or
       ``(3) under any security agreement or arrangement or other 
     credit enhancement forming a part of or related to a 
     qualified financial contract of the debtor or an affiliate.
       ``(b)(1) During the period specified in section 
     1407(a)(3)(A), the trustee or the affiliate shall perform all 
     payment and delivery obligations under a qualified financial 
     contract of the debtor or the affiliate, respectively, that 
     become due after the commencement of the case. The stay 
     provided under subsection (a) terminates as to a qualified 
     financial contract of the debtor or an affiliate immediately 
     upon the failure of the trustee or the affiliate, 
     respectively, to perform any such obligation during such 
     period.
       ``(2) A counterparty to any qualified financial contract of 
     the debtor that is assumed and assigned in a transfer under 
     section 1406 may perform any unperformed payment or delivery 
     obligation under the qualified financial contract promptly 
     after the assumption and assignment with the same effect as 
     if the counterparty had timely performed such obligations.
       ``(c) A qualified financial contract between an entity and 
     the debtor may not be assigned to or assumed by the bridge 
     company in a transfer under section 1406 unless--
       ``(1) all qualified financial contracts between the entity 
     and the debtor are assigned to and assumed by the bridge 
     company in the transfer under section 1406;
       ``(2) all claims of the entity against the debtor under any 
     qualified financial contract between the entity and the 
     debtor (other than any claim that, under the terms of the 
     qualified financial contract, is subordinated to the claims 
     of general unsecured creditors) are assigned to and assumed 
     by the bridge company;
       ``(3) all claims of the debtor against the entity under any 
     qualified financial contract between the entity and the 
     debtor are assigned to and assumed by the bridge company; and
       ``(4) all property securing or any other credit enhancement 
     furnished by the debtor for any qualified financial contract 
     described in paragraph (1) or any claim described in 
     paragraph (2) or (3) under any qualified financial contract 
     between the entity and the debtor is assigned to and assumed 
     by the bridge company.
       ``(d) Section 365(b)(1) does not apply to a default under a 
     qualified financial contract of the debtor that is assumed 
     and assigned in a transfer under section 1406 if the 
     default--
       ``(1) is a breach of a provision of the kind specified in 
     section 1407(a)(1)(B)(iv); and
       ``(2) in the case of a breach of a provision of the kind 
     specified in section 1407(a)(1)(B)(iv)(III), occurs while the 
     bridge company is a direct or indirect beneficial holder of 
     more than 50 percent of the equity securities of the 
     affiliate.
       ``(e) Notwithstanding any provision in a qualified 
     financial contract or in applicable nonbankruptcy law, a 
     qualified financial contract of the debtor that is assumed or 
     assigned in a transfer under section 1406 may not be 
     terminated or modified, and any right or obligation under the 
     qualified financial contract may not be terminated or 
     modified, for a breach of a provision of the kind specified 
     in section 1407(b) at any time after the entry of an order 
     under section 1406 until such time as the special trustee is 
     no longer the direct or indirect beneficial holder of more 
     than 50 percent of the equity securities of the bridge 
     company.
       ``(f) Notwithstanding any provision in any agreement or in 
     applicable nonbankruptcy law, an agreement of an affiliate 
     (including an executory contract, unexpired lease, or 
     agreement under which the affiliate issued or is obligated 
     for debt), and any right or obligation under such agreement, 
     may not be terminated or modified at any time after the 
     commencement of the case solely because of a condition 
     described in section 1407(b) if--
       ``(1) all direct or indirect interests in the affiliate 
     that are property of the estate are transferred under section 
     1406 to the bridge company within the period specified in 
     subsection (a);
       ``(2) the bridge company assumes--
       ``(A) any guarantee or other credit enhancement issued by 
     the debtor relating to the agreement of the affiliate; and
       ``(B) any right of setoff, netting arrangement, or debt of 
     the debtor that directly arises out of or directly relates to 
     the guarantee or credit enhancement; and
       ``(3) any property of the estate that directly serves as 
     collateral for the guarantee or credit enhancement is 
     transferred to the bridge company.

     ``Sec. 1409. Licenses, permits, and registrations

       ``(a) Notwithstanding any otherwise applicable 
     nonbankruptcy law, if a request is made under section 1406 
     for a transfer of property of the estate, any Federal, State, 
     or local license, permit, or registration that the debtor or 
     an affiliate had immediately before the commencement of the 
     case and that is proposed to be transferred under section 
     1406 may not be terminated or modified at any time after the 
     request solely on account of--
       ``(1) the insolvency or financial condition of the debtor 
     at any time before the closing of the case;
       ``(2) the commencement of a case under this title 
     concerning the debtor;
       ``(3) the appointment of or taking possession by a trustee 
     in a case under this title concerning the debtor or by a 
     custodian before the commencement of the case; or
       ``(4) a transfer under section 1406.
       ``(b) Notwithstanding any otherwise applicable 
     nonbankruptcy law, any Federal,

[[Page S9061]]

     State, or local license, permit, or registration that the 
     debtor had immediately before the commencement of the case 
     that is included in a transfer under section 1406 shall vest 
     in the bridge company.

     ``Sec. 1410. Exemption from securities laws

       ``For purposes of section 1145, a security of the bridge 
     company shall be deemed to be a security of a successor to 
     the debtor under a plan if the court approves the disclosure 
     statement for the plan as providing adequate information (as 
     defined in section 1125(a)) about the bridge company and the 
     security.

     ``Sec. 1411. Inapplicability of certain avoiding powers

       ``Except with respect to a capital structure debt, a 
     transfer made or an obligation incurred by the debtor, 
     including any obligation released by the debtor or the 
     estate, to or for the benefit of an affiliate in a transfer 
     under section 1406, is not avoidable under section 544, 547, 
     548(a)(1)(B), or 549, or under any similar nonbankruptcy 
     law.''.
       (b) Technical and Conforming Amendment.--The table of 
     chapters for title 11, United States Code, is amended by 
     inserting after the item relating to chapter 13 the 
     following:

``14 Liquidation, reorganization, or recapitalization of a covered 
    financial corporation...................................1401''.....

     SEC. 5. AMENDMENTS TO TITLE 28, UNITED STATES CODE.

       (a) Amendment to Chapter 13.--Chapter 13 of title 28, 
     United States Code, is amended by adding at the end the 
     following:

     ``Sec. 298. Judge for a case under chapter 14 of title 11

       ``(a) Notwithstanding section 295, the Chief Justice of the 
     United States shall designate not less than 1 district judge 
     from each circuit to be available to hear an appeal under 
     section 158(a) in a case under title 11 concerning a covered 
     financial corporation or under section 1403(c) of title 11.
       ``(b)(1) Notwithstanding section 295, the Chief Justice of 
     the United States shall designate a panel of not less than 10 
     bankruptcy judges, who are experts in cases under title 11 in 
     which a financial institution is a debtor, to be available to 
     hear a case under chapter 14 of title 11.
       ``(2) Notwithstanding section 295, a case under chapter 14 
     of title 11 shall be heard under section 157 by a bankruptcy 
     judge designated under paragraph (1), who shall be assigned 
     to hear such case by the chief judge of the court of appeals 
     for the circuit embracing the district in which the case is 
     pending.
       ``(3) If the bankruptcy judge designated and assigned to 
     hear a case under paragraphs (1) and (2) is not assigned to 
     the district in which the case is pending, the bankruptcy 
     judge shall be temporarily assigned to the district.
       ``(c)(1) Notwithstanding section 295, an appeal under 
     section 158(a) in a case under title 11 concerning a covered 
     financial corporation or under section 1403(c) of title 11 
     shall be heard by a district judge who--
       ``(A) is the district judge designated under subsection (a) 
     from the circuit in which the case is pending;
       ``(B) if more than 1 district judge has been designated 
     under subsection (a) from the circuit in which the case is 
     pending, is 1 such district judge who is designated by the 
     chief judge of that circuit to hear the case; or
       ``(C) if none of the district judges designated under 
     subsection (a) for the circuit in which the case is pending 
     are immediately available, is designated under subsection (a) 
     from another circuit and has been designated by the Chief 
     Justice of the United States to hear the case.
       ``(2) If the district judge specified in paragraph (1) is 
     not assigned to the district in which the case is pending, 
     the district judge shall be temporarily assigned to the 
     district.
       ``(d) A case under chapter 14 of title 11, and all 
     proceedings in the case, shall take place in the district in 
     which the case is pending.
       ``(e) In this section, the terms `covered financial 
     corporation' and `financial institution' have the meaning 
     given such terms in section 101 of title 11.''.
       (b) Amendment to Section 1334.--Section 1334 of title 28, 
     United States Code, is amended by adding at the end the 
     following:
       ``(f) This section does not grant jurisdiction to the 
     district courts after a transfer pursuant to an order under 
     section 1406 of title 11--
       ``(1) of any proceeding related to a special trustee 
     appointed, or to a bridge company formed, under section 1405 
     of title 11; or
       ``(2) over the property held in trust by the special 
     trustee, the bridge company, or the property of the bridge 
     company.''.
       (c) Technical and Conforming Amendment.--The table of 
     sections for chapter 13 of title 28, United States Code, is 
     amended by adding at the end the following:

``298. Judge for a case under chapter 14 of title 11.''.

     SEC. 6. LIMITATION ON ADVANCES FROM A FEDERAL RESERVE BANK.

       Section 10B(b) of the Federal Reserve Act (12 U.S.C. 
     347b(b)) is amended--
       (1) by redesignating paragraph (5) as paragraph (6);
       (2) by inserting after paragraph (4) the following:
       ``(5) Limitation on advances to covered financial 
     corporations and bridge companies.--Notwithstanding paragraph 
     (2), a Federal Reserve bank may not make advances to any 
     covered financial corporation that is a debtor in a pending 
     case under chapter 14 of title 11, United States Code, or to 
     a bridge company, for the purpose of providing debtor-in-
     possession financing pursuant to section 364 of such 
     title.''; and
       (3) in paragraph (6), as redesignated--
       (A) by redesignating subparagraphs (B) through (E) as 
     subparagraphs (D) through (G), respectively; and
       (B) by inserting after subparagraph (A) the following:
       ``(B) Bridge company.--The term `bridge company' has the 
     same meaning as in section 1402(2) of title 11, United States 
     Code.
       ``(C) Covered financial corporation.--The term `covered 
     financial corporation' has the same meaning as in section 
     101(9A) of title 11, United States Code.''.
                                 ______