[Congressional Bills 113th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5421 Referred in Senate (RFS)]
113th CONGRESS
2d Session
H. R. 5421
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
December 2, 2014
Received; read twice and referred to the Committee on the Judiciary
_______________________________________________________________________
AN ACT
To amend title 11 of the United States Code in order to facilitate the
resolution of an insolvent financial institution in bankruptcy.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Financial Institution Bankruptcy Act
of 2014''.
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.
``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--
``(1) 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; or
``(2) by the Board only if the Board states to the best of
its knowledge under penalty of perjury in the petition that--
``(A) the debtor is a covered financial corporation
that--
``(i) has incurred losses that will deplete
all or substantially all of the capital of the
covered financial corporation, and there is no
reasonable prospect for the covered financial
corporation to avoid such depletion;
``(ii) is insolvent;
``(iii) is not paying, or is unable to pay,
the debts of the covered financial corporation
(other than debts subject to a bona fide
dispute as to liability or amount) as they
become due; or
``(iv) is likely to be in a financial
condition specified in clause (i), (ii), or
(iii) sufficiently soon such that the immediate
commencement of a case under this subchapter is
necessary to prevent serious adverse effects on
financial stability in the United States; and
``(B) the commencement of a case under this title
and effecting a transfer under section 1185 is
necessary to prevent serious adverse effects on
financial stability in the United States.
``(b)(1) Unless the debtor consents to an order for relief, the
court shall hold a hearing on the Board's petition under subsection
(a)(2) as soon as practicable but not later than 16 hours after the
Board files such a petition, with notice only to--
``(A) the covered financial corporation;
``(B) the Federal Deposit Insurance Corporation;
``(C) the Office of the Comptroller of the Currency of the
Department of the Treasury; and
``(D) the Secretary of the Treasury.
``(2) Only the Board and the entities specified in paragraph (1)
and their counsel may participate in a hearing described in this
subsection. The Board or the trustee may request that pleadings,
hearings, transcripts, and orders in connection with a hearing
described in this subsection be sealed if their disclosure could create
financial instability in the United States.
``(3) All pleadings, hearings, transcripts, and orders sealed under
paragraph (2) shall be available to only the court, the appellate
panel, the covered financial corporation, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency of the
Department of the Treasury, the Secretary of the Treasury, and the
Board. Notwithstanding paragraph (2), if the case is dismissed, all
court documents, including pleadings, hearings, transcripts, and
orders, shall be permanently sealed.
``(c)(1) The commencement of a case under subsection (a)(1)
constitutes an order for relief under this subchapter.
``(2) In a case commenced under subsection (a)(2), after notice and
hearing required under subsection (b) and not later than 18 hours after
the filing of the Board's petition, the court shall enter--
``(A) an order for relief--
``(i) if the Board has shown at the hearing under
this subsection that the requirements under subsection
(a)(2) are supported by a preponderance of the
evidence; or
``(ii) if the debtor consents to the Board's
petition under subsection (a)(2); or
``(B) an order dismissing the case.
``(d)(1) The covered financial corporation or the Board may appeal
to the court of appeals from an order entered by the court under
subsection (c)(2) not later than 1 hour after the court enters such
order, with notice only to the entities specified in subsection (b)(1)
and the Board. Such order shall be stayed pending such appeal.
``(2) The appellate panel specified under section 298(c)(1) of
title 28 for the judicial circuit in which the case is pending shall
hear the appeal under paragraph (1) within 12 hours of the filing of
the notice of appeal under this subsection. The standard of review
shall be abuse of discretion. The appellate panel shall enter an order
determining the matter that is the subject of the appeal not later than
14 hours after the notice of appeal is filed.
``(3) The court may not, on account of an appeal from an order for
relief under section 1183(d)(1), delay any proceeding under section
1185, except that the court shall not authorize a transfer under
section 1185 before the determination of the appeal.
``(e) 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 or consenting in good faith to a petition with
respect to 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.
``(f) Counsel to the debtor or the Board shall provide, to the
greatest extent practicable, sufficient confidential notice to the
Office of Court Services of the Administrative Office of the United
States Courts regarding the potential commencement of a subchapter V
case without disclosing the identity of the potential debtor in order
to allow such office to randomly designate and ensure the ready
availability of one of the bankruptcy judges designated under section
298(b)(1) of title 28 to be available to preside over such subchapter V
case.
``Sec. 1184. Regulators
``The Board, the Securities Exchange Commission, the Office of the
Comptroller of the Currency of the Department of the Treasury, 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 or the Board, 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 sections 363 and 365 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 Securities and Exchange Commission;
``(9) the United States trustee or bankruptcy
administrator; and
``(10) 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 of the debtor unless--
``(A)(i) the bridge company assumes such debt,
executory contract, unexpired lease or agreement,
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;
and
``(ii) the court has determined that assumption of
such debt, executory contract, unexpired lease 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;
``(4) the transfer does not provide for the assumption by
the bridge company of any debt, executory contract, unexpired
lease or agreement of the debtor secured by a lien on property
in which the estate has an interest 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 party requesting the transfer under this
subsection 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 the section, the bridge
company that is the recipient of the transfer shall--
``(1) not have any property, executory contracts, unexpired
leases, or debts, other than any property acquired or executory
contracts, unexpired leases, or debts assumed when acting as a
transferee of a transfer under 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 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 under any
qualified financial contract between the entity and the debtor
(other than any claim that, under the terms of the qualified
financial contract, is subordinated to the claims of general
unsecured creditors) are assigned to and assumed by the bridge
company;
``(3) all claims of the debtor against the entity under any
qualified financial contract between the entity and the debtor
are assigned to and assumed by the bridge company; and
``(4) all property securing or any other credit enhancement
furnished by the debtor for any qualified financial contract
described in paragraph (1) or any claim described in paragraph
(2) or (3) under any qualified financial contract between the
entity and the debtor is assigned to and assumed by the bridge
company.
``(d) 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 right of setoff, netting arrangement, or
debt of the debtor that directly arises out of or
directly relates to the guarantee or credit
enhancement; and
``(3) any property of the estate that directly serves as
collateral for the guarantee or credit enhancement is
transferred to the bridge company.
``Sec. 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) Notwithstanding section 295, the Chief Justice of the United
States shall designate not fewer than 3 judges of the courts of appeals
in not fewer than 4 circuits to serve on an appellate panel to be
available to hear an appeal under section 1183 of title 11 in a case
under such title concerning a covered financial corporation. Appellate
judges may request to be considered by the Chief Justice of the United
States for such designation.
``(b)(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 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.
``(c)(1) The court of appeals shall have jurisdiction of appeals
from all orders for relief and orders of dismissal under section 1183
of title 11.
``(2) Notwithstanding section 295, in an appeal under paragraph (1)
in a case under title 11 concerning a covered financial corporation
shall be heard by--
``(A) 3 judges selected from the appellate panel designated
under subsection (a); or
``(B) if the 3 judges of such panel are not immediately
available to hear the case, 3 judges designated under
subsection (a) from another circuit and assigned by the Chief
Justice of the United States to hear the case.
``(3) If any of the judges of the appellate panel specified in
paragraph (2) is not assigned to the circuit in which the appeal is
pending, the judges shall be temporarily assigned to the circuit.
``(4) 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.
``(d) 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.--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.''.
Passed the House of Representatives December 1, 2014.
Attest:
KAREN L. HAAS,
Clerk.