[House Report 105-794]
[From the U.S. Government Publishing Office]
105th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 105-794
_______________________________________________________________________
BANKRUPTCY REFORM ACT OF 1998
_______
October 7, 1998.--Ordered to be printed
_______________________________________________________________________
Mr. Hyde, from the committee of conference, submitted the following
CONFERENCE REPORT
[To accompany H.R. 3150]
The committee of conference on the disagreeing votes of
the two Houses on the amendment of the Senate to the bill (H.R.
3150), to amend title 11 of the United States Code, and for
other purposes, having met, after full and free conference,
have agreed to recommend and do recommend to their respective
Houses 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; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Bankruptcy
Reform Act of 1998''.
(b) Table of Contents.--The table of contents of this Act
is as follows:
Sec. 1. Short title; table of contents.
TITLE I--CONSUMER BANKRUPTCY PROVISIONS
Subtitle A--Needs based bankruptcy
Sec. 101. Conversion.
Sec. 102. Dismissal or conversion.
Sec. 103. Notice of alternatives.
Sec. 104. Debtor financial management training test program.
Subtitle B--Consumer Bankruptcy Protections
Sec. 105. Definitions.
Sec. 106. Disclosures.
Sec. 107. Debtor's bill of rights.
Sec. 108. Enforcement.
Sec. 109. Sense of the congress.
Sec. 110. Discouraging abuse reaffirmation practices.
Sec. 111. Promotion alternative dispute resolution.
Sec. 112. Enhanced disclosure for credit extensions secured by a
dwelling.
Sec. 113. Dual use debit card.
Sec. 114. Enhanced disclosures under an open-end credit plan.
Sec. 115. Protection of savings earmarked for the postsecondary
education of children.
Sec. 116. Effect of discharge.
Sec. 117. Automatic stay.
Sec. 118. Reinforce the fresh start.
Sec. 119. Discouraging bad faith repeat filings.
Sec. 120. Curbing abusive filings.
Sec. 121. Debtor retention of personal property security.
Sec. 122. Relief from the automatic stay when the debtor does not
complete intended surrender of consumer debt collateral.
Sec. 123. Giving secured creditors fair treatment in chapter 13.
Sec. 124. Restraining abusive purchases on secured credit.
Sec. 125. Fair valuation of collateral.
Sec. 126. Exemptions.
Sec. 127. Limitation.
Sec. 128. Rolling stock equipment.
Sec. 129. Discharge under chapter 13.
Sec. 130. Bankruptcy judgeships.
Sec. 131. Additional amendments to title 11, United States code.
Sec. 132. Amendment to section 1325 of title 11, United States code.
Sec. 133. Application of the codebtor stay only when the stay protects
the debtor.
Sec. 134. Adequate protection for investors.
Sec. 135. Limitation on luxury goods.
Sec. 136. Giving debtors the ability to keep leased personal property by
assumption.
Sec. 137. Adequate protection of lessors and purchase money secured
creditors.
Sec. 139. Automatic stay.
Sec. 140. Extend period between bankruptcy discharges.
Sec. 141. Definition of domestic support obligation.
Sec. 142. Priorities for claims for domestic support obligations.
Sec. 143. Requirements to obtain confirmation and discharge in cases
involving domestic support obligations.
Sec. 144. Exceptions to automatic stay in domestic support obligation
proceedings.
Sec. 145. Nondischargeability of certain debts for alimony, maintenance,
and support.
Sec. 146. Continued liability of property.
Sec. 147. Protection of domestic support claims against preferential
transfer motions.
Sec. 148. Definition of household goods and antiques.
Sec. 149. Nondischargeable debts.
TITLE II--DISCOURAGING BANKRUPTCY ABUSE
Sec. 201. Reenactment of chapter 12.
Sec. 202. Meetings of creditors and equity security holders.
Sec. 203. Protection of retirement savings in bankruptcy.
Sec. 204. Protection of refinance of security interest.
Sec. 205. Executory contracts and unexpired leases.
Sec. 206. Creditors and equity security holders committees.
Sec. 207. Amendment to section 546 of title 11, United States code.
Sec. 208. Limitation.
Sec. 209. Amendment to section 330(a) of title 11, United States code.
Sec. 210. Postpetition disclosure and solicitation.
Sec. 211. Preferences.
Sec. 212. Venue of certain proceedings.
Sec. 213. Period for filing plan under chapter 11.
Sec. 214. Fees arising from certain ownership interests.
Sec. 215. Claims relating to insurance deposits in cases ancillary to
foreign proceedings.
Sec. 216. Defaults based on nonmonetary obligations.
TITLE III--GENERAL BUSINESS BANKRUPTCY PROVISIONS
Sec. 301. Definition of disinterested person.
Sec. 302. Miscellaneous improvements.
TITLE IV--SMALL BUSINESS BANKRUPTCY PROVISIONS
Sec. 401. Flexible rules for disclosure Statement and plan.
Sec. 402. Definitions.
Sec. 403. Standard form disclosure Statement and plan.
Sec. 404. Uniform national reporting requirements.
Sec. 405. Uniform reporting rules and forms for small business cases.
Sec. 406. Duties in small business cases.
Sec. 407. Plan filing and confirmation deadlines.
Sec. 408. Plan confirmation deadline.
Sec. 409. Prohibition against extension of time.
Sec. 410. Duties of the United States trustee.
Sec. 411. Scheduling conferences.
Sec. 412. Serial filer provisions.
Sec. 413. Expanded grounds for dismissal or conversion and appointment
of trustee.
Sec. 414. Study of operation of title 11 of the United States code with
respect to small businesses.
Sec. 415. Payment of interest.
TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS
Sec. 501. Petition and proceedings related to petition.
Sec. 502. Applicability of other sections to chapter 9.
TITLE VI--STREAMLINING THE BANKRUPTCY SYSTEM
Sec. 601. Creditor representation at first meeting of creditors.
Sec. 602. Audit procedures.
Sec. 603. Giving creditors fair notice in chapter 7 and 13 cases.
Sec. 604. Dismissal for failure to timely file schedules or provide
required information.
Sec. 605. Adequate time to prepare for hearing on confirmation of the
plan.
Sec. 606. Chapter 13 plans to have a 5-year duration in certain cases.
Sec. 607. Sense of the Congress regarding expansion of rule 9011 of the
Federal rules of bankruptcy procedure.
Sec. 608. Elimination of certain fees payable in chapter 11 bankruptcy
cases.
Sec. 609. Study of bankruptcy impact of credit extended to dependent
students.
Sec. 610. Prompt relief from stay in individual cases.
Sec. 611. Stopping abusive conversions from chapter 13.
TITLE VII--BANKRUPTCY DATA
Sec. 701. Improved bankruptcy statistics.
Sec. 702. Uniform rules for the collection of bankruptcy data.
Sec. 703. Sense of the Congress regarding availability of bankruptcy
data.
TITLE VIII--BANKRUPTCY TAX PROVISIONS
Sec. 801. Treatment of certain liens.
Sec. 802. Effective notice to government.
Sec. 803. Notice of request for a determination of taxes.
Sec. 804. Rate of interest on tax claims.
Sec. 805. Tolling of priority of tax claim time periods.
Sec. 806. Priority property taxes incurred.
Sec. 807. Chapter 13 discharge of fraudulent and other taxes.
Sec. 808. Chapter 11 discharge of fraudulent taxes.
Sec. 809. Stay of tax proceedings.
Sec. 810. Periodic payment of taxes in chapter 11 cases.
Sec. 811. Avoidance of statutory tax liens prohibited.
Sec. 812. Payment of taxes in the conduct of business.
Sec. 813. Tardily filed priority tax claims.
Sec. 814. Income tax returns prepared by tax authorities.
Sec. 815. Discharge of the estate's liability for unpaid taxes.
Sec. 816. Requirement to file tax returns to confirm chapter 13 plans.
Sec. 817. Standards for tax disclosure.
Sec. 818. Setoff of tax refunds.
TITLE IX--ANCILLARY AND OTHER CROSS-BORDER CASES
Sec. 901. Amendment to add chapter 15 to title 11, United States code.
Sec. 902. Amendments to other chapters in title 11, United States code.
TITLE X--FINANCIAL CONTRACT PROVISIONS
Sec. 1001. Treatment of certain agreements by conservators or receivers
of insured depository institutions.
Sec. 1002. Authority of the corporation with respect to failed and
failing institutions.
Sec. 1003. Amendments relating to transfers of qualified financial
contracts.
Sec. 1004. Amendments relating to disaffirmance or repudiation of
qualified financial contracts.
Sec. 1005. Clarifying amendment relating to master agreements.
Sec. 1006. Federal deposit insurance corporation improvement act of
1991.
Sec. 1007. Bankruptcy code amendments.
Sec. 1008. Recordkeeping requirements.
Sec. 1009. Exemptions from contemporaneous execution requirement.
Sec. 1010. Damage measure.
Sec. 1011. SIPC stay.
Sec. 1012. Asset-backed securitizations.
Sec. 1013. Federal reserve collateral requirements.
Sec. 1014. Severability; effective date; application of amendments.
TITLE XI--TECHNICAL CORRECTIONS
Sec. 1101. Definitions.
Sec. 1102. Adjustment of dollar amounts.
Sec. 1103. Extension of time.
Sec. 1104. Technical amendments.
Sec. 1105. Penalty for persons who negligently or fraudulently prepare
bankruptcy petitions.
Sec. 1106. Limitation on compensation of professional persons.
Sec. 1107. Special tax provisions.
Sec. 1108. Effect of conversion.
Sec. 1109. Amendment to table of sections.
Sec. 1110. Allowance of administrative expenses.
Sec. 1111. Priorities.
Sec. 1112. Exemptions.
Sec. 1113. Exceptions to discharge.
Sec. 1114. Effect of discharge.
Sec. 1115. Protection against discriminatory treatment.
Sec. 1116. Property of the estate.
Sec. 1117. Preferences.
Sec. 1118. Postpetition transactions.
Sec. 1119. Disposition of property of the estate.
Sec. 1120. General provisions.
Sec. 1121. Appointment of elected trustee.
Sec. 1122. Abandonment of railroad line.
Sec. 1123. Contents of plan.
Sec. 1124. Discharge under chapter 12.
Sec. 1125. Bankruptcy cases and proceedings.
Sec. 1126. Knowing disregard of bankruptcy law or rule.
Sec. 1127. Transfers made by nonprofit charitable corporations.
Sec. 1128. Prohibition on certain actions for failure to incur finance
charges.
Sec. 1129. Protection of valid purchase money security interests.
Sec. 1130. Trustees.
TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS
Sec. 1201. Effective date; application of amendments.
TITLE I--CONSUMER BANKRUPTCY PROVISIONS
Subtitle A--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
13'';
and
(2) in subsection (b)--
(A) by inserting ``(1)'' after ``(b)''; and
(B) in paragraph (1), as redesignated by
subparagraph (A) of this paragraph--
(i) in the first sentence--
(I) by striking ``but not
at the request or suggestion''
and inserting ``, panel trustee
or'';
(II) by inserting ``, or,
with the debtor's consent,
convert such a case to a case
under chapter 13 of this
title,'' after ``consumer
debts''; and
(III) by striking
``substantial abuse'' and
inserting ``abuse''; and
(ii) by striking the last sentence
and inserting 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 less amounts set forth in clauses (ii),
(iii), and (iv), and multiplied by 60 months is not less than
25 percent of the debtor's nonpriority unsecured claims in the
case or $5,000, whichever is less.
``(ii) The debtor's monthly expenses shall be the
applicable monthly expenses under National Standards, Local
Standards, and Other Necessary Expenses allowance (excluding
payments for debts) 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.
``(iii) The debtor's average monthly payments on account of
secured debts shall be calculated as 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
dividing that total by 60 months.
``(iv) The debtor's expenses for payment of all priority
claims (including priority child support and alimony claims),
which shall be calculated as the total amount of debts entitled
to priority, and dividing the total by 60 months.
``(B) In any proceeding brought under this subsection, the
presumption of abuse may be rebutted only by demonstrating
extraordinary circumstances that require additional expenses or
adjustment of current monthly total income. In order to
establish extraordinary circumstances, the debtor must itemize
each additional expense or adjustment of income and provide
documentation for such expenses and a detailed explanation of
the extraordinary circumstances which make such expenses
necessary and reasonable. The debtor, and the attorney for the
debtor if the debtor has an attorney, shall attest under oath
to the accuracy of any information provided to demonstrate that
additional expenses or adjustment to income are required. The
presumption of abuse may be rebutted only if such additional
expenses or adjustments to income cause the debtor's current
monthly income less the amounts set forth in clauses (ii),
(iii), and (iv) of subparagraph (A) when multiplied by 60 to be
less than 25 percent of the debtor's nonpriority unsecured
claims $5,000, whichever is less.
``(C) As part of the schedule of current income and
expenditures required under section 521 of this title, the
debtor shall include a statement of the debtor's current
monthly income, and the calculations which determine whether a
presumption arises under subparagraph (A)(i), showing how each
amount is calculated. The bankruptcy rules promulgated under
section 2075 of title 28, United States Code, shall prescribe a
form for such statement and may provide general rules on its
content.
``(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) 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.''.
(b) Definition.--Title 11, United States Code, is amended--
(1) in section 101 by inserting after paragraph
(10) the following:
``(10A) `currently monthly income' means the
average monthly income from all sources derived which
the debtor, or in a joint case, the debtor and the
debtor's spouse, receive without regard to whether it
is taxable income, in the 180 days preceding the date
of determination, and includes any amount paid by
anyone other than the debtor or, in a joint case, the
debtor and the debtor's spouse, on a regular basis to
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;''; and
(2) in section 704--
(i) in paragraph (8) by striking ``and'' at
the end;
(ii) in paragraph (9) by striking the
period at the end and inserting ``; and''; and
(iii) by adding at the end the following:
``(10) With respect to an individual debtor under this
chapter, the panel trustee or bankruptcy administrator shall
review all materials filed by the debtor and, 10 days prior to
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) of this title, and the court shall
provide a copy of such statement to all creditors within 5
days. If, based on the filing of such statement with the court,
the panel trustee or bankruptcy administrator determines that
the debtor's case should be presumed to be an abuse under
section 707(b) of this title and the debtor's current monthly
income, when multiplied by 12, is not less than the highest
national median family income reported for a family of equal or
lesser size, or in the case of a household of 1 person, the
national median household income for 1 earner, the panel
trustee or bankruptcy administrator shall within 30 days file a
motion to dismiss or convert under section 707(b) of this
title, or file a statement setting forth the reasons the
trustee does not believe that such a motion would be
appropriate.
``(3)(A) If a panel trustee appointed under section
586(a)(1) of title 28 brings a motion for dismissal or
conversion under this subsection and the court grants that
motion and finds that the action of the counsel for the debtor
in filing under this chapter was not substantially justified,
the court shall order the counsel for the debtor to reimburse
the trustee for all reasonable costs in prosecuting the motion,
including reasonable attorneys' fees.
``(B) If the court finds that the attorney for the debtor
violated Rule 9011, at a minimum, the court shall order--
``(i) the assessment of an appropriate civil
penalty against the counsel for the debtor; and
``(ii) the payment of the civil penalty to the
panel trustee or the United States trustee.
``(C) In the case of a petition referred to in subparagraph
(B), the signature of an attorney shall constitute a
certificate that the attorney has--
``(i) performed a reasonable investigation into the
circumstances that gave rise to the petition; and
``(ii) determined that the petition--
``(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) of this subsection.
``(4)(A) Except as provided in subparagraph (B), the court
may award a debtor all reasonable costs in contesting a motion
brought by a party in interest (other than a panel trustee or
United States trustee) under this subsection (including
reasonable attorneys' fees) if--
``(i) the court does not grant the motion; and
``(ii) the court finds that--
``(I) the position of the party that
brought the motion was not substantially
justified; or
``(II) the party brought the motion solely
for the purpose of coercing a debtor into
waiving a right guaranteed to the debtor under
this title.
``(B) A party in interest that has a claim of an aggregate
amount less than $1,000 shall not be subject to subparagraph
(A).
``(5) However, only the judge, United States trustee,
bankruptcy administrator or panel trustee may bring a motion
under this section if the debtor and the debtor's spouse
combined, as of the date of the order for relief, have current
monthly total income equal to or less than the national median
household monthly income calculated on a monthly basis for a
household of equal size. However, for a household of more than
4 individuals, the median income shall be that of a household
of 4 individuals plus $583 for each additional member of that
household.''.
(c) Clerical Amendment.--The table of sections at the
beginning of 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 13.''.
SEC. 103. 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, that
individual shall be given or obtain (as required in section
521(a)(1), as part of the certification process under
subchapter 1 of chapter 5) a written notice prescribed by the
United States trustee for the district in which the petition is
filed pursuant to section 586 of title 28. The notice shall
contain the following:
``(1) A brief description of chapters 7, 11, 12,
and 13 and the general purpose, benefits, and costs of
proceeding under each of those chapters.
``(2) A brief description of services that may be
available to that individual from a credit counseling
service that is approved by the United States trustee
for that district.''.
SEC. 104. 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 are appointed under chapter 13 of title 11 of the
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 individual debtors on how to better manage their
finances.
(b) Test--(1) The Director shall select 3 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) For a 1-year period beginning not later than 270 days
after the date of the enactment of this Act, such curriculum
and materials shall be made available by the Director, directly
or indirectly, on request to individual debtors in cases filed
in such 1-year period under chapter 7 or 13 of title 11 of the
United States Code.
(c) Evaluation.--(1) During the 1-year 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 of the
United States Code, and by consumer counselling groups.
(2) 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.
Subtitle B--Consumer Bankruptcy Protections
SEC. 105. DEFINITIONS.
(a) Definitions.--Section 101 of title 11, United States
Code, is amended--
(1) by inserting after paragraph (3) the following:
``(3A) `assisted person' means any person whose
debts consist primarily of consumer debts and whose
non-exempt assets are 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
proceeding under this title;''; and
(3) by inserting after paragraph (12A) the
following:
``(12B) `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 pursuant to section 110 of this title, but
does not include any person that is any of the
following or an officer, director, employee or agent
thereof--
``(A) any nonprofit organization which is
exempt from taxation under section 501(c)(3) of
the Internal Revenue Code of 1986;
``(B) any creditor of the person to the
extent the creditor is assisting the person to
restructure any debt owed by the person to the
creditor; or
``(C) any 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 a
depository institution or credit union;''.
(b) Conforming Amendment.--In section 104(b)(1) by
inserting ``101(3),'' after ``sections''.
SEC. 106. DISCLOSURES.
(a) Disclosures.--Subchapter II of chapter 5 of title 11,
United States Code, is amended by adding at the end the
following:
``Sec. 526. Disclosures
``(a) A debt relief agency providing bankruptcy assistance
to an assisted person shall provide the following notices to
the assisted person:
``(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) of this section and
no later than three 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 of the following--
``(A) all information the assisted person
is required to provide with a petition and
thereafter during a case under this title must
be complete, accurate and truthful;
``(B) all assets and all liabilities must
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 total income,
projected monthly net income and, in a chapter
13case, monthly net income must be stated after
reasonable inquiry; and
``(D) that information 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 proceeding 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 three to five
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 may be providedorally or 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 total income, projected
monthly income and, in a chapter 13 case, net monthly
income, 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 two
years after the later of the date on which the notice is given
the assisted person.''.
(b) Conforming Amendment.--The table of section for chapter
5 of title 11, United States Code, is amended by inserting
after the item relating to section 525 the following:
``526. Disclosures.''.
SEC. 107. DEBTOR'S BILL OF RIGHTS.
(a) Debtor's Bill of Rights.--Subchapter II of chapter 5 of
title 11, United States Code, as amended by section 106, is
amended by adding at the end the following:
``Sec. 527. Debtor's bill of rights
``(a) A debt relief agency shall--
``(1) no later than five business days after the
first date on which a debt relief 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 the
assisted person specifying clearly and conspicuously
the services the agency will provide the assisted
person and the basis on which fees or charges will be
made for such services and the terms of payment, and
give the assisted person a copy of the fully executed
and completed contract in a form the person can keep;
``(2) 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 proceedings under this
title, clearly and conspicuously using the following
statement: `We are a debt relief agency. We help people
file Bankruptcy petitions to obtain relief under the
Bankruptcy Code.' or a substantially similar statement.
An advertisement shall be of bankruptcy assistance
services if it describes or offers bankruptcy
assistance with a chapter 13 plan, regardless of
whether chapter 13 is specifically mentioned, including
such statements as `federally supervised repayment
plan' or `Federal debt restructuring help' or other
similar statements which would lead a reasonable
consumer to believe that help with debts was being
offered when in fact in most cases the help available
is bankruptcy assistance with a chapter 13 plan; and
``(3) if an advertisement directed to the general
public indicates that the debt relief agency provides
assistance with respect to credit defaults, mortgage
foreclosures, lease eviction proceedings, excessive
debt, debt collection pressure, or inability to pay any
consumer debt, disclose conspicuously in that
advertisement that the assistance is with respect to or
may involve proceedings under this title, using the
following statement: ``We are a debt relief agency. We
help people file Bankruptcy petitions to obtain relief
under the Bankruptcy Code.'' or a substantially similar
statement.
``(b) A debt relief agency shall not--
``(1) fail to perform any service which the debt
relief agency has told the assisted person or
prospective assisted person the agency would provide
that person in connection with the preparation for or
activities during a proceeding under this title;
``(2) make any statement, or counsel or advise any
assisted person to make any statement in any document
filed in a proceeding under this title, which is untrue
and misleading or which upon the exercise of reasonable
care, should be known by the debt relief agency to be
untrue or misleading;
``(3) misrepresent to any assisted person or
prospective assisted person, directly or indirectly,
affirmatively or by material omission, what services
the debt relief agency can reasonably expect to provide
that person, or the benefits an assisted person may
obtain or the difficulties the person may experience if
the person seeks relief in a proceeding pursuant to
this title; or
``(4) advise an assisted person or prospective
assisted person to incur more debt in contemplation of
that person filing a proceeding under this title or in
order 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
proceeding under this title.''.
(b) Conforming Amendment.--The table of section for chapter
5 of title 11, United States Code, as amended by section 106,
is amended by inserting after the item relating to section 526,
the following:
``527. Debtor's bill of rights.''.
SEC. 108. ENFORCEMENT.
(a) Enforcement.--Subchapter II of chapter 5 of title 11,
United States Code, as amended by sections 106 and 107, is
amended by adding at the end the following:
``Sec. 528. Debt relief agency enforcement
``(a) Assisted Person Waivers Invalid.--Any waiver by any
assisted person of any protection or right provided by or under
section 526 or 527 of this title shall be void and may not be
enforced by any Federal or State court or any other person.
``(b) Noncompliance.--
``(1) Any contract between a debt relief agency and
an assisted person for bankruptcy assistance which does
not comply with the material requirements of section
526 or 527 of this title shall be treated as void and
may not be enforced by any Federal or State court or by
any other person.
``(2) Any debt relief agency which has been found,
after notice and hearing, to have--
``(A) negligently failed to comply with any
provision of section 526 or 527 with respect to
a bankruptcy case or related proceeding of an
assisted person;
``(B) provided bankruptcy assistance to an
assisted person in a case or related proceeding
which is dismissed or converted because the
debt relief agency's negligent failure to file
bankruptcy papers, including papers specified
in section 521 of this title; or
``(C) negligently or intentionally
disregarded the material requirements of this
title or the Federal Rules of Bankruptcy
Procedure applicable to such debt relief agency
shall be liable to the assisted person in the
amount of any fees and charges in connection
with providing bankruptcy assistance to such
person which the debt relief agency has already
been paid on account of that proceeding.
``(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 section
526 or 527 of this title, 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 United States District Court 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, if the court, on its own motion or on the
motion of the United States trustee, finds that a
person intentionally violated section 526 or 527 of
this title, or engaged in a clear and consistent
pattern or practice of violating section 526 or 527 of
this title, the court may--
``(A) enjoin the violation of such section;
or
``(B) impose an appropriate civil penalty
against such person.
``(c) Relation to State Law.--This section and sections 526
and 527 shall not annul, alter, affect or exempt any person
subject to those 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.''.
(b) Conforming Amendment.--The table of section for chapter
5 of title 11, United States Code, as amended by sections 106
and 107, is amended by inserting after the item relating to
section 527, the following:
``528. Debt relief agency enforcement.''.
SEC. 109. SENSE OF THE CONGRESS.
It is the sense of the Congress that States should develop
curricula relating to the subject of personal finance, designed
for use in elementary and secondary schools.
SEC. 110. DISCOURAGING ABUSE REAFFIRMATION PRACTICES.
Section 524(c)(2) of title 11, United States Code, is
amended--
(1) in subparagraph (A) by striking ``and'' at the
end;
(2) in subparagraph (B) by adding ``and'' at the
end; and
(3) by adding at the end the following:
``(C) if the consideration for such agreement is
based on a wholly unsecured consumer debt, such
agreement contains a clear and conspicuous statement
which advises the debtor--
``(i) that the debtor is entitled to a
hearing before the court at which the debtor
shall appear in person and at which the court
will decide whether the agreement is an undue
hardship, not in the debtor's best interest,
and not the result of a threat by the creditor
to take any action that cannot be legally taken
or that is not intended to be taken; and
``(ii) that if the debtor is represented by
counsel, the debtor may waive the debtor's
right to such a hearing by signing a statement
waiving the hearing, stating that the debtor is
represented by counsel, and identifying such
counsel;'';
(3) in subsection (6)(A)--
(A) by striking ``and'' at the end of
clause (i);
(B) by striking the period at the end of
clause (ii) and inserting ``; and'';
(C) by adding at the end thereof the
following:
``(iii) not entered into by the debtor as
the result of a threat by the creditor to take
anyaction that cannot be legally taken or that
is not intended to be taken.''; and
(4) in the 3d sentence of subsection (d)--
(A) by striking ``of this section'' and
inserting a comma; and
(B) by inserting after ``such agreement''
the following:
``or if the consideration for such agreement is based on a
wholly unsecured consumer debt (except for debts owed to
creditors defined in section 461(b)(10)(A)(iv) of title 12,
United States Code) and the debtor has not waived the debtor's
right to a hearing on the agreement in accordance with
subsection (c)(2)(C) of this section''.
SEC. 111. PROMOTION 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 unsecured consumer debts by not more than 20 percent,
if the debtor can prove by clear and convincing evidence that
the claim was filed by a creditor who unreasonably refused to
negotiate a reasonable alternative repayment schedule proposed
by an approved credit counseling agency acting on behalf of the
debtor, if--
``(A) such offer was made at least 60 days before
the filing of the petition;
``(B) such offer provided for payment of at least
60 percent of the amount of the debtor 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 that the
proposed alternative repayment schedule was made in the 60-day
period specified in subparagraph (A) and that the creditor
unreasonably refused to consider the debtor's proposal.''.
(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. 112. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED BY A
DWELLING.
(a) Study Required.--During the period beginning 180 days
after the date of enactment of this Act and ending 18 months
after the date of the enactment, the Board of Governors of the
Federal Reserve System (in this section referred to as the
``Board'') shall conduct a study and submit to Congress a
report (including recommendations for any appropriate
legislation) regarding--
(1) whether a consumer engaging in an open-end
credit transaction (as defined pursuant to section 103
of the Truth in Lending Act) secured by the consumer's
principal dwelling is provided adequate information
under Federal law, including under section 127A of the
Truth in Lending Act, regarding the tax deductibility
of interest paid on such transaction; and
(2) whether a consumer engaging in a closed-end
credit transaction (as defined pursuant to section 103
of the Truth in Lending Act) secured by the consumer's
principal dwelling is provided adequate information
regarding the tax deductibility of interest paid on
such transaction.
In conducting such study, the Board shall specifically consider
whether additional disclosures are necessary with respect to
such open-end or closed-end credit transactions in which the
amount of the credit extended exceeds the fair market value of
the dwelling.
(b) Regulations.--If the Board determines that additional
disclosures are necessary in connection with transactions
described in subsection (a), the Board, pursuant to its
authority under the Truth in Lending Act, may promulgate
regulations that would require such additional disclosures. Any
such regulations promulgated by the Board under this section
shall not take effect before the end of the 36-month period
after the date of the enactment of this Act.
SEC. 113. DUAL USE DEBIT CARD.
(a) Study Required.--The Board of Governors of the Federal
Reserve System (in this section referred to as the ``Board'')
shall conduct a study of existing protections provided to
consumers to limit their liability for unauthorized use or a
debit card or similar access device.
(b) Specific Considerations.--In conducting the study
required by subsection (a), the Board shall specifically
consider the following--
(1) the extent to which existing provisions of
section 909 of the Electronic Fund Transfer Act and the
Board's implementing regulations provide adequate
unauthorized use liability protection for consumers;
(2) the extent to which any voluntary industry
rules have enhanced the level of protection afforded
consumers in connection with such unauthorized use
liability; and
(3) whether amendments to the Electronic Funds
Transfer Act or the Board's implementing regulations
thereto are necessary to provide adequate protection
for consumers in this area.
(c) Report and Regulations.--Not later than 2 years after
the date of the enactment of this Act, the Board shall make
public a report on its findings with respect to the adequacy of
existing protections afforded consumers with respect to
unauthorized-use liability for debit cards and similar access
devices. If the Board determines that such protections are
inadequate, the Board, pursuant to its authority under the
Electronic Funds Transfer Act, may issue regulations to address
such inadequacy. Any regulations issued by the Board shall not
be effective before 36 months after the date of the enactment
of this Act.
SEC. 114. ENHANCED DISCLOSURES UNDER AN OPEN-END CREDIT PLAN.
(a) Initial and Annual Minimum Payment Disclosure.--Section
127(a) of the Truth in Lending Act (15 U.S.C. 1637(a)) is
amended by adding at the end the following:
``(9) In the case of any credit or charge card
account under an open-end consumer credit plan on which
a minimum monthly or periodic payment will be required,
other than an account described in paragraph (8)--
``(A) the following statement: `The minimum
payment amount shown on your billing statement
is the smallest payment which you can make in
order to keep the account in good standing.
This payment option is offered as a convenience
and you may make larger payments at any time.
Making only the minimum payment each month will
increase the amount of interest you pay and the
length of time it takes to repay your
outstanding balance.';
``(B) if the plan provides that the
consumer will be permitted to forgo making a
minimum payment during a specified billing
cycle, a statement, if applicable, that if the
consumer chooses to forgo making the minimum
payment, finance charges will continue to
accrue; and
``(C) an example, based on an annual
percentage rate and method for determining
minimum periodic payments recently in effect
for that creditor, and a $500 outstanding
balance, showing the estimated minimum periodic
payment, and the estimated period of time it
would take to repay the $500 outstanding
balance if the consumer paid only the minimum
periodic payment on each monthly or periodic
statement and obtained no additional extensions
of credit.
``(10) With respect to one billing cycle per
calendar year, the creditor shall transmit the
information required under paragraph (9) to each
consumer to whom the creditor is required to transit a
statement pursuant to subsection (b) for such billing
cycle. The creditor shall also transmit to such
consumer for such cycle a worksheet prescribed by the
Board to assist the consumer in determining the
consumer's household income and debt obligations.''.
(b) Period 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) The following statement: `The minimum
payment amount shown on your billing statement is the
smallest payment which you can make in order to keep
the account in good standing. This payment option is
offered as a convenience and you maymake larger
payments at any time. Making only the minimum payment each month will
increase the amount of interest you pay and the length of time it takes
to repay your outstanding balance.' ''.
(c) Enforcement.--Section 127 of the Truth in Lending Act
(15 U.S.C. 1637) is amended by adding at the end the following:
``(h) In promulgating regulations to implement the
disclosure of an example required under subsection (a)(9)(C)
and (a)(10), the Board shall set forth a model disclosure to
accompany the example stating that the credit features shown
are only an example which does not obligate the creditor, but
is intended to illustrate the approximate length of time it
could take to repay using the assumptions set forth in
subsection (a)(9)(C) without regard to any other factors that
could impact an approximate repayment period, including other
credit features or the consumer's payment or other behavior
with respect to the account. Compliance with the disclosures
required under subsection (a)(9)(C) and (a)(10) shall be
enforced exclusively by the Federal agencies set forth in
section 108.''.
(d) Regulatory Implementation.--The Board of Governors of
the Federal Reserve System (in this section referred to as the
``Board'') shall promulgate regulations implementing the
amendments made by subsections (a) and (b). Such regulations
shall take effect no earlier than the end of the 36-month
period beginning on the date of the enactment of this Act.
(e) Study Required.--The Board shall conduct a study to
determine whether consumers have adequate information about
borrowing activities which may result in financial problems. In
studying this issue, the Board shall consider the extent to
which--
(1) 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;
(2) minimum periodic payment features offered in
connection with open-end credit plans impact consumer
default rates;
(3) consumers always make only the minimum payment
throughout the life of the plan;
(4) consumers are aware that making only minimum
payments will increase the cost and repayment period of
an open-end loan; and
(5) the availability of low minimum payment options
is a cause of consumers experiencing financial
difficulty.
(f) Report to Congress.--Before the end of the 2-year
period beginning on the date of the enactment of this Act, the
Board shall submit to Congress a report containing the findings
of the Board in connection with the study required under
subsection (b).
(g) Regulations.--The Board shall, by regulation
promulgated pursuant to its authority under the Truth in
Lending Act, require additional disclosures to consumers
regarding minimum payment features, including periodic
statement disclosures, if the Board determines that such
disclosures are necessary based on its findings. Any such
regulations promulgated by the Board shall not take effect
earlier than January 1, 2001.
SEC. 115. PROTECTION OF SAVINGS EARMARKED FOR THE POSTSECONDARY
EDUCATION OF CHILDREN.
(a) In General.--Section 522(b) of title 11, United States
Code, as amended by section 330, is amended--
(1) in paragraph (2)--
(A) in subparagraph (B), by striking
``and'' at the end;
(B) in subparagraph (C), by striking the
period at the end and inserting ``; and''; and
(C) by adding at the end the following:
``(D) postsecondary education accounts as described
as follows:
``(i) except as provided under applicable
State law or except as provided in paragraph
(5), any funds placed in a qualified tuition
program (as described in section 529(b) of the
Internal Revenue Code of 1986) at least 365
days before the date of entry of the order for
relief and which has not been pledged or
promised to any person in connection with any
extension of credit; or
``(ii) except as provided in paragraph (5),
any funds placed in an education individual
retirement account (as defined in section
530(b)(1) of the Internal Revenue Code of 1986)
at least 365 days before the date of entry of
the order for relief and which has not been
pledged or promised to any person in connection
with any extension of credit;''; and
(4) by adding at the end the following:
``(5) For purposes of paragraph (3)(D), funds placed in a
qualified tuition program or in an education individual
retirement account shall not be exempt under this subsection--
``(A) unless the debtor has one or more dependent
children less than 22 years of age;
``(B) if the amounts in such postsecondary accounts
do not exceed the lesser of $50,000 (in the aggregate)
in accounts attributable to each such dependent child
or $100,000 (in the aggregate) attributable to all such
dependent children;
``(C) to the extent such funds contributed to such
account exceed $500 per year per child; and
``(D) any individual (other than the dependent
child of the debtor to whom such account is
attributable) has any ownership right to such funds, or
the right to obtain ownership in the future of any
amount of such funds (other than upon the death or
serious mental impairment of such child), or direct the
application of such funds for any purpose other than
the postsecondary education of such child.''.
SEC. 116. 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 (including a
plan of reorganization confirmed under chapter 11 of this
title) 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).
``(j)(1) An individual who is injured by the failure of a
creditor to comply with the requirements for a reaffirmation
agreement under subsections (c) and (d), or by any willful
violation of the injunction under subsection (a)(2), shall be
entitled to recover--
``(A) the greater of--
``(i) the amount of actual damages; or
``(ii) $1,000; and
``(B) costs and attorneys' fees.
``(2) An action to recover for a violation specified in
paragraph (1) may not be brought as a class action.''.
SEC. 117. AUTOMATIC STAY.
Section 362(h) of title 11, United States Code, is amended
to read as follows:
``(h)(1) An individual who is injured by any willful
violation of a stay provided in this section shall be entitled
to recover--
``(A) actual damages; and
``(B) reasonable costs, including attorneys' fees.
``(2) An action to recover for a violation specified in
paragraph (1) may not be brought as a class action.''.
SEC. 118. REINFORCE THE FRESH START.
(a) Restoration of an Effective Discharge.--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. 119. 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 new
paragraphs:
``(3) If a single or joint case is filed by or
against an individual debtor under chapter 7, 11, or
13, and if a single or joint case of the debtor was
pending within the previous 1-year period but was
dismissed, other than a case refiled under a chapter
other than chapter 7 after dismissal under section
707(b) of this title, 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 will terminate with respect to the debtor on the
30th day after the filing of the later case. Upon
motion by 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. A case is
presumptively filed not in good faith (but such
presumption may be rebutted by clear and convincing
evidence to the contrary)--
``(A) as to all creditors if--
``(i) more than 1 previous case
under any of chapters 7, 11, or 13 in
which the individual was a debtor was
pending within such 1-year period;
``(ii) a previous case under any of
chapters 7, 11, or 13 in which the
individual was a debtor was dismissed
within such 1-year period, 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 any of chapters 7, 11, or 13
of this title, or any other reason to
conclude that the later case will be
concluded, if a case under chapter 7 of
this title, with a discharge, and if a
chapter 11 or 13 case, a confirmed plan
which will be fully performed;
``(B) 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 still pending or had been resolved by
terminating, conditioning, or limiting the stay
as to actions of such creditor.
``(4) If a single or joint case is filed by or
against an individual debtor 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) of this
title, the stay under subsection (a) will not go into
effect upon the filing of the later case. On request of
a party in interest, the court shall promptly enter an
order confirming that no stay is in effect. If a party
in interest requests within 30 days of the filing of
the later case, 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 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. A
stay imposed pursuant to the preceding sentence will be
effective on the date of entry of the order allowing
the stay to go into effect. A case is presumptively not
filed in good faith (but such presumption may be
rebutted by clear and convincing evidence to the
contrary)--
``(A) 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 pay
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
``(B) 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. 120. 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 pursuant to 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 that recording,
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.''.
(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 at the
end; and
(3) by inserting after paragraph (18) the
following:
``(19) 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)
of this title as to that property in any prior
bankruptcy case for a period of 2 years after entry of
such an order. The debtor in a subsequent case,
however, may move the court for relief from such order
based upon changed circumstances or for other good
cause shown, after notice and a hearing; or
``(20) 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) of this title 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. 121. DEBTOR RETENTION OF PERSONAL PROPERTY SECURITY.
Title 11, United States Code, is amended--
(1) in section 521--
(A) in paragraph (4) by striking ``and'' at
the end;
(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 an individual case under chapter 7 of this
title, 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, in the case of an
individual debtor, the debtor takes 1 of the following
actions within 45 days after the first meeting of
creditors under section 341(a)--
``(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, the personal property affected 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, and after
notice and a hearing, that such property is of
consequential value or benefit to the estate.''; and
(2) in section 722 by inserting ``in full at the
time of redemption'' before the period at the end.
SEC. 122. RELIEF FROM THE AUTOMATIC STAY WHEN THE DEBTOR DOES NOT
COMPLETE INTENDED SURRENDER OF CONSUMER DEBT
COLLATERAL.
Title 11, United States Code, is amended as follows--
(1) in section 362--
(A) by striking ``(e), and (f)'' in
subsection (c) and inserting in lieu thereof
``(e), (f), and (h)''; and
(B) by redesignating subsection (h), as
amended by section 117, as subsection (i) and
by inserting after subsection (g) the
following:
``(h) In an individual case pursuant to chapter 7, 11, or
13 the stay provided by subsection (a) is terminated with
respect to property of the estate securing in whole or in part
a claim, or subject to an unexpired lease, if the debtor fails
within the applicable time set by section 521(a)(2) of this
title--
``(1) to file timely any statement of intention
required under section 521(a)(2) of this title with
respect to that property or to indicate therein 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; or
``(2) 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;
unless the court determines on the motion of the trustee, and
after notice and a hearing, that such property is of
consequential value or benefit to the estate.''; and
(2) in section 521, as amended by sections 121 and
604--
(A) in paragraph (2) by striking
``consumer'';
(B) in paragraph (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''
the second place it appears and
inserting ``30-day'';
(C) in paragraph (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:
``(c) 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. 123. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER 13.
Section 1325(a)(5)(B)(i) of title 11, United States Code,
is amended to read as follows:
``(i) the plan provides that the holder of
such claim retain the lien securing such claim
until the earlier of payment of the underlying
debt determined under nonbankruptcy law or
discharge under section 1328 of this title, and
that 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''.
SEC. 124. RESTRAINING ABUSIVE PURCHASES ON SECURED CREDIT.
Section 506 of title 11, United States Code, is amended by
adding at the end the following:
``(e) In an individual case under chapter 7, 11, 12, or
13--
``(1) subsection (a) shall not apply to an allowed
claim to the extent attributable in whole or in part to
the purchase price of personal property acquired by the
debtor within 5 years of the filing of the petition,
except for the purpose of applying paragraph (3) of
this subsection;
``(2) if such allowed claim attributable to the
purchase price is secured only by the personal property
so acquired, the value of the personal property and the
amount of the allowed secured claim shall be the sum of
the unpaid principal balance of the purchase price and
accrued and unpaid interest and charges at the contract
rate;
``(3) if such allowed claim attributable to the
purchase price is secured by the personal property so
acquired and other property, the value of the security
may be determined under subsection (a), but the value
of the security and the amount of the allowed secured
claim shall be not less than the unpaid principal
balance of the purchase price of the personal property
acquired and unpaid interest and charges at the
contract rate; and
``(4) in any subsequent case under this title that
is filed by or against the debtor in the 2-year period
beginning on the date the petition is filed in the
original case, the value of the personal property and
the amount of the allowed secured claim shall be deemed
to be not less than the amount provided under
paragraphs (2) and (3).''.
SEC. 125. FAIR VALUATION OF COLLATERAL.
Section 506(a) of title 11, United States Code, is amended
by adding at the end the following:
``In the case of an individual debtor under chapters 7 and 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 thepetition
without deduction for costs of sale or marketing. With respect to
property acquired for personal, family, or household purpose,
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. 126. EXEMPTIONS.
Section 522(b)(2)(A) of title 11, United States Code, is
amended--
(1) by striking ``180'' and inserting ``730''; and
(2) by striking ``, or for a longer portion of such
180-day period than in any other place''.
SEC. 127. LIMITATION.
Section 522 of title 11, United States Code, is amended--
(1) in subsection (b)(2)(A) by inserting ``subject
to subsection (n),'' before ``any property''; and
(2) by adding at the end the following:
``(n) For purposes of subsection (b)(2)(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; or
``(3) a burial plot for the debtor or a dependent
of the debtor;
shall be reduced to the extent such value is attributable to
any portion of any property that the debtor disposed of in the
730-day period ending of 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. 128. ROLLING STOCK EQUIPMENT.
(a) In General.--Section 1168 of title 11, United States
Code, is amended to read as follows:
``Sec. 1168. Rolling stock equipment.
``(a)(1) The right of a secured party with a security
interest in or of a lessor or conditional vendor of equipment
described in paragraph (2) to take possession of such equipment
in compliance with an equipment security agreement, lease, or
conditional sale contract, and to enforce any of its other
rights or remedies under such security agreement, lease, or
conditional sale contract, to sell, lease, or otherwise retain
or dispose of such equipment, is not limited or otherwise
affected by any other provision of this title or by any power
of the court, except that the right to take possession and
enforce those other rights and remedies shall be subject to
section 362 of this title, if--
``(A) before the date that is 60 days after the
date of commencement of a case under this chapter, the
trustee, subject to the court's approval, agrees to
perform all obligations of the debtor under such
security agreement, lease, or conditional sale
contract; and
``(B) any default, other than a default of a kind
described in section 365(b)(2) of this title, under
such security agreement, lease, or conditional sale
contract--
``(i) that occurs before the date of
commencement of the case and is an event of
default therewith is cured before the
expiration of such 60-day period;
``(ii) that occurs or becomes an event of
default after the date of commencement of the
case and before the expiration of such 60-day
period is cured before the later of--
``(I) the date that is 30 days
after the date of the default or event
of the default; or
``(II) the expiration of such 60-
day period; and
``(iii) that occurs on or after the
expiration of such 60-day period is cured in
accordance with the terms of such security
agreement, lease, or conditional sale contract,
if cure is permitted under that agreement,
lease, or conditional sale contract.
``(2) The equipment described in this paragraph--
``(A) is rolling stock equipment or accessories
used on rolling stock equipment, including
superstructures or racks, that is subject to a security
interest granted by, leased to, or conditionally sold
to a debtor; and
``(B) includes all records and documents relating
to such equipment that are required, under the terms of
the security agreement, lease, or conditional sale
contract, that is to be surrendered or returned by the
debtor in connection with the surrender or return of
such equipment.
``(3) Paragraph (1) applies to a secured party, lessor, or
conditional vendor acting in its own behalf or acting as
trustee or otherwise in behalf of another party.
``(b) The trustee and the secured party, lessor, or
conditional vendor whose right to take possession is protected
under subsection (a) may agree, subject to the court's
approval, to extend the 60-day period specified in subsection
(a)(1).
``(c)(1) In any case under this chapter, the trustee shall
immediately surrender and return to a secured party, lessor, or
conditional vendor, described in subsection (a)(1), equipment
described in subsection (a)(2), if at any time after the date
of commencement of the case under this chapter such secured
party, lessor, or conditional vendor is entitled pursuant to
subsection (a)(1) to take possession of such equipment and
makes a written demand for such possession of the trustee.
``(2) At such time as the trustee is required under
paragraph (1) to surrender and return equipment described in
subsection (a)(2), any lease of such equipment, and any
security agreement or conditional sale contract relating to
such equipment, if such security agreement or conditional sale
contract is an executory contract, shall be deemed rejected.
``(d) With respect to equipment first placed in service on
or prior to October 22, 1994, for purposes of this section--
``(1) the term `lease' includes any written
agreement with respect to which the lessor and the
debtor, as lessee, have expressed in the agreement or
in a substantially contemporaneous writing that the
agreement is to be treated as a lease for Federal
income tax purposes; and
``(2) the term `security interest' means a
purchase-money equipment security interest.
``(e) With respect to equipment first placed in service
after October 22, 1994, for purposes of this section, the term
`rolling stock equipment' includes rolling stock equipment that
is substantially rebuilt and accessories used on such
equipment.''.
(b) Aircraft Equipment and Vessels.--Section 1110 of title
11, United States Code, is amended to read as follows:
``Sec. 1110. Aircraft equipment and vessels
``(a)(1) Except as provided in paragraph (2) and subject to
subsection (b), the right of a secured party with a security
interest in equipment described in paragraph (3), or of a
lessor or conditional vendor of such equipment, to take
possession of such equipment in compliance with a security
agreement, lease, or conditional sale contract, and to enforce
any of its other rights or remedies, under such security
agreement, lease, or conditional sale contract, to sell, lease,
or otherwise retain or dispose of such equipment, is not
limited or otherwise affected by any other provision of this
title or by any power of the court.
``(2) The right to take possession and to enforce the other
rights and remedies described in paragraph (1) shall be subject
to section 362 of this title if--
``(A) before the date that is 60 days after the
date of the order for relief under this chapter, the
trustee, subject to the approval of the court, agrees
to perform all obligations of the debtor under such
security agreement, lease, or conditional sale
contract; and
``(B) any default, other than a default of a kind
specified in section 365(b)(2) of this title, under
such security agreement, lease, or conditional sale
contract--
``(i) that occurs before the date of the
order is cured before the expiration of such
60-day period;
``(ii) that occurs after the date of the
order and before the expiration of such 60-day
period is cured before the later of--
``(I) the date that is 30 days
after the date of the default; or
``(II) the expiration of such 60-
day period; and
``(iii) that occurs on or after the
expiration of such 60-day period is cured in
compliance with the terms of such security
agreement, lease, or conditional sale contract,
if a cure is permitted under that agreement,
lease, or contract.
``(3) The equipment described in this paragraph--
``(A) is--
``(i) an aircraft, aircraft engine,
propeller, appliance, or spare part (as defined
in section 40102 of title 49) that is subject
to a security interest granted by, leased to,
or conditionally sold to a debtor that, at the
time such transaction is entered into, holds an
air carrier operating certificate issued
pursuant to chapter 447 of title 49 for
aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo;
or
``(ii) a documented vessel (as defined in
section 30101(1) of title 46) that is subject
to a security interest granted by, leased to,
or conditionally sold to a debtor that is a
water carrier that, at the time such
transaction is entered into, holds a
certificate of public convenience and necessity
or permit issued by the Department of
Transportation; and
``(B) includes all records and documents relating
to such equipment that are required, under the terms of
the security agreement, lease, or conditional sale
contract, to be surrendered or returned by the debtor
in connection with the surrender or return of such
equipment.
``(4) Paragraph (1) applies to a secured party, lessor, or
conditional vendor acting in its own behalf or acting as
trustee or otherwise in behalf of another party.
``(b) The trustee and the secured party, lessor, or
conditional vendor whose right to take possession is protected
under subsection (a) may agree, subject to the approval of the
court, to extend the 60-day period specified in subsection
(a)(1).
``(c)(1) In any case under this chapter, the trustee shall
immediately surrender and return to a secured party, lessor, or
conditional vendor, described in subsection (a)(1), equipment
described in subsection (a)(3), if at any time after the date
of the order for relief under this chapter such secured party,
lessor, or conditional vendor is entitled pursuant to
subsection (a)(1) to take possession of such equipment and
makes a written demand for such possession to the trustee.
``(2) At such time as the trustee is required under
paragraph (1) to surrender and return equipment described in
subsection (a)(3), any lease of such equipment, and any
security agreement or conditional sale contract relating to
such equipment, if such security agreement or conditional sale
contract is an executory contract, shall be deemed rejected.
``(d) With respect to equipment first placed in service on
or before October 22, 1994, for purposes of this section--
``(1) the term `lease' includes any written
agreement with respect to which the lessor and the
debtor, as lessee, have expressed in the agreement or
in a substantially contemporaneous writing that the
agreement is to be treated as a lease for Federal
income tax purposes; and
``(2) the term `security interest' means a
purchase-money equipment security interest.''.
SEC. 129. 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) of this
title;
``(2) of the kind specified in paragraph (2), (4),
(3)(B), (5), (8), or (9) of section 523(a) of this
title;
``(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. 130. BANKRUPTCY JUDGESHIPS.
(a) Short Title.--This section may be cited as the
``Bankruptcy Judgeship Act of 1998''.
(b) Temporary Judgeships.--
(1) Appointments.--The following judgeship
positions shall be filled 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 judgeship for
the eastern district of California.
(B) Four additional bankruptcy judgeships
for the central district of California.
(C) One additional bankruptcy judgeship for
the southern district of Florida.
(D) Two additional bankruptcy judgeships
for the district of Maryland.
(E) One additional bankruptcy judgeship for
the eastern district of Michigan.
(F) One additional bankruptcy judgeship for
the southern district of Mississippi.
(G) One additional bankruptcy judgeship for
the district of New Jersey.
(H) One additional bankruptcy judgeship for
the eastern district of New York.
(I) One additional bankruptcy judgeship for
the northern district of New York.
(J) One additional bankruptcy judgeship for
the southern district of New York.
(K) One additional bankruptcy judgeship for
the eastern district of Pennsylvania.
(L) One additional bankruptcy judgeship for
the middle district of Pennsylvania.
(M) One additional bankruptcy judgeship for
the western district of Tennessee.
(N) One additional bankruptcy judgeship for
the eastern district of Virginia.
(2) Vacancies.--The first vacancy occurring in the
office of a bankruptcy judge in each of the judicial
districts set forth in paragraph (1) that--
(A) results from the death, retirement,
resignation, or removal of a bankruptcy judge;
and
(B) occurs 5 years or more after the
appointment date of a bankruptcy judge
appointed under paragraph (1);
shall not be filled.
(c) Extensions.--
(1) In general.--The temporary bankruptcy judgeship
positions authorized for the northern district of
Alabama, the district of Delaware, the district of
Puerto Rico, the district of South Carolina, and the
eastern district of Tennessee under section 3(a) (1),
(3), (7), (8), and (9) 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--
(A) 8 years or more after November 8, 1993,
with respect to the northern district of
Alabama;
(B) 10 years or more after October 28,
1993, with respect to the district of Delaware;
(C) 8 years or more after August 29, 1994,
with respect to the district of Puerto Rico;
(D) 8 years or more after June 27, 1994,
with respect to the district of South Carolina;
and
(E) 8 years or more after November 23,
1993, with respect to the eastern district of
Tennessee.
(2) Applicability of other provisions.--All other
provisions of section 3 of the Bankruptcy Judgeship Act
of 1992 remain applicable to such temporary judgeship
position.
(d) Technical Amendment.--The first sentence of section
152(a)(1) of title 28, United States Code, is amended to read
as follows: ``Each bankruptcy judge to be appointed for a
judicial district as provided in paragraph (2) shall be
appointed by the United States court of appeals for the circuit
in which such district is located.''.
(e) Travel Expenses of Bankruptcy Judges.--Section 156 of
title 28, United States Code, is amended by adding at the end
the following new subsection:
``(g)(1) In this subsection, the term `travel expenses'--
``(A) means the expenses incurred by a bankruptcy
judge for travel that is not directly related to any
case assigned to such bankruptcy judge; and
``(B) shall not include the travel expenses of a
bankruptcy judge if--
``(i) the payment for the travel expenses
is paid by such bankruptcy judge from the
personal funds of such bankruptcy judge; and
``(ii) such bankruptcy judge does not
receive funds (including reimbursement) from
the United States or any other person or entity
for the payment of such travel expenses.
``(2) Each bankruptcy judge shall annually submit the
information required under paragraph (3) to the chief
bankruptcy judge for the district in which the bankruptcy judge
is assigned.
``(3)(A) Each chief bankruptcy judge shall submit an annual
report to the Director of the Administrative Office of the
United States Courts on the travel expenses of each bankruptcy
judge assigned to the applicable district (including the travel
expenses of the chief bankruptcy judge of such district).
``(B) The annual report under this paragraph shall
include--
``(i) the travel expenses of each bankruptcy judge,
with the name of the bankruptcy judge to whom the
travel expenses apply;
``(ii) a description of the subject matter and
purpose of the travel relating to each travel expense
identified under clause (i), with the name of the
bankruptcy judge to whom the travel applies; and
``(iii) the number of days of each travel described
under clause (ii), with the name of the bankruptcy
judge to whom the travel applies.
``(4)(A) The Director of the Administrative Office of the
United States Courts shall--
``(i) consolidate the reports submitted under
paragraph (3) into a single report; and
``(ii) annually submit such consolidated report to
Congress.
``(B) The consolidated report submitted under this
paragraph shall include the specific information required under
paragraph (3)(B), including the name of each bankruptcy judge
with respect to clauses (i), (ii), and (iii) of paragraph
(3)(B).''.
SEC. 131. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES CODE.
(a) 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.''.
(b) Section 523(a)(9) of title 11, United States Code, is
amended by inserting ``or vessel'' after ``vehicle''.
SEC. 132. AMENDMENT TO SECTION 1325 OF TITLE 11, UNITED STATES CODE.
Section 1325(b)(2) of title 11, United States Code, is
amended by inserting after ``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 and which is reasonably
necessary to be expended)''.
SEC. 133. APPLICATION OF THE CODEBTOR STAY ONLY WHEN THE STAY PROTECTS
THE DEBTOR.
Section 1301(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) Notwithstanding subsection (c) and except as
provided in subparagraph (B), in any case in which the debtor
did not receive the consideration for the claim held by a
creditor, the stay provided by subsection (a) shall apply to
that creditor for a period not to exceed 30 days beginning on
the date of the order for relief, to the extent the creditor
proceeds against--
``(i) the individual that received that
consideration; or
``(ii) property not in the possession of the debtor
that secures that claim.
``(B) Notwithstanding subparagraph (A), the stay provided
by subsection (a) shall apply in any case in which the debtor
is primarily obligated to pay the creditor in whole or in part
with respect to a claim described in subparagraph (A) under a
legally binding separation or property settlement agreement or
divorce or dissolution decree with respect to--
``(i) an individual described in subparagraph
(A)(i); or
``(ii) property described in subparagraph (A)(ii).
``(3) Notwithstanding subsection (c), the stay provided by
subsection (a) shall terminate as of the date of confirmation
of the plan, in any case in which the plan of the debtor
provides that the debtor's interest in personal property
subject to a lease with respect to which the debtor is the
lessee will be surrendered or abandoned or no payments will be
made under the plan on account of the debtor's obligations
under the lease.''.
SEC. 134. 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 pursuant to
section 15A of the Securities Exchange Act of 1934 or a
national securities exchange registered with the
Securities and Exchange Commission pursuant to section
6 of the Securities Exchange Act of 1934;''.
(b) Automatic Stay.--Section 362(b) of title 11, United
States Code, as amended by section 120, is amended--
(1) in paragraph (19) by striking ``or'' at the
end;
(2) in paragraph (20) by striking the period at the
end and a inserting ``; or''; and
(3) by inserting after paragraph (20) the
following:
``(21) under subsection (a), of the commencement or
continuation of an investigation or action by a
securities self regulatory organization to enforce such
organization's regulatory power; of 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 of 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. 135. 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), consumer
debts owed to a single creditor and aggregating more
than $250 for `luxury goods or services' incurred by an
individual debtor on or within 90 days before the order
for relief under this title, or cash advances
aggregating more than $250 that are extensions of
consumer credit under an open end credit plan obtained
by an individual debtor on or within 90 days before the
order for relief under this title, are presumed to be
nondischargeable; and
``(ii) for purposes of this subparagraph--
``(I) 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; and
``(II) the term `an extension of consumer
credit under an open end credit plan' has the
same meaning such term has for purposes of the
Consumer Credit Protection Act;''.
SEC. 136. 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) of this title is automatically terminated.
``(2) In the case of an individual under chapter 7, 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. If within 30 days of such notice 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. The stay under section 362 of
this title and the injunction under section 524(a)(2) of this
title shall not be violated by notification of the debtor and
negotiation of cure under this subsection.
``(3) In a case under chapter 11 of this title in which the
debtor is an individual and in a case under chapter 13 of this
title, 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 of this title and any stay under section 1301
is automatically terminated with respect to the property
subject to the lease.''.
SEC. 137. ADEQUATE PROTECTION OF LESSORS AND PURCHASE MONEY SECURED
CREDITORS.
(a) In General.--Chapter 13 of title 11, United States
Code, is amended by adding after section 1307 the following:
``Sec. 1307A. Adequate protection in chapter 13 cases
``(a)(1)(A) On or before the date that is 30 days after the
filing of a case under this chapter, the debtor shall make cash
payments in an amount determined under paragraph (2)(A), to--
``(i) any lessor of personal property; and
``(ii) any creditor holding a claim secured by
personal property to the extent that the claim is
attributable to the purchase of that property by the
debtor.
``(B) The debtor or the plan shall continue making the
adequate protection payments until the earlier of the date on
which--
``(i) the creditor begins to receive actual
payments under the plan; or
``(ii) the debtor relinquishes possession of the
property referred to in subparagraph (A) to--
``(I) the lessor or creditor; or
``(II) any third party acting under claim
of right, as applicable.
``(2) The payments referred to in paragraph (1)(A) shall be
the contract amount.
``(b)(1) Subject to the limitations under paragraph (2),
the court may, after notice and hearing, change the amount and
timing of the dates of payment of payments made under
subsection (a).
``(2)(A) The payments referred to in paragraph (1) shall be
payable not less frequently than monthly.
``(B) The amount of payments referred to in paragraph (1)
shall not be less than the amount of any weekly, biweekly,
monthly, or other periodic payment schedules as payable under
the contract between the debtor and creditor.
``(c) Notwithstanding section 1326(b), the payments
referred to in subsection (a)(1)(A) shall be continued in
addition to plan payments under a confirmed plan until actual
payments to the creditor begin under that plan, if the
confirmed plan provides--
``(1) for payments to a creditor or lessor
described in subsection (a)(1); and
``(2) for the deferral of payments to such creditor
or lessor under the plan until the payment of amounts
described in section 1326(b).
``(d) Notwithstanding sections 362, 542, and 543, a lessor
or creditor described in subsection (a) may retain possession
of property described in that subsection that was obtained in
accordance with applicable law before the date of filing of the
petition until the first payment under subsection (a)(1)(A) is
received by the lessor or creditor.
``(e) On or before 60 days after the filling 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 each creditor or lessor 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.''.
(b) Clerical Amendment.--The table of sections at the
beginning of chapter 13 of title 11, United States Code, is
amended by inserting after the item relating to section 1307
the following:
``1307A. Adequate protection in chapter 13 cases.''.
SEC. 139. AUTOMATIC STAY.
Section 362(b) of title 11, United States Code, as amended
by sections 120 and 134, is amended--
(1) in paragraph (20), by striking ``or'' at the
end;
(2) in paragraph (21), by striking the period at
the end and inserting a semicolon; and
(3) by inserting after paragraph (21) the
following:
``(22) under subsection (a) of any transfer that is
not avoidable under section 544 of this title and that
is not avoidable under section 549 of this title;
``(23) under subsection (a)(3), of the continuation
of any eviction, unlawful detainer action, or similar
proceeding by a lessor against a debtor involving
residential real property in which the debtor resides
as a tenant under a rental agreement and the debtor has
not paid rent to the lessor pursuant to the terms of
the lease agreement or applicable State law after the
commencement and during the course of the case;
``(24) under subsection (a)(3), of the commencement
or continuation of any eviction, unlawful detainer
action, or similar proceeding by a lessor against a
debtor involving residential real property in which the
debtor resides as a tenant under a rental agreement
that has terminated pursuant to the lease agreement or
applicable State law;
``(25) under subsection (a)(3), of any eviction,
unlawful detainer action, or similar proceeding, if the
debtor has previously filed within the last year and
failed to pay post-petition rent during the course of
that case; or
``(26) under subsection (a)(3), of eviction actions
based on endangerment to property or person or the use
of illegal drugs.''.
SEC. 140. EXTEND 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 adding at the end the
following:
``(f) Notwithstanding subsections (a) and (b), the court
shall not grant a discharge of all debts provided for by the
plan or disallowed under section 502 of this title if the
debtor has received a discharge in any case filed under this
title within 5 years of the order for relief under this
chapter.''.
SEC. 141. 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 that is--
``(A) owed to or recoverable by--
``(i) a spouse, former spouse, or
child of the debtor or that child's
legal guardian; 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, 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 solely for the purpose of
collecting the debt.''.
SEC. 142. 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 redesignated, by striking
``First'' and inserting ``Second'';
(4) in paragraph (3), as redesignated, by striking
``Second'' and inserting ``Third'';
(5) in paragraph (4), as redesignated, by striking
``Third'' and inserting ``Fourth'';
(6) in paragraph (5), as redesignated, by striking
``Fourth'' and inserting ``Fifth'';
(7) in paragraph (6), as redesignated, by striking
``Fifth'' and inserting ``Sixth'';
(8) in paragraph (7), as redesignated, by striking
``Sixth'' and inserting ``Seventh''; and
(9) by inserting before paragraph (2), as
redesignated, the following:
``(1) First, allowed claims for domestic support
obligations to be paid in the following order on the condition
that funds received under this paragraph by a governmental unit
in a case under this title be applied:
``(A) Claims that, as of the date of entry of the
order for relief, are owed directly to a spouse, former
spouse, or child of the debtor, or the parent of such
child, without regard to whether the claim is filed by
the spouse, former spouse, child, or parent, or is
filed by a governmental unit on behalf of that person.
``(B) Claims that, as of the date of entry of the
order for relief, are assigned by a spouse, former
spouse, child of the debtor, or the parent of that
child to a governmental unit or are owed directly to a
governmental unit under applicable nonbankruptcy
law.''.
SEC. 143. 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 become payable after the date on which the
petition is filed.'';
(2) in section 1325(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
become payable after the date on which the petition is
filed.''; and
(3) in section 1328(a), as amended by section 129,
in the matter preceding paragraph (1), by inserting ``,
and with respect to a debtor who is required by a
judicial or administrative order to pay a domestic
support obligation, 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 or after the petition was filed) have been
paid'' after ``completion by the debtor of all payments
under the plan''.
SEC. 144. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT OBLIGATION
PROCEEDINGS.
Section 362(b) of title 11, United States Code, as amended
by sections 120, 134, and 139, is amended--
(1) by striking paragraph (2) and inserting the
following:
``(2) under subsection (a)--
``(A) of the commencement or continuation
of an action or proceeding for--
``(i) the establishment of
paternity as a part of an effort to
collect domestic support obligations;
or
``(ii) the establishment or
modification of an order for domestic
support obligations; or
``(B) the collection of a domestic support
obligation from property that is not property
of the estate;'';
(2) in paragraph (25), by striking ``or'' at the
end;
(3) in paragraph (26), by striking the period at
the end and inserting a semicolon; and
(4) by inserting after paragraph (26) the
following:
``(27) under subsection (a) with respect to the
withholding of income pursuant to an order as specified
in section 466(b) of the Social Security Act (42 U.S.C.
666(b)); or
``(28) under subsection (a) with respect to--
``(A) the withholding, suspension, or
restriction of drivers' licenses, professional
and occupational licenses, and recreational
licenses pursuant to State law, asspecified in
section 466(a)(16) of the Social Security Act (42 U.S.C. 666(a)(16)) or
with respect to the reporting of overdue support owed by an absent
parent to any consumer reporting agency as specified in section
466(a)(7) of the Social Security Act (42 U.S.C. 666(a)(7));
``(B) the interception of tax refunds, as
specified in sections 464 and 466(a)(3) of the
Social Security Act (42 U.S.C. 664 and
666(a)(3)); or
``(C) the enforcement of medical
obligations as specified under title IV of the
Social Security Act (42 U.S.C. 601 et seq.).''.
SEC. 145. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY,
MAINTENANCE, AND SUPPORT.
Section 523 of title 11, United States Code, is amended--
(1) in subsection (a), by striking paragraph (5)
and inserting the following:
``(5) for a domestic support obligation;'';
(2) in subsection (c), by striking ``(6), or (15)''
and inserting ``or (6)''; and
(3) in paragraph (15), by striking ``governmental
unit'' and all through the end of the paragraph and
inserting a semicolon.
SEC. 146. 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);''; and
(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''.
SEC. 147. 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;
or''.
SEC. 148. DEFINITION OF HOUSEHOLD GOODS AND ANTIQUES.
Section 522(f)(1)(B) of title 11, United States Code, is
amended as follows:
(1) by inserting ``(i)'' after ``(B)''; and
(2) by striking ``(i)'' and inserting ``(aa)''; and
(3) by striking ``(ii)'' and inserting ``(bb)'';
(4) by striking ``(iii)'' and inserting ``(cc)'';
(5) by adding at the end thereof the following:
``(ii) `household goods' shall mean for the
purposes of this subparagraph (B) clothing;
furniture; appliances; one radio; one
television; one VCR; linens; china; crockery;
kitchenware; educational materials and
educational equipment primarily for the use of
minor dependent children of the debtor, but
only one personal computer only if used
primarily for the education or entertainment of
such minor children; medical equipment and
supplies; furniture exclusively for the use of
minor children, elderly or disabled dependents
of the debtor; and personal effects (including
wedding rings and the toys and hobby equipment
of minor dependent children) of the debtor and
his or her dependents: Provided, That the
following are not included within the scope of
the term `household goods':
``(aa) works of art (unless by or
of the debtor or his or her
dependents);
``(bb) electronic entertainment
equipment (except one television, one
radio, and one VCR);
``(cc) items acquired as antiques;
``(dd) jewelry (except wedding
rings);
``(ee) 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.''.
SEC. 149. NONDISCHARGEABLE DEBTS.
Section 523(a) of title 11, United States Code, is amended
by inserting after paragraph (14) the following:
``(14A) incurred to pay a debt that is
nondischargeable by reason of section 727, 1141,
1228(a), 1228(b), or 1328(b), or any other provision of
this subsection, if the debtor incurred the debt to pay
such a nondischargeable debt with the intent to
discharge in bankruptcy the newly-created debt, except
that all debts incurred to pay nondischargeable debts,
without regard to intent, are nondischargeable if
incurred within 90 days of the filing of the
petition;''.
TITLE II--DISCOURAGING BANKRUPTCY ABUSE
SEC. 201. REENACTMENT OF CHAPTER 12.
(a) Reenactment.--Chapter 12 of title 11 of the United
States Code, as in effect on September 30, 1998, is hereby
reenacted.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on October 1, 1998.
SEC. 202. 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. 203. 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) by striking ``(2)(A) any
property'' and inserting:
``(3) Property listed in this paragraph is--
``(A) any property'';
(ii) in subparagraph (A), by
striking ``and'' at the end;
(iii) in subparagraph (B), by
striking the period at the end and
inserting ``; and''; and
(iv) 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.'';
(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) in the matter preceding paragraph (2)--
(i) by striking ``(b)'' and
inserting ``(b)(1)'';
(ii) by striking ``paragraph (2)''
both places it appears and inserting
``paragraph (3)'';
(iii) by striking ``paragraph (1)''
each place it appears and inserting
``paragraph (2)''; and
(iv) by striking ``Such property
is--''; and
(D) by adding at the end of the subsection
the following:
``(4) For purposes of paragraph (3)(C), the following shall
apply:
``(A) If the retirement funds are in a retirement
fund that has received a favorable determination
pursuant to 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
pursuant to 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) the retirement fund is in
substantial compliance with the applicable
requirements of the Internal Revenue Code of
1986.
``(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, pursuant to section
401(a)(31) of the Internal Revenue Code of 1986, or
otherwise, shall not cease to qualify for exemption
under paragraph (3)(C) 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) 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, as amended by sections 120, 134, 139, and 144 is
amended--
(1) in paragraph (27), by striking ``or'' at the
end;
(2) in paragraph (28), by striking the period and
inserting ``; or'';
(3) by inserting after paragraph (28) the
following:
``(29) under subsection (a), of withholding of
income from a debtor's wages and collection of amounts
withheld, pursuant to 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(a) 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
title 5, that satisfies the requirements of
section 8433(g) of such title.''; and
(4) by adding at the end of the flush material
following paragraph (19) the following: ``Paragraph
(19) does not apply to any amount owed to a plan
referred to in that paragraph that is incurred under a
loan made during the 1-year period preceding the filing
of a petition. Nothing in paragraph (19) 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.''.
(c) Exceptions To Discharge.--Section 523(a) of title 11,
United States Code, is amended--
(1) by striking ``or'' at the end of paragraph
(17);
(2) by striking the period at the end of paragraph
(18) and inserting ``; or''; and
(3) 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, pursuant to--
``(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 title 5, that
satisfies the requirements of section 8433(g)
of such title.
Paragraph (19) does not apply to any amount owed to a plan
referred to in that paragraph that is incurred under a loan
made during the 1-year period preceding the filing of a
petition. Nothing in paragraph (19) 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) of this title.''.
SEC. 204. PROTECTION OF REFINANCE OF SECURITY INTEREST.
Subparagraphs (A), (B), and (C) of section 547(e)(2) of
title 11, United States Code, are amended by striking ``10''
each place it appears and inserting ``30''.
SEC. 205. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.
Section 365(d)(4) of title 11, United States Code, is
amended to read as follows:
``(4)(A) Subject to subparagraph (B), in any case under any
chapter of this title, 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 180 days after the date of
the order for relief; or
``(ii) the date of the entry of an order confirming
a plan.
``(B) The court may extend the period determined under
subparagraph (A) only upon a motion of the lessor.''.
SEC. 206. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES.
Section 1102(a)(2) of title 11, United States Code, is
amended by inserting before the first sentence the following:
``On its own motion or on request of a party in interest, and
after notice and hearing, the court may order a change in 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.''.
SEC. 207. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES CODE.
Section 546 of title 11, United States Code, is amended by
inserting at the end thereof:
``(I) Notwithstanding section 545 (2) and (3) of
this title, the trustee may not avoid a warehouseman's
lien for storage, transportation or other costs
incidental to the storage and handling of goods, as
provided by section 7-209 of the Uniform Commercial
Code.''.
SEC. 208. LIMITATION.
Section 546(c)(1)(B) of title 11, United States Code, is
amended by striking ``20'' and inserting ``45''.
SEC. 209. AMENDMENT TO SECTION 330(A) OF TITLE 11, UNITED STATES CODE.
Section 330(a) of title 11, United States Code, is
amended--
(1) in subsection (3)(A) after the word
``awarded'', by inserting ``to an examiner, chapter 11
trustee, or professional person''; and
(2) by adding at the end of subsection (3)(A) the
following:
``(3)(B) In determining the amount of reasonable
compensation to be awarded a trustee, the court shall
treat such compensation as a commission based on the
results achieved.''.
SEC. 210. 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. 211. PREFERENCES.
Section 547(c) of title 11, United States Code, is
amended--
(1) by amending paragraph (2) to read as follows:
``(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 (7) by striking ``or'' at the end;
(3) in paragraph (8) by striking the period at the
end and inserting ``; or''; and
(4) 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 $5000.''.
SEC. 212. 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. 213. 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 (1), on''; and
(2) by adding at the end the following:
``(2)(A) Such 120-day period may not be extended beyond a
date that is 18 months after the date of the order for relief
under this chapter.
``(B) Such 180-day period may not be extended beyond a date
that is 20 months after the date of the order for relief under
this chapter.''.
SEC. 214. 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, and until such time as the debtor or trustee
has surrendered any legal, equitable or possessory
interest in such unit, such corporation, or such
lot,''.
SEC. 215. CLAIMS RELATING TO INSURANCE DEPOSITS IN CASES ANCILLARY TO
FOREIGN PROCEEDINGS.
Section 304 of title 11, United States Code, is amended to
read as follows:
``Sec. 304. Cases ancillary to foreign proceedings
``(a) For purposes of this section--
``(1) the term `domestic insurance company' means a
domestic insurance company, as such term is used in
section 109(b)(2);
``(2) the term `foreign insurance company' means a
foreign insurance company, as such term is used in
section 109(b)(3);
``(3) the term `United States claimant' means a
beneficiary of any deposit referred to in subsection
(b) or any multibeneficiary trust referred to in
subsection (b);
``(4) the term `United States creditor' means, with
respect to a foreign insurance company--
``(i) a United States claimant; or
``(ii) any business entity that operates in
the United States and that is a creditor; and
``(5) the term `United States policyholder' means a
holder of an insurance policy issued in the United
States.
``(b) The court may not grant relief under chapter 15 of
this title 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.''.
SEC. 215. 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--
``(i) 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
(excluding executory contracts that transfer a
right or interest under a filed or issued
patent, copyright, trademark, trade dress, or
trade secret), if it is impossible for the
trustee to cure such default by performing
nonmonetary acts at and after the time of
assumption; or
``(ii) 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 executory contract, if it is
impossible for the trustee to cure such default
by performing nonmonetary acts at and after the
time of assumption and if the court determines,
based on the equities of the case, that this
subparagraph should not apply with respect to
such default;''; and
(B) by amending paragraph (2)(D) to read as
follows:
``(D) the satisfaction of any penalty rate or
penalty provision relating to a default arising from a
failure to perform nonmonetary obligations under an
executory contract (excluding executory contracts that
transfer a right or interest under a filed or issued
patent, copyright, trademark, trade dress, or trade
secret) or under an unexpired lease of real or personal
property.'';
(2) in subsection (c)--
(A) in paragraph (2) by adding ``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)(1)(A) 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, 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''.
TITLE III--GENERAL BUSINESS BANKRUPTCY PROVISIONS
SEC. 301. 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. 302. MISCELLANEOUS IMPROVEMENTS.
(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 90-day period preceding the date of
filing of the petition of that individual, received credit
counseling, including, at a minimum, participation in an
individual or group briefing that outlined the opportunities
for available credit counseling and assisted that individual in
performing an initial budget analysis, through a credit
counseling program (offered through an approved credit
counseling service described in section 111(a)).
``(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 credit counseling
services for that district are not reasonably able to provide
adequate services to the additional individuals who would
otherwise seek credit counselingfrom those programs 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
one year after the date of that determination, and not less
frequently than every year thereafter.
``(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 credit counseling
service, 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.''.
(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.''.
(c) Chapter 13 Discharge.--Section 1328 of title 11, United
States Code, is amended by adding at the end the following:
``(f) 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.
``(g) Subsection (f) 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.
``(h) Each United States trustee or bankruptcy
administrator that makes a determination described in
subsection (g) 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, as amended by sections 121, 604, and 122, is
amended by adding at the end the following:
``(d) In addition to the requirements under subsection (a),
an individual debtor shall file with the court--
``(1) a certificate from the credit counseling
service that provided the debtor services under section
109(h); and
``(2) a copy of the debt repayment plan, if any,
developed under section 109(h) through the credit
counseling service referred to in paragraph (1).''.
(e) Exceptions to Discharge.--Section 523(d) of title 11,
United States Code, as amended by section 202 of this Act, is
amended by striking paragraph (3)(A)(i) and inserting the
following:
``(i) within the applicable period of time
prescribed under section 109(h), the debtor received
credit counseling through a credit counseling program
in accordance with section 109(h); and''.
(f) 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 services; financial management
instructional courses
``(a) The clerk of each district shall maintain a list of
credit counseling services that provide 1 or more programs
described in section 109(h) and a list of instructional courses
concerning personal financial management that have been
approved by--
``(1) the United States trustee; or
``(2) the bankruptcy administrator for the
district.''.
(2) Clerical amendment.--The table of sections at
the beginning of chapter 1 of title 11, United States
Code, is amended by adding at the end the following:
``111. Credit counseling services; financial management instructional
courses.''.
(g) Definitions.--Section 101 of title 11, United States
Code, as amended by section 317 of this Act, 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;''; and
(2) by inserting after paragraph (27A), as added by
section 318 of this Act, the following:
``(27B) `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;''.
(h) Limitation.--Section 362 of title 11, United States
Code, is amended by adding at the end the following:
``(j) If 1 case commenced under chapter 7, 11, or 13 of
this title is dismissed due to the creation of a debt repayment
plan, then for purposes of section 362(c)(3) of this title the
subsequent case commenced under any such chapter shall not be
presumed to be filed not in good faith.''.
SEC. 303. EXTENSIONS.
Section 302(d)(3) of the Bankruptcy, Judges, United States
Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C.
581 note) is amended--
(1) in subparagraph (A), in the matter following
clause (ii), by striking ``or October 1, 2002,
whichever occurs first''; and
(2) in subparagraph (F)--
(A) in clause (i)--
(i) in subclause (II), by striking
``or October 1, 2002, whichever occurs
first''; and
(ii) in the matter following
subclause (II), by striking ``October
1, 2003, or''; and
(B) in clause (ii), in the matter following
subclause (II)--
(i) by striking ``before October 1,
2003, or''; and
(ii) by striking ``, whichever
occurs first''.
TITLE IV--SMALL BUSINESS BANKRUPTCY PROVISIONS
SEC. 401. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.
Section 1125(f) of title 11, United States Code, is amended
to read as follows:
``(f) Notwithstanding subsection (b), in a small business
case--
``(1) 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;
``(2) the court may determine that the plan itself
provides adequate information and that a separate
disclosure statement is not necessary;
``(3) the court may approve a disclosure statement
submitted on standard forms approved by the court or
adopted pursuant to section 2075 of title 28; and
``(4)(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 less 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. 402. 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' means--
``(A) a person (including affiliates of
such person that are also debtors under this
title) 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 $4,000,000
(excluding debts owed to 1 or more affiliates
or insiders) a case in which the United States
trustee has appointed under section 1102(a)(1)
of this title a committee of unsecured
creditors that `the court has determined' is
sufficiently active and representative to
provide effective oversight of the debtor,
except that if a group of affiliated debtors
has aggregate noncontingent liquidated secured
and unsecured debts greater than $4,000,000
(excluding debt owed to 1 or more affiliates or
insiders), then no member of such group is a
small business debtor;''.
(b) Effect of Discharge.--Section 524 of title 11, United
States Code, as amended by section 402, is amended by adding at
the end the following:
``(k)(1) An individual who is injured by the willful
failure of a creditor to substantially comply with the
requirements specified in subsections (c) and (d), or by any
willful violation of the injunction operating under subsection
(a)(2), shall be entitled to recover--
``(A) the greater of--
``(i) the amount of actual damages; or
``(ii) $1,000; and
``(B) costs and attorneys' fees.
``(2) An action to recover for a violation specified in
paragraph (1) may not be brought as a class action.''.
(c) Conforming Amendment.--Section 1102(a)(3) of title 11,
United States Code, is amended by inserting ``debtor'' after
``small business''.
SEC. 403. STANDARD FORM DISCLOSURE STATEMENT AND PLAN.
The Advisory Committee on Bankruptcy Rules of the Judicial
Conference of the United States shall, within a reasonable
period of time after the date of the enactment of this Act,
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. 404. UNIFORM NATIONAL REPORTING REQUIREMENTS.
(a) Reporting Required.--(1) Title 11 of the United States
Code is amended by inserting after section 307 the following:
``Sec. 308. Debtor reporting requirements
``A small business debtor shall file periodic financial and
other reports containing information including--
``(1) the debtor's profitability, that is,
approximately how much money the debtor has been
earning or losing during current and recent fiscal
periods;
``(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) whether the debtor is--
``(A) in compliance in all material
respects with postpetition requirements imposed
by this title and the Federal Rules of
Bankruptcy Procedure; and
``(B) timely filing tax returns and paying
taxes and other administrative claims when due,
and, if not, what the failures are and how, at
what cost, and when the debtor intends to
remedy such failures; and
``(5) such other matters as are in the best
interests of the debtor and creditors, and in the
public interest in fair and efficient procedures under
chapter 11 of this title.''.
(2) The table of sections of 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 pursuant to section 2075, 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. 405. 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 claims when
due.
(b) Purpose.--The rules and forms proposed under subsection
(a) shall be designed to achieve a practical balance between--
(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
its financial condition and plan its future.
SEC. 406. DUTIES IN SMALL BUSINESS CASES.
(a) Duties in Chapter 11 Cases.--Title 11 of the United
States Code is amended by inserting after section 1114 the
following:
``Sec. 1115. 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 within 3 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 of this title
unless the court waives this requirement after notice
and 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) of this title,
maintain insurance customary and appropriate to the
industry;
``(6)(A) timely file tax returns;
``(B) subject to section 363(c)(2) of this title,
timely pay all administrative expense tax claims,
except those being contested by appropriate proceedings
being diligently prosecuted; and
``(C) subject to section 363(c)(2) of this title,
establish 1 or more separate deposit accounts not later
than 10 business days after the date of order for
relief (or as soon thereafter as possible if all banks
contacted decline the business) and deposit therein,
not later than 1 business day after receipt thereof,
all taxes payable for periods beginning after the date
the case is commenced that are collected or withheld by
the debtor for governmental units unless the court
waives this requirement after notice and hearing, upon
a finding of extraordinary and compelling
circumstances; and
``(7) allow the United States trustee, or its
designated representative, 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) Technical Amendment.--The table of sections of chapter
11, United States Code, is amended by inserting after the item
relating to section 1114 the following:
``1115. Duties of trustee or debtor in possession in small business
cases.''.
SEC. 407. PLAN FILING AND CONFIRMATION DEADLINES.
Section 1121(e) of title 11, United States Code, is amended
to read as follows:
``(e) In a small business case--
``(1) only the debtor may file a plan until after
90 days after the date of the order for relief, unless
shortened on request of a party in interest made during
the 90-day period, or unless extended as provided by
this subsection, after notice and hearing the court,
for cause, orders otherwise;
``(2) the plan, and any necessary disclosure
statement, shall be filed not later than 90 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) of this
title, 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 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. 408. 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 plan shall be confirmed
not later than 150 days after the date of the order for relief
unless such 150-day period is extended as provided in section
1121(e)(3) of this title.''.
SEC. 409. PROHIBITION AGAINST EXTENSION OF TIME.
Section 105(d) of title 11, United States Code, is
amended--
(1) in paragraph (2)(B)(vi) by striking the period
at the end and inserting ``; and''; and
(2) by adding at the end the following:
``(3) in a small business case, not extend the time
periods specified in sections 1121(e) and 1129(e) of
this title except as provided in section 1121(e)(3) of
this title.''.
SEC. 410. DUTIES OF THE UNITED STATES TRUSTEE.
(a) 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;'';
(2) in paragraph (6) by striking ``and'' at the
end;
(3) in paragraph (7) by striking the period at the
end and inserting ``; and''; and
(4) by inserting after paragraph (7) the following:
``(8) 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
begin to investigate the debtor's viability,
inquire about the debtor's business plan,
explain the debtor's obligations to file
monthly operating reports and other required
reports, attempt to develop an agreed
scheduling order, and inform the debtor of
other obligations;
``(B) when 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
``(9) in cases 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 to the court for relief.''.
SEC. 411. SCHEDULING CONFERENCES.
Section 105(d) of title 11, United States Code, is
amended--
(1) in the matter preceding paragraph (1) by
striking ``, may'';
(2) by amending paragraph (1) to read as follows:
``(1) shall hold such status conferences as are
necessary to further the expeditious and economical
resolution of the case; and''; and
(3) in paragraph (2) by striking ``unless
inconsistent with another provision of this title or
with applicable Federal Rules of Bankruptcy
Procedure,'' and inserting ``may''.
SEC. 412. SERIAL FILER PROVISIONS.
Section 362 of title 11, United States Code, is amended--
(1) in subsection (i) as so redesignated by section
124--
(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, then recovery under paragraph (1) against such
entity shall be limited to actual damages.''; and
(2) by inserting after subsection (i), as
redesignated by section 124, the following:
``(j) The filing of a petition under chapter 11 of this
title operates as a stay of the acts described in subsection
(a) only in an involuntary case involving no collusion by the
debtor with creditors and in which the debtor--
``(1) is a debtor in a small business case pending
at the time the petition is filed;
``(2) was a debtor in a small business case which
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;
``(3) 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
``(4) is an entity that has succeeded to
substantially all of the assets or business of a small
business debtor described in subparagraph (A), (B), or
(C); unless the debtor proves, by a preponderance of
the evidence, that the filing of such petition resulted
from circumstances beyond the control of the debtor not
foreseeable at the time the case then pending was
filed; and that it is more likely than not that the
court will confirm a feasible plan, but not a
liquidating plan, within a reasonable time.''.
SEC. 413. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND APPOINTMENT
OF TRUSTEE.
(a) Expanded Grounds for Dismissal or Conversion.--Section
1112(b) of title 11, United States Code, is amended to read as
follows:
``(b)(1) Except as provided in paragraph (2), in subsection
(c), and in section 1104(a)(3) of this title, on request of a
party in interest, and after notice and a hearing, the court
shall convert a case under this chapter to a case under chapter
7 of this title or dismiss a case under this chapter, whichever
is in the best interest of creditors and the estate, if the
movant establishes cause.
``(2) The relief provided in paragraph (1) shall not be
granted if the debtor or another party in interest objects and
establishes, by a preponderance of the evidence that--
``(A) it is more likely than not that a plan will
be confirmed within a time as fixed by this title or by
order of the court entered pursuant to section
1121(e)(3), or within a reasonable time if no time has
been fixed; and
``(B) if the reason is an act or omission of the
debtor that--
``(i) there exists a reasonable
justification for the act or omission; and
``(ii) the act or omission will be cured
within a reasonable time fixed by the court not
to exceed 30 days after the court decides the
motion, unless the movant expressly consents to
a continuance for a specific period of time, or
compelling circumstances beyond the control of
the debtor justify an extension.
``(3) For purposes of this subsection, cause includes--
``(A) substantial or continuing loss to or
diminution of the estate;
``(B) gross mismanagement of the estate;
``(C) failure to maintain appropriate insurance;
``(D) unauthorized use of cash collateral harmful
to 1 or more creditors;
``(E) failure to comply with an order of the court;
``(F) failure timely to satisfy 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) of this title or an
examination ordered under rule 2004 of the Federal
Rules of Bankruptcy Procedure;
``(H) failure timely to provide information or
attend meetings reasonably requested by the United
States trustee;
``(I) failure timely to pay taxes due 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 of this title;
``(M) inability to effectuate substantial
consummation of a confirmed plan;
``(N) material default by the debtor with respect
to a confirmed plan; and
``(O) termination of a plan by reason of the
occurrence of a condition specified in the plan.
``(4) The court shall commence the hearing on any motion
under this subsection not later than 30 days after filing of
the motion, and shall decide the motion within 15 days after
commencement of the 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 of this title, but the court
determines that the appointment of a trustee is in the
best interests of creditors and the estate.''.
SEC. 414. STUDY OF OPERATION OF TITLE 11 OF THE UNITED STATES CODE WITH
RESPECT TO SMALL BUSINESSES.
Not later than 2 years after the date of the enactment of
this Act, the Administrator of the Small Business
Administration, in consultation with the Attorney General, the
Director of the Administrative Office of 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 of the 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. 415. 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 amending subparagraph (B) to read as
follows:
``(B) the debtor has commenced monthly
payments (which payments may, in the debtor's
sole discretion, notwithstanding section
363(c)(2) of this title, 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), which payments 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''.
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 amending the last sentence to read as
follows:
``(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 of title 11, United States Code, is amended--
(1) by inserting ``555, 556,'' after ``553,''; and
(2) by inserting ``559, 560,'' after ``557,''.
TITLE VI--STREAMLINING THE BANKRUPTCY SYSTEM
SEC. 601. CREDITOR REPRESENTATION AT FIRST MEETING OF CREDITORS.
Section 341(c) of title 11, United States Code, is amended
by inserting after the first sentence 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 one 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. 602. AUDIT PROCEDURES.
(a) Amendments.--Section 586 of title 28, United States
Code, is amended--
(1) in subsection (a) by amending striking
paragraph (6) to read as follows:
``(6) make such reports as the Attorney General
directs, including the results of audits performed
under subsection (f); and''; and
(2) by adding at the end the following:
``(f)(1)(A) The Attorney General 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,
and, if applicable, section 111 of title 11, in individual
cases filed under chapter 7 or 13 of such title. Such audits
shall be in accordance with generally accepted auditing
standards and performed by independent certified public
accountants or independent licensed public accountants.
``(B) Those procedures shall--
``(i) establish a method of selecting appropriate
qualified persons to contract to perform those audits;
``(ii) 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;
``(iii) 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; and
``(iv) 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.
``(2) The United States trustee for each district is
authorized to contract with auditors to perform audits in cases
designated by the United States trustee according to the
procedures established under paragraph (1).
``(3)(A) The report of each audit conducted under this
subsection shall be filed with the court and transmitted to the
United States trustee. Each report shall clearly and
conspicuously specify any material misstatement ofincome or
expenditures or of assets identified by the person performing the
audit. In any case where a material misstatement of income or
expenditures or of assets has been reported, the clerk of the
bankruptcy court 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, United States Code; 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, United States Code.''.
(b) Amendments to Section 521 of Title 11, U.S.C.--Section
521(a) of title 11, United States Code, as amended by section
604, is amended in paragraphs (3) and (4) by adding ``or an
auditor appointed pursuant to section 586 of title 28, United
States Code'' after ``serving in the case''.
(c) Amendments to Section 727 of Title 11, U.S.C.--Section
727(d) of title 11, United States Code, is amended--
(1) by deleting ``or'' at the end of paragraph (2);
(2) by substituting ``; or'' for the period at the
end of paragraph (3); and
(3) by adding the following at the end the
following:
``(4) the debtor has failed to explain
satisfactorily--
``(A) a material misstatement in an audit
performed pursuant to section 586(f) of title
28, United States Code; 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
conducted pursuant to section 586(f) of title
28, United States Code.''.
(d) Effective Date.--The amendments made by this section
shall take effect 18 months after the date of enactment of this
Act.
SEC. 603. GIVING CREDITORS FAIR NOTICE IN CHAPTER 7 AND 13 CASES.
(a) Notice.--Section 342 of title 11, United States Code,
is amended--
(1) in subsection (c)--
(A) by striking ``, but the failure of such
notice to contain such information shall not
invalidate the legal effect of such notice'';
and
(B) by adding the following at the end:
``If the credit agreement between the debtor and the creditor
or the last communication before the filing of the petition in
a voluntary case from the creditor to a debtor who is an
individual states an account number of the debtor which is the
current account number of the debtor with respect to any debt
held by the creditor against the debtor, the debtor shall
include such account number in any notice to the creditor
required to be given under this title. If the creditor has
specified to the debtor an address at which the creditor wishes
to receive correspondence regarding the debtor's account, any
notice to the creditor required to be given by the debtor under
this title shall be given at such address. For the purposes of
this section, `notice' shall include, but shall not be limited
to, any correspondence from the debtor to the creditor after
the commencement of the case, any statement of the debtor's
intention under section 521(a)(2) of this title, notice of the
commencement of any proceeding in the case to which the
creditor is a party, and any notice of the hearing under
section 1324 of this title.'';
(2) by adding at the end the following:
``(d) At any time, a creditor in a case of an individual
debtor under chapter 7 or 13 may file with the court and serve
on the debtor a notice of the address to be used to notify the
creditor in that case. Five days after receipt of such notice,
if the court or the debtor is required to give the creditor
notice, such notice shall be given at that address.
``(e) An entity may file with the court a notice stating
its address for notice in cases under chapters 7 and 13. After
30 days following the filing of such notice, any notice in any
case filed under chapter 7 or 13 given by the court shall be to
that address unless specific notice is given under subsection
(d) with respect to a particular case.
``(f) Notice given to a creditor other than as provided in
this section shall not be effective notice until it has been
brought to the attention of the creditor. If the creditor has
designated a person or department to be responsible for
receiving notices concerning bankruptcy cases and has
established reasonable procedures so that bankruptcy notices
received by the creditor will be delivered to such department
or person, notice will not be brought to the attention of the
creditor until received by such person or department. No
sanction under section 362(h) of this title or any other
sanction which a court may impose on account of violations of
the stay under section 362(a) of this title or failure to
comply with section 542 or 543 of this title may be imposed on
any action of the creditor unless the action takes place after
the creditor has received notice of the commencement of the
case effective under this section.''.
(b) Debtor's Duties.--Section 521 of title 11, United
States Code, as amended by sections 121, 604, 122, 301, and
302, is amended--
(1) by inserting ``(a)'' before ``The debtor
shall--'';
(2) by striking paragraph (1) and inserting the
following:
``(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 applicable, a
certificate--
``(I) of an attorney whose
name is on the petition as the
attorney forthe debtor or any
bankruptcy petition preparer signing the petition pursuant to section
110(b)(1) of this title indicating that such attorney or bankruptcy
petition preparer delivered to the debtor any notice required by
section 342(b) of this title; or
``(II) if no attorney for
the debtor is indicated and no
bankruptcy petition preparer
signed the petition, of the
debtor that such notice was
obtained and read by the
debtor;
``(iv) copies of any Federal tax
returns, including any schedules or
attachments, filed by the debtor for
the 3-year period preceding the order
for relief;
``(v) copies of all payment advices
or other evidence of payment, if any,
received by the debtor from any
employer of the debtor in the period 60
days prior to the filing of the
petition;
``(vi) a statement of the amount of
projected monthly net income, itemized
to show how calculated; and
``(vii) a statement disclosing any
reasonably anticipated increase in
income or expenditures over the 12-
month period following the date of
filing;''; and
(3) by adding at the end the following:
``(e)(1) At any time, a creditor, in the case of an
individual under chapter 7 or 13, may file with the court
notice that the creditor requests the petition, schedules, and
a statement of affairs filed by the debtor in the case and the
court shall make those documents available to the creditor who
requests those documents.
``(2) At any time, a creditor in a case under chapter 13
may file with the court notice that the creditor requests the
plan filed by the debtor in the case, and the court shall make
such plan available to the creditor who requests such plan at a
reasonable cost and not later than 5 days after such request.
``(f) An individual debtor in a case under chapter 7 or 13
shall file with the court--
``(1) at the time filed with the taxing authority,
all tax returns, including any schedules or
attachments, with respect to the period from the
commencement of the case until such time as the case is
closed;
``(2) at the time filed with the taxing authority,
all tax returns, including any schedules or
attachments, that were not filed with the taxing
authority when the schedules under subsection (a)(1)
were filed with respect to the period that is 3 years
before the order for relief;
``(3) any amendments to any of the tax returns,
including schedules or attachments, described in
paragraph (1) or (2); and
``(4) in a case under chapter 13, a statement
subject to the penalties of perjury by the debtor of
the debtor's income and expenditures in the preceding
tax year and monthly income, that shows how the amounts
are calculated--
``(A) beginning on the date that is the
later of 90 days after the close of the
debtor's tax year or 1 year after the order for
relief, unless a plan has been confirmed; and
``(B) thereafter, on or before the date
that is 45 days before each anniversary of the
confirmation of the plan until the case is
closed.
``(d)(1) A statement referred to in subsection (c)(4) shall
disclose--
``(A) the amount and sources of income of the
debtor;
``(B) the identity of any persons responsible with
the debtor for the support of any dependents of the
debtor; and
``(C) the identity of any persons 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 paragraph (1) shall be available
to the United States trustee, any bankruptcy administrator, any
trustee, and any party in interest for inspection and copying,
subject to the requirements of subsection (e).
``(g)(1) Not later than 30 days after the date of enactment
of the Consumer Bankruptcy Reform Act of 1998, 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.
``(3) Not later than 1 year after the date of enactment of
the Consumer Bankruptcy Reform Act of 1998, the Director of the
Administrative Office of the United States Courts shall
prepare, and submit to Congress a report that--
``(A) assesses the effectiveness of the procedures
under paragraph (1); and
``(B) if appropriate, includes proposed
legislation--
``(i) to further protect the
confidentiality of tax information; and
``(ii) to provide penalties for the
improper use by any person of the tax
information required to be provided under this
section.
``(h) If requested by the United States trustee or a
trustee serving in the case, the debtor provide 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 and such other personal identifying information
relating to the debtor that establishes the identity of the
debtor.''.
SEC. 604. DISMISSAL FOR FAILURE TO TIMELY FILE SCHEDULES OR PROVIDE
REQUIRED INFORMATION.
Section 521 of title 11, United States Code, is amended--
(1) by inserting ``(a)'' before ``The debtor''; and
(2) by adding at the end the following:
``(b)(1) Notwithstanding section 707(a) of this title, and
subject to paragraph (2), 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) With respect to a case described in paragraph (1),
any party in interest may request the court to enter an order
dismissing the case. The court shall, if so requested, enter an
order of dismissal not later than 5 days after such request.
``(3) 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.''.
SEC. 605. ADEQUATE TIME TO PREPARE FOR HEARING ON CONFIRMATION OF THE
PLAN.
(a) Hearing.--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
meeting of creditors under section 341(a) of this title.''.
(b) Filing of Plan.--Section 1321 of title 11, United
States Code, is amended to read as follows:
``Sec. 1321. Filing of plan
``The debtor shall file a plan not later than 90 days after
the order for relief under this chapter, except that the court
may extend such period if the need for an extension is
attributable to circumstances for which the debtor should not
justly be held accountable.''.
SEC. 606. 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) If the current monthly total income of the debtor and
in a joint case, the debtor and the debtor's spouse combined,
is not less than the highest national median family income
reported for a family of equal or lesser size or, in the case
of a household of 1 person, not less than the national median
household income for 1 earner, the plan may not provide for
payments over a period that is longer than 5 years. If the
current monthly total income of the debtor or in a joint case,
the debtor and the debtor's spouse combined, is less than the
highest national median family income reported for a family of
equal or lesser size, or in the case of a household of 1 person
less than the national median household income for 1 earner,
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.''; and
(2) in section 1329--
(A) by striking in subsection (c) ``three
years'' and inserting ``the applicable
commitment period under section
1325(b)(1)(B)(ii)''; and
(B) by inserting at the end of subsection
(c) the following:
``The duration period shall be 5 years if the current monthly
total income of the debtor, and in a joint case, the debtor and
the debtor's spouse combined, is not less than the highest
national median family income reported for a family of equal or
lesser size or, in the case of a household of 1 person, not
less than the national median household income for 1 earner, as
of the date of the modification and shall be 3 years if the
current monthly total income is less than the highest national
median family income reported for a family of equal or lesser
size or, in the case of a household of 1 person, less than the
national median household income for 1 earner as of the date of
the modification.''.
SEC. 607. SENSE OF THE CONGRESS REGARDING EXPANSION OF RULE 9011 OF THE
FEDERAL RULES OF BANKRUPTCY PROCEDURE.
It is the sense of the 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 an attorney 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 is warranted by existing law or a good-
faith argument for the extension, modification, or reversal of
existing law.
SEC. 608. ELIMINATION OF CERTAIN FEES PAYABLE IN CHAPTER 11 BANKRUPTCY
CASES.
(a) Amendments.--Section 1930(a)(6) of title 28, United
States Code, is amended--
(1) in the 1st sentence by striking ``until the
case is converted or dismissed, whichever occurs
first''; and
(2) in the 2d sentence--
(A) by striking ``The'' and inserting
``Until the plan is confirmed or the case is
converted (whichever occurs first) the''; and
(B) by striking ``less than $300,000;'' and
inserting ``less than $300,000. Until the case
is converted, dismissed, or closed (whichever
occurs first and without regard to confirmation
of the plan) the fee shall be''.
(b) Delayed Effective Date.--The amendments made by
subsection (a) shall take effect on October 1, 1999.
SEC. 609. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO DEPENDENT
STUDENTS.
Not later than 1 year after the date of the enactment of
this Act, the Comptroller General of the United States shall--
(1) conduct a study regarding the impact that the
extension of credit to individuals who are--
(A) claimed as dependents for purposes of
the Internal Revenue Code of 1986; and
(B) enrolled in post-secondary educational
institutions,
has on the rate of cases filed under title 11 of the
United States Code; and
(2) submit to the Speaker of the House of
Representatives and the President pro tempore of the
Senate a report summarizing such study.
SEC. 610. 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 the case of an
individual filing under chapter 7, 11, or 13, 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
by for good cause as described in findings made
by the court.''.
SEC. 611. 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 chapter 11 or 12
but not in a case converted to 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 chapter 13 proceeding;
and
``(ii) unless a prebankruptcy default has
been fully cured pursuant to 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.''.
TITLE VII--BANKRUPTCY DATA
SEC. 701. IMPROVED BANKRUPTCY STATISTICS.
(a) Amendment.--Chapter 6 of part I of title 28, United
States Code, is amended by adding at the end the following:
``Sec. 159. Bankruptcy statistics
``(a) The clerk of each district shall compile statistics
regarding individual debtors with primarily consumer debts
seeking relief under chapters 7, 11, and 13 of title 11. Those
statistics shall be in a form prescribed by the Director of the
Administrative Office of the United States Courts (referred to
in this section as the `Office').
``(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 October 31, 1998, 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 total monthly income,
projected monthly net income, and average
income and average expenses of those debtors as
reported on the schedules and statements that
each such debtor files under sections 111, 521,
and 1322 of title 11;
``(C) the aggregate amount of debt
discharged in 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;
``(E) for 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 in
which the debtor was not represented by
an attorney; and
``(III) of those cases, 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
determining the value of property
securing a claim issued;
``(ii) the number of cases
dismissed for failure to make payments
under the plan; and
``(iii) the number of cases in
which the debtor filed another case
within the 6 years previous to 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 counsel and damages awarded under such
Rule.''.
(b) Clerical Amendment.--The table of sections at the
beginning of 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. 702. UNIFORM RULES FOR THE COLLECTION OF BANKRUPTCY DATA.
(a) Amendment.--Title 28 of the United States Code is
amended by inserting after section 589a 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, as the case may be, in cases under chapter 11
of title 11.
``(b) Reports.--All reports 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 1 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; and
``(2) economy, simplicity, and lack of undue burden
on persons with a duty to file reports.
``(d) Final Reports.--Final reports proposed for adoption
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;
``(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.--Periodic reports proposed for
adoption 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 at the date
of the order for relief and at 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, in 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) Technical Amendment.--The table of sections of chapter
39 of title 28, United States Code, is amended by adding at the
end the following:
``589b. Bankruptcy data.''.
SEC. 703. SENSE OF THE CONGRESS REGARDING AVAILABILITY OF BANKRUPTCY
DATA.
It is the sense of the 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
of the 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 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 VIII--BANKRUPTCY TAX PROVISIONS
SEC. 801. 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), after ``507(a)(1)'',
insert ``(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)''; 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) of
this title, 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
set forth in this section and subject to the requirements of
subsection (e)--
``(1) claims for wages, salaries, and commissions
that are entitled to priority under section 507(a)(3)
of this title; or
``(2) claims for contributions to an employee
benefit plan entitled to priority under section
507(a)(4) of this title,
may be paid from property of the estate which secures a tax
lien, or the proceeds of such property.''.
(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 amountunder
any law (other than a bankruptcy law) has expired.''.
SEC. 802. EFFECTIVE NOTICE TO GOVERNMENT.
(a) Effective Notice to Governmental Units.--Section 342 of
title 11, United States Code, is amended by adding at the end
the following:
``(d) If a debtor lists a governmental unit as a creditor
in a list or schedule, any notice required to be given by the
debtor under this title, any rule, any applicable law, or any
order of the court, shall identify the department, agency, or
instrumentality through which the debtor is indebted. The
debtor shall identify (with information such as a taxpayer
identification number, loan, account or contract number, or
real estate parcel number, where applicable), and describe the
underlying basis for the governmental unit's claim. If the
debtor's liability to a governmental unit arises from a debt or
obligation owed or incurred by another individual, entity, or
organization, or under a different name, the debtor shall
identify such individual, entity, organization, or name.
``(e) The clerk shall keep and update quarterly, in the
form and manner as the Director of the Administrative Office of
the United States Courts prescribes, and make available to
debtors, a register in which a governmental unit may designate
a safe harbor mailing address for service of notice in cases
pending in the district. A governmental unit may file a
statement with the clerk designating a safe harbor address to
which notices are to be sent, unless such governmental unit
files a notice of change of address.''.
(b) Adoption of Rules Providing Notice.--The Advisory
Committee on Bankruptcy Rules of the Judicial Conference shall,
within a reasonable period of time after the date of the
enactment of this Act, propose for adoption enhanced rules for
providing notice to State, Federal, and local government units
that have regulatory authority over the debtor or which may be
creditors in the debtor's case. Such rules shall be reasonably
calculated to ensure that notice will reach the representatives
of the governmental unit, or subdivision thereof, who will be
the proper persons authorized to act upon the notice. At a
minimum, the rules should require that the debtor--
(1) identify in the schedules and the notice, the
subdivision, agency, or entity in respect of which such
notice should be received;
(2) provide sufficient information (such as case
captions, permit numbers, taxpayer identification
numbers, or similar identifying information) to permit
the governmental unit or subdivision thereof, entitled
to receive such notice, to identify the debtor or the
person or entity on behalf of which the debtor is
providing notice where the debtor may be a successor in
interest or may not be the same as the person or entity
which incurred the debt or obligation; and
(3) identify, in appropriate schedules, served
together with the notice, the property in respect of
which the claim or regulatory obligation may have
arisen, if any, the nature of such claim or regulatory
obligation and the purpose for which notice is being
given.
(c) Effect of Failure of Notice.--Section 342 of title 11,
United States Code, as amended by subsection (a), is amended by
adding at the end the following:
``(f) A notice that does not comply with subsections (d)
and (e) shall not be effective unless the debtor demonstrates,
by clear and convincing evidence, that timely notice was given
in a manner reasonably calculated to satisfy the requirements
of this section was given, and that--
``(1) either the notice was timely sent to the safe
harbor address provided in the register maintained by
the clerk of the district in which the case was pending
for such purposes; or
``(2) no safe harbor address was provided in such
list for the governmental unit and that an officer of
the governmental unit who is responsible for the matter
or claim had actual knowledge of the case in sufficient
time to act.''.
SEC. 803. NOTICE OF REQUEST FOR A DETERMINATION OF TAXES.
Section 505(b) of title 11, United States Code, is amended
by striking ``Unless'' at the beginning of the second sentence
thereof and inserting ``If the request is made substantially in
the manner designated by the governmental unit and unless''.
SEC. 804. RATE OF INTEREST ON TAX CLAIMS.
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
``If any provision of this title requires the payment of
interest on a tax claim or requires 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 as
follows:
``(1) In the case of ad valorem tax claims, whether
secured or unsecured, other unsecured tax claims where
interest is required to be paid under section 726(a)(5)
of this title, secured tax claims, and administrative
tax claims paid under section 503(b)(1) of this title,
the rate shall be determined under applicable
nonbankruptcy law.
``(2) In the case of all other tax claims, the
minimum rate of interest shall be the Federal short-
term rate rounded to the nearest full percent,
determined under section 1274(d) of the Internal
Revenue Code of 1986, plus 3 percentage points
``(A) In the case of claims for Federal
income taxes, such rate shall be subject to any
adjustment that may be required under section
6621(d) of the Internal Revenue Code of 1986.
``(B) In the case of taxes paid under a
confirmed plan or reorganization, such rate
shall be determined as of the calendar month in
which the plan is confirmed.''.
SEC. 805. TOLLING OF PRIORITY OF TAX CLAIM TIME PERIODS.
Section 507(a)(9)(A) of title 11, United States Code, as so
redesignated, is amended--
(1) in clause (i) by inserting after ``petition''
and before the semicolon ``, plus any time, plus 6
months, during which the stay of proceedings was in
effect in a prior case under this title''; and
(2) amend clause (ii) to read as follows:
``(ii) assessed within 240 days
before the date of the filing of the
petition, exclusive of--
``(I) any time plus 30 days
during which an offer in
compromise with respect of such
tax, was pending or in effect
during such 240-day period;
``(II) any time plus 30
days during which an
installment agreement with
respect of such tax was pending
or in effect during such 240-
day period, up to 1 year; and
``(III) any time plus 6
months during which a stay of
proceedings against collections
was in effect in a prior case
under this title during such
240-day period.''.
SEC. 806. PRIORITY PROPERTY TAXES INCURRED.
Section 507(a)(8)(B) of title 11, United States Code, is
amended by striking ``assessed'' and inserting ``incurred''.
SEC. 807. CHAPTER 13 DISCHARGE OF FRAUDULENT AND OTHER TAXES.
Section 1328(a)(2) of title 11, United States Code, is
amended by inserting ``(1),'' after ``paragraph''.
SEC. 808. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.
Section 1141(d) of title 11, United States Code, as amended
by section 119A, is amended by adding at the end the following:
``(6) Notwithstanding the provisions of paragraph (1), the
confirmation of a plan does not discharge a debtor which is a
corporation from any debt for a tax or customs duty with
respect to which the debtor made a fraudulent return or
willfully attempted in any manner to evade or defeat such
tax.''.
SEC. 809. STAY OF TAX PROCEEDINGS.
(a) Section 362 Stay Limited to Prepetition Taxes.--Section
362(a)(8) of title 11, United States Code, is amended by
striking the period at the end and inserting ``, in respect of
a tax liability for a taxable period ending before the order
for relief.''.
(b) Appeal of Tax Court Decisions Permitted.--Section
362(b)(9) of title 11, United States Code, is amended--
(1) in subparagraph (C) by striking ``or'' at the
end;
(2) in subparagraph (D) by striking the period at
the end and inserting ``; or''; and
(3) by adding at the end the following:
``(E) the appeal of a decision by a court
or administrative tribunal which determines a
tax liability of the debtor without regard to
whether such determination was made prepetition
or postpetition.''.
SEC. 810. PERIODIC PAYMENT OF TAXES IN CHAPTER 11 CASES.
Section 1129(a)(9) of title 11, United States Code, is
amended--
(1) in subparagraph (B) by striking ``and'' at the
end; and
(2) in subparagraph (C)--
(A) by striking ``deferred cash payments,
over a period not exceeding six years after the
date of assessment of such claim,'' and
inserting ``regular installment payments in
cash, but in no case with a balloon provision,
and no more than three months apart, beginning
no later than the effective date of the plan
and ending on the earlier of five years after
the petition date or the last date payments are
to be made under the plan to unsecured
creditors,'';
(B) by striking the period at the end and
inserting ``; and''; and
(3) by adding at the end the following:
``(D) with respect to a secured claim which
would be described in section 507(a)(8) of this
title but for its secured status, the holder of
such claim will receive on account of such
claim cash payments of not less than is
required in subparagraph (C) and over a period
no greater than is required in such
subparagraph.''.
SEC. 811. AVOIDANCE OF STATUTORY TAX LIENS PROHIBITED.
Section 545(2) of title 11, United States Code, is amended
by striking the semicolon at the end and inserting ``, except
where such purchaser is a purchaser described in section 6323
of the Internal Revenue Code of 1986 or similar provision of
State or local law;''.
SEC. 812. 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) Such taxes shall be paid when due in the conduct of
such business unless--
``(1) the tax is a property tax secured by a lien
against property that is abandoned within a reasonable
time after the lien attaches, by the trustee of a
bankruptcy estate, pursuant to 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, the court has
made 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 such tax.''.
(b) Payment of Ad Valorem Taxes Required.--Section
503(b)(1)(B) of title 11, United States Code, is amended in
clause (i) by inserting after ``estate,'' and before ``except''
the following: ``whether secured or unsecured, including
property taxes for which liability is in rem only, in personam
or both,''.
(c) Request for Payment of Administrative Expense Taxes
Eliminated.--Section 503(b)(1) of title 11, United States Code,
is amended by adding at the end the following:
``(D) notwithstanding the requirements of
subsection (a) of this section, a governmental unit
shall not be required to file a request for the payment
of a claim described in subparagraph (B) or (C);''.
(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 in respect
of the property'' before the period at the end.
SEC. 813. 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 ``on
or before the earlier of 10 days after the mailing to creditors
of the summary of the trustee's final report or the date on
which the trustee commences final distribution under this
section''.
SEC. 814. INCOME TAX RETURNS PREPARED BY TAX AUTHORITIES.
Section 523(a)(1)(B) of title 11, United States Code, is
amended--
(1) by inserting ``or equivalent report or
notice,'' after ``a return,'';
(2) in clause (i)--
(A) by inserting ``or given'' after
``filed''; and
(B) by striking ``or'' at the end;
(3) in clause (ii)--
(A) by inserting ``or given'' after
``filed''; and
(B) by inserting ``, report, or notice''
after ``return''; and
(4) by adding at the end the following:
``(iii) for purposes of this
subsection, a return--
``(I) must satisfy the
requirements of applicable
nonbankruptcy law, and 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 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 similar State or local
law; and
``(II) must have been filed
in a manner permitted by
applicable nonbankruptcy law;
or''.
SEC. 815. DISCHARGE OF THE ESTATE'S LIABILITY FOR UNPAID TAXES.
Section 505(b) of title 11, United States Code, is amended
in the second sentence by inserting ``the estate,'' after
``misrepresentation,''.
SEC. 816. 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 section 143, is amended--
(1) in paragraph (6) by striking ``and'' at the
end;
(2) in paragraph (7) by striking the period at the
end and inserting ``; and''; and
(3) by adding at the end the following:
``(8) if the debtor has filed all Federal, State,
and local tax returns as required by section 1308 of
this title.''.
(b) Additional Time Permitted for Filing Tax Returns.--(1)
Chapter 13 of title 11, United States Code, as amended by
section 137, is amended by adding at the end the following:
``Sec. 1308. Filing of prepetition tax returns
``(a) On or before the day prior to the day on which the
first meeting of the creditors is convened under section 341(a)
of this title, the debtor shall have filed with appropriate tax
authorities all tax returns for all taxable periods ending in
the 3-year period ending on the date of filing of the petition.
``(b) If the tax returns required by subsection (a) have
not been filed by the date on which the first meeting of
creditors is convened under section 341(a) of this title, the
trustee may continue such meeting for a reasonable period of
time, to allow the debtor additional time to file any unfiled
returns, but such additional time shall be no more than--
``(1) for returns that are past due as of the date
of the filing of the petition, 120 days from such date;
``(2) for returns which are not past due as of the
date of the filing of the petition, the later of 120
days from such date or the due date for such returns
under the last automatic extension of time for filing
such returns to which the debtor is entitled,and for
which request has been timely made, according to applicable
nonbankruptcy law; and
``(3) upon notice and hearing, and order entered
before the lapse of any deadline fixed according to
this subsection, where the debtor demonstrates, by
clear and convincing evidence, that the failure to file
the returns as required is because of circumstances
beyond the control of the debtor, the court may extend
the deadlines set by the trustee as provided in this
subsection for--
``(A) a period of no more than 30 days for
returns described in paragraph (1) of this
subsection; and
``(B) for no more than the period of time
ending on the applicable extended due date for
the returns described in paragraph (2).
``(c) For purposes of this section only, a return includes
a return prepared pursuant to section 6020 (a) or (b) of the
Internal Revenue Code of 1986 or similar State or local law, or
a written stipulation to a judgment entered by a nonbankruptcy
tribunal.''.
(2) The table of sections of chapter 13 of title 11, United
States Code, is amended by inserting after the item relating to
section 1307 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 tax returns
under section 1308 of this title, 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 interests of creditors and the estate.''.
(d) Timely Filed Claims.--Section 502(b)(9) of title 11,
United States Code, is amended by striking the period at the
end and inserting ``, and except that in a case under chapter
13 of this title, a claim of a governmental unit for a tax in
respect of a return filed under section 1308 of this title
shall be timely if it is filed on or before 60 days after such
return or returns were filed as required.''.
(e) Rules for Objections to Claims and to Confirmation.--It
is the sense of the Congress that the Advisory Committee on
Bankruptcy Rules of the Judicial Conference should, within a
reasonable period of time after the date of the 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, a governmental unit may object to the
confirmation of a plan on or before 60 days after the
debtor files all tax returns required under sections
1308 and 1325(a)(7) of title 11, United States Code;
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 tax in respect of a return
required to be filed under such section 1308 shall be
filed until such return has been filed as required.
SEC. 817. STANDARDS FOR TAX DISCLOSURE.
Section 1125(a) of title 11, United States Code, is amended
in paragraph (1)--
(1) by inserting after ``records,'' the following:
``including a full discussion of the potential material
Federal, State, and local tax consequences of the plan
to the debtor, any successor to the debtor, and a
hypothetical investor domiciled in the State in which
the debtor resides or has its principal place of
business typical of the holders of claims or interests
in the case,'';
(2) by inserting ``such'' after ``enable''; and
(3) by striking ``reasonable'' where it appears
after ``hypothetical'' and by striking ``typical of
holders of claims or interests'' after ``investor''.
SEC. 818. SETOFF OF TAX REFUNDS.
Section 362(b) of title 11, United States Code, as amended
by sections 120, 134, 139, and 203, is amended--
(1) in paragraph (29) by striking ``or'';
(2) in paragraph (29) by striking the period at the
end and inserting ``; or''; and
(3) by inserting after paragraph (29) the
following:
``(30) under subsection (a) of the setoff of an
income tax refund, by a governmental unit, in respect
of a taxable period which ended before the order for
relief against an income tax liability for a taxable
period which also ended before the order for relief,
unless--
``(A) prior to such setoff, an action to
determine the amount or legality of such tax
liability under section 505(a) was commenced;
or
``(B) where the setoff of an income tax
refund is not permitted 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.''.
TITLE IX--ANCILLARY AND OTHER CROSS-BORDER CASES
SEC. 901. 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 of a foreign proceeding.
``1516. Presumptions concerning recognition.
``1517. Order recognizing a foreign proceeding.
``1518. Subsequent information.
``1519. Relief that may be granted upon petition for recognition of a
foreign proceeding.
``1520. Effects of recognition of a foreign main proceeding.
``1521. Relief that may be granted upon recognition of a foreign
proceeding.
``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 of 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) United States courts, 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 identified
by exclusion in subsection 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, 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.
``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; and
``(7) `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 1 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, upon recognition of a foreign
proceeding, to 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 is entitled to commence a
case under section 1504 by filing a petition for recognition
under section 1515, and upon recognition, to apply directly to
other Federal and State courts for appropriate relief in those
courts.
``(b) Upon recognition, and subject to section 1510, a
foreign representative has the capacity to sue and be sued, and
shall be subject to the laws of the United States of general
applicability.
``(c) Subject to section 1510 of this title, a foreign
representative is subject to laws of general application.
``(d) Recognition under this chapter is prerequisite to the
granting of comity or cooperation to a foreign representative
in any State or Federal court in the United States. Any request
for comity or cooperation by a foreign representative in any
court shall be accompanied by a sworn statement setting forth
whether recognition under section 1515 has been sought and the
status of any such petition.
``(e) Upon denial of recognition under this chapter, the
court may issue appropriate orders necessary to prevent an
attempt to obtain comity or cooperation from courts in the
United States without such recognition.
``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 statement describing the petition for
recognition and its current status. 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 that 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.
``(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 letters
rogatory or other similar 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 pursuant
to 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 of a foreign proceeding
``(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) must 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 as defined in section 101 and that the person or
body is a foreign representative as defined in section 101, 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 recognizing a foreign proceeding
``(a) Subject to section 1506, after notice and a hearing
an order recognizing a foreign proceeding shall be entered if--
``(1) the foreign proceeding 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 as defined in section
101; 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 shall constitute
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 granting of recognition. The case under
this chapter may be closed in the manner prescribed for a case
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 petition for recognition
of a foreign proceeding
``(a) From the time of filing a petition for recognition
until the petition is decided upon, 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 decided upon.
``(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.
``Sec. 1520. Effects of recognition of a foreign main proceeding
``(a) Upon recognition of a foreign proceeding that is a
foreign main proceeding--
``(1) section 362 applies with respect to the
debtor and that property of the debtor that is within
the territorial jurisdiction of the United States;
``(2) a transfer, an encumbrance, or any other
disposition of an interest of the debtor in property
within the territorial jurisdiction of the United
States is restrained as and to the extent that is
provided for property of an estate under sections 363,
549, and 552; and
``(3) unless the court orders otherwise, the
foreign representative may operate the debtor's
business and may exercise the powers of a trustee under
section 549, subject to sections 363 and 552.
``(b) The scope, and the modification or termination, of
the stay and restraints referred to in subsection (a) are
subject to the exceptions and limitations provided in
subsections (b), (c), and (d) of section 362, subsections (b)
and (c) of section 363, and sections 552, 555 through 557, 559,
and 560.
``(c) Subsection (a) does not affect the right to commence
individual actions or proceedings in a foreign country to the
extent necessary to preserve a claim against the debtor.
``(d) 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 of a foreign
proceeding
``(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
individual actions or individual proceedings 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, 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).
``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)(2) 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, 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
``Where 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) When 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 sections
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) When 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 sections
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 law 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. 902. AMENDMENTS TO OTHER CHAPTERS IN TITLE 11, 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, 304, 555 through 557, 559, and 560 apply in a case
under chapter 15''; and
(2) by adding at the end the following:
``(j) Chapter 15 applies only in a case under such chapter,
except that--
``(1) sections 1513 and 1514 apply in all cases
under this title; and
``(2) section 1505 applies to trustees and to any
other entity (including an examiner) authorized by the
court under chapters 7, 11, and 12, to debtors in
possession under chapters 11 and 12, and to debtors
under chapter 9 who are authorized to act under section
1505.''.
(b) Definitions.--Paragraphs (23) and (24) of title 11,
United States Code, are amended to read as follows:
``(23) `foreign proceeding' means a collective
judicial or administrative proceeding in a foreign
country, including an interim proceeding, pursuant to a
law relating to insolvency 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:
``(P) recognition of foreign proceedings and other
matters under chapter 15 of title 11.''.
(2) Bankruptcy cases and proceedings.--Section
1334(c)(1) 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 inserting ``15,''
after ``chapter''.
TITLE X--FINANCIAL CONTRACT PROVISIONS
SEC. 1001. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR RECEIVERS
OF INSURED DEPOSITORY INSTITUTIONS.
(a) Definition of Qualified Financial Contract.--Section
11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12 U.S.C.
1821(e)(8)(D)(i)) is amended 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, 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, 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.''.
(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) a security agreement
or arrangement or other credit
enhancement related to 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
agreement, reverse repurchase agreement, 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) a security agreement
or arrangement or other credit
enhancement related to any
agreement or transaction
referred to in subclause (I),
(II), (III), or (IV).''.
(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
terms `repurchase agreement' and
`reverse repurchase agreement'--
``(I) mean an agreement,
including related terms, which
provides for the transfer of 1
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, loans,
or interests with a
simultaneous agreement by such
transferee to transfer to the
transferor thereof certificates
of deposit, eligible bankers'
acceptances, securities, loans,
or interests as described
above, at a date 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 a security
agreement or arrangement or
other credit enhancement
related to any agreement or
transaction referred to in
subclause (I), (III), (IV), or
(V).
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.--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 credit spread or credit
swap, option, future, or forward agreement; a commodity index or
commodity swap, option, future, or forward agreement;
``(II) any agreement or
transaction similar to any
other agreement or transaction
referred to in this clause that
is presently, or in the future
becomes, regularly entered into
in the swap market (including
terms and conditions
incorporated by reference in
such agreement) and that is a
forward, swap, future, or
option on 1 or more rates,
currencies, commodities, equity
securities or other equity
instruments, debt securities or
other debt instruments, or
economic indices or measures of
economic 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
subparagraph (I), (II), (III),
or (IV).
Such term is applicable for purposes of
this Act 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, and
the regulations promulgated by the
Securities and Exchange Commission or
the Commodity Futures Trading
Commission.''.
(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 institutions'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), by striking ``paragraph
(10)'' and inserting ``paragraphs (9) and (10)'';
(2) in subparagraph (A)(i), by striking ``to cause
the termination or liquidation'' and inserting ``such
person has to cause the termination, liquidation, or
acceleration'';
(3) by amending subparagraph (A)(ii) to read as
follows:
``(ii) any right under any security
agreement or arrangement or other
credit enhancement related to 1 or more
qualified financial contracts described
in clause (i);''; and
(4) by amending subparagraph (E)(ii) to read as
follows:
``(ii) any right under any security
agreement or arrangement or other
credit enhancement related to 1 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 (12
U.S.C. 91) or any other Federal or State law relating to the
avoidance of preferential or fraudulent transfers,'' before
``the Corporation''.
SEC. 1002. 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'' after ``the appointment''.
SEC. 1003. 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 1 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 pursuant to
subparagraph (A)(i), the conservator or
receiver for such 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 1 or more qualified financial contracts the
contractual rights of the parties 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 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) Definition.--For purposes of this
section, 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.''.
(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 by amending
the flush material following clause (ii) to read as follows:
``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 further 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
such person has to terminate,
liquidate, or net such contract under
paragraph (8)(A) 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
such person has to terminate,
liquidate, or net such contract under
paragraph (8)(E) or sections 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 subsection, 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) of this subsection.
``(C) Treatment of bridge banks.--The
following institutions shall not be considered
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
subsection (e)(9)--
``(i) a bridge bank; or
``(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 such
institution and the Corporation
as receiver for a depository
institution in default.''.
SEC. 1004. 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 further amended--
(1) by redesignating paragraphs (11) through (15)
as paragraphs (12) through (16), respectively; and
(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).''.
SEC. 1005. 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 1 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 asa 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. 1006. 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 (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) (as
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;'';
(2) in paragraph (11), by adding before the period
``and any other clearing organization with which such
clearing organization has a netting contract'';
(3) 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 closeout values relating
to such obligations or entitlements)
among the parties to the agreement;
and''; and
(4) 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 amending subsection (a) to read as follows:
``(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).''; 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 1 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) 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 amending subsection (a) to read as follows:
``(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
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 1 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 and Uninsured Federal Branches and Agencies.--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 408;
and
(2) by adding after section 406 the following new
section:
``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND
UNINSURED FEDERAL BRANCHES AND AGENCIES.
``(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
except--
``(1) any reference to the `Corporation as
receiver' or `the receiver or the Corporation' shall
refer to the receiver of an uninsured national bank or
uninsured Federal branch or Federal agency appointed by
the Comptroller of the Currency;
``(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 of an uninsured
national bank or uninsured Federal branch or Federal
agency appointed by the Comptroller of the Currency;
and
``(3) any reference to an `insured depository
institution' or `depository institution' shall refer to
an uninsured national bank or an uninsured Federal
branch or Federal agency.
``(b) Liability.--The liability of a receiver or
conservator of an uninsured national bank or uninsured Federal
branch or agency 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 consultation with the Federal Deposit Insurance
Corporation, may promulgate regulations to implement
this section.
``(2) Specific requirement.--In promulgating
regulations to implement this section, the Comptroller
of the Currency 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 meaning as in section 1(b) of the International Banking
Act.''.
SEC. 1007. BANKRUPTCY CODE 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) a combination of agreements or
transactions referred to in subparagraphs (A)
and (C);
``(C) an option to enter into an agreement
or transaction referred to in subparagraph (A)
or (B);
``(D) a master netting agreement that
provides for an agreement or transaction
referred to in subparagraph (A), (B), or (C),
together with all supplements to such master
netting agreement, without regard to whether
such master netting agreement provides for an
agreement or transaction that is not a forward
contract under this paragraph, except that such
master netting agreement shall be considered to
be a forward contract under this paragraph only
with respect to each agreement or transaction
under such master netting agreement that is
referred to in subparagraph (A), (B) or (C); or
``(E) a security agreement or arrangement,
or other credit enhancement, directly
pertaining to a contract, option, agreement, or
transaction referred to in subparagraph (A),
(B), (C), or (D), but not to exceed the actual
value of such contract, option, agreement, or
transaction on the date of the filing of the
petition;'';
(B) by amending paragraph (47) to read as
follows:
``(47) `repurchase agreement' and `reverse
repurchase agreement'--
``(A) mean--
``(i) an agreement, including
related terms, which provides for the
transfer of--
``(I) a certificate of
deposit, mortgage-related
security (as defined in the
Securities Exchange Act of
1934), mortgage loan, interest
in a mortgage-related security
or mortgage loan, eligible
bankers' acceptance, qualified
foreign government security; or
``(II) security that is a
direct obligation of, or that
is fully guaranteed by, the
United States or an agency of
the United States against the
transfer of funds by the
transferee of such certificate
of deposit, eligible bankers'
acceptance, security, loan, or
interest;
with a simultaneous agreement by such
transferee to transfer to the
transferor thereof a certificate of
deposit, eligible bankers' acceptance,
security, loan, or interest of the kind
described in subclause (I) or (II), at
a date certain not later than 1 year
after the transferor's transfer or on
demand, against the transfer of funds;
``(ii) a 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 netting agreement
that provides for an agreement or
transaction referred to in clause (i),
(ii), or (iii), together with all
supplements to such master netting
agreement, without regard to whether
such master netting agreement provides
for an agreement or transaction that is
not a repurchase agreement under this
subparagraph, except that such master
netting agreement shall be considered
to be a repurchase agreement under this
subparagraph only with respect to each
agreement or transaction under such
master netting agreement that is
referred to in clause (i), (ii), or
(iii); or
``(v) a security agreement or
arrangement, or other credit
enhancement, directly pertaining to a
contract referred to in clause (i),
(ii), (iii), or (iv), but not to exceed
the actual value of such contract on
the date of the filing of the petition;
and
``(B) do not include a repurchase
obligation under a participation in a
commercial mortgage loan;
and, for purposes of this paragraph, 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;'';
(C) 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
(D) by amending paragraph (53B) to read as
follows:
``(53B) `swap agreement' means--
``(A) an agreement, including the terms and
conditions incorporated by reference in such
agreement, that 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 an equity
swap, option, future, or forward
agreement;
``(v) a debt index or a debt swap,
option, future, or forward agreement;
``(vi) a credit spread or a credit
swap, option, future, or forward
agreement; or
``(vii) a commodity index or a
commodity swap, option, future, or
forward agreement;
``(B) an agreement or transaction similar
to an agreement or transaction referred to in
this paragraph that--
``(i) is currently, or in the
future becomes, regularly entered into
in the swap market (including terms and
conditions incorporated by reference
therein); and
``(ii) is a forward, swap, future,
or option on a rate, currency,
commodity, equity security, or other
equity instrument, on a debt security
or other debt instrument, or on an
economic index or measure of economic
risk or value;
``(C) a combination of agreements or
transactions referred to in this paragraph;
``(D) an option to enter into an agreement
or transaction referred to in this paragraph;
``(E) a master netting agreement that
provides for an agreement or transaction
referred to in subparagraph (A), (B), (C), or
(D), together with all supplements to such
master netting agreement and without regard to
whether such master netting agreement contains
an agreement or transaction described in any
such subparagraph, but only with respect to
each agreement or transaction referred to in
any such subparagraph that is under such master
netting agreement; or
``(F) 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, and the regulations prescribed by the
Securities and Exchange Commission or the
Commodity Futures Trading Commission.'';
(2) by amending section 741(7) to read as follows:
``(7) `securities contract'--
``(A) means--
``(i) a contract for the purchase,
sale, or loan of a security, a mortgage
loan or an interest in a mortgage loan,
a group or index of securities, 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 of the
foregoing;
``(ii) an option entered into on a
national securities exchange relating
to foreign currencies;
``(iii) the guarantee by or to a
securities clearing agency of a
settlement of cash, securities,
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 of the
foregoing;
``(iv) a margin loan;
``(v) any other agreement or
transaction that is similar to an
agreement or transaction referred to in
this subparagraph;
``(vi) a combination of the
agreements or transactions referred to
in this subparagraph;
``(vii) an option to enter into an
agreement or transaction referred to in
this subparagraph;
``(viii) a master netting 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 such
master netting agreement, without
regard to whether such master netting
agreement provides for an agreement or
transaction that is not a securities
contract under this subparagraph,
except that such master netting
agreement shall be considered to be a
securities contract under this
subparagraph only with respect to each
agreement or transaction under such
master netting agreement that is
referred to in clause (i), (ii), (iii),
(iv), (v), (vi), or (vii); or
``(ix) a security agreement or
arrangement, or other credit
enhancement, directly pertaining to a
contract referred to in this
subparagraph, but not to exceed the
actual value of such contract on the
date of the filing of the petition; and
``(B) does not include a 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) a combination of the agreements or
transactions referred to in this paragraph;
``(H) an option to enter into an agreement
or transaction referred to in this paragraph;
``(I) a master netting 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 netting agreement,
without regard to whether such master netting
agreement provides for an agreement or
transaction that is not a commodity contract
under this paragraph, except that such master
netting agreement shall be considered to be a
commodity contract under this paragraph only
with respect to each agreement or transaction
under such master netting agreement that is
referred to in subparagraph (A), (B), (C), (D),
(E), (F), (G), or (H); or
``(J) a security agreement or arrangement,
or other credit enhancement, directly
pertaining to a contract referred to in this
paragraph, but not to exceed the actual value
of such contract on the date of the filing of
the petition;''.
(b) Definitions of Financial Institution, Financial
Participant, and Forward Contract Merchant.--Section 101 of
title 11, United States Code, is amended--
(1) by amending paragraph (22) to read as follows:
``(22) `financial institution' means--
``(A) a Federal reserve bank, or an entity
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 such
Federal reserve bank, receiver, or conservator
or entity is acting as agent or custodian for a
customer in connection with a securities
contract, as defined in section 741 of this
title, such customer; or
``(B) in connection with a securities
contract, as defined in section 741 of this
title, an investment company registered under
the Investment Company Act of 1940;'';
(2) by inserting after paragraph (22) the
following:
``(22A) `financial participant' means an entity
that is a party to a securities contract, commodity
contract or forward contract, or on the date of the
filing of the petition, has a commodity contract (as
defined in section 761 of this title) with the debtor
or any other entity (other than an affiliate) of a
total gross dollar value of at least $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 at least $100,000,000
(aggregated across counterparties) in any such
agreement or transaction with the debtor or any other
entity (other than an affiliate) on any day during the
previous 15-month period;''; and
(3) by amending paragraph (26) to read as follows:
``(26) `forward contract merchant' means a Federal
reserve bank, or an entity whose business consists in
whole or in part of entering into forward contracts as
or with merchants or in a commodity, as defined or in
section 761 of this title, or any similar good,
article, service, right, or interest which is presently
or in the future becomes the subject of dealing or 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) the term `master netting agreement' means
an agreement providing for the exercise of rights,
including rights of netting, setoff, liquidation,
termination, acceleration, or closeout, under or in
connection with 1 or more contracts that are described
in any 1 or more of paragraphs (1) through (5) of
section 561(a), or any security agreement or
arrangement or other credit enhancement related to 1 or
more of the foregoing. If a master netting agreement
contains provisions relating to agreements or
transactions that are not contracts described in
paragraphs (1) through (5) of section 561(a), the
master netting agreement shall be deemed to be a master
netting agreement only with respect to those agreements
or transactions that are described in any 1 or more of
the paragraphs (1) through (5) of section 561(a);
``(38B) the term `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 120, 134, 139, 203
and 818, is amended--
(A) in paragraph (6), by inserting ``,
pledged to, and under the control of,'' after
``held by'';
(B) in paragraph (7), by inserting ``,
pledged to, and under the control of,'' after
``held by'';
(C) by amending paragraph (17) to read as
follows:
``(17) under subsection (a), of the setoff by a
swap participant of a mutual debt and claim under or in
connection with a swap agreement that constitutes the
setoff of a claim against the debtor for a payment or
transfer due from the debtor under or in connection
with a swap agreement against a payment due to the
debtor from the swap participant under or in connection
with a swap agreement or against cash, securities, or
other property held by, pledged to, and under the
control of, or due from such swap participant to
guarantee, secure, or settle a swap agreement;'';
(D) in paragraph (27), by striking ``or''
at the end;
(E) in paragraph (28) by striking the
period at the end and inserting ``; and''; and
(F) by inserting after paragraph (28) the
following new paragraph:
``(29) under subsection (a), of the setoff by a
master netting agreement participant of a mutual debt
and claim under or in connection with 1 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 oragainst cash, securities, or other
property held by, pledged or and 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 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, is amended by adding at the end the
following:
``(i) Limitation.--The exercise of rights not subject to
the stay arising under subsection (a) pursuant to paragraph
(6), (7), or (17) of subsection (b) shall not be stayed by an
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'';
(2) by redesignating subsection (g) (as added by
section 222(a) of Public Law 103-394) as subsection
(i); and
(3) by inserting before subsection (i) (as
redesignated) the following new subsection:
``(h) Notwithstanding sections 544, 545, 547, 548(a)(2)(B),
and 548(b) of this title, 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, and except to the extent the trustee
could otherwise avoid such a transfer made under an individual
contract covered by such master netting agreement, except under
section 548(a)(1)(A) of this title.''.
(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'';
(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, with respect to a transfer under any
individual contract covered thereby, to the
extent 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''; and
(2) in the first sentence, by striking
``liquidation'' and inserting ``liquidation,
termination, or acceleration''.
(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''; and
(2) in the first sentence, by striking
``liquidation'' and inserting ``liquidation,
termination, or acceleration''.
(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''; and
(2) in the first sentence, by striking
``termination of a swap agreement'' and inserting
``liquidation, termination, or acceleration of a swap
agreement''; and
(3) by striking ``in connection with any swap
agreement'' and inserting ``in connection with the
termination, liquidation, or acceleration of a swap
agreement''.
(k) Liquidation, Termination, Acceleration, or Offset Under
a Master Netting Agreement and Across Contracts.--Title 11,
United States Code, is amended by inserting after section 560
the following new section:
``Sec. 561. Contractual right to terminate, liquidate, accelerate, or
offset under a master netting agreement and across
contracts
``(a) In General.--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 1 or more (or the termination,
liquidation, or acceleration of 1 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) Exception.--
``(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 of this title--
``(A) a party may not net or offset an
obligation to the debtor arising under, or in
connection with, a commodity contract against
any claim arising under, or in connection with,
other instruments, contracts, or agreements
listed in subsection (a) except to the extent
the party has no positive net equity in the
commodity accounts at the debtor, as calculated
under subchapter IV;
``(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 against any claim
arising under, or in connection with, other
instruments, contracts, or agreements listed in
subsection (a).
``(c) Definition.--As used in this section, 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 evidenced in writing, arising under common law,
under law merchant, or by reason of normal business
practice.''.
(l) Municipal Bankruptcies.--Section 901 of title 11,
United States Code, is amended--
(1) by inserting ``, 555, 556'' after ``553''; and
(2) by inserting ``, 559, 560, 561,'' after
``557''.
(m) Ancillary Proceedings.--Section 304 of title 11, United
States Code, is amended by adding at the end the following:
``(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 ancillary to a foreign proceeding under this
section or any other section of this title, 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).''.
(n) 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, 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, 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.''.
(o) 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, 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.''.
(p) Setoff.--Section 553 of title 11, United States Code,
is amended--
(1) in subsection (a)(3)(C), by inserting ``(except
for a setoff of a kind described in section 362(b)(6),
362(b)(7), 362(b)(17), 362(b)(19), 555, 556, 559, or
560 of this title)'' before the period; and
(2) in subsection (b)(1), by striking
``362(b)(14),'' and inserting ``362(b)(17), 362(b)(19),
555, 556, 559, 560,''.
(q) 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 section 546(e), by inserting ``financial
participant'' after ``financial institution,'';
(3) in section 548(d)(2)(B), by inserting
``financial participant'' after ``financial
institution,'';
(4) in section 555--
(A) by inserting ``financial participant''
after ``financial institution,''; and
(B) by inserting before the period ``, 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''; and
(5) in section 556, by inserting ``, financial
participant'' after ``commodity broker''.
(r) Conforming Amendments.--Title 11 of the United States
Code is amended--
(1) in the table of sections of 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 555 and 556 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 of 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,
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, securities
clearing agencies, swap participants, repo participants, and
master netting agreement participants.''.
SEC. 1008. 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 with respect to qualified
financial contracts (including market
valuations) by insured depository
institutions.''.
SEC. 1009. 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) 1 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. 1010. DAMAGE MEASURE.
(a) Title 11, United States Code, is amended--
(1) by inserting after section 561 the following:
``Sec. 562. Damage measure in connection with swap agreements,
securities contracts, forward contracts, commodity
contracts, repurchase agreements, or master netting
agreements
``If the trustee rejects a swap agreement, securities
contract as defined in section 741 of this title, forward
contract, commodity contract (as defined in section 761 of this
title) repurchase agreement, or master netting agreement
pursuant to section 365(a) of this title, 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 of such liquidation, termination, or
acceleration.''; and
(2) in the table of sections of chapter 5 by
inserting after the item relating to section 561 the
following:
``562. 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 designating the existing text as paragraph
(1); and
(2) by adding at the end the following:
``(2) A claim for damages calculated in accordance with
section 561 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. 1011. 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 after
subparagraph (B) 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 Securities
Investor Protection Corporation 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, each as defined in
title 11, to offset or net termination
values, payment amounts, or other
transfer obligations arising under or
in connection with 1 or more of such
contracts or agreements, or to
foreclose on any cash collateral
pledged by the debtor whether or not
with respect to 1 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
securities collateral pledged by the
debtor, whether or not with respect to
1 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 section,
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, arisingunder common law, under
law merchant, or by reason of normal business practice.''.
SEC. 1012. ASSET-BACKED SECURITIZATIONS.
Section 541 of title 11, United States Code, is amended--
(1) in subsection (b), by striking ``or'' at the
end of paragraph (4);
(2) by redesignating paragraph (5) of subsection
(b) as paragraph (6);
(3) by inserting after paragraph (4) of subsection
(b) the following new paragraph:
``(5) any eligible asset (or proceeds thereof), to
the extent that such eligible asset was transferred by
the debtor, before the date of commencement of the
case, to an eligible entity in connection with an
asset-backed securitization, except to the extent such
asset (or proceeds or value thereof) may be recovered
by the trustee under section 550 by virtue of avoidance
under section 548(a); or''; and
(4) by adding at the end the following new
subsection:
``(e) Definitions.--For purposes of this section, the
following definitions shall apply:
``(1) Asset-backed securitization.--The term
`asset-backed securitization' means a transaction in
which eligible assets transferred to an eligible entity
are used as the source of payment on securities, the
most senior of which are rated investment grade by 1 or
more nationally recognized securities rating
organizations, issued by an issuer;
``(2) Eligible asset.--The term `eligible asset'
means--
``(A) financial assets (including interests
therein and proceeds thereof), either fixed or
revolving, including residential and commercial
mortgage loans, consumer receivables, trade
receivables, and lease receivables, that, by
their terms, convert into cash within a finite
time period, plus any rights or other assets
designed to assure the servicing or timely
distribution of proceeds to security holders;
``(B) cash; and
``(C) securities.
``(3) Eligible entity.--The term `eligible entity'
means--
``(A) an issuer; or
``(B) a trust, corporation, partnership, or
other entity engaged exclusively in the
business of acquiring and transferring eligible
assets directly or indirectly to an issuer and
taking actions ancillary thereto;
``(4) Issuer.--The term `issuer' means a trust,
corporation, partnership, or other entity engaged
exclusively in the business of acquiring and holding
eligible assets, issuing securities backed by eligible
assets, and taking actions ancillary thereto.
``(5) Transferred.--The term `transferred' means
the debtor, pursuant to a written agreement,
represented and warranted that eligible assets were
sold, contributed, or otherwise conveyed with the
intention of removing them from the estate of the
debtor pursuant to subsection (b)(5), irrespective,
without limitation of--
``(A) whether the debtor directly or
indirectly obtained or held an interest in the
issuer or in any securities issued by the
issuer;
``(B) whether the debtor had an obligation
to repurchase or to service or supervise the
servicing of all or any portion of such
eligible assets; or
``(C) the characterization of such sale,
contribution, or other conveyance for tax,
accounting, regulatory reporting, or other
purposes.''.
SEC. 1013. FEDERAL RESERVE COLLATERAL REQUIREMENTS.
The 2d sentence of the 2d undesignated paragraph of section
16 of the Federal Reserve Act (12 U.S.C. 412) is amended by
striking ``acceptances acquired under section 13 of this Act''
and inserting ``acceptances acquired under section 10A, 10B,
13, or 13A of this Act''.
SEC. 1014. SEVERABILITY; EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) Severability.--If any provision of this Act or any
amendment made by this Act, or the application of any such
provision or amendment to any person or circumstance, is held
to be unconstitutional, the remaining provisions of and
amendments made by this Act and the application of such other
provisions and amendments to any person or circumstance shall
not be affected thereby.
(b) Effective Date.--This Act shall take effect on the date
of the enactment of this Act.
(c) Application of Amendments.--The amendments made by this
Act shall apply with respect to cases commenced or appointments
made under any Federal or State law after the date of enactment
of this Act, but shall not apply with respect to cases
commenced or appointments made under any Federal or State law
before the date of enactment of this Act.
TITLE XI--TECHNICAL CORRECTIONS
SEC. 1101. DEFINITIONS.
Section 101 of title 11, United States Code, as amended by
section 317, is amended--
(1) by striking ``In this title--'' and inserting
``In this title:'';
(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) and (38), 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;
(6) by amending paragraph (54) to read as follows:
``(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) in each of paragraphs (1) through (35), in each
of paragraphs (36) and (37), and in each of paragraphs
(40) through (55) (including paragraph (54), as amended
by paragraph (6) of this section), by striking the
semicolon at the end and inserting a period; and
(8) by redesignating paragraphs (4) through (55),
including paragraph (54), as amended by paragraph (6)
of this section, in entirely numerical sequence.
SEC. 1102. ADJUSTMENT OF DOLLAR AMOUNTS.
Section 104 of title 11, United States Code, is amended by
inserting ``522(f)(3), 707(b)(5),'' after ``522(d),'' each
place it appears.
SEC. 1103. 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. 1104. TECHNICAL AMENDMENTS.
Title 11 of the United States Code is amended--
(1) in section 109(b)(2) by striking ``subsection
(c) or (d) of'';
(2) in section 541(b)(4) by adding ``or'' at the
end; and
(3) in section 552(b)(1) by striking ``product''
each place it appears and inserting ``products''.
SEC. 1105. PENALTY FOR PERSONS WHO NEGLIGENTLY OR FRAUDULENTLY PREPARE
BANKRUPTCY PETITIONS.
Section 110(j)(3) of title 11, United States Code, is
amended by striking ``attorney's'' and inserting ``attorneys'
''.
SEC. 1106. 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. 1107. SPECIAL TAX PROVISIONS.
Section 346(g)(1)(C) of title 11, United States Code, is
amended by striking ``, except'' and all that follows through
``1986''.
SEC. 1108. 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. 1109. AMENDMENT TO TABLE OF SECTIONS.
The table of sections for chapter 5 of title 11, United
States Code, is amended by striking the item relating to
section 556 and inserting the following:
``556. Contractual right to liquidate a commodities contract or forward
contract.''.
SEC. 1110. 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. 1111. PRIORITIES.
Section 507(a) of title 11, United States Code, as amended
by section 323, is amended--
(1) in paragraph (3)(B), by striking the semicolon
at the end and inserting a period; and
(2) in paragraph (7), by inserting ``unsecured''
after ``allowed''.
SEC. 1112. EXEMPTIONS.
Section 522 of title 11, United States Code, as amended by
section 320, is amended--
(1) in subsection (f)(1)(A)(ii)(II)--
(A) by striking ``includes a liability
designated as'' and inserting ``is for a
liability that is designated as, and is
actually in the nature of,''; and
(B) by striking ``, unless'' and all that
follows through ``support''; and
(2) in subsection (g)(2), by striking ``subsection
(f)(2)'' and inserting ``subsection (f)(1)(B)''.
SEC. 1113. EXCEPTIONS TO DISCHARGE.
Section 523 of title 11, United States Code, is amended--
(1) in subsection (a)(3), by striking ``or (6)''
each place it appears and inserting ``(6), or (15)'';
(2) as amended by section 304(e) of Public Law 103-
394 (108 Stat. 4133), in paragraph (15), by
transferring such paragraph so as to insert it after
paragraph (14) of subsection (a);
(3) in subsection (a)(9), by inserting ``,
watercraft, or aircraft'' after ``motor vehicle'';
(4) in subsection (a)(15), as so redesignated by
paragraph (2) of this subsection, by inserting ``to a
spouse, former spouse, or child of the debtor and''
after ``(15)'';
(5) in subsection (a)(17)--
(A) by striking ``by a court'' and
inserting ``on a prisoner by any court'';
(B) by striking ``section 1915 (b) or (f)''
and inserting ``subsection (b) or (f)(2) of
section 1915''; and
(C) by inserting ``(or a similar non-
Federal law)'' after ``title 28'' each place it
appears; and
(6) in subsection (e), by striking ``a insured''
and inserting ``an insured''.
SEC. 1114. 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) of this title, or that''.
SEC. 1115. 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. 1116. 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. 1117. PREFERENCES.
Section 547 of title 11, United States Code, is amended--
(1) in subsection (b), by striking ``subsection
(c)'' and inserting ``subsections (c) and (h)''; and
(2) by adding at the end the following:
``(h) If the trustee avoids under subsection (b) a security
interest given 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 security interest shall be considered to be
avoided under this section only with respect to the creditor
that is an insider.''.
SEC. 1118. POSTPETITION TRANSACTIONS.
Section 549(c) of title 11, United States Code, is
amended--
(1) by inserting ``an interest in'' after
``transfer of'';
(2) by striking ``such property'' and inserting
``such real property''; and
(3) by striking ``the interest'' and inserting
``such interest''.
SEC. 1119. DISPOSITION OF PROPERTY OF THE ESTATE.
Section 726(b) of title 11, United States Code, is amended
by striking ``1009,''.
SEC. 1120. GENERAL PROVISIONS.
Section 901(a) of title 11, United States Code, as amended
by section 408, is amended by inserting ``1123(d),'' after
``1123(b),''.
SEC. 1121. 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.
Upon the filing of a report under the preceding sentence--
``(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.
``(B) In the case of any dispute arising out of an election
under subparagraph (A), the court shall resolve the dispute.''.
SEC. 1122. 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. 1123. 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. 1124. DISCHARGE UNDER CHAPTER 12.
Subsections (a) and (c) of section 1228 of title 11, United
States Code, are amended by striking ``1222(b)(10)'' each place
it appears and inserting ``1222(b)(9)''.
SEC. 1125. 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. 1126. 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. 1127. TRANSFERS MADE BY NONPROFIT CHARITABLE CORPORATIONS.
(a) Sale of Property of Estate.--Section 363(d) of title
11, United States Code, is amended--
(1) 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 of this title.''.
(b) Confirmation of Plan for Reorganization.--Section
1129(a) of title 11, United States Code, as amended by section
143, is amended by adding at the end the following:
``(15) 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, is amended by adding at the end the following:
``(e) 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, except that the
court shall not confirm a plan under chapter 11 of this title
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 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
deemed to require the court in which a case under chapter 11 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. 1128. 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.''.
SEC. 1129. 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. 1130. 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 of the United States
Code may obtain judicial review of the final agency decision by
commencing an action in the United States district court for
the district for which the panel to which the trustee is
appointed under subsection (a)(1), or in the United States
district court 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 United States district court in the
district where the individual resides. The decision of the
agency shall be affirmed by the district court unless it is
unreasonable or without cause based upon the administrative
record before the agency.
``(4) The Attorney General shall prescribe procedures to
implement this subsection.''.
TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS
SEC. 1201. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.
(a) Effective Date.--Except as provided otherwise in this
Act, this Act and the amendments made by this Act shall take
effect 180 days after the date of the enactment of this Act.
(b) Application of Amendments.--The amendments made by this
Act shall not apply with respect to cases commenced under title
11 of the United States Code before the effective date 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:
Henry Hyde,
Bill McCollum,
George W. Gekas,
Bob Goodlatte,
Ed Bryant,
Steve Chabot,
Rick Boucher,
Managers on the Part of the House.
Orrin G. Hatch,
Chuck Grassley,
Jeff Sessions,
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. 3150), to amend
title 11 of the United States Code, and for other purposes,
submit the following joint statement to the House and Senate in
explanation of the effect of the action agreed upon by the
managers and recommended in the accompanying conference report:
Differences between the House and Senate bills on several
primary issues were the focus of discussions at the Conference.
means testing
The House version contained a pre-filing formula to steer
debtors with repayment capacity into Chapter 13 repayment
plans. The Senate bill directed bankruptcy judges to consider
the repayment capacity of debtors who had filed in Chapter 7
bankruptcy to determine whether they were appropriately filed.
The compromise combines the best aspects of both approaches. It
adopts the procedural approach of the Senate bill directing
bankruptcy judges to consider repayment capacity, while
instructing that such repayment capacity shall be presumed by
the judge if the individual meets certain bright-line standards
for measuring such repayment capacity. This approach preserves
the right of a debtor in bankruptcy to have a judge review his
or her individual case so that the debtor's unique
circumstances could be taken into account.
non-dischargeability
The House bill contained a provision that any debts
incurred within 90 days of declaring bankruptcy, other than
reasonably necessary living expenses not exceeding $250, were
presumed to be nondischargeable. The House bill capped
necessary living expenses at $250. The Senate bill contained a
provision that debts other than reasonably necessary living
expenses incurred within 90 days of declaring bankruptcy were
presumed non-dischargeable. The Senate bill exempted all
expenses, whether reasonable or not, up to $400. The Conferees
reached a compromise between these provisions that new debts
incurred within 90 days of bankruptcy for luxury goods over
$250 in value would be presumed non-dischargeable. The
compromise provides no limitation for reasonably necessary
living expenses.
In addition, the House bill contained a provision that
any debt incurred to pay non-dischargeable debt is also non-
dischargeable. Under the Senate bill, debts incurred to pay
non-dischargeable debts were only non-dischargeable if the
debtor intended to discharge the newly created debt in
bankruptcy. Under the Committee compromise, only debts incurred
within 90 days prior to filing for bankruptcy to pay non-
dischargeable debts are non-dischargeable, however, debts
incurred prior to 90 days prior to filing for bankruptcy to pay
nondischargeable debts are nondischargeable only if the debtor
intended to discharge the newly created debt in bankruptcy.
ENHANCED DISCLOSURES AND CREDITOR PENALTIES
The House bill contained disclosure requirements for
debtor lawyers who advertise debt relief services to ensure
that unwary consumers were not lured into bankruptcy without
being fully aware of their alternatives. The Senate bill
contained provisions which required certain lenders to make
disclosures, regarding minimum monthly payments, total costs,
among others. The House bill contained no such provisions on
enhanced consumer disclosures for credit extensions. The
Conferees agreed to retain the disclosure provisions for debtor
attorneys and to direct the Board of Governors of the Federal
Reserve to develop appropriate and meaningful additional
disclosure requirements for the use of consumers. In addition,
several of the Senate bill provisions which assessed stiff
fines on creditors who used abusive collection techniques, were
adopted in the final Conference Report. The Conference Report
also specifies that the new penalties will not give rise to
class action liability.
REAFFIRMATIONS
The House bill contained no comparable provision to the
Senate bill, which imposed a requirement for a hearing before a
judge for certain types of reaffirmations by debtors. The
Conference Committee streamlined these judicial procedures by
ensuring that every debtor who reaffirms unsecured debt has the
opportunity to appear before a judge. Under the compromise an
enhanced standard is provided for the review of certain
reaffirmation agreements. The judge is now required to
determine that the reaffirmation was in the best interest of
the debtor, would not impose an undue hardship, and was not the
result of coercion.
CRAMDOWNS
The House bill prohibited cramdowns for certain secured
debts incurred within 180 days prior to bankruptcy. The Senate
bill contained an absolute prohibition on cramdowns in Chapter
13 cases. The Committee compromised by prohibiting cramdowns on
debts securing personal property incurred within five years of
filing for bankruptcy.
HOMESTEAD EXEMPTION
The House version of the homestead exemption required a
one-year residency prior to being able to claim the homestead
exemption. The Senate versions capped all homestead exemptions
at $100,000. The Committee compromise imposes a two-year
residency requirement before a debtor can claim the homestead
exemption available in a particular state.
Other differences between the bills that were resolved by
the Committee of Conference are apparent from a comparison of
the two bills.
CURBING ABUSIVE FILINGS
The conferees have added a new paragraph to section 707(b)
to make clear that, among the considerations in applying the
``totality of the circumstances'' test for ``abuse'' is whether
an individual debtor seeks to reject a personal services
contract and the financial need for such rejection as sought by
the debtor. This is intended to remedy problems brought to the
attention of Congress involving bankruptcy filings that were
motivated in material part in order to reject executory
contracts for personal services so that the debtor could
negotiate a new and better contract with a different company.
This problem was initially addressed in Section 212 of H.R.
3150, and the solution contained in that provision was targeted
at this particular form of abuse of the bankruptcy process.
With the new standard for ``abuse'' in Section 707(b)(2)(C),
the conferees have determined that the specific provisions of
Section 212 are no longer necessary, as the bankruptcy court
will not have the authority to identify and remedy such abuses.
The conferees intend that, under the ``totality of the
circumstances'' test, an ``abuse'' of Chapter 7 exists when
rejection of the personal services contract was a material
reason for commencing the bankruptcy case, and economic
rehabilitation of the debtor's finances can be achieved absent
rejection of the contract. The conferees also intend that
application of the existing judicially-determined ``bad faith''
standard now be used in these circumstances in Chapter 7 cases
and in Chapter 11 and Chapter 13 cases, in which the debtor or
debtors are parties to a single personal services contract.
From the Committee on the Judiciary, for
consideration of the House bill and the Senate
amendment, and modifications committed to
conference:
Henry Hyde,
Bill McCollum,
George W. Gekas,
Bob Goodlatte,
Ed Bryant,
Steve Chabot,
Rick Boucher,
Managers on the Part of the House.
Orrin G. Hatch,
Chuck Grassley,
Jeff Sessions,
Managers on the Part of the Senate.