[Congressional Record Volume 168, Number 97 (Tuesday, June 7, 2022)]
[House]
[Pages H5260-H5262]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                              {time}  1700
     BANKRUPTCY THRESHOLD ADJUSTMENT AND TECHNICAL CORRECTIONS ACT

  Mr. NEGUSE. Mr. Speaker, I move to suspend the rules and pass the 
bill (S. 3823) to amend title 11, United States Code, to modify the 
eligibility requirements for a debtor under chapter 13, and for other 
purposes.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                                S. 3823

       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 ``Bankruptcy Threshold 
     Adjustment and Technical Corrections Act''.

     SEC. 2. BANKRUPTCY AMENDMENTS.

       (a) Definition of Small Business Debtor.--Section 
     101(51D)(B) of title 11, United States Code, is amended--
       (1) in clause (i), by inserting ``under this title'' after 
     ``affiliated debtors''; and
       (2) in clause (iii), by striking ``an issuer'' and all that 
     follows and inserting ``a corporation described in clause 
     (ii).''.
       (b) Adjustments for Inflation.--Section 104 of title 11, 
     United States Code, is amended--
       (1) in subsection (a), by inserting ``1182(1),'' after 
     ``707(b),''; and
       (2) in subsection (b), by inserting ``1182(1),'' after 
     ``707(b),''.
       (c) Who May Be a Debtor Under Chapter 13.--Section 109 of 
     title 11, United States Code is amended by striking 
     subsection (e) and inserting the following:
       ``(e) Only an individual with regular income that owes, on 
     the date of the filing of the petition, noncontingent, 
     liquidated debts of less than $2,750,000 or an individual 
     with regular income and such individual's spouse, except a 
     stockbroker or a commodity broker, that owe, on the date of 
     the filing of the petition, noncontingent, liquidated debts 
     that aggregate less than $2,750,000 may be a debtor under 
     chapter 13 of this title.''.
       (d) Definition of Debtor.--Section 1182(1) of title 11, 
     United States Code, is amended to read as follows:
       ``(1) Debtor.--The term `debtor'--
       ``(A) subject to subparagraph (B), means a person engaged 
     in commercial or business activities (including any affiliate 
     of such person that is also a debtor under this title and 
     excluding a person whose primary activity is the business of 
     owning single asset real estate) that has aggregate 
     noncontingent liquidated secured and unsecured debts as of 
     the date of the filing of the petition or the date of the 
     order for relief in an amount not more than $7,500,000 
     (excluding debts owed to 1 or more affiliates or insiders) 
     not less than 50 percent of which arose from the commercial 
     or business activities of the debtor; and
       ``(B) does not include--
       ``(i) any member of a group of affiliated debtors under 
     this title that has aggregate noncontingent liquidated 
     secured and unsecured debts in an amount greater than 
     $7,500,000 (excluding debt owed to 1 or more affiliates or 
     insiders);
       ``(ii) any debtor that is a corporation subject to the 
     reporting requirements under section 13 or 15(d) of the 
     Securities Exchange Act of 1934 (15 U.S.C. 78m, 78o(d)); or
       ``(iii) any debtor that is an affiliate of a corporation 
     described in clause (ii).''.
       (e) Trustee.--Section 1183(b)(5) of title 11, United States 
     Code, is amended--
       (1) by striking ``possession, perform'' and inserting 
     ``possession--
       ``(A) perform'';
       (2) in subparagraph (A), as so designated--
       (A) by striking ``, including operating the business of the 
     debtor''; and
       (B) by adding ``and'' at the end; and
       (3) by adding at the end the following:
       ``(B) be authorized to operate the business of the 
     debtor;''.
       (f) Confirmation of Plan.--Section 1191(c) of title 11, 
     United States Code, is amended by striking paragraph (3) and 
     inserting the following:

[[Page H5261]]

       ``(3)(A) The debtor will be able to make all payments under 
     the plan; or
       ``(B)(i) there is a reasonable likelihood that the debtor 
     will be able to make all payments under the plan; and
       ``(ii) the plan provides appropriate remedies, which may 
     include the liquidation of nonexempt assets, to protect the 
     holders of claims or interests in the event that the payments 
     are not made.''.
       (g) Technical Corrections to the Bankruptcy Administration 
     Improvement Act.--Section 589a of title 28, United States 
     Code is amended--
       (1) in subsection (c) by striking ``subsection (a)'' and 
     inserting ``subsections (a) and (f)''; and
       (2) in subsection (f)(1)--
       (A) in the matter preceding subparagraph (A), by striking 
     ``subsections (b) and (c)'' and inserting ``subsection 
     (b)(5)''; and
       (B) in subparagraph (A), by inserting ``needed to offset 
     the amount'' after ``amounts''.
       (h) Effective Date; Applicability.--
       (1) In general.--Subsections (b) and (c) and the amendments 
     made by subsections (b) and (c) shall take effect on the date 
     of enactment of this Act.
       (2) Retroactive application of certain amendments.--The 
     amendments made by subsections (a), (d), (e), and (f) shall 
     apply with respect to any case that--
       (A) is commenced under title 11, United States Code, on or 
     after March 27, 2020; and
       (B) with respect to a case that was commenced on or after 
     March 27, 2020 and before the date of enactment of this Act, 
     is pending on the date of enactment of this Act.
       (3) Effective date of technical corrections to baia.--The 
     amendments made by subsection (g) shall take effect as if 
     enacted on October 1, 2021.
       (i) Sunsets.--
       (1) In general.--Effective on the date that is 2 years 
     after the date of enactment of this Act--
       (A) subsection (e) of section 109 of title 11, United 
     States Code is amended to read as such subsection read on the 
     day before the date of enactment of this Act; and
       (B) section 1182(1) of title 11, United States Code, is 
     amended to read as follows:
       ``(1) Debtor.--The term `debtor' means a small business 
     debtor.''.
       (2) Amounts.--For purposes of applying subsection (e) of 
     section 109 of title 11, United States Code, as amended by 
     paragraph (1)(A), the amounts specified in such subsection 
     shall be the amounts that were in effect on the day before 
     the date of enactment of this Act.
  The SPEAKER pro tempore (Mr. Veasey). Pursuant to the rule, the 
gentleman from Colorado (Mr. Neguse) and the gentleman from Oregon (Mr. 
Bentz) each will control 20 minutes.
  The Chair recognizes the gentleman from Colorado.


                             General Leave

  Mr. NEGUSE. Mr. Speaker, I ask unanimous consent that all Members 
have 5 legislative days to revise and extend their remarks and include 
extraneous material on S. 3823.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentleman from Colorado?
  There was no objection.
  Mr. NEGUSE. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, I thank Senator Durbin and Senator Grassley for their 
work on this bill. I also thank my colleague on the other side of the 
aisle, Representative Cline, for being the Republican lead on the bill.
  The Bankruptcy Threshold Adjustment and Technical Corrections Act 
shows that we can still come together in a bipartisan and bicameral way 
and make commonsense changes to the law that help small businesses on 
Main Street and everyday Americans.
  Before the COVID-19 pandemic, Mr. Speaker, many sole proprietors and 
middle-class families who live in high cost-of-living areas were 
ineligible to receive chapter 13 bankruptcy protections because the 
debt limits were far too low. For families forced into bankruptcy who 
wanted to keep their homes, vehicles, or any essential property, and 
were willing to pay off their debts under court supervision, chapter 13 
is their only lifeline. The alternative for these families can be 
devastating. Many have lost everything, including their homes.
  The story is similar for small businesses. In 2019, the American 
Bankruptcy Institute's Commission on Consumer Bankruptcy found that the 
artificially low chapter 13 limits were driving people away from the 
relief that they needed, and they called on this Congress to act.
  Sole proprietors who could otherwise save their businesses and 
protect their families have been forced to liquidate everything because 
they exceeded the debt limits of chapter 13.
  The Small Business Reorganization Act of 2019, the SBRA, as the 
Speaker pro tempore knows, created subchapter V in chapter 11 
bankruptcy, a voluntary option for small businesses in need of 
expedited bankruptcy relief. But that low debt limit meant that many 
small businesses simply could not take advantage of the program.
  The travesty of the pandemic really brought the need to increase 
these debt limits into stark relief. The CARES Act raised the debt 
limit threshold under the SBRA. That was done on a bipartisan basis by 
this House. It provided important protections to families and 
homeowners, but those provisions were temporary.
  My office has been contacted by countless professionals from all over 
the bankruptcy community expressing the need for this legislation. The 
National Conference of Bankruptcy Judges, an association of the 
bankruptcy judges of the United States, has said that the SBRA was one 
of the best modifications to the Bankruptcy Code in recent years. It 
assisted nearly 3,000 small businesses across the country that were in 
need of expedited relief through the pandemic. The Office of the United 
States Trustee Program also reported that more than half of these small 
business debtors received successful outcomes through a confirmed 
reorganization plan in 6 months or less.
  Despite the success of this program, the debt limit increase under 
the SBRA expired earlier this year, just a few months ago, on March 27, 
2022, which created an environment of uncertainty and unpredictability 
within the bankruptcy arena. Today's legislation retroactively restores 
that higher debt limit and extends it for another 2 years, allowing 
more businesses to take advantage of these protections under court 
supervision.
  This bill passed the Senate by unanimous consent, and I certainly 
hope that we can get a similar level of bipartisan support here in the 
House. This bill will make a big difference by allowing families to 
keep their homes, vehicles, and livelihoods intact while they repay 
their debt.
  Mr. Speaker, I reserve the balance of my time.
  Mr. BENTZ. Mr. Speaker, I yield myself such time as I may consume.
  Mr. Speaker, S. 3823 would make modest and temporary changes to the 
U.S. Bankruptcy Code.
  First, the bill temporarily increases debt limits for small business 
debtors under subchapter V of chapter 11 and for individual debtors 
reorganizing debt under chapter 13.
  Subchapter V of the Bankruptcy Code is a lower cost reorganization 
bankruptcy option for small businesses. These businesses don't have 
deep pockets, and traditional, expensive chapter 11 reorganizations may 
not be feasible.
  Subchapter V is a more affordable and streamlined approach, which can 
lead to more successful reorganizations. That means that both debtors 
and creditors should be better off because, hopefully, less of the 
debtor's estate will go toward professional fees and more will be left 
for the debtor's business and, ultimately, the creditors.
  Subchapter V took effect in February 2020. At that time, the debt 
limit for those wishing to utilize this more streamlined law was just 
over $2.7 million. Due in part to expected trouble for small 
businesses, the CARES Act and later legislation temporarily increased 
the debt limit for subchapter V filers to $7.5 million. That temporary 
increase sunsetted in March of this year. This bill again extends the 
$7.5 million debt limit for another 2 years.
  Likewise, the bill also changes the bankruptcy debt limits for 
chapter 13, which is a way for eligible individuals, including sole 
proprietors, to reorganize their debts. The bill removes the 
distinction between secured and unsecured debt limits under chapter 13 
and increases the overall debt limit for those who wish to file for 
their individual protection from about $1.9 million to $2.75 million.

  Like the adjustment to subchapter V, these changes to chapter 13 
apply for only 2 years. Put simply, Americans are having a harder time 
making ends meet due to what I think we would agree are mistakes made 
under the Biden administration and Democrats in control of Congress.
  Raising the debt limit will allow those suffering from these failed 
policies to adjust their debts to fit the new

[[Page H5262]]

realities of our economy, skyrocketing energy and input costs, not 
enough workers, and more. A successful reorganization can leave both 
debtors and creditors better off.
  At the same time, we just don't have certain data about some of these 
bankruptcy policy changes or their likely long-term effects. That is 
why these changes to our Bankruptcy Code should be temporary.
  An additional 2 years of normal post-pandemic bankruptcy activity 
will give us a better understanding of the underlying policy issues and 
will help guide the future design of our bankruptcy system.
  It is also worth noting that this bill did not go through regular 
order in the Judiciary Committee, so it did not benefit from robust 
oversight or legislative hearings. Americans are best served when 
Federal policy is made after careful and focused congressional 
deliberation, something that would have occurred in regular order.
  The bill makes clarifications to small business bankruptcies that 
relate to eligibility, trustee responsibilities, and bankruptcy plan 
requirements. These would be permanent. The bill also makes accounting-
related clarifications that will operate to improve the U.S. Trustee 
System Fund.
  Mr. Speaker, I reserve the balance of my time.
  Mr. NEGUSE. Mr. Speaker, I yield 3 minutes to the distinguished 
gentlewoman from Texas (Ms. Jackson Lee).
  Ms. JACKSON LEE. Mr. Speaker, I thank the distinguished member of our 
committee, Mr. Neguse, for his leadership joining with the Senate, and 
I thank him for yielding, Mr. Speaker.
  This is a fresh start. This is a new opportunity in important 
bipartisan, bicameral legislation that Mr. Neguse has nurtured and 
introduced and will ensure, under his leadership, that our bankruptcy 
system works for the entrepreneurs, small businesses, homeowners, and 
American families, who are the backbone of this country and of the 
communities where they live and work.
  Having the privilege of having served on the Judiciary Committee for 
some time, I am reminded of the work that we have done, almost like a 
puzzle putting together a better matrix for the American people to be 
able to renew their lives even as they may have the necessity of filing 
for bankruptcy.
  If there is one fundamental principle of American bankruptcy law, it 
is the promise of a fresh start, and the fresh start is 
quintessentially an American idea. It is a promise that even when your 
best efforts have failed, you are not a failure, and you will have a 
chance to get back up and try again. It is a promise that your debts 
will not destroy you.
  Increasing the debt limit for small businesses electing to file for 
bankruptcy under subchapter V of chapter 11 to $7.5 million is long 
overdue.
  Mr. Speaker, I particularly thank Mr. Neguse because really small 
businesses across America have been raising this question, making the 
point that it is impossible for them to survive with the previous cap 
for individual chapter 11 filers of $2.75 million.
  This legislation will provide much-needed certainty that the 
bankruptcy system will be responsive to hardworking Americans and their 
families trying to stay afloat in a world that can be turned upside 
down by global economic shocks.
  Just as I started, again, the filing of bankruptcy should not cause 
one to never renew again. This legislation, with the leadership of Mr. 
Neguse, gives our American businesspersons, homeowners, and others a 
fresh start.
  I ask my colleagues to support this legislation.

                              {time}  1715

  Mr. NEGUSE. Mr. Speaker, I am prepared to close and I reserve the 
balance of my time.
  Mr. BENTZ. Mr. Speaker, I yield back the balance of my time.
  Mr. NEGUSE. Mr. Speaker, I yield myself the balance of my time. I 
will simply close by first thanking the distinguished chairwoman from 
Texas (Ms. Jackson Lee), who is always so articulate and I am grateful 
for her leadership and kind remarks.
  I also thank Mr. Cicilline, the chairman of the subcommittee of 
jurisdiction, whose leadership was pivotal; and as I mentioned before, 
my Senate partners and Representative Cline.
  At the end of the day, I think we have a real opportunity today to 
honor American ingenuity, entrepreneurship, and innovation by providing 
our small businesses across the United States in Main Street after Main 
Street with the opportunity and the tools that they need to be able to 
survive.
  Mr. Speaker, I think this bill is a small step in that direction. It 
is bipartisan. It passed the Senate unanimously, and I certainly hope 
that it will pass this Chamber unanimously as well.
  Mr. Speaker, I urge my colleagues to support the bill, and I yield 
back the balance of my time.
  Mr. CICILLINE. Mr. Speaker, I rise in strong support of S. 3823, the 
``Bankruptcy Threshold Adjustment and Technical Corrections Act.''
  This important bipartisan, bicameral legislation introduced by my 
colleague, Congressman Neguse, will ensure that our bankruptcy system 
works for the entrepreneurs, small businesses, homeowners, and American 
families who are the backbone of this country and of the communities 
where they live and work.
  If there is one foundational principle of American bankruptcy law, it 
is the promise of the ``fresh start.'' The fresh start is a 
quintessentially American idea. It is the promise that even when your 
best efforts have failed, you will have a chance to get back up and try 
again. It is the promise that your debts will not destroy you.
  By increasing the debt limit for small businesses electing to file 
for bankruptcy under subchapter V of Chapter 11 to $7.5 million, and 
for individual Chapter 13 filers to $2.75 million, this legislation 
will provide much-needed certainty that the bankruptcy system will be 
responsive to hardworking Americans and their families trying to stay 
afloat in a world that can get turned upside down by global economic 
shocks.
  We all benefit from the fresh start. When it works as intended, it 
boosts economic growth, reduces unemployment, and encourages innovation 
and entrepreneurship. This legislation represents a major step toward 
ensuring that our bankruptcy system makes good on that promise.
  I thank my colleagues, Representatives Neguse and Cline, for their 
leadership on this bill and for their work to ensure that small 
businesses and families have meaningful access to the bankruptcy 
process.
  I urge my colleagues to support S. 3823.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentleman from Colorado (Mr. Neguse) that the House suspend the rules 
and pass the bill, S. 3823.
  The question was taken.
  The SPEAKER pro tempore. In the opinion of the Chair, two-thirds 
being in the affirmative, the ayes have it.
  Mr. ROY. Mr. Speaker, on that I demand the yeas and nays.
  The SPEAKER pro tempore. Pursuant to section 3(s) of House Resolution 
8, the yeas and nays are ordered.
  Pursuant to clause 8 of rule XX, further proceedings on this motion 
are postponed.

                          ____________________