[House Report 114-477]
[From the U.S. Government Publishing Office]


114th Congress }                                           { Report
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                           { 114-477

======================================================================
 
              FINANCIAL INSTITUTION BANKRUPTCY ACT OF 2016

                                _______
                                

 March 23, 2016.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Goodlatte, from the Committee on the Judiciary, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2947]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 2947) to amend title 11 of the United States Code in 
order to facilitate the resolution of an insolvent financial 
institution in bankruptcy, having considered the same, reports 
favorably thereon with an amendment and recommends that the 
bill as amended do pass.

                                CONTENTS

                                                                   Page

The Amendment....................................................     1
Purpose and Summary..............................................     9
Background and Need for the Legislation..........................     9
Hearings.........................................................    16
Committee Consideration..........................................    18
Committee Votes..................................................    18
Committee Oversight Findings.....................................    19
New Budget Authority and Tax Expenditures........................    19
Congressional Budget Office Cost Estimate........................    19
Duplication of Federal Programs..................................    22
Disclosure of Directed Rule Makings..............................    22
Performance Goals and Objectives.................................    22
Advisory on Earmarks.............................................    22
Section-by-Section Analysis......................................    22
Changes in Existing Law Made by the Bill, as Reported............    28

                             The Amendment

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Financial Institution Bankruptcy Act 
of 2016''.

SEC. 2. GENERAL PROVISIONS RELATING TO COVERED FINANCIAL CORPORATIONS.

  (a) Definition.--Section 101 of title 11, United States Code, is 
amended by inserting the following after paragraph (9):
          ``(9A) The term `covered financial corporation' means any 
        corporation incorporated or organized under any Federal or 
        State law, other than a stockbroker, a commodity broker, or an 
        entity of the kind specified in paragraph (2) or (3) of section 
        109(b), that is--
                  ``(A) a bank holding company, as defined in section 
                2(a) of the Bank Holding Company Act of 1956; or
                  ``(B) a corporation that exists for the primary 
                purpose of owning, controlling and financing its 
                subsidiaries, that has total consolidated assets of 
                $50,000,000,000 or greater, and for which, in its most 
                recently completed fiscal year--
                          ``(i) annual gross revenues derived by the 
                        corporation and all of its subsidiaries from 
                        activities that are financial in nature (as 
                        defined in section 4(k) of the Bank Holding 
                        Company Act of 1956) and, if applicable, from 
                        the ownership or control of one or more insured 
                        depository institutions, represents 85 percent 
                        or more of the consolidated annual gross 
                        revenues of the corporation; or
                          ``(ii) the consolidated assets of the 
                        corporation and all of its subsidiaries related 
                        to activities that are financial in nature (as 
                        defined in section 4(k) of the Bank Holding 
                        Company Act of 1956) and, if applicable, 
                        related to the ownership or control of one or 
                        more insured depository institutions, 
                        represents 85 percent or more of the 
                        consolidated assets of the corporation.''.
  (b) Applicability of Chapters.--Section 103 of title 11, United 
States Code, is amended by adding at the end the following:
  ``(l) Subchapter V of chapter 11 of this title applies only in a case 
under chapter 11 concerning a covered financial corporation.''.
  (c) Who May Be a Debtor.--Section 109 of title 11, United States 
Code, is amended--
          (1) in subsection (b)--
                  (A) in paragraph (2), by striking ``or'' at the end;
                  (B) in paragraph (3)(B), by striking the period at 
                the end and inserting ``; or''; and
                  (C) by adding at the end the following:
          ``(4) a covered financial corporation.''; and
          (2) in subsection (d)--
                  (A) by striking ``and'' before ``an uninsured State 
                member bank'';
                  (B) by striking ``or'' before ``a corporation''; and
                  (C) by inserting ``, or a covered financial 
                corporation'' after ``Federal Deposit Insurance 
                Corporation Improvement Act of 1991''.
  (d) Conversion to Chapter 7.--Section 1112 of title 11, United States 
Code, is amended by adding at the end the following:
  ``(g) Notwithstanding section 109(b), the court may convert a case 
under subchapter V to a case under chapter 7 if--
          ``(1) a transfer approved under section 1185 has been 
        consummated;
          ``(2) the court has ordered the appointment of a special 
        trustee under section 1186; and
          ``(3) the court finds, after notice and a hearing, that 
        conversion is in the best interest of the creditors and the 
        estate.''.
  (e)(1) Section 726(a)(1) of title 11, United States Code, is amended 
by inserting after ``first,'' the following: ``in payment of any unpaid 
fees, costs, and expenses of a special trustee appointed under section 
1186, and then''.
  (2) Section 1129(a) of title 11, United States Code, is amended by 
inserting after paragraph (16) the following:
          ``(17) In a case under subchapter V, all payable fees, costs, 
        and expenses of the special trustee have been paid or the plan 
        provides for the payment of all such fees, costs, and expenses 
        on the effective date of the plan.
          ``(18) In a case under subchapter V, confirmation of the plan 
        is not likely to cause serious adverse effects on financial 
        stability in the United States.''.
  (f) Section 322(b)(2) of title 11, United States Code, is amended by 
striking ``The'' and inserting ``In cases under subchapter V, the 
United States trustee shall recommend to the court, and in all other 
cases, the''.

SEC. 3. LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A COVERED 
                    FINANCIAL CORPORATION.

  Chapter 11 of title 11, United States Code, is amended by adding at 
the end the following:

 ``SUBCHAPTER V--LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A 
                     COVERED FINANCIAL CORPORATION

``Sec. 1181. Inapplicability of other sections

  ``Sections 303 and 321(c) do not apply in a case under this 
subchapter concerning a covered financial corporation. Section 365 does 
not apply to a transfer under section 1185, 1187, or 1188.

``Sec. 1182. Definitions for this subchapter

  ``In this subchapter, the following definitions shall apply:
          ``(1) The term `Board' means the Board of Governors of the 
        Federal Reserve System.
          ``(2) The term `bridge company' means a newly formed 
        corporation to which property of the estate may be transferred 
        under section 1185(a) and the equity securities of which may be 
        transferred to a special trustee under section 1186(a).
          ``(3) The term `capital structure debt' means all unsecured 
        debt of the debtor for borrowed money for which the debtor is 
        the primary obligor, other than a qualified financial contract 
        and other than debt secured by a lien on property of the estate 
        that is to be transferred to a bridge company pursuant to an 
        order of the court under section 1185(a).
          ``(4) The term `contractual right' means a contractual right 
        of a kind defined in section 555, 556, 559, 560, or 561.
          ``(5) The term `qualified financial contract' means any 
        contract of a kind defined in paragraph (25), (38A), (47), or 
        (53B) of section 101, section 741(7), or paragraph (4), (5), 
        (11), or (13) of section 761.
          ``(6) The term `special trustee' means the trustee of a trust 
        formed under section 1186(a)(1).

``Sec. 1183. Commencement of a case concerning a covered financial 
                    corporation

  ``(a) A case under this subchapter concerning a covered financial 
corporation may be commenced by the filing of a petition with the court 
by the debtor under section 301 only if the debtor states to the best 
of its knowledge under penalty of perjury in the petition that it is a 
covered financial corporation.
  ``(b) The commencement of a case under subsection (a) constitutes an 
order for relief under this subchapter.
  ``(c) The members of the board of directors (or body performing 
similar functions) of a covered financial company shall have no 
liability to shareholders, creditors, or other parties in interest for 
a good faith filing of a petition to commence a case under this 
subchapter, or for any reasonable action taken in good faith in 
contemplation of or in connection with such a petition or a transfer 
under section 1185 or section 1186, whether prior to or after 
commencement of the case.
  ``(d) Counsel to the debtor shall provide, to the greatest extent 
practicable without disclosing the identity of the potential debtor, 
sufficient confidential notice to the chief judge of the court of 
appeals for the circuit embracing the district in which such counsel 
intends to file a petition to commence a case under this subchapter 
regarding the potential commencement of such case. The chief judge of 
such court shall randomly assign to preside over such case a bankruptcy 
judge selected from among the bankruptcy judges designated by the Chief 
Justice of the United States under section 298 of title 28.

``Sec. 1184. Regulators

  ``The Board, the Securities Exchange Commission, the Office of the 
Comptroller of the Currency of the Department of the Treasury, the 
Commodity Futures Trading Commission, and the Federal Deposit Insurance 
Corporation may raise and may appear and be heard on any issue in any 
case or proceeding under this subchapter.

``Sec. 1185. Special transfer of property of the estate

  ``(a) On request of the trustee, and after notice and a hearing that 
shall occur not less than 24 hours after the order for relief, the 
court may order a transfer under this section of property of the 
estate, and the assignment of executory contracts, unexpired leases, 
and qualified financial contracts of the debtor, to a bridge company. 
Upon the entry of an order approving such transfer, any property 
transferred, and any executory contracts, unexpired leases, and 
qualified financial contracts assigned under such order shall no longer 
be property of the estate. Except as provided under this section, the 
provisions of section 363 shall apply to a transfer and assignment 
under this section.
  ``(b) Unless the court orders otherwise, notice of a request for an 
order under subsection (a) shall consist of electronic or telephonic 
notice of not less than 24 hours to--
          ``(1) the debtor;
          ``(2) the holders of the 20 largest secured claims against 
        the debtor;
          ``(3) the holders of the 20 largest unsecured claims against 
        the debtor;
          ``(4) counterparties to any debt, executory contract, 
        unexpired lease, and qualified financial contract requested to 
        be transferred under this section;
          ``(5) the Board;
          ``(6) the Federal Deposit Insurance Corporation;
          ``(7) the Secretary of the Treasury and the Office of the 
        Comptroller of the Currency of the Treasury;
          ``(8) the Commodity Futures Trading Commission;
          ``(9) the Securities and Exchange Commission;
          ``(10) the United States trustee or bankruptcy administrator; 
        and
          ``(11) each primary financial regulatory agency, as defined 
        in section 2(12) of the Dodd-Frank Wall Street Reform and 
        Consumer Protection Act, with respect to any affiliate the 
        equity securities of which are proposed to be transferred under 
        this section.
  ``(c) The court may not order a transfer under this section unless 
the court determines, based upon a preponderance of the evidence, 
that--
          ``(1) the transfer under this section is necessary to prevent 
        serious adverse effects on financial stability in the United 
        States;
          ``(2) the transfer does not provide for the assumption of any 
        capital structure debt by the bridge company;
          ``(3) the transfer does not provide for the transfer to the 
        bridge company of any property of the estate that is subject to 
        a lien securing a debt, executory contract, unexpired lease or 
        agreement (including a qualified financial contract) of the 
        debtor unless--
                  ``(A)(i) the bridge company assumes such debt, 
                executory contract, unexpired lease or agreement 
                (including a qualified financial contract), including 
                any claims arising in respect thereof that would not be 
                allowed secured claims under section 506(a)(1) and 
                after giving effect to such transfer, such property 
                remains subject to the lien securing such debt, 
                executory contract, unexpired lease or agreement 
                (including a qualified financial contract); and
                  ``(ii) the court has determined that assumption of 
                such debt, executory contract, unexpired lease or 
                agreement (including a qualified financial contract) by 
                the bridge company is in the best interests of the 
                estate; or
                  ``(B) such property is being transferred to the 
                bridge company in accordance with the provisions of 
                section 363;
          ``(4) the transfer does not provide for the assumption by the 
        bridge company of any debt, executory contract, unexpired lease 
        or agreement (including a qualified financial contract) of the 
        debtor secured by a lien on property of the estate unless the 
        transfer provides for such property to be transferred to the 
        bridge company in accordance with paragraph (3)(A) of this 
        subsection;
          ``(5) the transfer does not provide for the transfer of the 
        equity of the debtor;
          ``(6) the trustee has demonstrated that the bridge company is 
        not likely to fail to meet the obligations of any debt, 
        executory contract, qualified financial contract, or unexpired 
        lease assumed and assigned to the bridge company;
          ``(7) the transfer provides for the transfer to a special 
        trustee all of the equity securities in the bridge company and 
        appointment of a special trustee in accordance with section 
        1186;
          ``(8) after giving effect to the transfer, adequate provision 
        has been made for the fees, costs, and expenses of the estate 
        and special trustee; and
          ``(9) the bridge company will have governing documents, and 
        initial directors and senior officers, that are in the best 
        interest of creditors and the estate.
  ``(d) Immediately before a transfer under this section, the bridge 
company that is the recipient of the transfer shall--
          ``(1) not have any property, executory contracts, unexpired 
        leases, qualified financial contracts, or debts, other than any 
        property acquired or executory contracts, unexpired leases, or 
        debts assumed when acting as a transferee of a transfer under 
        this section; and
          ``(2) have equity securities that are property of the estate, 
        which may be sold or distributed in accordance with this title.

``Sec. 1186. Special trustee

  ``(a)(1) An order approving a transfer under section 1185 shall 
require the trustee to transfer to a qualified and independent special 
trustee, who is appointed by the court, all of the equity securities in 
the bridge company that is the recipient of a transfer under section 
1185 to hold in trust for the sole benefit of the estate, subject to 
satisfaction of the special trustee's fees, costs, and expenses. The 
trust of which the special trustee is the trustee shall be a newly 
formed trust governed by a trust agreement approved by the court as in 
the best interests of the estate, and shall exist for the sole purpose 
of holding and administering, and shall be permitted to dispose of, the 
equity securities of the bridge company in accordance with the trust 
agreement.
  ``(2) In connection with the hearing to approve a transfer under 
section 1185, the trustee shall confirm to the court that the Board has 
been consulted regarding the identity of the proposed special trustee 
and advise the court of the results of such consultation.
  ``(b) The trust agreement governing the trust shall provide--
          ``(1) for the payment of the fees, costs, expenses, and 
        indemnities of the special trustee from the assets of the 
        debtor's estate;
          ``(2) that the special trustee provide--
                  ``(A) quarterly reporting to the estate, which shall 
                be filed with the court; and
                  ``(B) information about the bridge company reasonably 
                requested by a party in interest to prepare a 
                disclosure statement for a plan providing for 
                distribution of any securities of the bridge company if 
                such information is necessary to prepare such 
                disclosure statement;
          ``(3) that for as long as the equity securities of the bridge 
        company are held by the trust, the special trustee shall file a 
        notice with the court in connection with--
                  ``(A) any change in a director or senior officer of 
                the bridge company;
                  ``(B) any modification to the governing documents of 
                the bridge company; and
                  ``(C) any material corporate action of the bridge 
                company, including--
                          ``(i) recapitalization;
                          ``(ii) a material borrowing;
                          ``(iii) termination of an intercompany debt 
                        or guarantee;
                          ``(iv) a transfer of a substantial portion of 
                        the assets of the bridge company; or
                          ``(v) the issuance or sale of any securities 
                        of the bridge company;
          ``(4) that any sale of any equity securities of the bridge 
        company shall not be consummated until the special trustee 
        consults with the Federal Deposit Insurance Corporation and the 
        Board regarding such sale and discloses the results of such 
        consultation with the court;
          ``(5) that, subject to reserves for payments permitted under 
        paragraph (1) provided for in the trust agreement, the proceeds 
        of the sale of any equity securities of the bridge company by 
        the special trustee be held in trust for the benefit of or 
        transferred to the estate;
          ``(6) the process and guidelines for the replacement of the 
        special trustee; and
          ``(7) that the property held in trust by the special trustee 
        is subject to distribution in accordance with subsection (c).
  ``(c)(1) The special trustee shall distribute the assets held in 
trust--
          ``(A) if the court confirms a plan in the case, in accordance 
        with the plan on the effective date of the plan; or
          ``(B) if the case is converted to a case under chapter 7, as 
        ordered by the court.
  ``(2) As soon as practicable after a final distribution under 
paragraph (1), the office of the special trustee shall terminate, 
except as may be necessary to wind up and conclude the business and 
financial affairs of the trust.
  ``(d) After a transfer to the special trustee under this section, the 
special trustee shall be subject only to applicable nonbankruptcy law, 
and the actions and conduct of the special trustee shall no longer be 
subject to approval by the court in the case under this subchapter.

``Sec. 1187. Temporary and supplemental automatic stay; assumed debt

  ``(a)(1) A petition filed under section 1183 operates as a stay, 
applicable to all entities, of the termination, acceleration, or 
modification of any debt, contract, lease, or agreement of the kind 
described in paragraph (2), or of any right or obligation under any 
such debt, contract, lease, or agreement, solely because of--
          ``(A) a default by the debtor under any such debt, contract, 
        lease, or agreement; or
          ``(B) a provision in such debt, contract, lease, or 
        agreement, or in applicable nonbankruptcy law, that is 
        conditioned on--
                  ``(i) the insolvency or financial condition of the 
                debtor at any time before the closing of the case;
                  ``(ii) the commencement of a case under this title 
                concerning the debtor;
                  ``(iii) the appointment of or taking possession by a 
                trustee in a case under this title concerning the 
                debtor or by a custodian before the commencement of the 
                case; or
                  ``(iv) a credit rating agency rating, or absence or 
                withdrawal of a credit rating agency rating--
                          ``(I) of the debtor at any time after the 
                        commencement of the case;
                          ``(II) of an affiliate during the period from 
                        the commencement of the case until 48 hours 
                        after such order is entered;
                          ``(III) of the bridge company while the 
                        trustee or the special trustee is a direct or 
                        indirect beneficial holder of more than 50 
                        percent of the equity securities of--
                                  ``(aa) the bridge company; or
                                  ``(bb) the affiliate, if all of the 
                                direct or indirect interests in the 
                                affiliate that are property of the 
                                estate are transferred under section 
                                1185; or
                          ``(IV) of an affiliate while the trustee or 
                        the special trustee is a direct or indirect 
                        beneficial holder of more than 50 percent of 
                        the equity securities of--
                                  ``(aa) the bridge company; or
                                  ``(bb) the affiliate, if all of the 
                                direct or indirect interests in the 
                                affiliate that are property of the 
                                estate are transferred under section 
                                1185.
  ``(2) A debt, contract, lease, or agreement described in this 
paragraph is--
          ``(A) any debt (other than capital structure debt), executory 
        contract, or unexpired lease of the debtor (other than a 
        qualified financial contract);
          ``(B) any agreement under which the debtor issued or is 
        obligated for debt (other than capital structure debt);
          ``(C) any debt, executory contract, or unexpired lease of an 
        affiliate (other than a qualified financial contract); or
          ``(D) any agreement under which an affiliate issued or is 
        obligated for debt.
  ``(3) The stay under this subsection terminates--
          ``(A) for the benefit of the debtor, upon the earliest of--
                  ``(i) 48 hours after the commencement of the case;
                  ``(ii) assumption of the debt, contract, lease, or 
                agreement by the bridge company under an order 
                authorizing a transfer under section 1185;
                  ``(iii) a final order of the court denying the 
                request for a transfer under section 1185; or
                  ``(iv) the time the case is dismissed; and
          ``(B) for the benefit of an affiliate, upon the earliest of--
                  ``(i) the entry of an order authorizing a transfer 
                under section 1185 in which the direct or indirect 
                interests in the affiliate that are property of the 
                estate are not transferred under section 1185;
                  ``(ii) a final order by the court denying the request 
                for a transfer under section 1185;
                  ``(iii) 48 hours after the commencement of the case 
                if the court has not ordered a transfer under section 
                1185; or
                  ``(iv) the time the case is dismissed.
  ``(4) Subsections (d), (e), (f), and (g) of section 362 apply to a 
stay under this subsection.
  ``(b) A debt, executory contract (other than a qualified financial 
contract), or unexpired lease of the debtor, or an agreement under 
which the debtor has issued or is obligated for any debt, may be 
assumed by a bridge company in a transfer under section 1185 
notwithstanding any provision in an agreement or in applicable 
nonbankruptcy law that--
          ``(1) prohibits, restricts, or conditions the assignment of 
        the debt, contract, lease, or agreement; or
          ``(2) accelerates, terminates, or modifies, or permits a 
        party other than the debtor to terminate or modify, the debt, 
        contract, lease, or agreement on account of--
                  ``(A) the assignment of the debt, contract, lease, or 
                agreement; or
                  ``(B) a change in control of any party to the debt, 
                contract, lease, or agreement.
  ``(c)(1) A debt, contract, lease, or agreement of the kind described 
in subparagraph (A) or (B) of subsection (a)(2) may not be accelerated, 
terminated, or modified, and any right or obligation under such debt, 
contract, lease, or agreement may not be accelerated, terminated, or 
modified, as to the bridge company solely because of a provision in the 
debt, contract, lease, or agreement or in applicable nonbankruptcy 
law--
          ``(A) of the kind described in subsection (a)(1)(B) as 
        applied to the debtor;
          ``(B) that prohibits, restricts, or conditions the assignment 
        of the debt, contract, lease, or agreement; or
          ``(C) that accelerates, terminates, or modifies, or permits a 
        party other than the debtor to terminate or modify, the debt, 
        contract, lease or agreement on account of--
                  ``(i) the assignment of the debt, contract, lease, or 
                agreement; or
                  ``(ii) a change in control of any party to the debt, 
                contract, lease, or agreement.
  ``(2) If there is a default by the debtor under a provision other 
than the kind described in paragraph (1) in a debt, contract, lease or 
agreement of the kind described in subparagraph (A) or (B) of 
subsection (a)(2), the bridge company may assume such debt, contract, 
lease, or agreement only if the bridge company--
          ``(A) shall cure the default;
          ``(B) compensates, or provides adequate assurance in 
        connection with a transfer under section 1185 that the bridge 
        company will promptly compensate, a party other than the debtor 
        to the debt, contract, lease, or agreement, for any actual 
        pecuniary loss to the party resulting from the default; and
          ``(C) provides adequate assurance in connection with a 
        transfer under section 1185 of future performance under the 
        debt, contract, lease, or agreement, as determined by the court 
        under section 1185(c)(4).

``Sec. 1188. Treatment of qualified financial contracts and affiliate 
                    contracts

  ``(a) Notwithstanding sections 362(b)(6), 362(b)(7), 362(b)(17), 
362(b)(27), 362(o), 555, 556, 559, 560, and 561, a petition filed under 
section 1183 operates as a stay, during the period specified in section 
1187(a)(3)(A), applicable to all entities, of the exercise of a 
contractual right--
          ``(1) to cause the modification, liquidation, termination, or 
        acceleration of a qualified financial contract of the debtor or 
        an affiliate;
          ``(2) to offset or net out any termination value, payment 
        amount, or other transfer obligation arising under or in 
        connection with a qualified financial contract of the debtor or 
        an affiliate; or
          ``(3) under any security agreement or arrangement or other 
        credit enhancement forming a part of or related to a qualified 
        financial contract of the debtor or an affiliate.
  ``(b)(1) During the period specified in section 1187(a)(3)(A), the 
trustee or the affiliate shall perform all payment and delivery 
obligations under such qualified financial contract of the debtor or 
the affiliate, as the case may be, that become due after the 
commencement of the case. The stay provided under subsection (a) 
terminates as to a qualified financial contract of the debtor or an 
affiliate immediately upon the failure of the trustee or the affiliate, 
as the case may be, to perform any such obligation during such period.
  ``(2) Any failure by a counterparty to any qualified financial 
contract of the debtor or any affiliate to perform any payment or 
delivery obligation under such qualified financial contract, including 
during the pendency of the stay provided under subsection (a), shall 
constitute a breach of such qualified financial contract by the 
counterparty.
  ``(c) Subject to the court's approval, a qualified financial contract 
between an entity and the debtor may be assigned to or assumed by the 
bridge company in a transfer under, and in accordance with, section 
1185 if and only if--
          ``(1) all qualified financial contracts between the entity 
        and the debtor are assigned to and assumed by the bridge 
        company in the transfer under section 1185;
          ``(2) all claims of the entity against the debtor in respect 
        of any qualified financial contract between the entity and the 
        debtor (other than any claim that, under the terms of the 
        qualified financial contract, is subordinated to the claims of 
        general unsecured creditors) are assigned to and assumed by the 
        bridge company;
          ``(3) all claims of the debtor against the entity under any 
        qualified financial contract between the entity and the debtor 
        are assigned to and assumed by the bridge company; and
          ``(4) all property securing or any other credit enhancement 
        furnished by the debtor for any qualified financial contract 
        described in paragraph (1) or any claim described in paragraph 
        (2) or (3) under any qualified financial contract between the 
        entity and the debtor is assigned to and assumed by the bridge 
        company.
  ``(d) Notwithstanding any provision of a qualified financial contract 
or of applicable nonbankruptcy law, a qualified financial contract of 
the debtor that is assumed or assigned in a transfer under section 1185 
may not be accelerated, terminated, or modified, after the entry of the 
order approving a transfer under section 1185, and any right or 
obligation under the qualified financial contract may not be 
accelerated, terminated, or modified, after the entry of the order 
approving a transfer under section 1185 solely because of a condition 
described in section 1187(c)(1), other than a condition of the kind 
specified in section 1187(b) that occurs after property of the estate 
no longer includes a direct beneficial interest or an indirect 
beneficial interest through the special trustee, in more than 50 
percent of the equity securities of the bridge company.
  ``(e) Notwithstanding any provision of any agreement or in applicable 
nonbankruptcy law, an agreement of an affiliate (including an executory 
contract, an unexpired lease, qualified financial contract, or an 
agreement under which the affiliate issued or is obligated for debt) 
and any right or obligation under such agreement may not be 
accelerated, terminated, or modified, solely because of a condition 
described in section 1187(c)(1), other than a condition of the kind 
specified in section 1187(b) that occurs after the bridge company is no 
longer a direct or indirect beneficial holder of more than 50 percent 
of the equity securities of the affiliate, at any time after the 
commencement of the case if--
          ``(1) all direct or indirect interests in the affiliate that 
        are property of the estate are transferred under section 1185 
        to the bridge company within the period specified in subsection 
        (a);
          ``(2) the bridge company assumes--
                  ``(A) any guarantee or other credit enhancement 
                issued by the debtor relating to the agreement of the 
                affiliate; and
                  ``(B) any obligations in respect of rights of setoff, 
                netting arrangement, or debt of the debtor that 
                directly arises out of or directly relates to the 
                guarantee or credit enhancement; and
          ``(3) any property of the estate that directly serves as 
        collateral for the guarantee or credit enhancement is 
        transferred to the bridge company.

``Sec. 1189. Licenses, permits, and registrations

  ``(a) Notwithstanding any otherwise applicable nonbankruptcy law, if 
a request is made under section 1185 for a transfer of property of the 
estate, any Federal, State, or local license, permit, or registration 
that the debtor or an affiliate had immediately before the commencement 
of the case and that is proposed to be transferred under section 1185 
may not be accelerated, terminated, or modified at any time after the 
request solely on account of--
          ``(1) the insolvency or financial condition of the debtor at 
        any time before the closing of the case;
          ``(2) the commencement of a case under this title concerning 
        the debtor;
          ``(3) the appointment of or taking possession by a trustee in 
        a case under this title concerning the debtor or by a custodian 
        before the commencement of the case; or
          ``(4) a transfer under section 1185.
  ``(b) Notwithstanding any otherwise applicable nonbankruptcy law, any 
Federal, State, or local license, permit, or registration that the 
debtor had immediately before the commencement of the case that is 
included in a transfer under section 1185 shall be valid and all rights 
and obligations thereunder shall vest in the bridge company.

``Sec. 1190. Exemption from securities laws

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

``Sec. 1191. Inapplicability of certain avoiding powers

  ``A transfer made or an obligation incurred by the debtor to an 
affiliate prior to or after the commencement of the case, including any 
obligation released by the debtor or the estate to or for the benefit 
of an affiliate, in contemplation of or in connection with a transfer 
under section 1185 is not avoidable under section 544, 547, 
548(a)(1)(B), or 549, or under any similar nonbankruptcy law.

``Sec. 1192. Consideration of financial stability

  ``The court may consider the effect that any decision in connection 
with this subchapter may have on financial stability in the United 
States.''.

SEC. 4. AMENDMENTS TO TITLE 28, UNITED STATES CODE.

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

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

  ``(a)(1) Notwithstanding section 295, the Chief Justice of the United 
States shall designate not fewer than 10 bankruptcy judges to be 
available to hear a case under subchapter V of chapter 11 of title 11. 
Bankruptcy judges may request to be considered by the Chief Justice of 
the United States for such designation.
  ``(2) Notwithstanding section 155, a case under subchapter V of 
chapter 11 of title 11 shall be heard under section 157 by a bankruptcy 
judge designated under paragraph (1), who shall be randomly assigned to 
hear such case by the chief judge of the court of appeals for the 
circuit embracing the district in which the case is pending. To the 
greatest extent practicable, the approvals required under section 155 
should be obtained.
  ``(3) If the bankruptcy judge assigned to hear a case under paragraph 
(2) is not assigned to the district in which the case is pending, the 
bankruptcy judge shall be temporarily assigned to the district.
  ``(b) A case under subchapter V of chapter 11 of title 11, and all 
proceedings in the case, shall take place in the district in which the 
case is pending.
  ``(c) In this section, the term `covered financial corporation' has 
the meaning given that term in section 101(9A) of title 11.''.
  (b) Amendment to Section 1334 of Title 28.--Section 1334 of title 28, 
United States Code, is amended by adding at the end the following:
  ``(f) This section does not grant jurisdiction to the district court 
after a transfer pursuant to an order under section 1185 of title 11 of 
any proceeding related to a special trustee appointed, or to a bridge 
company formed, in connection with a case under subchapter V of chapter 
11 of title 11.''.
  (c) Technical and Conforming Amendment.--The table of sections for 
chapter 13 of title 28, United States Code, is amended by adding at the 
end the following:

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

                          Purpose and Summary

    The U.S. bankruptcy process is not optimally designed for 
the orderly resolution of financial institutions for many 
reasons, including these institutions' interconnectedness and, 
in the case of larger and more interconnected institutions, a 
potential to pose ``systemic risk'' to the broader financial 
system. H.R. 2947, the ``Financial Institution Bankruptcy Act 
of 2016,'' amends chapter 11 of Title 11 of the United States 
Code (Bankruptcy Code) to address better the unique challenges 
presented by the insolvency of a financial institution and 
better allow such an institution to be resolved through the 
bankruptcy process.

                Background and Need for the Legislation

                    A. BRIEF OVERVIEW OF CHAPTER 11

    Chapter 11 of the Bankruptcy Code is designed primarily to 
allow a business to restructure its debt obligations while 
maintaining its operations. The underlying principle is that a 
business in its entirety is more valuable than each of its 
assets valued independently. Preservation of a business through 
chapter 11, and in turn its enterprise value, can benefit both 
creditors, who should receive a higher recovery as a result of 
a debtor's restructuring than they would otherwise obtain 
through a liquidation, and debtors, who benefit from the 
ability to continue their business operations. Employees, 
suppliers, customers and others can also benefit if debtors 
continue their business operations.
    A chapter 11 case begins by the filing of a petition for 
relief with the relevant bankruptcy court. Once the petition is 
filed, an ``automatic stay'' is put into place that prevents, 
with some exceptions, creditors from taking actions to recover 
their debts. The automatic stay allows a debtor the breathing 
room necessary to organize its operations, negotiate with 
creditors, and achieve consensus on a chapter 11 plan. The 
inflection point of a chapter 11 case is the chapter 11 plan, 
which dictates what each of the creditors will receive as a 
recovery. The chapter 11 plan must be approved by the debtor's 
creditors and the bankruptcy court. Once a chapter 11 plan is 
approved, creditors of the debtor may only pursue recoveries as 
provided by the chapter 11 plan, and the reorganized company is 
treated as a new corporate entity.
    There are generally two primary paths for a debtor to 
restructure under chapter 11. The first path is a traditional 
reorganization of a debtor's capital structure. A simple 
example of this type of reorganization would involve a debtor's 
shareholders not receiving any recovery on account of their 
shares, and the debtor's secured creditors becoming the new 
equity holders of the reorganized company. The second path is a 
sale of a debtor's primary business, with the proceeds of the 
sale used to provide recoveries to the debtor's creditors. The 
sale of a business as a whole is distinct from a liquidation, 
in that the enterprise typically will continue to operate in a 
substantially similar form under new, third party ownership. In 
a liquidation, the debtor's assets likely will be sold in 
piecemeal fashion or simply handed over to creditors.

 B. THE EXISTING BANKRUPTCY CODE AND ADDRESSING FINANCIAL INSTITUTION 
                              INSOLVENCIES

    The bankruptcy process has been the traditional mechanism 
for handling the orderly resolution of distressed companies in 
the U.S. because of bankruptcy's established history of laws, 
precedent and impartial administration. According to a report 
by the Federal Deposit Insurance Corporation (FDIC) and the 
Bank of England, ``[t]he U.S. would prefer that large financial 
organizations be resolvable through ordinary bankruptcy.''\1\ 
However, the report added that ``the U.S. bankruptcy process 
may not be able to handle the failure of a systemic financial 
institution without significant disruption to the financial 
system.''\2\ Of note, smaller financial institutions can also 
restructure their operations under the Bankruptcy Code in the 
event of material financial distress or failure.
---------------------------------------------------------------------------
    \1\See Federal Deposit Insurance Corporation and the Bank of 
England, Resolving Globally 
Active, Systemically Important, Financial Institutions (Dec. 10, 2012), 
available at http://www.bankofengland.co.uk/publications/Documents/
news/2012/nr156.pdf.
    \2\Id.
---------------------------------------------------------------------------
    In the wake of the 2008 financial crisis, the Dodd-Frank 
Wall Street Reform and Consumer Protection Act, Pub. L. No. 
111-203, directed the Board of Governors of the Federal Reserve 
System (Federal Reserve) and the Governmental Accountability 
Office (GAO) to study the Bankruptcy Code and international 
issues related to the insolvency of financial institutions as 
part of an overall effort to reduce systemic risk within the 
financial sector.\3\ The studies identified a number of issues 
specific to the resolution of insolvent financial institutions 
and discussed theories regarding how to address such issues, 
without offering specific recommendations or independent 
opinions regarding potential revisions to the Bankruptcy 
Code.\4\
---------------------------------------------------------------------------
    \3\Pub. L. No. 111-203 Sec. Sec. 202(e), 216, 217 (2010).
    \4\See the Board of Governors of the Federal Reserve System, Study 
on the International Coordination Relating to Bankruptcy Process for 
Nonbank Financial Institutions (July 2011); see also Government 
Accountability Office, Complex Financial Institutions and International 
Coordinate Pose Challenges (July 2011).
---------------------------------------------------------------------------
    Following these reports, the FDIC published a notice 
detailing its intended method for implementing its resolution/
orderly liquidation authority under Title II of the Dodd-Frank 
Act, a non-bankruptcy resolution process the Dodd-Frank 
legislation made available for large, ``systemically 
important'' financial institutions.\5\ The FDIC's method, 
referred to as ``single point of entry,'' relies on placing a 
parent holding company into receivership while maintaining the 
operations and solvency of its operating subsidiaries.\6\ Under 
this approach, the FDIC would be appointed as the receiver of 
the parent holding company and could transfer the parent 
company's assets into a bridge financial holding company, 
impose losses on the shareholders and creditors of the parent 
company, and eventually transition ownership of the bridge 
financial company into private hands.\7\
---------------------------------------------------------------------------
    \5\Resolution of Systemically Important Financial Institutions: The 
Single Point of Entry Strategy, 78 Fed. Reg. 76,614 (Dec. 18, 2013).
    \6\Id.
    \7\Id.
---------------------------------------------------------------------------
    Some commentators have suggested that the ``single point of 
entry'' approach should also be made available in the 
Bankruptcy Code.\8\ One of the proposed methods to amend the 
Bankruptcy Code to facilitate the use of this approach creates 
an entirely new subchapter within chapter 11, referred to as 
``subchapter V,'' dedicated to addressing the insolvency of a 
financial institution.
---------------------------------------------------------------------------
    \8\See The Bankruptcy Code and Financial Institution Insolvencies: 
Hearing Before the Subcomm. on Regulatory Reform, Commercial and 
Antitrust Law of the H. Comm. on the Judiciary, 113th Cong. 12 (2013) 
(hereinafter December Bankruptcy Hearing) (statement of Donald S. 
Bernstein).
---------------------------------------------------------------------------
    Another leading proposal is referred to as ``chapter 14'' 
and would introduce an entirely new chapter to the Bankruptcy 
Code, with substantially similar amendments to the Bankruptcy 
Code as subchapter V. One significant difference between these 
two approaches is that chapter 14 may not incorporate the 
relevant case law related to other components of chapter 11 
that remain undisturbed under both approaches, while subchapter 
V clearly maintains such case law.\9\
---------------------------------------------------------------------------
    \9\Letter from Stephen E. Hessler, Partner, Kirkland & Ellis LLP to 
Bob Goodlatte et al., Chairman, House of Representatives Committee on 
the Judiciary (Mar. 14, 2016) (on file with the Committee).
---------------------------------------------------------------------------
    As explained in additional detail below, the subchapter V 
proposal is designed to address the unique issues presented by 
a financial institution's bankruptcy. Subchapter V would, among 
other elements: apply to financial institutions; confer 
explicit standing to the financial institution's primary 
regulators in the institution's bankruptcy proceeding; 
designate a select group of bankruptcy judges to oversee these 
bankruptcies; and, provide specialized treatment for derivative 
contracts. Advocates of this approach argue that a transparent 
judicial process that allows for the reorganization, rather 
than liquidation, of a large financial institution is a 
preferable resolution strategy because of, among other things, 
the benefits of due process.\10\
---------------------------------------------------------------------------
    \10\H.R. ____, the ``Financial INstitution Bankruptcy Act of 
2014'': Hearing Before the Subcomm. on Regulatory Reform, Commercial 
and Antitrust Law of the H. Comm. on the Judiciary, 113th Cong. (2014) 
at 34 (hereinafter July FIBA Hearing) (statement of Donald S. 
Bernstein).
---------------------------------------------------------------------------

 C. THE CHALLENGES PRESENTED BY A FINANCIAL INSTITUTION INSOLVENCY AND 
HOW THE FINANCIAL INSTITUTION BANKRUPTCY ACT ADDRESSES THESE CHALLENGES

    There are a number of challenges posed by the insolvency of 
a financial institution, particularly the insolvency of a 
large, multi-national financial institution. The resolution of 
a financial institution must be swift, transparent and account 
for the potential impact on the general financial system, due 
to the typically liquid and quickly transferable assets of a 
financial institution. While the existing Bankruptcy Code 
possesses many of the provisions necessary to resolve a large, 
failing firm, commentators have suggested that improvements are 
necessary to resolve effectively a financial institution.\11\
---------------------------------------------------------------------------
    \11\See, e.g., Too Big To Fail: The Role for Bankruptcy and 
Antitrust Law in Financial Regulation Reform (Part I): Hearing before 
the Subcomm. on Commercial and Administrative Law of the H. Comm. on 
the Judiciary, 111th Cong. 64-79 (2009) (statement of Harvey R. 
Miller).
---------------------------------------------------------------------------
    As explained above, commentators generally agree that the 
``single point of entry'' approach is the most efficient 
proposal to provide for an expeditious resolution of a 
financial firm.\12\ H.R. 2947, the ``Financial Institution 
Bankruptcy Act of 2016,'' adopts the proposed method of 
creating a new subchapter within chapter 11 of the Bankruptcy 
Code to allow the ``single point of entry'' approach to be 
utilized in the bankruptcy process. H.R. 2947 allows the debtor 
holding company that sits atop the financial firm's corporate 
structure to transfer its assets, including the equity in all 
of its operating subsidiaries, to a newly-formed bridge company 
over a single weekend.\13\ The debt, any remaining assets, and 
equity of the holding company will remain in the bankruptcy 
process and absorb the losses of the financial institution. 
Identifying the debt and equity to remain in the bankruptcy 
process allows existing creditors of the debtor to price 
appropriately their dealings and investment with the debtor 
prior to any bankruptcy proceeding.
---------------------------------------------------------------------------
    \12\See, e.g., July FIBA Hearing (statements of Donald Bernstein & 
Thomas Jackson).
    \13\Given the sensitivity of banking relationships and the 
financial marketplace, practicalities dictate that this transfer must 
be performed over the course of a period when the financial markets are 
not open.
---------------------------------------------------------------------------
    Furthermore, the subchapter V ``single point of entry'' 
approach allows all of the financial institution's operating 
subsidiaries to remain out of the bankruptcy process. Keeping 
these entities out of an insolvency proceeding is particularly 
helpful for multi-national firms that otherwise could be 
required to comply with multiple, and potentially conflicting, 
insolvency jurisdictions. The following is a graphical 
representation of the ``single point of entry'' approach in 
bankruptcy.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               __________

    The amendments to the Bankruptcy Code contained in H.R. 
2947 also account for the potential of a financial firm's 
insolvency to impact the general financial markets, often 
referred to as systemic risk. H.R. 2947 provides that key 
financial regulators are granted explicit standing in 
subchapter V cases in order to give the presiding bankruptcy 
judge the benefit of their views when considering pending 
motions. Additionally, the legislation allows the presiding 
bankruptcy judge to consider the impact of a decision on 
financial stability in the United States before issuing a final 
judgment on any motion. Both of these provisions are designed 
to account for the potential of systemic risk in a subchapter V 
case.
    An additional element of H.R. 2947 intended to address 
systemic risk is its amendments to the Bankruptcy Code that 
deal with the types of transactions through which systemic 
contagion can most readily spread and that financial 
institutions engage in routinely, namely, derivative and 
similarly-structured transactions. Currently, the Bankruptcy 
Code contains exemptions for counterparties to derivative and 
similarly-structured transactions to collect on outstanding 
debts notwithstanding the commencement of a chapter 11 case and 
the consequent ``automatic stay.'' This exemption stands in 
contrast to the treatment of other contracts and debts under 
the Bankruptcy Code, which typically results in requiring 
creditors to wait until a chapter 11 plan is approved before 
they receive a recovery on account of their relationship with 
the debtor. H.R. 2947 overrides the exemption for derivative 
and similarly-structured transactions contained in the 
Bankruptcy Code by imposing a temporary 2-day stay that would 
allow for the effective transfer of the financial institution's 
operations to a bridge company. Without this override of the 
existing exemption, counterparties to derivatives and 
similarly-structured transactions could terminate their 
relationships with a financial institution debtor upon the 
commencement of a bankruptcy case, which likely would endanger 
the successful transfer and continued operation of the bridge 
company and potentially threaten other entities within the 
broader financial system.\14\
---------------------------------------------------------------------------
    \14\July FIBA Hearing (statement of Stephen E. Hessler).
---------------------------------------------------------------------------
    H.R. 2947 contains key protections for counterparties to 
derivative contracts. For example, new section 1188(b) under 
the bill requires the financial institution to perform its 
contractual obligations during the stay, the failure of which 
results in the termination of the stay.\15\ This provision 
ensures that the financial institution continues to perform 
such that counterparties are protected during the brief stay 
period. Additionally, to the extent the financial institution 
wishes to transfer its derivative contracts to the bridge 
institution, all of the contracts between the financial 
institution and the counterparty must be transferred.\16\ This 
ensures that the financial institution cannot ``cherry pick'' 
between the contracts it has with a particular counterparty. 
Additionally, the financial institution must transfer all 
related claims and collateral along with the to-be transferred 
derivative contracts.\17\ This provision ensures that the 
counterparty has all of its rights and collateral preserved at 
the bridge company. Finally, immediately following the 
transfer, a derivative contract counterparty may terminate the 
contract based on any provision predicated on the non-
performance of a contractual obligation. In sum, derivative 
contract counterparties have a host of protections afforded to 
them within H.R. 2947.
---------------------------------------------------------------------------
    \15\H.R. 2947 Sec. 1188(b).
    \16\H.R. 2947 Sec. 1188(c)(1).
    \17\H.R. 2947 Sec. Sec. 1188(c)(2)-(4).
---------------------------------------------------------------------------
    Notably, 18 major financial institutions have separately 
and voluntarily agreed to include a 48-hour stay in their 
derivative contracts with each other to the extent any of the 
financial institutions are subject to a ``resolution 
action.''\18\ In other words, these institutions already have 
voluntarily incorporated the 48-hour stay concept included in 
H.R. 2947. However, these voluntary agreements are not 
comprehensive and some parties who enter into derivative 
contracts are not subject to the voluntary 48-hour stay.
---------------------------------------------------------------------------
    \18\International Swaps and Derivatives Association, Major Banks 
Agree to Sign ISDA Resolution Stay Protocol (Oct. 11, 2014), available 
at http://www2.isda.org/news/major-banks-agree-to-sign-isda-resolution-
stay-protocol. The 18 financial institutions subject to the agreement 
are: Bank of America Merrill Lynch; Bank of Tokyo-Mitsubishi UFJ; 
Barclays; BNP Paribas; Citigroup; Credit Agricole; Credit Suisse; 
Deutsche Bank; Goldman Sachs; HSBC; JP Morgan Chase; Mizuho Financial 
Group; Morgan Stanley; Nomura; Royal Bank of Scotland; Societe 
Generale; Sumitomo Mitsui Financial Group; and UBS.
---------------------------------------------------------------------------
    H.R. 2947 also expressly acknowledges the speed by which a 
financial institution must be resolved in order to mitigate 
financial contagion. To that end, the legislation includes 
specific and expedient timeframes for the commencement of a 
case as well as court approval of the transfer of assets to the 
bridge company.
    The bill also recognizes that overseeing a subchapter V 
case requires a presiding bankruptcy judge to have a certain 
level of expertise and experience with either financial 
industry cases or large corporate reorganizations. To that end, 
H.R. 2947 contains provisions that require the advance 
designation of bankruptcy judges who can be available to hear 
these cases.

             D. THE AMENDMENT TO THE FINANCIAL INSTITUTION 
                             BANKRUPTCY ACT

    During Committee consideration of the Financial Institution 
Bankruptcy Act, a substitute amendment was adopted by the 
Committee. The amendment makes several revisions to the 
introduced version of the bill. First, it removes the Federal 
Reserve's ability to initiate an involuntary bankruptcy 
petition and the related expedited judicial review process for 
such a petition. All of the witnesses at the July 9, 2015 
Subcommittee hearing testified in support of this revision, 
stating that the Federal Reserve already has sufficient 
regulatory power to induce a financial institution to seek a 
subchapter V bankruptcy.\19\ Second, the amendment clarifies 
that the chief judge of the Court of Appeals for the district 
in which the subchapter V case will be commenced will be the 
person who randomly selects the bankruptcy judge from the pre-
designated pool of judges. This revision reflects comments 
provided by the Administrative Office of the U.S. Courts. 
Finally, the legislation makes several clarifying technical 
revisions to the introduced text. For example, the amendment 
clarifies that the term ``agreement'' includes ``qualified 
financial contracts'' and revises the short title to refer to 
the year 2016 rather than 2015.
---------------------------------------------------------------------------
    \19\See, e.g., H.R. 2947, the ``Financial Institution Bankruptcy 
Act of 2015'': Hearing Before the Subcomm. on Regulatory Reform, 
Commercial and Antitrust Law of the H. Comm. on the Judiciary, 114th 
Cong. 18 (2015) (statement of Stephen E. Hessler).
---------------------------------------------------------------------------

                                Hearings

    Last Congress, the Committee conducted two separate 
hearings on the topic of enhancing the Bankruptcy Code to 
address the resolution of a financial institution through the 
bankruptcy process. Additionally, the Committee conducted a 
legislative hearing on a discussion draft of the ``Financial 
Institution Bankruptcy Act,'' which served as the foundation 
for the later-introduced bill.
    On December 3, 2013, the Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law (hereinafter, the 
``Subcommittee'') conducted a hearing entitled ``The Bankruptcy 
Code and Financial Institution Insolvencies.''\20\ The 
witnesses at the hearing were: the Honorable Jeffrey M. Lacker, 
President of the Federal Reserve Bank of Richmond; Professor 
Mark J. Roe, David Berg Professor of Law, Harvard Law School; 
and Donald S. Bernstein, Esq., partner and head of Davis Polk & 
Wardwell LLP's Insolvency and Restructuring Practice and past 
chair of the National Bankruptcy Conference. At the hearing, 
witnesses testified that a financial institution's bankruptcy 
presents unique issues that the existing Bankruptcy Code could 
be equipped better to address.
---------------------------------------------------------------------------
    \20\December Bankruptcy Hearing.
---------------------------------------------------------------------------
    On March 26, 2014, the Subcommittee conducted a hearing 
entitled ``Exploring Chapter 11 Reform: Corporate and Financial 
Institution Insolvencies; Treatment of Derivatives.''\21\ The 
witnesses at the hearing were: Professor Michelle Harner, 
Reporter for the American Bankruptcy Institute Commission to 
Study the Reform of Chapter 11, University of Maryland; 
Professor Thomas H. Jackson, William E. Simon School of 
Business, University of Rochester; the Honorable Christopher 
Sontchi, U.S. Bankruptcy Court for the District of Delaware; 
Seth Grosshandler, Esq., Partner, Cleary Gottlieb Steen & 
Hamilton, LLP; and Jane Vris, Millstein & Co, on behalf of the 
National Bankruptcy Conference. During this hearing, the 
Committee received testimony in support of amending the 
Bankruptcy Code to create a subchapter V under chapter 11 to 
allow the resolution of a financial institution through the 
bankruptcy process, using the single-point-of-entry 
approach.\22\
---------------------------------------------------------------------------
    \21\Exploring Chapter 11 Reform: Corporate and Financial 
Institution Insolvencies; Treatment of Derivatives: Hearing Before the 
Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. 
Comm. on the Judiciary, 113th Cong. (2014).
    \22\Id. (testimony of Prof. Jackson).
---------------------------------------------------------------------------
    In addition, on July 15, 2014, the Subcommittee conducted a 
legislative hearing on a discussion draft of the Financial 
Institution Bankruptcy Act. The witnesses at the hearing were: 
Donald S. Bernstein, Esq., partner and head of Davis Polk & 
Wardwell LLP's Insolvency and Restructuring Practice and past 
chair of the National Bankruptcy Conference; Stephen E. 
Hessler, Esq., Partner, Kirkland & Ellis, LLP; Professor Thomas 
H. Jackson, William E. Simon School of Business, University of 
Rochester; and, Professor Stephen J. Lubben, Seton Hall 
University School of Law. All four witnesses, including the 
Minority witness, testified that they believed the Financial 
Institution Bankruptcy Act, subject to certain modifications, 
should be enacted into law.
    Following the July 2014 hearing, the Committee received 
informal staff-level comments on the discussion draft of the 
Financial Institution Bankruptcy Act from, among others, the 
Federal Reserve, the FDIC, the Office of the Comptroller of the 
Currency, the Administrative Office of the U.S. Courts, the 
National Conference of Bankruptcy Judges, the National 
Bankruptcy Conference, and the International Swaps and 
Derivatives Association. The comments received from these 
parties served as the basis for revisions to the discussion 
draft.
    On September 9, 2014, Rep. Spencer Bachus (R-AL), together 
with Rep. Bob Goodlatte (R-VA) and Rep. John Conyers, Jr. (D-
MI) introduced H.R. 5421, the ``Financial Institution 
Bankruptcy Act of 2014.'' On September 10, 2014, the full 
Committee reported H.R. 5421 favorably to the House by voice 
vote. On December 1, 2014, the House passed H.R. 5421 under 
suspension of the rules. The introduced version of H.R. 2947 is 
identical to the House-passed version of H.R. 5421.
    This Congress, on July 9, 2015, the Subcommittee conducted 
a legislative hearing on H.R 2947. The witnesses at the hearing 
were: Donald S. Bernstein, Esq., partner and head of Davis Polk 
& Wardwell LLP's Insolvency and Restructuring Practice and past 
chair of the National Bankruptcy Conference; Stephen E. 
Hessler, Esq., Partner, Kirkland & Ellis, LLP; and, Richard 
Levin, Esq., partner, Jenner & Block, LLP on behalf of the 
National Bankruptcy Conference. All of the witnesses testified 
in support of the Financial Institution Bankruptcy Act, subject 
to certain modifications.

                        Committee Consideration

    On February 11, 2016, the Committee met in open session and 
ordered the bill H.R. 2947 favorably reported, with an 
amendment, by a vote of 25-0, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that the 
following rollcall votes occurred during the Committee's 
consideration of H.R. 2947:
    1. Motion to report H.R. 2947, as amended, favorably to the 
House of Representatives. Agreed to by a vote of 25 ayes to 0 
noes.

                             ROLLCALL NO. 1
 
                                                  Ayes    Nays   Present
------------------------------------------------------------------------
Mr. Goodlatte (VA), Chairman...................      X
Mr. Sensenbrenner, Jr. (WI)....................
Mr. Smith (TX).................................
Mr. Chabot (OH)................................      X
Mr. Issa (CA)..................................
Mr. Forbes (VA)................................      X
Mr. King (IA)..................................      X
Mr. Franks (AZ)................................      X
Mr. Gohmert (TX)...............................      X
Mr. Jordan (OH)................................
Mr. Poe (TX)...................................      X
Mr. Chaffetz (UT)..............................      X
Mr. Marino (PA)................................      X
Mr. Gowdy (SC).................................      X
Mr. Labrador (ID)..............................      X
Mr. Farenthold (TX)............................
Mr. Collins (GA)...............................      X
Mr. DeSantis (FL)..............................      X
Ms. Walters (CA)...............................
Mr. Buck (CO)..................................      X
Mr. Ratcliffe (TX).............................      X
Mr. Trott (MI).................................      X
Mr. Bishop (MI)................................      X
 
Mr. Conyers, Jr. (MI), Ranking Member..........      X
Mr. Nadler (NY)................................      X
Ms. Lofgren (CA)...............................      X
Ms. Jackson Lee (TX)...........................
Mr. Cohen (TN).................................      X
Mr. Johnson, Jr. (GA)..........................
Mr. Pierluisi (PR).............................
Ms. Chu (CA)...................................      X
Mr. Deutch (FL)................................
Mr. Gutierrez (IL).............................
Ms. Bass (CA)..................................
Mr. Richmond (LA)..............................
Ms. DelBene (WA)...............................      X
Mr. Jeffries (NY)..............................
Mr. Cicilline (RI).............................      X
Mr. Peters (CA)................................      X
                                                ------------------------
    Total......................................     25       0
------------------------------------------------------------------------


                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee advises that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of rule XIII of the Rules of the House of 
Representatives is inapplicable because this legislation does 
not provide new budgetary authority or increased tax 
expenditures.

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 2947, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                    Washington, DC, March 21, 2016.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2947, the 
``Financial Institution Bankruptcy Act of 2016.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Kathleen 
Gramp, who can be reached at 226-2860.
            Sincerely,
                                                Keith Hall,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




        H.R. 2947--Financial Institution Bankruptcy Act of 2016.

      As ordered reported by the House Committee on the Judiciary 
                         on February 11, 2016.




                                SUMMARY

    H.R. 2947 would establish a new bankruptcy process for 
certain financial institutions with assets of more than $50 
billion. The new process could assist institutions that may be 
too complex to resolve a bankruptcy under existing laws. CBO 
estimates that enacting the legislation would have no 
significant effect on the Federal budget.
    Pay-as-you-go procedures apply because enacting the 
legislation could affect direct spending and revenues related 
to bankruptcy proceedings and other programs aimed at resolving 
the failure of banks and other financial firms. However, CBO 
estimates that those effects would not be significant.
    CBO estimates that enacting H.R. 2947 would not increase 
net direct spending or on-budget deficits in any of the four 
consecutive 10-year period beginning in 2027.
    H.R. 2947 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA).
    H.R. 2947 would impose a private-sector mandate, as defined 
in UMRA, on entities that have certain types of contracts with 
bank holding companies or large financial institutions that 
have entered the bankruptcy process established under the bill. 
Because of uncertainty about both the number and size of 
contracts that would be affected and the amount of losses that 
would occur as a result of this provision, CBO cannot determine 
whether the cost of the mandate would exceed the threshold 
established in UMRA for private-sector mandates ($154 million 
in 2016, adjusted for inflation).

                           BASIS OF ESTIMATE

    The new bankruptcy procedures in H.R. 2947 could affect the 
cash flows of Federal programs that are currently available to 
resolve the failure of financial institutions. For example, it 
is possible that some firms eligible to use the new bankruptcy 
process also could use the current procedures of the Federal 
Deposit Insurance Corporation (FDIC) to resolve their financial 
difficulties. FDIC is authorized to resolve financial problems 
for large, systemically important financial firms that become 
insolvent or are in danger of becoming insolvent.
    Using FDIC's resolution program under current law is 
contingent on certain conditions, including a finding by the 
Secretary of the Treasury that the bankruptcy process would not 
be appropriate for the resolution of a firm's financial 
difficulties. If the necessary conditions are met, the FDIC may 
borrow funds from the Treasury to finance resolution activities 
and must collect fees from other large financial firms to 
offset the cost of any losses; those transactions occur through 
the Orderly Liquidation Fund (OLF). Although any spending from 
the OLF for resolution activities would initially increase 
Federal outlays, those costs would subsequently be offset by 
income received from selling the assets of the firm or from 
assessing fees. CBO anticipates that the secretary would use 
the OLF primarily during times of economic distress for complex 
financial institutions that require significant levels of 
capital or liquidity support. There is a very small chance that 
such a condition could occur in any year.
    CBO expects that implementing H.R. 2947 would increase the 
probability that some financial firms would use the bankruptcy 
process instead of the FDIC process described above. The 
effects of that change on the cash flows of the OLF would 
depend on economic, legal, and strategic factors that are 
difficult to quantify. CBO expects that the types of financial 
institutions with difficulties that could be resolved under the 
bankruptcy provisions in H.R. 2947 would be those that 
otherwise would have had a negligible net effect on the budget 
(for example, the failure of a single firm with financial 
losses and liquidity requirements that largely could be covered 
by non-federal resources). Shifting those types of cases from 
the FDIC to the bankruptcy courts probably would have no 
significant net effect on the budget.

                      PAY-AS-YOU-GO CONSIDERATIONS

    The Statutory Pay-As-You-Go Act of 2010 establishes budget-
reporting and enforcement procedures for legislation affecting 
direct spending or revenues. CBO estimates that any changes in 
direct spending and revenues under H.R. 2947 would be 
insignificant over the 2016-2026 period.

           INCREASE IN LONG-TERM DIRECT SPENDING AND DEFICITS

    CBO estimates that enacting the legislation would not 
increase net direct spending or on-budget deficits in any of 
the four consecutive 10-year periods beginning in 2027.

        ESTIMATED IMPACT ON STATE, LOCAL, AND TRIBAL GOVERNMENTS

    H.R. 2947 contains no intergovernmental mandates as defined 
in UMRA.

                 ESTIMATED IMPACT ON THE PRIVATE SECTOR

    H.R. 2947 would impose a private-sector mandate, as defined 
in UMRA, on entities that have certain types of contracts with 
bank holding companies or large financial institutions that 
have entered the bankruptcy process established under the bill. 
The bill would limit the contractual rights that those entities 
have under current law by imposing a temporary stay on actions 
to terminate or modify such contracts for 48 hours after a 
bankruptcy petition is filed. Limiting the ability of those 
entities to take actions such as collecting collateral or 
accelerating debt during that 2-day period could cause them to 
incur losses. The cost of the mandate would total any losses 
sustained by such parties as a result of the stay.
    As the bankruptcy process under the bill is reserved for 
large financial institutions, the potential losses for the 
parties affected by a stay could be quite substantial. However, 
because of uncertainty about both the number and size of 
contracts that would be affected and the amount of losses that 
would occur as a result of this provision, CBO cannot determine 
whether the cost of the mandate would exceed the threshold 
established in UMRA for private-sector mandates ($154 million 
in 2016, adjusted for inflation).

                         ESTIMATE PREPARED BY:

    Federal Costs: Kathleen Gramp
    Impact on State, Local, and Tribal Governments: Rachel 
Austin
    Impact on the Private Sector: Logan Smith

                         ESTIMATE APPROVED BY:

    H. Samuel Papenfuss
    Deputy Assistant Director for Budget Analysis

                    Duplication of Federal Programs

    No provision of H.R. 2947 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from GAO to Congress pursuant to section 21 of Public 
Law 111-139, or a program related to a program identified in 
the most recent Catalog of Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 2947 specifically directs 
to be completed no specific rule makings within the meaning of 
5 U.S.C. Sec. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
2947 amends title 11 of the United States Code in order to 
facilitate the resolution of an insolvent financial institution 
in bankruptcy.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 2947 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f) or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
Section 1. Short Title.
    Sets forth the short title of the legislation as the 
``Financial Institution Bankruptcy Act of 2016.''
Section 2. General Provisions Relating to Covered Financial 
        Corporations.
    Subsection (a) amends Bankruptcy Code section 101, which 
defines various terms used throughout the Bankruptcy Code, to 
add the definition of ``covered financial corporation.'' In 
sum, the term is defined as a bank holding company, as defined 
in the Bank Holding Company Act of 1956 (BHCA),\23\ or a 
corporation that: exists for the primary purpose of owning 
subsidiaries; has consolidated assets of $50 billion or more; 
and derives annual gross revenues from activities that are 
financial in nature as defined in the BHCA or with respect to 
which at least 85% of the company's consolidated assets are 
financial in nature as defined in the BHCA.\24\
---------------------------------------------------------------------------
    \23\See 12 U.S.C. Sec. 1841(a) (2016).
    \24\See 12 U.S.C. Sec. 1843(k) (2016).
---------------------------------------------------------------------------
    Subsection (b) of the bill amends Bankruptcy Code section 
103, which specifies those provisions that apply to the 
Bankruptcy Code's substantive titles. Subsection (b) provides 
that subchapter V of chapter 11 (as added by the legislation) 
will only apply to chapter 11 cases in which a covered 
financial corporation is the debtor. To be clear, to the extent 
a covered financial corporation could utilize the chapter 11 
process and chooses not to invoke the subchapter V process, 
that covered financial corporation can still choose to pursue a 
``traditional'' chapter 11 case.
    Subsection (c) amends Bankruptcy Code section 109, which 
sets forth the eligibility criteria to be a bankruptcy debtor, 
to provide that a covered financial corporation is eligible to 
be a chapter 11 debtor.
    Subsection (d) amends Bankruptcy Code section 1112, which 
authorizes conversion of a chapter 11 case to a chapter 7 case 
or the dismissal of the chapter 11 case, under certain, 
specified circumstances. This subsection adds new subsection 
(g) to section 1112 to permit the conversion of a subchapter V 
case to a chapter 7 case, if: (1) a transfer approved under 
section 1185 (as added by the bill) has been consummated; (2) 
the court has ordered the appointment of a special trustee 
under section 1186 (as added by the bill); and (3) the court 
finds that such conversion is in the best interest of creditors 
and the estate.
    Subsection (e)(1) amends Bankruptcy Code section 726(a)(1) 
to accord first payment priority to the fees, costs and 
expenses of a special trustee appointed under section 1186. 
Subsection (e)(2) makes two amendments to Bankruptcy Code 
section 1129(a), which sets forth the requirements for 
confirmation of a chapter 11 case. First, it requires the fees, 
costs and expenses of a special trustee to have been paid or 
for the subchapter V plan to provide for such payment. Second, 
it requires the court to find that confirmation of a subchapter 
V plan is not likely to cause adverse effects on financial 
stability in the United States.
    Subsection (f) provides that a U.S. Trustee will recommend 
to the court the amount of a bond necessary in the event of a 
trustee appointment in a subchapter V case.
Section 3. Liquidation, Reorganization, or Recapitalization of a 
        Covered Financial Corporation.
    Section 3 inserts a new subchapter V into chapter 11 
designed to address a bankruptcy of a covered financial 
corporation. All further references are to the new sections 
added to chapter 11 by the bill.
  Sec. 1181. Inapplicability of other sections.
    Specifies that Bankruptcy Code sections 303 (authorizing 
the commencement of an involuntary bankruptcy case, under 
certain circumstances) and 321(c) (which permits the United 
States Trustee to serve as a trustee in a bankruptcy case) do 
not apply to a subchapter V case. Also, specifies that 
Bankruptcy Code section 365 does not apply to the transfer 
under subchapter V. Sections 1185, 1187 and 1188 provide a 
complete list of considerations for the bankruptcy court 
regarding the transfer of assets, executory contracts, 
unexpired leases and qualified financial contracts such that 
section 365, which deals with the transfer and assignment of 
executory contracts and unexpired leases, is unnecessary in the 
context of a subchapter V case.
  Sec. 1182. Definitions for this chapter.
    Defines the following terms: Board; bridge company; capital 
structure debt; contractual right; qualified financial 
contract; and special trustee.
  Sec. 1183. Commencement of a case concerning a covered financial 
        corporation.
    Subsection (a) authorizes the voluntary commencement of a 
subchapter V case if the debtor states under penalty of perjury 
that it is a covered financial corporation.
    Subsection (b) provides that a subchapter V case commenced 
by the debtor constitutes an order for relief.
    Subsection (c) shields a debtor's board of directors from 
any liability to shareholders, creditors or other parties in 
interest for a good faith filing of a subchapter V petition or 
with respect to a transfer under sections 1185 and 1186, as 
added by the bill.
    Subsection (d) requires the debtor's counsel to provide as 
much advance notice as practicable, without disclosing the 
identity of the potential debtor, to the Chief Judge of the 
Court of Appeals for the Circuit embracing the district in 
which the debtor's counsel intends to file the petition for 
relief about the potential subchapter V case. This allows time 
for the Chief Judge to select randomly the presiding bankruptcy 
judge from the pool of pre-designated experienced bankruptcy 
judges. Additionally, this allows the selected bankruptcy judge 
time to prepare for weekend bankruptcy proceedings.
  Sec. 1184. Regulators.
    Provides the Federal Reserve, the Securities and Exchange 
Commission, the Office of the Comptroller of the Currency of 
the Department of the Treasury, the Commodity Futures Trading 
Commission, and the FDIC with standing in a subchapter V 
bankruptcy case.
  Sec. 1185. Special transfer of property of the estate.
    On request of the debtor, subsection (a) authorizes the 
bankruptcy court to order a transfer of estate property and the 
assignment of executory contracts and unexpired leases to a 
bridge company after notice and a hearing that must occur not 
less than 24 hours after commencement of the case. This 
subsection also clarifies that all property transferred is no 
longer property of the estate. Subsection (a) further provides 
that Bankruptcy Code section 363 (concerning sales of 
bankruptcy case assets) apply to such transfer, unless 
otherwise specified.
    Subsection (b) requires not less than 24 hours' notice of 
the hearing under subsection (a), to be provided either by 
electronic or telephonic means, and identifies who must receive 
such notice.
    Subsection (c) provides that the court may not order a 
transfer unless it determines by a preponderance of the 
evidence that: (1) the transfer is necessary to prevent serious 
adverse effects on financial stability in the United States; 
(2) the transfer does not provide for the assumption of any 
capital structure debt by the bridge company; (3) the transfer 
does not provide for the transfer of the debtor's equity; (4) 
the debtor has demonstrated that the bridge company is not 
likely to fail to meet the obligations of any debt, executory 
contract, qualified financial contract or unexpired lease 
assumed and assigned to such company; (5) the bridge company 
after the transfer has adequate provision for fees, costs and 
expenses of the special trustee; (6) all of the bridge 
company's equity securities are transferred to a special 
trustee; (7) adequate provision has been made for the payment 
of the expenses of the bankruptcy estate and the special 
trustee; and (8) the bridge company has governing documents and 
initial directors and senior officers that are in the best 
interests of creditors and the estate.
    With respect to property of the estate that is subject to a 
lien securing a debt, executory contract, unexpired lease or 
agreement of the debtor, subsection (c)(3) specifies that the 
transfer of this secured property may not be authorized unless:

        (A) the bridge company assumes such debt, executory 
        contract, unexpired lease, qualified financial contract 
        or agreement, and the property remains subject to such 
        lien securing such debt, executory contract, unexpired 
        lease, qualified financial contract or agreement and 
        the court determines that assumption of such debt, 
        executory contract, unexpired lease, qualified 
        financial contract or agreement by the bridge company 
        is in the best interests of the estate; or

        (B) such property is being transferred to the bridge 
        company in accordance with the provisions of section 
        363.

    Subsection (d) requires the bridge company to: (1) not have 
any property (e.g., executory contracts, unexpired leases, 
qualified financial contracts) or debts immediately prior to 
the transfer; and (2) have equity securities that are property 
of the estate, which may be sold or distributed subject to the 
limitations contained in subchapter V.
  Sec. 1186. Special Trustee.
    Requires the section 1185 transfer order to provide that 
the debtor transfer to the special trustee all of the equity 
securities in the bridge company, and for the bridge company's 
equity to be held in trust for the sole benefit of the estate, 
subject to the payment of the special trustee's fees, costs and 
expenses. The court must approve the trust agreement as being 
in the best interests of the estate. The trust must exist 
solely for the purpose of holding, administering and disposing 
of the bridge company's equity securities. Subsection (a)(2) 
requires the debtor to confirm to the court that the Federal 
Reserve was consulted regarding the identity of the proposed 
special trustee and advise the court of the results of such 
consultation.
    Subsection (b) specifies that the trust agreement governing 
the trust must satisfy certain requirements. These requirements 
include: (1) the trust must provide for the payment of the 
special trustee's fees, costs, expenses and indemnities from 
the assets of the debtor's estate; (2) the special trustee must 
prepare a quarterly report to the estate that is filed with the 
court; (3) the special trustee must provide information about 
the bridge company as reasonably requested by a party in 
interest to prepare a disclosure statement for a plan providing 
for distribution of any securities of the bridge company; (4) 
as long as the equity securities of the bridge company are held 
by the trust, the special trustee must file with the court a 
notice regarding any change in the management of the bridge 
company, its governing documents and any material corporate 
action of the company; (5) any sale of any equity securities of 
the bridge company may not be consummated until the special 
trustee consults with the FDIC and the Federal Reserve 
regarding such sale, and discloses the results of such 
consultation with the court; and (6) the proceeds of the sale 
of any equity securities of the bridge company by the special 
trustee must be held in trust for the benefit of, or 
transferred to, the estate.
    Subsection (c)(1) requires the special trustee to 
distribute the trust assets in accordance with a confirmed 
chapter 11 plan on its effective date or as ordered by the 
court if the subchapter V case is converted to a case under 
chapter 7. Subsection (c)(2) specifies that the office of the 
special trustee terminates as soon as practicable after final 
distribution.
    Subsection (d) specifies that after the transfer of the 
bridge company's equity is made to the special trustee under 
this section, such trustee is subject only to applicable 
nonbankruptcy law and the trustee is no longer subject to the 
control of the bankruptcy court.
  Sec. 1187. Temporary and supplemental automatic stay; assumed debt.
    Extends the ``automatic stay'' triggered by the filing of a 
chapter 11 case to creditors who entered into contracts, 
leases, agreements and debt contracts with the debtor or its 
affiliates. Contrary to the typical automatic stay, which often 
can extend for the duration of the bankruptcy case and only is 
for the benefit of the entities that file for bankruptcy, the 
stay provided for under this section extends both to the debtor 
and to its affiliates. This section provides for temporary 
relief so that the debtor's and its affiliates' essential 
contracts, leases and agreements that are critical for the 
future operation of the bridge company can be transferred 
without disruption. The stay that benefits the debtor expires 
no later than 48 hours after the commencement of the case, or 
earlier if the transfer order is entered, or the case is 
dismissed, within the 48-hour time period. In order to allow 
the bridge company to operate, the stay covering ipso facto 
clauses, or contract provisions that relate to the insolvency 
of the debtor or the commencement of a bankruptcy case, 
continues for the benefit of affiliates. This extension of the 
stay to affiliates terminates if the transfer order does not 
provide for the transfer of the affiliate's interests to the 
bridge company, the case is dismissed, a transfer order is 
denied, or after 48 hours if a transfer order has not been 
ordered.
    This section also provides that certain Bankruptcy Code 
provisions authorizing the termination of the automatic stay 
apply, subject to the satisfaction of the relevant conditions 
contained in those sections of the Bankruptcy Code.
    In addition, section 1187 also allows the bridge company to 
assume debts, executory contracts (other than a qualified 
financial contract), or unexpired leases of the debtor 
notwithstanding anti-assignment provisions contained in those 
contracts. To the extent that a default has occurred in these 
contracts, other than a default predicated on the assignment of 
the contract, the bridge company must cure the default, 
compensate the counterparty for the default, and demonstrate to 
the bankruptcy court that the bridge company will satisfy its 
obligations under the contract going forward.
    Qualified financial contracts are excluded from this 
section because their treatment is provided for in section 
1188. Capital structure debt is also excluded from this section 
because that debt remains in the bankruptcy case and those 
creditors will receive their recoveries through the traditional 
bankruptcy process.
  Sec. 1188. Treatment of qualified financial contracts and affiliate 
        contracts.
    Extends the ``automatic stay'' triggered by the filing of a 
chapter 11 case to creditors who entered into derivative, 
repurchase and similarly constructed contracts with the debtor 
and its affiliates. In a typical chapter 11 case, these 
contracts are not subject to the automatic stay and creditors 
may exercise certain contractual remedies upon the filing of a 
bankruptcy case. This section provides that creditors are 
prohibited from exercising a limited set of rights. The stay 
with respect to qualified financial contracts of the debtor 
expires on the earlier of: (1) 48 hours from the commencement 
of the case; (2) the transfer of the contracts to the bridge 
company; or (3) the bankruptcy court's entry of an order 
denying the transfer to the bridge company. The stay with 
respect to qualified financial contracts of the debtor's 
affiliates expires on the earlier of: (1) 48 hours from the 
commencement of the case if the bankruptcy court does not enter 
a section 1185 transfer order; (2) entry of an order denying a 
section 1185 transfer; (3) entry of a section 1185 transfer 
order that does not include the transfer of the affiliate's 
qualified financial contracts; or (4) the case is dismissed. 
The anti-assignment provisions of qualified financial contracts 
are restored when more than fifty percent of the bridge 
company's equity is no longer held by the special trustee.
    While the automatic stay is in place, the debtor and its 
affiliates are required to perform all payment and delivery 
obligations under the qualified financial contracts. Any 
failure to fulfill these obligations results in an automatic 
termination of the stay. Furthermore, any failure to fulfill 
these obligations during any period of time results in a breach 
of the relevant qualified financial contract.
    In order to transfer a qualified financial contract to the 
bridge company, the terms of the contract must continue to be 
honored and all of the obligations must continue to be 
performed. Furthermore, all of the qualified financial 
contracts between the entity and the debtor and/or its 
affiliates must be transferred to the bridge company. This 
provision is intended to prevent against ``cherry picking'' 
transfers of only a select number of contracts. Additionally, 
the financial institution must transfer all related claims and 
collateral along with the to-be transferred derivative 
contracts. This provision ensures that the counterparty has all 
of its rights and collateral preserved at the bridge company.
    Section 1188 is critical to ensure that the bridge company 
can continue to operate the debtor's business in the normal 
course following the transfer.
  Sec. 1189. Licenses, permits, and registrations.
    Provides that the bridge company will retain the debtor's 
and its affiliates' rights and obligations under the debtor's 
and its affiliates' licenses, permits and registrations. In 
other words, the bridge company will continue to operate under 
these contracts just as the debtor operated prior to the 
commencement of the bankruptcy. Furthermore, the bridge company 
will be subject to the same regulatory oversight as the debtor 
following the transfer. This section also overrides all 
nonbankruptcy laws to prevent the termination or modification 
of any federal, state or local license, permit, or registration 
that the debtor or an affiliate had immediately before the 
commencement of the case, if a request is made to transfer 
property of the estate under section 1185 and such default is 
based on certain ipso facto events.
  Sec. 1190. Exemption from securities laws and special tax provisions.
    Provides the same exemption granted to the securities (or 
equity) of a typical debtor company to the securities of the 
bridge company. Specifically, this provision clarifies that 
with respect to Bankruptcy Code section 1145 (which exempts the 
offer or sale of securities from certain federal, state and 
local laws requiring registration of such offer and sale if it 
occurs under a plan), a bridge company's security shall be 
deemed to be the security of the debtor's successor under a 
plan if the court approves the disclosure statement for the 
plan as having adequate information about the bridge company 
and its securities.
  Sec. 1191. Inapplicability of certain avoiding powers.
    Provides for an exemption from the avoidance powers 
contained in the Bankruptcy Code for the transfer from the 
debtor to the bridge company. In other words, this prevents a 
subchapter V transfer, or certain aspects of the transfer, from 
being unwound at a later date.
  Sec. 1192. Consideration of Financial Stability.
    Allows, but does not require, the bankruptcy court to 
consider the financial stability of the United States when 
rendering decisions related to a subchapter V case.
Section 4. Amendments to Title 28, United States Code.
  Sec. 298. Judge for a case under Subchapter V of title 11.
    Requires the Chief Justice of the United States to 
designate at least ten experienced bankruptcy judges to be 
available to hear subchapter V bankruptcy cases. Bankruptcy 
judges may request that they be considered for such designation 
by the Chief Justice. Further, this provision clarifies that 
the district courts will not have jurisdiction over the issues 
related to the appointment of a special trustee and the 
formation of the bridge company.

         Changes in Existing Law Made by the Bill, as Reported

    In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 11, UNITED STATES CODE



           *       *       *       *       *       *       *
                     CHAPTER 1--GENERAL PROVISIONS

Sec. 101. Definitions

   In this title the following definitions shall apply:
          (1) The term ``accountant'' means accountant 
        authorized under applicable law to practice public 
        accounting, and includes professional accounting 
        association, corporation, or partnership, if so 
        authorized.
          (2) The term ``affiliate'' means--
                  (A) entity that directly or indirectly owns, 
                controls, or holds with power to vote, 20 
                percent or more of the outstanding voting 
                securities of the debtor, other than an entity 
                that holds such securities--
                          (i) in a fiduciary or agency capacity 
                        without sole discretionary power to 
                        vote such securities; or
                          (ii) solely to secure a debt, if such 
                        entity has not in fact exercised such 
                        power to vote;
                  (B) corporation 20 percent or more of whose 
                outstanding voting securities are directly or 
                indirectly owned, controlled, or held with 
                power to vote, by the debtor, or by an entity 
                that directly or indirectly owns, controls, or 
                holds with power to vote, 20 percent or more of 
                the outstanding voting securities of the 
                debtor, other than an entity that holds such 
                securities--
                          (i) in a fiduciary or agency capacity 
                        without sole discretionary power to 
                        vote such securities; or
                          (ii) solely to secure a debt, if such 
                        entity has not in fact exercised such 
                        power to vote;
                  (C) person whose business is operated under a 
                lease or operating agreement by a debtor, or 
                person substantially all of whose property is 
                operated under an operating agreement with the 
                debtor; or
                  (D) entity that operates the business or 
                substantially all of the property of the debtor 
                under a lease or operating agreement.
          (3) The term ``assisted person'' means any person 
        whose debts consist primarily of consumer debts and the 
        value of whose nonexempt property is less than 
        $150,000.
          (4) The term ``attorney'' means attorney, 
        professional law association, corporation, or 
        partnership, authorized under applicable law to 
        practice law.
          (4A) The term ``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 case or proceeding on behalf 
        of another or providing legal representation with 
        respect to a case or proceeding under this title.
          (5) The term ``claim'' means--
                  (A) right to payment, whether or not such 
                right is reduced to judgment, liquidated, 
                unliquidated, fixed, contingent, matured, 
                unmatured, disputed, undisputed, legal, 
                equitable, secured, or unsecured; or
                  (B) right to an equitable remedy for breach 
                of performance if such breach gives rise to a 
                right to payment, whether or not such right to 
                an equitable remedy is reduced to judgment, 
                fixed, contingent, matured, unmatured, 
                disputed, undisputed, secured, or unsecured.
          (6) The term ``commodity broker'' means futures 
        commission merchant, foreign futures commission 
        merchant, clearing organization, leverage transaction 
        merchant, or commodity options dealer, as defined in 
        section 761 of this title, with respect to which there 
        is a customer, as defined in section 761 of this title.
          (7) The term ``community claim'' means claim that 
        arose before the commencement of the case concerning 
        the debtor for which property of the kind specified in 
        section 541(a)(2) of this title is liable, whether or 
        not there is any such property at the time of the 
        commencement of the case.
          (7A) The term ``commercial fishing operation'' 
        means--
                  (A) the catching or harvesting of fish, 
                shrimp, lobsters, urchins, seaweed, shellfish, 
                or other aquatic species or products of such 
                species; or
                  (B) for purposes of section 109 and chapter 
                12, aquaculture activities consisting of 
                raising for market any species or product 
                described in subparagraph (A).
          (7B) The term ``commercial fishing vessel'' means a 
        vessel used by a family fisherman to carry out a 
        commercial fishing operation.
          (8) The term ``consumer debt'' means debt incurred by 
        an individual primarily for a personal, family, or 
        household purpose.
          (9) The term ``corporation''--
                  (A) includes--
                          (i) association having a power or 
                        privilege that a private corporation, 
                        but not an individual or a partnership, 
                        possesses;
                          (ii) partnership association 
                        organized under a law that makes only 
                        the capital subscribed responsible for 
                        the debts of such association;
                          (iii) joint-stock company;
                          (iv) unincorporated company or 
                        association; or
                          (v) business trust; but
                  (B) does not include limited partnership.
          (9A) The term ``covered financial corporation'' means 
        any corporation incorporated or organized under any 
        Federal or State law, other than a stockbroker, a 
        commodity broker, or an entity of the kind specified in 
        paragraph (2) or (3) of section 109(b), that is--
                  (A) a bank holding company, as defined in 
                section 2(a) of the Bank Holding Company Act of 
                1956; or
                  (B) a corporation that exists for the primary 
                purpose of owning, controlling and financing 
                its subsidiaries, that has total consolidated 
                assets of $50,000,000,000 or greater, and for 
                which, in its most recently completed fiscal 
                year--
                          (i) annual gross revenues derived by 
                        the corporation and all of its 
                        subsidiaries from activities that are 
                        financial in nature (as defined in 
                        section 4(k) of the Bank Holding 
                        Company Act of 1956) and, if 
                        applicable, from the ownership or 
                        control of one or more insured 
                        depository institutions, represents 85 
                        percent or more of the consolidated 
                        annual gross revenues of the 
                        corporation; or
                          (ii) the consolidated assets of the 
                        corporation and all of its subsidiaries 
                        related to activities that are 
                        financial in nature (as defined in 
                        section 4(k) of the Bank Holding 
                        Company Act of 1956) and, if 
                        applicable, related to the ownership or 
                        control of one or more insured 
                        depository institutions, represents 85 
                        percent or more of the consolidated 
                        assets of the corporation.
          (10) The term ``creditor'' means--
                  (A) entity that has a claim against the 
                debtor that arose at the time of or before the 
                order for relief concerning the debtor;
                  (B) entity that has a claim against the 
                estate of a kind specified in section 348(d), 
                502(f), 502(g), 502(h) or 502(i) of this title; 
                or
                  (C) entity that has a community claim.
          (10A) The term ``current monthly income''--
                  (A) means the average monthly income from all 
                sources that the debtor receives (or in a joint 
                case the debtor and the debtor's spouse 
                receive) without regard to whether such income 
                is taxable income, derived during the 6-month 
                period ending on--
                          (i) the last day of the calendar 
                        month immediately preceding the date of 
                        the commencement of the case if the 
                        debtor files the schedule of current 
                        income required by section 
                        521(a)(1)(B)(ii); or
                          (ii) the date on which current income 
                        is determined by the court for purposes 
                        of this title if the debtor does not 
                        file the schedule of current income 
                        required by section 521(a)(1)(B)(ii); 
                        and
                  (B) includes any amount paid by any entity 
                other than the debtor (or in a joint case the 
                debtor and the debtor's spouse), on a regular 
                basis for the household expenses of the debtor 
                or the debtor's dependents (and in a joint case 
                the debtor's spouse if not otherwise a 
                dependent), but excludes benefits received 
                under the Social Security Act, payments to 
                victims of war crimes or crimes against 
                humanity on account of their status as victims 
                of such crimes, and payments to victims of 
                international terrorism (as defined in section 
                2331 of title 18) or domestic terrorism (as 
                defined in section 2331 of title 18) on account 
                of their status as victims of such terrorism.
          (11) The term ``custodian'' means--
                  (A) receiver or trustee of any of the 
                property of the debtor, appointed in a case or 
                proceeding not under this title;
                  (B) assignee under a general assignment for 
                the benefit of the debtor's creditors; or
                  (C) trustee, receiver, or agent under 
                applicable law, or under a contract, that is 
                appointed or authorized to take charge of 
                property of the debtor for the purpose of 
                enforcing a lien against such property, or for 
                the purpose of general administration of such 
                property for the benefit of the debtor's 
                creditors.
          (12) The term ``debt'' means liability on a claim.
          (12A) The term ``debt relief agency'' means any 
        person who provides any bankruptcy assistance to an 
        assisted person in return for the payment of money or 
        other valuable consideration, or who is a bankruptcy 
        petition preparer under section 110, but does not 
        include--
                  (A) any person who is an officer, director, 
                employee, or agent of a person who provides 
                such assistance or of the bankruptcy petition 
                preparer;
                  (B) a nonprofit organization that is exempt 
                from taxation under section 501(c)(3) of the 
                Internal Revenue Code of 1986;
                  (C) a creditor of such assisted person, to 
                the extent that the creditor is assisting such 
                assisted person to restructure any debt owed by 
                such assisted person to the creditor;
                  (D) a depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act) 
                or any Federal credit union or State credit 
                union (as those terms are defined in section 
                101 of the Federal Credit Union Act), or any 
                affiliate or subsidiary of such depository 
                institution or credit union; or
                  (E) an author, publisher, distributor, or 
                seller of works subject to copyright protection 
                under title 17, when acting in such capacity.
          (13) The term ``debtor'' means person or municipality 
        concerning which a case under this title has been 
        commenced.
          (13A) The term ``debtor's principal residence''--
                  (A) means a residential structure if used as 
                the principal residence by the debtor, 
                including incidental property, without regard 
                to whether that structure is attached to real 
                property; and
                  (B) includes an individual condominium or 
                cooperative unit, a mobile or manufactured 
                home, or trailer if used as the principal 
                residence by the debtor.
          (14) The term ``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.
          (14A) The term ``domestic support obligation'' means 
        a debt that accrues before, on, or after the date of 
        the order for relief in a case under this title, 
        including interest that accrues on that debt as 
        provided under applicable nonbankruptcy law 
        notwithstanding any other provision of this title, that 
        is--
                  (A) owed to or recoverable by--
                          (i) a spouse, former spouse, or child 
                        of the debtor or such child's parent, 
                        legal guardian, or responsible 
                        relative; or
                          (ii) a governmental unit;
                  (B) in the nature of alimony, maintenance, or 
                support (including assistance provided by a 
                governmental unit) of such spouse, former 
                spouse, or child of the debtor or such child's 
                parent, without regard to whether such debt is 
                expressly so designated;
                  (C) established or subject to establishment 
                before, on, or after the date of the order for 
                relief in a case 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 of the 
                debtor, or such child's parent, legal guardian, 
                or responsible relative for the purpose of 
                collecting the debt.
          (15) The term ``entity'' includes person, estate, 
        trust, governmental unit, and United States trustee.
          (16) The term ``equity security'' means--
                  (A) share in a corporation, whether or not 
                transferable or denominated ``stock'', or 
                similar security;
                  (B) interest of a limited partner in a 
                limited partnership; or
                  (C) warrant or right, other than a right to 
                convert, to purchase, sell, or subscribe to a 
                share, security, or interest of a kind 
                specified in subparagraph (A) or (B) of this 
                paragraph.
          (17) The term ``equity security holder'' means holder 
        of an equity security of the debtor.
          (18) The term ``family farmer'' means--
                  (A) individual or individual and spouse 
                engaged in a farming operation whose aggregate 
                debts do not exceed $3,237,000 and not less 
                than 50 percent of whose aggregate 
                noncontingent, liquidated debts (excluding a 
                debt for the principal residence of such 
                individual or such individual and spouse unless 
                such debt arises out of a farming operation), 
                on the date the case is filed, arise out of a 
                farming operation owned or operated by such 
                individual or such individual and spouse, and 
                such individual or such individual and spouse 
                receive from such farming operation more than 
                50 percent of such individual's or such 
                individual and spouse's gross income for--
                          (i) the taxable year preceding; or
                          (ii) each of the 2d and 3d taxable 
                        years preceding;
                the taxable year in which the case concerning 
                such individual or such individual and spouse 
                was filed; or
                  (B) corporation or partnership in which more 
                than 50 percent of the outstanding stock or 
                equity is held by one family, or by one family 
                and the relatives of the members of such 
                family, and such family or such relatives 
                conduct the farming operation, and
                          (i) more than 80 percent of the value 
                        of its assets consists of assets 
                        related to the farming operation;
                          (ii) its aggregate debts do not 
                        exceed $3,237,000 and not less than 50 
                        percent of its aggregate noncontingent, 
                        liquidated debts (excluding a debt for 
                        one dwelling which is owned by such 
                        corporation or partnership and which a 
                        shareholder or partner maintains as a 
                        principal residence, unless such debt 
                        arises out of a farming operation), on 
                        the date the case is filed, arise out 
                        of the farming operation owned or 
                        operated by such corporation or such 
                        partnership; and
                          (iii) if such corporation issues 
                        stock, such stock is not publicly 
                        traded.
          (19) The term ``family farmer with regular annual 
        income'' means family farmer whose annual income is 
        sufficiently stable and regular to enable such family 
        farmer to make payments under a plan under chapter 12 
        of this title.
          (19A) The term ``family fisherman'' means--
                  (A) an individual or individual and spouse 
                engaged in a commercial fishing operation--
                          (i) whose aggregate debts do not 
                        exceed $1,500,000 and not less than 80 
                        percent of whose aggregate 
                        noncontingent, liquidated debts 
                        (excluding a debt for the principal 
                        residence of such individual or such 
                        individual and spouse, unless such debt 
                        arises out of a commercial fishing 
                        operation), on the date the case is 
                        filed, arise out of a commercial 
                        fishing operation owned or operated by 
                        such individual or such individual and 
                        spouse; and
                          (ii) who receive from such commercial 
                        fishing operation more than 50 percent 
                        of such individual's or such 
                        individual's and spouse's gross income 
                        for the taxable year preceding the 
                        taxable year in which the case 
                        concerning such individual or such 
                        individual and spouse was filed; or
                  (B) a corporation or partnership--
                          (i) in which more than 50 percent of 
                        the outstanding stock or equity is held 
                        by--
                                  (I) 1 family that conducts 
                                the commercial fishing 
                                operation; or
                                  (II) 1 family and the 
                                relatives of the members of 
                                such family, and such family or 
                                such relatives conduct the 
                                commercial fishing operation; 
                                and
                          (ii)(I) more than 80 percent of the 
                        value of its assets consists of assets 
                        related to the commercial fishing 
                        operation;
                          (II) its aggregate debts do not 
                        exceed $1,500,000 and not less than 80 
                        percent of its aggregate noncontingent, 
                        liquidated debts (excluding a debt for 
                        1 dwelling which is owned by such 
                        corporation or partnership and which a 
                        shareholder or partner maintains as a 
                        principal residence, unless such debt 
                        arises out of a commercial fishing 
                        operation), on the date the case is 
                        filed, arise out of a commercial 
                        fishing operation owned or operated by 
                        such corporation or such partnership; 
                        and
                          (III) if such corporation issues 
                        stock, such stock is not publicly 
                        traded.
          (19B) The term ``family fisherman with regular annual 
        income'' means a family fisherman whose annual income 
        is sufficiently stable and regular to enable such 
        family fisherman to make payments under a plan under 
        chapter 12 of this title.
          (20) The term ``farmer'' means (except when such term 
        appears in the term ``family farmer'') person that 
        received more than 80 percent of such person's gross 
        income during the taxable year of such person 
        immediately preceding the taxable year of such person 
        during which the case under this title concerning such 
        person was commenced from a farming operation owned or 
        operated by such person.
          (21) The term ``farming operation'' includes farming, 
        tillage of the soil, dairy farming, ranching, 
        production or raising of crops, poultry, or livestock, 
        and production of poultry or livestock products in an 
        unmanufactured state.
          (21A) The term ``farmout agreement'' means a written 
        agreement in which--
                  (A) the owner of a right to drill, produce, 
                or operate liquid or gaseous hydrocarbons on 
                property agrees or has agreed to transfer or 
                assign all or a part of such right to another 
                entity; and
                  (B) such other entity (either directly or 
                through its agents or its assigns), as 
                consideration, agrees to perform drilling, 
                reworking, recompleting, testing, or similar or 
                related operations, to develop or produce 
                liquid or gaseous hydrocarbons on the property.
          (21B) The term ``Federal depository institutions 
        regulatory agency'' means--
                  (A) with respect to an insured depository 
                institution (as defined in section 3(c)(2) of 
                the Federal Deposit Insurance Act) for which no 
                conservator or receiver has been appointed, the 
                appropriate Federal banking agency (as defined 
                in section 3(q) of such Act);
                  (B) with respect to an insured credit union 
                (including an insured credit union for which 
                the National Credit Union Administration has 
                been appointed conservator or liquidating 
                agent), the National Credit Union 
                Administration;
                  (C) with respect to any insured depository 
                institution for which the Resolution Trust 
                Corporation has been appointed conservator or 
                receiver, the Resolution Trust Corporation; and
                  (D) with respect to any insured depository 
                institution for which the Federal Deposit 
                Insurance Corporation has been appointed 
                conservator or receiver, the Federal Deposit 
                Insurance Corporation.
          (22) The term ``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, federally-insured credit union, 
                or receiver, liquidating agent, or conservator 
                for such entity and, when any such Federal 
                reserve bank, receiver, liquidating agent, 
                conservator or entity is acting as agent or 
                custodian for a customer (whether or not a 
                ``customer'', as defined in section 741) in 
                connection with a securities contract (as 
                defined in section 741) such customer; or
                  (B) in connection with a securities contract 
                (as defined in section 741) an investment 
                company registered under the Investment Company 
                Act of 1940.
          (22A) The term ``financial participant'' means--
                  (A) an entity that, at the time it enters 
                into a securities contract, commodity contract, 
                swap agreement, repurchase agreement, or 
                forward contract, or at the time of the date of 
                the filing of the petition, has one or more 
                agreements or transactions described in 
                paragraph (1), (2), (3), (4), (5), or (6) of 
                section 561(a) with the debtor or any other 
                entity (other than an affiliate) of a total 
                gross dollar value of not less than 
                $1,000,000,000 in notional or actual principal 
                amount outstanding (aggregated across 
                counterparties) at such time or on any day 
                during the 15-month period preceding the date 
                of the filing of the petition, or has gross 
                mark-to-market positions of not less than 
                $100,000,000 (aggregated across counterparties) 
                in one or more such agreements or transactions 
                with the debtor or any other entity (other than 
                an affiliate) at such time or on any day during 
                the 15-month period preceding the date of the 
                filing of the petition; or
                  (B) a clearing organization (as defined in 
                section 402 of the Federal Deposit Insurance 
                Corporation Improvement Act of 1991).
          (23) The term ``foreign proceeding'' means a 
        collective judicial or administrative proceeding in a 
        foreign country, including an interim proceeding, under 
        a law relating to insolvency or adjustment of debt in 
        which proceeding the assets and affairs of the debtor 
        are subject to control or supervision by a foreign 
        court, for the purpose of reorganization or 
        liquidation.
          (24) The term ``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 such foreign proceeding.
          (25) The term ``forward contract'' means--
                  (A) a contract (other than a commodity 
                contract, as defined in section 761) for the 
                purchase, sale, or transfer of a commodity, as 
                defined in section 761(8) of this title, 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 two 
                days after the date the contract is entered 
                into, including, but not limited to, a 
                repurchase or reverse repurchase transaction 
                (whether or not such repurchase or reverse 
                repurchase transaction is a ``repurchase 
                agreement'', as defined in this section) 
                consignment, lease, swap, hedge transaction, 
                deposit, loan, option, allocated transaction, 
                unallocated transaction, or any other similar 
                agreement;
                  (B) any combination of agreements or 
                transactions referred to in subparagraphs (A) 
                and (C);
                  (C) any option to enter into an agreement or 
                transaction referred to in subparagraph (A) or 
                (B);
                  (D) a master agreement that provides for an 
                agreement or transaction referred to in 
                subparagraph (A), (B), or (C), together with 
                all supplements to any such master agreement, 
                without regard to whether such master agreement 
                provides for an agreement or transaction that 
                is not a forward contract under this paragraph, 
                except that such master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement 
                or transaction under such master agreement that 
                is referred to in subparagraph (A), (B), or 
                (C); or
                  (E) any security agreement or arrangement, or 
                other credit enhancement related to any 
                agreement or transaction referred to in 
                subparagraph (A), (B), (C), or (D), including 
                any guarantee or reimbursement obligation by or 
                to a forward contract merchant or financial 
                participant in connection with any agreement or 
                transaction referred to in any such 
                subparagraph, but not to exceed the damages in 
                connection with any such agreement or 
                transaction, measured in accordance with 
                section 562.
          (26) The term ``forward contract merchant'' means a 
        Federal reserve bank, or an entity the business of 
        which consists in whole or in part of entering into 
        forward contracts as or with merchants in a commodity 
        (as defined in section 761) or any similar good, 
        article, service, right, or interest which is presently 
        or in the future becomes the subject of dealing in the 
        forward contract trade.
          (27) The term ``governmental unit'' means United 
        States; State; Commonwealth; District; Territory; 
        municipality; foreign state; department, agency, or 
        instrumentality of the United States (but not a United 
        States trustee while serving as a trustee in a case 
        under this title), a State, a Commonwealth, a District, 
        a Territory, a municipality, or a foreign state; or 
        other foreign or domestic government.
          (27A) The term ``health care business''--
                  (A) means any public or private entity 
                (without regard to whether that entity is 
                organized for profit or not for profit) that is 
                primarily engaged in offering to the general 
                public facilities and services for--
                          (i) the diagnosis or treatment of 
                        injury, deformity, or disease; and
                          (ii) surgical, drug treatment, 
                        psychiatric, or obstetric care; and
                  (B) includes--
                          (i) any--
                                  (I) general or specialized 
                                hospital;
                                  (II) ancillary ambulatory, 
                                emergency, or surgical 
                                treatment facility;
                                  (III) hospice;
                                  (IV) home health agency; and
                                  (V) other health care 
                                institution that is similar to 
                                an entity referred to in 
                                subclause (I), (II), (III), or 
                                (IV); and
                          (ii) any long-term care facility, 
                        including any--
                                  (I) skilled nursing facility;
                                  (II) intermediate care 
                                facility;
                                  (III) assisted living 
                                facility;
                                  (IV) home for the aged;
                                  (V) domiciliary care 
                                facility; and
                                  (VI) health care institution 
                                that is related to a facility 
                                referred to in subclause (I), 
                                (II), (III), (IV), or (V), if 
                                that institution is primarily 
                                engaged in offering room, 
                                board, laundry, or personal 
                                assistance with activities of 
                                daily living and incidentals to 
                                activities of daily living.
          (27B) The term ``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 
                property 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.
          (28) The term ``indenture'' means mortgage, deed of 
        trust, or indenture, under which there is outstanding a 
        security, other than a voting-trust certificate, 
        constituting a claim against the debtor, a claim 
        secured by a lien on any of the debtor's property, or 
        an equity security of the debtor.
          (29) The term ``indenture trustee'' means trustee 
        under an indenture.
          (30) The term ``individual with regular income'' 
        means individual whose income is sufficiently stable 
        and regular to enable such individual to make payments 
        under a plan under chapter 13 of this title, other than 
        a stockbroker or a commodity broker.
          (31) The term ``insider'' includes--
                  (A) if the debtor is an individual--
                          (i) relative of the debtor or of a 
                        general partner of the debtor;
                          (ii) partnership in which the debtor 
                        is a general partner;
                          (iii) general partner of the debtor; 
                        or
                          (iv) corporation of which the debtor 
                        is a director, officer, or person in 
                        control;
                  (B) if the debtor is a corporation--
                          (i) director of the debtor;
                          (ii) officer of the debtor;
                          (iii) person in control of the 
                        debtor;
                          (iv) partnership in which the debtor 
                        is a general partner;
                          (v) general partner of the debtor; or
                          (vi) relative of a general partner, 
                        director, officer, or person in control 
                        of the debtor;
                  (C) if the debtor is a partnership--
                          (i) general partner in the debtor;
                          (ii) relative of a general partner 
                        in, general partner of, or person in 
                        control of the debtor;
                          (iii) partnership in which the debtor 
                        is a general partner;
                          (iv) general partner of the debtor; 
                        or
                          (v) person in control of the debtor;
                  (D) if the debtor is a municipality, elected 
                official of the debtor or relative of an 
                elected official of the debtor;
                  (E) affiliate, or insider of an affiliate as 
                if such affiliate were the debtor; and
                  (F) managing agent of the debtor.
          (32) The term ``insolvent'' means--
                  (A) with reference to an entity other than a 
                partnership and a municipality, financial 
                condition such that the sum of such entity's 
                debts is greater than all of such entity's 
                property, at a fair valuation, exclusive of--
                          (i) property transferred, concealed, 
                        or removed with intent to hinder, 
                        delay, or defraud such entity's 
                        creditors; and
                          (ii) property that may be exempted 
                        from property of the estate under 
                        section 522 of this title;
                  (B) with reference to a partnership, 
                financial condition such that the sum of such 
                partnership's debts is greater than the 
                aggregate of, at a fair valuation--
                          (i) all of such partnership's 
                        property, exclusive of property of the 
                        kind specified in subparagraph (A)(i) 
                        of this paragraph; and
                          (ii) the sum of the excess of the 
                        value of each general partner's 
                        nonpartnership property, exclusive of 
                        property of the kind specified in 
                        subparagraph (A) of this paragraph, 
                        over such partner's nonpartnership 
                        debts; and
                  (C) with reference to a municipality, 
                financial condition such that the municipality 
                is--
                          (i) generally not paying its debts as 
                        they become due unless such debts are 
                        the subject of a bona fide dispute; or
                          (ii) unable to pay its debts as they 
                        become due.
          (33) The term ``institution-affiliated party''--
                  (A) with respect to an insured depository 
                institution (as defined in section 3(c)(2) of 
                the Federal Deposit Insurance Act), has the 
                meaning given it in section 3(u) of the Federal 
                Deposit Insurance Act; and
                  (B) with respect to an insured credit union, 
                has the meaning given it in section 206(r) of 
                the Federal Credit Union Act.
          (34) The term ``insured credit union'' has the 
        meaning given it in section 101(7) of the Federal 
        Credit Union Act.
          (35) The term ``insured depository institution''--
                  (A) has the meaning given it in section 
                3(c)(2) of the Federal Deposit Insurance Act; 
                and
                  (B) includes an insured credit union (except 
                in the case of paragraphs (21B) and (33)(A) of 
                this subsection).
          (35A) The term ``intellectual property'' means--
                  (A) trade secret;
                  (B) invention, process, design, or plant 
                protected under title 35;
                  (C) patent application;
                  (D) plant variety;
                  (E) work of authorship protected under title 
                17; or
                  (F) mask work protected under chapter 9 of 
                title 17;
        to the extent protected by applicable nonbankruptcy 
        law.
          (36) The term ``judicial lien'' means lien obtained 
        by judgment, levy, sequestration, or other legal or 
        equitable process or proceeding.
          (37) The term ``lien'' means charge against or 
        interest in property to secure payment of a debt or 
        performance of an obligation.
          (38) The term ``margin payment'' means, for purposes 
        of the forward contract provisions of this title, 
        payment or deposit of cash, a security or other 
        property, that is commonly known in the forward 
        contract trade as original margin, initial margin, 
        maintenance margin, or variation margin, including 
        mark-to-market payments, or variation payments.
          (38A) The term ``master netting agreement''--
                  (A) means an agreement providing for the 
                exercise of rights, including rights of 
                netting, setoff, liquidation, termination, 
                acceleration, or close out, under or in 
                connection with one or more contracts that are 
                described in any one or more of paragraphs (1) 
                through (5) of section 561(a), or any security 
                agreement or arrangement or other credit 
                enhancement related to one or more of the 
                foregoing, including any guarantee or 
                reimbursement obligation related to 1 or more 
                of the foregoing; and
                  (B) if the agreement contains provisions 
                relating to agreements or transactions that are 
                not contracts described in paragraphs (1) 
                through (5) of section 561(a), shall be deemed 
                to be a master netting agreement only with 
                respect to those agreements or transactions 
                that are described in any one or more of 
                paragraphs (1) through (5) of section 561(a).
          (38B) The term ``master netting agreement 
        participant'' means an entity that, at any time before 
        the date of the filing of the petition, is a party to 
        an outstanding master netting agreement with the 
        debtor.
          (39) The term ``mask work'' has the meaning given it 
        in section 901(a)(2) of title 17.
          (39A) The term ``median family income'' means for any 
        year--
                  (A) the median family income both calculated 
                and reported by the Bureau of the Census in the 
                then most recent year; and
                  (B) if not so calculated and reported in the 
                then current year, adjusted annually after such 
                most recent year until the next year in which 
                median family income is both calculated and 
                reported by the Bureau of the Census, to 
                reflect the percentage change in the Consumer 
                Price Index for All Urban Consumers during the 
                period of years occurring after such most 
                recent year and before such current year.
          (40) The term ``municipality'' means political 
        subdivision or public agency or instrumentality of a 
        State.
          (40A) The term ``patient'' means any individual who 
        obtains or receives services from a health care 
        business.
          (40B) The term ``patient records'' means any record 
        relating to a patient, including a written document or 
        a record recorded in a magnetic, optical, or other form 
        of electronic medium.
          (41) The term ``person'' includes individual, 
        partnership, and corporation, but does not include 
        governmental unit, except that a governmental unit 
        that--
                  (A) acquires an asset from a person--
                          (i) as a result of the operation of a 
                        loan guarantee agreement; or
                          (ii) as receiver or liquidating agent 
                        of a person;
                  (B) is a guarantor of a pension benefit 
                payable by or on behalf of the debtor or an 
                affiliate of the debtor; or
                  (C) is the legal or beneficial owner of an 
                asset of--
                          (i) an employee pension benefit plan 
                        that is a governmental plan, as defined 
                        in section 414(d) of the Internal 
                        Revenue Code of 1986; or
                          (ii) an eligible deferred 
                        compensation plan, as defined in 
                        section 457(b) of the Internal Revenue 
                        Code of 1986;
        shall be considered, for purposes of section 1102 of 
        this title, to be a person with respect to such asset 
        or such benefit.
          (41A) The term ``personally identifiable 
        information'' means--
                  (A) if provided by an individual to the 
                debtor in connection with obtaining a product 
                or a service from the debtor primarily for 
                personal, family, or household purposes--
                          (i) the first name (or initial) and 
                        last name of such individual, whether 
                        given at birth or time of adoption, or 
                        resulting from a lawful change of name;
                          (ii) the geographical address of a 
                        physical place of residence of such 
                        individual;
                          (iii) an electronic address 
                        (including an e-mail address) of such 
                        individual;
                          (iv) a telephone number dedicated to 
                        contacting such individual at such 
                        physical place of residence;
                          (v) a social security account number 
                        issued to such individual; or
                          (vi) the account number of a credit 
                        card issued to such individual; or
                  (B) if identified in connection with 1 or 
                more of the items of information specified in 
                subparagraph (A)--
                          (i) a birth date, the number of a 
                        certificate of birth or adoption, or a 
                        place of birth; or
                          (ii) any other information concerning 
                        an identified individual that, if 
                        disclosed, will result in contacting or 
                        identifying such individual physically 
                        or electronically.
          (42) The term ``petition'' means petition filed under 
        section 301, 302, 303 and 1504 of this title, as the 
        case may be, commencing a case under this title.
          (42A) The term ``production payment'' means a term 
        overriding royalty satisfiable in cash or in kind--
                  (A) contingent on the production of a liquid 
                or gaseous hydrocarbon from particular real 
                property; and
                  (B) from a specified volume, or a specified 
                value, from the liquid or gaseous hydrocarbon 
                produced from such property, and determined 
                without regard to production costs.
          (43) The term ``purchaser'' means transferee of a 
        voluntary transfer, and includes immediate or mediate 
        transferee of such a transferee.
          (44) The term ``railroad'' means common carrier by 
        railroad engaged in the transportation of individuals 
        or property or owner of trackage facilities leased by 
        such a common carrier.
          (45) The term ``relative'' means individual related 
        by affinity or consanguinity within the third degree as 
        determined by the common law, or individual in a step 
        or adoptive relationship within such third degree.
          (46) The term ``repo participant'' means an entity 
        that, at any time before the filing of the petition, 
        has an outstanding repurchase agreement with the 
        debtor.
          (47) The term ``repurchase agreement'' (which 
        definition also applies to a reverse repurchase 
        agreement)--
                  (A) means--
                          (i) an agreement, including related 
                        terms, which provides for the transfer 
                        of one or more certificates of deposit, 
                        mortgage related securities (as defined 
                        in section 3 of the Securities Exchange 
                        Act of 1934), mortgage loans, interests 
                        in mortgage related securities or 
                        mortgage loans, eligible bankers' 
                        acceptances, qualified foreign 
                        government securities (defined as a 
                        security that is a direct obligation 
                        of, or that is fully guaranteed by, the 
                        central government of a member of the 
                        Organization for Economic Cooperation 
                        and Development), or securities that 
                        are direct obligations of, or that are 
                        fully guaranteed by, the United States 
                        or any agency of the United States 
                        against the transfer of funds by the 
                        transferee of such certificates of 
                        deposit, eligible bankers' acceptances, 
                        securities, mortgage loans, or 
                        interests, with a simultaneous 
                        agreement by such transferee to 
                        transfer to the transferor thereof 
                        certificates of deposit, eligible 
                        bankers' acceptance, securities, 
                        mortgage loans, or interests of the 
                        kind described in this clause, at a 
                        date certain not later than 1 year 
                        after such transfer or on demand, 
                        against the transfer of funds;
                          (ii) any combination of agreements or 
                        transactions referred to in clauses (i) 
                        and (iii);
                          (iii) an option to enter into an 
                        agreement or transaction referred to in 
                        clause (i) or (ii);
                          (iv) a master agreement that provides 
                        for an agreement or transaction 
                        referred to in clause (i), (ii), or 
                        (iii), together with all supplements to 
                        any such master agreement, without 
                        regard to whether such master agreement 
                        provides for an agreement or 
                        transaction that is not a repurchase 
                        agreement under this paragraph, except 
                        that such master agreement shall be 
                        considered to be a repurchase agreement 
                        under this paragraph only with respect 
                        to each agreement or transaction under 
                        the master agreement that is referred 
                        to in clause (i), (ii), or (iii); or
                          (v) any security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreement or transaction 
                        referred to in clause (i), (ii), (iii), 
                        or (iv), including any guarantee or 
                        reimbursement obligation by or to a 
                        repo participant or financial 
                        participant in connection with any 
                        agreement or transaction referred to in 
                        any such clause, but not to exceed the 
                        damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562 of this 
                        title; and
                  (B) does not include a repurchase obligation 
                under a participation in a commercial mortgage 
                loan.
          (48) The term ``securities clearing agency'' means 
        person that is registered as a clearing agency under 
        section 17A of the Securities Exchange Act of 1934, or 
        exempt from such registration under such section 
        pursuant to an order of the Securities and Exchange 
        Commission, or whose business is confined to the 
        performance of functions of a clearing agency with 
        respect to exempted securities, as defined in section 
        3(a)(12) of such Act for the purposes of such section 
        17A.
          (48A) The term ``securities self regulatory 
        organization'' means either a securities association 
        registered with the Securities and Exchange Commission 
        under section 15A of the Securities Exchange Act of 
        1934 or a national securities exchange registered with 
        the Securities and Exchange Commission under section 6 
        of the Securities Exchange Act of 1934.
          (49) The term ``security''--
                  (A) includes--
                          (i) note;
                          (ii) stock;
                          (iii) treasury stock;
                          (iv) bond;
                          (v) debenture;
                          (vi) collateral trust certificate;
                          (vii) pre-organization certificate or 
                        subscription;
                          (viii) transferable share;
                          (ix) voting-trust certificate;
                          (x) certificate of deposit;
                          (xi) certificate of deposit for 
                        security;
                          (xii) investment contract or 
                        certificate of interest or 
                        participation in a profit-sharing 
                        agreement or in an oil, gas, or mineral 
                        royalty or lease, if such contract or 
                        interest is required to be the subject 
                        of a registration statement filed with 
                        the Securities and Exchange Commission 
                        under the provisions of the Securities 
                        Act of 1933, or is exempt under section 
                        3(b) of such Act from the requirement 
                        to file such a statement;
                          (xiii) interest of a limited partner 
                        in a limited partnership;
                          (xiv) other claim or interest 
                        commonly known as ``security''; and
                          (xv) certificate of interest or 
                        participation in, temporary or interim 
                        certificate for, receipt for, or 
                        warrant or right to subscribe to or 
                        purchase or sell, a security; but
                  (B) does not include--
                          (i) currency, check, draft, bill of 
                        exchange, or bank letter of credit;
                          (ii) leverage transaction, as defined 
                        in section 761 of this title;
                          (iii) commodity futures contract or 
                        forward contract;
                          (iv) option, warrant, or right to 
                        subscribe to or purchase or sell a 
                        commodity futures contract;
                          (v) option to purchase or sell a 
                        commodity;
                          (vi) contract or certificate of a 
                        kind specified in subparagraph (A)(xii) 
                        of this paragraph that is not required 
                        to be the subject of a registration 
                        statement filed with the Securities and 
                        Exchange Commission and is not exempt 
                        under section 3(b) of the Securities 
                        Act of 1933 from the requirement to 
                        file such a statement; or
                          (vii) debt or evidence of 
                        indebtedness for goods sold and 
                        delivered or services rendered.
          (50) The term ``security agreement'' means agreement 
        that creates or provides for a security interest.
          (51) The term ``security interest'' means lien 
        created by an agreement.
          (51A) The term ``settlement payment'' means, for 
        purposes of the forward contract provisions of this 
        title, a preliminary settlement payment, a partial 
        settlement payment, an interim settlement payment, a 
        settlement payment on account, a final settlement 
        payment, a net settlement payment, or any other similar 
        payment commonly used in the forward contract trade.
          (51B) The term ``single asset real estate'' means 
        real property constituting a single property or 
        project, other than residential real property with 
        fewer than 4 residential units, which generates 
        substantially all of the gross income of a debtor who 
        is not a family farmer and on which no substantial 
        business is being conducted by a debtor other than the 
        business of operating the real property and activities 
        incidental thereto.
          (51C) The term ``small business case'' means a case 
        filed under chapter 11 of this title in which the 
        debtor is a small business debtor.
          (51D) The term ``small business debtor''--
                  (A) subject to subparagraph (B), means a 
                person engaged in commercial or business 
                activities (including any affiliate of such 
                person that is also a debtor under this title 
                and excluding a person whose primary activity 
                is the business of owning or operating real 
                property or activities incidental thereto) that 
                has aggregate noncontingent liquidated secured 
                and unsecured debts as of the date of the 
                filing of the petition or the date of the order 
                for relief in an amount not more than 
                $2,000,000 (excluding debts owed to 1 or more 
                affiliates or insiders) for a case in which the 
                United States trustee has not appointed under 
                section 1102(a)(1) a committee of unsecured 
                creditors or where the court has determined 
                that the committee of unsecured creditors is 
                not sufficiently active and representative to 
                provide effective oversight of the debtor; and
                  (B) does not include any member of a group of 
                affiliated debtors that has aggregate 
                noncontingent liquidated secured and unsecured 
                debts in an amount greater than $2,000,000 
                (excluding debt owed to 1 or more affiliates or 
                insiders).
          (52) The term ``State'' includes the District of 
        Columbia and Puerto Rico, except for the purpose of 
        defining who may be a debtor under chapter 9 of this 
        title.
          (53) The term ``statutory lien'' means lien arising 
        solely by force of a statute on specified circumstances 
        or conditions, or lien of distress for rent, whether or 
        not statutory, but does not include security interest 
        or judicial lien, whether or not such interest or lien 
        is provided by or is dependent on a statute and whether 
        or not such interest or lien is made fully effective by 
        statute.
          (53A) The term ``stockbroker'' means person--
                  (A) with respect to which there is a 
                customer, as defined in section 741 of this 
                title; and
                  (B) that is engaged in the business of 
                effecting transactions in securities--
                          (i) for the account of others; or
                          (ii) with members of the general 
                        public, from or for such person's own 
                        account.
          (53B) The term ``swap agreement''--
                  (A) means--
                          (i) any agreement, including the 
                        terms and conditions incorporated by 
                        reference in such agreement, which is--
                                  (I) an interest rate swap, 
                                option, future, or forward 
                                agreement, including a rate 
                                floor, rate cap, rate collar, 
                                cross-currency rate swap, and 
                                basis swap;
                                  (II) a spot, same day-
                                tomorrow, tomorrow-next, 
                                forward, or other foreign 
                                exchange, precious metals, or 
                                other commodity agreement;
                                  (III) a currency swap, 
                                option, future, or forward 
                                agreement;
                                  (IV) an equity index or 
                                equity swap, option, future, or 
                                forward agreement;
                                  (V) a debt index or debt 
                                swap, option, future, or 
                                forward agreement;
                                  (VI) a total return, credit 
                                spread or credit swap, option, 
                                future, or forward agreement;
                                  (VII) a commodity index or a 
                                commodity swap, option, future, 
                                or forward agreement;
                                  (VIII) a weather swap, 
                                option, future, or forward 
                                agreement;
                                  (IX) an emissions swap, 
                                option, future, or forward 
                                agreement; or
                                  (X) an inflation swap, 
                                option, future, or forward 
                                agreement;
                          (ii) any agreement or transaction 
                        that is similar to any other agreement 
                        or transaction referred to in this 
                        paragraph and that--
                                  (I) is of a type that has 
                                been, is presently, or in the 
                                future becomes, the subject of 
                                recurrent dealings in the swap 
                                or other derivatives markets 
                                (including terms and conditions 
                                incorporated by reference 
                                therein); and
                                  (II) is a forward, swap, 
                                future, option, or spot 
                                transaction on one or more 
                                rates, currencies, commodities, 
                                equity securities, or other 
                                equity instruments, debt 
                                securities or other debt 
                                instruments, quantitative 
                                measures associated with an 
                                occurrence, extent of an 
                                occurrence, or contingency 
                                associated with a financial, 
                                commercial, or economic 
                                consequence, or economic or 
                                financial indices or measures 
                                of economic or financial risk 
                                or value;
                          (iii) any combination of agreements 
                        or transactions referred to in this 
                        subparagraph;
                          (iv) any option to enter into an 
                        agreement or transaction referred to in 
                        this subparagraph;
                          (v) a master agreement that provides 
                        for an agreement or transaction 
                        referred to in clause (i), (ii), (iii), 
                        or (iv), together with all supplements 
                        to any such master agreement, and 
                        without regard to whether the master 
                        agreement contains an agreement or 
                        transaction that is not a swap 
                        agreement under this paragraph, except 
                        that the master agreement shall be 
                        considered to be a swap agreement under 
                        this paragraph only with respect to 
                        each agreement or transaction under the 
                        master agreement that is referred to in 
                        clause (i), (ii), (iii), or (iv); or
                          (vi) any security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreements or 
                        transactions referred to in clause (i) 
                        through (v), including any guarantee or 
                        reimbursement obligation by or to a 
                        swap participant or financial 
                        participant in connection with any 
                        agreement or transaction referred to in 
                        any such clause, but not to exceed the 
                        damages in connection with any such 
                        agreement or transaction, measured in 
                        accordance with section 562; and
                  (B) is applicable for purposes of this title 
                only, and shall not be construed or applied so 
                as to challenge or affect the characterization, 
                definition, or treatment of any swap agreement 
                under any other statute, regulation, or rule, 
                including the Gramm-Leach-Bliley Act, the Legal 
                Certainty for Bank Products Act of 2000, the 
                securities laws (as such term is defined in 
                section 3(a)(47) of the Securities Exchange Act 
                of 1934) and the Commodity Exchange Act.
          (53C) The term ``swap participant'' means an entity 
        that, at any time before the filing of the petition, 
        has an outstanding swap agreement with the debtor.
          (56A) The term ``term overriding royalty'' means an 
        interest in liquid or gaseous hydrocarbons in place or 
        to be produced from particular real property that 
        entitles the owner thereof to a share of production, or 
        the value thereof, for a term limited by time, 
        quantity, or value realized.
          (53D) The term ``timeshare plan'' means and shall 
        include that interest purchased in any arrangement, 
        plan, scheme, or similar device, but not including 
        exchange programs, whether by membership, agreement, 
        tenancy in common, sale, lease, deed, rental agreement, 
        license, right to use agreement, or by any other means, 
        whereby a purchaser, in exchange for consideration, 
        receives a right to use accommodations, facilities, or 
        recreational sites, whether improved or unimproved, for 
        a specific period of time less than a full year during 
        any given year, but not necessarily for consecutive 
        years, and which extends for a period of more than 
        three years. A ``timeshare interest'' is that interest 
        purchased in a timeshare plan which grants the 
        purchaser the right to use and occupy accommodations, 
        facilities, or recreational sites, whether improved or 
        unimproved, pursuant to a timeshare plan.
          (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.
          (54A) The term ``uninsured State member bank'' means 
        a State member bank (as defined in section 3 of the 
        Federal Deposit Insurance Act) the deposits of which 
        are not insured by the Federal Deposit Insurance 
        Corporation.
          (55) The term ``United States'', when used in a 
        geographical sense, includes all locations where the 
        judicial jurisdiction of the United States extends, 
        including territories and possessions of the United 
        States.

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Sec. 103. Applicability of chapters

  (a) Except as provided in section 1161 of this title, 
chapters 1, 3, and 5 of this title apply in a case under 
chapter 7, 11, 12, or 13 of this title, and this chapter, 
sections 307, 362(o), 555 through 557, and 559 through 562 
apply in a case under chapter 15.
  (b) Subchapters I and II of chapter 7 of this title apply 
only in a case under such chapter.
  (c) Subchapter III of chapter 7 of this title applies only in 
a case under such chapter concerning a stockbroker.
  (d) Subchapter IV of chapter 7 of this title applies only in 
a case under such chapter concerning a commodity broker.
  (e) Scope of Application.--Subchapter V of chapter 7 of this 
title shall apply only in a case under such chapter concerning 
the liquidation of an uninsured State member bank, or a 
corporation organized under section 25A of the Federal Reserve 
Act, which operates, or operates as, a multilateral clearing 
organization pursuant to section 409 of the Federal Deposit 
Insurance Corporation Improvement Act of 1991.
  (f) Except as provided in section 901 of this title, only 
chapters 1 and 9 of this title apply in a case under such 
chapter 9.
  (g) Except as provided in section 901 of this title, 
subchapters I, II, and III of chapter 11 of this title apply 
only in a case under such chapter.
  (h) Subchapter IV of chapter 11 of this title applies only in 
a case under such chapter concerning a railroad.
  (i) Chapter 13 of this title applies only in a case under 
such chapter.
  (j) Chapter 12 of this title applies only in a case under 
such chapter.
  (k) Chapter 15 applies only in a case under such chapter, 
except that--
          (1) sections 1505, 1513, and 1514 apply in all cases 
        under this title; and
          (2) section 1509 applies whether or not a case under 
        this title is pending.
  (l) Subchapter V of chapter 11 of this title applies only in 
a case under chapter 11 concerning a covered financial 
corporation.

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Sec. 109. Who may be a debtor

  (a) Notwithstanding any other provision of this section, only 
a person that resides or has a domicile, a place of business, 
or property in the United States, or a municipality, may be a 
debtor under this title.
  (b) A person may be a debtor under chapter 7 of this title 
only if such person is not--
          (1) a railroad;
          (2) a domestic insurance company, bank, savings bank, 
        cooperative bank, savings and loan association, 
        building and loan association, homestead association, a 
        New Markets Venture Capital company as defined in 
        section 351 of the Small Business Investment Act of 
        1958, a small business investment company licensed by 
        the Small Business Administration under section 301 of 
        the Small Business Investment Act of 1958, credit 
        union, or industrial bank or similar institution which 
        is an insured bank as defined in section 3(h) of the 
        Federal Deposit Insurance Act, except that an uninsured 
        State member bank, or a corporation organized under 
        section 25A of the Federal Reserve Act, which operates, 
        or operates as, a multilateral clearing organization 
        pursuant to section 409 of the Federal Deposit 
        Insurance Corporation Improvement Act of 1991 may be a 
        debtor if a petition is filed at the direction of the 
        Board of Governors of the Federal Reserve System; [or]
          (3)(A) a foreign insurance company, engaged in such 
        business in the United States; or
          (B) a foreign bank, savings bank, cooperative bank, 
        savings and loan association, building and loan 
        association, or credit union, that has a branch or 
        agency (as defined in section 1(b) of the International 
        Banking Act of 1978) in the United States[.]; or
          (4) a covered financial corporation.
  (c) An entity may be a debtor under chapter 9 of this title 
if and only if such entity--
          (1) is a municipality;
          (2) is specifically authorized, in its capacity as a 
        municipality or by name, to be a debtor under such 
        chapter by State law, or by a governmental officer or 
        organization empowered by State law to authorize such 
        entity to be a debtor under such chapter;
          (3) is insolvent;
          (4) desires to effect a plan to adjust such debts; 
        and
          (5)(A) has obtained the agreement of creditors 
        holding at least a majority in amount of the claims of 
        each class that such entity intends to impair under a 
        plan in a case under such chapter;
          (B) has negotiated in good faith with creditors and 
        has failed to obtain the agreement of creditors holding 
        at least a majority in amount of the claims of each 
        class that such entity intends to impair under a plan 
        in a case under such chapter;
          (C) is unable to negotiate with creditors because 
        such negotiation is impracticable; or
          (D) reasonably believes that a creditor may attempt 
        to obtain a transfer that is avoidable under section 
        547 of this title.
  (d) Only a railroad, a person that may be a debtor under 
chapter 7 of this title (except a stockbroker or a commodity 
broker), [and] an uninsured State member bank, [or] a 
corporation organized under section 25A of the Federal Reserve 
Act, which operates, or operates as, a multilateral clearing 
organization pursuant to section 409 of the Federal Deposit 
Insurance Corporation Improvement Act of 1991, or a covered 
financial corporation may be a debtor under chapter 11 of this 
title.
  (e) Only an individual with regular income that owes, on the 
date of the filing of the petition, noncontingent, liquidated, 
unsecured debts of less than $250,000 and noncontingent, 
liquidated, secured debts of less than $750,000, or an 
individual with regular income and such individual's spouse, 
except a stockbroker or a commodity broker, that owe, on the 
date of the filing of the petition, noncontingent, liquidated, 
unsecured debts that aggregate less than $250,000 and 
noncontingent, liquidated, secured debts of less than $750,000 
may be a debtor under chapter 13 of this title.
  (f) Only a family farmer or family fisherman with regular 
annual income may be a debtor under chapter 12 of this title.
  (g) Notwithstanding any other provision of this section, no 
individual or family farmer may be a debtor under this title 
who has been a debtor in a case pending under this title at any 
time in the preceding 180 days if--
          (1) the case was dismissed by the court for willful 
        failure of the debtor to abide by orders of the court, 
        or to appear before the court in proper prosecution of 
        the case; or
          (2) the debtor requested and obtained the voluntary 
        dismissal of the case following the filing of a request 
        for relief from the automatic stay provided by section 
        362 of this title.
  (h)(1) Subject to paragraphs (2) and (3), and notwithstanding 
any other provision of this section other than paragraph (4) of 
this subsection, an individual may not be a debtor under this 
title unless such individual has, during the 180-day period 
ending on the date of filing of the petition by such 
individual, received from an approved nonprofit budget and 
credit counseling agency described in section 111(a) an 
individual or group briefing (including a briefing conducted by 
telephone or on the Internet) that outlined the opportunities 
for available credit counseling and assisted such individual in 
performing a related budget analysis.
  (2)(A) Paragraph (1) shall not apply with respect to a debtor 
who resides in a district for which the United States trustee 
(or the bankruptcy administrator, if any) determines that the 
approved nonprofit budget and credit counseling agencies for 
such district are not reasonably able to provide adequate 
services to the additional individuals who would otherwise seek 
credit counseling from such agencies by reason of the 
requirements of paragraph (1).
  (B) The United States trustee (or the bankruptcy 
administrator, if any) who makes a determination described in 
subparagraph (A) shall review such determination not later than 
1 year after the date of such determination, and not less 
frequently than annually thereafter. Notwithstanding the 
preceding sentence, a nonprofit budget and credit counseling 
agency may be disapproved by the United States trustee (or the 
bankruptcy administrator, if any) at any time.
  (3)(A) Subject to subparagraph (B), the requirements of 
paragraph (1) shall not apply with respect to a debtor who 
submits to the court a certification that--
          (i) describes exigent circumstances that merit a 
        waiver of the requirements of paragraph (1);
          (ii) states that the debtor requested credit 
        counseling services from an approved nonprofit budget 
        and credit counseling agency, but was unable to obtain 
        the services referred to in paragraph (1) during the 7-
        day period beginning on the date on which the debtor 
        made that request; and
          (iii) is satisfactory to the court.
  (B) With respect to a debtor, an exemption under subparagraph 
(A) shall cease to apply to that debtor on the date on which 
the debtor meets the requirements of paragraph (1), but in no 
case may the exemption apply to that debtor after the date that 
is 30 days after the debtor files a petition, except that the 
court, for cause, may order an additional 15 days.
  (4) The requirements of paragraph (1) shall not apply with 
respect to a debtor whom the court determines, after notice and 
hearing, is unable to complete those requirements because of 
incapacity, disability, or active military duty in a military 
combat zone. For the purposes of this paragraph, incapacity 
means that the debtor is impaired by reason of mental illness 
or mental deficiency so that he is incapable of realizing and 
making rational decisions with respect to his financial 
responsibilities; and ``disability'' means that the debtor is 
so physically impaired as to be unable, after reasonable 
effort, to participate in an in person, telephone, or Internet 
briefing required under paragraph (1).

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CHAPTER 3--CASE ADMINISTRATION

           *       *       *       *       *       *       *


SUBCHAPTER II--OFFICERS

           *       *       *       *       *       *       *


Sec. 322. Qualification of trustee

  (a) Except as provided in subsection (b)(1), a person 
selected under section 701, 702, 703, 1104, 1163, 1202, or 1302 
of this title to serve as trustee in a case under this title 
qualifies if before seven days after such selection, and before 
beginning official duties, such person has filed with the court 
a bond in favor of the United States conditioned on the 
faithful performance of such official duties.
  (b)(1) The United States trustee qualifies wherever such 
trustee serves as trustee in a case under this title.
  (2) [The] In cases under subchapter V, the United States 
trustee shall recommend to the court, and in all other cases, 
the United States trustee shall determine--
          (A) the amount of a bond required to be filed under 
        subsection (a) of this section; and
          (B) the sufficiency of the surety on such bond.
  (c) A trustee is not liable personally or on such trustee's 
bond in favor of the United States for any penalty or 
forfeiture incurred by the debtor.
  (d) A proceeding on a trustee's bond may not be commenced 
after two years after the date on which such trustee was 
discharged.

           *       *       *       *       *       *       *


CHAPTER 7--LIQUIDATION

           *       *       *       *       *       *       *


SUBCHAPTER II--COLLECTION, LIQUIDATION, AND DISTRIBUTION OF THE ESTATE

           *       *       *       *       *       *       *


Sec. 726. Distribution of property of the estate

  (a) Except as provided in section 510 of this title, property 
of the estate shall be distributed--
          (1) first, in payment of any unpaid fees, costs, and 
        expenses of a special trustee appointed under section 
        1186, and then in payment of claims of the kind 
        specified in, and in the order specified in, section 
        507 of this title, proof of which is timely filed under 
        section 501 of this title or tardily filed on or before 
        the earlier of--
                  (A) the date that is 10 days after the 
                mailing to creditors of the summary of the 
                trustee's final report; or
                  (B) the date on which the trustee commences 
                final distribution under this section;
          (2) second, in payment of any allowed unsecured 
        claim, other than a claim of a kind specified in 
        paragraph (1), (3), or (4) of this subsection, proof of 
        which is--
                  (A) timely filed under section 501(a) of this 
                title;
                  (B) timely filed under section 501(b) or 
                501(c) of this title; or
                  (C) tardily filed under section 501(a) of 
                this title, if--
                          (i) the creditor that holds such 
                        claim did not have notice or actual 
                        knowledge of the case in time for 
                        timely filing of a proof of such claim 
                        under section 501(a) of this title; and
                          (ii) proof of such claim is filed in 
                        time to permit payment of such claim;
          (3) third, in payment of any allowed unsecured claim 
        proof of which is tardily filed under section 501(a) of 
        this title, other than a claim of the kind specified in 
        paragraph (2)(C) of this subsection;
          (4) fourth, in payment of any allowed claim, whether 
        secured or unsecured, for any fine, penalty, or 
        forfeiture, or for multiple, exemplary, or punitive 
        damages, arising before the earlier of the order for 
        relief or the appointment of a trustee, to the extent 
        that such fine, penalty, forfeiture, or damages are not 
        compensation for actual pecuniary loss suffered by the 
        holder of such claim;
          (5) fifth, in payment of interest at the legal rate 
        from the date of the filing of the petition, on any 
        claim paid under paragraph (1), (2), (3), or (4) of 
        this subsection; and
          (6) sixth, to the debtor.
  (b) Payment on claims of a kind specified in paragraph (1), 
(2), (3), (4), (5), (6), (7), (8), (9), or (10) of section 
507(a) of this title, or in paragraph (2), (3), (4), or (5) of 
subsection (a) of this section, shall be made pro rata among 
claims of the kind specified in each such particular paragraph, 
except that in a case that has been converted to this chapter 
under section 1112, 1208, or 1307 of this title, a claim 
allowed under section 503(b) of this title incurred under this 
chapter after such conversion has priority over a claim allowed 
under section 503(b) of this title incurred under any other 
chapter of this title or under this chapter before such 
conversion and over any expenses of a custodian superseded 
under section 543 of this title.
  (c) Notwithstanding subsections (a) and (b) of this section, 
if there is property of the kind specified in section 541(a)(2) 
of this title, or proceeds of such property, in the estate, 
such property or proceeds shall be segregated from other 
property of the estate, and such property or proceeds and other 
property of the estate shall be distributed as follows:
          (1) Claims allowed under section 503 of this title 
        shall be paid either from property of the kind 
        specified in section 541(a)(2) of this title, or from 
        other property of the estate, as the interest of 
        justice requires.
          (2) Allowed claims, other than claims allowed under 
        section 503 of this title, shall be paid in the order 
        specified in subsection (a) of this section, and, with 
        respect to claims of a kind specified in a particular 
        paragraph of section 507 of this title or subsection 
        (a) of this section, in the following order and manner:
                  (A) First, community claims against the 
                debtor or the debtor's spouse shall be paid 
                from property of the kind specified in section 
                541(a)(2) of this title, except to the extent 
                that such property is solely liable for debts 
                of the debtor.
                  (B) Second, to the extent that community 
                claims against the debtor are not paid under 
                subparagraph (A) of this paragraph, such 
                community claims shall be paid from property of 
                the kind specified in section 541(a)(2) of this 
                title that is solely liable for debts of the 
                debtor.
                  (C) Third, to the extent that all claims 
                against the debtor including community claims 
                against the debtor are not paid under 
                subparagraph (A) or (B) of this paragraph such 
                claims shall be paid from property of the 
                estate other than property of the kind 
                specified in section 541(a)(2) of this title.
                  (D) Fourth, to the extent that community 
                claims against the debtor or the debtor's 
                spouse are not paid under subparagraph (A), 
                (B), or (C) of this paragraph, such claims 
                shall be paid from all remaining property of 
                the estate.

           *       *       *       *       *       *       *


                       CHAPTER 11--REORGANIZATION

SUBCHAPTER I--OFFICERS AND ADMINISTRATION

           *       *       *       *       *       *       *


Sec. 1112. Conversion or dismissal

  (a) The debtor may convert a case under this chapter to a 
case under chapter 7 of this title unless--
          (1) the debtor is not a debtor in possession;
          (2) the case originally was commenced as an 
        involuntary case under this chapter; or
          (3) the case was converted to a case under this 
        chapter other than on the debtor's request.
  (b)(1) Except as provided in paragraph (2) and subsection 
(c), 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 or dismiss a case under this chapter, 
whichever is in the best interests of creditors and the estate, 
for cause unless the court determines that the appointment 
under section 1104(a) of a trustee or an examiner is in the 
best interests of creditors and the estate.
  (2) The court may not convert a case under this chapter to a 
case under chapter 7 or dismiss a case under this chapter if 
the court finds and specifically identifies unusual 
circumstances establishing that converting or dismissing the 
case is not in the best interests of creditors and the estate, 
and the debtor or any other party in interest establishes 
that--
          (A) there is a reasonable likelihood that a plan will 
        be confirmed within the timeframes established in 
        sections 1121(e) and 1129(e) of this title, or if such 
        sections do not apply, within a reasonable period of 
        time; and
          (B) the grounds for converting or dismissing the case 
        include an act or omission of the debtor other than 
        under paragraph (4)(A)--
                  (i) for which there exists a reasonable 
                justification for the act or omission; and
                  (ii) that will be cured within a reasonable 
                period of time fixed by the court.
  (3) The court shall commence the hearing on a motion under 
this subsection not later than 30 days after filing of the 
motion, and shall decide the motion not later than 15 days 
after commencement of such hearing, unless the movant expressly 
consents to a continuance for a specific period of time or 
compelling circumstances prevent the court from meeting the 
time limits established by this paragraph.
  (4) For purposes of this subsection, the term ``cause'' 
includes--
          (A) substantial or continuing loss to or diminution 
        of the estate and the absence of a reasonable 
        likelihood of rehabilitation;
          (B) gross mismanagement of the estate;
          (C) failure to maintain appropriate insurance that 
        poses a risk to the estate or to the public;
          (D) unauthorized use of cash collateral substantially 
        harmful to 1 or more creditors;
          (E) failure to comply with an order of the court;
          (F) unexcused failure to satisfy timely any filing or 
        reporting requirement established by this title or by 
        any rule applicable to a case under this chapter;
          (G) failure to attend the meeting of creditors 
        convened under section 341(a) or an examination ordered 
        under rule 2004 of the Federal Rules of Bankruptcy 
        Procedure without good cause shown by the debtor;
          (H) failure timely to provide information or attend 
        meetings reasonably requested by the United States 
        trustee (or the bankruptcy administrator, if any);
          (I) failure timely to pay taxes owed after the date 
        of the order for relief or to file tax returns due 
        after the date of the order for relief;
          (J) failure to file a disclosure statement, or to 
        file or confirm a plan, within the time fixed by this 
        title or by order of the court;
          (K) failure to pay any fees or charges required under 
        chapter 123 of title 28;
          (L) revocation of an order of confirmation under 
        section 1144;
          (M) inability to effectuate substantial consummation 
        of a confirmed plan;
          (N) material default by the debtor with respect to a 
        confirmed plan;
          (O) termination of a confirmed plan by reason of the 
        occurrence of a condition specified in the plan; and
          (P) failure of the debtor to pay any domestic support 
        obligation that first becomes payable after the date of 
        the filing of the petition.
  (c) The court may not convert a case under this chapter to a 
case under chapter 7 of this title if the debtor is a farmer or 
a corporation that is not a moneyed, business, or commercial 
corporation, unless the debtor requests such conversion.
  (d) The court may convert a case under this chapter to a case 
under chapter 12 or 13 of this title only if--
          (1) the debtor requests such conversion;
          (2) the debtor has not been discharged under section 
        1141(d) of this title; and
          (3) if the debtor requests conversion to chapter 12 
        of this title, such conversion is equitable.
  (e) Except as provided in subsections (c) and (f), the court, 
on request of the United States trustee, may convert a case 
under this chapter to a case under chapter 7 of this title or 
may dismiss a case under this chapter, whichever is in the best 
interest of creditors and the estate if the debtor in a 
voluntary case fails to file, within fifteen days after the 
filing of the petition commencing such case or such additional 
time as the court may allow, the information required by 
paragraph (1) of section 521(a), including a list containing 
the names and addresses of the holders of the twenty largest 
unsecured claims (or of all unsecured claims if there are fewer 
than twenty unsecured claims), and the approximate dollar 
amounts of each of such claims.
  (f) Notwithstanding any other provision of this section, a 
case may not be converted to a case under another chapter of 
this title unless the debtor may be a debtor under such 
chapter.
  (g) Notwithstanding section 109(b), the court may convert a 
case under subchapter V to a case under chapter 7 if--
          (1) a transfer approved under section 1185 has been 
        consummated;
          (2) the court has ordered the appointment of a 
        special trustee under section 1186; and
          (3) the court finds, after notice and a hearing, that 
        conversion is in the best interest of the creditors and 
        the estate.

           *       *       *       *       *       *       *


SUBCHAPTER II--THE PLAN

           *       *       *       *       *       *       *


Sec. 1129. Confirmation of plan

  (a) The court shall confirm a plan only if all of the 
following requirements are met:
          (1) The plan complies with the applicable provisions 
        of this title.
          (2) The proponent of the plan complies with the 
        applicable provisions of this title.
          (3) The plan has been proposed in good faith and not 
        by any means forbidden by law.
          (4) Any payment made or to be made by the proponent, 
        by the debtor, or by a person issuing securities or 
        acquiring property under the plan, for services or for 
        costs and expenses in or in connection with the case, 
        or in connection with the plan and incident to the 
        case, has been approved by, or is subject to the 
        approval of, the court as reasonable.
          (5)(A)(i) The proponent of the plan has disclosed the 
        identity and affiliations of any individual proposed to 
        serve, after confirmation of the plan, as a director, 
        officer, or voting trustee of the debtor, an affiliate 
        of the debtor participating in a joint plan with the 
        debtor, or a successor to the debtor under the plan; 
        and
          (ii) the appointment to, or continuance in, such 
        office of such individual, is consistent with the 
        interests of creditors and equity security holders and 
        with public policy; and
          (B) the proponent of the plan has disclosed the 
        identity of any insider that will be employed or 
        retained by the reorganized debtor, and the nature of 
        any compensation for such insider.
          (6) Any governmental regulatory commission with 
        jurisdiction, after confirmation of the plan, over the 
        rates of the debtor has approved any rate change 
        provided for in the plan, or such rate change is 
        expressly conditioned on such approval.
          (7) With respect to each impaired class of claims or 
        interests--
                  (A) each holder of a claim or interest of 
                such class--
                          (i) has accepted the plan; or
                          (ii) will receive or retain under the 
                        plan on account of such claim or 
                        interest property of a value, as of the 
                        effective date of the plan, that is not 
                        less than the amount that such holder 
                        would so receive or retain if the 
                        debtor were liquidated under chapter 7 
                        of this title on such date; or
                  (B) if section 1111(b)(2) of this title 
                applies to the claims of such class, each 
                holder of a claim of such class will receive or 
                retain under the plan on account of such claim 
                property of a value, as of the effective date 
                of the plan, that is not less than the value of 
                such holder's interest in the estate's interest 
                in the property that secures such claims.
          (8) With respect to each class of claims or 
        interests--
                  (A) such class has accepted the plan; or
                  (B) such class is not impaired under the 
                plan.
          (9) Except to the extent that the holder of a 
        particular claim has agreed to a different treatment of 
        such claim, the plan provides that--
                  (A) with respect to a claim of a kind 
                specified in section 507(a)(2) or 507(a)(3) of 
                this title, on the effective date of the plan, 
                the holder of such claim will receive on 
                account of such claim cash equal to the allowed 
                amount of such claim;
                  (B) with respect to a class of claims of a 
                kind specified in section 507(a)(1), 507(a)(4), 
                507(a)(5), 507(a)(6), or 507(a)(7) of this 
                title, each holder of a claim of such class 
                will receive--
                          (i) if such class has accepted the 
                        plan, deferred cash payments of a 
                        value, as of the effective date of the 
                        plan, equal to the allowed amount of 
                        such claim; or
                          (ii) if such class has not accepted 
                        the plan, cash on the effective date of 
                        the plan equal to the allowed amount of 
                        such claim;
                  (C) with respect to a claim of a kind 
                specified in section 507(a)(8) of this title, 
                the holder of such claim will receive on 
                account of such claim regular installment 
                payments in cash--
                          (i) of a total value, as of the 
                        effective date of the plan, equal to 
                        the allowed amount of such claim;
                          (ii) over a period ending not later 
                        than 5 years after the date of the 
                        order for relief under section 301, 
                        302, or 303; and
                          (iii) in a manner not less favorable 
                        than the most favored nonpriority 
                        unsecured claim provided for by the 
                        plan (other than cash payments made to 
                        a class of creditors under section 
                        1122(b)); and
                  (D) with respect to a secured claim which 
                would otherwise meet the description of an 
                unsecured claim of a governmental unit under 
                section 507(a)(8), but for the secured status 
                of that claim, the holder of that claim will 
                receive on account of that claim, cash 
                payments, in the same manner and over the same 
                period, as prescribed in subparagraph (C).
          (10) If a class of claims is impaired under the plan, 
        at least one class of claims that is impaired under the 
        plan has accepted the plan, determined without 
        including any acceptance of the plan by any insider.
          (11) Confirmation of the plan is not likely to be 
        followed by the liquidation, or the need for further 
        financial reorganization, of the debtor or any 
        successor to the debtor under the plan, unless such 
        liquidation or reorganization is proposed in the plan.
          (12) All fees payable under section 1930 of title 28, 
        as determined by the court at the hearing on 
        confirmation of the plan, have been paid or the plan 
        provides for the payment of all such fees on the 
        effective date of the plan.
          (13) The plan provides for the continuation after its 
        effective date of payment of all retiree benefits, as 
        that term is defined in section 1114 of this title, at 
        the level established pursuant to subsection (e)(1)(B) 
        or (g) of section 1114 of this title, at any time prior 
        to confirmation of the plan, for the duration of the 
        period the debtor has obligated itself to provide such 
        benefits.
          (14) If the debtor is required by a judicial or 
        administrative order, or by statute, to pay a domestic 
        support obligation, the debtor has paid all amounts 
        payable under such order or such statute for such 
        obligation that first become payable after the date of 
        the filing of the petition.
          (15) In a case in which the debtor is an individual 
        and in which the holder of an allowed unsecured claim 
        objects to the confirmation of the plan--
                  (A) the value, as of the effective date of 
                the plan, of the property to be distributed 
                under the plan on account of such claim is not 
                less than the amount of such claim; or
                  (B) the value of the property to be 
                distributed under the plan is not less than the 
                projected disposable income of the debtor (as 
                defined in section 1325(b)(2)) to be received 
                during the 5-year period beginning on the date 
                that the first payment is due under the plan, 
                or during the period for which the plan 
                provides payments, whichever is longer.
          (16) All transfers of property under 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.
          (17) In a case under subchapter V, all payable fees, 
        costs, and expenses of the special trustee have been 
        paid or the plan provides for the payment of all such 
        fees, costs, and expenses on the effective date of the 
        plan.
          (18) In a case under subchapter V, confirmation of 
        the plan is not likely to cause serious adverse effects 
        on financial stability in the United States.
  (b)(1) Notwithstanding section 510(a) of this title, if all 
of the applicable requirements of subsection (a) of this 
section other than paragraph (8) are met with respect to a 
plan, the court, on request of the proponent of the plan, shall 
confirm the plan notwithstanding the requirements of such 
paragraph if the plan does not discriminate unfairly, and is 
fair and equitable, with respect to each class of claims or 
interests that is impaired under, and has not accepted, the 
plan.
  (2) For the purpose of this subsection, the condition that a 
plan be fair and equitable with respect to a class includes the 
following requirements:
          (A) With respect to a class of secured claims, the 
        plan provides--
                  (i)(I) that the holders of such claims retain 
                the liens securing such claims, whether the 
                property subject to such liens is retained by 
                the debtor or transferred to another entity, to 
                the extent of the allowed amount of such 
                claims; and
                  (II) that each holder of a claim of such 
                class receive on account of such claim deferred 
                cash payments totaling at least the allowed 
                amount of such claim, of a value, as of the 
                effective date of the plan, of at least the 
                value of such holder's interest in the estate's 
                interest in such property;
                  (ii) for the sale, subject to section 363(k) 
                of this title, of any property that is subject 
                to the liens securing such claims, free and 
                clear of such liens, with such liens to attach 
                to the proceeds of such sale, and the treatment 
                of such liens on proceeds under clause (i) or 
                (iii) of this subparagraph; or
                  (iii) for the realization by such holders of 
                the indubitable equivalent of such claims.
          (B) With respect to a class of unsecured claims--
                  (i) the plan provides that each holder of a 
                claim of such class receive or retain on 
                account of such claim property of a value, as 
                of the effective date of the plan, equal to the 
                allowed amount of such claim; or
                  (ii) the holder of any claim or interest that 
                is junior to the claims of such class will not 
                receive or retain under the plan on account of 
                such junior claim or interest any property, 
                except that in a case in which the debtor is an 
                individual, the debtor may retain property 
                included in the estate under section 1115, 
                subject to the requirements of subsection 
                (a)(14) of this section.
          (C) With respect to a class of interests--
                  (i) the plan provides that each holder of an 
                interest of such class receive or retain on 
                account of such interest property of a value, 
                as of the effective date of the plan, equal to 
                the greatest of the allowed amount of any fixed 
                liquidation preference to which such holder is 
                entitled, any fixed redemption price to which 
                such holder is entitled, or the value of such 
                interest; or
                  (ii) the holder of any interest that is 
                junior to the interests of such class will not 
                receive or retain under the plan on account of 
                such junior interest any property.
  (c) Notwithstanding subsections (a) and (b) of this section 
and except as provided in section 1127(b) of this title, the 
court may confirm only one plan, unless the order of 
confirmation in the case has been revoked under section 1144 of 
this title. If the requirements of subsections (a) and (b) of 
this section are met with respect to more than one plan, the 
court shall consider the preferences of creditors and equity 
security holders in determining which plan to confirm.
  (d) Notwithstanding any other provision of this section, on 
request of a party in interest that is a governmental unit, the 
court may not confirm a plan if the principal purpose of the 
plan is the avoidance of taxes or the avoidance of the 
application of section 5 of the Securities Act of 1933. In any 
hearing under this subsection, the governmental unit has the 
burden of proof on the issue of avoidance.
  (e) In a small business case, the court shall confirm a plan 
that complies with the applicable provisions of this title and 
that is filed in accordance with section 1121(e) not later than 
45 days after the plan is filed unless the time for 
confirmation is extended in accordance with section 1121(e)(3).

           *       *       *       *       *       *       *


  SUBCHAPTER V--LIQUIDATION, REORGANIZATION, OR RECAPITALIZATION OF A 
                     COVERED FINANCIAL CORPORATION

Sec. 1181. Inapplicability of other sections

  Sections 303 and 321(c) do not apply in a case under this 
subchapter concerning a covered financial corporation. Section 
365 does not apply to a transfer under section 1185, 1187, or 
1188.

Sec. 1182. Definitions for this subchapter

  In this subchapter, the following definitions shall apply:
          (1) The term ``Board'' means the Board of Governors 
        of the Federal Reserve System.
          (2) The term ``bridge company'' means a newly formed 
        corporation to which property of the estate may be 
        transferred under section 1185(a) and the equity 
        securities of which may be transferred to a special 
        trustee under section 1186(a).
          (3) The term ``capital structure debt'' means all 
        unsecured debt of the debtor for borrowed money for 
        which the debtor is the primary obligor, other than a 
        qualified financial contract and other than debt 
        secured by a lien on property of the estate that is to 
        be transferred to a bridge company pursuant to an order 
        of the court under section 1185(a).
          (4) The term ``contractual right'' means a 
        contractual right of a kind defined in section 555, 
        556, 559, 560, or 561.
          (5) The term ``qualified financial contract'' means 
        any contract of a kind defined in paragraph (25), 
        (38A), (47), or (53B) of section 101, section 741(7), 
        or paragraph (4), (5), (11), or (13) of section 761.
          (6) The term ``special trustee'' means the trustee of 
        a trust formed under section 1186(a)(1).

Sec. 1183. Commencement of a case concerning a covered financial 
                    corporation

  (a) A case under this subchapter concerning a covered 
financial corporation may be commenced by the filing of a 
petition with the court by the debtor under section 301 only if 
the debtor states to the best of its knowledge under penalty of 
perjury in the petition that it is a covered financial 
corporation.
  (b) The commencement of a case under subsection (a) 
constitutes an order for relief under this subchapter.
  (c) The members of the board of directors (or body performing 
similar functions) of a covered financial company shall have no 
liability to shareholders, creditors, or other parties in 
interest for a good faith filing of a petition to commence a 
case under this subchapter, or for any reasonable action taken 
in good faith in contemplation of or in connection with such a 
petition or a transfer under section 1185 or section 1186, 
whether prior to or after commencement of the case.
  (d) Counsel to the debtor shall provide, to the greatest 
extent practicable without disclosing the identity of the 
potential debtor, sufficient confidential notice to the chief 
judge of the court of appeals for the circuit embracing the 
district in which such counsel intends to file a petition to 
commence a case under this subchapter regarding the potential 
commencement of such case. The chief judge of such court shall 
randomly assign to preside over such case a bankruptcy judge 
selected from among the bankruptcy judges designated by the 
Chief Justice of the United States under section 298 of title 
28.

Sec. 1184. Regulators

  The Board, the Securities Exchange Commission, the Office of 
the Comptroller of the Currency of the Department of the 
Treasury, the Commodity Futures Trading Commission, and the 
Federal Deposit Insurance Corporation may raise and may appear 
and be heard on any issue in any case or proceeding under this 
subchapter.

Sec. 1185. Special transfer of property of the estate

  (a) On request of the trustee, and after notice and a hearing 
that shall occur not less than 24 hours after the order for 
relief, the court may order a transfer under this section of 
property of the estate, and the assignment of executory 
contracts, unexpired leases, and qualified financial contracts 
of the debtor, to a bridge company. Upon the entry of an order 
approving such transfer, any property transferred, and any 
executory contracts, unexpired leases, and qualified financial 
contracts assigned under such order shall no longer be property 
of the estate. Except as provided under this section, the 
provisions of section 363 shall apply to a transfer and 
assignment under this section.
  (b) Unless the court orders otherwise, notice of a request 
for an order under subsection (a) shall consist of electronic 
or telephonic notice of not less than 24 hours to--
          (1) the debtor;
          (2) the holders of the 20 largest secured claims 
        against the debtor;
          (3) the holders of the 20 largest unsecured claims 
        against the debtor;
          (4) counterparties to any debt, executory contract, 
        unexpired lease, and qualified financial contract 
        requested to be transferred under this section;
          (5) the Board;
          (6) the Federal Deposit Insurance Corporation;
          (7) the Secretary of the Treasury and the Office of 
        the Comptroller of the Currency of the Treasury;
          (8) the Commodity Futures Trading Commission;
          (9) the Securities and Exchange Commission;
          (10) the United States trustee or bankruptcy 
        administrator; and
          (11) each primary financial regulatory agency, as 
        defined in section 2(12) of the Dodd-Frank Wall Street 
        Reform and Consumer Protection Act, with respect to any 
        affiliate the equity securities of which are proposed 
        to be transferred under this section.
  (c) The court may not order a transfer under this section 
unless the court determines, based upon a preponderance of the 
evidence, that--
          (1) the transfer under this section is necessary to 
        prevent serious adverse effects on financial stability 
        in the United States;
          (2) the transfer does not provide for the assumption 
        of any capital structure debt by the bridge company;
          (3) the transfer does not provide for the transfer to 
        the bridge company of any property of the estate that 
        is subject to a lien securing a debt, executory 
        contract, unexpired lease or agreement (including a 
        qualified financial contract) of the debtor unless--
                  (A)(i) the bridge company assumes such debt, 
                executory contract, unexpired lease or 
                agreement (including a qualified financial 
                contract), including any claims arising in 
                respect thereof that would not be allowed 
                secured claims under section 506(a)(1) and 
                after giving effect to such transfer, such 
                property remains subject to the lien securing 
                such debt, executory contract, unexpired lease 
                or agreement (including a qualified financial 
                contract); and
                  (ii) the court has determined that assumption 
                of such debt, executory contract, unexpired 
                lease or agreement (including a qualified 
                financial contract) by the bridge company is in 
                the best interests of the estate; or
                  (B) such property is being transferred to the 
                bridge company in accordance with the 
                provisions of section 363;
          (4) the transfer does not provide for the assumption 
        by the bridge company of any debt, executory contract, 
        unexpired lease or agreement (including a qualified 
        financial contract) of the debtor secured by a lien on 
        property of the estate unless the transfer provides for 
        such property to be transferred to the bridge company 
        in accordance with paragraph (3)(A) of this subsection;
          (5) the transfer does not provide for the transfer of 
        the equity of the debtor;
          (6) the trustee has demonstrated that the bridge 
        company is not likely to fail to meet the obligations 
        of any debt, executory contract, qualified financial 
        contract, or unexpired lease assumed and assigned to 
        the bridge company;
          (7) the transfer provides for the transfer to a 
        special trustee all of the equity securities in the 
        bridge company and appointment of a special trustee in 
        accordance with section 1186;
          (8) after giving effect to the transfer, adequate 
        provision has been made for the fees, costs, and 
        expenses of the estate and special trustee; and
          (9) the bridge company will have governing documents, 
        and initial directors and senior officers, that are in 
        the best interest of creditors and the estate.
  (d) Immediately before a transfer under this section, the 
bridge company that is the recipient of the transfer shall--
          (1) not have any property, executory contracts, 
        unexpired leases, qualified financial contracts, or 
        debts, other than any property acquired or executory 
        contracts, unexpired leases, or debts assumed when 
        acting as a transferee of a transfer under this 
        section; and
          (2) have equity securities that are property of the 
        estate, which may be sold or distributed in accordance 
        with this title.

Sec. 1186. Special trustee

  (a)(1) An order approving a transfer under section 1185 shall 
require the trustee to transfer to a qualified and independent 
special trustee, who is appointed by the court, all of the 
equity securities in the bridge company that is the recipient 
of a transfer under section 1185 to hold in trust for the sole 
benefit of the estate, subject to satisfaction of the special 
trustee's fees, costs, and expenses. The trust of which the 
special trustee is the trustee shall be a newly formed trust 
governed by a trust agreement approved by the court as in the 
best interests of the estate, and shall exist for the sole 
purpose of holding and administering, and shall be permitted to 
dispose of, the equity securities of the bridge company in 
accordance with the trust agreement.
  (2) In connection with the hearing to approve a transfer 
under section 1185, the trustee shall confirm to the court that 
the Board has been consulted regarding the identity of the 
proposed special trustee and advise the court of the results of 
such consultation.
  (b) The trust agreement governing the trust shall provide--
          (1) for the payment of the fees, costs, expenses, and 
        indemnities of the special trustee from the assets of 
        the debtor's estate;
          (2) that the special trustee provide--
                  (A) quarterly reporting to the estate, which 
                shall be filed with the court; and
                  (B) information about the bridge company 
                reasonably requested by a party in interest to 
                prepare a disclosure statement for a plan 
                providing for distribution of any securities of 
                the bridge company if such information is 
                necessary to prepare such disclosure statement;
          (3) that for as long as the equity securities of the 
        bridge company are held by the trust, the special 
        trustee shall file a notice with the court in 
        connection with--
                  (A) any change in a director or senior 
                officer of the bridge company;
                  (B) any modification to the governing 
                documents of the bridge company; and
                  (C) any material corporate action of the 
                bridge company, including--
                          (i) recapitalization;
                          (ii) a material borrowing;
                          (iii) termination of an intercompany 
                        debt or guarantee;
                          (iv) a transfer of a substantial 
                        portion of the assets of the bridge 
                        company; or
                          (v) the issuance or sale of any 
                        securities of the bridge company;
          (4) that any sale of any equity securities of the 
        bridge company shall not be consummated until the 
        special trustee consults with the Federal Deposit 
        Insurance Corporation and the Board regarding such sale 
        and discloses the results of such consultation with the 
        court;
          (5) that, subject to reserves for payments permitted 
        under paragraph (1) provided for in the trust 
        agreement, the proceeds of the sale of any equity 
        securities of the bridge company by the special trustee 
        be held in trust for the benefit of or transferred to 
        the estate;
          (6) the process and guidelines for the replacement of 
        the special trustee; and
          (7) that the property held in trust by the special 
        trustee is subject to distribution in accordance with 
        subsection (c).
  (c)(1) The special trustee shall distribute the assets held 
in trust--
          (A) if the court confirms a plan in the case, in 
        accordance with the plan on the effective date of the 
        plan; or
          (B) if the case is converted to a case under chapter 
        7, as ordered by the court.
  (2) As soon as practicable after a final distribution under 
paragraph (1), the office of the special trustee shall 
terminate, except as may be necessary to wind up and conclude 
the business and financial affairs of the trust.
  (d) After a transfer to the special trustee under this 
section, the special trustee shall be subject only to 
applicable nonbankruptcy law, and the actions and conduct of 
the special trustee shall no longer be subject to approval by 
the court in the case under this subchapter.

Sec. 1187. Temporary and supplemental automatic stay; assumed debt

  (a)(1) A petition filed under section 1183 operates as a 
stay, applicable to all entities, of the termination, 
acceleration, or modification of any debt, contract, lease, or 
agreement of the kind described in paragraph (2), or of any 
right or obligation under any such debt, contract, lease, or 
agreement, solely because of--
          (A) a default by the debtor under any such debt, 
        contract, lease, or agreement; or
          (B) a provision in such debt, contract, lease, or 
        agreement, or in applicable nonbankruptcy law, that is 
        conditioned on--
                  (i) the insolvency or financial condition of 
                the debtor at any time before the closing of 
                the case;
                  (ii) the commencement of a case under this 
                title concerning the debtor;
                  (iii) the appointment of or taking possession 
                by a trustee in a case under this title 
                concerning the debtor or by a custodian before 
                the commencement of the case; or
                  (iv) a credit rating agency rating, or 
                absence or withdrawal of a credit rating agency 
                rating--
                          (I) of the debtor at any time after 
                        the commencement of the case;
                          (II) of an affiliate during the 
                        period from the commencement of the 
                        case until 48 hours after such order is 
                        entered;
                          (III) of the bridge company while the 
                        trustee or the special trustee is a 
                        direct or indirect beneficial holder of 
                        more than 50 percent of the equity 
                        securities of--
                                  (aa) the bridge company; or
                                  (bb) the affiliate, if all of 
                                the direct or indirect 
                                interests in the affiliate that 
                                are property of the estate are 
                                transferred under section 1185; 
                                or
                          (IV) of an affiliate while the 
                        trustee or the special trustee is a 
                        direct or indirect beneficial holder of 
                        more than 50 percent of the equity 
                        securities of--
                                  (aa) the bridge company; or
                                  (bb) the affiliate, if all of 
                                the direct or indirect 
                                interests in the affiliate that 
                                are property of the estate are 
                                transferred under section 1185.
  (2) A debt, contract, lease, or agreement described in this 
paragraph is--
          (A) any debt (other than capital structure debt), 
        executory contract, or unexpired lease of the debtor 
        (other than a qualified financial contract);
          (B) any agreement under which the debtor issued or is 
        obligated for debt (other than capital structure debt);
          (C) any debt, executory contract, or unexpired lease 
        of an affiliate (other than a qualified financial 
        contract); or
          (D) any agreement under which an affiliate issued or 
        is obligated for debt.
  (3) The stay under this subsection terminates--
          (A) for the benefit of the debtor, upon the earliest 
        of--
                  (i) 48 hours after the commencement of the 
                case;
                  (ii) assumption of the debt, contract, lease, 
                or agreement by the bridge company under an 
                order authorizing a transfer under section 
                1185;
                  (iii) a final order of the court denying the 
                request for a transfer under section 1185; or
                  (iv) the time the case is dismissed; and
          (B) for the benefit of an affiliate, upon the 
        earliest of--
                  (i) the entry of an order authorizing a 
                transfer under section 1185 in which the direct 
                or indirect interests in the affiliate that are 
                property of the estate are not transferred 
                under section 1185;
                  (ii) a final order by the court denying the 
                request for a transfer under section 1185;
                  (iii) 48 hours after the commencement of the 
                case if the court has not ordered a transfer 
                under section 1185; or
                  (iv) the time the case is dismissed.
  (4) Subsections (d), (e), (f), and (g) of section 362 apply 
to a stay under this subsection.
  (b) A debt, executory contract (other than a qualified 
financial contract), or unexpired lease of the debtor, or an 
agreement under which the debtor has issued or is obligated for 
any debt, may be assumed by a bridge company in a transfer 
under section 1185 notwithstanding any provision in an 
agreement or in applicable nonbankruptcy law that--
          (1) prohibits, restricts, or conditions the 
        assignment of the debt, contract, lease, or agreement; 
        or
          (2) accelerates, terminates, or modifies, or permits 
        a party other than the debtor to terminate or modify, 
        the debt, contract, lease, or agreement on account of--
                  (A) the assignment of the debt, contract, 
                lease, or agreement; or
                  (B) a change in control of any party to the 
                debt, contract, lease, or agreement.
  (c)(1) A debt, contract, lease, or agreement of the kind 
described in subparagraph (A) or (B) of subsection (a)(2) may 
not be accelerated, terminated, or modified, and any right or 
obligation under such debt, contract, lease, or agreement may 
not be accelerated, terminated, or modified, as to the bridge 
company solely because of a provision in the debt, contract, 
lease, or agreement or in applicable nonbankruptcy law--
          (A) of the kind described in subsection (a)(1)(B) as 
        applied to the debtor;
          (B) that prohibits, restricts, or conditions the 
        assignment of the debt, contract, lease, or agreement; 
        or
          (C) that accelerates, terminates, or modifies, or 
        permits a party other than the debtor to terminate or 
        modify, the debt, contract, lease or agreement on 
        account of--
                  (i) the assignment of the debt, contract, 
                lease, or agreement; or
                  (ii) a change in control of any party to the 
                debt, contract, lease, or agreement.
  (2) If there is a default by the debtor under a provision 
other than the kind described in paragraph (1) in a debt, 
contract, lease or agreement of the kind described in 
subparagraph (A) or (B) of subsection (a)(2), the bridge 
company may assume such debt, contract, lease, or agreement 
only if the bridge company--
          (A) shall cure the default;
          (B) compensates, or provides adequate assurance in 
        connection with a transfer under section 1185 that the 
        bridge company will promptly compensate, a party other 
        than the debtor to the debt, contract, lease, or 
        agreement, for any actual pecuniary loss to the party 
        resulting from the default; and
          (C) provides adequate assurance in connection with a 
        transfer under section 1185 of future performance under 
        the debt, contract, lease, or agreement, as determined 
        by the court under section 1185(c)(4).

Sec. 1188. Treatment of qualified financial contracts and affiliate 
                    contracts

  (a) Notwithstanding sections 362(b)(6), 362(b)(7), 
362(b)(17), 362(b)(27), 362(o), 555, 556, 559, 560, and 561, a 
petition filed under section 1183 operates as a stay, during 
the period specified in section 1187(a)(3)(A), applicable to 
all entities, of the exercise of a contractual right--
          (1) to cause the modification, liquidation, 
        termination, or acceleration of a qualified financial 
        contract of the debtor or an affiliate;
          (2) to offset or net out any termination value, 
        payment amount, or other transfer obligation arising 
        under or in connection with a qualified financial 
        contract of the debtor or an affiliate; or
          (3) under any security agreement or arrangement or 
        other credit enhancement forming a part of or related 
        to a qualified financial contract of the debtor or an 
        affiliate.
  (b)(1) During the period specified in section 1187(a)(3)(A), 
the trustee or the affiliate shall perform all payment and 
delivery obligations under such qualified financial contract of 
the debtor or the affiliate, as the case may be, that become 
due after the commencement of the case. The stay provided under 
subsection (a) terminates as to a qualified financial contract 
of the debtor or an affiliate immediately upon the failure of 
the trustee or the affiliate, as the case may be, to perform 
any such obligation during such period.
  (2) Any failure by a counterparty to any qualified financial 
contract of the debtor or any affiliate to perform any payment 
or delivery obligation under such qualified financial contract, 
including during the pendency of the stay provided under 
subsection (a), shall constitute a breach of such qualified 
financial contract by the counterparty.
  (c) Subject to the court's approval, a qualified financial 
contract between an entity and the debtor may be assigned to or 
assumed by the bridge company in a transfer under, and in 
accordance with, section 1185 if and only if--
          (1) all qualified financial contracts between the 
        entity and the debtor are assigned to and assumed by 
        the bridge company in the transfer under section 1185;
          (2) all claims of the entity against the debtor in 
        respect of any qualified financial contract between the 
        entity and the debtor (other than any claim that, under 
        the terms of the qualified financial contract, is 
        subordinated to the claims of general unsecured 
        creditors) are assigned to and assumed by the bridge 
        company;
          (3) all claims of the debtor against the entity under 
        any qualified financial contract between the entity and 
        the debtor are assigned to and assumed by the bridge 
        company; and
          (4) all property securing or any other credit 
        enhancement furnished by the debtor for any qualified 
        financial contract described in paragraph (1) or any 
        claim described in paragraph (2) or (3) under any 
        qualified financial contract between the entity and the 
        debtor is assigned to and assumed by the bridge 
        company.
  (d) Notwithstanding any provision of a qualified financial 
contract or of applicable nonbankruptcy law, a qualified 
financial contract of the debtor that is assumed or assigned in 
a transfer under section 1185 may not be accelerated, 
terminated, or modified, after the entry of the order approving 
a transfer under section 1185, and any right or obligation 
under the qualified financial contract may not be accelerated, 
terminated, or modified, after the entry of the order approving 
a transfer under section 1185 solely because of a condition 
described in section 1187(c)(1), other than a condition of the 
kind specified in section 1187(b) that occurs after property of 
the estate no longer includes a direct beneficial interest or 
an indirect beneficial interest through the special trustee, in 
more than 50 percent of the equity securities of the bridge 
company.
  (e) Notwithstanding any provision of any agreement or in 
applicable nonbankruptcy law, an agreement of an affiliate 
(including an executory contract, an unexpired lease, qualified 
financial contract, or an agreement under which the affiliate 
issued or is obligated for debt) and any right or obligation 
under such agreement may not be accelerated, terminated, or 
modified, solely because of a condition described in section 
1187(c)(1), other than a condition of the kind specified in 
section 1187(b) that occurs after the bridge company is no 
longer a direct or indirect beneficial holder of more than 50 
percent of the equity securities of the affiliate, at any time 
after the commencement of the case if--
          (1) all direct or indirect interests in the affiliate 
        that are property of the estate are transferred under 
        section 1185 to the bridge company within the period 
        specified in subsection (a);
          (2) the bridge company assumes--
                  (A) any guarantee or other credit enhancement 
                issued by the debtor relating to the agreement 
                of the affiliate; and
                  (B) any obligations in respect of rights of 
                setoff, netting arrangement, or debt of the 
                debtor that directly arises out of or directly 
                relates to the guarantee or credit enhancement; 
                and
          (3) any property of the estate that directly serves 
        as collateral for the guarantee or credit enhancement 
        is transferred to the bridge company.

Sec. 1189. Licenses, permits, and registrations

  (a) Notwithstanding any otherwise applicable nonbankruptcy 
law, if a request is made under section 1185 for a transfer of 
property of the estate, any Federal, State, or local license, 
permit, or registration that the debtor or an affiliate had 
immediately before the commencement of the case and that is 
proposed to be transferred under section 1185 may not be 
accelerated, terminated, or modified at any time after the 
request solely on account of--
          (1) the insolvency or financial condition of the 
        debtor at any time before the closing of the case;
          (2) the commencement of a case under this title 
        concerning the debtor;
          (3) the appointment of or taking possession by a 
        trustee in a case under this title concerning the 
        debtor or by a custodian before the commencement of the 
        case; or
          (4) a transfer under section 1185.
  (b) Notwithstanding any otherwise applicable nonbankruptcy 
law, any Federal, State, or local license, permit, or 
registration that the debtor had immediately before the 
commencement of the case that is included in a transfer under 
section 1185 shall be valid and all rights and obligations 
thereunder shall vest in the bridge company.

Sec. 1190. Exemption from securities laws

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

Sec. 1191. Inapplicability of certain avoiding powers

  A transfer made or an obligation incurred by the debtor to an 
affiliate prior to or after the commencement of the case, 
including any obligation released by the debtor or the estate 
to or for the benefit of an affiliate, in contemplation of or 
in connection with a transfer under section 1185 is not 
avoidable under section 544, 547, 548(a)(1)(B), or 549, or 
under any similar nonbankruptcy law.

Sec. 1192. Consideration of financial stability

  The court may consider the effect that any decision in 
connection with this subchapter may have on financial stability 
in the United States.

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                      TITLE 28, UNITED STATES CODE

PART I--ORGANIZATION OF COURTS

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            CHAPTER 13--ASSIGNMENT OF JUDGES TO OTHER COURTS

Sec.
291. Circuit judges.
     * * * * * * *
298. Judge for a case under subchapter V of chapter 11 of title 11.

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Sec. 298. Judge for a case under subchapter V of chapter 11 of title 11

  (a)(1) Notwithstanding section 295, the Chief Justice of the 
United States shall designate not fewer than 10 bankruptcy 
judges to be available to hear a case under subchapter V of 
chapter 11 of title 11. Bankruptcy judges may request to be 
considered by the Chief Justice of the United States for such 
designation.
  (2) Notwithstanding section 155, a case under subchapter V of 
chapter 11 of title 11 shall be heard under section 157 by a 
bankruptcy judge designated under paragraph (1), who shall be 
randomly assigned to hear such case by the chief judge of the 
court of appeals for the circuit embracing the district in 
which the case is pending. To the greatest extent practicable, 
the approvals required under section 155 should be obtained.
  (3) If the bankruptcy judge assigned to hear a case under 
paragraph (2) is not assigned to the district in which the case 
is pending, the bankruptcy judge shall be temporarily assigned 
to the district.
  (b) A case under subchapter V of chapter 11 of title 11, and 
all proceedings in the case, shall take place in the district 
in which the case is pending.
  (c) In this section, the term ``covered financial 
corporation'' has the meaning given that term in section 
101(9A) of title 11.

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PART IV--JURISDICTION AND VENUE

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CHAPTER 85--DISTRICT COURTS; JURISDICTION

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Sec. 1334. Bankruptcy cases and proceedings

  (a) Except as provided in subsection (b) of this section, the 
district courts shall have original and exclusive jurisdiction 
of all cases under title 11.
  (b) Except as provided in subsection (e)(2), and 
notwithstanding any Act of Congress that confers exclusive 
jurisdiction on a court or courts other than the district 
courts, the district courts shall have original but not 
exclusive jurisdiction of all civil proceedings arising under 
title 11, or arising in or related to cases under title 11.
  (c)(1) Except with respect to a case under chapter 15 of 
title 11, nothing in this section prevents a district court in 
the interest of justice, or in the interest of comity with 
State courts or respect for State law, from abstaining from 
hearing a particular proceeding arising under title 11 or 
arising in or related to a case under title 11.
          (2) Upon timely motion of a party in a proceeding 
        based upon a State law claim or State law cause of 
        action, related to a case under title 11 but not 
        arising under title 11 or arising in a case under title 
        11, with respect to which an action could not have been 
        commenced in a court of the United States absent 
        jurisdiction under this section, the district court 
        shall abstain from hearing such proceeding if an action 
        is commenced, and can be timely adjudicated, in a State 
        forum of appropriate jurisdiction.
  (d) Any decision to abstain or not to abstain made under 
subsection (c) (other than a decision not to abstain in a 
proceeding described in subsection (c)(2)) is not reviewable by 
appeal or otherwise by the court of appeals under section 
158(d), 1291, or 1292 of this title or by the Supreme Court of 
the United States under section 1254 of this title. Subsection 
(c) and this subsection shall not be construed to limit the 
applicability of the stay provided for by section 362 of title 
11, United States Code, as such section applies to an action 
affecting the property of the estate in bankruptcy.
  (e) The district court in which a case under title 11 is 
commenced or is pending shall have exclusive jurisdiction--
          (1) of all the property, wherever located, of the 
        debtor as of the commencement of such case, and of 
        property of the estate; and
          (2) over all claims or causes of action that involve 
        construction of section 327 of title 11, United States 
        Code, or rules relating to disclosure requirements 
        under section 327.
  (f) This section does not grant jurisdiction to the district 
court after a transfer pursuant to an order under section 1185 
of title 11 of any proceeding related to a special trustee 
appointed, or to a bridge company formed, in connection with a 
case under subchapter V of chapter 11 of title 11.

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