Summary: S.1985 — 102nd Congress (1991-1992)All Information (Except Text)

Bill summaries are authored by CRS.

Shown Here:
Senate agreed to House amendment with amendment (10/07/1992)

Bankruptcy Amendments of 1992 - Title I: Improved Bankruptcy Administration - Amends Federal bankruptcy law to provide that the final hearing on a motion to lift an automatic stay must conclude within 30 days of the conclusion of the preliminary hearing on such motion, unless the 30 day period is extended with the consent of the parties in interest, or for a specific time which the court finds is required by compelling circumstances.

Limits a debtor's exclusive periods for filing a reorganization plan and soliciting acceptances to one year, and 425 days, respectively, unless the need for such an increase is attributable to circumstances for which the debtor should not justly be held accountable.

Permits the bankruptcy court to extend the filing period for a debt adjustment plan of a family farmer with regular annual income if the need for an extension is attributable to circumstances for which the debtor should not justly be held accountable.

Postpones from October 1, 1993, to October 1, 1995, the expiration date for Chapter 12 bankruptcy laws regarding family farmers.

States that the reaffirmation of a dischargeable debt is enforceable only if: (1) the reaffirmation agreement contains a clear and conspicuous statement advising the debtor that the agreement is not required under bankruptcy law, nonbankruptcy law or under any agreement not in accordance with bankruptcy law; and (2) the agreement is filed with the court, accompanied by a declaration that the debtor's attorney has fully advised the debtor of its legal consequences, and of any default under it.

Permits bankruptcy court judges to hold status conferences, and to issue case limitations and conditions at such conferences. Specifies kinds of orders that may be issued.

Amends the Federal judicial code to mandate that the judicial council of a circuit establish a bankruptcy appellate service composed of district bankruptcy judges in the circuit who are appointed by the council to hear appeals, subject to the consent of all parties (unless the judicial council finds that there are either insufficient judicial resources available in the circuit or the creation of such services would result in undue delay or increased cost to parties in bankruptcy cases). Sets forth appeals guidelines.

Amends the Bankruptcy Code to permit bankruptcy administrators (in States in which the bankruptcy system is administered by a Bankruptcy Administrator instead of a U.S. Trustee) to preside at meetings of creditors and equity security holders, and to examine the debtor at creditors' meetings.

Amends the Bankruptcy Code to include within the definition of "person" pension benefit guarantors, certain pension plans, and legal or beneficial owners of an asset of an eligible deferred compensation plan, or of a governmental employee pension benefit plan (thus enabling such persons, State pension funds and the Pension Benefit Guaranty Corporation to serve on creditors' committees).

Increases the incentive compensation guidelines for bankruptcy trustees.

Increases the dollar limitations and debt limits applicable to specified bankruptcy procedures (thus expanding the range of debtors eligible to repay debts over a period from regular income -- Chapter 13 debtors, and accounting for inflation since 1978).

Amends the judicial code to prohibit bankruptcy fees revised by the Judicial Conference from taking effect until they have been reported to the Congress, and until the expiration of 180 days after they have been reported. Requires the Judicial Conference to report to certain congressional committees regarding the impact of waiving certain bankruptcy fees and costs for debtors who file a voluntary Chapter 11 reorganization case in forma pauperis.

Amends the Bankruptcy Code to conform its corporate premerger notification provisions to the requirements for antitrust review of transactions under the Clayton Act.

Entitles members of Chapter 11 bankruptcy reorganization committees to reimbursement for actual and necessary expenses incurred in the performance of their duties (other than claims for compensation for services rendered as a member of such committee).

Title II: Consumer Bankruptcy Issues - Permits a Chapter 13 debtor to cure a home mortgage default on its principal residence before its foreclosure sale. States that in a case in which the last payment on the original payment schedule for a claim secured only by a security interest in real property that is the debtor's principal residence is due before the final payment under the debt adjustment plan, the plan may provide for payment of the claim as modified.

Declares that the rights of the holder of a senior security interest in a Chapter 13 debtor's principal residence may not be bifurcated to the extent they were not undersecured when they were originated.

Declares criminal fines non-dischargeable under a Chapter 13 proceeding.

Provides that a petition in bankruptcy does not operate as an automatic stay with respect to the continuation or commencement of an action or proceeding for: (1) the establishment of paternity; or (2) the establishment or modification of an order for child or spousal maintenance, or support.

Includes within the priority list of expenses and claims that are to be paid by the bankrupt estate any claims for child or spousal support pursuant to a court order. Declares that a debtor in bankruptcy may not avoid a judicial lien that secures a debt for child and spousal support or maintenance. Prohibits a bankruptcy trustee from avoiding a transfer that was a bona fide payment of a debt for child or spousal support or maintenance pursuant to a court order.

Permits child support creditors to appear and intervene without charge, and without meeting any special local court requirement for attorney appearances, in any bankruptcy proceeding in any bankruptcy or district court upon filing a court form detailing the status of the child support debt.

Title III: Commercial Bankruptcy Issues - Declares that if a bankruptcy trustee avoids a transfer that was made between 90 days and one year before the filing of a petition in bankruptcy for the benefit of a creditor that at the time of the transfer was an insider, the trustee may not recover from a transferee that is not an insider (thus shielding a non-insider transferee from treatment as a corporate insider creditor).

Grants purchase-money security interest lenders a 20-day period in which to perfect their security interest (currently, ten days).

Provides that a security interest agreement regarding property and rents, which was created before the commencement of a bankruptcy case and extended to properties likewise acquired before such commencement, also extends to rents acquired by the bankrupt estate after the commencement of the case (whether or not the security interest in such rents is perfected under non-bankruptcy law, except to the extent that the court orders otherwise).

Limits certain avoidance powers of the bankruptcy trustee. Declares that pursuant to a court determination that a return is in the best interests of the estate, the debtor, with the consent of a creditor, may return goods shipped before the commencement of the case, and the creditor may offset the value of such goods against claims against the debtor that arose before commencement of the case.

Requires the trustee to orally examine the debtor before the conclusion of the meeting of creditors or equity security holders to ensure that the debtor is aware of specified consequences and alternatives of the bankruptcy proceeding.

Presumes nondischargeable any consumer debts owed to a single creditor and aggregating more than $500 for "luxury goods or services" incurred by an individual debtor within 60 (currently 40) days before the order for relief.

States that the validity of a good faith assignment of either an executory contract or unexpired lease made pursuant to court approval is not affected by a subsequent reversal or modification upon appeal (unless the assignment was stayed pending appeal).

Modifies the guidelines for professional fees which the court may award to certain persons in conformance with guidelines adopted by the Executive Office for United States Trustees.

Provides that the proceeds of money orders sold 14 days prior to a bankruptcy filing are not part of the estate (and therefore available to the money order issuer, if an agreement exists between the parties that money order proceeds will not be commingled with those of the debtor).

Declares that if the bankruptcy trustee does not assume or reject by a specified deadline executory contracts or unexpired leases for the use or possession by the debtor of airport facilities, then such contracts shall be deemed rejected, and the trustee shall immediately surrender the facilities to the airport operator.

Amends the judicial code to direct a United States trustee to apply uniformly the guidelines adopted by the Executive Office of the United States Trustee when reviewing applications submitted by certain bankruptcy court personnel for compensation and reimbursement.

Grants certain secured parties, lessors, or conditional vendors the right to take possession of aircraft equipment, maritime vessels, or railroad rolling stock notwithstanding certain bankruptcy law restrictions or judicial injunctions unless the trustee, subject to court approval, assumes the debtor's obligations and certain defaults are cured. (Current law limits this right to secured parties with a purchase-money security interest).

Authorizes judicial orders which require) a Chapter 11 debtor to use cash collateral, credit, or the incurring of debt to make timely payments with respect to either a collective bargaining agreement or insurance benefits to retired employees, if there are insufficient unencumbered assets available to make such payments.

Extends from ten to 30 days the period in which a seller may reclaim goods from an insolvent debtor.

Title IV: Governmental Bankruptcy Issues - Modifies the criteria for municipal bankruptcy filing to require that municipalities be specifically authorized by the State to file for bankruptcy.

Title V: Bankruptcy Review Commission - National Bankruptcy Review Commission Act - Establishes the National Bankruptcy Review Commission to investigate and report to the Congress, the Chief Justice, and the President on issues relating to business bankruptcies. Requires that, prior to the appointment of Commission members, the President, the President pro tempore of the Senate, the Speaker of the House of Representatives, and the Chief Justice consult with each other to ensure equitable representation of various points of view on the Commission and its staff. Terminates the Commission after submission of such report. Authorizes appropriations.

Title VI: Technical Corrections - Sets forth technical corrections to affected legislation.

Title VII: Severability; Effective Date; Application of Amendments - Sets forth the effective date of this Act. Makes it inapplicable to bankruptcy cases commenced before its enactment.

Applies the amendments of the Act with respect to aircraft equipment and vessels to any lease entered into in connection with a settlement of any litigation pending under the bankruptcy code on the date of enactment.