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106th Congress                                           Rept. 106-123,
  1st Session           HOUSE OF REPRESENTATIVES             Part 1    

=======================================================================



 
                     BANKRUPTCY REFORM ACT OF 1999

                                _______


                 April 29, 1999.--Ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

                        [To accompany H.R. 833]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 833) to amend title 11 of the United States Code, 
and for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................    86
Purpose and Summary..............................................    86
Background and Need for the Legislation..........................    86
Hearings.........................................................    95
Committee Consideration..........................................    97
Vote of the Committee............................................    98
Committee Oversight Findings.....................................   110
Committee on Government Reform Findings..........................   110
New Budget Authority and Tax Expenditures........................   110
Committee Cost Estimate..........................................   111
Committee Jurisdiction Letters...................................   112
Constitutional Authority Statement...............................   114
Preemption of State Law..........................................   114
Section-by-Section Analysis and Discussion.......................   114
Agency Views.....................................................   198
Changes in Existing Law Made by the Bill, as Reported............   229
Additional Views.................................................   376
Dissenting Views.................................................   381
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Bankruptcy Reform 
Act of 1999''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

                TITLE I--CONSUMER BANKRUPTCY PROVISIONS

                   Subtitle A--Needs based bankruptcy

Sec. 101. Conversion.
Sec. 102. Dismissal or conversion.
Sec. 103. Notice of alternatives.
Sec. 104. Debtor financial management training test program.

              Subtitle B--Consumer Bankruptcy Protections

Sec. 105. Definitions.
Sec. 106. Enforcement.
Sec. 107. Sense of the congress.
Sec. 108. Discouraging abusive reaffirmation practices.
Sec. 109. Promotion of alternative dispute resolution.
Sec. 110. Enhanced disclosure for credit extensions secured by a 
dwelling.
Sec. 111. Dual use debit card.
Sec. 112. Enhanced disclosures under an open-end credit plan.
Sec. 113. Protection of savings earmarked for the postsecondary 
education of children.
Sec. 114. Effect of discharge.
Sec. 115. Limiting trustee liability.
Sec. 116. Reinforce the fresh start.
Sec. 117. Discouraging bad faith repeat filings.
Sec. 118. Curbing abusive filings.
Sec. 119. Debtor retention of personal property security.
Sec. 120. Relief from the automatic stay when the debtor does not 
complete intended surrender of consumer debt collateral.
Sec. 121. Giving secured creditors fair treatment in chapter 13.
Sec. 122. Restraining abusive purchases on secured credit.
Sec. 123. Fair valuation of collateral.
Sec. 124. Domiciliary requirements for exemptions.
Sec. 125. Restrictions on certain exempt property obtained through 
fraud.
Sec. 126. Rolling stock equipment.
Sec. 127. Discharge under chapter 13.
Sec. 128. Bankruptcy judgeships.
Sec. 129. Additional amendments to title 11, United States Code.
Sec. 130. Amendment to section 1325 of title 11, United States Code.
Sec. 131. Application of the codebtor stay only when the stay protects 
the debtor.
Sec. 132. Adequate protection for investors.
Sec. 133. Limitation on luxury goods.
Sec. 134. Giving debtors the ability to keep leased personal property 
by assumption.
Sec. 135. Adequate protection of lessors and purchase money secured 
creditors.
Sec. 136. Automatic stay.
Sec. 137. Extend period between bankruptcy discharges.
Sec. 138. Definition of domestic support obligation.
Sec. 139. Priorities for claims for domestic support obligations.
Sec. 140. Requirements to obtain confirmation and discharge in cases 
involving domestic support obligations.
Sec. 141. Exceptions to automatic stay in domestic support obligation 
proceedings.
Sec. 142. Nondischargeability of certain debts for alimony, 
maintenance, and support.
Sec. 143. Continued liability of property.
Sec. 144. Protection of domestic support claims against preferential 
transfer motions.
Sec. 145. Clarification of meaning of household goods.
Sec. 146. Nondischargeable debts.
Sec. 147. Monetary limitation on certain exempt property.
Sec. 148. Bankruptcy fees.
Sec. 149. Collection of child support.
Sec. 150. Excluding employee benefit plan participant contributions and 
other property from the estate.
Sec. 151. Clarification of postpetition wages and benefits.
Sec. 152. Exceptions to automatic stay in domestic support obligation 
proceedings.
Sec. 153. Automatic stay inapplicable to certain proceedings against 
the debtor.

                TITLE II--DISCOURAGING BANKRUPTCY ABUSE

Sec. 201. Reenactment of chapter 12.
Sec. 202. Meetings of creditors and equity security holders.
Sec. 203. Protection of retirement savings in bankruptcy.
Sec. 204. Protection of refinance of security interest.
Sec. 205. Executory contracts and unexpired leases.
Sec. 206. Creditors and equity security holders committees.
Sec. 207. Amendment to section 546 of title 11, United States Code.
Sec. 208. Limitation.
Sec. 209. Amendment to section 330(a) of title 11, United States Code.
Sec. 210. Postpetition disclosure and solicitation.
Sec. 211. Preferences.
Sec. 212. Venue of certain proceedings.
Sec. 213. Period for filing plan under chapter 11.
Sec. 214. Fees arising from certain ownership interests.
Sec. 215. Claims relating to insurance deposits in cases ancillary to 
foreign proceedings.
Sec. 216. Defaults based on nonmonetary obligations.
Sec. 217. Sharing of compensation.
Sec. 218. Priority for administrative expenses.

           TITLE III--GENERAL BUSINESS BANKRUPTCY PROVISIONS

Sec. 301. Definition of disinterested person.
Sec. 302. Miscellaneous improvements.
Sec. 303. Extensions.
Sec. 304. Local filing of bankruptcy cases.
Sec. 305. Permitting assumption of contracts.

             TITLE IV SMALL BUSINESS BANKRUPTCY PROVISIONS

Sec. 401. Flexible rules for disclosure Statement and plan.
Sec. 402. Definitions.
Sec. 403. Standard form disclosure Statement and plan.
Sec. 404. Uniform national reporting requirements.
Sec. 405. Uniform reporting rules and forms for small business cases.
Sec. 406. Duties in small business cases.
Sec. 407. Plan filing and confirmation deadlines.
Sec. 408. Plan confirmation deadline.
Sec. 409. Prohibition against extension of time.
Sec. 410. Duties of the United States trustee.
Sec. 411. Scheduling conferences.
Sec. 412. Serial filer provisions.
Sec. 413. Expanded grounds for dismissal or conversion and appointment 
of trustee or examiner.
Sec. 414. Study of operation of title 11 of the United States Code with 
respect to small businesses.
Sec. 415. Payment of interest.

                TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS

Sec. 501. Petition and proceedings related to petition.
Sec. 502. Applicability of other sections to chapter 9.

              TITLE VI--STREAMLINING THE BANKRUPTCY SYSTEM

Sec. 601. Creditor representation at first meeting of creditors.
Sec. 602. Audit procedures.
Sec. 603. Giving creditors fair notice in chapter 7 and 13 cases.
Sec. 604. Dismissal for failure to timely file schedules or provide 
required information.
Sec. 605. Adequate time to prepare for hearing on confirmation of the 
plan.
Sec. 606. Chapter 13 plans to have a 5-year duration in certain cases.
Sec. 607. Sense of the Congress regarding expansion of rule 9011 of the 
Federal Rules of Bankruptcy Procedure.
Sec. 608. Elimination of certain fees payable in chapter 11 bankruptcy 
cases.
Sec. 609. Study of bankruptcy impact of credit extended to dependent 
students.
Sec. 610. Prompt relief from stay in individual cases.
Sec. 611. Stopping abusive conversions from chapter 13.
Sec. 612. Bankruptcy appeals.
Sec. 613. GAO study.

                       TITLE VII--BANKRUPTCY DATA

Sec. 701. Improved bankruptcy statistics.
Sec. 702. Uniform rules for the collection of bankruptcy data.
Sec. 703. Sense of the Congress regarding availability of bankruptcy 
data.

                 TITLE VIII--BANKRUPTCY TAX PROVISIONS

Sec. 801. Treatment of certain liens.
Sec. 802. Effective notice to government.
Sec. 803. Notice of request for a determination of taxes.
Sec. 804. Rate of interest on tax claims.
Sec. 805. Tolling of priority of tax claim time periods.
Sec. 806. Priority property taxes incurred.
Sec. 807. Chapter 13 discharge of fraudulent and other taxes.
Sec. 808. Chapter 11 discharge of fraudulent taxes.
Sec. 809. Stay of tax proceedings.
Sec. 810. Periodic payment of taxes in chapter 11 cases.
Sec. 811. Avoidance of statutory tax liens prohibited.
Sec. 812. Payment of taxes in the conduct of business.
Sec. 813. Tardily filed priority tax claims.
Sec. 814. Income tax returns prepared by tax authorities.
Sec. 815. Discharge of the estate's liability for unpaid taxes.
Sec. 816. Requirement to file tax returns to confirm chapter 13 plans.
Sec. 817. Standards for tax disclosure.
Sec. 818. Setoff of tax refunds.

            TITLE IX--ANCILLARY AND OTHER CROSS-BORDER CASES

Sec. 901. Amendment to add chapter 15 to title 11, United States Code.
Sec. 902. Amendments to other chapters in title 11, United States Code.

                 TITLE X--FINANCIAL CONTRACT PROVISIONS

Sec. 1001. Treatment of certain agreements by conservators or --
receivers of insured depository institutions.
Sec. 1002. Authority of the corporation with respect to failed and 
failing institutions.
Sec. 1003. Amendments relating to transfers of qualified financial 
contracts.
Sec. 1004. Amendments relating to disaffirmance or repudiation of 
qualified financial contracts.
Sec. 1005. Clarifying amendment relating to master agreements.
Sec. 1006. Federal Deposit Insurance Corporation Improvement Act of 
1991.
Sec. 1007. Bankruptcy Code amendments.
Sec. 1008. Recordkeeping requirements.
Sec. 1009. Exemptions from contemporaneous execution ---requirement.
Sec. 1010. Damage measure.
Sec. 1011. Sipc stay.
Sec. 1012. Asset-backed securitizations.
Sec. 1013. Federal Reserve collateral requirements.
Sec. 1014. Effective date; application of ---amendments.

                    TITLE XI--TECHNICAL CORRECTIONS

Sec. 1101. Definitions.
Sec. 1102. Adjustment of dollar amounts.
Sec. 1103. Extension of time.
Sec. 1104. Technical amendments.
Sec. 1105. Penalty for persons who negligently or fraudulently prepare 
bankruptcy petitions.
Sec. 1106. Limitation on compensation of professional persons.
Sec. 1107. Special tax provisions.
Sec. 1108. Effect of conversion.
Sec. 1109. Allowance of administrative expenses.
Sec. 1110. Priorities.
Sec. 1111. Exemptions.
Sec. 1112. Exceptions to discharge.
Sec. 1113. Effect of discharge.
Sec. 1114. Protection against discriminatory treatment.
Sec. 1115. Property of the estate.
Sec. 1116. Preferences.
Sec. 1117. Postpetition transactions.
Sec. 1118. Disposition of property of the estate.
Sec. 1119. General provisions.
Sec. 1120. Appointment of elected trustee.
Sec. 1121. Abandonment of railroad line.
Sec. 1122. Contents of plan.
Sec. 1123. Discharge under chapter 12.
Sec. 1124. Bankruptcy cases and proceedings.
Sec. 1125. Knowing disregard of bankruptcy law or rule.
Sec. 1126. Transfers made by nonprofit charitable corporations.
Sec. 1127. Prohibition on certain actions for failure to incur finance 
charges.
Sec. 1128. Protection of valid purchase money security interests.
Sec. 1129. Trustees.

      TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

Sec. 1201. Effective date; application of amendments.

                TITLE I--CONSUMER BANKRUPTCY PROVISIONS

                   Subtitle A--Needs based bankruptcy

SEC. 101. CONVERSION.

  Section 706(c) of title 11, United States Code, is amended by 
inserting ``or consents to'' after ``requests''.

SEC. 102. DISMISSAL OR CONVERSION.

  (a) In General.--Section 707 of title 11, United States Code, is 
amended--
          (1) by striking the section heading and inserting the 
        following:

``Sec. 707. Dismissal of a case or conversion to a case under chapter 
                    13'';

        and
          (2) in subsection (b)--
                  (A) by inserting ``(1)'' after ``(b)''; and
                  (B) in paragraph (1), as redesignated by subparagraph 
                (A) of this paragraph--
                          (i) in the first sentence--
                                  (I) by striking ``but not at the 
                                request or suggestion of'' and 
                                inserting ``the trustee, or'';
                                  (II) by inserting ``, or, with the 
                                debtor's consent, convert such a case 
                                to a case under chapter 13 of this 
                                title,'' after ``consumer debts''; and
                                  (III) by striking ``substantial 
                                abuse'' and inserting ``abuse''; and
                          (ii) by striking the second and third 
                        sentences and inserting the following:
  ``(2)(A)(i) In considering under paragraph (1) whether the granting 
of relief would be an abuse of the provisions of this chapter, the 
court shall presume abuse exists if the debtor's current monthly income 
less estimated administrative expenses and reasonable attorneys' fees, 
and amounts set forth in clauses (ii) for monthly expenses (which shall 
include, if applicable, the continuation of actual expenses of a 
dependent child under the age of 18 for tuition, books, and required 
fees at a private elementary or secondary school, not exceeding $10,000 
per year, which amount shall be adjusted pursuant to section 104(b)), 
(iii) for monthly payments on account of secured debts, and (iv) for 
monthly unsecured priority debt payments, and multiplied by 60 months 
is not less than $6,000.
  ``(ii) The debtor's monthly expenses shall be the debtor's applicable 
monthly expense amounts specified under the National Standards and 
Local Standards, and the debtor's applicable monthly expenses for the 
categories specifically listed as Other Necessary Expenses issued by 
the Internal Revenue Service for the area in which the debtor resides, 
as in effect on the date of the entry of the order for relief, for the 
debtor, the dependents of the debtor, and the spouse of the debtor in a 
joint case, if the spouse is not otherwise a dependent In addition, if 
it is demonstrated that it is reasonable and necessary, the debtor may 
also subtract an allowance of up to 5% of the food and clothing 
categories as specified by the National Standards issued by the 
Internal Revenue Service Notwithstanding any other provision of this 
clause, the debtor's monthly expenses shall not include any payments 
for debts.
  ``(iii) The debtor's average monthly payments on account of secured 
debts shall be calculated as the total of all amounts scheduled as 
contractually due to securedcreditors in each month of the 60 months 
following the date of the petition, and dividing that total by 60 
months.
  ``(iv) The debtor's monthly unsecured priority debt payments 
(including payments for priority child support and alimony claims) 
shall be calculated as the total amount of unsecured debts entitled to 
priority, and dividing the total by 60 months.
  ``(v) For the purposes of this subsection, a family or household 
shall consist of the debtor, the debtor's spouse, and the debtor's 
dependents, but not a legally separated spouse unless the spouse files 
a joint case with the debtor.
  ``(B) In any proceeding brought under this subsection, the 
presumption of abuse may be rebutted only by demonstrating 
extraordinary circumstances that require additional expenses or 
adjustment of current monthly income In order to establish 
extraordinary circumstances, the debtor must itemize each additional 
expense or adjustment of income and provide documentation for such 
expenses or adjustment of income and a detailed explanation of the 
extraordinary circumstances which make such expenses or adjustment of 
income necessary and reasonable The debtor shall attest under oath to 
the accuracy of any information provided to demonstrate that additional 
expenses or adjustment to income are required The presumption of abuse 
may be rebutted only if such additional expenses or adjustments to 
income cause the debtor's current monthly income less estimated 
administrative expenses and reasonable attorneys' fees, and the amounts 
set forth in clauses (ii), (iii), and (iv) of subparagraph (A) when 
multiplied by 60 to be less than $6,000.
  ``(C) As part of the schedule of current income and expenditures 
required under section 521 of this title, the debtor shall include a 
statement of the debtor's current monthly income, and the calculations 
which determine whether a presumption arises under subparagraph (A)(i), 
showing how each amount is calculated The bankruptcy rules promulgated 
under section 2075 of title 28, United States Code, shall prescribe a 
form for such statement and may provide general rules on its content.
  ``(D) No judge, United States trustee, panel trustee, bankruptcy 
administrator or other party in interest shall bring a motion under 
this paragraph if the debtor and the debtor's spouse combined, as of 
the date of the order for relief, have current monthly total income 
equal to or less than the regional median household monthly income 
calculated on a semiannual basis for a household of equal size However, 
for a household of more than 4 individuals, the median income shall be 
that of a household of 4 individuals plus $583 for each additional 
member of that household.
  ``(3) In considering under paragraph (1) whether the granting of 
relief would be an abuse of the provisions of this chapter in a case in 
which the presumption in paragraph (2)(A)(i) does not apply or has been 
rebutted, the court shall consider--
          ``(A) whether the debtor filed the petition in bad faith; or
          ``(B) the totality of the circumstances (including whether 
        the debtor seeks to reject a personal services contract and the 
        financial need for such rejection as sought by the debtor) of 
        the debtor's financial situation demonstrates abuse.
  ``(4)(A) If a panel trustee appointed under section 586(a)(1) of 
title 28 or bankruptcy administrator brings a motion for dismissal or 
conversion under this subsection and the court grants that motion and 
finds that the action of the counsel for the debtor in filing under 
this chapter violated Rule 9011, the court shall assess damages which 
may include ordering:
          ``(i) the counsel for the debtor to reimburse the trustee for 
        all reasonable costs in prosecuting the motion, including 
        reasonable attorneys' fees.
          ``(ii) the assessment of an appropriate civil penalty against 
        the counsel for the debtor; and
          ``(iii) the payment of the civil penalty to the panel 
        trustee, bankruptcy administrator or the United States trustee.
  ``(B) In the case of a petition filed under sections 301, 302, or 303 
of this title and supporting lists, schedules and documents filed under 
section 521(a)(1) of this title, the signature of an attorney on the 
petition shall constitute a certificate that the attorney has--
          ``(i) performed a reasonable investigation into the 
        circumstances that gave rise to the petition; and
          ``(ii) determined that the petition, lists, schedules, and 
        documents--
                  ``(I) are well grounded in fact; and
                  ``(II) are warranted by existing law or a good faith 
                argument for the extension, modification, or reversal 
                of existing law and do not constitute an abuse under 
                paragraph (1) of this subsection.
  ``(5) The court may award a debtor all reasonable costs in contesting 
a motion filed by a party in interest (not including a trustee or the 
United States trustee) under this subsection (including reasonable 
attorneys' fees) if--
          ``(A) the court does not grant the motion; and
          ``(B) the court finds that--
                  ``(i) the position of the party that brought the 
                motion was not substantially justified; or
                  ``(ii) the party brought the motion solely for the 
                purpose of coercing a debtor into waiving a right 
                guaranteed to the debtor under this title.
  ``(6) However, only the court, the United States trustee, or the 
trustee may file a motion to dismiss or convert a case under this 
subsection if the current monthly income of the debtor and the debtor's 
spouse combined, as of the date of the order for relief, when 
multiplied by 12, is less than the highest national median family 
income last reported by the Bureau of the Census for a family of equal 
or lesser size, or in the case of a household of 1 person, the national 
median household income for 1 earner Notwithstanding the foregoing, the 
national median family income for a family of more than 4 individuals 
shall be the national median family income last reported by the Bureau 
of the Census for a family of 4 individuals plus $583 for each 
additional member of the family.
  ``(7) In making a determination whether to dismiss a case under this 
section, the court may not take into consideration whether a debtor has 
made, or continues to make, charitable contributions (that meet the 
definition of `charitable contribution' under section 548(d)(3)) to any 
qualified religious or charitable entity or organization (as that term 
is defined in section 548(d)(4)).
  ``(8) Not later than 3 years after the date of enactment of the 
Bankruptcy Reform Act of 1999, the Director of the Executive Office for 
United States Trustees shall submit a report, to the Committee on the 
Judiciary of the House of Representatives and the Committee on the 
Judiciary of the Senate, containing its findings regarding the 
utilization of the Internal Revenue Service standards for determining 
the current monthly expenses under section 707(b)(1)(A)(ii) of title 
11, United States Code, of debtors and the impact that the application 
of such standards has had on debtors and on the bankruptcy courts Such 
report may include recommendations for amendments to such title, 
consistent with the Director's findings.''.
  (b) Definitions.--Section 101 of title 11, United States Code, is 
amended--
          (1) by inserting after paragraph (10) the following:
          ``(10A) `current monthly income' means the average monthly 
        income from all sources derived which the debtor, or in a joint 
        case, the debtor and the debtor's spouse, receive without 
        regard to whether it is taxable income, in the 180 days 
        preceding the date of determination, and includes any amount 
        paid by anyone other than the debtor or, in a joint case, the 
        debtor and the debtor's spouse, on a regular basis to the 
        household expenses of the debtor or the debtor's dependents 
        and, in a joint case, the debtor's spouse if not otherwise a 
        dependent, but excludes payments to victims of war crimes or 
        crimes against humanity;''; and
          (2) by inserting after paragraph (17) the following:
          ``(17A) `estimated administrative expenses and reasonable 
        attorneys' fees' means 10 percent of projected payments under a 
        chapter 13 plan;''.
  (c) Administrative Provisions.--Section 704 of title 11, United 
States Code, is amended--
          (1) in paragraph (8) by striking ``and'' at the end;
          (2) in paragraph (9) by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(10)(A) With respect to an individual debtor, the trustee 
        shall review all materials filed by the debtor, consider all 
        information presented at the first meeting of creditors, and 
        within 10 days after the first meeting of creditors file with 
        the court a statement as to whether the debtor's case should be 
        presumed to be an abuse under section 707(b) of this title The 
        court shall provide a copy of such statement to all creditors 
        within 5 days after such statement is filed If, based on the 
        filing of such statement with the court, the trustee determines 
        that the debtor's case should be presumed to be an abuse under 
        section 707(b) of this title and if the current monthly income 
        of the debtor and the debtor's spouse combined, as of the date 
        of the order for relief, when multiplied by 12, is not less 
        than the highest national median family income reported for a 
        family of equal or lesser size, or in the case of a household 
        of 1 person, the national median household income for 1 earner, 
        then the trustee shall within 30 days of the filing of such 
        statement, either--
                  ``(i) file a motion to dismiss or convert under 
                section 707(b) of this title; or
                  ``(ii) file a statement setting forth the reasons the 
                trustee or bankruptcy administrator does not believe 
                that such a motion would be appropriate.
          ``(B) Notwithstanding subparagraph (A), for purposes of this 
        paragraph the national family income for a family of more than 
        4 individuals shall be the national median family income last 
        reported by the Bureau of the Census for a family of 4 
        individuals plus $583 for each additional member of the 
        family.''.
  (d) Clerical Amendment.--The table of sections at the beginning of 
chapter 7 of title 11, United States Code, is amended by striking the 
item relating to section 707 and inserting the following:

``707. Dismissal of a case or conversion to a case under chapter 13.''.

SEC. 103. NOTICE OF ALTERNATIVES.

  Section 342(b) of title 11, United States Code, is amended to read as 
follows:
  ``(b) Before the commencement of a case under this title by an 
individual whose debts are primarily consumer debts, the clerk shall 
give to such individual written notice containing--
          ``(1) a brief description of--
                  ``(A) chapters 7, 11, 12, and 13 and the general 
                purpose, benefits, and costs of proceeding under each 
                of those chapters; and
                  ``(B) the types of services available from credit 
                counseling agencies; and
          ``(2) statements specifying that--
                  ``(A) a person who knowingly and fraudulently 
                conceals assets or makes a false oath or statement 
                under penalty of perjury in connection with a 
                bankruptcy case shall be subject to fine, imprisonment, 
                or both; and
                  ``(B) all information supplied by a debtor in 
                connection with a bankruptcy case is subject to 
                examination by the Attorney General.''.

SEC. 104. DEBTOR FINANCIAL MANAGEMENT TRAINING TEST PROGRAM.

  (a) Development of Financial Management and Training Curriculum and 
Materials.--The Director of the Executive Office for United States 
Trustees (in this section referred to as the ``Director'') shall 
consult with a wide range of individuals who are experts in the field 
of debtor education, including trustees who are appointed under chapter 
13 of title 11 of the United States Code and who operate financial 
management education programs for debtors, and shall develop a 
financial management training curriculum and materials that can be used 
to educate individual debtors on how to better manage their finances.
  (b) Test--(1) The Director shall select 6 judicial districts of the 
United States in which to test the effectiveness of the financial 
management training curriculum and materials developed under subsection 
(a).
  (2) For a 18-month period beginning not later than 270 days after the 
date of the enactment of this Act, such curriculum and materials shall 
be, for the 6 judicial districts selected under paragraph (1), used as 
the instructional course concerning personal financial management for 
purposes of section 111 of this title.
  (c) Evaluation.--(1) During the 1-year period referred to in 
subsection (b), the Director shall evaluate the effectiveness of--
          (A) the financial management training curriculum and 
        materials developed under subsection (a); and
          (B) a sample of existing consumer education programs such as 
        those described in the Report of the National Bankruptcy Review 
        Commission (October 20, 1997) that are representative of 
        consumer education programs carried out by the credit industry, 
        by trustees serving under chapter 13 of title 11 of the United 
        States Code, and by consumer counselling groups.
  (2) Not later than 3 months after concluding such evaluation, the 
Director shall submit a report to the Speaker of the House of 
Representatives and the President pro tempore of the Senate, for 
referral to the appropriate committees of the Congress, containing the 
findings of the Director regarding the effectiveness of such 
curriculum, such materials, and such programs and their costs.

              Subtitle B--Consumer Bankruptcy Protections

SEC. 105. DEFINITIONS.

  (a) Definitions.--Section 101 of title 11, United States Code, is 
amended--
          (1) by inserting after paragraph (2) the following:
          ``(3) `assisted person' means any person whose debts consist 
        primarily of consumer debts and whose non-exempt assets are 
        less than $150,000;'';
          (2) by inserting after paragraph (4) the following:
          ``(4A) `bankruptcy assistance' means any goods or services 
        sold or otherwise provided to an assisted person with the 
        express or implied purpose of providing
information, advice, counsel, document preparation or filing, or 
attendance at a creditors' meeting or appearing in a proceeding on 
behalf of another or providing legal representation with respect to a 
proceeding under this title;''; and
          (3) by inserting after paragraph (12A) the following:
          ``(12B) `debt relief agency' means any person who provides 
        any bankruptcy assistance to an assisted person in return for 
        the payment of money or other valuable consideration, or who is 
        a bankruptcy petition preparer pursuant to section 110 of this 
        title, but does not include any person that is any of the 
        following or an officer, director, employee or agent thereof--
                  ``(A) any nonprofit organization which is exempt from 
                taxation under section 501(c)(3) of the Internal 
                Revenue Code of 1986;
                  ``(B) any creditor of the person to the extent the 
                creditor is assisting the person to restructure any 
                debt owed by the person to the creditor; or
                  ``(C) any depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act) or any 
                Federal credit union or State credit union (as those 
                terms are defined in section 101 of the Federal Credit 
                Union Act), or any affiliate or subsidiary of such a 
                depository institution or credit union;''.
  (b) Conforming Amendment.--In section 104(b)(1) by inserting 
``101(3),'' after ``sections''.

SEC. 106. ENFORCEMENT.

  (a) Enforcement.--Subchapter II of chapter 5 of title 11, United 
States Code, is amended by adding at the end the following:

``Sec. 526. Debt relief agency enforcement

  ``(a) A debt relief agency shall not--
          ``(1) fail to perform any service which the debt relief 
        agency has told the assisted person or prospective assisted 
        person the agency would provide that person in connection with 
        the preparation for or activities during a proceeding under 
        this title;
          ``(2) make any statement, or counsel or advise any assisted 
        person to make any statement in any document filed in a 
        proceeding under this title, which is untrue and misleading or 
        which upon the exercise of reasonable care, should be known by 
        the debt relief agency to be untrue or misleading;
          ``(3) misrepresent to any assisted person or prospective 
        assisted person, directly or indirectly, affirmatively or by 
        material omission, what services the debt relief agency can 
        reasonably expect to provide that person, or the benefits an 
        assisted person may obtain or the difficulties the person may 
        experience if the person seeks relief in a proceeding pursuant 
        to this title; or
          ``(4) advise an assisted person or prospective assisted 
        person to incur more debt in contemplation of that person 
        filing a proceeding under this title or in order to pay an 
        attorney or bankruptcy petition preparer fee or charge for 
        services performed as part of preparing for or representing a 
        debtor in a proceeding under this title.''.
  ``(b) Assisted Person Waivers Invalid.--Any waiver by any assisted 
person of any protection or right provided by or under this section 
shall not be enforceable against the debtor by any Federal or State 
court or any other person, but may be enforced against a debt relief 
agency.
  ``(c) Noncompliance.--
          ``(1) Any contract between a debt relief agency and an 
        assisted person for bankruptcy assistance which does not comply 
        with the material requirements of this section shall be treated 
        as void and may not be enforced by any Federal or State court 
        or by any other person.
          ``(2) Any debt relief agency shall be liable to an assisted 
        person in the amount of any fees or charges in connection with 
        providing bankruptcy assistance to such person which the debt 
        relief agency has received, for actual damages, and for 
        reasonable attorneys' fees and costs if the debt relief agency 
        is found, after notice and hearing, to have--
                  ``(A) intentionally or negligently failed to comply 
                with any provision of this section with respect to a 
                bankruptcy case or related proceeding of the assisted 
                person;
                  ``(B) provided bankruptcy assistance to an assisted 
                person in a case or related proceeding which is 
                dismissed or converted because of the debt relief 
                agency's intentional or negligent failure to file 
                bankruptcy papers, including papers specified in 
                section 521 of this title; or
                  ``(C) intentionally or negligently disregarded the 
                material requirements of this title or the Federal 
                Rules of Bankruptcy Procedure applicable to such debt 
                relief agency.
          ``(3) In addition to such other remedies as are provided 
        under State law, whenever the chief law enforcement officer of 
        a State, or an official or agency designated by a State, has 
        reason to believe that any person has violated or is violating 
        this section, the State--
                  ``(A) may bring an action to enjoin such violation;
                  ``(B) may bring an action on behalf of its residents 
                to recover the actual damages of assisted persons 
                arising from such violation, including any liability 
                under paragraph (2); and
                  ``(C) in the case of any successful action under 
                subparagraph (A) or (B), shall be awarded the costs of 
                the action and reasonable attorney fees as determined 
                by the court.
          ``(4) The United States District Court for any district 
        located in the State shall have concurrent jurisdiction of any 
        action under subparagraph (A) or (B) of paragraph (3).
          ``(5) Notwithstanding any other provision of Federal law and 
        in addition to any other remedy provided under Federal or State 
        law, if the court, on its own motion or on the motion of the 
        United States trustee or the debtor, finds that a person 
        intentionally violated this section, or engaged in a clear and 
        consistent pattern or practice of violating this section, the 
        court may--
                  ``(A) enjoin the violation of such section; or
                  ``(B) impose an appropriate civil penalty against 
                such person.
  ``(c) Relation to State Law.--This section shall not annul, alter, 
affect or exempt any person subject to those sections from complying 
with any law of any State except to the extent that such law is 
inconsistent with those sections, and then only to the extent of the 
inconsistency.''.
  (b) Conforming Amendment.--The table of sections for chapter 5 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 527, the following:

``526. Debt relief agency enforcement.''.

SEC. 107. SENSE OF THE CONGRESS.

  It is the sense of the Congress that States should develop curricula 
relating to the subject of personal finance, designed for use in 
elementary and secondary schools.

SEC. 108. DISCOURAGING ABUSIVE REAFFIRMATION PRACTICES.

  Section 524 of title 11, United States Code, is amended--
          (1) in subsection (c)--
                  (A) in paragraph (2)--
                          (i) in subparagraph (A) by striking ``and'' 
                        at the end;
                          (ii) in subparagraph (B) by adding ``and'' at 
                        the end; and
                          (iii) by adding at the end the following:
          ``(C) if the consideration for such agreement is based on a 
        wholly unsecured consumer debt (except for debts owed to 
        creditors defined in section 461(b)(1)(A)(iv) of title 12, 
        United States Code), such agreement contains a clear and 
        conspicuous statement which advises the debtor--
                  ``(i) that the debtor is entitled to a hearing before 
                the court at which the debtor shall appear in person 
                and at which the court will decide whether the 
                agreement is an undue hardship, not in the debtor's 
                best interest, and not the result of a threat by the 
                creditor to take any action that cannot be legally 
                taken or that is not intended to be taken; and
                  ``(ii) that if the debtor is represented by counsel, 
                the debtor may waive the debtor's right to such a 
                hearing by signing a statement waiving the hearing, 
                stating that the debtor is represented by counsel, and 
                identifying such counsel;''; and
                  (B) in paragraph (6)(A)--
                          (i) by striking ``and'' at the end of clause 
                        (i);
                          (ii) by striking the period at the end of 
                        clause (ii) and inserting ``; and''; and
                          (iii) by adding at the end thereof the 
                        following:
                  ``(iii) not entered into by the debtor as the result 
                of a threat by the creditor to take any action that 
                cannot be legally taken or that is not intended to be 
                taken.''; and
          (2) in the 3d sentence of subsection (d)--
                  (A) by striking ``of this section'' and inserting a 
                comma; and
                  (B) by inserting after ``such agreement'' the 
                following:
``or if the consideration for such agreement is based on a wholly 
unsecured consumer debt (except for debts owed to creditors defined in 
section 461(b)(1)(A)(iv) of title 12,United States Code) and the debtor 
has not waived the debtor's right to a hearing on the agreement in 
accordance with subsection (c)(2)(C) of this section''.

SEC. 109. PROMOTION OF ALTERNATIVE DISPUTE RESOLUTION.

  (a) Reduction of Claim.--Section 502 of title 11, United States Code, 
is amended by adding at the end the following:
  ``(k)(1) The court, on the motion of the debtor and after a hearing, 
may reduce a claim filed under this section based wholly on unsecured 
consumer debts by not more than 20 percent, if the debtor can prove by 
clear and convincing evidence that the claim was filed by a creditor 
who unreasonably refused to negotiate a reasonable alternative 
repayment schedule proposed by an approved credit counseling agency 
acting on behalf of the debtor, and if--
          ``(A) such offer was made within the period beginning 60 days 
        before the filing of the petition;
          ``(B) such offer provided for payment of at least 60 percent 
        of the amount of the debt over a period not to exceed the 
        repayment period of the loan, or a reasonable extension 
        thereof; and
          ``(C) no part of the debt under the alternative repayment 
        schedule is nondischargeable, is entitled to priority under 
        section 507 of this title, or would be paid a greater 
        percentage in a chapter 13 proceeding than offered by the 
        debtor.
  ``(2) The debtor shall have the burden of proving that the proposed 
alternative repayment schedule was made in the 60-day period specified 
in subparagraph (A) and that the creditor unreasonably refused to 
consider the debtor's proposal.''.
  (b) Limitation on Avoidability.--Section 547 of title 11, United 
States Code, is amended by adding at the end the following:
  ``(h) The trustee may not avoid a transfer if such transfer was made 
as a part of an alternative repayment plan between the debtor and any 
creditor of the debtor created by an approved credit counseling 
agency.''.

SEC. 110. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED BY A 
                    DWELLING.

  (a) Study Required.--During the period beginning 180 days after the 
date of enactment of this Act and ending 18 months after the date of 
the enactment, the Board of Governors of the Federal Reserve System (in 
this section referred to as the ``Board'') shall conduct a study and 
submit to Congress a report (including recommendations for any 
appropriate legislation) regarding--
          (1) whether a consumer engaging in an open-end credit 
        transaction (as defined pursuant to section 103 of the Truth in 
        lending Act) secured by the consumer's principal dwelling is 
        provided adequate information under Federal law, including 
        under section 127A of the Truth in Lending Act, regarding the 
        tax deductibility of interest paid on such transaction; and
          (2) whether a consumer engaging in a closed-end credit 
        transaction (as defined pursuant to section 103 of the Truth in 
        Lending Act) secured by the consumer's principal dwelling is 
        provided adequate information regarding the tax deductibility 
        of interest paid on such transaction.
In conducting such study, the Board shall specifically consider whether 
additional disclosures are necessary with respect to such open-end or 
closed-end credit transactions in which the amount of the credit 
extended exceeds the fair market value of the dwelling.
  (b) Regulations.--If the Board determines that additional disclosures 
are necessary in connection with transactions described in subsection 
(a), the Board, pursuant to its authority under the Truth in Lending 
Act, may promulgate regulations that would require such additional 
disclosures Any such regulations promulgated by the Board under this 
section shall not take effect before the end of the 36-month period 
after the date of the enactment of this Act.

SEC. 111. DUAL USE DEBIT CARD.

  (a) Study Required.--The Board of Governors of the Federal Reserve 
System (in this section referred to as the ``Board'') shall conduct a 
study of existing protections provided to consumers to limit their 
liability for unauthorized use of a debit card or similar access 
device.
  (b) Specific Considerations.--In conducting the study required by 
subsection (a), the Board shall specifically consider the following--
          (1) the extent to which existing provisions of section 909 of 
        the Electronic Fund Transfer Act and the Board's implementing 
        regulations provide adequate unauthorized use liability 
        protection for consumers;
          (2) the extent to which any voluntary industry rules have 
        enhanced the level of protection afforded consumers in 
        connection with such unauthorized use liability; and
          (3) whether amendments to the Electronic Funds Transfer Act 
        or the Board's implementing regulations thereto are necessary 
        to provide adequate protection for consumers in this area.
  (c) Report and Regulations.--Not later than 2 years after the date of 
the enactment of this Act, the Board shall make public a report on its 
findings with respect to the adequacy of existing protections afforded 
consumers with respect to unauthorized-use liability for debit cards 
and similar access devices If the Board determines that such 
protections are inadequate, the Board, pursuant to its authority under 
the Electronic Funds Transfer Act, may issue regulations to address 
such inadequacy Any regulations issued by the Board shall not be 
effective before 36 months after the date of the enactment of this Act.

SEC. 112. ENHANCED DISCLOSURES UNDER AN OPEN-END CREDIT PLAN.

  (a) Initial and Annual Minimum Payment Disclosure.--Section 127(a) of 
the Truth in Lending Act (15 U.S.C 1637(a)) is amended by adding at the 
end the following:
          ``(9) In the case of any credit or charge card account under 
        an open-end consumer credit plan on which a minimum monthly or 
        periodic payment will be required, other than an account 
        described in paragraph (8)--
                  ``(A) the following statement: `The minimum payment 
                amount shown on your billing statement is the smallest 
                payment which you can make in order to keep the account 
                in good standing This payment option is offered as a 
                convenience and you may make larger payments at any 
                time Making only the minimum payment each month will 
                increase the amount of interest you pay and the length 
                of time it takes to repay your outstanding balance.';
                  ``(B) if the plan provides that the consumer will be 
                permitted to forgo making a minimum payment during a 
                specified billing cycle, a statement, if applicable, 
                that if the consumer chooses to forgo making the 
                minimum payment, finance charges will continue to 
                accrue; and
                  ``(C) an example, based on an annual percentage rate 
                and method for determining minimum periodic payments 
                recently in effect for that creditor, and a $500 
                outstanding balance, showing the estimated minimum 
                periodic payment, and the estimated period of time it 
                would take to repay the $500 outstanding balance if the 
                consumer paid only the minimum periodic payment on each 
                monthly or periodic statement and obtained no 
                additional extensions of credit.
          ``(10) With respect to one billing cycle per calendar year, 
        the creditor shall transmit the information required under 
        paragraph (9) to each consumer to whom the creditor is required 
        to transit a statement pursuant to subsection (b) for such 
        billing cycle The creditor shall also transmit to such consumer 
        for such cycle a worksheet prescribed by the Board to assist 
        the consumer in determining the consumer's household income and 
        debt obligations.''.
  (b) Periodic Minimum Payment Disclosures.--Section 127(b) of the 
Truth in Lending Act (15 U.S.C 1637(b)) is amended by adding at the end 
the following:
          ``(11) The following statement: `The minimum payment amount 
        shown on your billing statement is the smallest payment which 
        you can make in order to keep the account in good standing This 
        payment option is offered as a convenience and you may make 
        larger payments at any time Making only the minimum payment 
        each month will increase the amount of interest you pay and the 
        length of time it takes to repay your outstanding balance.' ''.
  (c) Enforcement.--Section 127 of the Truth in Lending Act (15 U.S.C 
1637) is amended by adding at the end the following:
  ``(h) In promulgating regulations to implement the disclosure of an 
example required under subsection (a)(9)(C) and (a)(10), the Board 
shall set forth a model disclosure to accompany the example stating 
that the credit features shown are only an example which does not 
obligate the creditor, but is intended to illustrate the approximate 
length of time it could take to repay using the assumptions set forth 
in subsection (a)(9)(C) without regard to any other factors that could 
impact an approximate repayment period, including other credit features 
or the consumer's payment or other behavior with respect to the account 
Compliance with the disclosures required under subsection (a)(9)(C) and 
(a)(10) shall be enforced exclusively by the Federal agencies set forth 
in section 108.''.
  (d) Regulatory Implementation.--The Board of Governors of the Federal 
Reserve System (in this section referred to as the ``Board'') shall 
promulgate regulations implementing the amendments made by subsections 
(a) and (b) Such regulations shall take effect no earlier than the end 
of the 36-month period beginning on the date of the enactment of this 
Act.
  (e) Study Required.--The Board shall conduct a study to determine 
whether consumers have adequate information about borrowing activities 
which may result in financial problems In studying this issue, the 
Board shall consider the extent to which--
          (1) consumers, in establishing new credit arrangements, are 
        aware of their existing payment obligations, the need to 
        consider those obligations in deciding to take on new credit, 
        and how taking on excessive credit can result in financial 
        difficulty;
          (2) minimum periodic payment features offered in connection 
        with open-end credit plans impact consumer default rates;
          (3) consumers always make only the minimum payment throughout 
        the life of the plan;
          (4) consumers are aware that making only minimum payments 
        will increase the cost and repayment period of an open-end 
        loan; and
          (5) the availability of low minimum payment options is a 
        cause of consumers experiencing financial difficulty.
  (f) Report to Congress.--Before the end of the 2-year period 
beginning on the date of the enactment of this Act, the Board shall 
submit to Congress a report containing the findings of the Board in 
connection with the study required under subsection (e).
  (g) Regulations.--The Board shall, by regulation promulgated pursuant 
to its authority under the Truth in Lending Act, require additional 
disclosures to consumers regarding minimum payment features, including 
periodic statement disclosures, if the Board determines that such 
disclosures are necessary based on its findings Any such regulations 
promulgated by the Board shall not take effect earlier than January 1, 
2002.

SEC. 113. PROTECTION OF SAVINGS EARMARKED FOR THE POSTSECONDARY 
                    EDUCATION OF CHILDREN.

  Section 522 of title 11, United States Code, is amended--
          (1) in subsection (b)(2)--
                  (A) in subparagraph (A) by striking ``and'' at the 
                end;
                  (B) in subparagraph (B) by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(C) except as provided in paragraph (n), funds placed in an 
        education individual retirement account (as defined in section 
        530(b)(1) of the Internal Revenue Code of 1986) not less than 
        365 days before the date of entry of the order of relief but 
        only to the extent such funds--
                  ``(i) are not pledged or promised to any entity in 
                connection with any extension of credit; and
                  ``(ii) are not excess contributions (as described in 
                section 4973(e) of the Internal Revenue Code of 
                1986).''; and
          (2) by adding at the end the following:
  ``(n) For purposes of subsection (b)(3)(C), funds placed in an 
education individual retirement account shall not be exempt under this 
subsection--
          ``(1) unless the designated beneficiary of such account was a 
        dependent child of the debtor for the taxable year for which 
        the funds were placed in such account; and
          ``(2) to the extent such funds exceed--
                  ``(A) $50,000 in the aggregate in all such accounts 
                having the same designated beneficiary; or
                  ``(B) $100,000 in the aggregate in all such accounts 
                attributable to all such dependent children of the 
                debtor.''.

SEC. 114. EFFECT OF DISCHARGE.

  Section 524 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(i) The willful failure of a creditor to credit payments received 
under a plan confirmed under this title (including a plan of 
reorganization confirmed under chapter 11 of this title) in the manner 
required by the plan (including crediting the amounts required under 
the plan) shall constitute a violation of any injunction under 
subsection (a)(2) which has arisen at the time of the failure.
  ``(j)(1) An individual who is injured by the willful failure of a 
creditor to comply with the requirements for a reaffirmation agreement 
under subsections (c) and (d), or by any willful violation of the 
injunction under subsection (a)(2), shall be entitled to recover--
          ``(A) the greater of--
                  ``(i) the amount of actual damages; or
                  ``(ii) $1,000; and
          ``(B) costs and attorneys' fees.
  ``(2) An action to recover for a violation specified in paragraph (1) 
may not be brought as a class action.''.

SEC. 115. LIMITING TRUSTEE LIABILITY.

  (a) Qualification of Trustee.--Section 322 of title 11, United States 
Code, is amended--
          (1) in subsection (a) by adding at the end the following:
        ``The trustee in a case under this title is not liable 
        personally or on such trustee's bond for acts taken within the 
        scope of the trustee's duties or authority as delineated by 
        other sections of this title or by order of the court, except 
        to the extent that the trustee acted with gross negligence 
        Gross negligence shall be defined as reckless indifference or 
        deliberate disregard of the trustee's fiduciary duty.''; and
          (2) in subsection (c) by inserting ``for any acts within the 
        scope of the trustee's authority defined in subsection (a)'' 
        before the period at the end.
  (b) Role and Capacity of Trustee.--Section 323 of title 11, United 
States Code, is amended--
          (1) in subsection (b) by inserting at the end the following: 
        ``in the trustee's official capacity as representative of the 
        estate'' before the period at the end; and
          (2) by adding at the end the following:
  ``(c) The trustee in a case under this title may not be sued, either 
personally, in a representative capacity, or against the trustee's bond 
in favor of the United States--
          ``(1) for acts taken in furtherance of the trustee's duties 
        or authority in a case in which the debtor is subsequently 
        determined to be ineligible for relief under the chapter in 
        which the trustee was appointed; or
          ``(2) for the dissemination of statistics and other 
        information regarding a case or cases, unless the trustee has 
        actual knowledge that the information is false.
  ``(d) The trustee in a case under this title may not be sued in a 
personal capacity without leave of the bankruptcy court in which the 
case is pending.''.

SEC. 116. REINFORCE THE FRESH START.

  (a) Restoration of an Effective Discharge.--Section 523(a)(17) of 
title 11, United States Code, is amended--
          (1) by striking ``by a court'' and inserting ``by any 
        court'',
          (2) by striking ``section 1915(b) or (f)'' and inserting 
        ``subsection (b) or (f)(2) of section 1915'', and
          (3) by inserting ``(or a similar non-Federal law)'' after 
        ``title 28'' each place it appears.

SEC. 117. DISCOURAGING BAD FAITH REPEAT FILINGS.

  Section 362(c) of title 11, United States Code, is amended--
          (1) in paragraph (1) by striking ``and'' at the end;
          (2) in paragraph (2) by striking the period at the end and 
        inserting a semicolon; and
          (3) by adding at the end the following new paragraphs:
          ``(3) If a single or joint case is filed by or against an 
        individual debtor under chapter 7, 11, or 13 (other than a case 
        refiled under a chapter other than chapter 7 after dismisssal 
        under section 707(b) of this title), and if a single or joint 
        case of the debtor was pending within the previous 1-year 
        period but was dismissed, the stay under subsection (a) with 
        respect to any action taken with respect to a debt or property 
        securing such debt or with respect to any lease will terminate 
        with respect to the debtor on the 30th day after the filing of 
        the later case Upon motion by a party in interest for 
        continuation of the automatic stay and upon notice and a 
        hearing, the court may extend the stay in particular cases as 
        to any or all creditors (subject to such conditions or 
        limitations as the court may then impose) after notice and a 
        hearing completed before the expiration of the 30-day period 
        only if the party in interest demonstrates that the filing of 
        the later case is in good faith as to the creditors to be 
        stayed A case is presumptively filed not in good faith (but 
        such presumption may be rebutted by clear and convincing 
        evidence to the contrary)--
                  ``(A) as to all creditors if--
                          ``(i) more than 1 previous case under any of 
                        chapter 7, 11, or 13 in which the individual 
                        was a debtor was pending within such 1-year 
                        period;
                          ``(ii) a previous case under any of chapters 
                        7, 11, or 13 in which the individual was a 
                        debtor was dismissed within such 1-year period, 
                        after the debtor failed to file or amend the 
                        petition or other documents as required by this 
                        title or the court without substantial excuse 
                        (but mere inadvertence or negligence shall not 
                        be substantial excuse unless the dismissal was 
                        caused by the negligence of the debtor's 
                        attorney), failed to provide adequate 
                        protection as ordered by the court, or failed 
                        to perform the terms of a plan confirmed by the 
                        court; or
                          ``(iii) there has not been a substantial 
                        change in the financial or personal affairs of 
                        the debtor since the dismissal of the next most 
                        previous case under any of chapters 7, 11, or 
                        13 of this title, or there is not any other 
                        reason to conclude that the later case will be 
                        concluded, if a case under chapter 7 of this 
                        title, with a discharge, and if a chapter 11 or 
                        13 case, a confirmed plan which will be fully 
                        performed;
                  ``(B) as to any creditor that commenced an action 
                under subsection (d) in a previous case in which the 
                individual was a debtor if, as of the date of dismissal 
                of such case, that action was still pending or had been 
                resolved by terminating, conditioning, or limiting the 
                stay as to actions of such creditor.
          ``(4) If a single or joint case is filed by or against an 
        individual debtor under this title (other than a case refiled 
        under a chapter other than chapter 7 after a dismissal under 
        section 707(b) of this title), and if 2 or more single or joint 
        cases of the debtor were pending within the previous year but 
        were dismissed, the stay under subsection (a) will not go into 
        effect upon the filing of the later case On request of a party 
        in interest, the court shall promptly enter an order confirming 
        that no stay is in effect If a party in interest requests 
        within 30 days of the filing of the later case, the court may 
        order the stay to take effect in the case as to any or all 
        creditors (subject to such conditions or limitations as the 
        court may impose), after notice and hearing, only ifthe party 
in interest demonstrates that the filing of the later case is in good 
faith as to the creditors to be stayed A stay imposed pursuant to the 
preceding sentence will be effective on the date of entry of the order 
allowing the stay to go into effect A case is presumptively not filed 
in good faith (but such presumption may be rebutted by clear and 
convincing evidence to the contrary)--
                  ``(A) as to all creditors if--
                          ``(i) 2 or more previous cases under this 
                        title in which the individual was a debtor were 
                        pending within the 1-year period;
                          ``(ii) a previous case under this title in 
                        which the individual was a debtor was dismissed 
                        within the time period stated in this paragraph 
                        after the debtor failed to file or amend the 
                        petition or other documents as required by this 
                        title or the court without substantial excuse 
                        (but mere inadvertence or negligence shall not 
                        be substantial excuse unless the dismissal was 
                        caused by the negligence of the debtor's 
                        attorney), failed to provide adequate 
                        protection as ordered by the court, or failed 
                        to perform the terms of a plan confirmed by the 
                        court; or
                          ``(iii) there has not been a substantial 
                        change in the financial or personal affairs of 
                        the debtor since the dismissal of the next most 
                        previous case under this title, or there is not 
                        any other reason to conclude that the later 
                        case will be concluded, if a case under chapter 
                        7, with a discharge, and if a case under 
                        chapter 11 or 13, with a confirmed plan that 
                        will be fully performed; or
                  ``(B) as to any creditor that commenced an action 
                under subsection (d) in a previous case in which the 
                individual was a debtor if, as of the date of dismissal 
                of such case, such action was still pending or had been 
                resolved by terminating, conditioning, or limiting the 
                stay as to action of such creditor.''.

SEC. 118. CURBING ABUSIVE FILINGS.

  (a) In General.--Section 362(d) of title 11, United States Code, is 
amended--
          (1) in paragraph (2), by striking ``or'' at the end;
          (2) in paragraph (3), by striking the period at the end and 
        inserting ``; or''; and
          (3) by adding at the end the following:
          ``(4) with respect to a stay of an act against real property 
        under subsection (a), by a creditor whose claim is secured by 
        an interest in such real estate, if the court finds that the 
        filing of the bankruptcy petition was part of a scheme to 
        delay, hinder, and defraud creditors that involved either--
                  ``(A) transfer of all or part ownership of, or other 
                interest in, the real property without the consent of 
                the secured creditor or court approval; or
                  ``(B) multiple bankruptcy filings affecting the real 
                property.
If recorded in compliance with applicable State laws governing notices 
of interests or liens in real property, an order entered pursuant to 
this subsection shall be binding in any other case under this title 
purporting to affect the real property filed not later than 2 years 
after that recording, except that a debtor in a subsequent case may 
move for relief from such order based upon changed circumstances or for 
good cause shown, after notice and a hearing Any Federal, State, or 
local governmental unit which accepts notices of interests or liens in 
real property shall accept any certified copy of an order described in 
this subsection for indexing and recording.''.
  (b) Automatic Stay.--Section 362(b) of title 11, United States Code, 
is amended--
          (1) in paragraph (17), by striking ``or'' at the end;
          (2) in paragraph (18) by striking the period at the end and 
        inserting a semicolon; and
          (3) by inserting after paragraph (18) the following:
          ``(19) under subsection (a), of any act to enforce any lien 
        against or security interest in real property following the 
        entry of an order under section 362(d)(4) of this title as to 
        that property in any prior bankruptcy case for a period of 2 
        years after entry of such an order The debtor in a subsequent 
        case, however, may move the court for relief from such order 
        based upon changed circumstances or for other good cause shown 
        (consistent with the standards for good faith in subsection 
        (c)), after notice and a hearing; or
          ``(20) under subsection (a), of any act to enforce any lien 
        against or security interest in real property--
                  ``(A) if the debtor is ineligible under section 
                109(g) of this title to be a debtor in a bankruptcy 
                case; or
                  ``(B) if the bankruptcy case was filed in violation 
                of a bankruptcy court order in a prior bankruptcy case 
                prohibiting the debtor from being a debtor in another 
                bankruptcy case.''.

SEC. 119. DEBTOR RETENTION OF PERSONAL PROPERTY SECURITY.

  Title 11, United States Code, is amended--
          (1) in section 521--
                  (A) in paragraph (4) by striking ``, and'' at the end 
                and inserting a semicolon;
                  (B) in paragraph (5) by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(6) in an individual case under chapter 7 of this title, 
        not retain possession of personal property as to which a 
        creditor has an allowed claim for the purchase price secured in 
        whole or in part by an interest in that personal property 
        unless, in the case of an individual debtor, the debtor takes 1 
        of the following actions within 45 days after the first meeting 
        of creditors under section 341(a)--
                  ``(A) enters into an agreement with the creditor 
                pursuant to section 524(c) of this title with respect 
                to the claim secured by such property; or
                  ``(B) redeems such property from the security 
                interest pursuant to section 722 of this title.
        ``If the debtor fails to so act within the 45-day period, the 
        stay under section 362(a) of this title is terminated with 
        respect to the personal property of the estate or of the debtor 
        which is affected, such property shall no longer be property of 
        the estate, and the creditor may take whatever action as to 
        such property as is permitted by applicable nonbankruptcy law, 
        unless the court determines on the motion of the trustee 
        brought before the expiration of such 45-day period, and after 
        notice and a hearing, that such property is of consequential 
        value or benefit to the estate, orders appropriate adequate 
        protection of the creditor's interest, and orders the debtor to 
        deliver any collateral in the debtor's possession to the 
        trustee.''; and
          (2) in section 722 by inserting ``in full at the time of 
        redemption'' before the period at the end.

SEC. 120. RELIEF FROM THE AUTOMATIC STAY WHEN THE DEBTOR DOES NOT 
                    COMPLETE INTENDED SURRENDER OF CONSUMER DEBT 
                    COLLATERAL.

  Title 11, United States Code, is amended as follows--
          (1) in section 362--
                  (A) by striking ``(e), and (f)'' in subsection (c) 
                and inserting in lieu thereof ``(e), (f), and (h)''; 
                and
                  (B) by redesignating subsection (h) as subsection (i) 
                and by inserting after subsection (g) the following:
  ``(h) In an individual case pursuant to chapter 7, 11, or 13 the stay 
provided by subsection (a) is terminated with respect to personal 
property of the estate or of the debtor securing in whole or in part a 
claim, or subject to an unexpired lease, and such personal property 
shall no longer be property of the estate if the debtor fails within 
the applicable time set by section 521(a)(2) of this title--
          ``(1) to file timely any statement of intention required 
        under section 521(a)(2) of this title with respect to that 
        property or to indicate therein that the debtor will either 
        surrender the property or retain it and, if retaining it, 
        either redeem the property pursuant to section 722 of this 
        title, reaffirm the debt it secures pursuant to section 524(c) 
        of this title, or assume the unexpired lease pursuant to 
        section 365(p) of this title if the trustee does not do so, as 
        applicable; or
          ``(2) to take timely the action specified in that statement 
        of intention, as it may be amended before expiration of the 
        period for taking action, unless the statement of intention 
        specifies reaffirmation and the creditor refuses to reaffirm on 
        the original contract terms;
unless the court determines on the motion of the trustee filed before 
the expiration of the applicable time set by section 521(a)(2), and 
after notice and a hearing, that such property is of consequential 
value or benefit to the estate, orders appropriate adequate protection 
of the creditor's interest, and orders the debtor to deliver any 
collateral in the debtor's possession to the trustee If the court does 
not so determine an order, the stay shall terminate upon the conclusion 
of the proceeding on the motion.''; and
          (2) in section 521, as amended by sections 603 and 604--
                  (A) in paragraph (2) by striking ``consumer'';
                  (B) in paragraph (2)(B)--
                          (i) by striking ``forty-five days after the 
                        filing of a notice of intent under this 
                        section'' and inserting ``30 days after the 
                        first date set for the meeting of creditors 
                        under section 341(a) of this title''; and
                          (ii) by striking ``forty-five day'' the 
                        second place it appears and inserting ``30-
                        day'';
                  (C) in paragraph (2)(C) by inserting ``except as 
                provided in section 362(h) of this title'' before the 
                semicolon; and
                  (D) by inserting after subsection (b) the following:
  ``(c) If the debtor fails timely to take the action specified in 
subsection (a)(6) of this section, or in paragraphs (1) and (2) of 
section 362(h) of this title, with respect to property which a lessor 
or bailor owns and has leased, rented, or bailed to the debtor or as to 
which a creditor holds a security interest not otherwise voidable under 
section 522(f), 544, 545, 547, 548, or 549 of this title, nothing in 
this title shall prevent or limit the operation of a provision in the 
underlying lease or agreement which has the effect of placing the 
debtor in default under such lease or agreement by reason of the 
occurrence, pendency, or existence of a proceeding under this title or 
the insolvency of the debtor Nothing in this subsection shall be deemed 
to justify limiting such a provision in any other circumstance.''.

SEC. 121. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER 13.

  Section 1325(a)(5)(B)(i) of title 11, United States Code, is amended 
to read as follows:
                  ``(i) the plan provides that the holder of such claim 
                retain the lien securing such claim until the earlier 
                of payment of the underlying debt determined under 
                nonbankruptcy law or discharge under section 1328 of 
                this title, and that if the case under this chapter is 
                dismissed or converted without completion of the plan, 
                such lien shall also be retained by such holder to the 
                extent recognized by applicable nonbankruptcy law; 
                and''.

SEC. 122. RESTRAINING ABUSIVE PURCHASES ON SECURED CREDIT.

  Section 506 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) In an individual case under chapter 7, 11, 12, or 13--
          ``(1) subsection (a) shall not apply to an allowed claim to 
        the extent attributable in whole or in part to the purchase 
        price of personal property acquired by the debtor within 5 
        years of the filing of the petition, except for the purpose of 
        applying paragraph (3) of this subsection;
          ``(2) if such allowed claim attributable to the purchase 
        price is secured only by the personal property so acquired, the 
        value of the personal property and the amount of the allowed 
        secured claim shall be the sum of the unpaid principalbalance 
of the purchase price and accrued and unpaid interest and charges at 
the contract rate;
          ``(3) if such allowed claim attributable to the purchase 
        price is secured by the personal property so acquired and other 
        property, the value of the security may be determined under 
        subsection (a), but the value of the security and the amount of 
        the allowed secured claim shall be not less than the unpaid 
        principal balance of the purchase price of the personal 
        property acquired and unpaid interest and charges at the 
        contract rate; and
          ``(4) in any subsequent case under this title that is filed 
        by or against the debtor in the 2-year period beginning on the 
        date the petition is filed in the original case, the value of 
        the personal property and the amount of the allowed secured 
        claim shall be deemed to be not less than the amount provided 
        under paragraphs (2) and (3) less any payments actually 
        received.''.

SEC. 123. FAIR VALUATION OF COLLATERAL.

  Section 506(a) of title 11, United States Code, is amended by adding 
at the end the following:
``In the case of an individual debtor under chapters 7 and 13, such 
value with respect to personal property securing an allowed claim shall 
be determined based on the replacement value of such property as of the 
date of filing the petition without deduction for costs of sale or 
marketing With respect to property acquired for personal, family, or 
household purpose, replacement value shall mean the price a retail 
merchant would charge for property of that kind considering the age and 
condition of the property at the time value is determined.''.

SEC. 124. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.

  Section 522(b)(2)(A) of title 11, United States Code, is amended--
          (1) by striking ``180'' and inserting ``730''; and
          (2) by striking ``, or for a longer portion of such 180-day 
        period than in any other place'' and inserting ``or if the 
        debtor's domicile has not been located at a single State for 
        such 730-day period, the place in which the debtor's domicile 
        was located for 180 days immediately preceding the 730-day 
        period or for a longer portion of such 180-day period than in 
        any other place''.

SEC. 125. RESTRICTIONS ON CERTAIN EXEMPT PROPERTY OBTAINED THROUGH 
                    FRAUD.

  Section 522 of title 11, United States Code, as amended by section 
113, is amended--
          (1) in subsection (b)(2)(A) by inserting ``subject to 
        subsection (o),'' before ``any property''; and
          (2) by adding at the end the following:
  ``(o) For purposes of subsection (b)(3)(A) and notwithstanding 
subsection (a), the value of an interest in--
          ``(1) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
          ``(2) a cooperative that owns property that the debtor or a 
        dependent of the debtor uses as a residence; or
          ``(3) a burial plot for the debtor or a dependent of the 
        debtor;
shall be reduced to the extent such value is attributable to any 
portion of any property that the debtor disposed of in the 730-day 
period ending of the date of the filing of the petition, with the 
intent to hinder, delay, or defraud a creditor and that the debtor 
could not exempt, or that portion that the debtor could not exempt, 
under subsection (b) if on such date the debtor had held the property 
so disposed of.''.

SEC. 126. ROLLING STOCK EQUIPMENT.

  (a) In General.--Section 1168 of title 11, United States Code, is 
amended to read as follows:

``Sec. 1168. Rolling stock equipment

  ``(a)(1) The right of a secured party with a security interest in or 
of a lessor or conditional vendor of equipment described in paragraph 
(2) to take possession of such equipment in compliance with an 
equipment security agreement, lease, or conditional sale contract, and 
to enforce any of its other rights or remedies under such security 
agreement, lease, or conditional sale contract, to sell, lease, or 
otherwise retain or dispose of such equipment, is not limited or 
otherwise affected by any other provision of this title or by any power 
of the court, except that the right to take possession and enforce 
those other rights and remedies shall be subject to section 362 of this 
title, if--
          ``(A) before the date that is 60 days after the date of 
        commencement of a case under this chapter, the trustee, subject 
        to the court's approval, agrees toperform all obligations of 
the debtor under such security agreement, lease, or conditional sale 
contract; and
          ``(B) any default, other than a default of a kind described 
        in section 365(b)(2) of this title, under such security 
        agreement, lease, or conditional sale contract--
                  ``(i) that occurs before the date of commencement of 
                the case and is an event of default therewith is cured 
                before the expiration of such 60-day period;
                  ``(ii) that occurs or becomes an event of default 
                after the date of commencement of the case and before 
                the expiration of such 60-day period is cured before 
                the later of--
                          ``(I) the date that is 30 days after the date 
                        of the default or event of the default; or
                          ``(II) the expiration of such 60-day period; 
                        and
                  ``(iii) that occurs on or after the expiration of 
                such 60-day period is cured in accordance with the 
                terms of such security agreement, lease, or conditional 
                sale contract, if cure is permitted under that 
                agreement, lease, or conditional sale contract.
  ``(2) The equipment described in this paragraph--
          ``(A) is rolling stock equipment or accessories used on 
        rolling stock equipment, including superstructures or racks, 
        that is subject to a security interest granted by, leased to, 
        or conditionally sold to a debtor; and
          ``(B) includes all records and documents relating to such 
        equipment that are required, under the terms of the security 
        agreement, lease, or conditional sale contract, that is to be 
        surrendered or returned by the debtor in connection with the 
        surrender or return of such equipment.
  ``(3) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as trustee or 
otherwise in behalf of another party.
  ``(b) The trustee and the secured party, lessor, or conditional 
vendor whose right to take possession is protected under subsection (a) 
may agree, subject to the court's approval, to extend the 60-day period 
specified in subsection (a)(1).
  ``(c)(1) In any case under this chapter, the trustee shall 
immediately surrender and return to a secured party, lessor, or 
conditional vendor, described in subsection (a)(1), equipment described 
in subsection (a)(2), if at any time after the date of commencement of 
the case under this chapter such secured party, lessor, or conditional 
vendor is entitled pursuant to subsection (a)(1) to take possession of 
such equipment and makes a written demand for such possession of the 
trustee.
  ``(2) At such time as the trustee is required under paragraph (1) to 
surrender and return equipment described in subsection (a)(2), any 
lease of such equipment, and any security agreement or conditional sale 
contract relating to such equipment, if such security agreement or 
conditional sale contract is an executory contract, shall be deemed 
rejected.
  ``(d) With respect to equipment first placed in service on or prior 
to October 22, 1994, for purposes of this section--
          ``(1) the term `lease' includes any written agreement with 
        respect to which the lessor and the debtor, as lessee, have 
        expressed in the agreement or in a substantially 
        contemporaneous writing that the agreement is to be treated as 
        a lease for Federal income tax purposes; and
          ``(2) the term `security interest' means a purchase-money 
        equipment security interest.
  ``(e) With respect to equipment first placed in service after October 
22, 1994, for purposes of this section, the term `rolling stock 
equipment' includes rolling stock equipment that is substantially 
rebuilt and accessories used on such equipment.''.
  (b) Aircraft Equipment and Vessels.--Section 1110 of title 11, United 
States Code, is amended to read as follows:

``Sec. 1110. Aircraft equipment and vessels

  ``(a)(1) Except as provided in paragraph (2) and subject to 
subsection (b), the right of a secured party with a security interest 
in equipment described in paragraph (3), or of a lessor or conditional 
vendor of such equipment, to take possession of such equipment in 
compliance with a security agreement, lease, or conditional sale 
contract, and to enforce any of its other rights or remedies, under 
such security agreement, lease, or conditional sale contract, to sell, 
lease, or otherwise retain or dispose of such equipment, is not limited 
or otherwise affected by any other provision of this title or by any 
power of the court.
  ``(2) The right to take possession and to enforce the other rights 
and remedies described in paragraph (1) shall be subject to section 362 
of this title if--
          ``(A) before the date that is 60 days after the date of the 
        order for relief under this chapter, the trustee, subject to 
        the approval of the court, agrees to perform all obligations of 
        the debtor under such security agreement, lease, or conditional 
        sale contract; and
          ``(B) any default, other than a default of a kind specified 
        in section 365(b)(2) of this title, under such security 
        agreement, lease, or conditional sale contract--
                  ``(i) that occurs before the date of the order is 
                cured before the expiration of such 60-day period;
                  ``(ii) that occurs after the date of the order and 
                before the expiration of such 60-day period is cured 
                before the later of--
                          ``(I) the date that is 30 days after the date 
                        of the default; or
                          ``(II) the expiration of such 60-day period; 
                        and
                  ``(iii) that occurs on or after the expiration of 
                such 60-day period is cured in compliance with the 
                terms of such security agreement, lease, or conditional 
                sale contract, if a cure is permitted under that 
                agreement, lease, or contract.
  ``(3) The equipment described in this paragraph--
          ``(A) is--
                  ``(i) an aircraft, aircraft engine, propeller, 
                appliance, or spare part (as defined in section 40102 
                of title 49) that is subject to a security interest 
                granted by, leased to, or conditionally sold to a 
                debtor that, at the time such transaction is entered 
                into, holds an air carrier operating certificate issued 
                pursuant to chapter 447 of title 49 for aircraft 
                capable of carrying 10 or more individuals or 6,000 
                pounds or more of cargo; or
                  ``(ii) a documented vessel (as defined in section 
                30101(1) of title 46) that is subject to a security 
                interest granted by, leased to, or conditionally sold 
                to a debtor that is a water carrier that, at the time 
                such transaction is entered into, holds a certificate 
                of public convenience and necessity or permit issued by 
                the Department of Transportation; and
          ``(B) includes all records and documents relating to such 
        equipment that are required, under the terms of the security 
        agreement, lease, or conditional sale contract, to be 
        surrendered or returned by the debtor in connection with the 
        surrender or return of such equipment.
  ``(4) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as trustee or 
otherwise in behalf of another party.
  ``(b) The trustee and the secured party, lessor, or conditional 
vendor whose right to take possession is protected under subsection (a) 
may agree, subject to the approval of the court, to extend the 60-day 
period specified in subsection (a)(1).
  ``(c)(1) In any case under this chapter, the trustee shall 
immediately surrender and return to a secured party, lessor, or 
conditional vendor, described in subsection (a)(1), equipment described 
in subsection (a)(3), if at any time after the date of the order for 
relief under this chapter such secured party, lessor, or conditional 
vendor is entitled pursuant to subsection (a)(1) to take possession of 
such equipment and makes a written demand for such possession to the 
trustee.
  ``(2) At such time as the trustee is required under paragraph (1) to 
surrender and return equipment described in subsection (a)(3), any 
lease of such equipment, and any security agreement or conditional sale 
contract relating to such equipment, if such security agreement or 
conditional sale contract is an executory contract, shall be deemed 
rejected.
  ``(d) With respect to equipment first placed in service on or before 
October 22, 1994, for purposes of this section--
          ``(1) the term `lease' includes any written agreement with 
        respect to which the lessor and the debtor, as lessee, have 
        expressed in the agreement or in a substantially 
        contemporaneous writing that the agreement is to be treated as 
        a lease for Federal income tax purposes; and
          ``(2) the term `security interest' means a purchase-money 
        equipment security interest.''.

SEC. 127. DISCHARGE UNDER CHAPTER 13.

  Section 1328(a) of title 11, United States Code, is amended by 
striking paragraphs (1) through (3) and inserting the following:
          ``(1) provided for under section 1322(b)(5) of this title;
          ``(2) of the kind specified in paragraph (2), (4), (3)(B), 
        (5), (8), or (9) of section 523(a) of this title;
          ``(3) for restitution, or a criminal fine, included in a 
        sentence on the debtor's conviction of a crime; or
          ``(4) for restitution, or damages, awarded in a civil action 
        against the debtor as a result of willful or malicious injury 
        by the debtor that caused personal injury to an individual or 
        the death of an individual.''.

SEC. 128. BANKRUPTCY JUDGESHIPS.

  (a) Short Title.--This section may be cited as the ``Bankruptcy 
Judgeship Act of 1999''.
  (b) Temporary Judgeships.--
          (1) Appointments.--The following judgeship positions shall be 
        filled in the manner prescribed in section 152(a)(1) of title 
        28, United States Code, for the appointment of bankruptcy 
        judges provided for in section 152(a)(2) of such title:
                  (A) One additional bankruptcy judgeship for the 
                eastern district of California.
                  (B) Four additional bankruptcy judgeships for the 
                central district of California.
                  (C) One additional bankruptcy judgeship for the 
                southern district of Florida.
                  (D) Two additional bankruptcy judgeships for the 
                district of Maryland.
                  (E) One additional bankruptcy judgeship for the 
                eastern district of Michigan.
                  (F) One additional bankruptcy judgeship for the 
                southern district of Mississippi.
                  (G) One additional bankruptcy judgeship for the 
                district of New Jersey.
                  (H) One additional bankruptcy judgeship for the 
                eastern district of New York.
                  (I) One additional bankruptcy judgeship for the 
                northern district of New York.
                  (J) One additional bankruptcy judgeship for the 
                southern district of New York.
                  (K) One additional bankruptcy judgeship for the 
                eastern district of Pennsylvania.
                  (L) One additional bankruptcy judgeship for the 
                middle district of Pennsylvania.
                  (M) One additional bankruptcy judgeship for the 
                western district of Tennessee.
                  (N) One additional bankruptcy judgeship for the 
                eastern district of Virginia.
          (2) Vacancies.--The first vacancy occurring in the office of 
        a bankruptcy judge in each of the judicial districts set forth 
        in paragraph (1) that--
                  (A) results from the death, retirement, resignation, 
                or removal of a bankruptcy judge; and
                  (B) occurs 5 years or more after the appointment date 
                of a bankruptcy judge appointed under paragraph (1);
        shall not be filled.
  (c) Extensions.--
          (1) In general.--The temporary bankruptcy judgeship positions 
        authorized for the northern district of Alabama, the district 
        of Delaware, the district of Puerto Rico, the district of South 
        Carolina, and the eastern district of Tennessee under section 
        3(a) (1), (3), (7), (8), and (9) of the Bankruptcy Judgeship 
        Act of 1992 (28 U.S.C 152 note) are extended until the first 
        vacancy occurring in the office of a bankruptcy judge in the 
        applicable district resulting from the death, retirement, 
        resignation, or removal of a bankruptcy judge and occurring--
                  (A) 8 years or more after November 8, 1993, with 
                respect to the northern district of Alabama;
                  (B) 10 years or more after October 28, 1993, with 
                respect to the district of Delaware;
                  (C) 8 years or more after August 29, 1994, with 
                respect to the district of Puerto Rico;
                  (D) 8 years or more after June 27, 1994, with respect 
                to the district of South Carolina; and
                  (E) 8 years or more after November 23, 1993, with 
                respect to the eastern district of Tennessee.
          (2) Applicability of other provisions.--All other provisions 
        of section 3 of the Bankruptcy Judgeship Act of 1992 remain 
        applicable to such temporary judgeship position
  (d) Technical Amendment.--The first sentence of section 152(a)(1) of 
title 28, United States Code, is amended to read as follows: ``Each 
bankruptcy judge to beappointed for a judicial district as provided in 
paragraph (2) shall be appointed by the United States court of appeals 
for the circuit in which such district is located.''.
  (e) Travel Expenses of Bankruptcy Judges.--Section 156 of title 28, 
United States Code, is amended by adding at the end the following new 
subsection:
  ``(g)(1) In this subsection, the term `travel expenses'--
          ``(A) means the expenses incurred by a bankruptcy judge for 
        travel that is not directly related to any case assigned to 
        such bankruptcy judge; and
          ``(B) shall not include the travel expenses of a bankruptcy 
        judge if--
                  ``(i) the payment for the travel expenses is paid by 
                such bankruptcy judge from the personal funds of such 
                bankruptcy judge; and
                  ``(ii) such bankruptcy judge does not receive funds 
                (including reimbursement) from the United States or any 
                other person or entity for the payment of such travel 
                expenses.
  ``(2) Each bankruptcy judge shall annually submit the information 
required under paragraph (3) to the chief bankruptcy judge for the 
district in which the bankruptcy judge is assigned.
  ``(3)(A) Each chief bankruptcy judge shall submit an annual report to 
the Director of the Administrative Office of the United States Courts 
on the travel expenses of each bankruptcy judge assigned to the 
applicable district (including the travel expenses of the chief 
bankruptcy judge of such district).
  ``(B) The annual report under this paragraph shall include--
          ``(i) the travel expenses of each bankruptcy judge, with the 
        name of the bankruptcy judge to whom the travel expenses apply;
          ``(ii) a description of the subject matter and purpose of the 
        travel relating to each travel expense identified under clause 
        (i), with the name of the bankruptcy judge to whom the travel 
        applies; and
          ``(iii) the number of days of each travel described under 
        clause (ii), with the name of the bankruptcy judge to whom the 
        travel applies.
  ``(4)(A) The Director of the Administrative Office of the United 
States Courts shall--
          ``(i) consolidate the reports submitted under paragraph (3) 
        into a single report; and
          ``(ii) annually submit such consolidated report to Congress.
  ``(B) The consolidated report submitted under this paragraph shall 
include the specific information required under paragraph (3)(B), 
including the name of each bankruptcy judge with respect to clauses 
(i), (ii), and (iii) of paragraph (3)(B).''.

SEC. 129. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES CODE.

  Section 507(a) of title 11, United States Code, is amended by 
inserting after paragraph (9) the following:
          ``(10) Tenth, allowed claims for death or personal injuries 
        resulting from the operation of a motor vehicle or vessel if 
        such operation was unlawful because the debtor was intoxicated 
        from using alcohol, a drug or another substance.''.

SEC 130 AMENDMENT TO SECTION 1325 OF TITLE 11, UNITED STATES CODE.

  Section 1325(b) of title 11, United States Code, is amended--
          (1) in paragraph (1), by inserting ``to unsecured creditors'' 
        after ``to make payments'';
          (2) in paragraph (2)--
                  (A) by inserting ``current monthly'' before 
                ``income'';
                  (B) by striking ``and which is not'' and inserting 
                ``less amounts'';
                  (C) by inserting after ``received by the debtor'', 
                ``(other than child support payments, foster care 
                payments, or disability payments for a dependent child 
                made in accordance with applicable nonbankruptcy law 
                and which is reasonably necessary to be expended)''; 
                and
                  (D) in subparagraph (A) by inserting after 
                ``dependent of the debtor'' the following: ``, as 
                determined in accordance with section 707(b)(2)(A) and 
                if applicable 707(b)(2)(B)''.

SEC. 131. APPLICATION OF THE CODEBTOR STAY ONLY WHEN THE STAY PROTECTS 
                    THE DEBTOR.

  Section 1301(b) of title 11, United States Code, is amended--
          (1) by inserting ``(1)'' after ``(b)''; and
          (2) by adding at the end the following:
  ``(2)(A) Notwithstanding subsection (c) and except as provided in 
subparagraph (B), in any case in which the debtor did not receive the 
consideration for the claim held by a creditor, the stay provided by 
subsection (a) shall apply to that creditor for a period not to exceed 
30 days beginning on the date of the order for relief, to the extent 
the creditor proceeds against--
          ``(i) the individual that received that consideration; or
          ``(ii) property not in the possession of the debtor that 
        secures that claim.
  ``(B) Notwithstanding subparagraph (A), the stay provided by 
subsection (a) shall apply in any case in which the debtor is primarily 
obligated to pay the creditor in whole or in part with respect to a 
claim described in subparagraph (A) under a legally binding separation 
or property settlement agreement or divorce or dissolution decree with 
respect to--
          ``(i) an individual described in subparagraph (A)(i); or
          ``(ii) property described in subparagraph (A)(ii).
  ``(3) Notwithstanding subsection (c), the stay provided by subsection 
(a) shall terminate as of the date of confirmation of the plan, in any 
case in which the plan of the debtor provides that the debtor's 
interest in personal property subject to a lease with respect to which 
the debtor is the lessee will be surrendered or abandoned or no 
payments will be made under the plan on account of the debtor's 
obligations under the lease.''.

SEC. 132. ADEQUATE PROTECTION FOR INVESTORS.

  (a) Definition.--Section 101 of title 11, United States Code, is 
amended by inserting after paragraph (48) the following:
          ``(48A) `securities self regulatory organization' means 
        either a securities association registered with the Securities 
        and Exchange Commission pursuant to section 15A of the 
        Securities Exchange Act of 1934 or a national securities 
        exchange registered with the Securities and Exchange Commission 
        pursuant to section 6 of the Securities Exchange Act of 
        1934;''.
  (b) Automatic Stay.--Section 362(b) of title 11, United States Code, 
as amended by section 118, is amended--
          (1) in paragraph (19) by striking ``or'' at the end;
          (2) in paragraph (20) by striking the period at the end and a 
        inserting ``; or''; and
          (3) by inserting after paragraph (20) the following:
          ``(21) under subsection (a), of the commencement or 
        continuation of an investigation or action by a securities self 
        regulatory organization to enforce such organization's 
        regulatory power; of the enforcement of an order or decision, 
        other than for monetary sanctions, obtained in an action by the 
        securities self regulatory organization to enforce such 
        organization's regulatory power; or of any act taken by the 
        securities self regulatory organization to delist, delete, or 
        refuse to permit quotation of any stock that does not meet 
        applicable regulatory requirements.''.

SEC. 133. LIMITATION ON LUXURY GOODS.

  Section 523(a)(2)(C) of title 11, United States Code, is amended to 
read as follows:
                  ``(C)(i) for purposes of subparagraph (A), consumer 
                debts owed to a single creditor and aggregating more 
                than $250 for `luxury goods or services' incurred by an 
                individual debtor on or within 90 days before the order 
                for relief under this title, or cash advances 
                aggregating more than $250 that are extensions of 
                consumer credit under an open end credit plan obtained 
                by an individual debtor on or within 90 days before the 
                order for relief under this title, are presumed to be 
                nondischargeable; and
                  ``(ii) for purposes of this subparagraph--
                          ``(I) the term `luxury goods or services' 
                        does not include goods or services reasonably 
                        necessary for the support or maintenance of the 
                        debtor or a dependent of the debtor; and
                          ``(II) the term `an extension of consumer 
                        credit under an open end credit plan' has the 
                        same meaning such term has for purposes of the 
                        Consumer Credit Protection Act;''.

SEC. 134. GIVING DEBTORS THE ABILITY TO KEEP LEASED PERSONAL PROPERTY 
                    BY ASSUMPTION.

  Section 365 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(p)(1) If a lease of personal property is rejected or not timely 
assumed by the trustee under subsection (d), the leased property is no 
longer property of the estate and the stay under section 362(a) of this 
title is automatically terminated.
  ``(2) In the case of an individual under chapter 7, the debtor may 
notify the creditor in writing that the debtor desires to assume the 
lease Upon being so notified, the creditor may, at its option, notify 
the debtor that it is willing to have the lease assumed by the debtor 
and may, at its option, condition such assumption on cure of any 
outstanding default on terms set by the contract If within 30 days 
ofthe notice from the creditor the debtor notifies the lessor in 
writing that the lease is assumed, the liability under the lease will 
be assumed by the debtor and not by the estate The stay under section 
362 of this title and the injunction under section 524(a) of this title 
shall not be violated by notification of the debtor and negotiation of 
cure under this subsection Nothing in this paragraph shall require a 
debtor to assume a lease, or a creditor to permit assumption.
  ``(3) In a case under chapter 11 of this title in which the debtor is 
an individual and in a case under chapter 13 of this title, if the 
debtor is the lessee with respect to personal property and the lease is 
not assumed in the plan confirmed by the court, the lease is deemed 
rejected as of the conclusion of the hearing on confirmation If the 
lease is rejected, the stay under section 362 of this title and any 
stay under section 1301 is automatically terminated with respect to the 
property subject to the lease.''.

SEC. 135. ADEQUATE PROTECTION OF LESSORS AND PURCHASE MONEY SECURED 
                    CREDITORS.

  (a) In General.--Chapter 13 of title 11, United States Code, is 
amended by adding after section 1307 the following:

``Sec. 1307A. Adequate protection in chapter 13 cases

  ``(a)(1)(A) On or before the date that is 30 days after the filing of 
a case under this chapter, the debtor shall make cash payments in an 
amount determined under paragraph (2), to--
          ``(i) any lessor of personal property; and
          ``(ii) any creditor holding a claim secured by personal 
        property to the extent that the claim is attributable to the 
        purchase of that property by the debtor
  ``(B) The debtor or the plan shall continue making the adequate 
protection payments required under subparagraph (A) until the earlier 
of the date on which--
          ``(i) the creditor begins to receive actual payments under 
        the plan; or
          ``(ii) the debtor relinquishes possession of the property 
        referred to in subparagraph (A) to--
                  ``(I) the lessor or creditor; or
                  ``(II) any third party acting under claim of right, 
                as applicable.
  ``(2) The payments referred to in paragraph (1)(A) shall be the 
contract amount and shall reduce any amount payable under section 
1326(a) of the title.
  ``(b)(1) Subject to the limitations under paragraph (2), the court 
may, after notice and hearing, change the amount and timing of the 
dates of payment of payments made under subsection (a)
  ``(2)(A) The payments referred to in paragraph (1) shall be payable 
not less frequently than monthly.
  ``(B) The amount of payments referred to in paragraph (1) shall not 
be less than the amount of any weekly, biweekly, monthly, or other 
periodic payment scheduled as payable under the contract between the 
debtor and creditor.
  ``(c) Notwithstanding section 1326(b), the payments referred to in 
subsection (a)(1)(A) shall be continued in addition to plan payments 
under a confirmed plan until actual payments to the creditor begin 
under that plan, if the confirmed plan provides--
          ``(1) for payments to a creditor or lessor described in 
        subsection (a)(1); and
          ``(2) for the deferral of payments to such creditor or lessor 
        under the plan until the payment of amounts described in 
        section 1326(b)
  ``(d) Notwithstanding sections 362, 542, and 543, a lessor or 
creditor described in subsection (a) may retain possession of property 
described in that subsection that was obtained in accordance with 
applicable law before the date of filing of the petition until the 
first payment under subsection (a)(1)(A) is received by the lessor or 
creditor.
  ``(e) On or before 60 days after the filling of a case under this 
chapter, a debtor retaining possession of personal property subject to 
a lease or securing a claim attributable in whole or in part to the 
purchase price of such property shall provide each creditor or lessor 
reasonable evidence of the maintenance of any required insurance 
coverage with respect to the use or ownership of such property and 
continue to do so for so long as the debtor retains possession of such 
property.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 13 of title 11, United States Code, is amended by inserting 
after the item relating to section 1307 the following:

``1307A. Adequate protection in chapter 13 cases.''.

SEC. 136. AUTOMATIC STAY.

  Section 362(b) of title 11, United States Code, as amended by 
sections 118 and 132, is amended--
          (1) in paragraph (20), by striking ``or'' at the end;
          (2) in paragraph (21), by striking the period at the end and 
        inserting a semicolon; and
          (3) by inserting after paragraph (21) the following:
          ``(22) under subsection (a) of any transfer that is not 
        avoidable under section 544 of this title and that is not 
        avoidable under section 549 of this title;
          ``(23) under subsection (a)(3), of the continuation of any 
        eviction, unlawful detainer action, or similar proceeding by a 
        lessor against a debtor involving residential real property in 
        which the debtor resides as a tenant under a rental agreement 
        and the debtor has not paid rent to the lessor pursuant to the 
        terms of the lease agreement or applicable State law after the 
        commencement and during the course of the case;
          ``(24) under subsection (a)(3), of the commencement or 
        continuation of any eviction, unlawful detainer action, or 
        similar proceeding by a lessor against a debtor involving 
        residential real property in which the debtor resides as a 
        tenant under a rental agreement that has terminated pursuant to 
        the lease agreement or applicable State law;
          ``(25) under subsection (a)(3), of any eviction, unlawful 
        detainer action, or similar proceeding, if the debtor has 
        previously filed within the last year and failed to pay post-
        petition rent during the course of that case; or
          ``(26) under subsection (a)(3), of eviction actions based on 
        endangerment to property or person or the use of illegal 
        drugs.''.

SEC. 137. EXTEND PERIOD BETWEEN BANKRUPTCY DISCHARGES.

  Title 11, United States Code, is amended--
          (1) in section 727(a)(8) by striking ``six'' and inserting 
        ``8''; and
          (2) in section 1328 by adding at the end the following:
  ``(f) Notwithstanding subsections (a) and (b), the court shall not 
grant a discharge of all debts provided for by the plan or disallowed 
under section 502 of this title if the debtor has received a discharge 
in any case filed under this title within 5 years of the order for 
relief under this chapter.''.

SEC. 138. DEFINITION OF DOMESTIC SUPPORT OBLIGATION.

  Section 101 of title 11, United States Code, is amended--
          (1) by striking paragraph (12A); and
          (2) by inserting after paragraph (14) the following:
          ``(14A) `domestic support obligation' means a debt that 
        accrues before or after the entry of an order for relief under 
        this title that is--
                  ``(A) owed to or recoverable by--
                          ``(i) a spouse, former spouse, or child of 
                        the debtor or that child's legal guardian; or
                          ``(ii) a governmental unit;
                  ``(B) in the nature of alimony, maintenance, or 
                support (including assistance provided by a 
                governmental unit) of such spouse, former spouse, or 
                child, without regard to whether such debt is expressly 
                so designated;
                  ``(C) established or subject to establishment before 
                or after entry of an order for relief under this title, 
                by reason of applicable provisions of--
                          ``(i) a separation agreement, divorce decree, 
                        or property settlement agreement;
                          ``(ii) an order of a court of record; or
                          ``(iii) a determination made in accordance 
                        with applicable nonbankruptcy law by a 
                        governmental unit; and
                  ``(D) not assigned to a nongovernmental entity, 
                unless that obligation is assigned voluntarily by the 
                spouse, former spouse, child, or parent solely for the 
                purpose of collecting the debt.''.

SEC. 139. PRIORITIES FOR CLAIMS FOR DOMESTIC SUPPORT OBLIGATIONS.

  Section 507(a) of title 11, United States Code, is amended--
          (1) by striking paragraph (7);
          (2) by redesignating paragraphs (1) through (6) as paragraphs 
        (2) through (7), respectively;
          (3) in paragraph (2), as redesignated, by striking ``First'' 
        and inserting ``Second'';
          (4) in paragraph (3), as redesignated, by striking ``Second'' 
        and inserting ``Third'';
          (5) in paragraph (4), as redesignated, by striking ``Third'' 
        and inserting ``Fourth'';
          (6) in paragraph (5), as redesignated, by striking ``Fourth'' 
        and inserting ``Fifth'';
          (7) in paragraph (6), as redesignated, by striking ``Fifth'' 
        and inserting ``Sixth'';
          (8) in paragraph (7), as redesignated, by striking ``Sixth'' 
        and inserting ``Seventh''; and
          (9) by inserting before paragraph (2), as redesignated, the 
        following:
          ``(1) First, allowed claims for domestic support obligations 
        to be paid in the following order on the condition that funds 
        received under this paragraph by a governmental unit in a case 
        under this title be applied:
                  ``(A) Claims that, as of the date of entry of the 
                order for relief, are owed directly to a spouse, former 
                spouse, or child of the debtor, or the parent of such 
                child, without regard to whether the claim is filed by 
                the spouse, former spouse, child, or parent, or is 
                filed by a governmental unit on behalf of that person.
                  ``(B) Claims that, as of the date of entry of the 
                order for relief, are assigned by a spouse, former 
                spouse, child of the debtor, or the parent of that 
                child to a governmental unit or are owed directly to a 
                governmental unit under applicable nonbankruptcy 
                law.''.

SEC. 140. REQUIREMENTS TO OBTAIN CONFIRMATION AND DISCHARGE IN CASES 
                    INVOLVING DOMESTIC SUPPORT OBLIGATIONS.

  Title 11, United States Code, is amended--
          (1) in section 1129(a), by adding at the end the following:
          ``(14) If the debtor is required by a judicial or 
        administrative order or statute to pay a domestic support 
        obligation, the debtor has paid all amounts payable under such 
        order or statute for such obligation that become payable after 
        the date on which the petition is filed.'';
          (2) in section 1325(a)--
                  (A) in paragraph (5), by striking ``and'' at the end;
                  (B) in paragraph (6), by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(7) if the debtor is required by a judicial or 
        administrative order or statute to pay a domestic support 
        obligation, the debtor has paid all amounts payable under such 
        order for such obligation that become payable after the date on 
        which the petition is filed.''; and
          (3) in section 1328(a), as amended by section 127, in the 
        matter preceding paragraph (1), by inserting ``, and with 
        respect to a debtor who is required by a judicial or 
        administrative order to pay a domestic support obligation, 
        certifies that all amounts payable under such order or statute 
        that are due on or before the date of the certification 
        (including amounts due before or after the petition was filed) 
        have been paid'' after ``completion by the debtor of all 
        payments under the plan''.

SEC. 141. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT OBLIGATION 
                    PROCEEDINGS.

  Section 362(b) of title 11, United States Code, as amended by 
sections 118, 132, and 136, is amended--
          (1) by striking paragraph (2) and inserting the following:
          ``(2) under subsection (a)--
                  ``(A) of the commencement or continuation of an 
                action or proceeding for--
                          ``(i) the establishment of paternity; or
                          ``(ii) the establishment or modification of 
                        an order for domestic support obligations; or
                  ``(B) the collection of a domestic support obligation 
                from property that is not property of the estate;'';
          (2) in paragraph (25), by striking ``or'' at the end;
          (3) in paragraph (26), by striking the period at the end and 
        inserting a semicolon; and
          (4) by inserting after paragraph (26) the following:
          ``(27) under subsection (a) with respect to the withholding 
        of income pursuant to an order as specified in section 466(b) 
        of the Social Security Act (42 U.S.C 666(b)); or
          ``(28) under subsection (a) with respect to--
                  ``(A) the withholding, suspension, or restriction of 
                drivers' licenses, professional and occupational 
                licenses, and recreational licenses pursuant to State 
                law, as specified in section 466(a)(16) of the Social 
                Security Act (42 U.S.C 666(a)(16)) or with respect to 
                the reporting of overdue support owedby an absent 
parent to any consumer reporting agency as specified in section 
466(a)(7) of the Social Security Act (42 U.S.C 666(a)(7));
                  ``(B) the interception of tax refunds, as specified 
                in sections 464 and 466(a)(3) of the Social Security 
                Act (42 U.S.C 664 and 666(a)(3)); or
                  ``(C) the enforcement of medical obligations as 
                specified under title IV of the Social Security Act (42 
                U.S.C 601 et seq.).''.

SEC. 142. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY, 
                    MAINTENANCE, AND SUPPORT.

  Section 523 of title 11, United States Code, is amended--
          (1) in subsection (a), by striking paragraph (5) and 
        inserting the following:
          ``(5) for a domestic support obligation;'';
          (2) in subsection (a)(15)--
                  (A) by inserting ``or'' after ``court of record,'';
                  (B) by striking ``unless--'' and all that follows 
                through ``debtor'' the last place it appears; and
          (3) in subsection (c), by striking ``(6), or (15)'' each 
        place it appears and inserting ``or (6)''.

SEC. 143. CONTINUED LIABILITY OF PROPERTY.

  Section 522 of title 11, United States Code, is amended--
          (1) in subsection (c), by striking paragraph (1) and 
        inserting the following:
          ``(1) a debt of a kind specified in paragraph (1) or (5) of 
        section 523(a) (in which case, notwithstanding any provision of 
        applicable nonbankruptcy law to the contrary, such property 
        shall be liable for a debt of a kind specified in section 
        523(a)(5);''; and
          (2) in subsection (f)(1)(A), by striking the dash and all 
        that follows through the end of the subparagraph and inserting 
        ``of a kind that is specified in section 523(a)(5); or''.

SEC. 144. PROTECTION OF DOMESTIC SUPPORT CLAIMS AGAINST PREFERENTIAL 
                    TRANSFER MOTIONS.

  Section 547(c)(7) of title 11, United States Code, is amended to read 
as follows:
          ``(7) to the extent such transfer was a bona fide payment of 
        a debt for a domestic support obligation; or''.

SEC. 145. CLARIFICATION OF MEANING OF HOUSEHOLD GOODS.

  Section 101 of title 11, United States Code, is amended by inserting 
after paragraph (27) the following:
          ``(27A) `household goods' includes tangible personal property 
        normally found in or around a residence, but does not include 
        motorized vehicles used for transportation purposes;''.

SEC. 146. NONDISCHARGEABLE DEBTS.

  Section 523(a) of title 11, United States Code, is amended by 
inserting after paragraph (14) the following:
          ``(14A) incurred to pay a debt that is nondischargeable by 
        reason of section 727, 1141, 1228(a), 1228(b), or 1328(c), or 
        any other provision of this subsection, if the debtor incurred 
        the debt to pay such a nondischargeable debt with the intent to 
        discharge in bankruptcy the newly-created debt, except that all 
        debts incurred to pay nondischargeable debts, without regard to 
        intent, are nondischargeable if incurred within 90 days of the 
        filing of the petition;''.

SEC. 147. MONETARY LIMITATION ON CERTAIN EXEMPT PROPERTY.

  Section 522 of title 11, United States Code, as amended by section 
125, is amended--
          (1) in subsection (b)(2)(A) by striking ``subsection (o)'' 
        and inserting ``subsections (o) and (p)'' before ``any 
        property''; and
          (2) by adding at the end the following:
  ``(p)(1) Except as provided in paragraphs (2) and (3), as a result of 
electing under subsection (b)(3)(A) to exempt property under State or 
local law, a debtor may not exempt any interest that exceeds $250,000 
in value, in the aggregate, in--
          ``(A) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
          ``(B) a cooperative that owns property that the debtor or a 
        dependent of the debtor uses as a residence; or
          ``(C) a burial plot for the debtor or a dependent of the 
        debtor.
  ``(2) The limitation under paragraph (1) shall not apply to an 
exemption claimed under subsection (b)(3)(A) by a family farmer for the 
principal residence of that farmer.
  ``(3) Paragraph (1) shall not apply to debtors if applicable State 
law expressly provides by a statute enacted after the effective date of 
this paragraph that such paragraph shall not apply to debtors.''.

SEC. 148. BANKRUPTCY FEES.

  Section 1930 of title 28, United States Code, is amended--
          (1) in subsection (a) by striking ``Notwithstanding section 
        1915 of this title, the'' and inserting ``The''; and
          (2) by adding at the end the following:
  ``(f)(1) Pursuant to procedures prescribed by the Judicial Conference 
of the United States, the district court or the bankruptcy court may 
waive the filing fee in a case under chapter 7 of title 11 for an 
individual debtor who is unable to pay such fee in installments For 
purposes of this paragraph, the term `filing fee' means the filing fee 
required by subsection (a), or any other fee prescribed by the Judicial 
Conference under subsections (b) and (c) that is payable to the clerk 
upon the commencement of a case under chapter 7 of title 11.
  ``(2) The district court or the bankruptcy court may also waive for 
such debtors other fees prescribed pursuant to subsections (b) and (c).
  ``(3) This subsection does not restrict the district court or the 
bankruptcy court from waiving, in accordance with Judicial Conference 
policy, fees prescribed pursuant to such subsections for other debtors 
and creditors.''.

SEC. 149. COLLECTION OF CHILD SUPPORT.

  (a) Duties of Trustee Under Chapter 7.--Section 704 of title 11, 
United States Code, as amended by section 102, is amended--
          (1) by inserting ``(a)'' before ``The trustee'',
          (2) in paragraph (9) by striking ``and'' at the end,
          (3) in paragraph (10) by striking the period and inserting 
        ``; and'', and
          (4) by adding at the end the following:
          ``(11) if, with respect to an individual debtor, there is a 
        claim for support of a child of the debtor or a custodial 
        parent of such child entitled to receive priority under section 
        507(a)(1) of this title, provide the applicable notification 
        specified in subsection (b).
  ``(b)(1) In any case described in subsection (a)(11), the trustee 
shall--
          ``(A)(i) notify in writing the holder of the claim of the 
        right of such holder to use the services of a State child 
        support enforcement agency established under sections 464 and 
        466 of the Social Security Act for the State in which the 
        holder resides; and
          ``(ii) include in the notice under this paragraph the address 
        and telephone number of the child support enforcement agency; 
        and
          ``(B)(i) notify in writing the State child support agency of 
        the State in which the holder of the claim resides of the 
        claim;
          ``(ii) include in the notice under this paragraph the name, 
        address, and telephone number of the holder of the claim; and
          ``(iii) at such time as the debtor is granted a discharge 
        under section 727 of this title, notify the holder of such 
        claim and the State child support agency of the State in which 
        such holder resides of--
                  ``(I) the granting of the discharge;
                  ``(II) the last recent known address of the debtor; 
                and
                  ``(III) with respect to the debtor's case, the name 
                of each creditor that holds a claim that is not 
                discharged under paragraph (2), (4), or (14A) of 
                section 523(a) of this title or that was reaffirmed by 
                the debtor under section 524(c) of this title.
  ``(2)(A) If, after receiving a notice under paragraph (1)(B)(iii), a 
holder of a claim or a State child support agency is unable to locate 
the debtor that is the subject of the notice, such holder or such 
agency may request from a creditor described in paragraph 
(1)(B)(iii)(III) the last known address of the debtor.
  ``(B) Notwithstanding any other provision of law, a creditor that 
makes a disclosure of a last known address of a debtor in connection 
with a request made under subparagraph (A) shall not be liable to the 
debtor or any other person by reason of making such disclosure.''.
  (b) Duties of Trustee Under Chapter 13.--Section 1302 of title 11, 
United States Code, is amended--
          (1) in subsection (b)--
                  (A) in paragraph (4) by striking ``and'' at the end,
                  (B) in paragraph (5) by striking the period and 
                inserting ``; and'', and
                  (C) by adding at the end the following:
          ``(6) if, with respect to an individual debtor, there is a 
        claim for support of a child of the debtor or a custodial 
        parent of such child entitled to receivepriority under section 
507(a)(1) of this title, provide the applicable notification specified 
in subsection (d).'', and
          (2) by adding at the end the following:
  ``(d)(1) In any case described in subsection (b)(6), the trustee 
shall--
          ``(A)(i) notify in writing the holder of the claim of the 
        right of such holder to use the services of a State child 
        support enforcement agency established under sections 464 and 
        466 of the Social Security Act for the State in which the 
        holder resides; and
          ``(ii) include in the notice under this paragraph the address 
        and telephone number of the child support enforcement agency; 
        and
          ``(B)(i) notify in writing the State child support agency of 
        the State in which the holder of the claim resides of the 
        claim; and
          ``(ii) include in the notice under this paragraph the name, 
        address, and telephone number of the holder of the claim;
          ``(iii) at such time as the debtor is granted a discharge 
        under section 1328 of this title, notify the holder of the 
        claim and the State child support agency of the State in which 
        such holder resides of--
                  ``(I) the granting of the discharge;
                  ``(II) the last recent known address of the debtor; 
                and
                  ``(III) with respect to the debtor's case, the name 
                of each creditor that holds a claim that is not 
                discharged under paragraph (2), (4), or (14A) of 
                section 523(a) of this title or that was reaffirmed by 
                the debtor under section 524(c) of this title.
  ``(2)(A) If, after receiving a notice under paragraph (1)(B)(iii), a 
holder of a claim or a State child support agency is unable to locate 
the debtor that is the subject of the notice, such holder or such 
agency may request from a creditor described in paragraph (1)(B)(iii) 
the last known address of the debtor.
  ``(B) Notwithstanding any other provision of law, a creditor that 
makes a disclosure of a last known address of a debtor in connection 
with a request made under subparagraph (A) shall not be liable to the 
debtor or any other person by reason of making such disclosure.''.

SEC. 150. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICIPANT CONTRIBUTIONS AND 
                    OTHER PROPERTY FROM THE ESTATE.

  (a) In General.--Section 541(b) of title 11 of the United States Code 
is amended--
          (1) by striking ``or'' at the end of paragraph (4)(B)(ii);
          (2) by striking the period at the end of paragraph (5) and 
        inserting ``; or''; and
          (3) by inserting after paragraph (5) the following:
          ``(7) any amount or interest in property to the extent that 
        an employer has withheld amounts from the wages of employees 
        for contribution to an employee benefit plan subject to title I 
        of the Employee Retirement Income Security Act of 1974, or to 
        the extent that the employer has received amounts as a result 
        of payments by participants or beneficiaries to an employer for 
        contribution to an employee benefit plan subject to title I of 
        the Employee Retirement Income Security Act of 1974.''.
  (b) Application of Amendment.--The amendment made by this section 
shall not apply to cases commenced under title 11 of the United States 
Code before the expiration of the 180-day period beginning on the date 
of the enactment of this Act.

SEC. 151. CLARIFICATION OF POSTPETITION WAGES AND BENEFITS.

  Section 503(b)(1)(A) of title 11, United States Code, is amended to 
read as follows:
          ``(A) the actual, necessary costs and expenses of preserving 
        the estate, including wages, salaries, or commissions for 
        services rendered after the commencement of the case, and wages 
        and benefits attributable to any period of time after 
        commencement of the case as a result of the debtor's violation 
        of Federal law, without regard to when the original unlawful 
        act occurred or to whether any services were rendered;''.

SEC. 152. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT OBLIGATION 
                    PROCEEDINGS.

  Section 362(b)(2) of title 11, United States Code, is amended--
          (1) in subparagraph (A) by striking ``or'' at the end;
          (2) in subparagraph (B) by adding ``or'' at the end; and
          (3) by adding at the end the following:
                  ``(C) under subsection (a) of--
                          ``(i) the withholding of income for payment 
                        of a domestic support obligation pursuant to a 
                        judicial or administrative order or statute for 
                        such obligation that first becomes payable 
                        after the date on which the petition is filed; 
                        or
                          ``(ii) the withholding of income for payment 
                        of a domestic support obligation owed directly 
                        to the spouse, former spouse or child of the 
                        debtor or the parent of such child, pursuant to 
                        a judicial or administrative order or statute 
                        for such obligation that becomes payable before 
                        the date on which the petition is filed unless 
                        the court finds, after notice and hearing, that 
                        such withholding would render the plan 
                        infeasible;''.

SEC. 153. AUTOMATIC STAY INAPPLICABLE TO CERTAIN PROCEEDINGS AGAINST 
                    THE DEBTOR.

  Section 362(b)(2) of title 11, United States Code, as amended by 
section 153, is amended--
          (1) in subparagraph (B) by striking ``or'' at the end;
          (2) by inserting after subparagraph (C) the following:
                  ``(D) the commencement or continuation of a 
                proceeding concerning a child custody or visitation;
                  ``(E) the commencement or continuation of a 
                proceeding alleging domestic violence; or
                  ``(F) the commencement or continuation of a 
                proceeding seeking a dissolution of marriage, except to 
                the extent the proceeding concerns property of the 
                estate;''.

                TITLE II--DISCOURAGING BANKRUPTCY ABUSE

SEC. 201. REENACTMENT OF CHAPTER 12.

  (a) Reenactment.--Chapter 12 of title 11 of the United States Code, 
as in effect on March 31, 1999, is hereby reenacted.
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect on March 31, 1999.

SEC. 202. MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS.

  Section 341 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) Notwithstanding subsections (a) and (b), the court, on the 
request of a party in interest and after notice and a hearing, for 
cause may order that the United States trustee not convene a meeting of 
creditors or equity security holders if the debtor has filed a plan as 
to which the debtor solicited acceptances prior to the commencement of 
the case.''.

SEC. 203. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.

  (a) In General.--Section 522 of title 11, United States Code, as 
amended by sections 113, 125, and 147 is amended--
          (1) in subsection (b)--
                  (A) in paragraph (2)--
                          (i) by striking ``(2)(A)'' and inserting:
  ``(3) Property listed in this paragraph is--
          ``(A) subject to subsections (o) and (p),'';
                          (ii) in subparagraph (B), by striking ``and'' 
                        at the end;
                          (iii) in subparagraph (C), by striking the 
                        period at the end and inserting ``; and''; and
                          (iv) by adding at the end the following:
          ``(D) retirement funds to the extent that those funds are in 
        a fund or account that is exempt from taxation under section 
        401, 403, 408, 408A, 414, 457, or 501(a) of the Internal 
        Revenue Code of 1986.'';
                  (B) by striking paragraph (1) and inserting:
  ``(2) Property listed in this paragraph is property that is specified 
under subsection (d), unless the State law that is applicable to the 
debtor under paragraph (3)(A) specifically does not so authorize.'';
                  (C) in the matter preceding paragraph (2)--
                          (i) by striking ``(b)'' and inserting 
                        ``(b)(1)'';
                          (ii) by striking ``paragraph (2)'' both 
                        places it appears and inserting ``paragraph 
                        (3)'';
                          (iii) by striking ``paragraph (1)'' each 
                        place it appears and inserting ``paragraph 
                        (2)''; and
                          (iv) by striking ``Such property is--''; and
                  (D) by adding at the end of the subsection the 
                following:
  ``(4) For purposes of paragraph (3)(D) and subsection (d)(12), the 
following shall apply:
          ``(A) If the retirement funds are in a retirement fund that 
        has received a favorable determination pursuant to section 7805 
        of the Internal Revenue Code of 1986, and that determination is 
        in effect as of the date of the commencement of the case under 
        section 301, 302, or 303 of this title, those funds shall be 
        presumed to be exempt from the estate
          ``(B) If the retirement funds are in a retirement fund that 
        has not received a favorable determination pursuant to such 
        section 7805, those funds are exempt from the estate if the 
        debtor demonstrates that--
                  ``(i) no prior determination to the contrary has been 
                made by a court or the Internal Revenue Service; and
                  ``(ii) the retirement fund is in substantial 
                compliance with the applicable requirements of the 
                Internal Revenue Code of 1986.
          ``(C) A direct transfer of retirement funds from 1 fund or 
        account that is exempt from taxation under section 401, 403, 
        408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 
        1986, pursuant to section 401(a)(31) of the Internal Revenue 
        Code of 1986, or otherwise, shall not cease to qualify for 
        exemption under paragraph (3)(D) or subsection (d)(12) by 
        reason of that direct transfer.
          ``(D)(i) Any distribution that qualifies as an eligible 
        rollover distribution within the meaning of section 402(c) of 
        the Internal Revenue Code of 1986 or that is described in 
        clause (ii) shall not cease to qualify for exemption under 
        paragraph (3)(D) or subsection (d)(12) by reason of that 
        distribution.
          ``(ii) A distribution described in this clause is an amount 
        that--
                  ``(I) has been distributed from a fund or account 
                that is exempt from taxation under section 401, 403, 
                408, 408A, 414, 457, or 501(a) of the Internal Revenue 
                Code of 1986; and
                  ``(II) to the extent allowed by law, is deposited in 
                such a fund or account not later than60 days after the 
distribution of that amount.''; and
          (2) in subsection (d)--
                  (A) in the matter preceding paragraph (1), by 
                striking ``subsection (b)(1)'' and inserting 
                ``subsection (b)(2)''; and
                  (B) by adding at the end the following:
          ``(12) Retirement funds to the extent that those funds are in 
        a fund or account that is exempt from taxation under section 
        401, 403, 408, 408A, 414, 457, or 501(a) of the Internal 
        Revenue Code of 1986.''.
  (b) Automatic Stay.--Section 362(b) of title 11, United States Code, 
as amended by sections 118, 132, 136, and 141 is amended--
          (1) in paragraph (27), by striking ``or'' at the end;
          (2) in paragraph (28), by striking the period and inserting 
        ``; or'';
          (3) by inserting after paragraph (28) the following:
          ``(29) under subsection (a), of withholding of income from a 
        debtor's wages and collection of amounts withheld, pursuant to 
        the debtor's agreement authorizing that withholding and 
        collection for the benefit of a pension, profit-sharing, stock 
        bonus, or other plan established under section 401, 403, 408, 
        408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986 
        that is sponsored by the employer of the debtor, or an 
        affiliate, successor, or predecessor of such employer--
                  ``(A) to the extent that the amounts withheld and 
                collected are used solely for payments relating to a 
                loan from a plan that satisfies the requirements of 
                section 408(b)(1) of the Employee Retirement Income 
                Security Act of 1974 or is subject to section 72(p) of 
                the Internal Revenue Code of 1986; or
                  ``(B) in the case of a loan from a thrift savings 
                plan described in subchapter III of title 5, that 
                satisfies the requirements of section 8433(g) of such 
                title.''; and
          (4) by adding at the end of the flush material following 
        paragraph (29) the following: ``Paragraph (29) does not apply 
        to any amount owed to a plan referred to in that paragraph that 
        is incurred under a loan made during the 1-year period 
        preceding the filing of a petition Nothing in paragraph (29) 
        may be construed to provide that any loan made under a 
        governmental plan under section 414(d), or a contract or 
        account under section 403(b), of the Internal Revenue Code of 
        1986 constitutes a claim or a debt under this title.''.
  (c) Exceptions to Discharge.--Section 523(a) of title 11, United 
States Code, is amended--
          (1) by striking ``or'' at the end of paragraph (17);
          (2) by striking the period at the end of paragraph (18) and 
        inserting ``; or''; and
          (3) by adding at the end the following:
          ``(19) owed to a pension, profit-sharing, stock bonus, or 
        other plan established under section 401, 403, 408, 408A, 414, 
        457, or 501(c) of the Internal Revenue Code of 1986, pursuant 
        to--
                  ``(A) a loan permitted under section 408(b)(1) of the 
                Employee Retirement Income Security Act of 1974) or 
                subject to section 72(p) of the Internal Revenue Code 
                of 1986; or
                  ``(B) a loan from the thrift savings plan described 
                in subchapter III of title 5, that satisfies the 
                requirements of section 8433(g) of such title.
Paragraph (19) does not apply to any amount owed to a plan referred to 
in that paragraph that is incurred under a loan made during the 1-year 
period preceding the filing of a petition Nothing in paragraph (19) may 
be construed to provide that any loan made under a governmental plan 
under section 414(d), or a contract or account under section 403(b), of 
the Internal Revenue Code of 1986 constitutes a claim or a debt under 
this title.''.
  (d) Plan Contents.--Section 1322 of title 11, United States Code, is 
amended by adding at the end the following:
  ``(f) A plan may not materially alter the terms of a loan described 
in section 362(b)(29) of this title.''.

SEC. 204. PROTECTION OF REFINANCE OF SECURITY INTEREST.

  Subparagraphs (A), (B), and (C) of section 547(e)(2) of title 11, 
United States Code, are amended by striking ``10'' each place it 
appears and inserting ``30''.

SEC. 205. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

  Section 365(d)(4) of title 11, United States Code, is amended to read 
as follows:
  ``(4)(A) Subject to subparagraph (B), in any case under any chapter 
in this title, an unexpired lease of nonresidential real property under 
which the debtor is the lessee shall be deemed rejected, and the 
trustee shall immediately surrender such property to the lessor, if the 
trustee does not assume or reject the unexpired lease by the earlier 
of--
          ``(i) the date that is 120 days after the date of the order 
        for relief; or
          ``(ii) the date of the entry of an order confirming a plan.
  ``(B)(i) The court may extend the period determined under 
subparagraph (A) for 120 days upon motion of the trustee or the lessor 
for cause.
  ``(ii) If the court grants an extension under clause (i), the court 
may grant a subsequent extension only upon prior written consent of the 
lessor.''.

SEC. 206. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES.

  Section 1102(a)(2) of title 11, United States Code, is amended by 
inserting before the first sentence the following: ``On its own motion 
or on request of a party in interest, and after notice and hearing, the 
court may order a change in the membership of a committee appointed 
under this subsection, if the court determines that the change is 
necessary to ensure adequate representation of creditors or equity 
security holders.''.

SEC. 207. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES CODE.

  Section 546 of title 11, United States Code, is amended by inserting 
at the end thereof:
  ``(i) Notwithstanding section 545 (2) and (3) of this title, the 
trustee may not avoid a warehouseman's lien for storage, transportation 
or other costs incidental to the storage and handling of goods, as 
provided by section 7-209 of the Uniform Commercial Code.''.

SEC. 208. LIMITATION.

  Section 546(c)(1)(B) of title 11, United States Code, is amended by 
striking ``20'' and inserting ``45''.

SEC. 209. AMENDMENT TO SECTION 330(A) OF TITLE 11, UNITED STATES CODE.

  Section 330(a) of title 11, United States Code, is amended--
          (1) in paragraph (3)--
                  (A) in subparagraph (A) after ``awarded'', by 
                inserting ``to an examiner, chapter 11 trustee, or 
                professional person''; and
                  (B) by redesignating subdivisions (A) through (E) as 
                clauses (i) through (iv), respectively; and
          (2) by adding at the following:
          ``(B) In determining the amount of reasonable compensation to 
        be awarded a trustee, the court shall treat such compensation 
        as a commission based on the results achieved.''.

SEC. 210. POSTPETITION DISCLOSURE AND SOLICITATION.

  Section 1125 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(g) Notwithstanding subsection (b), an acceptance or rejection of 
the plan may be solicited from a holder of a claim or interest if such 
solicitation complies with applicable nonbankruptcy law and if such 
holder was solicited before the commencement of the case in a manner 
complying with applicable nonbankruptcy law.''.

SEC. 211. PREFERENCES.

  Section 547(c) of title 11, United States Code, is amended--
          (1) by amending paragraph (2) to read as follows:
          ``(2) to the extent that such transfer was in payment of a 
        debt incurred by the debtor in the ordinary course of business 
        or financial affairs of the debtor and the transferee, and such 
        transfer was--
                  ``(A) made in the ordinary course of business or 
                financial affairs of the debtor and the transferee; or
                  ``(B) made according to ordinary business terms;'';
          (2) in paragraph (7) by striking ``or'' at the end;
          (3) in paragraph (8) by striking the period at the end and 
        inserting ``; or''; and
          (4) by adding at the end the following:
          ``(9) if, in a case filed by a debtor whose debts are not 
        primarily consumer debts, the aggregate value of all property 
        that constitutes or is affected by such transfer is less than 
        $5,000.''.

SEC. 212. VENUE OF CERTAIN PROCEEDINGS.

  Section 1409(b) of title 28, United States Code, is amended by 
inserting ``, or a nonconsumer debt against a noninsider of less than 
$10,000,'' after ``$5,000''.

SEC. 213. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

  Section 1121(d) of title 11, United States Code, is amended--
          (1) by striking ``On'' and inserting ``(1) Subject to 
        paragraph (1), on''; and
          (2) by adding at the end the following:
  ``(2)(A) Such 120-day period may not be extended beyond a date that 
is 18 months after the date of the order for relief under this chapter.
  ``(B) Such 180-day period may not be extended beyond a date that is 
20 months after the date of the order for relief under this chapter.''.

SEC. 214. FEES ARISING FROM CERTAIN OWNERSHIP INTERESTS.

  Section 523(a)(16) of title 11, United States Code, is amended--
          (1) by striking ``dwelling'' the first place it appears;
          (2) by striking ``ownership or'' and inserting 
        ``ownership,'';
          (3) by striking ``housing'' the first place it appears; and
          (4) by striking ``but only'' and all that follows through 
        ``such period,'', and inserting ``or a lot in a homeowners 
        association, for as long as the debtor or the trustee has a 
        legal, equitable, or possessory ownership interest in such 
        unit, such corporation, or such lot,''.

SEC. 215. CLAIMS RELATING TO INSURANCE DEPOSITS IN CASES ANCILLARY TO 
                    FOREIGN PROCEEDINGS.

  Section 304 of title 11, United States Code, is amended to read as 
follows:

``Sec. 304. Cases ancillary to foreign proceedings

  ``(a) For purposes of this section--
          ``(1) the term `domestic insurance company' means a domestic 
        insurance company, as such term is used in section 109(b)(2);
          ``(2) the term `foreign insurance company' means a foreign 
        insurance company, as such term is used in section 109(b)(3);
          ``(3) the term `United States claimant' means a beneficiary 
        of any deposit referred to in subsection (b) or any 
        multibeneficiary trust referred to in subsection (b);
          ``(4) the term `United States creditor' means, with respect 
        to a foreign insurance company--
                  ``(A) a United States claimant; or
                  ``(B) any business entity that operates in the United 
                States and that is a creditor; and
          ``(5) the term `United States policyholder' means a holder of 
        an insurance policy issued in the United States.
  ``(b) The court may not grant relief under chapter 15 of this title 
with respect to any deposit, escrow, trust fund, or other security 
required or permitted under any applicable State insurance law or 
regulation for the benefit of claim holders in the United States.''.

SEC. 216. DEFAULTS BASED ON NONMONETARY OBLIGATIONS.

  (a) Executory Contracts and Unexpired Leases.--Section 365 of title 
11, United States Code, is amended--
          (1) in subsection (b)--
                  (A) in paragraph (1)(A) by striking the semicolon at 
                the end and inserting the following:
        ``other than a default that is a breach of a provision relating 
        to--
                  ``(i) the satisfaction of any provision (other than a 
                penalty rate or penalty provision) relating to a 
                default arising from any failure to perform nonmonetary 
                obligations under an unexpired lease of real property 
                (excluding executory contracts that transfer a right or 
                interest under a filed or issued patent, copyright, 
                trademark, trade dress, or trade secret), if it is 
                impossible for the trustee to cure such default by 
                performing nonmonetary acts at and after the time of 
                assumption; or
                  ``(ii) the satisfaction of any provision (other than 
                a penalty rate or penalty provision) relating to a 
                default arising from any failure to perform nonmonetary 
                obligations under an executory contract, if it is 
                impossible for the trustee to cure such default by 
                performing nonmonetary acts at and after the time of 
                assumption and if the court determines, based on the 
                equities of the case, that this subparagraph should not 
                apply with respect to such default;''; and
                  (B) by amending paragraph (2)(D) to read as follows:
          ``(D) the satisfaction of any penalty rate or penalty 
        provision relating to a default arising from a failure to 
        perform nonmonetary obligations under an executory contract 
        (excluding executory contracts that transfer a right or 
        interest under a filed or issued patent, copyright, trademark, 
        trade dress, or trade secret) or under an unexpired lease of 
        real or personal property.'';
          (2) in subsection (c)--
                  (A) in paragraph (2) by adding ``or'' at the end;
                  (B) in paragraph (3) by striking ``; or'' at the end 
                and inserting a period; and
                  (C) by striking paragraph (4);
          (3) in subsection (d)--
                  (A) by striking paragraphs (5) through (9); and
                  (B) by redesignating paragraph (10) as paragraph (5); 
                and
          (4) in subsection (f)(1) by striking ``; except that'' and 
        all that follows through the end of the paragraph and inserting 
        a period.
  (b) Impairment of Claims or Interests.--Section 1124(2) of title 11, 
United States Code, is amended--
          (1) in subparagraph (A) by inserting ``or of a kind that 
        section 365(b)(1)(A) of this title expressly does not require 
        to be cured'' before the semicolon at the end;
          (2) in subparagraph (C) by striking ``and'' at the end;
          (3) by redesignating subparagraph (D) as subparagraph (E); 
        and
          (4) by inserting after subparagraph (C) the following:
                  ``(D) if such claim or such interest arises from any 
                failure to perform a nonmonetary obligation, 
                compensates the holder of such claim or such interest 
                (other than the debtor or an insider) for any actual 
                pecuniary loss incurred by such holder as a result of 
                such failure; and''.

SEC. 217. SHARING OF COMPENSATION.

  Section 504 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(c) This section shall not apply with respect to sharing, or 
agreeing to share, compensation with a bona fide public service 
attorney referral program that operates in accordance with non-Federal 
law regulating attorney referral services and with rules of 
professional responsibility applicable to attorney acceptance of 
referrals.''.

SEC. 218. PRIORITY FOR ADMINISTRATIVE EXPENSES.

  Section 503(b) of title 11, United States Code, is amended--
          (1) by deleting ``and'' at the end of paragraph (5);
          (2) by striking the period at the end of paragraph (6) and 
        inserting ``; and'';
          (3) by inserting the following after paragraph (6):
          ``(7) with respect to a nonresidential real property lease 
        previously assumed under section 365, and subsequently 
        rejected, a sum equal to all monetary obligations due, 
        excluding those arising from or relating to a failure to 
        operate or penalty provisions, for the period of one year 
        following the later of the rejection date or date of actual 
        turnover of the premises, without reduction or setoff for any 
        reason whatsoever except for sums actually received or to be 
        received from a nondebtor; and the claim for remaining sums due 
        for the balance of the term of the lease shall be a claim under 
        section 502(b)(6).''.

           TITLE III--GENERAL BUSINESS BANKRUPTCY PROVISIONS

SEC. 301. DEFINITION OF DISINTERESTED PERSON.

  Section 101(14) of title 11, United States Code, is amended to read 
as follows:
          ``(14) `disinterested person' means a person that--
                  ``(A) is not a creditor, an equity security holder, 
                or an insider;
                  ``(B) is not and was not, within 2 years before the 
                date of the filing of the petition, a director, 
                officer, or employee of the debtor; and
                  ``(C) does not have an interest materially adverse to 
                the interest of the estate or of any class of creditors 
                or equity security holders, by reason of any direct or 
                indirect relationship to, connection with, or interest 
                in, the debtor, or for any other reason;''.

SEC. 302. MISCELLANEOUS IMPROVEMENTS.

  (a) Who May Be a Debtor.--Section 109 of title 11, United States 
Code, is amended by adding at the end the following:
  ``(h)(1) Subject to paragraphs (2) and (3) and notwithstanding any 
other provision of this section, an individual may not be a debtor 
under this title unless that individual has, during the 90-day period 
preceding the date of filing of the petition of that individual, 
received credit counseling, including, at a minimum, participation in 
an individual or group briefing that outlined the opportunities for 
available credit counseling and assisted that individual in performing 
an initial budget analysis, through a credit counseling program 
(offered through an approved credit counseling service described in 
section 111(a)).
  ``(2)(A) Paragraph (1) shall not apply with respect to a debtor who 
resides in a district for which the United States trustee or bankruptcy 
administrator of the bankruptcy court of that district determines that 
the approved credit counseling services for that district are not 
reasonably able to provide adequate services to the additional 
individuals who would otherwise seek credit counseling from those 
programs by reason of the requirements of paragraph (1).
  ``(B) Each United States trustee or bankruptcy administrator that 
makes a determination described in subparagraph (A) shall review that 
determination not later than one year after the date of that 
determination, and not less frequently than every year thereafter.
  ``(3)(A) Subject to subparagraph (B), the requirements of paragraph 
(1) shall not apply with respect to a debtor who submits to the court a 
certification that--
          ``(i) describes exigent circumstances that merit a waiver of 
        the requirements of paragraph (1);
          ``(ii) states that the debtor requested credit counseling 
        services from an approved credit counseling service, but was 
        unable to obtain the services referred to in paragraph (1) 
        during the 5-day period beginning on the date on which the 
        debtor made that request or that the exigent circumstances 
        require filing before such 5-day period expires; and
          ``(iii) is satisfactory to the court.
  ``(B) With respect to a debtor, an exemption under subparagraph (A) 
shall cease to apply to that debtor on the date on which the debtor 
meets the requirements of paragraph (1), but in no case may the 
exemption apply to that debtor after the date that is 30 days after the 
debtor files a petition.''.
  (b) Chapter 7 Discharge.--Section 727(a) of title 11, United States 
Code, is amended--
          (1) in paragraph (9), by striking ``or'' at the end;
          (2) in paragraph (10), by striking the period and inserting 
        ``; or''; and
          (3) by adding at the end the following:
          ``(11) after the filing of the petition, the debtor failed to 
        complete an instructional course concerning personal financial 
        management described in section 111 unless the debtor resides 
        in a district for which the United States trustee or bankruptcy 
        administrator of the bankruptcy court of that district 
        determines that the approved instructional courses are not 
        adequate to provide service to the additional individuals who 
        would be required to compete the instructional course by reason 
        of the requirements of this section Each United States trustee 
        or bankruptcy administrator that makes such a determination 
        shall review that determination not later than 1 year after the 
        date of that determination, and not less frequently than every 
        year thereafter.''.
  (c) Chapter 13 Discharge.--Section 1328 of title 11, United States 
Code, as amended by section 137, is amended by adding at the end the 
following:
  ``(g) The court shall not grant a discharge under this section to a 
debtor, unless after filing a petition the debtor has completed an 
instructional course concerning personal financial management described 
in section 111.
  ``(h) Subsection (g) shall not apply with respect to a debtor who 
resides in a district for which the United States trustee or bankruptcy 
administrator of the bankruptcy court of that district determines that 
the approved instructional courses are not adequate to provide service 
to the additional individuals who would be required to complete the 
instructional course by reason of the requirements of this section.
  ``(i) Each United States trustee or bankruptcy administrator that 
makes a determination described in subsection (h) shall review that 
determination not later than 1 year after the date of that 
determination, and not less frequently than every year thereafter.''.
  (d) Debtor's Duties.--Section 521 of title 11, United States Code, as 
amended by sections 604 and 120, is amended by adding at the end the 
following:
  ``(d) In addition to the requirements under subsection (a), an 
individual debtor shall file with the court--
          ``(1) a certificate from the credit counseling service that 
        provided the debtor services under section 109(h); and
          ``(2) a copy of the debt repayment plan, if any, developed 
        under section 109(h) through the credit counseling service 
        referred to in paragraph (1).''.
  (e) General Provisions.--
          (1) In general.--Chapter 1 of title 11, United States Code, 
        is amended by adding at the end the following:

``Sec. 111. Credit counseling services; financial management 
                    instructional courses

  ``The clerk of each district shall maintain a list of credit 
counseling services that provide 1 or more programs described in 
section 109(h) and a list of instructional courses concerning personal 
financial management that have been approved by--
          ``(1) the United States trustee; or
          ``(2) the bankruptcy administrator for the district.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 1 of title 11, United States Code, is 
        amended by adding at the end the following:

``111. Credit counseling services; financial management instructional 
courses.''.

  (e) Definitions.--Section 101 of title 11, United States Code, is 
amended--
          (1) by inserting after paragraph (13) the following:
          ``(13A) `debtor's principal residence' means a residential 
        structure including incidental property when the structure 
        contains 1 to 4 units, whether or not that structure is 
        attached to real property, and includes, without limitation, an 
        individual condominium or cooperative unit or mobile or 
        manufactured home or trailer;'';
          (2) by inserting after paragraph (27A), as added by section 
        318 of this Act, the following:
          ``(27B) `incidental property' means property incidental to 
        such residence including, without limitation, property commonly 
        conveyed with a principal residence where the real estate is 
        located, window treatments, carpets, appliances and equipment 
        located in the residence, and easements, appurtenances, 
        fixtures, rents, royalties, mineral rights, oil and gas rights, 
        escrow funds and insurance proceeds;'';
          (3) in section 362(b), as amended by sections 117, 118, 132, 
        136, 141 203, 818, and 1007,--
                  (A) in paragraph (28) by striking ``or'' at the end 
                thereof;
                  (B) in paragraph (29) by striking the period at the 
                end and inserting ``; or''; and
                  (C) by inserting after paragraph (29) the following:
          ``(30) under subsection (a), until a prepetition default is 
        cured fully in a case under chapter 13 of this title by actual 
        payment of all arrears as required by the plan, of the 
        postponement, continuation or other similar delay of a 
        prepetition foreclosure proceeding or sale in accordance with 
        applicable nonbankruptcy law, but nothing herein shall imply 
        that such postponement, continuation or other similar delay is 
        a violation of the stay under subsection (a).''; and
          (4) by amending section 1322(b)(2) to read as follows:
          ``(2) modify the rights of holders of secured claims, other 
        than a claim secured primarily by a security interest in 
        property used as the debtor's principal residence at any time 
        during 180 days prior to the filing of the petition, or of 
        holders of unsecured claims, or leave unaffected the rights of 
        holders of any class of claims;''.
  (f) Limitation.--Section 362 of title 11, United States Code, is 
amended by adding at the end the following:
  ``(j) If one case commenced under chapter 7, 11, or 13 of this title 
is dismissed due to the creation of a debt repayment plan administered 
by a credit counseling agency approved pursuant to section 111 of this 
title, then for purposes of section 362(c)(3) of this title the 
subsequent case commenced under any such chapter shall not be presumed 
to be filed not in good faith.''.
  (g) Return of Goods Shipped.--Section 546(g) of title 11, United 
States Code, as added by section 222(a) of Public Law 103-394, is 
amended to read as follows:
  ``(h) Notwithstanding the rights and powers of a trustee under 
sections 544(a), 545, 547, 549, and 553 of this title, if the court 
determines on a motion by the trustee made not later than 120 days 
after the date of the order for relief in a case under chapter 11 of 
this title and after notice and hearing, that a return is in the best 
interests of the estate, the debtor, with the consent of the creditor, 
and subject to the prior rights, if any, of third parties in such 
goods, may return goods shipped to the debtor by the creditor before 
the commencement of the case, and the creditor may offset the purchase 
price of such goods against any claim of the creditor against the 
debtor that arose before the commencement of the case.''.

SEC. 303. EXTENSIONS.

  Section 302(d)(3) of the Bankruptcy, Judges, United States Trustees, 
and Family Farmer Bankruptcy Act of 1986 (28 U.S.C 581 note) is 
amended--
          (1) in subparagraph (A), in the matter following clause (ii), 
        by striking ``or October 1, 2002, whichever occurs first''; and
          (2) in subparagraph (F)--
                  (A) in clause (i)--
                          (i) in subclause (II), by striking ``or 
                        October 1, 2002, whichever occurs first''; and
                          (ii) in the matter following subclause (II), 
                        by striking ``October 1, 2003, or''; and
                  (B) in clause (ii), in the matter following subclause 
                (II)--
                          (i) by striking ``before October 1, 2003, 
                        or''; and
                          (ii) by striking ``, whichever occurs 
                        first''.

SEC. 304. LOCAL FILING OF BANKRUPTCY CASES.

  Section 1408 of title 28, United States Code, is amended--
          (1) by striking ``Except'' and inserting ``(a) Except''; and
          (2) by adding at the end the following:
  ``(b) For the purposes of subsection (a), if the debtor is a 
corporation, the domicile and residence of the debtor are conclusively 
presumed to be where the debtor's principal place of business in the 
United States is located.''.

SEC. 305. PERMITTING ASSUMPTION OF CONTRACTS.

  (a) Section 365(c) of title 11, United States Code, is amended to 
read as follows:
  ``(c)(1) The trustee may not assume or assign an executory contract 
or unexpired lease of the debtor, whether or not the contract or lease 
prohibits or restricts assignment of rights or delegation of duties, 
if--
          ``(A)(i) applicable law excuses a party to the contract or 
        lease from accepting performance from or rendering performance 
        to an assignee of the contract or lease, whether or not the 
        contract or lease prohibits or restricts assignment of rights 
        or delegation of duties; and
          ``(ii) the party does not consent to the assumption or 
        assignment; or
          ``(B) the contract is a contract to make a loan, or extend 
        other debt financing or financial accommodations, to or for the 
        benefit of the debtor, or to issue a security of the debtor.
  ``(2) Notwithstanding paragraph (1)(A) and applicable nonbankruptcy 
law, in a case under chapter 11 of this title, a trustee in a case in 
which a debtor is a corporation, or a debtor in possession, may assume 
an executory contract or unexpired lease of the debtor, whether or not 
the contract or lease prohibits or restricts assignment of rights or 
delegation of duties.
  ``(3) The trustee may not assume or assign an unexpired lease of the 
debtor of nonresidential real property, whether or not the contract or 
lease prohibits or restricts assignment of rights or delegation of 
duties, if the lease has been terminated under applicable nonbankruptcy 
law before the order for relief.''.
  (b) Section 365(d) of title 11, United States Code, is amended by 
striking paragraphs (5), (6), (7), (8), and (9), and redesignating 
paragraph (10) as paragraph (5).
  (c) Section 365(e) of title 11, United States Code, is amended to 
read as follows:
  ``(e)(1) Notwithstanding a provision in an executory contract or 
unexpired lease, or in applicable law, an executory contract or 
unexpired lease of the debtor may not be terminated or modified, and 
any right or obligation under such contract or lease may not be 
terminated or modified, at any time after the commencement of the case 
solely because of a provision in such contract or lease that is 
conditioned on--
          ``(A) the insolvency or financial condition of the debtor at 
        any time before the closing of the case;
          ``(B) the commencement of a case under this title; or
          ``(C) the appointment of or taking possession by a trustee in 
        a case under this title or a custodian before such 
        commencement.
  ``(2) Paragraph (1) does not apply to an executory contract or 
unexpired lease of the debtor if the trustee may not assume or assign, 
and the debtor in possession may not assume, the contract or lease by 
reason of the provisions of subsection (c) of this section.''.
  (d) Section 365(f)(1) of title 11, United States Code, is amended by 
striking the semicolon and all that follows through ``event''.

             TITLE IV SMALL BUSINESS BANKRUPTCY PROVISIONS

SEC. 401. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.

  (a) Section 1125(a)(1) of title 11, United States Code, is amended by 
inserting before the semicolon following:
``and in determining whether a disclosure statement provides adequate 
information, the court shall consider the complexity of the case, the 
benefit of additional information to creditors and other parties in 
interest, and the cost of providing additional information''.
  (b) Section 1125(f) of title 11, United States Code, is amended to 
read as follows:
  ``(f) Notwithstanding subsection (b)--
          ``(1) the court may determine that the plan itself provides 
        adequate information and that a separate disclosure statement 
        is not necessary;
          ``(2) the court may approve a disclosure statement submitted 
        on standard forms approved by the court or adopted pursuant to 
        section 2075 of title 28; and
          ``(3)(A) the court may conditionally approve a disclosure 
        statement subject to final approval after notice and a hearing;
          ``(B) acceptances and rejections of a plan may be solicited 
        based on a conditionally approved disclosure statement if the 
        debtor provides adequate information to each holder of a claim 
        or interest that is solicited, but a conditionally approved 
        disclosure statement shall be mailed not less than 20 days 
        before the date of the hearing on confirmation of the plan; and
  ``(C) the hearing on the disclosure statement may be combined with 
the hearing on confirmation of a plan.''.

SEC. 402. DEFINITIONS.

  (a) Definitions Section 101 of title 11, United States Code, is 
amended by striking paragraph (51C) and inserting the following:
          ``(51C) `small business case' means a case filed under 
        chapter 11 of this title in which the debtor is a small 
        business debtor; and
          ``(51D) `small business debtor' means (A) a person (including 
        affiliates of such person that are also debtors under this 
        title) that has aggregate noncontingent, liquidated secured and 
        unsecured debts as of the date of the petition orthe order for 
relief in an amount not more than $4,000,000 (excluding debts owed to 1 
or more affiliates or insiders), except that if a group of affiliated 
debtors has aggregate noncontingent liquidated secured and unsecured 
debts greater than $4,000,000 (excluding debt owed to 1 or more 
affiliates or insiders), then no member of such group is a small 
business debtor;''.
  (b) Conforming Amendment.--Section 1102(a)(3) of title 11, United 
States Code, is amended by inserting ``debtor'' after ``small 
business'' .

SEC. 403. STANDARD FORM DISCLOSURE STATEMENT AND PLAN.

  The Advisory Committee on Bankruptcy Rules of the Judicial Conference 
of the United States shall, within a reasonable period of time after 
the date of the enactment of this Act, propose for adoption standard 
form disclosure statements and plans of reorganization for small 
business debtors (as defined in section 101 of title 11, United States 
Code, as amended by this Act), designed to achieve a practical balance 
between--
          (1) the reasonable needs of the courts, the United States 
        trustee, creditors, and other parties in interest for 
        reasonably complete information; and
          (2) economy and simplicity for debtors.

SEC. 404. UNIFORM NATIONAL REPORTING REQUIREMENTS.

  (a) Reporting Required.--
          (1) Title 11 of the United States Code is amended by 
        inserting after section 307 the following:

``Sec. 308. Debtor reporting requirements

  ``A small business debtor shall file periodic financial and other 
reports containing information including--
          ``(1) the debtor's profitability, that is, approximately how 
        much money the debtor has been earning or losing during current 
        and recent fiscal periods;
          ``(2) reasonable approximations of the debtor's projected 
        cash receipts and cash disbursements over a reasonable period;
          ``(3) comparisons of actual cash receipts and disbursements 
        with projections in prior reports; and
          ``(4) whether the debtor is--
                  ``(A) in compliance in all material respects with 
                postpetition requirements imposed by this title and the 
                Federal Rules of Bankruptcy Procedure; and
                  ``(B) timely filing tax returns and paying taxes and 
                other administrative claims when due, and, if not, what 
                the failures are and how, at what cost, and when the 
                debtor intends to remedy such failures; and
          ``(5) such other matters as are in the best interests of the 
        debtor and creditors, and in the public interest in fair and 
        efficient procedures under chapter 11 of this title.''.
          (2) The table of sections of chapter 3 of title 11, United 
        States Code, is amended by inserting after the item relating to 
        section 307 the following:

``308. Debtor reporting requirements.''.

  (b) Effective Date.--The amendments made by subsection (a) shall take 
effect 60 days after the date on which rules are prescribed pursuant to 
section 2075, title 28, United States Code to establish forms to be 
used to comply with section 308 of title 11, United States Code, as 
added by subsection (a).

SEC. 405. UNIFORM REPORTING RULES AND FORMS FOR SMALL BUSINESS CASES.

  (a) Proposal of Rules and Forms.--The Advisory Committee on 
Bankruptcy Rules of the Judicial Conference of the United States shall 
propose for adoption amended Federal Rules of Bankruptcy Procedure and 
Official Bankruptcy Forms to be used by small business debtors to file 
periodic financial and other reports containing information, including 
information relating to--
          (1) the debtor's profitability;
          (2) the debtor's cash receipts and disbursements; and
          (3) whether the debtor is timely filing tax returns and 
        paying taxes and other administrative claims when due.
  (b) Purpose.--The rules and forms proposed under subsection (a) shall 
be designed to achieve a practical balance between--
          (1) the reasonable needs of the bankruptcy court, the United 
        States trustee, creditors, and other parties in interest for 
        reasonably complete information;
          (2) the small business debtor's interest that required 
        reports be easy and inexpensive to complete; and
          (3) the interest of all parties that the required reports 
        help the small business debtor to understand its financial 
        condition and plan its future.

SEC. 406. DUTIES IN SMALL BUSINESS CASES.

  (a) Duties in Chapter 11 Cases.--Title 11 of the United States Code 
is amended by inserting after section 1114 the following:

``Sec. 1115. Duties of trustee or debtor in possession in small 
                    business cases

  ``(a) In a small business case, a trustee or the debtor in 
possession, in addition to the duties provided in this title and as 
otherwise required by law, shall--
          ``(1) append to the voluntary petition or, in an involuntary 
        case, file within 3 days after the date of the order for 
        relief--
                  ``(A) its most recent balance sheet, statement of 
                operations, cash-flow statement, Federal income tax 
                return; or
                  ``(B) a statement made under penalty of perjury that 
                no balance sheet, statement of operations, or cash-flow 
                statement has been prepared and no Federal tax return 
                has been filed;
          ``(2) attend, through its responsible individual, meetings 
        scheduled by the court or the United States trustee, including 
        initial debtor interviews and meetings of creditors convened 
        under section 341 of this title;
          ``(3) timely file all schedules and statements of financial 
        affairs, unless the court, after notice and a hearing, grants 
        an extension, which shall not extend such time period to a date 
        later than 30 days after the date of the order for relief, 
        absent extraordinary and compelling circumstances;
          ``(4) file all postpetition financial and other reports 
        required by the Federal Rules of Bankruptcy Procedure or by 
        local rule of the district court;
          ``(5) subject to section 363(c)(2) of this title, maintain 
        insurance customary and appropriate to the industry;
          ``(6)(A) timely file tax returns;
          ``(B) subject to section 363(c)(2) of this title, timely pay 
        all administrative expense tax claims, except those being 
        contested by appropriate proceedings being diligently 
        prosecuted; and
          ``(C) subject to section 363(c)(2) of this title, establish 1 
        or more separate deposit accounts not later than 10 business 
        days after the date of order for relief (or as soon thereafter 
        as possible if all banks contacted decline the business) and 
        deposit therein, not later than 1 business day after receipt 
        thereof or a responsible time set by the court, all taxes 
        payable for periods beginning after the date the case is 
        commenced that are collected or withheld by the debtor for 
        governmental units unless the court waives this requirement 
        after notice and hearing; and
          ``(7) allow the United States trustee, or its designated 
        representative, to inspect the debtor's business premises, 
        books, and records at reasonable times, after reasonable prior 
        written notice, unless notice is waived by the debtor.''.
  (b) Technical Amendment.--The table of sections of chapter 11, United 
States Code, is amended by inserting after the item relating to section 
1114 the following:

``1115. Duties of trustee or debtor in possession in small business 
cases.''.

SEC. 407. PLAN FILING AND CONFIRMATION DEADLINES.

  Section 1121(e) of title 11, United States Code, is amended to read 
as follows:
  ``(e) In a small business case--
          ``(1) only the debtor may file a plan until after 90 days 
        after the date of the order for relief, unless a trustee has 
        been appointed under this chapter, or unless the court, on 
        request of a party in interest and after notice and hearing, 
        shortens such time;
          ``(2) the debtor shall file a plan, and any necessary 
        disclosure statement, not later than 90 days after the date of 
        the order for relief, unless the United States Trustee has 
        appointed under section 1102(a)(1) of this title a committee of 
        unsecured creditors that the court has determined, before the 
        90 days has expired, is sufficiently active and representative 
        to provide effective oversight of the debtor; and
          ``(3) the time periods specified in paragraphs (1) and (2) of 
        this subsection and the time fixed in section 1129(e) of this 
        title for confirmation of a plan, may be extended only as 
        follows:
                  ``(A) On request of a party in interest made within 
                the respective periods, and after notice and hearing, 
                the court may for cause grant one or more extensions, 
                cumulatively not to exceed 60 days, if the movant 
                establishes--
                          ``(i) that no cause exists to dismiss or 
                        convert the case or appoint a trustee or 
                        examiner under subparagraphs (A) (I) of section 
                        1112(b) of this title; and
                          ``(ii) that there is a reasonable possibility 
                        the court will confirm a plan within a 
                        reasonable time;
                  ``(B) On request of a party in interest made within 
                the respective periods, and after notice and hearing, 
                the court may for cause grant one or more extensions in 
                excess of those authorized under subparagraph (A) of 
                this paragraph, if the movant establishes--
                          ``(i) that no cause exists to dismiss or 
                        convert the case or appoint a trustee or 
                        examiner under subparagraphs (A) (I) of section 
                        1112(b)(3) of this title; and
                          ``(ii) that it is more likely than not that 
                        the court will confirm a plan within a 
                        reasonable time; and
                  ``(C) a new deadline shall be imposed whenever an 
                extension is granted.''.

SEC. 408. PLAN CONFIRMATION DEADLINE.

  Section 1129 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) In a small business case, the debtor shall confirm a plan not 
later than 150 days after the date of the order for relief unless--
          ``(1) the United States Trustee has appointed, under section 
        1102(a)(1) of this title, a committee of unsecured creditors 
        that the court has determined, before the 150 days has expired, 
        is sufficiently active and representative to provide effective 
        oversight of the debtor; or
          ``(2) such 150-day period is extended as provided in section 
        1121(e)(3) of this title.''.

SEC. 409. PROHIBITION AGAINST EXTENSION OF TIME.

  Section 105(d) of title 11, United States Code, is amended--
          (1) in paragraph (2)(B)(vi) by striking the period at the end 
        and inserting ``; and''; and
          (2) by adding at the end the following:
          ``(3) in a small business case, not extend the time periods 
        specified in sections 1121(e) and 1129(e) of this title except 
        as provided in section 1121(e)(3) of this title.''.

SEC. 410. DUTIES OF THE UNITED STATES TRUSTEE.

  (a) Duties of the United States Trustee.--
  Section 586(a) of title 28, United States Code, is amended--
          (1) in paragraph (3)--
                  (A) in subparagraph (G) by striking ``and at the 
                end'';
                  (B) by redesignating subparagraph (H) as subparagraph 
                (I); and
                  (C) by inserting after subparagraph (G) the 
                following:
                  ``(H) in small business cases (as defined in section 
                101 of title 11), performing the additional duties 
                specified in title 11 pertaining to such cases'';
          (2) in paragraph (5) by striking ``and at the end'';
          (3) in paragraph (6) by striking the period at the end and 
        inserting ``; and''; and
          (4) by inserting after paragraph (7) the following:
          ``(7) in each of such small business cases--
                  ``(A) conduct an initial debtor interview as soon as 
                practicable after the entry of order for relief but 
                before the first meeting scheduled under section 341(a) 
                of title 11 at which time the United States trustee 
                shall begin to investigate the debtor's viability, 
                inquire about the debtor's business plan, explain the 
                debtor's obligations to file monthly operating reports 
                and other required reports, attempt to develop an 
                agreed scheduling order, and inform the debtor of other 
                obligations;
                  ``(B) when determined to be appropriate and 
                advisable, visit the appropriate business premises of 
                the debtor and ascertain the state of the debtor's 
                books and records and verify that the debtor has filed 
                its tax returns; and
                  ``(C) review and monitor diligently the debtor's 
                activities, to identify as promptly as possible whether 
                the debtor will be unable to confirm a plan; and
          ``(8) in cases in which the United States trustee finds 
        material grounds for any relief under section 1112 of title 11, 
        the United States trustee shall apply promptly to the court for 
        relief.''.

SEC. 411. SCHEDULING CONFERENCES.

  Section 105(d) of title 11, United States Code, is amended--
          (1) in the matter preceding paragraph (1) by striking ``, 
        may'';
          (2) by amending paragraph (1) to read as follows:
          ``(1) shall hold such status conferences as are necessary to 
        further the expeditious and economical resolution of the case; 
        and''; and
          (3) in paragraph (2) by striking ``unless inconsistent with 
        another provision of this title or with applicable Federal 
        Rules of Bankruptcy Procedure'', and inserting ``may''.

SEC. 412. SERIAL FILER PROVISIONS.

  Section 362 of title 11, United States Code, as amended by section 
302, is amended--
          (1) in subsection (i) as so redesignated by section 122--
                  (A) by striking ``An'' and inserting ``(1) Except as 
                provided in paragraph (2), an''; and
                  (B) by adding at the end the following:
  ``(2) If such violation is based on an action taken by an entity in 
the good-faith belief that subsection (h) applies to the debtor, then 
recovery under paragraph (1) against such entity shall be limited to 
actual damages.''; and
          (2) by inserting after subsection (j), as added by section 
        302, the following:
  ``(k)(1) Except as provided in paragraph (2) of this subsection, the 
provisions of subsection (a) of thissection shall not apply in a case 
in which the debtor--
          ``(A) is a debtor in a case under this title pending at the 
        time the petition is filed;
          ``(B) was a debtor in a case under this title which was 
        dismissed for any reason by an order that became final in the 
        2-year period ending on the date of the order for relief 
        entered with respect to the petition;
          ``(C) was a debtor in a case under this title in which a 
        chapter 11, 12, or 13 plan was confirmed in the 2-year period 
        ending on the date of the order for relief entered with respect 
        to the petition; or
          ``(D) is an entity that has succeeded to substantially all of 
        the assets or business of a debtor described in subparagraph 
        (A), (B), or (C).
  ``(2) This subsection shall not apply--
          ``(A) to a case initiated by an involuntary petition filed by 
        a creditor that is not an insider or affiliate of the debtor; 
        or
          ``(B) after such time as the debtor, after notice and a 
        hearing, demonstrates by a preponderance of the evidence, that 
        the filing of such petition resulted from circumstances beyond 
        the control of the debtor and not foreseeable at the time the 
        earlier case was filed; and that it is more likely than not 
        that the court will confirm a plan, other than a liquidating 
        plan, within a reasonable time.''.

SEC. 413. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND APPOINTMENT 
                    OF TRUSTEE OR EXAMINER.

  (a) Expanded Grounds for Dismissal or Conversion.--Section 1112(b) of 
title 11, United States Code, is amended to read as follows:
  ``(b)(1) Except as provided in paragraphs (2) and (4) of this 
subsection, and in subsection (c) of this section, on request of a 
party in interest, and after notice and a hearing, the court shall 
convert a case under this chapter to a case under chapter 7 of this 
title or dismiss a case under this chapter, or appoint a trustee or 
examiner under section 1104(e) of this title, whichever is in the best 
interest of creditors and the estate, if the movant establishes cause
  ``(2) The court may decline to grant the relief specified in 
paragraph (1) of this subsection if the debtor or another party in 
interest objects and establishes by a preponderance of the evidence 
that--
          ``(A) it is more likely than not that a plan will be 
        confirmed within a time as fixed by this title or by order of 
        the court entered pursuant to section 1121(e)(3), or within a 
        reasonable time if no time has been fixed; and
          ``(B) if the cause is an act or omission of the debtor that--
                  ``(i) there exists a reasonable justification for the 
                act or omission; and
                  ``(ii) the act or omission will be cured within a 
                reasonable time fixed by the court not to exceed 30 
                days after the court decides the motion, unless the 
                movant expressly consents to a continuance for a 
                specific period of time, or compelling circumstances 
                beyond the control of the debtor justify an extension.
  ``(3) For purposes of this subsection, cause includes--
          ``(A) substantial or continuing loss to or diminution of the 
        estate;
          ``(B) gross mismanagement of the estate;
          ``(C) failure to maintain insurance that poses a material 
        risk to the estate or the public;
          ``(D) unauthorized use of cash collateral harmful to 1 or 
        more creditors;
          ``(E) failure to comply with an order of the court;
          ``(F) failure timely to satisfy any filing or reporting 
        requirement established by this title or by any rule applicable 
        to a case under this chapter;
          ``(G) failure to attend the meeting of creditors convened 
        under section 341(a) of this title;
          ``(H) failure timely to provide information or attend 
        meetings reasonably requested by the United States trustee or 
        bankruptcy administrator;
          ``(I) failure timely to pay taxes due after the date of the 
        order for relief or to file tax returns due after the order for 
        relief;
          ``(J) failure to file a disclosure statement, or to file or 
        confirm a plan, within the time fixed by this title or by order 
        of the court;
          ``(K) failure to pay any fees or charges required under 
        chapter 123 of title 28;
          ``(L) revocation of an order of confirmation under section 
        1144 of this title;
          ``(M) inability to effectuate substantial consummation of a 
        confirmed plan;
          ``(N) material default by the debtor with respect to a 
        confirmed plan; and
          ``(O) termination of a plan by reason of the occurrence of a 
        condition specified in the plan.
  ``(4) The court may grant relief under this subsection for cause as 
defined in subparagraphs C, F, G, H, or K of paragraph 3 of this 
subsection only upon motion of the United States trustee or bankruptcy 
administrator or upon the court s own motion.
  ``(5) The court shall commence the hearing on any motion under this 
subsection not later than 30 days after filing of the motion, and shall 
decide the motion within 15 days after commencement of the hearing, 
unless the movant expressly consents to a continuance for a specific 
period of time or compelling circumstances prevent the court from 
meeting the time limits established by this paragraph.''.
  (b) Additional Grounds for Appointment of Trustee or Examiner.--
Section 1104 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) If grounds exist to convert or dismiss the case under section 
1112 of this title, the court may instead appoint a trustee or 
examiner, if it determines that such appointment is in the best 
interests of creditors and the estate.''.

SEC. 414. STUDY OF OPERATION OF TITLE 11 OF THE UNITED STATES CODE WITH 
                    RESPECT TO SMALL BUSINESSES.

  Not later than 2 years after the date of the enactment of this Act, 
the Administrator of the Small Business Administration, in consultation 
with the Attorney General, the Director of the Administrative Office of 
United States Trustees, and the Director of the Administrative Office 
of the United States Courts, shall--
          (1) conduct a study to determine--
                  (A) the internal and external factors that cause 
                small businesses, especially sole proprietorships, to 
                become debtors in cases under title 11 of the United 
                States Code and that cause certain small businesses to 
                successfully complete cases under chapter 11 of such 
                title; and
                  (B) how Federal laws relating to bankruptcy may be 
                made more effective and efficient in assisting small 
                businesses to remain viable; and
          (2) submit to the President pro tempore of the Senate and the 
        Speaker of the House of Representatives a report summarizing 
        that study.

SEC. 415. PAYMENT OF INTEREST.

  Section 362(d)(3) of title 11, United States Code, is amended--
          (1) by inserting ``or 30 days after the court determines that 
        the debtor is subject to this paragraph, whichever is later'' 
        after ``90-day period)''; and
          (2) by amending subparagraph (B) to read as follows:
                  ``(B) the debtor has commenced monthly payments 
                (which payments may, in the debtor's sole discretion, 
                notwithstanding section 363(c)(2) of this title, be 
                made from rents or other income generated before or 
                after the commencement of the case by or from the 
                property) to each creditor whose claim is secured by 
                such real estate (other than a claim secured by a 
                judgment lien or by an unmatured statutory lien), which 
                payments are in an amount equal to interest at the 
                then-applicable nondefault contract rate of interest on 
                the value of the creditor's interest in the real 
                estate; or''

                TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS

SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETITION.

  (a) Technical Amendment Relating to Municipalities.--Section 921(d) 
of title 11, United States Code, is amended by inserting 
``notwithstanding section 301(b)'' before the period at the end.
  (b) Conforming Amendment.--Section 301 of title 11, United States 
Code, is amended--
          (1) by inserting ``(a)'' before ``A voluntary''; and
          (2) by amending the last sentence to read as follows:
  ``(b) The commencement of a voluntary case under a chapter of this 
title constitutes an order for relief under such chapter.''.

SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 9.

  Section 901(a) of title 11, United States Code, is amended--
          (1) by inserting ``555, 556,'' after ``553,''; and
          (2) by inserting ``559, 560, 561, 562'' after ``557,''.

              TITLE VI--STREAMLINING THE BANKRUPTCY SYSTEM

SEC. 601. CREDITOR REPRESENTATION AT FIRST MEETING OF CREDITORS.

  Section 341(c) of title 11, United States Code, is amended by 
inserting after the first sentence the following: ``Notwithstanding any 
local court rule, provision of a State constitution, any other Federal 
or State law that is not a bankruptcy law, or other requirement that 
representation at the meeting of creditors under subsection (a) be by 
an attorney, a creditor holding a consumer debt or any representative 
of the creditor (which may include an entity or an employee of an 
entity and may be a representative for more than one creditor) shall be 
permitted to appear at and participate in the meeting of creditors and 
activities related thereto in a case under chapter 7 or 13, either 
alone or in conjunction with an attorney for the creditor Nothing in 
this subsection shall be construed to require any creditor to be 
represented by an attorney at any meeting of creditors.''.

SEC. 602. AUDIT PROCEDURES.

  (a) Amendments.--Section 586 of title 28, United States Code, is 
amended--
          (1) in subsection (a) by amending striking paragraph (6) to 
        read as follows:
          ``(6) make such reports as the Attorney General directs, 
        including the results of audits performed under subsection (f); 
        and''; and
          (2) by adding at the end the following:
  ``(f)(1)(A) The Attorney General shall establish procedures to 
determine the accuracy, veracity, and completeness of petitions, 
schedules, and other information which the debtor is required to 
provide under sections 521 and 1322 of title 11, and, if applicable, 
section 111 of title 11, in individual cases filed under chapter 7 or 
13 of such title Such audits shall be in accordance with generally 
accepted auditing standards and performed by independent certified 
public accountants or independent licensed public accountants.
  ``(B) Those procedures shall--
          ``(i) establish a method of selecting appropriate qualified 
        persons to contract to perform those audits;
          ``(ii) establish a method of randomly selecting cases to be 
        audited, except that not less than 1 out of every 250 cases in 
        each Federal judicial district shall be selected for audit;
          ``(iii) require audits for schedules of income and expenses 
        which reflect greater than average variances from the 
        statistical norm of the district in which the schedules were 
        filed; and
          ``(iv) establish procedures for providing, not less 
        frequently than annually, public information concerning the 
        aggregate results of such audits including the percentage of 
        cases, by district, in which a material misstatement of income 
        or expenditures is reported.
  ``(2) The United States trustee for each district is authorized to 
contract with auditors to perform audits in cases designated by the 
United States trustee according to the procedures established under 
paragraph (1).
  ``(3)(A) The report of each audit conducted under this subsection 
shall be filed with the court and transmitted to the United States 
trustee Each report shall clearly and conspicuously specify any 
material misstatement of income or expenditures or of assets identified 
by the person performing the audit In any case where a material 
misstatement of income or expenditures or of assets has been reported, 
the clerk of the bankruptcy court shall give notice of the misstatement 
to the creditors in the case.
  ``(B) If a material misstatement of income or expenditures or of 
assets is reported, the United States trustee shall--
          ``(i) report the material misstatement, if appropriate, to 
        the United States Attorney pursuant to section 3057 of title 
        18, United States Code; and
          ``(ii) if advisable, take appropriate action, including but 
        not limited to commencing an adversary proceeding to revoke the 
        debtor's discharge pursuant to section 727(d) of title 11, 
        United States Code.''.
  (b) Amendments to Section 521 of Title 11, U.S.C.--Section 521(a) of 
title 11, United States Code, as amended by section 603, is amended in 
paragraphs (3) and (4) by adding ``or an auditor appointed pursuant to 
section 586 of title 28, United States Code'' after ``serving in the 
case''.
  (c) Amendments to Section 727 of Title 11, U.S.C.--Section 727(d) of 
title 11, United States Code, is amended--
          (1) by deleting ``or'' at the end of paragraph (2);
          (2) by substituting ``; or'' for the period at the end of 
        paragraph (3); and
          (3) by adding the following at the end the following:
          ``(4) the debtor has failed to explain satisfactorily--
                  ``(A) a material misstatement in an audit performed 
                pursuant to section 586(f) of title 28, United States 
                Code; or
                  ``(B) a failure to make available for inspection all 
                necessary accounts, papers, documents, financial 
                records, files, and all other papers, things, or 
                property belonging to the debtor that are requested for 
                an audit conducted pursuant to section 586(f) of title 
                28, United States Code.''.
  (d) Effective Date.--The amendments made by this section shall take 
effect 18 months after the date of enactment of this Act.

SEC. 603. GIVING CREDITORS FAIR NOTICE IN CHAPTER 7 AND 13 CASES.

  (a) Notice.--Section 342 of title 11, United States Code, is 
amended--
          (1) in subsection (c)--
                  (A) by striking ``, but the failure of such notice to 
                contain such information shall not invalidate the legal 
                effect of such notice''; and
                  (B) by adding the following at the end:
``If the credit agreement between the debtor and the creditor or the 
last communication before the filing of the petition in a voluntary 
case from the creditor to a debtor who is an individual states an 
account number of the debtor which is the current account number of the 
debtor with respect to any debt held by the creditor against the 
debtor, the debtor shall include such account number in any notice to 
the creditor required to be given under this title If the creditor has 
specified to the debtor an address at which the creditor wishes to 
receive correspondence regarding the debtor's account, any notice to 
the creditor required to be given by the debtor under this title shall 
be given at such address For the purposes of this section, `notice' 
shall include, but shall not be limited to, any correspondence from the 
debtor to the creditor after the commencement of the case, any 
statement of the debtor's intention under section 521(a)(2) of this 
title, notice of the commencement of any proceeding in the case to 
which the creditor is a party, and any notice of the hearing under 
section 1324 of this title.'';
          (2) by adding at the end the following:
  ``(d) At any time, a creditor in a case of an individual debtor under 
chapter 7 or 13 may file with the court and serve on the debtor a 
notice of the address to be used to notify the creditor in that case 
After 5 days following receipt of such notice, any notice the court or 
the debtor is required to give the creditor shall be given at that 
address.
  ``(e) An entity may file with the court a notice stating its address 
for notice in cases under chapters 7 and 13 After 30 days following the 
filing of such notice, any notice in any case filed under chapter 7 or 
13 given by the court shall be to that address unless specific notice 
is given under subsection (d) with respect to a particular case.
  ``(f) Notice given to a creditor other than as provided in this 
section shall not be effective notice until it has been brought to the 
attention of the creditor If the creditor has designated a person or 
department to be responsible for receiving notices concerning 
bankruptcy cases and has established reasonable procedures so that
    bankruptcy notices received by the creditor will be delivered to 
such department or person, notice will not be brought to the attention 
of the creditor until received by such person or department No sanction 
under section 362(h) of this title or any other sanction which a court 
may impose on account of violations of the stay under section 362(a) of 
this title or failure to comply with section 542 or 543 of this title 
may be imposed on any action of the creditor unless the action takes 
place after the creditor has received notice of the commencement of the 
case effective under this section.''.
  (b) Debtor's Duties.--Section 521 of title 11, United States Code, as 
amended by sections 604, 120, and 302, is amended--
          (1) by inserting ``(a)'' before ``The debtor shall--'';
          (2) by striking paragraph (1) and inserting the following:
          ``(1) file--
                  ``(A) a list of creditors; and
                  ``(B) unless the court orders otherwise--
                          ``(i) a schedule of assets and liabilities;
                          ``(ii) a schedule of current monthly income 
                        and current expenditures prepared in accordance 
                        with section 707(b)(2);
                          ``(iii) a statement of the debtor's financial 
                        affairs and, if applicable, a certificate--
                                  ``(I) of an attorney whose name is on 
                                the petition as the attorney for the 
                                debtor or any bankruptcy petition 
                                preparer signing the petition pursuant 
                                to section 110(b)(1) of this title 
                                indicating that such attorney or 
                                bankruptcy petition preparer delivered 
                                to the debtor any notice required by 
                                section 342(b) of this title; or
                                  ``(II) if no attorney for the debtor 
                                is indicated and no bankruptcy petition 
                                preparer signed the petition, of the 
                                debtor that such notice was obtained 
                                and read by the debtor;
                          ``(iv) copies of any Federal tax returns, 
                        including any schedules or attachments, filed 
                        by the debtor for the 3-year period preceding 
                        the order for relief;
                          ``(v) copies of all payment advices or other 
                        evidence of payment, if any, received by the 
                        debtor from any employer of the debtor in the 
                        period 60 days prior to the filing of the 
                        petition; and
                          ``(vi) a statement disclosing any reasonably 
                        anticipated increase in income or expenditures 
                        over the 12-month period following the date of 
                        filing;'';
          (3) by adding at the end the following:
  ``(e)(1) At any time, a creditor, in the case of an individual under 
chapter 7 or 13, may file with the court notice that the creditor 
requests the petition, schedules, and a statement of affairs filed by 
the debtor in the case and the court shall make those documents 
available to the creditor who requests those documents at a reasonable 
cost within 5 business days after such request.
  ``(2) At any time, a creditor in a case under chapter 13 may file 
with the court notice that the creditor requests the plan filed by the 
debtor in the case, and the court shall make such plan available to the 
creditor who requests such plan at a reasonable cost and not later than 
5 days after such request
  ``(f) An individual debtor in a case under chapter 7 or 13 shall file 
with the court--
          ``(1) at the time filed with the taxing authority, all tax 
        returns, including any schedules or attachments, with respect 
        to the period from the commencement of the case until such time 
        as the case is closed;
          ``(2) at the time filed with the taxing authority, all tax 
        returns, including any schedules or attachments, that were not 
        filed with the taxing authority when the schedules under 
        subsection (a)(1) were filed with respect to the period that is 
        3 years before the order for relief;
          ``(3) any amendments to any of the tax returns, including 
        schedules or attachments, described in paragraph (1) or (2); 
        and
          ``(4) in a case under chapter 13, a statement subject to the 
        penalties of perjury by the debtor of the debtor's current 
        monthly income and expenditures in the preceding tax year and 
        current monthly income less expenditures for the month 
        preceding the statement prepared in accordance with section 
        707(b)(2) that shows how the amounts are calculated--
                  ``(A) beginning on the date that is the later of 90 
                days after the close of the debtor's tax year or 1 year 
                after the order for relief, unless a plan has been 
                confirmed; and
                  ``(B) thereafter, on or before the date that is 45 
                days before each anniversary of the confirmation of the 
                plan until the case is closed
  ``(g)(1) A statement referred to in subsection (f)(4) shall 
disclose--
          ``(A) the amount and sources of income of the debtor;
          ``(B) the identity of any persons responsible with the debtor 
        for the support of any dependents of the debtor; and
          ``(C) the identity of any persons who contributed, and the 
        amount contributed, to the household in which the debtor 
        resides
  ``(2) The tax returns, amendments, and statement of income and 
expenditures described in paragraph (1) shall be available to the 
United States trustee, any bankruptcy administrator, any trustee, and 
any party in interest for inspection and copying, subject to the 
requirements of subsection (h).
  ``(h)(1) Not later than 30 days after the date of enactment of the 
Consumer Bankruptcy Reform Act of 1999, the Director of the 
Administrative Office of the United States Courts shall establish 
procedures for safeguarding the confidentiality of any tax information 
required to be provided under this section.
  ``(2) The procedures under paragraph (1) shall include reasonable 
restrictions on creditor access to tax information that is required to 
be provided under this section to verify creditor identity and to 
restrict use of the information except with respect to the case.
  ``(3) Not later than 1 year after the date of enactment of the 
Consumer Bankruptcy Reform Act of 1999, the Director of the 
Administrative Office of the United States Courts shall prepare, and 
submit to Congress a report that--
          ``(A) assesses the effectiveness of the procedures under 
        paragraph (1) to provide timely and sufficient information to 
        creditors concerning the case; and
          ``(B) if appropriate, includes proposed legislation--
                  ``(i) to further protect the confidentiality of tax 
                information or to make it better available to 
                creditors; and
                  ``(ii) to provide penalties for the improper use by 
                any person of the tax information required to be 
                provided under this section.
  ``(i) If requested by the United States trustee or a trustee serving 
in the case, the debtor provide a document that establishes the 
identity of the debtor, including a driver's license, passport, or 
other document that contains a photograph of the debtor and such other 
personal identifying information relating to the debtor that 
establishes the identity of the debtor.''.
  (c) Section 1324 of title 11, United States Code, is amended--
          (1) by inserting ``(a)'' before ``After''; and
          (2) by inserting at the end thereof--
  ``(c) Whenever a party in interest is given notice of a hearing on 
the confirmation or modification of a plan under this chapter, such 
notice shall include the information provided by the debtor on the most 
recent statement filed with the court pursuant to section 
521(a)(1)(B)(ii) or (f)(4) of this title.''.

SEC. 604. DISMISSAL FOR FAILURE TO TIMELY FILE SCHEDULES OR PROVIDE 
                    REQUIRED INFORMATION.

  Section 521 of title 11, United States Code, as amended by section 
603 is amended by inserting after subsection (a) the following:
  ``(b)(1) Notwithstanding section 707(a) of this title, and subject to 
paragraph (2), if an individual debtor in a voluntary case under 
chapter 7 or 13 fails to file all of the information required under 
subsection (a)(1) within 45 days after the filing of the petition 
commencing the case, the case shall be automatically dismissed 
effective on the 46th day after the filing of the petition.
  ``(2) With respect to a case described in paragraph (1), any party in 
interest may request the court to enter an order dismissing the case 
The court shall, if so requested, enter an order of dismissal not later 
than 5 days after such request
  ``(3) Upon request of the debtor made within 45 days after the filing 
of the petition commencing a case described in paragraph (1), the court 
may allow the debtor an additional period not to exceed 45 days to file 
the information required under subsection (a)(1) if the court finds 
justification for extending the period for the filing.''.

SEC. 605. ADEQUATE TIME TO PREPARE FOR HEARING ON CONFIRMATION OF THE 
                    PLAN.

  (a) Hearing.--Section 1324 of title 11, United States Code, is 
amended--
          (1) by striking ``After'' and inserting the following:
  ``(a) Except as provided in subsection (b) and after''; and
          (2) by adding at the end the following:
  ``(b) The hearing on confirmation of the plan may be held not earlier 
than 20 days, and not later than 45 days, after the meeting of 
creditors under section 341(a) of this title.''.

SEC. 606. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION IN CERTAIN CASES.

  Title 11, United States Code, is amended--
          (1) by amending section 1322(d) to read as follows:
  ``(d) If the current monthly income of the debtor and the debtor's 
spouse combined, when multiplied by 12, is not less than the highest 
national median family income last reported by the Bureau of the Census 
for a family of equal or lesser size or, in the case of a household of 
1 person, not less than the national median household income for 1 
earner, the plan may not provide for payments over a period that is 
longer than 5 years If the current monthly income of the debtor and the 
debtor's spouse combined, when multiplied by 12, is less than the 
highest national median family income for a family of equal or lesser 
size, or in the case of a household of 1 person, the national median 
household income for 1 earner, the plan may not provide for payments 
over a period that is longer than 3 years, unless the court, for cause, 
approves a longer period, but the court may not approve a period that 
is longer than 5 years Notwithstanding the foregoing, the national 
median family income for a family of more than 4 individuals shall be 
the national median family income last reported by the Bureau of the 
Census for a family of 4 individuals plus $583 for each additional 
member of the family.'';
          (2) in section 1325(b)(1)(B) as amended by section 130--
                  (A) by striking ``three year period'' and inserting 
                ``applicable commitment period''; and
                  (B) by inserting at the end of subparagraph (B) the 
                following: ``The `applicable commitment period' shall 
                be not less than 5 years if the current monthly income 
                of the debtor and the debtor's spouse combined, when 
                multiplied by 12, is not less than the highest national 
                median family income last reported by the Bureau of the 
                Census for a family of equal or lesser size, or in the 
                case of a household of 1 person, the national median 
                household income for 1 earner Notwithstanding the 
                foregoing, the national median family income for a 
                family of more than 4 individuals shall be the national 
                median family income last reported by the Bureau of the 
                Census for a family of 4 individuals plus $583 for each 
                additional member of the family.''; and
          (3) in section 1329--
                  (A) by striking in subsection (c) ``three years'' and 
                inserting ``the applicable commitment period under 
                section 1325(b)(1)(B)''; and
                  (B) by inserting at the end of subsection (c) the 
                following:
``The duration period shall be 5 years if the current monthly income of 
the debtor and the debtor's spouse combined, when multiplied by 12, is 
not less than the highest national median family income last reported 
by the Bureau of the Census for a family of equal or lesser size or, in 
the case of a household of 1 person, the national median household 
income for 1 earner, as of the date of the modification and shall be 3 
years if the current monthly total income of the debtor and the 
debtor's spouse combined, when multiplied by 12, is less than the 
highest national median family income last reported by the Bureau of 
the Census for a family of equal or lesser size or, in the case of a 
household of 1 person, less than the national median household income 
for 1 earner as of the date of the modification Notwithstanding the 
foregoing, the national median family income for a family of more than 
4 individuals shall be the national median family income last reported 
by the Bureau of the Census for a family of 4 individuals plus $583 for 
each additional member of the family.''.

SEC. 607. SENSE OF THE CONGRESS REGARDING EXPANSION OF RULE 9011 OF THE 
                    FEDERAL RULES OF BANKRUPTCY PROCEDURE.

  It is the sense of the Congress that rule 9011 of the Federal Rules 
of Bankruptcy Procedure (11 U.S.C App) should be modified to include a 
requirement that all documents (including schedules), signed and 
unsigned, submitted to the court or to a trustee by debtors who 
represent themselves and debtors who are represented by an attorney be 
submitted only after the debtor or the debtor's attorney has made 
reasonable inquiry to verify that the information contained in such 
documents is well grounded in fact, and is warranted by existing law or 
a good-faith argument for the extension, modification, or reversal of 
existing law.

SEC. 608. ELIMINATION OF CERTAIN FEES PAYABLE IN CHAPTER 11 BANKRUPTCY 
                    CASES.

  (a) Amendments.--Section 1930(a)(6) of title 28, United States Code, 
is amended--
          (1) in the 1st sentence by striking ``until the case is 
        converted or dismissed, whichever occurs first''; and
          (2) in the 2d sentence--
                  (A) by striking ``The'' and inserting ``Until the 
                plan is confirmed or the case is converted (whichever 
                occurs first) the''; and
                  (B) by striking ``less than $300,000;'' and inserting 
                ``less than $300,000 Until the case is converted, 
                dismissed, or closed (whichever occurs first and 
                without regard to confirmation of the plan) the fee 
                shall be''.
  (b) Delayed Effective Date.--The amendments made by subsection (a) 
shall take effect on October 1, 1999.

SEC. 609. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO DEPENDENT 
                    STUDENTS.

  Not later than 1 year after the date of the enactment of this Act, 
the Comptroller General of the United States shall--
          (1) conduct a study regarding the impact that the extension 
        of credit to individuals who are--
                  (A) claimed as dependents for purposes of the 
                Internal Revenue Code of 1986; and
                  (B) enrolled in post-secondary educational 
                institutions,
        has on the rate of cases filed under title 11 of the United 
        States Code; and
          (2) submit to the Speaker of the House of Representatives and 
        the President pro tempore of the Senate a report summarizing 
        such study.

SEC. 610. PROMPT RELIEF FROM STAY IN INDIVIDUAL CASES.

  Section 362(e) of title 11, United States Code, is amended--
          (1) by inserting ``(1)'' after ``(e)''; and
          (2) by adding at the end the following:
  ``(2) Notwithstanding paragraph (1), in the case of an individual 
filing under chapter 7, 11, or 13, the stay under subsection (a) shall 
terminate on the date that is 60 days after a request is made by a 
party in interest under subsection (d), unless--
          ``(A) a final decision is rendered by the court during the 
        60-day period beginning on the date of the request; or
          ``(B) that 60-day period is extended--
                  ``(i) by agreement of all parties in interest; or
                  ``(ii) by the court for such specific period of time 
                as the court finds is required by for good cause as 
                described in findings made by the court.''.

SEC. 611. STOPPING ABUSIVE CONVERSIONS FROM CHAPTER 13.

  Section 348(f)(1) of title 11, United States Code, is amended--
          (1) in subparagraph (A), by striking ``and'' at the end;
          (2) in subparagraph (B)--
                  (A) by striking ``in the converted case, with allowed 
                secured claims'' and inserting ``only in a case 
                converted to chapter 11 or 12 but not in a case 
                converted to chapter 7, with allowed secured claims in 
                cases under chapters 11 and 12''; and
                  (B) by striking the period and inserting ``; and''; 
                and
          (3) by adding at the end the following:
          ``(C) with respect to cases converted from chapter 13--
                  ``(i) the claim of any creditor holding security as 
                of the date of the petition shall continue to be 
                secured by that security unless the full amount of such 
                claim determined under applicable nonbankruptcy law has 
                been paid in full as of the date of conversion, 
                notwithstanding any valuation or determination of the 
                amount of an allowed secured claim made for the 
                purposes of the chapter 13 proceeding; and
                  ``(ii) unless a prebankruptcy default has been fully 
                cured pursuant to the plan at the time of conversion, 
                in any proceeding under this title or otherwise, the 
                default shall have the effect given under applicable 
                nonbankruptcy law.''.

SEC. 612. BANKRUPTCY APPEALS.

  Title 28 of the United States Code is amended by inserting after 
section 1292 the following:

``Sec. 1293 Bankruptcy appeals

  ``(a) The courts of appeals (other than the United States Court of 
Appeals for the Federal Circuit) shall have jurisdiction of appeals 
from the following:
          ``(1) Final orders and judgments entered by bankruptcy courts 
        and district courts in cases under title 11, in proceedings 
        arising under title 11, and in proceedings arising in or 
        related to a case under title 11, including final orders in 
        proceedings regarding the automatic stay of section 362 of 
        title 11.
          ``(2) Interlocutory orders entered by bankruptcy courts and 
        district courts granting, continuing, modifying, refusing or 
        dissolving injunctions, or refusingto dissolve or modify 
injunctions in cases under title 11, in proceedings arising under title 
11, and in proceedings arising in or related to a case under title 11, 
other than interlocutory orders in proceedings regarding the automatic 
stay of section 362 of title 11.
          ``(3) Interlocutory orders of bankruptcy courts and district 
        courts entered under section 1104(a) or 1121(d) of title 11, or 
        the refusal to enter an order under such section.
          ``(4) An interlocutory order of a bankruptcy court or 
        district court entered in a case under title 11, in a 
        proceeding arising under title 11, or in a proceeding arising 
        in or related to a case under title 11, if the court of appeals 
        that would have jurisdiction of an appeal of a final order 
        entered in such case or such proceeding permits, in its 
        discretion, appeal to be taken from such interlocutory order.
  ``(b) Final decisions, judgments, orders, and decrees entered by a 
bankruptcy appellate panel under subsection (b) of this section.
  ``(c)(1) The judicial council of a circuit may establish a bankruptcy 
appellate panel composed of bankruptcy judges in the circuit who are 
appointed by the judicial council, which panel shall exercise the 
jurisdiction to review orders and judgments of bankruptcy courts 
described in paragraphs (1)-(4) of subsection (a) of this section 
unless--
          ``(A) the appellant elects at the time of filing the appeal; 
        or
          ``(B) any other party elects, not later than 10 days after 
        service of the notice of the appeal;
to have such jurisdiction exercised by the court of appeals.
  ``(2) An appeal to be heard by a bankruptcy appellate panel under 
this subsection (b) shall be heard by 3 members of the bankruptcy 
appellate panel, provided that a member of such panel may not hear an 
appeal originating in the district for which such member is appointed 
or designated under section 152 of this title.
  ``(3) If authorized by the Judicial Conference of the United States, 
the judicial councils of 2 or more circuits may establish a joint 
bankruptcy appellate panel.''.

SEC. 613. GAO STUDY.

  (a) Study.--Not later than 270 days after the date of the enactment 
of this Act, the Comptroller General of the United States shall conduct 
a study of the feasibility, effectiveness, and cost of requiring 
trustees appointed under title 11 of the United States Code, or the 
bankruptcy courts, to provide to the Office of Child Support 
Enforcement promptly after the commencement of cases by individual 
debtors under such title, the names and social security numbers of such 
debtors for the purposes of allowing such Office to determine whether 
such debtors have outstanding obligations for child support (as 
determined on the basis of information in the Federal Case Registry or 
other national database).
  (b) Report.--Not later than 300 days after the date of the enactment 
of this Act, the Comptroller General shall submit to the Speaker of the 
House of Representatives and the President pro tempore of the Senate, a 
report containing the results of the study required by subsection (a).

                       TITLE VII--BANKRUPTCY DATA

SEC. 701. IMPROVED BANKRUPTCY STATISTICS.

  (a) Amendment.--Chapter 6 of part I of title 28, United States Code, 
is amended by adding at the end the following:

``Sec. 159. Bankruptcy statistics

  ``(a) The clerk of each district shall compile statistics regarding 
individual debtors with primarily consumer debts seeking relief under 
chapters 7, 11, and 13 of title 11 Those statistics shall be in a form 
prescribed by the Director of the Administrative Office of the United 
States Courts (referred to in this section as the `Office')
  ``(b) The Director shall--
          ``(1) compile the statistics referred to in subsection (a);
          ``(2) make the statistics available to the public; and
          ``(3) not later than October 31, 2000, and annually 
        thereafter, prepare, and submit to Congress a report concerning 
        the information collected under subsection (a) that contains an 
        analysis of the information.
  ``(c) The compilation required under subsection (b) shall--
          ``(1) be itemized, by chapter, with respect to title 11;
          ``(2) be presented in the aggregate and for each district; 
        and
          ``(3) include information concerning--
                  ``(A) the total assets and total liabilities of the 
                debtors described in subsection (a), and in each 
                category of assets and liabilities, as reported in the 
                schedules prescribed pursuant to section 2075 of this 
                title and filed by those debtors;
                  ``(B) the current monthly income, and average income 
                and average expenses of those debtors as reported on 
                the schedules and statements that each such debtor 
                files under sections 521 and 1322 of title 11;
                  ``(C) the aggregate amount of debt discharged in the 
                reporting period, determined as the difference between 
                the total amount of debt and obligations of a debtor 
                reported on the schedules and the amount of such debt 
                reported in categories which are predominantly 
                nondischargeable;
                  ``(D) the average period of time between the filing 
                of the petition and the closing of the case;
                  ``(E) for the reporting period--
                          ``(i) the number of cases in which a 
                        reaffirmation was filed; and
                          ``(ii)(I) the total number of reaffirmations 
                        filed;
                          ``(II) of those cases in which a 
                        reaffirmation was filed, the number in which 
                        the debtor was not represented by an attorney; 
                        and
                          ``(III) of those cases, the number of cases 
                        in which the reaffirmation was approved by the 
                        court;
                  ``(F) with respect to cases filed under chapter 13 of 
                title 11, for the reporting period--
                          ``(i)(I) the number of cases in which a final 
                        order was entered determining the value of 
                        property securing a claim in an amount less 
                        than the amount of the claim; and
                          ``(II) the number of final orders determining 
                        the value of property securing a claim issued;
                          ``(ii) the number of cases dismissed, the 
                        number of cases dismissed for failure to make 
                        payments under the plan, the number of cases 
                        refiled after dismissal, and the number of 
                        cases in which the plan was completed, 
                        separately itemized with respect to the number 
                        of modifications made before completion of the 
                        plan, if any; and
                          ``(iii) the number of cases in which the 
                        debtor filed another case within the 6 years 
                        previous to the filing;
                  ``(G) the number of cases in which creditors were 
                fined for misconduct and any amount of punitive damages 
                awarded by the court for creditor misconduct; and
                  ``(H) the number of cases in which sanctions under 
                rule 9011 of the Federal Rules of Bankruptcy Procedure 
                were imposed against debtor's counsel and damages 
                awarded under such Rule.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 6 of title 28, United States Code, is amended by adding at the 
end the following:

``159. Bankruptcy statistics.''.

  (c) Effective Date.--The amendments made by this section shall take 
effect 18 months after the date of enactment of this Act.

SEC. 702. UNIFORM RULES FOR THE COLLECTION OF BANKRUPTCY DATA.

  (a) Amendment.--Title 28 of the United States Code is amended by 
inserting after section 589a the following:

``Sec. 589b. Bankruptcy data

  ``(a) Rules.--The Attorney General shall, within a reasonable time 
after the effective date of this section, issue rules requiring uniform 
forms for (and from time to time thereafter to appropriately modify and 
approve)--
          ``(1) final reports by trustees in cases under chapters 7, 
        12, and 13 of title 11; and
          ``(2) periodic reports by debtors in possession or trustees, 
        as the case may be, in cases under chapter 11 of title 11.
  ``(b) Reports.--All reports referred to in subsection (a) shall be 
designed (and the requirements as to place and manner of filing shall 
be established) so as to facilitate compilation of data and maximum 
possible access of the public, both by physical inspection at 1 or more 
central filing locations, and by electronic access through the Internet 
or other appropriate media.
  ``(c) Required Information.--The information required to be filed in 
the reports referred to in subsection (b) shall be that which is in the 
best interests of debtors and creditors, and in the public interest in 
reasonable and adequate information to evaluate the efficiency and 
practicality of the Federal bankruptcy system Inissuing rules proposing 
the forms referred to in subsection (a), the Attorney General shall 
strike the best achievable practical balance between--
          ``(1) the reasonable needs of the public for information 
        about the operational results of the Federal bankruptcy system; 
        and
          ``(2) economy, simplicity, and lack of undue burden on 
        persons with a duty to file reports.
  ``(d) Final Reports.--Final reports proposed for adoption by trustees 
under chapters 7, 12, and 13 of title 11 shall, in addition to such 
other matters as are required by law or as the Attorney General in the 
discretion of the Attorney General, shall propose, include with respect 
to a case under such title--
          ``(1) information about the length of time the case was 
        pending;
          ``(2) assets abandoned;
          ``(3) assets exempted;
          ``(4) receipts and disbursements of the estate;
          ``(5) expenses of administration;
          ``(6) claims asserted;
          ``(7) claims allowed; and
          ``(8) distributions to claimants and claims discharged 
        without payment,
in each case by appropriate category and, in cases under chapters 12 
and 13 of title 11, date of confirmation of the plan, each modification 
thereto, and defaults by the debtor in performance under the plan.
  ``(e) Periodic Reports.--Periodic reports proposed for adoption by 
trustees or debtors in possession under chapter 11 of title 11 shall, 
in addition to such other matters as are required by law or as the 
Attorney General, in the discretion of the Attorney General, shall 
propose, include--
          ``(1) information about the standard industry classification, 
        published by the Department of Commerce, for the businesses 
        conducted by the debtor;
          ``(2) length of time the case has been pending;
          ``(3) number of full-time employees as at the date of the 
        order for relief and at end of each reporting period since the 
        case was filed;
          ``(4) cash receipts, cash disbursements and profitability of 
        the debtor for the most recent period and cumulatively since 
        the date of the order for relief;
          ``(5) compliance with title 11, whether or not tax returns 
        and tax payments since the date of the order for relief have 
        been timely filed and made;
          ``(6) all professional fees approved by the court in the case 
        for the most recent period and cumulatively since the date of 
        the order for relief (separately reported, in for the 
        professional fees incurred by or on behalf of the debtor, 
        between those that would have been incurred absent a bankruptcy 
        case and those not); and
          ``(7) plans of reorganization filed and confirmed and, with 
        respect thereto, by class, the recoveries of the holders, 
        expressed in aggregate dollar values and, in the case of 
        claims, as a percentage of total claims of the class 
        allowed.''.
  (b) Technical Amendment.--The table of sections of chapter 39 of 
title 28, United States Code, is amended by adding at the end the 
following:

``589b. Bankruptcy data.''.

SEC. 703. SENSE OF THE CONGRESS REGARDING AVAILABILITY OF BANKRUPTCY 
                    DATA.

  It is the sense of the Congress that--
          (1) the national policy of the United States should be that 
        all data held by bankruptcy clerks in electronic form, to the 
        extent such data reflects only public records (as defined in 
        section 107 of title 11 of the United States Code), should be 
        released in a usable electronic form in bulk to the public 
        subject to such appropriate privacy concerns and safeguards as 
        the Judicial Conference of the United States may determine; and
          (2) there should be established a bankruptcy data system in 
        which--
                  (A) a single set of data definitions and forms are 
                used to collect data nationwide; and
                  (B) data for any particular bankruptcy case are 
                aggregated in the same electronic record.

                 TITLE VIII--BANKRUPTCY TAX PROVISIONS

SEC. 801. TREATMENT OF CERTAIN LIENS.

  (a) Treatment of Certain Liens.--Section 724 of title 11, United 
States Code, is amended--
          (1) in subsection (b), in the matter preceding paragraph (1), 
        by inserting ``(other than to the extent that there is a 
        properly perfected unavoidable tax lien arising in connection 
        with an ad valorem tax on real or personal property of the 
        estate)'' after ``under this title'';
          (2) in subsection (b)(2), after ``507(a)(1)'', insert 
        ``(except that such expenses, other than claims for wages, 
        salaries, or commissions which arise after the filing of a 
        petition, shall be limited to expenses incurred under chapter 7 
        of this title and shall not include expenses incurred under 
        chapter 11 of this title)''; and
          (3) by adding at the end the following:
  ``(e) Before subordinating a tax lien on real or personal property of 
the estate, the trustee shall--
          ``(1) exhaust the unencumbered assets of the estate; and
          ``(2) in a manner consistent with section 506(c) of this 
        title, recover from property securing an allowed secured claim 
        the reasonable, necessary costs and expenses of preserving or 
        disposing of that property.
  ``(f) Notwithstanding the exclusion of ad valorem tax liens set forth 
in this section and subject to the requirements of subsection (e)--
          ``(1) claims for wages, salaries, and commissions that are 
        entitled to priority under section 507(a)(3) of this title; or
          ``(2) claims for contributions to an employee benefit plan 
        entitled to priority under section 507(a)(4) of this title,
may be paid from property of the estate which secures a tax lien, or 
the proceeds of such property.''.
  (b) Determination of Tax Liability.--Section 505(a)(2) of title 11, 
United States Code, is amended--
          (1) in subparagraph (A), by striking ``or'' at the end;
          (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; or''; and
          (3) by adding at the end the following:
          ``(C) the amount or legality of any amount arising in 
        connection with an ad valorem tax on real or personal property 
        of the estate, if the applicable period for contesting or 
        redetermining that amountunder any law (other than a bankruptcy 
law) has expired.''.

SEC. 802. EFFECTIVE NOTICE TO GOVERNMENT.

  (a) Effective Notice to Governmental Units.--Section 342 of title 11, 
United States Code, as amended by section 603, is amended by adding at 
the end the following:
  ``(g) If a debtor lists a governmental unit as a creditor in a list 
or schedule, any notice required to be given by the debtor under this 
title, any rule, any applicable law, or any order of the court, shall 
identify the department, agency, or instrumentality through which the 
debtor is indebted The debtor shall identify (with information such as 
a taxpayer identification number, loan, account or contract number, or 
real estate parcel number, where applicable), and describe the 
underlying basis for the governmental unit's claim If the debtor's 
liability to a governmental unit arises from a debt or obligation owed 
or incurred by another individual, entity, or organization, or under a 
different name, the debtor shall identify such individual, entity, 
organization, or name.
  ``(h) The clerk shall keep and update quarterly, in the form and 
manner as the Director of the Administrative Office of the United 
States Courts prescribes, and make available to debtors, a register in 
which a governmental unit may designate a safe harbor mailing address 
for service of notice in cases pending in the district A governmental 
unit may file a statement with the clerk designating a safe harbor 
address to which notices are to be sent, unless such governmental unit 
files a notice of change of address.''.
  (b) Adoption of Rules Providing Notice.--The Advisory Committee on 
Bankruptcy Rules of the Judicial Conference shall, within a reasonable 
period of time after the date of the enactment of this Act, propose for 
adoption enhanced rules for providing notice to State, Federal, and 
local government units that have regulatory authority over the debtor 
or which may be creditors in the debtor's case Such rules shall be 
reasonably calculated to ensure that notice will reach the 
representatives of the governmental unit, or subdivision thereof, who 
will be the proper persons authorized to act upon the notice At a 
minimum, the rules should require that the debtor--
          (1) identify in the schedules and the notice, the 
        subdivision, agency, or entity in respect of which such notice 
        should be received;
          (2) provide sufficient information (such as case captions, 
        permit numbers, taxpayer identification numbers, or similar 
        identifying information) to permit the governmental unit or 
        subdivision thereof, entitled to receive such notice, to 
        identify the debtor or the person or entity on behalf of which 
        the debtor is providing notice where the debtor may be a 
        successor in interest or may not be the same as the person or 
        entity which incurred the debt or obligation; and
          (3) identify, in appropriate schedules, served together with 
        the notice, the property in respect of which the claim or 
        regulatory obligation may have arisen, if any, the nature of 
        such claim or regulatory obligation and the purpose for which 
        notice is being given.
  (c) Effect of Failure of Notice.--Section 342 of title 11, United 
States Code, as amended by section 603 and subsection (a), is amended 
by adding at the end the following:
  ``(i) A notice that does not comply with subsections (d) and (e) 
shall not be effective unless the debtor demonstrates, by clear and 
convincing evidence, that timely notice was given in a manner 
reasonably calculated to satisfy the requirements of this section was 
given, and that--
          ``(1) either the notice was timely sent to the safe harbor 
        address provided in the register maintained by the clerk of the 
        district in which the case was pending for such purposes; or
          ``(2) no safe harbor address was provided in such list for 
        the governmental unit and that an officer of the governmental 
        unit who is responsible for the matter or claim had actual 
        knowledge of the case in sufficient time to act.''.

SEC. 803. NOTICE OF REQUEST FOR A DETERMINATION OF TAXES.

  Section 505(b) of title 11, United States Code, is amended by 
striking ``Unless'' at the beginning of the second sentence thereof and 
inserting ``If the request is made substantially in the manner 
designated by the governmental unit and unless''.

SEC. 804. RATE OF INTEREST ON TAX CLAIMS.

  (a) Amendment.--Chapter 5 of title 11, United States Code, is amended 
by adding at the end the following:

``Sec. 511. Rate of interest on tax claims

  ``If any provision of this title requires the payment of interest on 
a tax claim or requires the payment of interest to enable a creditor to 
receive the present value of the allowed amount of a tax claim, the 
rate of interest shall be as follows:
          ``(1) In the case of ad valorem tax claims, whether secured 
        or unsecured, other unsecured tax claims where interest is 
        required to be paid under section 726(a)(5) of this title, 
        secured tax claims, and administrative tax claims paid under 
        section 503(b)(1) of this title, the rate shall be determined 
        under applicable nonbankruptcy law.
          ``(2) In the case of all other tax claims, the minimum rate 
        of interest shall be the Federal short-term rate rounded to the 
        nearest full percent, determined under section 1274(d) of the 
        Internal Revenue Code of 1986, plus 3 percentage points.
                  ``(A) In the case of claims for Federal income taxes, 
                such rate shall be subject to any adjustment that may 
                be required under section 6621(d) of the Internal 
                Revenue Code of 1986.
                  ``(B) In the case of taxes paid under a confirmed 
                plan or reorganization, such rate shall be determined 
                as of the calendar month in which the plan is 
                confirmed.''.
  (b) Conforming Amendment.--The table of sections of chapter 5 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 510 the following:

``511. Rate of interest on tax claims.''.

SEC. 805. TOLLING OF PRIORITY OF TAX CLAIM TIME PERIODS.

  Section 507(a)(8)(A) of title 11, United States Code, as so 
redesignated, is amended--
          (1) in clause (i) by inserting after ``petition'' and before 
        the semicolon ``, plus any time, plus 6 months, during which 
        the stay of proceedings was in effect in a prior case under 
        this title''; and
          (2) amend clause (ii) to read as follows:
                          ``(ii) assessed within 240 days before the 
                        date of the filing of the petition, exclusive 
                        of--
                                  ``(I) any time plus 30 days during 
                                which an offer in compromise with 
                                respect of such tax, was pending or in 
                                effect during such 240-day period;
                                  ``(II) any time plus 30 days during 
                                which an installment agreement with 
                                respect of such tax was pending or in 
                                effect during such 240-day period, up 
                                to 1 year; and
                                  ``(III) any time plus 6 months during 
                                which a stay of proceedings against 
                                collections was in effect in a prior 
                                case under this title during such 240-
                                day period.''.

SEC. 806. PRIORITY PROPERTY TAXES INCURRED.

  Section 507(a)(8)(B) of title 11, United States Code, is amended by 
striking ``assessed'' and inserting ``incurred''.

SEC. 807. CHAPTER 13 DISCHARGE OF FRAUDULENT AND OTHER TAXES.

  Section 1328(a)(2) of title 11, United States Code, is amended by 
inserting ``(1),'' after ``paragraph''.

SEC. 808. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.

  Section 1141(d) of title 11, United States Code, is amended by adding 
at the end the following:
  ``(6) Notwithstanding the provisions of paragraph (1), the 
confirmation of a plan does not discharge a debtor which is a 
corporation from any debt for a tax or customs duty with respect to 
which the debtor made a fraudulent return or willfully attempted in any 
manner to evade or defeat such tax.''.

SEC. 809. STAY OF TAX PROCEEDINGS.

  (a) Section 362 Stay Limited to Prepetition Taxes.--Section 362(a)(8) 
of title 11, United States Code, is amended by striking the period at 
the end and inserting ``, in respect of a tax liability for a taxable 
period ending before the order for relief.''.
  (b) Appeal of Tax Court Decisions Permitted.--Section 362(b)(9) of 
title 11, United States Code, is amended--
          (1) in subparagraph (C) by striking ``or'' at the end;
          (2) in subparagraph (D) by striking the period at the end and 
        inserting ``; or''; and
          (3) by adding at the end the following:
                  ``(E) the appeal of a decision by a court or 
                administrative tribunal which determines a tax 
                liability of the debtor without regard to whether such 
                determination was made prepetition or postpetition.''.

SEC. 810. PERIODIC PAYMENT OF TAXES IN CHAPTER 11 CASES.

  Section 1129(a)(9) of title 11, United States Code, is amended--
          (1) in subparagraph (B) by striking ``and'' at the end; and
          (2) in subparagraph (C)--
                  (A) by striking ``deferred cash payments, over a 
                period not exceeding six years after the date of 
                assessment of such claim,'' and inserting ``regular 
                installment payments in cash, but in no case with a 
                balloon provision, and no more than three months apart, 
                beginning no later than the effective date of the plan 
                and ending on the earlier of five years after the 
                petition date or the last date payments are to be made 
                under the plan to unsecured creditors,'';
                  (B) by striking the period at the end and inserting 
                ``; and''; and
          (3) by adding at the end the following:
                  ``(D) with respect to a secured claim which would be 
                described in section 507(a)(8) of this title but for 
                its secured status, the holder of such claim will 
                receive on account of such claim cash payments of not 
                less than is required in subparagraph (C) and over a 
                period no greater than is required in such 
                subparagraph.''.

SEC. 811. AVOIDANCE OF STATUTORY TAX LIENS PROHIBITED.

  Section 545(2) of title 11, United States Code, is amended by 
striking the semicolon at the end and inserting ``, except where such 
purchaser is a purchaser described in section 6323 of the Internal 
Revenue Code of 1986 or similar provision of State or local law;''.

SEC. 812. PAYMENT OF TAXES IN THE CONDUCT OF BUSINESS.

  (a) Payment of Taxes Required.--Section 960 of title 28, United 
States Code, is amended--
          (1) by inserting ``(a)'' before ``Any''; and
          (2) by adding at the end the following:
  ``(b) Such taxes shall be paid when due in the conduct of such 
business unless--
          ``(1) the tax is a property tax secured by a lien against 
        property that is abandoned within a reasonable time after the 
        lien attaches, by the trustee of a bankruptcy estate, pursuant 
        to section 554 of title 11; or
          ``(2) payment of the tax is excused under a specific 
        provision of title 11.
  ``(c) In a case pending under chapter 7 of title 11, payment of a tax 
may be deferred until final distribution is made under section 726 of 
title 11 if--
          ``(1) the tax was not incurred by a trustee duly appointed 
        under chapter 7 of title 11; or
          ``(2) before the due date of the tax, the court has made a 
        finding of probable insufficiency of funds of the estate to pay 
        in full the administrative expenses allowed under section 
        503(b) of title 11 that have the same priority in distribution 
        under section 726(b) of title 11 as such tax.''.
  (b) Payment of Ad Valorem Taxes Required.--Section 503(b)(1)(B) of 
title 11, United States Code, is amended in clause (i) by inserting 
after ``estate,'' and before ``except'' the following: ``whether 
secured or unsecured, including property taxes for which liability is 
in rem only, in personam or both,''.
  (c) Request for Payment of Administrative Expense Taxes Eliminated.--
Section 503(b)(1) of title 11, United States Code, is amended by adding 
at the end the following:
          ``(D) notwithstanding the requirements of subsection (a) of 
        this section, a governmental unit shall not be required to file 
        a request for the payment of a claim described in subparagraph 
        (B) or (C);''.
  (d) Payment of Taxes and Fees as Secured Claims.--Section 506 of 
title 11, United States Code, is amended--
          (1) in subsection (b) by inserting ``or State statute'' after 
        ``agreement''; and
          (2) in subsection (c) by inserting ``, including the payment 
        of all ad valorem property taxes in respect of the property'' 
        before the period at the end.

SEC. 813. TARDILY FILED PRIORITY TAX CLAIMS.

  Section 726(a)(1) of title 11, United States Code, is amended by 
striking ``before the date on which the trustee commences distribution 
under this section'' and inserting ``on or before the earlier of 10 
days after the mailing to creditors of the summary of the trustee's 
final report or the date on which the trustee commences final 
distribution under this section''.

SEC. 814. INCOME TAX RETURNS PREPARED BY TAX AUTHORITIES.

  Section 523(a)(1)(B) of title 11, United States Code, is amended--
          (1) by inserting ``or equivalent report or notice,'' after 
        ``a return,'';
          (2) in clause (i)--
                  (A) by inserting ``or given'' after ``filed''; and
                  (B) by striking ``or'' at the end;
          (3) in clause (ii)--
                  (A) by inserting ``or given'' after ``filed''; and
                  (B) by inserting ``, report, or notice'' after 
                ``return''; and
          (4) by adding at the end the following:
                          ``(iii) for purposes of this subsection, a 
                        return--
                                  ``(I) must satisfy the requirements 
                                of applicable nonbankruptcy law, and 
                                includes a return prepared pursuant to 
                                section 6020(a) of the Internal Revenue 
                                Code of 1986, or similar State or local 
                                law, or a written stipulation to a 
                                judgment entered by a nonbankruptcy 
                                tribunal, but does not include a return 
                                made pursuant to section 6020(b) of the 
                                Internal Revenue Code of 1986, or 
                                similar State or local law; and
                                  ``(II) must have been filed in a 
                                manner permitted by applicable 
                                nonbankruptcy law; or''.

SEC. 815. DISCHARGE OF THE ESTATE'S LIABILITY FOR UNPAID TAXES.

  Section 505(b) of title 11, United States Code, is amended in the 
second sentence by inserting ``the estate,'' after 
``misrepresentation,''.

SEC. 816. REQUIREMENT TO FILE TAX RETURNS TO CONFIRM CHAPTER 13 PLANS.

  (a) Filing of Prepetition Tax Returns Required for Plan 
Confirmation.--Section 1325(a) of title 11, United States Code, as 
amended by section 140, is amended--
          (1) in paragraph (6) by striking ``and'' at the end;
          (2) in paragraph (7) by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(8) if the debtor has filed all Federal, State, and local 
        tax returns as required by section 1308 of this title.''.
  (b) Additional Time Permitted for Filing Tax Returns.--(1) Chapter 13 
of title 11, United States Code, as amended by section 135, is amended 
by adding at the end the following:

``Sec. 1308. Filing of prepetition tax returns

  ``(a) On or before the day prior to the day on which the first 
meeting of the creditors is convened under section 341(a) of this 
title, the debtor shall have filed with appropriate tax authorities all 
tax returns for all taxable periods ending in the 3-year period ending 
on the date of filing of the petition.
  ``(b) If the tax returns required by subsection (a) have not been 
filed by the date on which the first meeting of creditors is convened 
under section 341(a) of this title, the trustee may continue such 
meeting for a reasonable period of time, to allow the debtor additional 
time to file any unfiled returns, but such additional time shall be no 
more than--
          ``(1) for returns that are past due as of the date of the 
        filing of the petition, 120 days from such date;
          ``(2) for returns which are not past due as of the date of 
        the filing of the petition, the later of 120 days from such 
        date or the due date for such returns under the last automatic 
        extension of time for filing such returns to which the debtor 
        is entitled, and for which request has been timely made, 
        according to applicable nonbankruptcy law; and
          ``(3) upon notice and hearing, and order entered before the 
        lapse of any deadline fixed according to this subsection, where 
        the debtor demonstrates, by clear and convincing evidence, that 
        the failure to file the returns as required is because of 
        circumstances beyond the control of the debtor, the court may 
        extend the deadlines set by the trustee as provided in this 
        subsection for--
                  ``(A) a period of no more than 30 days for returns 
                described in paragraph (1) of this subsection; and
                  ``(B) for no more than the period of time ending on 
                the applicable extended due date for the returns 
                described in paragraph (2).
  ``(c) For purposes of this section only, a return includes a return 
prepared pursuant to section 6020 (a) or (b) of the Internal Revenue 
Code of 1986 or similar State or local law, or a written stipulation to 
a judgment entered by a nonbankruptcy tribunal.''.
  (2) The table of sections of chapter 13 of title 11, United States 
Code, is amended by inserting after the item relating to section 1307 
the following:

``1308. Filing of prepetition tax returns.''.

  (c) Dismissal or Conversion on Failure To Comply.--Section 1307 of 
title 11, United States Code, is amended--
          (1) by redesignating subsections (e) and (f) as subsections 
        (f) and (g), respectively; and
          (2) by inserting after subsection (d) the following:
  ``(e) Upon the failure of the debtor to file tax returns under 
section 1308 of this title, on request of a party in interest or the 
United States trustee and after notice and a hearing, the court shall 
dismiss a case or convert a case under this chapter to a case under 
chapter 7 of this title, whichever is in the best interests of 
creditors and the estate.''.
  (d) Timely Filed Claims.--Section 502(b)(9) of title 11, United 
States Code, is amended by striking the period at the end and inserting 
``, and except that in a case under chapter 13 of this title, a claim 
of a governmental unit for a tax in respect of a return filed under 
section 1308 of this title shall be timely if it is filed on or before 
60 days after such return or returns were filed as required.''.
  (e) Rules for Objections to Claims and to Confirmation.--It is the 
sense of the Congress that the Advisory Committee on Bankruptcy Rules 
of the Judicial Conference should, within a reasonable period of time 
after the date of the enactment of this Act, propose for adoption 
amended Federal Rules of Bankruptcy Procedure which provide that--
          (1) notwithstanding the provisions of Rule 3015(f), in cases 
        under chapter 13 of title 11, United States Code, a 
        governmental unit may object to the confirmation of a plan on 
        or before 60 days after the debtor files all tax returns 
        required under sections 1308 and 1325(a)(7) of title 11, United 
        States Code; and
          (2) in addition to the provisions of Rule 3007, in a case 
        under chapter 13 of title 11, United States Code, no objection 
        to a tax in respect of a return required to be filed under such 
        section 1308 shall be filed until such return has been filed as 
        required.

SEC. 817. STANDARDS FOR TAX DISCLOSURE.

  Section 1125(a) of title 11, United States Code, is amended in 
paragraph (1)--
          (1) by inserting after ``records,'' the following: 
        ``including a full discussion of the potential material 
        Federal, State, and local tax consequences of the plan to the 
        debtor, any successor to the debtor, and a hypothetical 
        investor domiciled in the State in which the debtor resides or 
        has its principal place of business typical of the holders of 
        claims or interests in the case,'';
          (2) by inserting ``such'' after ``enable''; and
          (3) by striking ``reasonable'' where it appears after 
        ``hypothetical'' and by striking ``typical of holders of claims 
        or interests'' after ``investor''.

SEC. 818. SETOFF OF TAX REFUNDS.

  Section 362(b) of title 11, United States Code, as amended by 
sections 118, 132, 136, and 203, is amended--
          (1) in paragraph (29) by striking ``or'';
          (2) in paragraph (30) by striking the period at the end and 
        inserting ``; or''; and
          (3) by inserting after paragraph (30) the following:
          ``(31) under subsection (a) of the setoff of an income tax 
        refund, by a governmental unit, in respect of a taxable period 
        which ended before the order for relief against an income tax 
        liability for a taxable period which also ended before the 
        order for relief, unless--
                  ``(A) prior to such setoff, an action to determine 
                the amount or legality of such tax liability under 
                section 505(a) was commenced; or
                  ``(B) where the setoff of an income tax refund is not 
                permitted because of a pending action to determine the 
                amount or legality of a tax liability, the governmental 
                unit may hold the refund pending the resolution of the 
                action.''.

            TITLE IX--ANCILLARY AND OTHER CROSS-BORDER CASES

SEC. 901. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, UNITED STATES CODE.

  (a) In General.--Title 11, United States Code, is amended by 
inserting after chapter 13 the following:

          ``CHAPTER 15--ANCILLARY AND OTHER CROSS-BORDER CASES

``Sec.
``1501. Purpose and scope of application.

                   ``SUBCHAPTER I--GENERAL PROVISIONS

``1502. Definitions.
``1503. International obligations of the United States.
``1504. Commencement of ancillary case.
``1505. Authorization to act in a foreign country.
``1506. Public policy exception.
``1507. Additional assistance.
``1508. Interpretation.

``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE 
                                 COURT

``1509. Right of direct access.
``1510. Limited jurisdiction.
``1511. Commencement of case under section 301 or 303.
``1512. Participation of a foreign representative in a case under this 
title.
``1513. Access of foreign creditors to a case under this title.
``1514. Notification to foreign creditors concerning a case under this 
title.

    ``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

``1515. Application for recognition of a foreign proceeding.
``1516. Presumptions concerning recognition.
``1517. Order recognizing a foreign proceeding.
``1518. Subsequent information.
``1519. Relief that may be granted upon petition for recognition of a 
foreign proceeding.
``1520. Effects of recognition of a foreign main proceeding.
``1521. Relief that may be granted upon recognition of a foreign 
proceeding.
``1522. Protection of creditors and other interested persons.
``1523. Actions to avoid acts detrimental to creditors.
``1524. Intervention by a foreign representative.

     ``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                            REPRESENTATIVES

``1525. Cooperation and direct communication between the court and 
foreign courts or foreign representatives.
``1526. Cooperation and direct communication between the trustee and 
foreign courts or foreign representatives.
``1527. Forms of cooperation.

                 ``SUBCHAPTER V--CONCURRENT PROCEEDINGS

``1528. Commencement of a case under this title after recognition of a 
foreign main proceeding.
``1529. Coordination of a case under this title and a foreign 
proceeding.
``1530. Coordination of more than 1 foreign proceeding.
``1531. Presumption of insolvency based on recognition of a foreign 
main proceeding.
``1532. Rule of payment in concurrent proceedings.

``Sec. 1501. Purpose and scope of application

  ``(a) The purpose of this chapter is to incorporate the Model Law on 
Cross-Border Insolvency so as to provide effective mechanisms for 
dealing with cases of cross-border insolvency with the objectives of--
          ``(1) cooperation between--
                  ``(A) United States courts, United States trustees, 
                trustees, examiners, debtors, and debtors in 
                possession; and
                  ``(B) the courts and other competent authorities of 
                foreign countries involved in cross-border insolvency 
                cases;
          ``(2) greater legal certainty for trade and investment;
          ``(3) fair and efficient administration of cross-border 
        insolvencies that protects the interests of all creditors, and 
        other interested entities, including the debtor;
          ``(4) protection and maximization of the value of the 
        debtor's assets; and
          ``(5) facilitation of the rescue of financially troubled 
        businesses, thereby protecting investment and preserving 
        employment.
  ``(b) This chapter applies where--
          ``(1) assistance is sought in the United States by a foreign 
        court or a foreign representative in connection with a foreign 
        proceeding;
          ``(2) assistance is sought in a foreign country in connection 
        with a case under this title;
          ``(3) a foreign proceeding and a case under this title with 
        respect to the same debtor are taking place concurrently; or
          ``(4) creditors or other interested persons in a foreign 
        country have an interest in requesting the commencement of, or 
        participating in, a case or proceeding under this title.
  ``(c) This chapter does not apply to--
          ``(1) a proceeding concerning an entity identified by 
        exclusion in subsection 109(b);
          ``(2) an individual, or to an individual and such 
        individual's spouse, who have debts within the limits specified 
        in section 109(e) and who are citizens of the United States or 
        aliens lawfully admitted for permanent residence in the United 
        States; or
          ``(3) an entity subject to a proceeding under the Securities 
        Investor Protection Act, a stockbroker subject to subchapter 
        III of chapter 7 of this title, or a commodity broker subject 
        to subchapter IV of chapter 7 of this title.

                   ``SUBCHAPTER I--GENERAL PROVISIONS

``Sec. 1502. Definitions

  ``For the purposes of this chapter, the term--
          ``(1) `debtor' means an entity that is the subject of a 
        foreign proceeding;
          ``(2) `establishment' means any place of operations where the 
        debtor carries out a nontransitory economic activity;
          ``(3) `foreign court' means a judicial or other authority 
        competent to control or supervise a foreign proceeding;
          ``(4) `foreign main proceeding' means a foreign proceeding 
        taking place in the country where the debtor has the center of 
        its main interests;
          ``(5) `foreign nonmain proceeding' means a foreign 
        proceeding, other than a foreign main proceeding, taking place 
        in a country where the debtor has an establishment;
          ``(6) `trustee' includes a trustee, a debtor in possession in 
        a case under any chapter of this title, or a debtor under 
        chapter 9 of this title; and
          ``(7) `within the territorial jurisdiction of the United 
        States' when used with reference to property of a debtor refers 
        to tangible property located within the territory of the United 
        States and intangible property deemed under applicable 
        nonbankruptcy law to be located within that territory, 
        including any property subject to attachment or garnishment 
        that may properly be seized or garnished by an action in a 
        Federal or State court in the United States.

``Sec. 1503. International obligations of the United States

  ``To the extent that this chapter conflicts with an obligation of the 
United States arising out of any treaty or other form of agreement to 
which it is a party with 1 or more other countries, the requirements of 
the treaty or agreement prevail.

``Sec. 1504. Commencement of ancillary case

  ``A case under this chapter is commenced by the filing of a petition 
for recognition of a foreign proceeding under section 1515.

``Sec. 1505. Authorization to act in a foreign country

  ``A trustee or another entity (including an examiner) may be 
authorized by the court to act in a foreign country on behalf of an 
estate created under section 541 An entity authorized to act under this 
section may act in any way permitted by the applicable foreign law.

``Sec. 1506. Public policy exception

  ``Nothing in this chapter prevents the court from refusing to take an 
action governed by this chapter if the action would be manifestly 
contrary to the public policy of the United States.

``Sec. 1507. Additional assistance

  ``(a) Subject to the specific limitations stated elsewhere in this 
chapter the court, upon recognition of a foreign proceeding, the court 
may provide additional assistance to a foreign representative under 
this title or under other laws of the United States.
  ``(b) In determining whether to provide additional assistance under 
this title or under other laws of the United States, the court shall 
consider whether such additional assistance, consistent with the 
principles of comity, will reasonably assure--
          ``(1) just treatment of all holders of claims against or 
        interests in the debtor's property;
          ``(2) protection of claim holders in the United States 
        against prejudice and inconvenience in the processing of claims 
        in such foreign proceeding;
          ``(3) prevention of preferential or fraudulent dispositions 
        of property of the debtor;
          ``(4) distribution of proceeds of the debtor's property 
        substantially in accordance with the order prescribed by this 
        title; and
          ``(5) if appropriate, the provision of an opportunity for a 
        fresh start for the individual that such foreign proceeding 
        concerns.

``Sec. 1508. Interpretation

  ``In interpreting this chapter, the court shall consider its 
international origin, and the need to promote an application of this 
chapter that is consistent with the application of similar statutes 
adopted by foreign jurisdictions.

``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE 
                                 COURT

``Sec. 1509. Right of direct access

  ``(a) A foreign representative may commence a case under section 1504 
of this title by filing with the court a petition for recognition of a 
foreign proceeding under section 1515 of this title.
  ``(b) If the court grants recognition under section 1515 of this 
title, and subject to any limitations that the court may impose 
consistent with the policy of this chapter--
          ``(1) the foreign representative has the capacity to sue and 
        be sued in a court in the United States;
          ``(2) the foreign representative may apply directly to a 
        court in the United States for appropriate relief in that 
        court; and
          ``(3) a court in the United States shall grant comity or 
        cooperation to the foreign representative.
  ``(c) A request for comity or cooperation by a foreign representative 
in a court in the United States shall be accompanied by a certified 
copy of an order granting recognition under section 1517 of this title.
  ``(d) If the court denies recognition under this chapter, the court 
may issue any appropriate order necessary to prevent the foreign 
representative from obtaining comity or cooperation from courts in the 
United States.
  ``(e) Whether or not the court grants recognition, and subject to 
sections 306 and 1510 of this title, a foreign representative is 
subject to applicable nonbankruptcy law.
  ``(f) Notwithstanding any other provision of this section, the 
failure of a foreign representative to commence a case or to obtain 
recognition under this chapter does not affect any right the foreign 
representative may have to sue in a court in the United State to 
collect or recover a claim which is the property of the debtor.''.

``Sec. 1510. Limited jurisdiction

  ``The sole fact that a foreign representative files a petition under 
section 1515 does not subject the foreign representative to the 
jurisdiction of any court in the United States for any other purpose.

``Sec. 1511. Commencement of case under section 301 or 303

  ``(a) Upon recognition, a foreign representative may commence--
          ``(1) an involuntary case under section 303; or
          ``(2) a voluntary case under section 301 or 302, if the 
        foreign proceeding is a foreign main proceeding.
  ``(b) The petition commencing a case under subsection (a) must be 
accompanied by certified copy of an order granting recognition The 
court where the petition for recognition has been filed must be advised 
of the foreign representative's intent to commence a case under 
subsection (a) prior to such commencement.

``Sec. 1512. Participation of a foreign representative in a case under 
                    this title

  ``Upon recognition of a foreign proceeding, the foreign 
representative in that proceeding is entitled to participate as a party 
in interest in a case regarding the debtor under this title.

``Sec. 1513. Access of foreign creditors to a case under this title

  ``(a) Foreign creditors have the same rights regarding the 
commencement of, and participation in, a case under this title as 
domestic creditors.
  ``(b)(1) Subsection (a) does not change or codify present law as to 
the priority of claims under section 507 or 726 of this title, except 
that the claim of a foreign creditor under those sections shall not be 
given a lower priority than that of general unsecured claims without 
priority solely because the holder of such claim is a foreign creditor.
  ``(2)(A) Subsection (a) and paragraph (1) do not change or codify 
present law as to the allowability of foreign revenue claims or other 
foreign public law claims in a proceeding under this title.
  ``(B) Allowance and priority as to a foreign tax claim or other 
foreign public law claim shall be governed by any applicable tax treaty 
of the United States, under the conditions and circumstances specified 
therein.

``Sec. 1514. Notification to foreign creditors concerning a case under 
                    this title

  ``(a) Whenever in a case under this title notice is to be given to 
creditors generally or to any class or category of creditors, such 
notice shall also be given to the known creditors generally, or to 
creditors in the notified class or category, that do not have addresses 
in the United States The court may order that appropriate steps be 
taken with a view to notifying any creditor whose address is not yet 
known.
  ``(b) Such notification to creditors with foreign addresses described 
in subsection (a) shall be given individually, unless the court 
considers that, under the circumstances, some other form of 
notification would be more appropriate No letters rogatory or other 
similar formality is required.
  ``(c) When a notification of commencement of a case is to be given to 
foreign creditors, the notification shall--
          ``(1) indicate the time period for filing proofs of claim and 
        specify the place for their filing;
          ``(2) indicate whether secured creditors need to file their 
        proofs of claim; and
          ``(3) contain any other information required to be included 
        in such a notification to creditors under this title and the 
        orders of the court.
  ``(d) Any rule of procedure or order of the court as to notice or the 
filing of a claim shall provide such additional time to creditors with 
foreign addresses as is reasonable under the circumstances.

    ``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

``Sec. 1515. Application for recognition of a foreign proceeding

  ``(a) A foreign representative applies to the court for recognition 
of the foreign proceeding in which the foreign representative has been 
appointed by filing a petition for recognition.
  ``(b) A petition for recognition shall be accompanied by--
          ``(1) a certified copy of the decision commencing the foreign 
        proceeding and appointing the foreign representative;
          ``(2) a certificate from the foreign court affirming the 
        existence of the foreign proceeding and of the appointment of 
        the foreign representative; or
          ``(3) in the absence of evidence referred to in paragraphs 
        (1) and (2), any other evidence acceptable to the court of the 
        existence of the foreign proceeding and of the appointment of 
        the foreign representative.
  ``(c) A petition for recognition shall also be accompanied by a 
statement identifying all foreign proceedings with respect to the 
debtor that are known to the foreign representative.
  ``(d) The documents referred to in paragraphs (1) and (2) of 
subsection (b) must be translated into English The court may require a 
translation into English of additional documents.

``Sec. 1516. Presumptions concerning recognition

  ``(a) If the decision or certificate referred to in section 1515(b) 
indicates that the foreign proceeding is a foreign proceeding as 
defined in section 101 and that the person or body is a foreign 
representative as defined in section 101, the court is entitled to so 
presume.
  ``(b) The court is entitled to presume that documents submitted in 
support of the petition for recognition are authentic, whether or not 
they have been legalized.
  ``(c) In the absence of evidence to the contrary, the debtor's 
registered office, or habitual residence in the case of an individual, 
is presumed to be the center of the debtor's main interests.

``Sec. 1517. Order recognizing a foreign proceeding

  ``(a) Subject to section 1506, after notice and a hearing an order 
recognizing a foreign proceeding shall be entered if--
          ``(1) the foreign proceeding is a foreign main proceeding or 
        foreign nonmain proceeding within the meaning of section 1502;
          ``(2) the foreign representative applying for recognition is 
        a person or body as defined in section 101; and
          ``(3) the petition meets the requirements of section 1515.
  ``(b) The foreign proceeding shall be recognized--
          ``(1) as a foreign main proceeding if it is taking place in 
        the country where the debtor has the center of its main 
        interests; or
          ``(2) as a foreign nonmain proceeding if the debtor has an 
        establishment within the meaning of section 1502 in the foreign 
        country where the proceeding is pending.
  ``(c) A petition for recognition of a foreign proceeding shall be 
decided upon at the earliest possible time Entry of an order 
recognizing a foreign proceeding constitutes recognition under this 
chapter.
  ``(d) The provisions of this subchapter do not prevent modification 
or termination of recognition if it is shown that the grounds for 
granting it were fully or partially lacking or have ceased to exist, 
but in considering such action the court shall give due weight to 
possible prejudice to parties that have relied upon the granting of 
recognition The case under this chapter may be closed in the manner 
prescribed under section 350.

``Sec. 1518. Subsequent information

  ``From the time of filing the petition for recognition of the foreign 
proceeding, the foreign representative shall file with the court 
promptly a notice of change of status concerning--
          ``(1) any substantial change in the status of the foreign 
        proceeding or the status of the foreign representative's 
        appointment; and
          ``(2) any other foreign proceeding regarding the debtor that 
        becomes known to the foreign representative.

``Sec. 1519. Relief that may be granted upon petition for recognition 
                    of a foreign proceeding

  ``(a) From the time of filing a petition for recognition until the 
court rules on the petition, the court may, at the request of the 
foreign representative, where relief is urgently needed to protect the 
assets of the debtor or the interests of the creditors, grant relief of 
a provisional nature, including--
          ``(1) staying execution against the debtor's assets;
          ``(2) entrusting the administration or realization of all or 
        part of the debtor's assets located in the United States to the 
        foreign representative or another person authorized by the 
        court, including an examiner, in order to protect and preserve 
        the value of assets that, by their nature or because of 
othercircumstances, are perishable, susceptible to devaluation or 
otherwise in jeopardy; and
          ``(3) any relief referred to in paragraph (3), (4), or (7) of 
        section 1521(a).
  ``(b) Unless extended under section 1521(a)(6), the relief granted 
under this section terminates when the petition for recognition is 
decided upon.
  ``(c) It is a ground for denial of relief under this section that 
such relief would interfere with the administration of a foreign main 
proceeding.
  ``(d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, under 
this section.
  ``(e) The standards, procedures, and limitations applicable to an 
injunction shall apply to relief under this section.

``Sec. 1520. Effects of recognition of a foreign main proceeding

  ``(a) Upon recognition of a foreign proceeding that is a foreign main 
proceeding--
          ``(1) sections 361 and 362 with respect to the debtor and 
        that property of the debtor that is within the territorial 
        jurisdiction of the United States;
          ``(2) sections 363, 549, and 552 of this title apply to a 
        transfer of an interest of the debtor in property that is 
        within the territorial jurisdiction of the United States to the 
        same extent that the sections would apply to property of an 
        estate;
          ``(3) unless the court orders otherwise, the foreign 
        representative may operate the debtor's business and may 
        exercise the rights and powers of a trustee under and to the 
        extent provided by sections 363 and 552; and
          ``(4) section 552 applies to property of the debtor that is 
        within the territorial jurisdiction of the United States.''.
  ``(b) Subsection (a) does not affect the right to commence an 
individual action or proceeding in a foreign country to the extent 
necessary to preserve a claim against the debtor.
  ``(c) Subsection (a) does not affect the right of a foreign 
representative or an entity to file a petition commencing a case under 
this title or the right of any party to file claims or take other 
proper actions in such a case.

``Sec. 1521. Relief that may be granted upon recognition of a foreign 
                    proceeding

  ``(a) Upon recognition of a foreign proceeding, whether main or 
nonmain, where necessary to effectuate the purpose of this chapter and 
to protect the assets of thedebtor or the interests of the creditors, 
the court may, at the request of the foreign representative, grant any 
appropriate relief, including--
          ``(1) staying the commencement or continuation of an 
        individual action or proceeding concerning the debtor's assets, 
        rights, obligations or liabilities to the extent they have not 
        been stayed under section 1520(a);
          ``(2) staying execution against the debtor's assets to the 
        extent it has not been stayed under section 1520(a);
          ``(3) suspending the right to transfer, encumber or otherwise 
        dispose of any assets of the debtor to the extent this right 
        has not been suspended under section 1520(a);
          ``(4) providing for the examination of witnesses, the taking 
        of evidence or the delivery of information concerning the 
        debtor's assets, affairs, rights, obligations or liabilities;
          ``(5) entrusting the administration or realization of all or 
        part of the debtor's assets within the territorial jurisdiction 
        of the United States to the foreign representative or another 
        person, including an examiner, authorized by the court;
          ``(6) extending relief granted under section 1519(a); and
          ``(7) granting any additional relief that may be available to 
        a trustee, except for relief available under sections 522, 544, 
        545, 547, 548, 550, and 724(a).
  ``(b) Upon recognition of a foreign proceeding, whether main or 
nonmain, the court may, at the request of the foreign representative, 
entrust the distribution of all or part of the debtor's assets located 
in the United States to the foreign representative or another person, 
including an examiner, authorized by the court, provided that the court 
is satisfied that the interests of creditors in the United States are 
sufficiently protected.
  ``(c) In granting relief under this section to a representative of a 
foreign nonmain proceeding, the court must be satisfied that the relief 
relates to assets that, under the law of the United States, should be 
administered in the foreign nonmain proceeding or concerns information 
required in that proceeding.
  ``(d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, under 
this section.
  ``(e) The standards, procedures, and limitations applicable to an 
injunction shall apply to relief under paragraphs (1), (2), (3), and 
(6) of subsection (a).

``Sec. 1522. Protection of creditors and other interested persons

  ``(a) The court may grant relief under section 1519 or 1521, or may 
modify or terminate relief under subsection (c), only if the interests 
of the creditors and other interested entities, including the debtor, 
are sufficiently protected.
  ``(b) The court may subject relief granted under section 1519 or 
1521, or the operation of the debtor's business under section 
1520(a)(3) of this title, to conditions it considers appropriate, 
including the giving of security or the filing of a bond.
  ``(c) The court may, at the request of the foreign representative or 
an entity affected by relief granted under section 1519 or 1521, or at 
its own motion, modify or terminate such relief.
  ``(d) Section 1104(d) shall apply to the appointment of an examiner 
under this chapter Any examiner shall comply with the qualification 
requirements imposed on a trustee by section 322.

``Sec. 1523. Actions to avoid acts detrimental to creditors

  ``(a) Upon recognition of a foreign proceeding, the foreign 
representative has standing in a case concerning the debtor pending 
under another chapter of this title to initiate actions under sections 
522, 544, 545, 547, 548, 550, and 724(a).
  ``(b) When the foreign proceeding is a foreign nonmain proceeding, 
the court must be satisfied that an action under subsection (a) relates 
to assets that, under United States law, should be administered in the 
foreign nonmain proceeding.

``Sec. 1524. Intervention by a foreign representative

  ``Upon recognition of a foreign proceeding, the foreign 
representative may intervene in any proceedings in a State or Federal 
court in the United States in which the debtor is a party.

     ``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                            REPRESENTATIVES

``Sec. 1525. Cooperation and direct communication between the court and 
                    foreign courts or foreign representatives

  ``(a) Consistent with section 1501, the court shall cooperate to the 
maximum extent possible with foreign courts or foreign representatives, 
either directly or through the trustee.
  ``(b) The court is entitled to communicate directly with, or to 
request information or assistance directly from, foreign courts or 
foreign representatives, subject to the rights of parties in interest 
to notice and participation.

``Sec. 1526. Cooperation and direct communication between the trustee 
                    and foreign courts or foreign representatives

  ``(a) Consistent with section 1501, the trustee or other person, 
including an examiner, authorized by the court, shall, subject to the 
supervision of the court, cooperate to the maximum extent possible with 
foreign courts or foreign representatives.
  ``(b) The trustee or other person, including an examiner, authorized 
by the court is entitled, subject to the supervision of the court, to 
communicate directly with foreign courts or foreign representatives.

``Sec. 1527. Forms of cooperation

  ``Cooperation referred to in sections 1525 and 1526 may be 
implemented by any appropriate means, including--
          ``(1) appointment of a person or body, including an examiner, 
        to act at the direction of the court;
          ``(2) communication of information by any means considered 
        appropriate by the court;
          ``(3) coordination of the administration and supervision of 
        the debtor's assets and affairs;
          ``(4) approval or implementation of agreements concerning the 
        coordination of proceedings; and
          ``(5) coordination of concurrent proceedings regarding the 
        same debtor.

                 ``SUBCHAPTER V--CONCURRENT PROCEEDINGS

``Sec. 1528. Commencement of a case under this title after recognition 
                    of a foreign main proceeding

  ``After recognition of a foreign main proceeding, a case under 
another chapter of this title may be commenced only if the debtor has 
assets in the United States The effects of such case shall be 
restricted to the assets of the debtor that are within the territorial 
jurisdiction of the United States and, to the extent necessary to 
implement cooperation and coordination under sections 1525, 1526, and 
1527, to other assets of the debtor that are within the jurisdiction of 
the court under sections 541(a) of this title, and 1334(e) of title 28, 
to the extent that such other assets are not subject to the 
jurisdiction and control of a foreign proceeding that has been 
recognized under this chapter.

``Sec. 1529. Coordination of a case under this title and a foreign 
                    proceeding

  ``Where a foreign proceeding and a case under another chapter of this 
title are taking place concurrently regarding the same debtor, the 
court shall seek cooperation and coordination under sections 1525, 
1526, and 1527, and the following shall apply:
          ``(1) When the case in the United States is taking place at 
        the time the petition for recognition of the foreign proceeding 
        is filed--
                  ``(A) any relief granted under sections 1519 or 1521 
                must be consistent with the relief granted in the case 
                in the United States; and
                  ``(B) even if the foreign proceeding is recognized as 
                a foreign main proceeding, section 1520 does not apply.
          ``(2) When a case in the United States under this title 
        commences after recognition, or after the filing of the 
        petition for recognition, of the foreign proceeding--
                  ``(A) any relief in effect under sections 1519 or 
                1521 shall be reviewed by the court and shall be 
                modified or terminated if inconsistent with the case in 
                the United States; and
                  ``(B) if the foreign proceeding is a foreign main 
                proceeding, the stay and suspension referred to in 
                section 1520(a) shall be modified or terminated if 
                inconsistent with the relief granted in the case in the 
                United States.
          ``(3) In granting, extending, or modifying relief granted to 
        a representative of a foreign nonmain proceeding, the court 
        must be satisfied that the relief relates to assets that, under 
        the law of the United States, should be administered in the 
        foreign nonmain proceeding or concerns information required in 
        that proceeding.
          ``(4) In achieving cooperation and coordination under 
        sections 1528 and 1529, the court may grant any of the relief 
        authorized under section 305.

``Sec. 1530. Coordination of more than 1 foreign proceeding

  ``In matters referred to in section 1501, with respect to more than 1 
foreign proceeding regarding the debtor, the court shall seek 
cooperation and coordination under sections 1525, 1526, and 1527, and 
the following shall apply:
          ``(1) Any relief granted under section 1519 or 1521 to a 
        representative of a foreign nonmain proceeding after 
        recognition of a foreign main proceeding must be consistent 
        with the foreign main proceeding.
          ``(2) If a foreign main proceeding is recognized after 
        recognition, or after the filing of a petition for recognition, 
        of a foreign nonmain proceeding, any relief in effect under 
        section 1519 or 1521 shall be reviewed by the court and shall 
        be modified or terminated if inconsistent with the foreign main 
        proceeding.
          ``(3) If, after recognition of a foreign nonmain proceeding, 
        another foreign nonmain proceeding is recognized, the court 
        shall grant, modify, or terminate relief for the purpose of 
        facilitating coordination of the proceedings.

``Sec. 1531. Presumption of insolvency based on recognition of a 
                    foreign main proceeding

  ``In the absence of evidence to the contrary, recognition of a 
foreign main proceeding is for the purpose of commencing a proceeding 
under section 303, proof that the debtor is generally not paying its 
debts as such debts become due.

``Sec. 1532. Rule of payment in concurrent proceedings

  ``Without prejudice to secured claims or rights in rem, a creditor 
who has received payment with respect to its claim in a foreign 
proceeding pursuant to a law relating to insolvency may not receive a 
payment for the same claim in a case under any other chapter of this 
title regarding the debtor, so long as the payment to othercreditors of 
the same class is proportionately less than the payment the creditor 
has already received.''.
  (b) Clerical Amendment.--The table of chapters for title 11, United 
States Code, is amended by inserting after the item relating to chapter 
13 the following:

``15. Ancillary and Other Cross-Border Cases................    1501''.

SEC. 902. AMENDMENTS TO OTHER CHAPTERS IN TITLE 11, UNITED STATES CODE.

  (a) Applicability of Chapters.--Section 103 of title 11, United 
States Code, is amended--
          (1) in subsection (a), by inserting before the period the 
        following: ``, and this chapter, sections 307, 304, 555 through 
        557, 559, and 560 apply in a case under chapter 15''; and
          (2) by adding at the end the following:
  ``(j) Chapter 15 applies only in a case under such chapter, except 
that--
          ``(1) sections 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.''.
  (b) Definitions.--Paragraphs (23) and (24) of title 11, United States 
Code, are amended to read as follows:
          ``(23) `foreign proceeding' means a collective judicial or 
        administrative proceeding in a foreign country, including an 
        interim proceeding, 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) `foreign representative' means a person or body, 
        including a person or body appointed on an interim basis, 
        authorized in a foreign proceeding to administer the 
        reorganization or the liquidation of the debtor's assets or 
        affairs or to act as a representative of the foreign 
        proceeding;''.
  (c) Amendments to Title 28, United States Code.--
          (1) Procedures.--Section 157(b)(2) of title 28, United States 
        Code, is amended--
                  (A) in subparagraph (N), by striking ``and'' at the 
                end;
                  (B) in subparagraph (O), by striking the period at 
                the end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(P) recognition of foreign proceedings and other matters 
        under chapter 15 of title 11.''.
          (2) Bankruptcy cases and proceedings.--Section 1334(c) of 
        title 28, United States Code, is amended by striking ``Nothing 
        in'' and inserting ``Except with respect to a case under 
        chapter 15 of title 11, nothing in''.
          (3) Duties of trustees.--Section 586(a)(3) of title 28, 
        United States Code, is amended by striking ``or 13'' and 
        inserting ``13, or 15,'' after ``chapter''.
          (4) Section 305(a)(2) of title 11, United States Code, is 
        amended to read:
          ``(2)(A) a petition under section 1515 of this title for 
        recognition of a foreign proceeding has been granted; and
          ``(B) the purposes of chapter 15 of this title would be best 
        served by such dismissal or suspension.''.
          (5) Section 508 of title 11, United States Code, is amended 
        by striking subsection (a) and by striking out the letter 
        ``(b)'' at the beginning of the second paragraph.

                 TITLE X--FINANCIAL CONTRACT PROVISIONS

SEC. 1001. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR --
                    RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS.

  (a) Definition of Qualified Financial Contract.--Section 
11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12 U.S.C 
1821(e)(8)(D)(i)) is amended by inserting ``, resolution or order'' 
after ``any similar agreement that the Corporation determines by 
regulation''.
  (b) Definition of Securities Contract.--Section 11(e)(8)(D)(ii) of 
the Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(ii)) is 
amended to read as follows:
                          ``(ii) Securities contract.--The term 
                        `securities contract'--
                                  ``(I) means a contract for the 
                                purchase, sale, or loan of a security, 
                                a certificate of deposit, a mortgage 
                                loan, or any interest in a mortgage 
                                loan, a group or index of securities, 
                                certificates of deposit, or mortgage 
                                loans or interests therein (including 
                                any interest therein or based on the 
                                value thereof) or any option on any of 
                                theforegoing, including any option to 
purchase or sell any such security, certificate of deposit, loan, 
interest, group or index, or option;
                                  ``(II) does not include any purchase, 
                                sale, or repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Corporation determines 
                                by regulation, resolution, or order to 
                                include any such agreement within the 
                                meaning of such term;
                                  ``(III) means any option entered into 
                                on a national securities exchange 
                                relating to foreign currencies;
                                  ``(IV) means the guarantee by or to 
                                any securities clearing agency of any 
                                settlement of cash, securities, 
                                certificates of deposit, mortgage loans 
                                or interests therein, group or index of 
                                securities, certificates of deposit, or 
                                mortgage loans or interests therein 
                                (including any interest therein or 
                                based on the value thereof) or option 
                                on any of the foregoing, including any 
                                option to purchase or sell any such 
                                security, certificate of deposit, loan, 
                                interest, group or index or option;
                                  ``(V) means any margin loan;
                                  ``(VI) means any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) means any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) means any option to enter 
                                into any agreement or transaction 
                                referred to in this clause;
                                  ``(IX) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), (V), (VI), (VII), or 
                                (VIII), together with all supplements 
                                to any such master agreement, without 
                                regard to whether the master agreement 
                                provides for an agreement or 
                                transaction that is not a securities 
                                contract under this clause, except that 
                                the master agreement shall be 
                                considered to be a securities contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (III), (IV), (V), (VI), 
                                (VII), or (VIII); and
                                  ``(X) means any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause.''.
  (c) Definition of Commodity Contract.--Section 11(e)(8)(D)(iii) of 
the Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(iii)) is 
amended to read as follows:
                          ``(iii) Commodity contract.--The term 
                        `commodity contract' means--
                                  ``(I) with respect to a futures 
                                commission merchant, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade;
                                  ``(II) with respect to a foreign 
                                futures commission merchant, a foreign 
                                future;
                                  ``(III) with respect to a leverage 
                                transaction merchant, a leverage 
                                transaction;
                                  ``(IV) with respect to a clearing 
                                organization, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade that is cleared by such clearing 
                                organization, or commodity option 
                                traded on, or subject to the rules of, 
                                a contract market or board of trade 
                                that is cleared by such clearing 
                                organization;
                                  ``(V) with respect to a commodity 
                                options dealer, a commodity option;
                                  ``(VI) any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(IX) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), (IV), (V), (VI), 
                                (VII), or (VIII), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                commodity contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a commodity 
                                contract under this clause only 
withrespect to each agreement or transaction under the master agreement 
that is referred to in subclause (I), (II), (III), (IV), (V), (VI), 
(VII), or (VIII); or
                                  ``(X) a security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause.''.
  (d) Definition of Forward Contract.--Section 11(e)(8)(D)(iv) of the 
Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(iv)) is amended 
to read as follows:
                          ``(iv) Forward contract.--The term `forward 
                        contract' means--
                                  ``(I) a contract (other than a 
                                commodity contract) for the purchase, 
                                sale, or transfer of a commodity or any 
                                similar good, article, service, right, 
                                or interest which is presently or in 
                                the future becomes the subject of 
                                dealing in the forward contract trade, 
                                or product or byproduct thereof, with a 
                                maturity date more than 2 days after 
                                the date the contract is entered into, 
                                including, but not limited to, a 
                                repurchase agreement, reverse 
                                repurchase agreement, consignment, 
                                lease, swap, hedge transaction, 
                                deposit, loan, option, allocated 
                                transaction, unallocated transaction, 
                                or any other similar agreement;
                                  ``(II) any combination of agreements 
                                or transactions referred to in 
                                subclauses (I) and (III);
                                  ``(III) any option to enter into any 
                                agreement or transaction referred to in 
                                subclause (I) or (II);
                                  ``(IV) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclauses 
                                (I), (II), or (III), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                forward contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a forward contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), or (III); or
                                  ``(V) a security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in subclause (I), (II), 
                                (III), or (IV).''.
  (e) Definition of Repurchase Agreement.--Section 11(e)(8)(D)(v) of 
the Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(v)) is 
amended to read as follows:
                          ``(v) Repurchase agreement.--The term 
                        `repurchase agreement' (which definition also 
                        applies to a reverse repurchase agreement)--
                                  ``(I) mean an agreement, including 
                                related terms, which provides for the 
                                transfer of 1 or more certificates of 
                                deposit, mortgage-related securities 
                                (as such term is defined in the 
                                Securities Exchange Act of 1934), 
                                mortgage loans, interests in mortgage-
                                related securities or mortgage loans, 
                                eligible bankers' acceptances, 
                                qualified foreign government securities 
                                or securities that are direct 
                                obligations of, or that are fully 
                                guaranteed by, the United States or any 
                                agency of the United States against the 
                                transfer of funds by the transferee of 
                                such certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                loans, or interests with a simultaneous 
                                agreement by such transferee to 
                                transfer to the transferor thereof 
                                certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                loans, or interests as described above, 
                                at a date certain not later than 1 year 
                                after such transfers or on demand, 
                                against the transfer of funds, or any 
                                other similar agreement;
                                  ``(II) does not include any 
                                repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Corporation determines 
                                by regulation, resolution, or order to 
                                include any such participation within 
                                the meaning of such term;
                                  ``(III) means any combination of 
                                agreements or transactions referred to 
                                in subclauses (I) and (IV);
                                  ``(IV) means any option to enter into 
                                any agreement or transaction referred 
                                to in subclause (I) or (III);
                                  ``(V) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), or (IV), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                repurchase agreement under thisclause, 
except that the master agreement shall be considered to be a repurchase 
agreement under this subclause only with respect to each agreement or 
transaction under the master agreement that is referred to in subclause 
(I), (III), or (IV); and
                                  ``(VI) means a security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in subclause (I), (III), 
                                (IV), or (V).
                        For purposes of this clause, the term 
                        `qualified foreign government security' means a 
                        security that is a direct obligation of, or 
                        that is fully guaranteed by, the central 
                        government of a member of the Organization for 
                        Economic Cooperation and Development (as 
                        determined by regulation or order adopted by 
                        the appropriate Federal banking authority).''.
  (f) Definition of Swap Agreement.--Section 11(e)(8)(D)(iv) of the 
Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(vi)) is amended 
to read as follows:
                          ``(vi) Swap agreement.--The term `swap 
                        agreement' means--
                                  ``(I) any agreement, including the 
                                terms and conditions incorporated by 
                                reference in any such agreement, which 
                                is an interest rate swap, option, 
                                future, or forward agreement, including 
                                a rate floor, rate cap, rate collar, 
                                cross-currency rate swap, and basis 
                                swap; a spot, same day-tomorrow, 
                                tomorrow-next, forward, or other 
                                foreign exchange or precious metals 
                                agreement; a currency swap, option, 
                                future, or forward agreement; an equity 
                                index or equity swap, option, future, 
                                or forward agreement; a debt index or 
                                debt swap, option, future, or forward 
                                agreement; a credit spread or credit 
                                swap, option, future, or forward 
                                agreement; a commodity index or 
                                commodity swap, option, future, or 
                                forward agreement;
                                  ``(II) any agreement or transaction 
                                similar to any other agreement or 
                                transaction referred to in this clause 
                                that is presently, or in the future 
                                becomes, regularly entered into in the 
                                swap market (including terms and 
                                conditions incorporated by reference in 
                                such agreement) and that is a forward, 
                                swap, future, or option on 1 or more 
                                rates, currencies, commodities, equity 
                                securities or other equity instruments, 
                                debt securities or other debt 
                                instruments, or economic indices or 
                                measures of economic risk or value;
                                  ``(III) any combination of agreements 
                                or transactions referred to in this 
                                clause;
                                  ``(IV) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(V) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), or (IV), together 
                                with all supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement contains an 
                                agreement or transaction that is not a 
                                swap agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a swap agreement 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), (III), or (IV); 
                                and
                                  ``(VI) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreements or 
                                transactions referred to in 
                                subparagraph (I), (II), (III), or (IV).
                        Such term is applicable for purposes of this 
                        title only and shall not be construed or 
                        applied so as to challenge or affect the 
                        characterization, definition, or treatment of 
                        any swap agreement under any other statute, 
                        regulation, or rule, including the Securities 
                        Act of 1933, the Securities Exchange Act of 
                        1934, the Public Utility Holding Company Act of 
                        1935, the Trust Indenture Act of 1939, the 
                        Investment Company Act of 1940, the Investment 
                        Advisers Act of 1940, the Securities Investor 
                        Protection Act of 1970, the Commodity Exchange 
                        Act, and the regulations promulgated by the 
                        Securities and Exchange Commission or the 
                        Commodity Futures Trading Commission.''.
  (g) Definition of Transfer.--Section 11(e)(8)(D)(viii) of the Federal 
Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(viii)) is amended to read 
as follows:
                          ``(viii) Transfer.--The term `transfer' means 
                        every mode, direct or indirect, absolute or 
                        conditional, voluntary or involuntary, of 
                        disposing of or parting with property or with 
                        an interest in property, including retention of 
                        title as a security interest and foreclosure of 
                        the depository institutions's equity of 
                        redemption.''.
  (h) Treatment of Qualified Financial Contracts.--Section 11(e)(8) of 
the Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)) is amended--
          (1) in subparagraph (A), by striking ``paragraph (10)'' and 
        inserting ``paragraphs (9) and (10)'';
          (2) in subparagraph (A)(i), by striking ``to cause the 
        termination or liquidation'' and inserting ``such person has to 
        cause the termination, liquidation, or acceleration'';
          (3) by amending subparagraph (A)(ii) to read as follows:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to 1 or more qualified financial 
                        contracts described in clause (i);''; and
          (4) by amending subparagraph (E)(ii) to read as follows:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to 1 or more qualified financial 
                        contracts described in clause (i);''.
  (i) Avoidance of Transfers.--Section 11(e)(8)(C)(i) of the Federal 
Deposit Insurance Act (12 U.S.C 1821(e)(8)(C)(i)) is amended by 
inserting ``section 5242 of the Revised Statutes of the United States 
(12 U.S.C 91) or any other Federal or State law relating to the 
avoidance of preferential or fraudulent transfers,'' before ``the 
Corporation''.

SEC. 1002. AUTHORITY OF THE CORPORATION WITH RESPECT TO FAILED AND 
                    FAILING INSTITUTIONS.

  (a) In General.--Section 11(e)(8) of the Federal Deposit Insurance 
Act (12 U.S.C 1821(e)(8)) is amended--
          (1) in subparagraph (E), by striking ``other than paragraph 
        (12) of this subsection, subsection (d)(9)'' and inserting 
        ``other than subsections (d)(9) and (e)(10)''; and
          (2) by adding at the end the following new subparagraphs:
                  ``(F) Clarification.--No provision of law shall be 
                construed as limiting the right or power of the 
                Corporation, or authorizing any court or agency to 
                limit or delay, in any manner, the right or power of 
                the Corporation to transfer any qualified financial 
                contract in accordance with paragraphs (9) and (10) of 
                this subsection or to disaffirm or repudiate any such 
                contract in accordance with subsection (e)(1) of this 
                section.
                  ``(G) Walkaway clauses not effective.--
                          ``(i) In general.--Notwithstanding the 
                        provisions of subparagraphs (A) and (E), and 
                        sections 403 and 404 of the Federal Deposit 
                        Insurance Corporation Improvement Act of 1991, 
                        no walkaway clause shall be enforceable in a 
                        qualified financial contract of an insured 
                        depository institution in default.
                          ``(ii) Walkaway clause defined.--For purposes 
                        of this subparagraph, the term `walkaway 
                        clause' means a provision in a qualified 
                        financial contract that, after calculation of a 
                        value of a party's position or an amount due to 
                        or from 1 of the parties in accordance with its 
                        terms upon termination, liquidation, or 
                        acceleration of the qualified financial 
                        contract, either does not create a payment 
                        obligation of a party or extinguishes a payment 
                        obligation of a party in whole or in part 
                        solely because of such party's status as a 
                        nondefaulting party.''.
  (b) Technical and Conforming Amendment.--Section 11(e)(12)(A) of the 
Federal Deposit Insurance Act (12 U.S.C 1821(e)(12)(A)) is amended by 
inserting ``or the exercise of rights or powers'' after ``the 
appointment''.

SEC. 1003. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED FINANCIAL 
                    CONTRACTS.

  (a) Transfers of Qualified Financial Contracts to Financial 
Institutions.--Section 11(e)(9) of the Federal Deposit Insurance Act 
(12 U.S.C 1821(e)(9)) is amended to read as follows:
          ``(9) Transfer of qualified financial contracts.--
                  ``(A) In general.--In making any transfer of assets 
                or liabilities of a depository institution in default 
                which includes any qualified financial contract, the 
                conservator or receiver for such depository institution 
                shall either--
                          ``(i) transfer to 1 financial institution, 
                        other than a financial institution for which a 
                        conservator, receiver, trustee in bankruptcy, 
                        or other legal custodian has been appointed or 
                        which is otherwise the subject of a bankruptcy 
                        or insolvency proceeding--
                                  ``(I) all qualified financial 
                                contracts between any person or any 
                                affiliate of such person and the 
                                depository institution in default;
                                  ``(II) all claims of such person or 
                                any affiliate of such person against 
                                such depository institution under any 
                                such contract (other than any claim 
                                which, under the terms of any such 
                                contract, is subordinated to the claims 
                                of general unsecured creditors of such 
                                institution);
                                  ``(III) all claims of such depository 
                                institution against such person or any 
                                affiliate of such person under any such 
                                contract; and
                                  ``(IV) all property securing or any 
                                other credit enhancement for any 
                                contract described in subclause (I) or 
                                any claim described in subclause (II) 
                                or (III) under any such contract; or
                          ``(ii) transfer none of the qualified 
                        financial contracts, claims, property or other 
                        credit enhancement referred to in clause (i) 
                        (with respect to such person and any affiliate 
                        of such person).
                  ``(B) Transfer to foreign bank, foreign financial 
                institution, or branch or agency of a foreign bank or 
                financial institution.--In transferring any qualified 
                financial contracts and related claims and property 
                pursuant to subparagraph (A)(i), the conservator or 
                receiver for such depository institution shall not make 
                such transfer to a foreign bank, financial institution 
                organized under the laws of a foreign country, or a 
                branch or agency of a foreign bank or financial 
                institution unless, under the law applicable to such 
                bank, financial institution, branch or agency, to the 
                qualified financial contracts, and to any netting 
                contract, any security agreement or arrangement or 
                other credit enhancement related to 1 or more qualified 
                financial contracts, the contractual rights of the 
                parties to such qualified financial contracts, netting 
                contracts, security agreements or arrangements, or 
                other credit enhancements are enforceable substantially 
                to the same extent as permitted under this section.
                  ``(C) Transfer of contracts subject to the rules of a 
                clearing organization.--In the event that a conservator 
                or receiver transfers any qualified financial contract 
                and related claims, property and credit enhancements 
                pursuant to subparagraph (A)(i) and such contract is 
                subject to the rules of a clearing organization, the 
                clearing organization shall not be required to accept 
                the transferee as a member by virtue of the transfer.
                  ``(D) Definition.--For purposes of this section, the 
                term `financial institution' means a broker or dealer, 
                a depository institution, a futures commission 
                merchant, or any other institution as determined by the 
                Corporation by regulation to be a financial 
                institution.''.
  (b) Notice to Qualified Financial Contract Counterparties.--Section 
11(e)(10)(A) of the Federal Deposit Insurance Act (12 U.S.C 
1821(e)(10)(A)) is amended by amending the flush material following 
clause (ii) to read as follows: ``the conservator or receiver shall 
notify any person who is a party to any such contract of such transfer 
by 5:00 p.m (eastern time) on the business day following the date of 
the appointment of the receiver, in the case of a receivership, or the 
business day following such transfer, in the case of a 
conservatorship.''.
  (c) Rights Against Receiver and Treatment of Bridge Banks.--Section 
11(e)(10) of the Federal Deposit Insurance Act (12 U.S.C 1821(e)(10)) 
is further amended--
          (1) by redesignating subparagraph (B) as subparagraph (D); 
        and
          (2) by inserting after subparagraph (A) the following new 
        subparagraphs:
                  ``(B) Certain rights not enforceable.--
                          ``(i) Receivership.--A person who is a party 
                        to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(A) or section 403 or 404 of the Federal 
                        Deposit Insurance Corporation Improvement Act 
                        of 1991 solely by reason of or incidental to 
                        the appointment of a receiver for the 
                        depository institution (or the insolvency or 
                        financial condition of the depository 
                        institution for which the receiver has been 
                        appointed)--
                                  ``(I) until 5:00 p.m (eastern time) 
                                on the business day following the date 
                                of the appointment of the receiver; or
                                  ``(II) after the person has received 
                                notice that the contract has been 
                                transferred pursuant to paragraph 
                                (9)(A).
                          ``(ii) Conservatorship.--A person who is a 
                        party to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(E) or sections 403 or 404 of the Federal 
                        Deposit Insurance Corporation Improvement Act 
                        of 1991, solely by reason of or incidental to 
                        the appointment of a conservator for the 
                        depositoryinstitution (or the insolvency or 
financial condition of the depository institution for which the 
conservator has been appointed).
                          ``(iii) Notice.--For purposes of this 
                        subsection, the Corporation as receiver or 
                        conservator of an insured depository 
                        institution shall be deemed to have notified a 
                        person who is a party to a qualified financial 
                        contract with such depository institution if 
                        the Corporation has taken steps reasonably 
                        calculated to provide notice to such person by 
                        the time specified in subparagraph (A) of this 
                        subsection.
                  ``(C) Treatment of bridge banks.--The following 
                institutions shall not be considered a financial 
                institution for which a conservator, receiver, trustee 
                in bankruptcy, or other legal custodian has been 
                appointed or which is otherwise the subject of a 
                bankruptcy or insolvency proceeding for purposes of 
                subsection (e)(9)--
                          ``(i) a bridge bank; or
                          ``(ii) a depository institution organized by 
                        the Corporation, for which a conservator is 
                        appointed either--
                                  ``(I) immediately upon the 
                                organization of the institution; or
                                  ``(II) at the time of a purchase and 
                                assumption transaction between such 
                                institution and the Corporation as 
                                receiver for a depository institution 
                                in default.''.

SEC. 1004. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION OF 
                    QUALIFIED FINANCIAL CONTRACTS.

  Section 11(e) of the Federal Deposit Insurance Act (12 U.S.C 1821(e)) 
is further amended--
          (1) by redesignating paragraphs (11) through (15) as 
        paragraphs (12) through (16), respectively; and
          (2) by inserting after paragraph (10) the following new 
        paragraph:
          ``(11) Disaffirmance or repudiation of qualified financial 
        contracts.--In exercising the rights of disaffirmance or 
        repudiation of a conservator or receiver with respect to any 
        qualified financial contract to which an insured depository 
        institution is a party, the conservator or receiver for such 
        institution shall either--
                  ``(A) disaffirm or repudiate all qualified financial 
                contracts between--
                          ``(i) any person or any affiliate of such 
                        person; and
                          ``(ii) the depository institution in default; 
                        or
                  ``(B) disaffirm or repudiate none of the qualified 
                financial contracts referred to in subparagraph (A) 
                (with respect to such person or any affiliate of such 
                person).''.

SEC. 1005. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

  Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance Act (12 
U.S.C 1821(e)(8)(D)(vii)) is amended to read as follows:
                          ``(vii) Treatment of master agreement as 1 
                        agreement.--Any master agreement for any 
                        contract or agreement described in any 
                        preceding clause of this subparagraph (or any 
                        master agreement for such master agreement or 
                        agreements), together with all supplements to 
                        such master agreement, shall be treated as a 
                        single agreement and a single qualified 
                        financial contract If a master agreement 
                        contains provisions relating to agreements or 
                        transactions that are not themselves qualified 
                        financial contracts, the master agreement shall 
                        be deemed to be a qualified financial contract 
                        only with respect to those transactions that 
                        are themselves qualified financial 
                        contracts.''.

SEC. 1006. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 
                    1991.

  (a) Definitions.--Section 402 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C 4402) is amended--
          (1) in paragraph (6)--
                  (A) by redesignating subparagraphs (B) through (D) as 
                subparagraphs (C) through (E), respectively;
                  (B) by inserting after subparagraph (A) the following 
                new subparagraph:
                  ``(B) an uninsured national bank or an uninsured 
                State bank that is a member of the Federal Reserve 
                System if the national bank or State member bank is not 
                eligible to make application to become an insured bank 
                under section 5 of the Federal Deposit Insurance 
                Act;''; and
                  (C) by amending subparagraph (C) (as redesignated) to 
                read as follows:
                  ``(C) a branch or agency of a foreign bank, a foreign 
                bank and any branch or agency of the foreign bank, or 
                the foreign bank that establishedthe branch or agency, 
as those terms are defined in section 1(b) of the International Banking 
Act of 1978;'';
          (2) in paragraph (11), by adding before the period ``and any 
        other clearing organization with which such clearing 
        organization has a netting contract'';
          (3) by amending paragraph (14)(A)(i) to read as follows:
                          ``(i) means a contract or agreement between 2 
                        or more financial institutions, clearing 
                        organizations, or members that provides for 
                        netting present or future payment obligations 
                        or payment entitlements (including liquidation 
                        or closeout values relating to such obligations 
                        or entitlements) among the parties to the 
                        agreement; and''; and
          (4) by adding at the end the following new paragraph:
          ``(15) Payment.--The term `payment' means a payment of United 
        States dollars, another currency, or a composite currency, and 
        a noncash delivery, including a payment or delivery to 
        liquidate an unmatured obligation.''.
  (b) Enforceability of Bilateral Netting Contracts.--Section 403 of 
the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 
U.S.C 4403) is amended--
          (1) by amending subsection (a) to read as follows:
  ``(a) General Rule.--Notwithstanding any other provision of State or 
Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act or any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1970, the covered contractual payment obligations and the 
covered contractual payment entitlements between any 2 financial 
institutions shall be netted in accordance with, and subject to the 
conditions of, the terms of any applicable netting contract (except as 
provided in section 561(b)(2) of title 11).''; and
          (2) by adding at the end the following new subsection:
  ``(f) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any 2 financial institutions 
shall be enforceable in accordance with their terms (except as provided 
in section 561(b)(2) of title 11) and shall not be stayed, avoided, or 
otherwise limited by any State or Federal law (other than paragraphs 
(8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal Deposit 
Insurance Act and section 5(b)(2) of the Securities Investor Protection 
Act of 1970).''.
  (c) Enforceability of Clearing Organization Netting Contracts.--
Section 404 of the Federal Deposit Insurance Corporation Improvement 
Act of 1991 (12 U.S.C 4404) is amended--
          (1) by amending subsection (a) to read as follows:
  ``(a) General Rule.--Notwithstanding any other provision of State or 
Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act and any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1970, the covered contractual payment obligations and the 
covered contractual payment entitlements of a member of a clearing 
organization to and from all other members of a clearing organization 
shall be netted in accordance with and subject to the conditions of any 
applicable netting contract (except as provided in section 561(b)(2) of 
title 11, United States Code).''; and
          (2) by adding at the end the following new subsection:
  ``(h) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any 2 members of a clearing 
organization shall be enforceable in accordance with their terms 
(except as provided in section 561(b)(2) of title 11, United States 
Code) and shall not be stayed, avoided, or otherwise limited by any 
State or Federal law other than paragraphs (8)(E), (8)(F), and (10)(B) 
of section 11(e) of the Federal Deposit Insurance Act and section 
5(b)(2) of the Securities Investor Protection Act of 1970.''.
  (d) Enforceability of Contracts With Uninsured National Banks and 
Uninsured Federal Branches and Agencies.--The Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C 4401 et seq.) is 
amended--
          (1) by redesignating section 407 as section 408; and
          (2) by adding after section 406 the following new section:

``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND 
                    UNINSURED FEDERAL BRANCHES AND AGENCIES.

  ``(a) In General.--Notwithstanding any other provision of law, 
paragraphs (8), (9), (10), and (11) of section 11(e) of the Federal 
Deposit Insurance Act shall apply to an uninsured national bank or 
uninsured Federal branch or Federal agency except--
          ``(1) any reference to the `Corporation as receiver' or `the 
        receiver or the Corporation' shall refer to the receiver of an 
        uninsured national bank or uninsuredFederal branch or Federal 
agency appointed by the Comptroller of the Currency;
          ``(2) any reference to the `Corporation' (other than in 
        section 11(e)(8)(D) of such Act), the `Corporation, whether 
        acting as such or as conservator or receiver', a `receiver', or 
        a `conservator' shall refer to the receiver or conservator of 
        an uninsured national bank or uninsured Federal branch or 
        Federal agency appointed by the Comptroller of the Currency; 
        and
          ``(3) any reference to an `insured depository institution' or 
        `depository institution' shall refer to an uninsured national 
        bank or an uninsured Federal branch or Federal agency.
  ``(b) Liability.--The liability of a receiver or conservator of an 
uninsured national bank or uninsured Federal branch or agency shall be 
determined in the same manner and subject to the same limitations that 
apply to receivers and conservators of insured depository institutions 
under section 11(e) of the Federal Deposit Insurance Act.
  ``(c) Regulatory Authority.--
          ``(1) In general.--The Comptroller of the Currency, in 
        consultation with the Federal Deposit Insurance Corporation, 
        may promulgate regulations to implement this section.
          ``(2) Specific requirement.--In promulgating regulations to 
        implement this section, the Comptroller of the Currency shall 
        ensure that the regulations generally are consistent with the 
        regulations and policies of the Federal Deposit Insurance 
        Corporation adopted pursuant to the Federal Deposit Insurance 
        Act.
  ``(d) Definitions.--For purposes of this section, the terms `Federal 
branch', `Federal agency', and `foreign bank' have the same meaning as 
in section 1(b) of the International Banking Act.''.

SEC. 1007. BANKRUPTCY CODE AMENDMENTS.

  (a) Definitions of Forward Contract, Repurchase Agreement, Securities 
Clearing Agency, Swap Agreement, Commodity Contract, and Securities 
Contract.--Title 11, United States Code, is amended--
          (1) in section 101--
                  (A) in paragraph (25)--
                          (i) by striking ``means a contract'' and 
                        inserting ``means--
                  ``(A) a contract'';
                          (ii) by striking ``, or any combination 
                        thereof or option thereon;'' and inserting ``, 
                        or any other similar agreement;''; and
                          (iii) by adding at the end the following:
                  ``(B) 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) a security agreement or arrangement, or other 
                credit enhancement related to any agreement or 
                transaction referred to in subparagraph (A), (B), (C), 
                or (D), but not to exceed the actual value of such 
                contract, option, agreement, or transaction on the date 
                of the filing of the petition;'';
                  (B) in paragraph (46), by striking ``on any day 
                during the period beginning 90 days before the date 
                of'' and replacing it with ``at any time before'';
                  (C) by amending paragraph (47) to read as follows:
          ``(47) `repurchase agreement' (which definition also applies 
        to a reverse repurchase agreement) means--
                          ``(i) an agreement, including related terms, 
                        which provides for the transfer of 1 or more 
                        certificates of deposit, mortgage-related 
                        securities (as defined in the Securities 
                        Exchange Act of 1934), mortgage loans, 
                        interests in mortgage-related securities or 
                        mortgage loans, eligible bankers' acceptances, 
                        qualified foreign government securities; or 
                        securities that are direct obligations of, or 
                        that are fully guaranteed by, the United States 
                        or any agency of the United States against the 
                        transfer of funds by the transferee of such 
                        certificates of deposit, eligible bankers' 
                        acceptances, securities, loans, or interests; 
                        with a simultaneousagreement by such transferee 
to transfer to the transferor thereof certificates of deposit, eligible 
bankers' acceptance, securities, loans, or interests of the kind 
described above, 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) a security agreement or arrangement or 
                        other credit enhancement related to any 
                        agreement or transaction referred to in clause 
                        (i), (ii), (iii), or (iv), but not to exceed 
                        the actual value of such contract on the date 
                        of the filing of the petition; and
                  ``(B) does not include a repurchase obligation under 
                a participation in a commercial mortgage loan;
        and, for purposes of this paragraph, the term `qualified 
        foreign government security' means a security that is a direct 
        obligation of, or that is fully guaranteed by, the central 
        government of a member of the Organization for Economic 
        Cooperation and Development;'';
                  (D) in paragraph (48) by inserting ``or exempt from 
                such registration under such section pursuant to an 
                order of the Securities and Exchange Commission'' after 
                ``1934''; and
                  (E) by amending paragraph (53B) to read as follows:
          ``(53B) `swap agreement'
                  ``(A) means--
                          ``(i) any agreement, including the terms and 
                        conditions incorporated by reference in such 
                        agreement, which is an interest rate swap, 
                        option, future, or forward agreement, including 
                        a rate floor, rate cap, rate collar, cross-
                        currency rate swap, and basis swap; a spot, 
                        same day-tomorrow, tomorrow-next, forward, or 
                        other foreign exchange or precious metals 
                        agreement; a currency swap, option, future, or 
                        forward agreement; an equity index or an equity 
                        swap, option, future, or forward agreement; a 
                        debt index or a debt swap, option, future, or 
                        forward agreement; a credit spread or a credit 
                        swap, option, future, or forward agreement; or 
                        a commodity index or a commodity swap, option, 
                        future, or forward agreement;
                          ``(ii) any agreement or transaction similar 
                        to any other agreement or transaction referred 
                        to in this paragraph that--
                                  ``(I) is presently, or in the future 
                                becomes, regularly entered into in the 
                                swap market (including terms and 
                                conditions incorporated by reference 
                                therein); and
                                  ``(II) is a forward, swap, future, or 
                                option on 1 or more rates, currencies 
                                commodities, equity securities, or 
                                other equity instruments, debt 
                                securities or other debt instruments, 
                                or on an economic index or measure of 
                                economic risk or value;
                          ``(iii) any combination of agreements or 
                        transactions referred to in this paragraph;
                          ``(iv) any option to enter into an agreement 
                        or transaction referred to in this paragraph;
                          ``(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
                  ``(B) any security agreement or arrangement or other 
                credit enhancement related to any agreements or 
                transactions referred to in subparagraph (A); and
                  ``(C) is applicable for purposes of this title only 
                and shall not be construed or applied so as to 
                challenge or affect the characterization, definition, 
                or treatment of any swap agreement under any other 
                statute, regulation, or rule, including the Securities 
                Act of 1933, the Securities Exchange Act of 1934, the 
                Public Utility Holding Company Act of 1935, the Trust 
                Indenture Act of 1939, the Investment Company Act of 
                1940, the Investment Advisers Act of 1940, the 
                Securities Investor Protection Act of 1970, the 
                Commodity Exchange Act, and the regulations prescribed 
                by the Securities and Exchange Commission or the 
                Commodity Futures Trading Commission.'';
          (2) by amending section 741(7) to read as follows:
          ``(7) `securities contract'--
                  ``(A) means--
                          ``(i) a contract for the purchase, sale, or 
                        loan of a security, a certificate of deposit, a 
                        mortgage loan or any interest in a mortgage 
                        loan, a group or index of securities, 
                        certificates of deposit or mortgage loans or 
                        interests therein (including an interest 
                        therein or based on the value thereof), or 
                        option on any of the foregoing, including an 
                        option to purchase or sell any such security 
                        certificate of deposit, loan, interest, group 
                        or index or option;
                          ``(ii) any option entered into on a national 
                        securities exchange relating to foreign 
                        currencies;
                          ``(iii) the guarantee by or to any securities 
                        clearing agency of a settlement of cash, 
                        securities, certificates of deposit mortgage 
                        loans or interests therein, group or index of 
                        securities, or mortgage loans or interests 
                        therein (including any interest therein or 
                        based on the value thereof), or option on any 
                        of the foregoing, including an option to 
                        purchase or sell any such security certificate 
                        of deposit, loan, interest, group or index or 
                        option;
                          ``(iv) any margin loan;
                          ``(v) any other agreement or transaction that 
                        is similar to an agreement or transaction 
                        referred to in this paragraph;
                          ``(vi) any combination of the agreements or 
                        transactions referred to in this paragraph;
                          ``(vii) any option to enter into any 
                        agreement or transaction referred to in this 
                        paragraph;
                          ``(viii) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), (iii), (iv), (v), (vi), or 
                        (vii), together with all supplements to any 
                        such master agreement, without regard to 
                        whether the master agreement provides for an 
                        agreement or transaction that is not a 
                        securities contract under this paragraph, 
                        except that such master agreement shall be 
                        considered to be a securities contract under 
                        this paragraph only with respect to each 
                        agreement or transaction under such master 
                        agreement that is referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii); or
                          ``(ix) any security agreement or arrangement, 
                        or other credit enhancement, related to any 
                        agreement or transaction referred to in this 
                        paragraph, but not to exceed the actual value 
                        of such contract on the date of the filing of 
                        the petition; and
                  ``(B) does not include any purchase, sale, or 
                repurchase obligation under a participation in a 
                commercial mortgage loan.''; and
          (3) in section 761(4)--
                  (A) by striking ``or'' at the end of subparagraph 
                (D); and
                  (B) by adding at the end the following:
                  ``(F) any other agreement or transaction that is 
                similar to an agreement or transaction referred to in 
                this paragraph;
                  ``(G) any combination of the agreements or 
                transactions referred to in this paragraph;
                  ``(H) any option to enter into an agreement or 
                transaction referred to in this paragraph;
                  ``(I) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), (C), (D), (E), (F), (G), or (H), together 
                with all supplements to such master netting agreement, 
                without regard to whether the master netting agreement 
                provides for an agreement or transaction that is not a 
                commodity contract under this paragraph, except that 
                the master agreement shall be considered to be a 
                commodity contract under this paragraph only with 
                respect to each agreement or transaction underthe 
master agreement that is referred to in subparagraph (A), (B), (C), 
(D), (E), (F), (G), or (H); or
                  ``(J) a security agreement or arrangement, or other 
                credit enhancement related to any agreement or 
                transaction referred to in this paragraph, but not to 
                exceed the actual value of such contract on the date of 
                the filing of the petition;''.
  (b) Definitions of Financial Institution, Financial Participant, and 
Forward Contract Merchant.--Section 101 of title 11, United States 
Code, is amended--
          (1) by amending paragraph (22) to read as follows:
          ``(22) `financial institution' means--
                  ``(A) a Federal reserve bank, or an entity (domestic 
                or foreign) that is a commercial or savings bank, 
                industrial savings bank, savings and loan association, 
                trust company, or receiver or conservator for such 
                entity and, when any such Federal reserve bank, 
                receiver, conservator or entity is acting as agent or 
                custodian for a customer in connection with a 
                securities contract, as defined in section 741 of this 
                title, such customer; or
                  ``(B) in connection with a securities contract, as 
                defined in section 741 of this title, an investment 
                company registered under the Investment Company Act of 
                1940;'';
          (2) by inserting after paragraph (22) the following:
          ``(22A) `financial participant' means an entity that, at the 
        time it enters into a securities contract, commodity contract 
        or forward contract, or at the time of the filing of the 
        petition, has 1 or more agreements or transactions that is 
        described in section 561(a)(2) with the debtor or any other 
        entity (other than an affiliate) of a total gross dollar value 
        of at least $1,000,000,000 in notional or actual principal 
        amount outstanding on any day during the previous 15-month 
        period, or has gross mark-to-market positions of at least 
        $100,000,000 (aggregated across counterparties) in 1 or more 
        such agreement or transaction with the debtor or any other 
        entity (other than an affiliate) on any day during the previous 
        15-month period;''; and
          (3) by amending paragraph (26) to read as follows:
          ``(26) `forward contract merchant' means a Federal reserve 
        bank, or an entity whose business consists in whole or in part 
        of entering into forward contracts as or with merchants or in a 
        commodity, as defined or in section 761 of this title, or any 
        similar good, article, service, right, or interest which is 
        presently or in the future becomes the subject of dealing or in 
        the forward contract trade;''.
  (c) Definition of Master Netting Agreement and Master Netting 
Agreement Participant.--Section 101 of title 11, United States Code, is 
amended by inserting after paragraph (38) the following new paragraphs:
          ``(38A) `master netting agreement' means an agreement 
        providing for the exercise of rights, including rights of 
        netting, setoff, liquidation, termination, acceleration, or 
        closeout, under or in connection with 1 or more contracts that 
        are described in any 1 or more of paragraphs (1) through (5) of 
        section 561(a), or any security agreement or arrangement or 
        other credit enhancement related to 1 or more of the foregoing 
        If a master netting agreement contains provisions relating to 
        agreements or transactions that are not contracts described in 
        paragraphs (1) through (5) of section 561(a), the master 
        netting agreement shall be deemed to be a master netting 
        agreement only with respect to those agreements or transactions 
        that are described in any 1 or more of the paragraphs (1) 
        through (5) of section 561(a);
          ``(38B) `master netting agreement participant' means an 
        entity that, at any time before the filing of the petition, is 
        a party to an outstanding master netting agreement with the 
        debtor;''.
  (d) Swap Agreements, Securities Contracts, Commodity Contracts, 
Forward Contracts, Repurchase Agreements, and Master Netting Agreements 
Under the Automatic-Stay.--
          (1) In general.--Section 362(b) of title 11, United States 
        Code, as amended by sections 118, 132, 136, 142, 203 and 818, 
        is amended--
                  (A) in paragraph (6), by inserting ``, pledged to, 
                and under the control of,'' after ``held by'';
                  (B) in paragraph (7), by inserting ``, pledged to, 
                and under the control of,'' after ``held by'';
                  (C) by amending paragraph (17) to read as follows:
          ``(17) under subsection (a), of the setoff by a swap 
        participant of a mutual debt and claim under or in connection 
        with 1 or more swap agreements that constitutes the setoff of a 
        claim against the debtor for any payment or othertransfer of 
property due from the debtor under or in connection with any swap 
agreement against any payment due to the debtor from the swap 
participant under or in connection with any swap agreement or against 
cash, securities, or other property held by, pledged to, and under the 
control of, or due from such swap participant to margin guarantee, 
secure, or settle a swap agreement;'';
                  (D) in paragraph (30) by striking ``or'' at the end;
                  (E) in paragraph (31) by striking the period at the 
                end and inserting ``; or''; and
                  (F) by inserting after paragraph (31) the following 
                new paragraph:
          ``(32) under subsection (a), of the setoff by a master 
        netting agreement participant of a mutual debt and claim under 
        or in connection with 1 or more master netting agreements or 
        any contract or agreement subject to such agreements that 
        constitutes the setoff of a claim against the debtor for any 
        payment or other transfer of property due from the debtor under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements against any payment due to 
        the debtor from such master netting agreement participant under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements or against cash, 
        securities, or other property held by, pledged or and under the 
        control of, or due from such master netting agreement 
        participant to margin, guarantee, secure, or settle such 
        agreements or any contract or agreement subject to such 
        agreements, to the extent such participant is eligible to 
        exercise such offset rights under paragraph (6), (7), or (17) 
        for each individual contract covered by the master netting 
        agreement in issue.''.
          (2) Limitation.--Section 362 of title 11, United States Code, 
        as amended by sections 120, 302, and 412, is amended by adding 
        at the end the following:
  ``(l) Limitation.--The exercise of rights not subject to the stay 
arising under subsection (a) pursuant to paragraph (6), (7), or (17), 
or (31) of subsection (b) shall not be stayed by any order of a court 
or administrative agency in any proceeding under this title.''.
  (e) Limitation of Avoidance Powers Under Master Netting Agreement.--
Section 546 of title 11, United States Code, as amended by sections 207 
and 302, is amended--
          (1) in subsection (g) (as added by section 103 of Public Law 
        101-311)--
                  (A) by striking ``under a swap agreement'';
                  (B) by striking ``in connection with a swap 
                agreement'' and inserting ``under or in connection with 
                any swap agreement''; and
          (2) by adding at the end the following:
  ``(j) Notwithstanding sections 544, 545, 547, 548(a)(2)(B), and 
548(b) of this title, the trustee may not avoid a transfer made by or 
to a master netting agreement participant under or in connection with 
any master netting agreement or any individual contract covered thereby 
that is made before the commencement of the case, except under section 
548(a)(1)(A) of this title, and except to the extent the trustee could 
otherwise avoid such a transfer made under an individual contract 
covered by such master netting agreement.''.
  (f) Fraudulent Transfers of Master Netting Agreements.--Section 
548(d)(2) of title 11, United States Code, is amended--
          (1) in subparagraph (C), by striking ``and'';
          (2) in subparagraph (D), by striking the period and inserting 
        ``; and''; and
          (3) by adding at the end the following new subparagraph:
          ``(E) a master netting agreement participant that receives a 
        transfer in connection with a master netting agreement or any 
        individual contract covered thereby takes for value to the 
        extent of such transfer, except, with respect to a transfer 
        under any individual contract covered thereby, to the extent 
        such master netting agreement participant otherwise did not 
        take (or is otherwise not deemed to have taken) such transfer 
        for value.''.
  (g) Termination or Acceleration of Securities Contracts.--Section 555 
of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
                    securities contract'';

        and
          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (h) Termination or Acceleration of Commodities or Forward 
Contracts.--Section 556 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
                    commodities contract or forward contract''; and

          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (i) Termination or Acceleration of Repurchase Agreements.--Section 
559 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
                    repurchase agreement''; and

          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (j) Liquidation, Termination, or Acceleration of Swap Agreements.--
Section 560 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
                    swap agreement''; and

          (2) in the first sentence, by striking ``termination of a 
        swap agreement'' and inserting ``liquidation, termination, or 
        acceleration of 1 or more swap agreements''; and
          (3) by striking ``in connection with any swap agreement'' and 
        inserting ``in connection with the termination, liquidation, or 
        acceleration of 1 or more swap agreements''.
  (k) Liquidation, Termination, Acceleration, or Offset Under a Master 
Netting Agreement and Across Contracts.--(1) Title 11, United States 
Code, is amended by inserting after section 560 the following:

``Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
                    offset under a master netting agreement and across 
                    contracts

  ``(a) In General.--Subject to subsection (b), the exercise of any 
contractual right, because of a condition of the kind specified in 
section 365(e)(1), to cause the termination, liquidation, or 
acceleration of or to offset or net termination values, payment amounts 
or other transfer obligations arising under or in connection with 1 or 
more (or the termination, liquidation, or acceleration of 1 or more)--
          ``(1) securities contracts, as defined in section 741(7);
          ``(2) commodity contracts, as defined in section 761(4);
          ``(3) forward contracts;
          ``(4) repurchase agreements;
          ``(5) swap agreements; or
          ``(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation of any 
provision of this title or by any order of a court or administrative 
agency in any proceeding under this title.
  ``(b) Exception.--
          ``(1) A party may exercise a contractual right described in 
        subsection (a) to terminate, liquidate, or accelerate only to 
        the extent that such party could exercise such a right under 
        section 555, 556, 559, or 560 for each individual contract 
        covered by the master netting agreement in issue.
          ``(2) If a debtor is a commodity broker subject to subchapter 
        IV of chapter 7 of this title--
                  ``(A) a party may not net or offset an obligation to 
                the debtor arising under, or in connection with, a 
                commodity contract against any claim arising under, or 
                in connection with, other instruments, contracts, or 
                agreements listed in subsection (a) except to the 
                extent the party has positive net equity in the 
                commodity accounts at the debtor, as calculated under 
                subchapter IV; and
                  ``(B) another commodity broker may not net or offset 
                an obligation to the debtor arising under, or in 
                connection with, a commodity contract entered into or 
                held on behalf of a customer of the debtor against any 
                claim arising under, or in connection with, other 
                instruments, contracts, or agreements listed in 
                subsection (a).
  ``(c) Definition.--As used in this section, the term `contractual 
right' includes a right set forth in a rule or bylaw of a national 
securities exchange, a national securities association, or a securities 
clearing agency, a right set forth in a bylaw of a clearing 
organization or contract market or in a resolution of the governing 
board thereof, and a right, whether or not evidenced in writing, 
arising under common law, under law merchant, or by reason of normal 
business practice.''.
  (2) Conforming amendment.--The table of sections of chapter 9 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 560 the following:

``561. Contractual right to terminate, liquidate, accelerate, or offset 
under a master netting agreement and across contracts.

  (l) Ancillary Proceedings.--Section 304 of title 11, United States 
Code, as amended by section 215, is amended by adding at the end the 
following:
  ``(c) Any provisions of this title relating to securities contracts, 
commodity contracts, forward contracts, repurchase agreements, swap 
agreements, or master netting agreements shall apply in a case 
ancillary to a foreign proceeding under this section or any other 
section of this title, so that enforcement of contractual provisions of 
such contracts and agreements in accordance with their terms will not 
be stayed or otherwise limited by operation of any provision of this 
title or by order of a court in any case under this title, and to limit 
avoidance powers to the same extent as in a proceeding under chapter 7 
or 11 of this title (such enforcement not to be limited based on the 
presence or absence of assets of the debtor in the United States).''.
  (m) Commodity Broker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 766 the following:

``Sec. 767. Commodity broker liquidation and forward contract 
                    merchants, commodity brokers, stockbrokers, 
                    financial institutions, securities clearing 
                    agencies, swap participants, repo participants, and 
                    master netting agreement participants

  ``Notwithstanding any other provision of this title, the exercise of 
rights by a forward contract merchant, commodity broker, stockbroker, 
financial institution, securities clearing agency, swap participant, 
repo participant, or master netting agreement participant under this 
title shall not affect the priority of any unsecured claim it may have 
after the exercise of such rights.''.
  (n) Stockbroker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 752 the following:

``Sec. 753. Stockbroker liquidation and forward contract merchants, 
                    commodity brokers, stockbrokers, financial 
                    institutions, securities clearing agencies, swap 
                    participants, repo participants, and master netting 
                    agreement participants

  ``Notwithstanding any other provision of this title, the exercise of 
rights by a forward contract merchant, commodity broker, stockbroker, 
financial institution, securities clearing agency, swap participant, 
repo participant, financial participant, or master netting agreement 
participant under this title shall not affect the priority of any 
unsecured claim it may have after the exercise of such rights.''.
  (o) Setoff.--Section 553 of title 11, United States Code, is 
amended--
          (1) in subsection (a)(3)(C), by inserting ``(except for a 
        setoff of a kind described in section 362(b)(6), 362(b)(7), 
        362(b)(17), 362(b)(19), 555, 556, 559, 560 or 561 of this 
        title)'' before the period; and
          (2) in subsection (b)(1), by striking ``362(b)(14),'' and 
        inserting ``362(b)(17), 362(b)(19), 555, 556, 559, 560, 561''.
  (p) Securities Contracts, Commodity Contracts, and Forward 
Contracts.--Title 11, United States Code, is amended--
          (1) in section 362(b)(6), by striking ``financial 
        institutions,'' each place such term appears and inserting 
        ``financial institution, financial participant'';
          (2) in section 546(e), by inserting ``financial 
        participant,'' after ``financial institution,'';
          (3) in section 548(d)(2)(B), by inserting ``financial 
        participant,'' after ``financial institution,'';
          (4) in section 555--
                  (A) by inserting ``financial participant,'' after 
                ``financial institution,''; and
                  (B) by inserting before the period at the end ``, a 
                right set forth in a bylaw of a clearing organization 
                or contract market or in a resolution of the governing 
                board thereof, and a right, whether or not in writing, 
                arising under common law, under law merchant, or by 
                reason of normal business practice''; and
          (5) in section 556, by inserting ``, financial participant'' 
        after ``commodity broker''.
  (q) Conforming Amendments.--Title 11 of the United States Code is 
amended--
          (1) in the table of sections of chapter 5--
                  (A) by amending the items relating to sections 555 
                and 556 to read as follows:

``555. Contractual right to liquidate, terminate, or accelerate a 
securities contract.
``556. Contractual right to liquidate, terminate, or accelerate a 
commodities contract or forward contract.'';

        and
                  (B) by amending the items relating to sections 559 
                and 560 to read as follows:

``559. Contractual right to liquidate, terminate, or accelerate a 
repurchase agreement.
``560. Contractual right to liquidate, terminate, or accelerate a swap 
agreement.'';

        and
          (2) in the table of sections of chapter 7--
                  (A) by inserting after the item relating to section 
                766 the following:

``767. Commodity broker liquidation and forward contract merchants, 
commodity brokers, stockbrokers, financial institutions, securities 
clearing agencies, swap participants, repo participants, and master 
netting agreement participants.'';

        and
                  (B) by inserting after the item relating to section 
                752 the following:

``753. Stockbroker liquidation and forward contract merchants, 
commodity brokers, stockbrokers, financial institutions, securities 
clearing agencies, swap participants, repo participants, and master 
netting agreement participants.''.

SEC. 1008. RECORDKEEPING REQUIREMENTS.

  Section 11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C 
1821(e)(8)) is amended by adding at the end the following new 
subparagraph:
                  ``(H) Recordkeeping requirements.--The Corporation, 
                in consultation with the appropriate Federal banking 
                agencies, may prescribe regulations requiring more 
                detailed recordkeeping with respect to qualified 
                financial contracts (including market valuations) by 
                insured depository institutions.''.

SEC. 1009. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION ---REQUIREMENT.

  Section 13(e)(2) of the Federal Deposit Insurance Act (12 U.S.C 
1823(e)(2)) is amended to read as follows:
          ``(2) Exemptions from contemporaneous execution 
        requirement.--An agreement to provide for the lawful 
        collateralization of--
                  ``(A) deposits of, or other credit extension by, a 
                Federal, State, or local governmental entity, or of any 
                depositor referred to in section 11(a)(2), including an 
                agreement to provide collateral in lieu of a surety 
                bond;
                  ``(B) bankruptcy estate funds pursuant to section 
                345(b)(2) of title 11, United States Code;
                  ``(C) extensions of credit, including any overdraft, 
                from a Federal reserve bank or Federal home loan bank; 
                or
                  ``(D) 1 or more qualified financial contracts, as 
                defined in section 11(e)(8)(D),
        shall not be deemed invalid pursuant to paragraph (1)(B) solely 
        because such agreement was not executed contemporaneously with 
        the acquisition of the collateral or because of pledges, 
        delivery, or substitution of the collateral made in accordance 
        with such agreement.''.

SEC. 1010. DAMAGE MEASURE.

  (a) Title 11, United States Code, as amended by section 1007, is 
amended--
          (1) by inserting after section 561 the following:

``Sec. 562. Damage measure in connection with swap agreements, 
                    securities contracts, forward contracts, commodity 
                    contracts, repurchase agreements, or master netting 
                    agreements

  ``If the trustee rejects a swap agreement, securities contract as 
defined in section 741 of this title, forward contract, commodity 
contract (as defined in section 761 of this title) repurchase 
agreement, or master netting agreement pursuant to section 365(a) of 
this title, or if a forward contract merchant, stockbroker, financial 
institution, securities clearing agency, repo participant, financial 
participant, master netting agreement participant, or swap participant 
liquidates, terminates, or accelerates such contract or agreement, 
damages shall be measured as of the earlier of--
          ``(1) the date of such rejection; or
          ``(2) the date of such liquidation, termination, or 
        acceleration.''; and
          (2) in the table of sections of chapter 5 by inserting after 
        the item relating to section 561 the following:

``562. Damage measure in connection with swap agreements, securities 
contracts, forward contracts, commodity contracts, repurchase 
agreements, or master netting agreements.''.

  (b) Claims Arising From Rejection.--Section 502(g) of title 11, 
United States Code, is amended--
          (1) by designating the existing text as paragraph (1); and
          (2) by adding at the end the following:
  ``(2) A claim for damages calculated in accordance with section 561 
of this title shall be allowed under subsection (a), (b), or (c), or 
disallowed under subsection (d) or (e), as if such claim had arisen 
before the date of the filing of the petition.''.

SEC. 1011. SIPC STAY.

  Section 5(b)(2) of the Securities Investor Protection Act of 1970 (15 
U.S.C 78eee(b)(2)) is amended by adding after subparagraph (B) the 
following new subparagraph:
                  ``(C) Exception from stay.--
                          ``(i) Notwithstanding section 362 of title 
                        11, United States Code, neither the filing of 
                        an application under subsection (a)(3) nor any 
                        order or decree obtained by Securities Investor 
                        Protection Corporation from the court shall 
                        operate as a stay of any contractual rights of 
                        a creditor to liquidate, terminate, or 
                        accelerate a securities contract, commodity 
                        contract, forward contract, repurchase 
                        agreement, swap agreement, or master netting 
                        agreement, each as defined in title 11, to 
                        offset or net termination values, payment 
                        amounts, or other transfer obligations arising 
                        under or in connection with 1 or more of such 
                        contracts or agreements, or to foreclose on any 
                        cash collateral pledged by the debtor whether 
                        or not with respect to 1 or more of such 
                        contracts or agreements.
                          ``(ii) Notwithstanding clause (i), such 
                        application, order, or decree may operate as a 
                        stay of the foreclosure on securities 
                        collateral pledged by the debtor, whether or 
                        not with respect to 1 or more of such contracts 
                        or agreements, securities sold by the debtor 
                        under a repurchase agreement or securities lent 
                        under a securities lending agreement.
                          ``(iii) As used in this section, the term 
                        `contractual right' includes a right set forth 
                        in a rule or bylaw of a national securities 
                        exchange, a national securities association, or 
                        a securities clearing agency, a right set forth 
                        in a bylaw of a clearing organization or 
                        contract market or in a resolution of the 
                        governing board thereof, and a right, whether 
                        or not in writing, arising under common law, 
                        under law merchant, or by reason of normal 
                        business practice.''.

SEC. 1012. ASSET-BACKED SECURITIZATIONS.

  Section 541 of title 11, United States Code, as amended by section 
150, is amended--
          (1) by redesignating paragraph (5) of subsection (b) as 
        paragraph (6);
          (2) by inserting after paragraph (4) of subsection (b) the 
        following new paragraph:
          ``(5) any eligible asset (or proceeds thereof), to the extent 
        that such eligible asset was transferred by the debtor, before 
        the date of commencement of the case, to an eligible entity in 
        connection with an asset-backed securitization, except to the 
        extent such asset (or proceeds or value thereof) may be 
        recovered by the trustee under section 550 by virtue of 
        avoidance under section 548(a);''; and
          (3) by adding at the end the following new subsection:
  ``(e) For purposes of this section, the following definitions shall 
apply:
          ``(1) the term `asset-backed securitization' means a 
        transaction in which eligible assets transferred to an eligible 
        entity are used as the source of payment on securities, the 
        most senior of which are rated investment grade by 1 or more 
        nationally recognized securities rating organizations, issued 
        by an issuer;
          ``(2) the term `eligible asset' means--
                  ``(A) financial assets (including interests therein 
                and proceeds thereof), either fixed or revolving, 
                including residential and commercial mortgage loans, 
                consumer receivables, trade receivables, and lease 
                receivables, that, by their terms, convert into cash 
                within a finite time period, plus any residual interest 
                in property subject to receivables included in such 
                financial assets plus any rights or other assets 
                designed to assure the servicing or timely distribution 
                of proceeds to security holders;
                  ``(B) cash; and
                  ``(C) securities.
          ``(3) the term `eligible entity' means--
                  ``(A) an issuer; or
                  ``(B) a trust, corporation, partnership, or other 
                entity engaged exclusively in the business of acquiring 
                and transferring eligible assets directly or indirectly 
                to an issuer and taking actions ancillary thereto;
          ``(4) the term `issuer' means a trust, corporation, 
        partnership, or other entity engaged exclusively in the 
        business of acquiring and holding eligible assets, issuing 
        securities backed by eligible assets, and taking actions 
        ancillary thereto; and
          ``(5) the term `transferred' means the debtor, pursuant to a 
        written agreement, represented and warranted that eligible 
        assets were sold, contributed, or otherwise conveyed with the 
        intention of removing them from the estate of the debtor 
        pursuant to subsection (b)(5), irrespective, without limitation 
        of--
                  ``(A) whether the debtor directly or indirectly 
                obtained or held an interest in the issuer or in any 
                securities issued by the issuer;
                  ``(B) whether the debtor had an obligation to 
                repurchase or to service or supervise the servicing of 
                all or any portion of such eligible assets; or
                  ``(C) the characterization of such sale, 
                contribution, or other conveyance for tax, accounting, 
                regulatory reporting, or other purposes.''.

SEC. 1013. FEDERAL RESERVE COLLATERAL REQUIREMENTS.

  The 3d sentence of the 3d undesignated paragraph of section 16 of the 
Federal Reserve Act (12 U.S.C 412) is amended by striking ``acceptances 
acquired under the provisions of section 13 of this Act'' and inserting 
``acceptances acquired under section 10A, 10B, 13, or 13A of this 
Act''.

SEC. 1014. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

  (a) Effective Date.--This title shall take effect on the date of the 
enactment of this Act.
  (b) Application of Amendments.--The amendments made by this title 
shall apply with respect to cases commenced or appointments made under 
any Federal or State law after the date of enactment of this Act, but 
shall not apply with respect to cases commenced or appointments made 
under any Federal or State law before the date of enactment of this 
Act.

                    TITLE XI--TECHNICAL CORRECTIONS

SEC. 1101. DEFINITIONS.

  Section 101 of title 11, United States Code, as amended by sections 
102, 105, 132, 138, 301, 302, 402, 902, and 1007, is amended--
          (1) by striking ``In this title--'' and inserting ``In this 
        title:'';
          (2) in each paragraph, by inserting ``The term'' after the 
        paragraph designation;
          (3) in paragraph (35)(B), by striking ``paragraphs (21B) and 
        (33)(A)'' and inserting ``paragraphs (23) and (35)'';
          (4) in each of paragraphs (35A) and (38), by striking ``; 
        and'' at the end and inserting a period;
          (5) in paragraph (51B)--
                  (A) by inserting ``who is not a family farmer'' after 
                ``debtor'' the first place it appears; and
                  (B) by striking ``thereto having aggregate'' and all 
                that follows through the end of the paragraph;
          (6) by amending paragraph (54) to read as follows:
          ``(54) The term `transfer' means--
                  ``(A) the creation of a lien;
                  ``(B) the retention of title as a security interest;
                  ``(C) the foreclosure of a debtor's equity of 
                redemption; or
                  ``(D) each mode, direct or indirect, absolute or 
                conditional, voluntary or involuntary, of disposing of 
                or parting with--
                          ``(i) property; or
                          ``(ii) an interest in property;'';
          (7) in each of paragraphs (1) through (35), in each of 
        paragraphs (36) and (37), and in each of paragraphs (40) 
        through (55) (including paragraph (54), as amended by paragraph 
        (6) of this section), by striking the semicolon at the end and 
        inserting a period; and
          (8) by redesignating paragraphs (4) through (55), including 
        paragraph (54), as amended by paragraph (6) of this section, in 
        entirely numerical sequence.

SEC. 1102. ADJUSTMENT OF DOLLAR AMOUNTS.

  Section 104 of title 11, United States Code, is amended by inserting 
``522(f)(3), 707(b)(5),'' after ``522(d),'' each place it appears.

SEC. 1103. EXTENSION OF TIME.

  Section 108(c)(2) of title 11, United States Code, is amended by 
striking ``922'' and all that follows through ``or'', and inserting 
``922, 1201, or''.

SEC. 1104. TECHNICAL AMENDMENTS.

  Title 11 of the United States Code is amended--
          (1) in section 109(b)(2) by striking ``subsection (c) or (d) 
        of''; and
          (2) in section 552(b)(1) by striking ``product'' each place 
        it appears and inserting ``products''.

SEC. 1105. PENALTY FOR PERSONS WHO NEGLIGENTLY OR FRAUDULENTLY PREPARE 
                    BANKRUPTCY PETITIONS.

  Section 110(j)(3) of title 11, United States Code, is amended by 
striking ``attorney's'' and inserting ``attorneys' ''.

SEC. 1106. LIMITATION ON COMPENSATION OF PROFESSIONAL PERSONS.

  Section 328(a) of title 11, United States Code, is amended by 
inserting ``on a fixed or percentage fee basis,'' after ``hourly 
basis,''.

SEC. 1107. SPECIAL TAX PROVISIONS.

  Section 346(g)(1)(C) of title 11, United States Code, is amended by 
striking ``, except'' and all that follows through ``1986''.

SEC. 1108. EFFECT OF CONVERSION.

  Section 348(f)(2) of title 11, United States Code, is amended by 
inserting ``of the estate'' after ``property'' the first place it 
appears.

SEC. 1109. ALLOWANCE OF ADMINISTRATIVE EXPENSES.

  Section 503(b)(4) of title 11, United States Code, is amended by 
inserting ``subparagraph (A), (B), (C), (D), or (E) of'' before 
``paragraph (3)''.

SEC. 1110. PRIORITIES.

  Section 507(a) of title 11, United States Code, as amended by section 
323, is amended in paragraph (4), as so redesignated by section 142, by 
striking the semicolon at the end and inserting a period.

SEC. 1111. EXEMPTIONS.

  Section 522(g)(2) of title 11, United States Code, is amended by 
striking ``subsection (f)(2)'' and inserting ``subsection (f)(1)(B)''.

SEC. 1112. EXCEPTIONS TO DISCHARGE.

  Section 523 of title 11, United States Code, as amended by section 
146, is amended--
          (1) in subsection (a)(3), by striking ``or (6)'' each place 
        it appears and inserting ``(6), or (15)'';
          (2) as amended by section 304(e) of Public Law 103-394 (108 
        Stat 4133), in paragraph (15), by transferring such paragraph 
        so as to insert it after paragraph (14A) of subsection (a);
          (3) in subsection (a)(9), by inserting ``, watercraft, or 
        aircraft'' after ``motor vehicle'';
          (4) in subsection (a)(15), as so redesignated by paragraph 
        (2) of this subsection, by inserting ``to a spouse, former 
        spouse, or child of the debtor and'' after ``(15)''; and
          (5) in subsection (e), by striking ``a insured'' and 
        inserting ``an insured''.

SEC. 1113. EFFECT OF DISCHARGE.

  Section 524(a)(3) of title 11, United States Code, is amended by 
striking ``section 523'' and all that follows through ``or that'' and 
inserting ``section 523, 1228(a)(1), or 1328(a)(1) of this title, or 
that''.

SEC. 1114. PROTECTION AGAINST DISCRIMINATORY TREATMENT.

  Section 525(c) of title 11, United States Code, is amended--
          (1) in paragraph (1), by inserting ``student'' before 
        ``grant'' the second place it appears; and
          (2) in paragraph (2), by striking ``the program operated 
        under part B, D, or E of'' and inserting ``any program operated 
        under''.

SEC. 1115. PROPERTY OF THE ESTATE.

  Section 541(b)(4)(B)(ii) of title 11, United States Code, is amended 
by inserting ``365 or'' before ``542''.

SEC. 1116. PREFERENCES.

  (a) In General.--Section 547 of title 11, United States Code, is 
amended--
          (1) in subsection (b), by striking ``subsection (c)'' and 
        inserting ``subsections (c) and (i)''; and
          (2) by adding at the end the following:
  ``(i) If the trustee avoids under subsection (b) a transfer made 
between 90 days and 1 year before the date of the filing of the 
petition, by the debtor to an entity that is not an insider for the 
benefit of a creditor that is an insider, such transfer may be avoided 
under this section only with respect to the creditor that is an 
insider.''.
  (b) Applicability.--The amendments made by this section shall apply 
to any case that is pending or commenced on or after the date of 
enactment of this Act.

SEC. 1117. POSTPETITION TRANSACTIONS.

  Section 549(c) of title 11, United States Code, is amended--
          (1) by inserting ``an interest in'' after ``transfer of'';
          (2) by striking ``such property'' and inserting ``such real 
        property''; and
          (3) by striking ``the interest'' and inserting ``such 
        interest''.

SEC. 1118. DISPOSITION OF PROPERTY OF THE ESTATE.

  Section 726(b) of title 11, United States Code, is amended by 
striking ``1009,''.

SEC. 1119. GENERAL PROVISIONS.

  Section 901(a) of title 11, United States Code, is amended by 
inserting ``1123(d),'' after ``1123(b),''.

SEC. 1120. APPOINTMENT OF ELECTED TRUSTEE.

  Section 1104(b) of title 11, United States Code, is amended--
          (1) by inserting ``(1)'' after ``(b)''; and
          (2) by adding at the end the following:
  ``(2)(A) If an eligible, disinterested trustee is elected at a 
meeting of creditors under paragraph (1), the United States trustee 
shall file a report certifying that election Upon the filing of a 
report under the preceding sentence--
          ``(i) the trustee elected under paragraph (1) shall be 
        considered to have been selected and appointed for purposes of 
        this section; and
          ``(ii) the service of any trustee appointed under subsection 
        (d) shall terminate.
  ``(B) In the case of any dispute arising out of an election under 
subparagraph (A), the court shall resolve the dispute.''.

SEC. 1121. ABANDONMENT OF RAILROAD LINE.

  Section 1170(e)(1) of title 11, United States Code, is amended by 
striking ``section 11347'' and inserting ``section 11326(a)''.

SEC. 1122. CONTENTS OF PLAN.

  Section 1172(c)(1) of title 11, United States Code, is amended by 
striking ``section 11347'' and inserting ``section 11326(a)''.

SEC. 1123. DISCHARGE UNDER CHAPTER 12.

  Subsections (a) and (c) of section 1228 of title 11, United States 
Code, are amended by striking ``1222(b)(10)'' each place it appears and 
inserting ``1222(b)(9)''.

SEC. 1124. BANKRUPTCY CASES AND PROCEEDINGS.

  Section 1334(d) of title 28, United States Code, is amended--
          (1) by striking ``made under this subsection'' and inserting 
        ``made under subsection (c)''; and
          (2) by striking ``This subsection'' and inserting 
        ``Subsection (c) and this subsection''.

SEC. 1125. KNOWING DISREGARD OF BANKRUPTCY LAW OR RULE.

  Section 156(a) of title 18, United States Code, is amended--
          (1) in the first undesignated paragraph--
                  (A) by inserting ``(1) the term'' before `` 
                `bankruptcy''; and
                  (B) by striking the period at the end and inserting 
                ``; and''; and
          (2) in the second undesignated paragraph--
                  (A) by inserting ``(2) the term'' before `` 
                `document''; and
                  (B) by striking ``this title'' and inserting ``title 
                11''.

SEC. 1126. TRANSFERS MADE BY NONPROFIT CHARITABLE CORPORATIONS.

  (a) Sale of Property of Estate.--Section 363(d) of title 11, United 
States Code, is amended--
          (1) by striking ``only'' and all that follows through the end 
        of the subsection and inserting ``only--
          ``(1) in accordance with applicable nonbankruptcy law that 
        governs the transfer of property by a corporation or trust that 
        is not a moneyed, business, or commercial corporation or trust; 
        and
          ``(2) to the extent not inconsistent with any relief granted 
        under subsection (c), (d), (e), or (f) of section 362 of this 
        title.''.
  (b) Confirmation of Plan for Reorganization.--Section 1129(a) of 
title 11, United States Code, as amended by section 140, is amended by 
adding at the end the following:
          ``(15) All transfers of property of the plan shall be made in 
        accordance with any applicable provisions of nonbankruptcy law 
        that govern the transfer of property by a corporation or trust 
        that is not a moneyed, business, or commercial corporation or 
        trust.''.
  (c) Transfer of Property.--Section 541 of title 11, United States 
Code, as amended by section 1102, is amended by adding at the end the 
following:
  ``(f) Notwithstanding any other provision of this title, property 
that is held by a debtor that is a corporation described in section 
501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax 
under section 501(a) of such Code may be transferred to an entity that 
is not such a corporation, but only under the same conditions as would 
apply if the debtor had not filed a case under this title.''.
  (d) Applicability.--The amendments made by this section shall apply 
to a case pending under title 11, United States Code, on the date of 
enactment of this Act, except that the court shall not confirm a plan 
under chapter 11 of this title without considering whether this section 
would substantially affect the rights of a party in interest who first 
acquired rights with respect to the debtor after the date of the 
petition The parties who may appear and be heard in a proceeding under 
this section include the attorney general of the State in which the 
debtor is incorporated, was formed, or does business.
  (e) Rule of Construction.--Nothing in this section shall be deemed to 
require the court in which a case under chapter 11 is pending to remand 
or refer any proceeding, issue, or controversy to any other court or to 
require the approval of any other court for the transfer of property.

SEC. 1127. PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO INCUR FINANCE 
                    CHARGES.

  Section 127 of the Truth in Lending Act (15 U.S.C 1637) is amended by 
adding at the end the following:
  ``(i) Prohibition on Certain Actions for Failure To Incur Finance 
Charges.--A creditor of an account under an open end consumer credit 
plan may not terminate an account prior to its expiration date solely 
because the consumer has not incurred finance charges on the account 
Nothing in this subsection shall prohibit a creditor from terminating 
an account for inactivity in 3 or more consecutive months.''.

SEC. 1128. PROTECTION OF VALID PURCHASE MONEY SECURITY INTERESTS.

  Section 547(c)(3)(B) of title 11, United States Code, is amended by 
striking ``20'' and inserting ``30''.

SEC. 1129. TRUSTEES.

  (a) Suspension and Termination of Panel Trustees and Standing 
Trustees.--Section 586(d) of title 28, United States Code, is amended--
          (1) by inserting ``(1)'' after ``(d)''; and
          (2) by adding at the end the following:
  ``(2) A trustee whose appointment under subsection (a)(1) or under 
subsection (b) is terminated or who ceases to be assigned to cases 
filed under title 11 of the United States Code may obtain judicial 
review of the final agency decision by commencing an action in the 
United States district court for the district for which the panel to 
which the trustee is appointed under subsection (a)(1), or in the 
United States district court for the district in which the trustee is 
appointed under subsection (b) resides, after first exhausting all 
available administrative remedies, which if the trustee so elects, 
shall also include an administrative hearing on the record Unless the 
trustee elects to have an administrative hearing on the record, the 
trustee shall be deemed to have exhausted all administrative remedies 
for purposes of this paragraph if the agency fails to make a final 
agency decision within 90 days after the trustee requests 
administrative remedies The Attorney General shall prescribe procedures 
to implement this paragraph The decision of the agency shall be 
affirmed by the district court unless it is unreasonable and without 
cause based on the administrative record before the agency.''.
  (b) Expenses of Standing Trustees.--Section 586(e) of title 28, 
United States Code, is amended by adding at the end the following:
  ``(3) After first exhausting all available administrative remedies, 
an individual appointed under subsection (b) may obtain judicial review 
of final agency action to deny a claim of actual, necessary expenses 
under this subsection by commencing an action in the United States 
district court in the district where the individual resides The 
decision of the agency shall be affirmed by the district court unless 
it is unreasonable and without cause based upon the administrative 
record before the agency.
  ``(4) The Attorney General shall prescribe procedures to implement 
this subsection.''.

      TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

SEC. 1201. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

  (a) Effective Date.--Except as provided otherwise in this Act, this 
Act and the amendments made by this Act shall take effect 180 days 
after the date of the enactment of this Act.
  (b) Application of Amendments.--Except as otherwise provided in this 
Act, the amendments made by this Act shall not apply with respect to 
cases commenced under title 11 of the United States Code before the 
effective date of this Act.

                             The Amendment

    Inasmuch as H.R. 833, the Bankruptcy Reform Act of 1999, 
was ordered reported with a single amendment in the nature of a 
substitute, as amended, the contents of this report constitute 
an explanation of the bill as so amended.

                          Purpose and Summary

    H.R. 833 is a comprehensive package of reform measures 
pertaining to both consumer and business bankruptcy cases. The 
purpose of H.R. 833 is to improve bankruptcy law and practice 
by restoring personal responsibility and integrity in the 
bankruptcy system and by ensuring that it is fair for both 
debtors and creditors.
    The heart of the bill's consumer bankruptcy reforms is the 
implementation of an income/expense screening mechanism 
(``needs-based bankruptcy relief'') to ensure that debtors 
repay creditors the maximum they can afford. In addition to 
implementing needs-based bankruptcy relief, H.R. 833 institutes 
a panoply of other consumer bankruptcy reforms designed to 
enhance the protections available to debtors and creditors.
    H.R. 833 also contains a comprehensive set of reforms 
pertinent to business bankruptcies. Many of these provisions 
are intended to heighten administrative scrutiny and judicial 
oversight of small business bankruptcy cases. In addition, the 
bill includes provisions designed to reduce ``systemic risk'' 
in the financial marketplace. It also creates a new form of 
bankruptcy relief for transnational insolvencies, includes 
provisions regarding the treatment of tax claims, and requires 
the collection of certain data relating to consumer bankruptcy 
cases.

                Background and Need for the Legislation

                               Background

    On February 24, 1999, Representative George Gekas (for 
himself and Representatives Rick Boucher (D-Va. ), Bill 
McCollum (R-Fla.), and James P. Moran (D-Va.)) introduced H.R. 
833, the Bankruptcy Reform Act of 1999. The bill currently has 
more than 100 bipartisan cosponsors. As introduced, H.R. 833 
was virtually identical to the conference report on H.R. 3150, 
the Bankruptcy Reform Act of 1998, which last year received 
overwhelming bipartisan support in the House as evidenced by a 
vote of 300 to 125.1
---------------------------------------------------------------------------
    \1\ 144 Cong. Rec. H10239-40 (daily ed. Oct. 9, 1998). The 
Committee reported H.R. 3150 favorably, as amended, H.R. Rep. No. 105-
540 (1998), and thereafter, the House passed the bill, as further 
amended, by a vote of 306 to 118 on June 10, 1998. 144 Cong. Rec. H4442 
(daily ed. June 10, 1998). Later that summer, the Senate Committee on 
the Judiciary favorably reported S. 1301, its consumer bankruptcy 
legislation. S. Rep. No. 105-253 (1998). The Senate then passed its 
version of H.R. 3150 by substituting the text of S. 1301, as amended, 
on September 23, 1998. On request of the Senate and consent of the 
House, a conference was appointed. On October 9, 1998, the House passed 
the conference report, H.R. Rep. No. 105-794 (1998), which had been 
filed two days earlier. The conference report was not acted upon by the 
Senate prior to the adjournment of the 105th Congress.
---------------------------------------------------------------------------

                        Need for the Legislation

Consumer bankruptcy

    Overview. According to statistics released by the 
Administrative Office of the United States Courts, more than 
1.4 million bankruptcy cases were filed in 1998.2 
Bankruptcy filings, after passing the one-million mark for the 
first time in the twelve-month period ending June 30, 1996, 
``have risen steadily ever since.'' 3 The number of 
consumer bankruptcy cases filed per million adults, according 
to the Congressional Budget Office, increased nearly 77 percent 
between the end of 1994 and the end of 1997.4 
Paradoxically, this increase in consumer bankruptcy filing 
rates is occurring while the economy is basically healthy, 
unemployment is low, personal incomes are generally rising, and 
consumer confidence is high.5
---------------------------------------------------------------------------
    \2\ Administrative Office for United States Courts News Release, 
Increase in Bankruptcy Filings Slowed in Calendar Year 1998, at 1 (Mar. 
1, 1999).
    \3\ Id. While the rate of the increase recently decreased (19.1 
percent in 1997; 2.7 percent in 1998), bankruptcy filings are at record 
levels. Id.
    \4\ Congressional Budget Office, A Report of Data and Studies About 
Personal Bankruptcy, at 5 (preliminary draft Apr. 16, 1999).
    \5\ Id.; see, e.g., Bankruptcy Reform Act of 1999: Hearings on H.R. 
833 Before the Subcomm. on Commercial and Admin. Law of the House Comm. 
on the Judiciary, 106th Cong. (1999) [hereinafter 1999 Hearings] 
(statement of Richard Stana, Associate Director, Administration of 
Justice Issues, General Government Division, General Accounting Office, 
at 1 (Mar. 17, 1999)).
---------------------------------------------------------------------------
    According to some analyses, this increase in consumer 
bankruptcy filings has significant adverse economic 
consequences. For example, they estimate that more than $40 
billion was written off as a result of losses discharged in 
bankruptcy cases in 1998, 6 which amounts to a loss 
of ``at least $110 million every day.'' 7 This loss, 
according to one study, translates into more than $400 annually 
per household.8 Last year, one economic analysis 
projected that even if the growth rate in personal bankruptcies 
slowed to 15 percent over the next three years, the American 
economy may absorb a cumulative cost of more than $220 
billion.9 In addition, certain studies conclude that 
some debtors who file for bankruptcy relief do have the ability 
to repay some portion of their otherwise dischargeable 
debts.10
---------------------------------------------------------------------------
    \6\ 1999 Hearings, supra note 5 (statement of Dean Sheaffer on 
behalf of the National Retail Federation, at 1 (Mar. 11, 1999)). A 
representative from the banking industry described the adverse economic 
consequences of the ``precipitous increase in the number of consumer 
bankruptcy filings'' and how it has impacted all Americans. Id. 
(statement of Bruce L. Hammonds, on behalf of MBNA America Bank, N.A., 
at 1 (Mar. 11, 1999)). Another witness explained the special concerns 
that increased bankruptcy filings present to credit unions and their 
members. Id. (statement of Larry Nuss on behalf of the Credit Union 
National Association, Inc., at 2 (Mar. 11, 1999)). The Committee 
received similar information last year. See, e.g., Bankruptcy Reform 
Act of 1998, Responsible Borrower Bankruptcy Protection Act, and 
Consumer Lenders and Borrowers Accountability Act of 1998: Hearings on 
H.R. 3150, 2500 and 3146 Before the Subcomm. on Commercial and Admin. 
Law of the House Comm. on the Judiciary, 105th Cong. (1998) 
[hereinafter 1998 Hearings] (statement of WEFA Group Resource Planning 
Service, Final Report: The Financial Costs of Personal Bankruptcy, at 
16 (Feb. 1998)).
    \7\ 1999 Hearings, supra note 5 (statement of Dean Sheaffer on 
behalf of the National Retail Federation, at 1 (Mar. 11, 1999)) 
(emphasis supplied). This witness also testified that bankruptcy 
filings were ``out of control.'' Id.
    \8\ 1998 Hearings, supra note 6 (statement of WEFA Group Resource 
Planning Service, Final Report: The Financial Costs of Personal 
Bankruptcy, at 16 (Feb. 1998)); see 1999 Hearings, supra note 5 
(statement of Bruce L. Hammonds on behalf of MBNA America Bank, N.A., 
at 1 (Mar. 11, 1999)). Others questioned, however, the economic 
benefits of the legislation. See, e.g., 1999 Hearings, supra note 5.
    \9\ 1998 Hearings, supra note 6 (statement of WEFA Group Resource 
Planning Service, ``Final Report: The Financial Costs of Personal 
Bankruptcy,'' at 17-18 (Feb. 1998)).
    \10\ See, e.g., Marianne B. Culhane & Michaela M. White, ``Taking 
the New Consumer Bankruptcy Model for a Test Drive: Means-Testing Real 
Chapter 7 Debtors,--Am. Bankr. L. J.--(to be published 1999) 
(concluding that 3.6% of sampled debtors ``emerged as apparent can-
pays''); 1999 Hearings, supra note 5 (statement of Dr. Thomas S. Neubig 
on behalf of Ernst & Young LLP--Policy Economics and Quantitative 
Analysis Group, at 2 (Mar. 17, 1999)) (stating, ``we can confidently 
predict that if the needs based provision had been in effect in 1997, 
10 percent of Chapter 7 filers, or about 100,000 filers, would likely 
have been required to file a Chapter 13 repayment plan''); id. 
(statement of Michael E. Staten on behalf of the Credit Research 
Center, at 2-3 (Mar. 17, 1999)) (concluding that, based on the 
debtors'' own statements of monthly living expenses, ``about 25 percent 
of Chapter 7 debtors could have repaid at least 30 percent of their 
non-housing debts over a 5-year repayment plan, after accounting for 
monthly expenses and housing payments'' and that ``[a]bout five percent 
of Chapter 7 filers appeared capable of repaying all of their non-
housing debt over a 5-year plan,'' although these ``calculations 
assumed income would remain unchanged relative to expenses over the 
five years'').
---------------------------------------------------------------------------
    This legislation responds to many of the factors 
contributing to this increase in consumer bankruptcy filings, 
such as lack of personal responsibility,11 the 
proliferation of serial filings, and the lack of effective 
oversight to eliminate abuse in the system. The consumer 
bankruptcy provisions of H.R. 833 address the needs of 
creditors as well as debtors. The bill's creditor protections 
generally are of three types: needs-based bankruptcy reforms, 
expanded protections for creditors in general, and protections 
for specific types of creditors. The debtor protections allow 
debtors to exempt certain education IRA plans, fortify the 
Bankruptcy Code's exemptions for certain retirement pension 
funds, enhance the professionalism standards for attorneys and 
others who assist consumer debtors with their bankruptcy cases, 
ensure that debtors receive notice of alternatives to 
bankruptcy relief, require debtors to participate in debt 
repayment programs, and institute a pilot program to study the 
effectiveness of consumer financial management programs.
---------------------------------------------------------------------------
    \11\ Some have likened the moral weakness of the present bankruptcy 
system to ``shoplifting.'' 1999 Hearings, supra note 5 (statement of 
Prof. Todd Zywicki, George Mason Law School, at 3 (Mar. 11, 1999)).
---------------------------------------------------------------------------
    Consumer creditor protections: needs-based reforms. Chapter 
7 is a form of bankruptcy relief where an individual debtor 
receives an immediate discharge of personal liability for 
certain debts in exchange for turning over his or her nonexempt 
assets to the bankruptcy trustee for distribution to 
creditors.12 This ``unconditional discharge'' in 
chapter 7 contrasts with the ``conditional discharge'' 
provisions of chapter 13, under which a debtor commits to repay 
some portion of his or her financial obligations in exchange 
for retaining nonexempt assets and receiving a broader 
discharge of debt than is available under chapter 7.
---------------------------------------------------------------------------
    \12\ Under the Bankruptcy Code, only an individual may obtain a 
chapter 7 discharge. 11 U.S.C. 727(a). Thus, a corporation is not 
eligible to receive a discharge under chapter 7.
---------------------------------------------------------------------------
    Allowing consumer debtors in financial distress to choose 
voluntarily an ``unconditional discharge'' has been a part of 
American bankruptcy law since the enactment of the Bankruptcy 
Act of 1898.13 The rationale of an unconditional 
discharge was explained by Congress more than 100 years ago:
---------------------------------------------------------------------------
    \13\ Bankruptcy Act of 1898, 30 Stat. 544 (1898) (repealed 1978).
---------------------------------------------------------------------------
          [W]hen an honest man is hopelessly down financially, 
        nothing is gained for the public by keeping him down, 
        but, on the contrary, the public good will be promoted 
        by having his assets distributed ratably as far as they 
        will go among his creditors and letting him start 
        anew.14

    \14\ H.R. Rep. No. 55-65, at 43 (1897).
---------------------------------------------------------------------------
    The concept of needs-based bankruptcy relief has also long 
been debated by the Congress and others. President Herbert 
Hoover, for instance, recommended:

          The discretion of the courts in granting or refusing 
        discharge should be broadened, and they should be 
        authorized to postpone discharges for a time and 
        require bankrupts, during the period of suspension to 
        make some satisfaction out of after-acquired property 
        as a condition to the granting of a full 
        discharge.15
---------------------------------------------------------------------------
    \15\ 1 Collier on Bankruptcy para. 0.04 (14th ed. 1974).

    Congressional recognition of needs-based relief has been 
gradual. In 1938, chapter XIII was enacted, a purely voluntary 
form of bankruptcy relief that allowed a debtor to voluntarily 
propose a plan to repay creditors out of future 
earnings.16 Over the ensuing years, there continued 
to be repeated expressions of support for and opposition to 
needs-based bankruptcy reform.17 The Bankruptcy 
Reform Act of 1978,18 however, retained the 
principle that a debtor's decision to choose relief premised on 
repayment to creditors had to be ``completely voluntary.'' 
19
---------------------------------------------------------------------------
    \16\ Chandler Act of 1938, 52 Stat. 840 (1938); see 1999 Hearings, 
supra note 5 (statement of Prof. Lawrence P. King, Charles Seligson 
Professor of Law at New York University School of Law, at 4 (Mar. 16, 
1999)).
    \17\ See, e.g., Report of the Commission on the Bankruptcy Laws of 
the United States--July 1973, H.R. Doc. No. 93-137, pt. I, at 158 
(1973) (observing that ``proposals have been made to Congress from time 
to time that a debtor able to obtain relief under Chapter XIII 
[predecessor of 13] should be denied relief in straight bankruptcy''); 
Hearings on H.R. 1057 and H.R. 5771 Before the Subcomm. No. 4 of the 
House Committee on the Judiciary, 90th Cong. (1967). Organizations that 
testified before Congress in 1967 in support of such reform included 
the American Bar Association, the American Bankers Association, the 
Chamber of Commerce of the United States, Credit Union National 
Association, Inc., the National Federation of Independent Businesses, 
and the American Industrial Bankers Association. Id. The Commission on 
the Bankruptcy Laws of the United States, while supporting the concept 
that repayment plans should be ``fostered,'' nevertheless concluded in 
1973 that ``forced participation by a debtor in a plan requiring 
contributions out of future income has so little prospect for success 
that it should not be adopted as a feature of the bankruptcy system.'' 
Id. at 159.
    \18\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).
    \19\ Bankruptcy Law Revision: Report of the Committee on the 
Judiciary to Accompany H.R. 8200, H.R. Rep. No. 95-595, at 120 (1977) 
(observing that ``[t]he thirteenth amendment prohibits involuntary 
servitude'' and suggesting that ``a mandatory chapter 13, by forcing an 
individual to work for creditors, would violate this prohibition'').
---------------------------------------------------------------------------
    Although as originally enacted, the Bankruptcy Code 
provided that a chapter 7 case could only be dismissed for 
``cause,'' the Code was in 1984 amended to permit the court to 
dismiss a chapter 7 case for ``substantial abuse.'' 
20 This provision, codified in section 707(b) of the 
Bankruptcy Code, was added ``as part of a package of consumer 
credit amendments designed to reduce perceived abuses in the 
use of chapter 7.'' 21 It was intended to respond 
``to concerns that some debtors who could easily pay their 
creditors might resort to chapter 7 to avoid their 
obligations.'' 22 In 1986, section 707(b) was 
further amended to allow a United States trustee (a Department 
of Justice official) to move for dismissal.
---------------------------------------------------------------------------
    \20\ 11 U.S.C. Sec. 707(b).
    \21\ Collier on Bankruptcy para. 707.LH[2] (Lawrence P. King et 
al., 15th ed. rev. 1999).
    \22\ Id. at para. 707.04.
---------------------------------------------------------------------------
    Under current practice, section 707(b) motions are 
infrequently made for several reasons.First, neither the court 
nor the United States trustee is required to make these motions, even 
in cases evidencing obvious abuse of the bankruptcy system. Second, 
other parties in interest, such as chapter 7 trustees and creditors, 
are prohibited from filing these motions. In fact, section 707(b) 
provides that a section 707(b) motion may not even be made ``at the 
request or suggestion of any party in interest.'' 23 Third, 
the standard for dismissal--substantial abuse--is inherently vague, 
which has lead to its disparate interpretation and application by the 
bankruptcy bench.24 Some courts, for example, hold that a 
debtor's ability to repay a significant portion of his or her debts out 
of future income constitutes substantial abuse and therefore is cause 
for dismissal.25 Others do not, absent some evidence of 
moral turpitude.26 A fourth reason militating against filing 
section 707(b) motions is that the Bankruptcy Code codifies a 
presumption that favors granting a debtor a discharge.27
---------------------------------------------------------------------------
    \23\ 11 U.S.C. 707(b).
    \24\ See, e.g., David White, ``Disorder in the Court: Section 
707(b) of the Bankruptcy Code,'' 1995-96 Ann. Survey of Bankr. L. 333, 
355 (1996) (noting that the courts ``have taken divergent views in an 
attempt to define the term'' and have resorted to ``a variety of 
methods'').
    \25\ See, e.g., In re Kelly, 841 F.2d 908, 913-14 (9th Cir. 1988) 
(observing that the ``principal factor to be considered in determining 
substantial abuse is the debtor's ability to repay debts for which a 
discharge is sought'').
    \26\ See, e.g., In re Braley, 103 B.R. 758 (Bankr. E.D. Va. 1989), 
aff'd, 110 B.R. 211 (E.D. Va. 1990). Notwithstanding the fact that the 
debtors in Braley had disposable monthly income of nearly $2,700, the 
bankruptcy court did not dismiss the case for substantial abuse. Id. at 
760. The court concluded, ``Based upon this legislative history, we are 
persuaded that no future income tests exists in 707(b) and if it did, 
as a finding of fact, the Braley family has insufficient future income 
to merit barring the door in light of the circumstances of this Navy 
family.'' Id at 762.
    \27\ Section 707(b) of the Bankruptcy Code mandates that ``[t]here 
shall be a presumption in favor of granting the relief requested by the 
debtor.'' 11 U.S.C. 707(b).
---------------------------------------------------------------------------
    Over the course of its hearings, both this year and last 
year, the Subcommittee on Commercial and Administrative Law 
received testimony that some chapter 7 debtors do have the 
ability to repay their debts 28 and that, if needs-
based reforms and other measures were implemented, the rate of 
repayment to creditors would increase as more debtors are 
shifted into chapter 13 as opposed to chapter 7.29
---------------------------------------------------------------------------
    \28\ See supra note 10.
    \29\ See, e.g., 1998 Hearings, supra note 6 (statement of WEFA 
Group Resource Planning Service, ``Final Report: The Financial Costs of 
Personal Bankruptcy,'' at 20 (Feb. 1998)).
---------------------------------------------------------------------------
    H.R. 833's needs-based reforms strengthen section 707(b) in 
several respects to ensure that chapter 7 cases presenting 
evidence of abuse are promptly eliminated from the bankruptcy 
system. They institute a screening mechanism designed to 
identify chapter 7 debtors having the ability to repay their 
debts and to presume that their cases constitute an abuse 
thereby warranting their dismissal. Chapter 7 debtors with 
incomes below certain thresholds are not subject to this 
presumption of abuse.30
---------------------------------------------------------------------------
    \30\ This income threshold ``safe harbor'' should significantly 
reduce the number of debtors subject to the needs-based formula 
presumption of abuse based on ability to repay.
---------------------------------------------------------------------------
    The needs-based reforms of H.R. 833 are implemented as 
follows. First, it amends section 707(b) of the Bankruptcy Code 
to allow--in addition to the courts and United States 
trustees--panel trustees and parties in interest (in certain 
circumstances) to seek dismissal of a chapter 7 case or 
conversion to chapter 13 on consent of the debtor. Under 
current law, only the courts and United States Trustees may 
make a motion for dismissal. Second, it revises the ground for 
dismissal under section 707(b) from ``substantial abuse'' to 
``abuse'' and replaces the present presumption in favor of the 
debtor with one that requires the court to presume abuse if the 
debtor has income available (after deduction of certain 
specified expenses, certain payments on debts, and ten percent 
of projected plan payments to account for estimated costs of 
administration) of at least $100 per month, determined over a 
five-year repayment period. Third, it provides for dismissal of 
these cases, unless the debtors consent to conversion to 
chapter 13.
    Irrespective of a debtor's ability to repay, H.R. 833 
provides that a chapter 7 case may be dismissed if the totality 
of the circumstances (including whether the case was filed by 
the debtor for the purpose of rejecting a personal services 
contract) demonstrates abuse, based on the debtor's financial 
situation.
    Protections for creditors--in general. H.R. 833 contains a 
broad range of reforms to provide greater protections for 
creditors, while ensuring that the claims of those creditors 
entitled to priority treatment, such as spousal and child 
support claims, are not adversely impacted. The bill 
accomplishes this goal by (1) ensuring that creditors receive 
proper and timely notice of important events and proceedings in 
a bankruptcy case; (2) prohibiting abusive serial filings and 
extending the period between successive discharges; (3) 
implementing various provisions designed to improve the 
accuracy of the information contained in debtors' schedules, 
statements of financial affairs, and other documents; and (4) 
limiting abusive use of exemptions. It also clarifies that 
creditors holding consumer debts may participate without 
counsel at the section 341 meeting of creditors (which provides 
an opportunity for creditors to examine the debtor under oath) 
and with respect to activities related thereto.
    Protection of family support obligations. Domestic support 
claimants receive a number of special protections under H.R. 
833. The bill creates a uniform and expanded definition of 
domestic support obligations to include debts that accrue both 
before or after a bankruptcy case is filed. H.R. 833 accords 
the highest payment priority for these debts and gives new 
priority treatment to certain claims assigned to governmental 
units by a spouse, former spouse, child of the debtor, or 
parent of a child. The bill mandates that chapter 13 and 11 
(reorganization) debtors must be current on their postpetition 
domestic support obligations to confirm their plans of 
reorganization. The same obligation is imposed on a chapter 13 
debtor as a prerequisite to receiving a discharge. To 
facilitate the domestic support collection efforts by 
governmental units, H.R. 833 creates various exceptions to 
automatic stay provisions of the Bankruptcy Code (which enjoin 
many forms of creditor collection activities). It also broadens 
the categories of nondischargeable family support obligations 
with the result that these debts will not be extinguished at 
the end of the bankruptcy process.
    Protections for secured creditors. H.R. 833 gives secured 
creditors a broad variety of enhanced protections: (1) a 
prohibition against bifurcation or ``cramdown'' of claims 
secured by personal property acquired within five years of the 
bankruptcy filing, (2) clarification that the value of a claim 
secured by personal property is the replacement value of such 
property without deduction for the secured creditor's costs of 
sale or marketing, (3) termination of the automatic stay with 
respect to personal property if the debtor does not timely 
reaffirm the underlying obligation or redeem the property, and 
(4) a requirement that a secured claimant retain its lien in a 
chapter 13 case until the underlying debt is paid or the debtor 
receives a discharge. H.R. 833 also clarifies certain important 
issues with respect to the rights of secured creditors in the 
bankruptcy context, such as the valuation of a secured 
interest, the debtor's retention of secured property, and the 
issue of ``ride through'' with respect to personal property.
    Protections for unsecured creditors. H.R. 833 contains 
various reforms responsive to certain forms of abuse and fraud 
in the present bankruptcy system. For example, the bill 
substantially limits a debtor's ability to file successive 
bankruptcy cases. It addresses abusive practices by consumer 
debtors who, for example, knowingly load up with credit card 
purchases or recklessly obtain credit and then file for 
bankruptcy relief. In addition, H.R. 833 prevents the discharge 
of debts based on fraud, embezzlement, and malicious injury in 
a chapter 13 case.
    Protections for lessors. With respect to the interests of 
lessors, H.R. 833 requires chapter 13 debtors to remain current 
on their personal property leases and provide proof of adequate 
insurance. The bill specifies that a lessor may condition 
assumption of a personal property lease on cure of any 
outstanding default and it provides that a lessor is not 
required to permit such assumption. The bill also addresses a 
problem faced by thousands of small landlords across the nation 
regarding the widespread practice of tenants who file for 
bankruptcy relief so that they can live ``rent free.''
    Debtor protections. H.R. 833 codifies various debtor 
protections. These include provisions allowing a consumer 
debtor to exempt certain education IRA plans for their child's 
postsecondary education and fortifying the Bankruptcy Code's 
exemption provisions for certain tax-qualified retirement 
funds. Under the bill, individuals with primarily consumer 
debts must receive notice of alternatives to bankruptcy relief 
before they file for bankruptcy and it requires them to be 
informed of other matters pertaining to the integrity of the 
bankruptcy system. This requirement ensures that debtors are 
aware of viable and cost-effective alternatives to bankruptcy. 
The bill requires debtors to participate in debt repayment 
programs before filing for bankruptcy relief (unless special 
circumstances do not permit such participation). In addition, 
H.R. 833 directs the Director of the Executive Office for 
United States Trustees to institute a consumer financial 
management pilot program that will enable the effectiveness and 
costs of such programs to be evaluated.
    The bill also enhances the standards of practice for 
attorneys and others who assist consumer debtors in connection 
with their bankruptcy cases. H.R. 833 mandates that certain 
services and specified notices be provided to consumers by 
professionals and others who render bankruptcy assistance. To 
ensure compliance with these provisions, H.R. 833 institutes 
variousenforcement mechanisms.
    Business Bankruptcy. H.R. 833 contains a comprehensive set 
of reforms pertinent to business bankruptcies. They include 
provisions addressing the special problems presented by small 
business bankruptcies and single asset real estate debtors as 
well as provisions dealing with business bankruptcy cases in 
general. H.R. 833 establishes a new form of bankruptcy relief 
for transnational insolvencies intended to promote 
international comity and greater certainty. It also includes 
provisions concerning the treatment of certain financial 
contracts under the banking laws as well as under the 
Bankruptcy Code. H.R. 833 responds to the special needs of 
family farmers by making chapter 12 of the Bankruptcy Code, a 
form of bankruptcy relief available only to eligible family 
farmers, permanent.
    Small business/single asset real estate debtors. The small 
business and single asset real estate provisions of H.R. 833 
are largely derived from consensus recommendations of the 
National Bankruptcy Review Commission.31 These 
provisions have also received broad support from many in the 
bankruptcy community, including various bankruptcy judges and 
creditor groups, and the Executive Office for United States 
Trustees.
---------------------------------------------------------------------------
    \31\ See generally Report of the National Bankruptcy Review 
Commission, at 303-706 (Oct. 20, 1997).
---------------------------------------------------------------------------
    Most chapter 11 cases are filed by small business debtors. 
Although the Bankruptcy Code envisions that creditors should 
play a major role in the oversight of chapter 11 cases, this 
does not often occur with respect to small business debtors. 
The main reason is that creditors in these smaller cases do not 
have claims large enough to warrant the expenditure of the 
necessary time and money to participate actively in these 
cases. The resulting lack of creditor oversight creates a 
greater need for the United States Trustee to monitor these 
cases actively. Nevertheless, the monitoring of these debtors 
by United States Trustees varies throughout the nation.
    H.R. 833 addresses the special problems presented by small 
business cases by instituting a variety of time frames and 
enforcement mechanisms to weed out small business debtors who 
are not likely to reorganize. It also requires these cases to 
be more actively monitored by United States Trustees and the 
bankruptcy courts.
    With regard to single asset real estate debtors, H.R. 833 
makes several amendments to the Bankruptcy Code's provisions. 
First, it eliminates the monetary cap from the definition 
currently in the Bankruptcy Code. Second, it makes these 
debtors subject to the small business provisions of the bill. 
Third, H.R. 833 amends the automatic stay provisions by 
permitting a single asset real estate debtor to make requisite 
interest payments out of rents or other proceeds generated by 
the real property.
    Financial contracts. Title X of H.R. 833 contains a series 
of provisions pertaining to the treatment of certain financial 
transactions under the Bankruptcy Code and relevant banking 
laws. These provisions are intended to reduce ``systemic risk'' 
in the banking system and financial marketplace. 32 
They amend provisions of the banking and investment laws, as 
well as the Bankruptcy Code, applicable to certain types of 
financial transactions. This is to minimize the risk of 
disruption when parties to these transactions become bankrupt 
or insolvent. In addition to the Bankruptcy Code, the bill 
amends the Federal Deposit Insurance Act; Financial 
Institutions Reform, Recovery and Enforcement Act of 1989; 
Federal Deposit Insurance Corporation Improvement Act of 1991; 
Federal Reserve Act; and Securities Investor Protection Act of 
1971. Many of these provisions are derived from recommendations 
issued by a presidential interagency working group chaired by 
Treasury Secretary Robert Rubin 33 and revisions 
espoused by the financial industry. 34 Among these 
provisions is one that would treat certain asset-backed 
securitizations as valid transfers. Other provisions broaden 
the scope of certain definitions to include additional types of 
business transactions and limit the authority of a court or 
administrative agency to enjoin certain actions.
---------------------------------------------------------------------------
    \32\ ``Systemic risk'' is explained as the following:

        Systemic risk is the risk that the failure of a firm or 
      disruption of a market or settlement system will cause 
      widespread difficulties at other firms, in other market 
      segments or in the financial system as a whole. If 
      participants in certain financial activities are unable to 
      enforce their rights to terminate financial contracts with 
      an insolvent entity in a timely manner, or to offset or net 
      their various contractual obligations, the resulting 
      uncertainty and potential lack of liquidity could increase 
---------------------------------------------------------------------------
      the risk of an inter-market disruption.

H. Rep. No. 105-688, Part 1, at 2 (1998).
---------------------------------------------------------------------------
    \33\ The Working Group's members included representatives from the 
Commodity Futures Trading Commission, the Federal Deposit Insurance 
Corporation, the Board of Governors of the Federal Reserve System, the 
Federal Reserve Bank of New York, the Securities and Exchange 
Commission, and the Department of the Treasury, including the Office of 
the Comptroller of the Currency. Id. at 1.
    \34\ The Bond Market Association (a group representing securities 
firms and banks that underwrite, trade and sell debt securities) and 
the International Swaps and Derivatives Association (an international 
financial trade association whose membership is comprised of 
commercial, merchant and investment banks that engage in swaps and 
other privately negotiated derivatives transactions). See, e.g., 
Statement of John D. Hawke, Jr., Treasury Under Secretary for Domestic 
Finance, before the U.S. House of Representatives Committee on Banking 
and Financial Services, at 1 (July 24, 1998) (stating that he was 
``pleased to report that we have negotiated compromise language with 
industry participants who wanted somewhat broader legislation than we 
were prepared to propose').
---------------------------------------------------------------------------
    Transnational insolvencies. In response to the increasing 
globalization of business dealings and operations, the bill 
establishes a separate chapter under the Bankruptcy Code 
devoted to transnational insolvencies. These provisions are 
intended to provide greater legal certainty for trade and 
investment as well as to provide for the fair and efficient 
administration of these cases.
    Other Provisions Having General Impact. H.R. 833 contains 
several provisions that generally impact bankruptcy law and 
practice. For example, it requires the Executive Office for 
United States Trustees to compile various statistics regarding 
chapter 7, 11, and 13 cases and to make these data available to 
the public. Another provision allows professionals to share 
compensation with bona fide public service attorney referral 
programs. H.R. 833 mandates that a bankruptcy court conduct a 
scheduling conference in a bankruptcy case, if necessary to 
further the expeditious and economical resolution of the case.
    The bill also revises the Bankruptcy Code's preference 
provisions. Under H.R. 833, a defendant in a preference action 
may establish that the transfer was made in the ordinary course 
of the debtor's financial affairs or business, or that the 
transfer was made in accordance with ordinary business terms. 
Current law requires the defendant to establish both defenses. 
The bill also prevents a preferential transfer action from 
being filed unless the transfer exceeds a specified monetary 
minimum. In addition, H.R. 833 amends the venue provisions for 
preferential transfer actions to require a preference action 
based on a transfer of $10,000 or less to be filed in the 
district where the defendant resides. Current law fixes this 
amount at $1,000.

                                Hearings
    The Committee's Subcommittee on Commercial and 
Administrative Law began its consideration of comprehensive 
bankruptcy reform more than two years ago. On April 16, 1997, 
the Subcommittee conducted a hearing on the operation of the 
bankruptcy system, which was combined with a status report from 
the National Bankruptcy Review Commission. 35 This 
would be the first of 13 hearings that the Subcommittee held on 
the subject of bankruptcy reform over the ensuing two years. 
36 Eight of these hearings were devoted solely to 
consideration of H.R. 833 and its predecessor, H.R. 3150, the 
Bankruptcy Reform Act of 1998. Over the course of these 
hearings, more than 130 witnesses, representing nearly every 
major constituency in the bankruptcy community, testified. With 
regard to H.R. 833 alone, testimony was received from 69 
witnesses, representing 23 organizations, with additional 
material submitted by other individuals and groups.
---------------------------------------------------------------------------
    \35\ Hearing Before the Subcommittee on Commercial and 
Administrative Law on the Operation of the Bankruptcy System and Status 
Report from the National Bankruptcy Review Commission, 105th Cong. 
(1997).
    \36\ The dates and subject matters of these hearings were as 
follows:
    April 16, 1997--Hearing on the operation of the bankruptcy system 
and status report from the National Bankruptcy Review Commission.
    April 30, 1997--Hearing on H.R. 764, Bankruptcy Amendments of 1997, 
and H.R. 120, Bankruptcy Law Technical Corrections Act of 1997.
    October 9, 1997--Hearing on H.R. 2592, Private Trustee Reform Act 
of 1997 and review of post-confirmation fees in Chapter 11 cases.
    November 13, 1997--Hearing on the Report of the National Bankruptcy 
Review Commission.
    February 12, 1998--Hearing on H.R. 2604, Religious Liberty and 
Charitable Donation Protection Act of 1997.
    March 10-11, 18-19, 1998--Hearings on H.R. 3150, Bankruptcy Reform 
Act of 1998, H.R. 3146, Consumer Lenders and Borrowers Bankruptcy 
Accountability Act of 1998, and H.R. 2500, Responsible Borrower 
Protection Bankruptcy Act.
    March 11, 16-18, 1999--Hearings on H.R. 833, the Bankruptcy Reform 
Act of 1999.
---------------------------------------------------------------------------
    The Subcommittee's first hearing on H.R. 833 was held 
jointly with the Senate Subcommittee on Administrative 
Oversight and the Courts on March 11, 1999. This marked the 
first time in more than 60 years that a bicameral hearing was 
held on the subject of bankruptcyreform.37 United 
States Senators who testified at the hearing included Senators Charles 
Grassley (R-Iowa), Joseph R. Biden (D-Del.) and Christopher J. Dodd (D-
Conn.). House Members included Representatives James P. Moran (D-Va.), 
Pete Sessions (R-Texas) and Nick Smith (R-Mich.). Other witnesses 
included Dean Sheaffer, Vice President and Director of Credit at 
Boscov's Department Store, Inc., representing the National Retail 
Federation; Bruce L. Hammonds, Senior Vice Chairman and Chief Operating 
Officer, MBNA America Bank, N.A.; the Honorable Carol J. Kenner, United 
States Bankruptcy Judge for the District of Massachusetts; Larry Nuss, 
Chief Executive Officer, Cedar Falls Community Credit Union, 
representing Credit Union National Association, Inc.; Gary Klein, 
Senior Attorney with the National Consumer Law Center; the Honorable 
Edith Hollan Jones, Judge, United States Court of Appeals for the Fifth 
Circuit, and former member of the National Bankruptcy Review 
Commission; Judith Greenstone Miller, Clark Hill, PLC, representing the 
Commercial Law League of America; Professor Todd Zywicki, George Mason 
University School of Law; and Professor Elizabeth Warren, Leo Gottlieb 
Professor of Law at Harvard Law School.
---------------------------------------------------------------------------
    \37\ Statement of Charles Grassley, U.S. Senator, at 1 (Mar. 11, 
1999).
---------------------------------------------------------------------------
    Witnesses at the March 16, 1999 hearing included the 
following: Representatives James P. Moran (D-Va.), Bill 
McCollum (R-Fla.), Nick Smith (R-Mich.), Rick Boucher (D-Va.), 
Steven Rothman (D-NJ), Sheila Jackson Lee (D-Tex.), Louise 
McIntosh Slaughter (D-NY), and John LaFalce (D-NY). Other 
witnesses included: James I. Shepard, a bankruptcy tax 
consultant and former member of the National Bankruptcy Review 
Commission; Professor Eric Posner of the University of Chicago 
Law School; Professor David Skeel of the University of 
Pennsylvania Law School; Professor Lawrence P. King, Charles 
Seligson Professor of Law at New York University School of Law; 
Ralph R. Mabey, a practitioner and former United States 
Bankruptcy Judge; the Honorable Joe Lee, United States 
Bankruptcy Judge for the Eastern District of Kentucky; Leon 
Forman, a practitioner; James E. Smith, President and Chief 
Executive Officer, Union State Bank and Trust, representing the 
American Bankers Association; Janet Kubica, President and Chief 
Executive Officer, Postmark Credit Union, representing the 
Credit Union National Association; and Frank Torres, 
Legislative Counsel for Consumers Union.
    Witnesses at the March 17, 1999 hearing included the 
following: George J. Wallace of Eckert, Seamans, Cherin & 
Mellott, LLC, representing the Consumer Bankruptcy Reform 
Coalition; the Honorable William Brown, United States 
Bankruptcy Judge for the Western District of Tennessee, 
representing the American Bankruptcy Institute; Professor Todd 
Zywicki of George Mason University School of Law; Professor 
Kenneth Klee of the University of Cali-

fornia--Los Angeles School of Law, representing the National 
Bankruptcy Conference; Jeffrey A. Tassey, Senior Vice President 
of Governmental and Legal Affairs for the American Financial 
Services Association; Michael Moore, President of Badcock Home 
Furnishing Centers, representing the National Retail 
Federation; Wayne Sigmon, a partner with the law firm of Gray, 
Layton, Kersh, Solomon, Sigmon, Furr and Smith, representing 
the National Association of Consumer Bankruptcy Attorneys; the 
Honorable Thomas R. Carper, Governor of the State of Delaware, 
representing the National Governors' Association; the Honorable 
Randall J. Newsome, United States Bankruptcy Judge for the 
Northern District of California, representing the National 
Conference of Bankruptcy Judges; Robert Waldschmidt, a chapter 
7 trustee, representing the National Association of Bankruptcy 
Trustees; Henry E. Hildebrand, III, a chapter 13 trustee, 
representing the National Association of Chapter 13 Trustees; 
Prof. Michael E. Staten, Director of the Credit Research 
Center, at the McDonough School of Business, Georgetown 
University; Professor Marianne B. Culhane, Creighton University 
School of Law; Lisa H. Ryu, Staff Economist at the National 
Association of Federal Credit Unions; Dr. Thomas S. Neubig, 
Ernst & Young LLP; and Richard M. Stana, Associate Director 
Administration of Justice Issues, General Government Division 
at the General Accounting Office.
    Witnesses at the fourth and final hearing held on March 18, 
1999 included the following: Representatives Robert E. Andrews 
(D-NJ), James A. Leach (R-Iowa) and Marge Roukema (R-NJ); 
Philip L. Strauss, Assistant District Attorney, Family Support 
Bureau of the Office of the District Attorney; Joan Entmacher, 
Vice President and Director of the Family Economic Center, 
National Women's Law Center; Stephanie M. Saperstein, Assistant 
Attorney General, Office of the Utah Attorney General, 
representing the National Association of Attorneys General; 
Professor Karen Gross, New York Law School; the Honorable 
Thomas Carlson, United States Bankruptcy Judge for the Northern 
District of California; H. Elizabeth Baird, Assistant General 
Counsel for the Bank of America Corporation; William H. 
Schorling, Klett, Lieber, Rooney & Schorling, representing the 
American Bar Association--Business Bankruptcy Section; Charles 
M. Tatelbaum, a partner with the law firm of Cummings & 
Lockwood, representing the National Association of Credit 
Managers; Judith Greenstone Miller, a partner with the law firm 
of Clark Hill, PLC, representing the Commercial Law League of 
America; Damon Silvers, Associate General Counsel for the 
American Federation of Labor and Congress of Industrial 
Organizations; Jere W. Glover, Chief Counsel for the Office of 
Advocacy, United States Small Business Administration; Ray 
Valdes, Tax Collector for Seminole County in Florida, on behalf 
of the National Association of County Treasurers and Finance 
Officers, the National Association of County Officials, and the 
National League of Cities; Don Harris, Special Assistant to the 
Attorney General, State of New Mexico, representing the States' 
Association of Bankruptcy Attorneys; Paul H. Asofsky, a partner 
at the law firm of Weil, Gotshal & Manges, LLP, representing 
the American Bar Association--Section of Taxation; the 
Honorable Tina Brozman, Chief United States Bankruptcy Judge 
for the Southern District of New York; Oliver Ireland, 
Associate General Counsel for the Board of Governors of the 
Federal Reserve System; Professor Randal C. Picker, Leffmann 
Professor of Commercial Law at University of Chicago Law 
School, representing the National Bankruptcy Conference; Seth 
Grosshandler, a partner at the New York office of Cleary, 
Gottlieb, Steen & Hamilton; Joseph Peiffer, Peiffer Law Office; 
and Harley D. Bergmeyer, Chairman, President and Chief 
Executive Officer of the Saline State Bank, representing the 
American Bankers Association.

                        Committee Consideration

    On March 25, 1999, the Subcommittee on Commercial and 
Administrative Law met in open session and ordered favorably 
reported the bill H.R. 833, with a single amendment in the 
nature of a substitute, by a record vote of five to three, a 
quorum being present. On April 20, 21, 22 , 27, and 28, 1999, 
the Committee met in open session and on April 28, 1999 ordered 
favorably reported the bill H.R. 833 with amendment in the 
nature of a substitute by a recorded vote of 22 ayes to 13 nays 
with one Member voting present, a quorum being present.

                         Votes of the Committee

    1. An amendment by Mr. Hyde modifying the needs-based test 
in section 102 to require a minimum payment of at least $100 
per month to general unsecured creditors after subtracting 10 
percent of projected payments to account for the costs of 
administration. On unanimous consent, Mr. Nadler added ``and 
reasonable attorney fees'' after every reference to 
``administrative expenses'' in the Hyde amendment. Passed 18 to 
11.
        AYES                          NAYS
Mr. Hyde                            Mr. Gekas
Mr. Coble                           Mr. Smith (TX)
Mr. Hutchinson                      Mr. Gallegly
Mr. Rogan                           Mr. Canady
Ms. Bono                            Mr. Goodlatte
Mr. Bachus                          Mr. Bryant
Mr. Frank                           Mr. Chabot
Mr. Nadler                          Mr. Barr
Mr. Scott                           Mr. Jenkins
Mr. Watt                            Mr. Pease
Ms. Lofgren                         Mr. Graham
Ms. Jackson-Lee
Mr. Meehan
Mr. Delahunt
Mr. Wexler
Mr. Rothman
Ms. Baldwin
Mr. Weiner

    2. An amendment by Mr. Hyde to replace the Internal Revenue 
Service expense allowance standards with a ``reasonably 
necessary'' standard in section 102 and to direct the Executive 
Office for United States Trustees to issue guidelines to assist 
in making assessments of whether living expenses are 
``reasonably necessary.'' Passed 13 to 11.
        AYES                          NAYS
Mr. Hyde                            Mr. Sensenbrenner
Mr. Rogan                           Mr. Gekas
Ms. Bono                            Mr. Coble
Mr. Berman                          Mr. Smith (TX)
Mr. Nadler                          Mr. Canady
Mr. Scott                           Mr. Goodlatte
Mr. Watt                            Mr. Bryant
Ms. Lofgren                         Mr. Barr
Mr. Meehan                          Mr. Jenkins
Mr. Delahunt                        Mr. Hutchinson
Mr. Wexler                          Mr. Boucher
Ms. Baldwin
Mr. Weiner

    3. An amendment offered by Mr. Watt to an amendment by Mr. 
Bryant (to deem an unexpired lease of nonresidential real 
property--where the debtor is the lessee--rejected under 
certain circumstances) to limit its application to a debtor who 
is delinquent on its lease payments. Defeated 7 to 17.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Lofgren                         Mr. Coble
Mr. Meehan                          Mr. Smith (TX)
Ms. Baldwin                         Mr. Gallegly
Mr. Weiner                          Mr. Canady
                                    Mr. Goodlatte
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Frank

    4. An amendment by Mr. Nadler to an amendment by Mr. Bryant 
(to deem an unexpired lease of nonresidential real property--
where the debtor is the lessee--rejected under certain 
circumstances) to permit the court to grant a subsequent 
extension (after expiration of the initial 120-day extension), 
if such further extension is substantially likely to preserve 
five or more jobs. Defeated 6 to 18.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Mr. Meehan                          Mr. Coble
Ms. Baldwin                         Mr. Smith (TX)
Mr. Weiner                          Mr. Gallegly
                                    Mr. Canady
                                    Mr. Goodlatte
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Frank
                                    Ms. Lofgren

    5. An amendment offered by Mr. Nadler to make specified 
debts relating to violations of law concerning certain health 
care facilities nondischargeable. Defeated 13 to 18.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Berman                          Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Smith (TX)
Ms. Lofgren                         Mr. Gallegly
Ms. Jackson-Lee                     Mr. Canady
Ms. Waters                          Mr. Goodlatte
Mr. Delahunt                        Mr. Bryant
Mr. Wexler                          Mr. Chabot
Ms. Baldwin                         Mr. Barr
Mr. Weiner                          Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono

    6. An amendment offered by Mr. Nadler to strike a provision 
prohibiting class action cases for certain discharge injunction 
violations. Defeated 12 to 16.
        AYES                          NAYS
Mr. Hyde                            Mr. McCollum
Mr. Conyers                         Mr. Gekas
Mr. Berman                          Mr. Coble
Mr. Nadler                          Mr. Smith (TX)
Mr. Scott                           Mr. Gallegly
Mr. Watt                            Mr. Canady
Ms. Lofgren                         Mr. Goodlatte
Ms. Jackson-Lee                     Mr. Bryant
Mr. Meehan                          Mr. Chabot
Mr. Delahunt                        Mr. Jenkins
Ms. Baldwin                         Mr. Hutchinson
Mr. Weiner                          Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Scarborough

    7. A substitute amendment offered by Mr. Bryant to the 
amendment of Ms. Jackson-Lee (ensuring that state 
constitutional law prohibiting the forced sale of a homestead 
to pay debts is not preempted) to make the $250,000 homestead 
limitation inapplicable to debtors in states that enact 
legislation opting out of such limitation. Passed 18 to 12.
        AYES                          NAYS
Mr. McCollum                        Mr. Hyde
Mr. Gekas                           Mr. Sensenbrenner
Mr. Coble                           Mr. Pease
Mr. Smith (TX)                      Mr. Conyers
Mr. Gallegly                        Mr. Nadler
Mr. Canady                          Mr. Scott
Mr. Goodlatte                       Mr. Watt
Mr. Bryant                          Mr. Meehan
Mr. Chabot                          Mr. Delahunt
Mr. Barr                            Mr. Rothman
Mr. Jenkins                         Ms. Baldwin
Mr. Hutchinson                      Mr. Weiner
Mr. Cannon
Mr. Graham
Ms. Bono
Mr. Scarborough
Ms. Jackson-Lee
Mr. Wexler

    8. An amendment offered by Ms. Jackson Lee (ensuring that 
state constitutional law prohibiting the forced sale of a 
homestead to pay debts is not preempted), as amended by Mr. 
Bryant's amendment, to make the $250,000 homestead limitation 
inapplicable to debtors in states that enact legislation opting 
out of such limitation. Passed 18 to 15.
        AYES                          NAYS
Mr. McCollum                        Mr. Hyde
Mr. Gekas                           Mr. Sensenbrenner
Mr. Coble                           Mr. Pease
Mr. Smith (TX)                      Mr. Conyers
Mr. Gallegly                        Mr. Berman
Mr. Canady                          Mr. Nadler
Mr. Goodlatte                       Mr. Scott
Mr. Bryant                          Mr. Watt
Mr. Chabot                          Ms. Lofgren
Mr. Barr                            Ms. Waters
Mr. Jenkins                         Mr. Meehan
Mr. Hutchinson                      Mr. Delahunt
Mr. Cannon                          Mr. Rothman
Mr. Graham                          Ms. Baldwin
Ms. Bono                            Mr. Weiner
Mr. Scarborough
Ms. Jackson-Lee
Mr. Wexler

    9. An amendment offered by Mr. Watt to require individual 
chapter 7 and chapter 13 debtors to file with the court copies 
of tax returns and related documents at the request of any 
party of interest. Defeated 13 to 13.
        AYES                          NAYS
Mr. Hyde                            Mr. Sensenbrenner
Mr. Canady                          Mr. Gekas
Mr. Pease                           Mr. Coble
Mr. Conyers                         Mr. Smith (TX)
Mr. Scott                           Mr. Goodlatte
Mr. Watt                            Mr. Bryant
Ms. Lofgren                         Mr. Chabot
Ms. Jackson-Lee                     Mr. Barr
Mr. Meehan                          Mr. Jenkins
Mr. Delahunt                        Mr. Cannon
Mr. Rothman                         Mr. Rogan
Ms. Baldwin                         Mr. Graham
Mr. Weiner                          Ms. Bono

    10. An amendment offered by Mr. Meehan to prohibit the 
discharge of a debt resulting from the use or purchase of 
firearms, if such debt is based on fraud, recklessness, or 
misrepresentation or is a product liability claim. Defeated 8 
to 19.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Ms. Lofgren                         Mr. Sensenbrenner
Ms. Jackson-Lee                     Mr. Gekas
Mr. Meehan                          Mr. Coble
Mr. Delahunt                        Mr. Smith (TX)
Mr. Rothman                         Mr. Canady
Ms. Baldwin                         Mr. Goodlatte
Mr. Weiner                          Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Scott
                                    Mr. Watt

    11. An amendment offered by Mr. Delahunt to disallow 
certain claims in bankruptcy cases if the creditor engaged in 
reckless lending practices. Defeated 10 to 19.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Berman                          Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Watt                            Mr. Coble
Ms. Lofgren                         Mr. Smith
Ms. Jackson-Lee                     Mr. Gallegly
Mr. Meehan                          Mr. Canady
Mr. Delahunt                        Mr. Bryant
Ms. Baldwin                         Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Boucher

    12. Reconsideration of an amendment offered by Mr. Nadler 
allowing a debtor to choose state or federal exemption law 
(which was agreed to by voice vote the previous day). Defeated 
13 to 21.
        AYES                          NAYS
Mr. Canady                          Mr. Hyde
Mr. Conyers                         Mr. Sensenbrenner
Mr. Berman                          Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Smith
Ms. Lofgren                         Mr. Goodlatte
Ms. Jackson-Lee                     Mr. Bryant
Ms. Waters                          Mr. Chabot
Mr. Meehan                          Mr. Barr
Mr. Delahunt                        Mr. Jenkins
Mr. Wexler                          Mr. Hutchinson
Ms. Baldwin                         Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Frank
                                    Mr. Boucher

    13. An amendment offered by Mr. Graham to restore the 
Internal Revenue expense allowance standards (as adjusted) and 
to require the Executive Office for United States Trustees to 
prepare a report of its findings following a three-year study 
of the utilization of the Internal Revenue Service standards 
for determining current monthly expenses of debtors. Passed 20 
to 17.
        AYES                          NAYS
Mr. McCollum                        Mr. Hyde
Mr. Gekas                           Mr. Sensenbrenner
Mr. Coble                           Mr. Bachus
Mr. Smith                           Mr. Conyers
Mr. Gallegly                        Mr. Frank
Mr. Canady                          Mr. Berman
Mr. Goodlatte                       Mr. Nadler
Mr. Bryant                          Mr. Scott
Mr. Chabot                          Mr. Watt
Mr. Barr                            Ms. Lofgren
Mr. Jenkins                         Ms. Jackson-Lee
Mr. Hutchinson                      Ms. Waters
Mr. Pease                           Mr. Meehan
Mr. Cannon                          Mr. Delahunt
Mr. Rogan                           Mr. Wexler
Mr. Graham                          Ms. Baldwin
Ms. Bono                            Mr. Weiner
Mr. Scarborough
Mr. Boucher
Mr. Rothman

    14. An amendment offered by Mr. Nadler to strike section 
132 of the bill, which makes the needs-based formula applicable 
to chapter 13. Defeated 9 to 12.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Berman                          Mr. Gekas
Mr. Nadler                          Mr. Smith (Tex.)
Mr. Scott                           Mr. Canady
Mr. Watt                            Mr. Goodlatte
Ms. Lofgren                         Mr. Chabot
Ms. Waters                          Mr. Jenkins
Mr. Delahunt                        Mr. Pease
Ms. Baldwin                         Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono

    15. An amendment offered by Mr. Watt to replace section 114 
of the bill (Enhanced Disclosures under an Open-End Credit 
Plan). Defeated 12 to 12.
        AYES                          NAYS
Mr. Canady                          Mr. Hyde
Mr. Conyers                         Mr. McCollum
Mr. Frank                           Mr. Gekas
Mr. Berman                          Mr. Smith (Tex.)
Mr. Nadler                          Mr. Gallegly
Mr. Scott                           Mr. Goodlatte
Mr. Watt                            Mr. Chabot
Ms. Lofgren                         Mr. Jenkins
Ms. Waters                          Mr. Cannon
Mr. Delahunt                        Mr. Rogan
Ms. Baldwin                         Mr. Graham
Mr. Weiner                          Ms. Bono

    16. An amendment offered by Mr. Watt to add section 151 to 
the bill (Discouraging Reckless Lending Practices). Defeated 12 
to 12.
        AYES                          NAYS
Mr. Canady                          Mr. Hyde
Mr. Conyers                         Mr. McCollum
Mr. Frank                           Mr. Gekas
Mr. Berman                          Mr. Gallegly
Mr. Nadler                          Mr. Goodlatte
Mr. Scott                           Mr. Chabot
Mr. Watt                            Mr. Jenkins
Ms. Lofgren                         Mr. Cannon
Ms. Waters                          Mr. Rogan
Mr. Wexler                          Mr. Graham
Ms. Baldwin                         Ms. Bono
Mr. Weiner                          Mr. Boucher

    17. An amendment offered by Mr. Nadler to strike a 
reference to unsecured creditors in section 1325(b)(1) of the 
Bankruptcy Code, as amended by section 132 of the bill. 
Defeated 11 to 17.
        AYES                          NAYS
Mr. Hyde                            Mr. Sensenbrenner
Mr. Conyers                         Mr. McCollum
Mr. Berman                          Mr. Gekas
Mr. Nadler                          Mr. Coble
Mr. Scott                           Mr. Smith (TX)
Mr. Watt                            Mr. Gallegly
Ms. Lofgren                         Mr. Canady
Ms. Waters                          Mr. Goodlatte
Mr. Delahunt                        Mr. Bryant
Ms. Baldwin                         Mr. Chabot
Mr. Weiner                          Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Ms. Bono
                                    Mr. Frank

    18. An amendment offered by Mr. Watt striking section 106 
of the bill (Disclosures) and part of section 107 (Debtor's 
Bill of Rights). Passed 13 to 12.
        AYES                          NAYS
Mr. Canady                          Mr. Hyde
Mr. Pease                           Mr. Sensenbrenner
Mr. Graham                          Mr. McCollum
Mr. Frank                           Mr. Gekas
Mr. Nadler                          Mr. Smith (Tex.)
Mr. Scott                           Mr. Bryant
Mr. Watt                            Mr. Chabot
Ms. Lofgren                         Mr. Barr
Ms. Jackson-Lee                     Mr. Jenkins
Ms. Waters                          Mr. Hutchinson
Mr. Meehan                          Mr. Rogan
Ms. Baldwin                         Ms. Bono
Mr. Weiner

    19. An amendment offered by Mr. Nadler to add section 151 
(Discouraging Reckless Lending Practices). Defeated 4 to 19.
        AYES                          NAYS
Mr. Nadler                          Mr. Hyde
Ms. Jackson-Lee                     Mr. Sensenbrenner
Mr. Delahunt                        Mr. McCollum
Ms. Baldwin                         Mr. Gekas
                                    Mr. Smith (Tex.)
                                    Mr. Canady
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Scarborough
                                    Mr. Frank
                                    Ms. Lofgren
                                    Ms. Waters

    20. An amendment offered by Mr. Gekas, as a substitute to 
an amendment offered by Mr. Nadler, providing for exceptions to 
the automatic stay with respect to domestic support obligation 
proceedings. Passed 17 to 10.
        AYES                          NAYS
Mr. Hyde                            Mr. Conyers
Mr. Sensenbrenner                   Mr. Frank
Mr. McCollum                        Mr. Nadler
Mr. Gekas                           Mr. Watt
Mr. Gallegly                        Ms. Lofgren
Mr. Canady                          Ms. Jackson-Lee
Mr. Goodlatte                       Ms. Waters
Mr. Bryant                          Mr. Meehan
Mr. Barr                            Ms. Baldwin
Mr. Jenkins                         Mr. Weiner
Mr. Hutchinson
Mr. Pease
Mr. Cannon
Mr. Rogan
Mr. Graham
Ms. Bono
Mr. Scarborough

    21. An amendment offered by Ms. Jackson-Lee to exclude 
federal or state disaster assistance from the income component 
of the needs-based formula in section 102 of the bill. Defeated 
12 to 21.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Berman                          Mr. Sensenbrenner
Mr. Nadler                          Mr. McCollum
Mr. Scott                           Mr. Gekas
Mr. Watt                            Mr. Coble
Ms. Lofgren                         Mr. Smith (Tex.)
Ms. Jackson-Lee                     Mr. Gallegly
Ms. Waters                          Mr. Canady
Mr. Meehan                          Mr. Goodlatte
Mr. Wexler                          Mr. Bryant
Ms. Baldwin                         Mr. Chabot
Mr. Weiner                          Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Bachus
                                    Mr. Frank

    22. An amendment offered by Mr. Scott and Mr. Meehan to 
exclude veterans benefits from the income component of the 
needs-based formula in section 102 of the bill. Defeated 10 to 
19.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Scott                           Mr. Gekas
Mr. Watt                            Mr. Coble
Ms. Lofgren                         Mr. Smith (Tex.)
Ms. Jackson-Lee                     Mr. Canady
Ms. Waters                          Mr. Goodlatte
Mr. Meehan                          Mr. Bryant
Mr. Delahunt                        Mr. Chabot
Ms. Baldwin                         Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Bachus
                                    Mr. Frank

    23. An amendment offered by Mr. Nadler to exclude 
disability payments from the income component of the needs-
based formula in section 102. Defeated 8 to 16.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Scott                           Mr. McCollum
Mr. Watt                            Mr. Gekas
Ms. Lofgren                         Mr. Coble
Ms. Jackson-Lee                     Mr. Gallegly
Ms. Baldwin                         Mr. Canady
Mr. Weiner                          Mr. Goodlatte
                                    Mr. Chabot
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Scarborough
                                    Mr. Frank

    24. An amendment offered by Mr. Nadler to exclude 
compensation to victims of war crimes or crimes against 
humanity from the income component of the needs-based formula 
of section 102 of the bill. Passed 21 to 7.
        AYES                          NAYS
Mr. Hyde                            Mr. Gekas
Mr. Sensenbrenner                   Mr. Coble
Mr. McCollum                        Mr. Canady
Mr. Gallegly                        Mr. Jenkins
Mr. Goodlatte                       Mr. Hutchinson
Mr. Chabot                          Mr. Pease
Mr. Rogan                           Mr. Cannon
Mr. Scarborough
Mr. Conyers
Mr. Frank
Mr. Berman
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Lofgren
Ms. Jackson-Lee
Ms. Waters
Mr. Meehan
Mr. Rothman
Ms. Baldwin
Mr. Weiner

    25. An amendment offered by Mr. Gekas striking the 
requirement of extraordinary circumstances in section 406 of 
the bill (duties in small business cases). Passed 17 to 12.
        AYES                          NAYS
Mr. Hyde                            Mr. Hutchinson
Mr. Sensenbrenner                   Mr. Conyers
Mr. Gekas                           Mr. Frank
Mr. Coble                           Mr. Berman
Mr. Smith (TX)                      Mr. Nadler
Mr. Gallegly                        Mr. Scott
Mr. Canady                          Mr. Watt
Mr. Goodlatte                       Ms. Lofgren
Mr. Bryant                          Ms. Jackson-Lee
Mr. Chabot                          Ms. Waters
Mr. Jenkins                         Mr. Wexler
Mr. Pease                           Ms. Baldwin
Mr. Cannon
Mr. Rogan
Mr. Graham
Mr. Scarborough
Mr. Boucher

    26. Amendment offered by Ms. Jackson-Lee to make certain 
debts relating to consumption or consumer purchase of a tobacco 
product nondischargeable in a chapter 11 case. Defeated 11 to 
21.
        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Berman                          Mr. Gekas
Mr. Nadler                          Mr. Coble
Ms. Lofgren                         Mr. Smith (TX)
Ms. Jackson-Lee                     Mr. Gallegly
Ms. Waters                          Mr. Canady
Mr. Meehan                          Mr. Goodlatte
Mr. Wexler                          Mr. Bryant
Mr. Rothman                         Mr. Chabot
Ms. Baldwin                         Mr. Jenkins
Mr. Weiner                          Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Frank
                                    Mr. Boucher
                                    Mr. Scott
                                    Mr. Watt

    27. An amendment offered by Ms. Jackson-Lee substituting a 
new section 148 of the bill (relating to the definition of 
household goods). Passed 21 to 13.
        AYES                          NAYS
Mr. Hyde                            Mr. McCollum
Mr. Sensenbrenner                   Mr. Gekas
Mr. Canady                          Mr. Coble
Mr. Hutchinson                      Mr. Gallegly
Mr. Rogan                           Mr. Goodlatte
Mr. Bachus                          Mr. Bryant
Mr. Conyers                         Mr. Chabot
Mr. Frank                           Mr. Jenkins
Mr. Berman                          Mr. Pease
Mr. Boucher                         Mr. Cannon
Mr. Nadler                          Mr. Graham
Mr. Scott                           Ms. Bono
Mr. Watt                            Mr. Scarborough
Ms. Lofgren
Ms. Jackson-Lee
Ms. Waters
Mr. Delahunt
Mr. Wexler
Mr. Rothman
Ms. Baldwin
Mr. Weiner

    28. An amendment offered by Mr. Nadler making various 
amendments to section 143 of the bill (Requirements to Obtain 
Confirmation and Discharge in Cases Involving DomesticSupport 
Obligations). Defeated 13 to 20.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Berman                          Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Gallegly
Ms. Lofgren                         Mr. Canady
Ms. Jackson-Lee                     Mr. Goodlatte
Ms. Waters                          Mr. Bryant
Mr. Wexler                          Mr. Chabot
Mr. Rothman                         Mr. Jenkins
Ms. Baldwin                         Mr. Hutchinson
Mr. Weiner                          Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Boucher

    29. Motion to report favorably the amendment in the nature 
of a substitute to H.R. 833, as amended. Passed 22 to 13, with 
one present.


                  AYES                                 NAYS                                 PRESENT

Mr. Hyde                             Mr. Conyers                          Mr. Frank
Mr. Sensenbrenner                    Mr. Berman
Mr. McCollum                         Mr. Nadler
Mr. Gekas                            Mr. Scott
Mr. Coble                            Mr. Watt
Mr. Smith (Tex.)                     Ms. Lofgren
Mr. Gallegly                         Ms. Jackson-Lee
Mr. Canady                           Ms. Waters
Mr. Goodlatte                        Mr. Meehan
Mr. Bryant                           Mr. Delahunt
Mr. Chabot                           Mr. Wexler
Mr. Jenkins                          Ms. Baldwin
Mr. Hutchinson                       Mr. Weiner
Mr. Pease
Mr. Cannon
Mr. Rogan
Mr. Graham
Ms. Bono
Mr. Bachus
Mr. Scarborough
Mr. Boucher
Mr. Rothman


                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports 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.

                Committee on Government Reform Findings

    No findings or recommendations of the Committee on 
Government Reform were received as referred to in clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

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

                        Committee Cost Estimate

    The estimate of the Congressional Budget Office (CBO) was 
not available at the time of the filing of this report. In 
compliance with clause 3(d)(2) of rule XIII of the rules of the 
House of Representatives, the Committee believes that the 
enactment of H.R. 833 will have a budget effect for fiscal year 
2000 and subsequent years similar to that projected by the CBO 
for H.R. 3150, the Bankruptcy Reform Act of 1998, a bill 
substantially similar to H.R. 833 that was passed by the House 
during the 105th Congress, with some differences.
    H.R. 833 authorizes 18 new temporary bankruptcy judges 
(which H.R. 3150 did not) and extends five existing judgeships, 
with salaries and benefits considered as mandatory costs that 
the Committee estimates at approximately $11 million a year 
over five years. However, the Committee believes that this 
provision is necessary to facilitate the improvements proposed 
by the legislation and will enhance the efficiency of the 
system. In addition, an amendment offered by Mr. Berman was 
adopted during the Committee's consideration that would waive 
bankruptcy filing fees for indigents. The Committee believes 
that this would have an effect on revenues to the government 
but is unable to project the extent of that effect other than 
to conclude it may not be substantial.
    As indicated, H.R. 833 is substantially similar to H.R. 
3150. In a letter dated June 5, 1998, the CBO prepared an 
initial federal cost estimate and an assessment of H.R. 3150's 
impact on state, local, and tribal governments. In that cost 
estimate, the CBO stated that implementing H.R. 3150 would have 
increased ``discretionary spending by $214 million over the 
1999-2003 period, subjectto appropriation of the necessary 
funds.'' It also concluded that the bill would have affected direct 
spending and governmental receipts, so pay-as-you-go procedures apply. 
It estimated that the ``net annual impact on direct spending would be 
negligible'' and that a certain provision in Title I of that bill would 
have increased receipts ``by about $3 million a year.'' In a 
supplemental letter, dated June 10, 1998, the CBO prepared a summary 
review of H.R. 3150 for private sector mandates. It found that certain 
provisions in the bill pertaining to its needs-based reforms would have 
imposed ``new private sector mandates, as defined in the Unfunded 
Mandates Reform Act (UMRA) with costs that exceed the statutory 
threshold ($100 million in 1996, adjusted for inflation).''
    The Committee notes that H.R. 833 could result in some 
increased discretionary expenditures with regard to such 
matters integral to the reforms proposed as: a debtor financial 
management training test program; increased auditing 
procedures; the maintenance of tax returns; the compilation and 
publication of bankruptcy data and statistics as well as other 
provisions. However, costs related to some of these 
expenditures, such as increased auditing, are subject to 
appropriations and are likely to be offset by enhanced 
collections resulting from greater protections accorded to 
federal taxing authorities in Title VIII of the H.R. 833, as 
amended by the amendment in the nature of a substitute.


                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, Section 8, Clauses 3 and 4 of 
the Constitution.

                        Preemption of State Law

    Pursuant to Section 423(e) of the Congressional Budget and 
Impoundment Act, the Committee states that the following 
provisions of H.R. 833 may preempt state law to the extent 
described herein.
    Section 108 contains provisions delineating the 
responsibilities that a ``debt relief agency'' is held to with 
respect to ``an assisted person'' and provides numerous 
procedures for those responsibilities to be enforced. Section 
108(c) states that neither this section, nor sections 526 and 
527, as enacted under the bill, ``annul, alter, affect or 
exempt any persons subject to these provisions from complying 
with any law of any State except to the extent that such law is 
inconsistent with these sections, and then only to the extent 
of the inconsistency.'' While the provision is intended to 
preempt any inconsistent state laws, the Committee makes no 
determination as to which state laws may at this time be 
inconsistent.
    Section 147 of H.R. 833 provides for a monetary limitation 
of certain exempt property not to exceed $250,000 under state 
or local law. While this is intended to be a uniform upper 
limit on property that can be exempted under state or local 
law, the Committee does not place any minimum requirement on 
states. Furthermore, the section provides that a state may 
enact legislation to make this limitation inapplicable to its 
citizens.

               Section-by-Section Analysis and Discussion

                Title I. Consumer Bankruptcy Provisions

                   subtitle a. needs based bankruptcy

Section 101. Conversion

    Section 101 of the bill amends section 706(c) of the 
Bankruptcy Code, which provides that a court may not convert a 
chapter 7 case to a case under chapter 12 or chapter 13 unless 
the debtor requests such conversion, to add that such 
conversion is also permissible if the debtor consents to it.
    Section 102. Dismissal or conversion
    Section 102 implements H.R. 833's needs-based bankruptcy 
reforms by making various amendments to the Bankruptcy Code's 
consumer bankruptcy provisions.
    Subsection (a) amends section 707(b) of the Bankruptcy Code 
to allow--in addition to thecourts and United States Trustees--
panel trustees and parties in interest (in certain circumstances) to 
seek dismissal of a chapter 7 case or its conversion to a case under 
chapter 13 on consent of the debtor. Under current law, only the courts 
and United States Trustees may seek dismissal of a chapter 7 case under 
section 707(b).
    In addition, it revises the ground for dismissal under 
section 707(b) from ``substantial abuse'' to ``abuse'' and 
replaces the present presumption in favor of the debtor with 
one that requires the court to presume abuse if the debtor has: 
(1) a certain threshold of income available after deduction of 
specified expenses and liabilities, and (2) income is not less 
than adjusted regional median income figures. Codified as 
section 707(b)(2), this provision requires the court to presume 
abuse exists if the debtor has at least $100 a month available 
to pay general (nonpriority) unsecured debts after subtracting 
from the debtor's current monthly income (1) ten percent of 
projected plan payments to account for estimated administrative 
expenses and reasonable attorney's fees, (2) monthly expenses 
(as determined under this provision) of the debtor, the 
debtor's dependents and the spouse of the debtor (if not 
otherwise a dependent), and (3) the debtor's monthly payments 
on account of secured and unsecured priority debts.
    The court, the United States trustee, trustee or other 
party in interest, however, are prohibited from filing a motion 
under section 707(b)(2) if the current monthly income of the 
debtor and the debtor's spouse combined (as of the date of the 
order for relief) equals or is less than the regional median 
household income (calculated on a semi-annual basis) for a 
household of equal size. For households of more than four 
individuals, the median income is that of a household of four 
individuals plus $583 for each additional member of that 
household.
    To determine whether the presumption of abuse based on 
ability to repay under section 707(b)(2) of the Bankruptcy Code 
applies, section 102 provides that the debtor's monthly 
expenses shall consist of: (1) the debtor's actual expenses for 
the education of a dependent child under the age of 18 for 
tuition, books and required fees at a private elementary or 
secondary school, not to exceed $10,000 per year (as adjusted 
pursuant to section 104(b) of the Bankruptcy Code), providing 
the child was a student at such school before the filing of the 
bankruptcy case; and (2) the applicable monthly expense amounts 
for certain categories of expenditures specified by the 
Internal Revenue Service in connection with the collection and 
compromise of delinquent tax obligations.
    The specified Internal Revenue Service expense categories 
are the National Standards, Local Standards, and Other 
Necessary Expenses 38 in effect for the area in 
which the debtor resides on the date when the bankruptcy case 
is commenced.39 The National Standards category 
applies to expenditures for food, housekeeping supplies, 
apparel and services (e.g., laundry and dry cleaning), personal 
care products, and miscellaneous items (up to $100 for one 
person and $25 for each additional person in a debtor's 
family).40 If the debtor is able to demonstrate that 
it is reasonable and necessary, he or she may claim expenses 
for food and clothing up to five percent above the amounts 
specified by the Internal Revenue Service for these 
expenditures.
---------------------------------------------------------------------------
    \38\ The Conditional Expenses category of expenditures, although 
permitted by the Internal Revenue Service, may not be claimed by a 
debtor.
    \39\ The Internal Revenue Service Restructuring and Reform Act of 
1998, Pub. L. 105-206 (1998), directs the Internal Revenue Service to 
promulgate guidelines instructing its employees to ``determine, on the 
basis of the facts and circumstances of each taxpayer, whether the use 
of the schedules . . . is appropriate'' and to direct that they not be 
used ``to the extent such use would result in the taxpayer not having 
adequate means to provide for basic living expenses.'' Internal Revenue 
Service Restructuring and Reform Act of 1998, Pub. L. 105-206, 
Sec. 3462 (1998).
    \40\ Internal Revenue Manual Collecting Contact Handbook (IRM 
105.1), at 3-3-4, 3-5, 3-13. (Sept. 25, 1996) [hereinafter ``IRS 
Manual'']. The permissible amount is based on the taxpayer's total 
gross monthly income and number of persons in the taxpayer's family. 
These standards are derived from the Bureau of Labor Statistics 
Consumer Expenditure Survey, except for a miscellaneous item expense 
category. Id. at 3-5.
---------------------------------------------------------------------------
    The Local Standards category applies to two general types 
of expenses: (1) housing and utilities (which includes mortgage 
or rent, property taxes, interest, necessary maintenance and 
repair, insurance, homeowner's and condominium fees, 
electricity, telephone, heat, and garbage collection); and (2) 
transportation (which includes public transportation, fuel, 
state/local license, registration, and inspection fees, tolls 
and auto insurance).41
---------------------------------------------------------------------------
    \41\ Id. at 3-13. These standards are determined based on a 
combination of national and regional factors. The housing standards are 
based on the taxpayer's county of residence and the size of taxpayer's 
family. The transportation standard consists of two components: (1) 
ownership and (2) maintenance/public transportation costs. Id. at 3-7, 
3-13.
---------------------------------------------------------------------------
    The ``Other Necessary Expenses'' category does not set 
forth specified amounts for the types of expenses to which it 
applies.42 Accordingly, the debtor must claim his or 
her actual expenses for the items listed under this category. 
They include the following:
---------------------------------------------------------------------------
    \42\ Under the Internal Revenue Manual, the only requirement is 
that the expense must provide for (1) the health and welfare of the 
taxpayer and the taxpayer's family, or (2) the production of income. 
Id. at 3-7.
---------------------------------------------------------------------------
          (1) child care;
          (2) dependent care: elderly, invalid, or disabled;
          (3) taxes;
          (4) health care;
          (5) court-ordered payments and involuntary 
        deductions;
          (6) minimum payments on secured or legally perfected 
        debts, if necessary for (a) the health or welfare of 
        the debtor or the debtor's dependents, or (b) for the 
        production of income;
          (7) life insurance, if limited to term policies 
        (expensive premiums must be justified), and disability 
        insurance for self-employed individuals;
          (8) education, if it is: (a) for a physically or 
        mentally handicapped dependent of the debtor and is not 
        provided by public schools, or (b) a condition of 
        employment;
          (9) union dues, professional association dues;
          (10) minimum payments on unsecured debts, if 
        necessary for (a) the health or welfare of the debtor 
        or the debtor's dependents, or (b) for the production 
        of income; 43 and
---------------------------------------------------------------------------
    \43\  The Internal Revenue Manual states that payments on credit or 
charge cards are not permitted if the taxpayer can repay the tax 
liability within 90 days if such payments are eliminated. Id. at 3-7-8.
---------------------------------------------------------------------------
          (11) optional telephone service (e.g., call waiting, 
        caller identification) or long distance calls (if they 
        meet the necessary expense test of health or welfare 
        and/or the production of income). 44
---------------------------------------------------------------------------
    \44\ Id. at 3-7-8. Examples of expenses that, according to the 
Internal Revenue Service, may not qualify as Other Necessary Expenses 
are voluntary (i.e., not pursuant to a court order) child support 
payments and payments to an IRA by a self-employed taxpayer who has no 
other source of retirement income. Id. at 3-14-18.
---------------------------------------------------------------------------
    If the debtor does not have an applicable expense under 
these categories, the debtor may not claim it as an expense for 
purposes of this provision. Thus, for example, if the debtor 
does not own a car, he or she may not claim the car ownership 
and expense allowance under the Internal Revenue Service's 
Local Standards. In addition, the expenditures claimed by a 
debtor under the specified Internal Revenue expense categories 
may not include any payments for debts. 45
---------------------------------------------------------------------------
    \45\ Section 102(a) also provides that not later than three years 
after the bill's date of enactment, the Director of the Executive 
Office for United States Trustees shall submit a report to the House 
and Senate Judiciary Committees containing its findings regarding the 
utilization of the Internal Revenue Service expense standards for 
determining current monthly expenses under section 707(b)(2), as 
amended. In addition, the report must assess the impact that the 
application of these standards has on debtors and the bankruptcy 
courts. The report may also include recommendations for amendment of 
the Bankruptcy Code.
---------------------------------------------------------------------------
    Under section 707(b)(2) of the Bankruptcy Code, as amended 
by section 102(a) of the bill, the debtor may deduct from his 
or her current monthly income the debtor's average monthly 
payments on account of secured debts. These payments are 
calculated as the total of all amounts scheduled as 
contractually due to the debtor's secured creditors in each 
month of the 60 months following the filing of the bankruptcy 
case and dividing that total by 60 months. In addition, the 
debtor may deduct his or her payments on priority claims, such 
as child support and alimony claims, which is calculated as the 
total amount of debts entitled to priority, divided by 60 
months.
    Section 707(b), as amended by section 102(a) of the bill, 
provides that, for purposes of this subsection, a family or 
household of the debtor consists of the debtor, the debtor's 
spouse, and the debtor's dependents. It does not, however, 
include a legally separated spouse, unless such spouse filed a 
joint case with the debtor.
    As amended by section 102(a) of the bill, section 707(b) 
provides that the presumption of abuse may be rebutted only if 
the debtor demonstrates extraordinary circumstances justifying 
additional expenses in excess of the amounts set forth above or 
requiring adjustment of the debtor's current monthly income. To 
establish extraordinary circumstances, the debtor must provide 
a detailed statement under oath explaining why each additional 
expense or adjustment of income is necessary and reasonable. 
The presumption of abuse may only be rebutted if such 
additional expenses or adjustment of income cause the debtor's 
current monthly income less various amounts to fall below the 
$100 per month threshold.
    If the presumption does not apply or has been rebutted, the 
court must still consider (1) whether the debtor filed the 
chapter 7 case in bad faith; or (2) whether the totality of the 
circumstances based on the debtor's financial situation 
(including whether the debtor filed the chapter 7 case for the 
purpose of having a personal services contract rejected, and 
the debtor's financial need for such rejection) demonstrates 
abuse.
    Should a court grant a motion filed by a trustee or 
bankruptcy administrator under section 707(b) and find that the 
action of debtor's counsel violated Federal Rule of Bankruptcy 
Procedure 9011 (a rule that allows courts to impose sanctions 
for frivolous or other inappropriate filings), section 102(a) 
mandates that the court shall assess sanctions. Section 102(a) 
specifies that these damages may include the payment of the 
trustee's reasonable attorney's fees and costs in connection 
with the motion. The court may also assess an appropriate civil 
penalty against debtor's counsel to be paid to the trustee, 
bankruptcy administrator, or the United States trustee.
    Section 102(a) also mandates that for a voluntary, joint, 
or involuntary case, that a signature of an attorney 
constitutes a certificate the attorney has (1) performed a 
reasonable investigation into the circumstances that gave rise 
to the petition, and (2) determined that the petition, 
schedules, lists, and related documents are well grounded in 
fact, are warranted by existing law or a good faith argument 
for the extension, modification, or reversal of existing law, 
and do not constitute an abuse under section 707(b) of the 
Bankruptcy Code, as amended.
    Under section 102(a) of the bill, a court may award a 
debtor all reasonable costs, including reasonable attorney's 
fees, incurred by the debtor in contesting a section 707(b) 
motion brought by a party in interest (other than a trustee or 
the United States trustee), under certain circumstances. These 
circumstances exist if the court denies the motion and finds 
that either the creditor's action in filing the motion was not 
substantially justified or the motion was filed solely for the 
purpose of coercing the debtor into waiving a right guaranteed 
to the debtor under the Bankruptcy Code.
    Section 102(a) specifies that a court, in determining 
whether to dismiss a case under section 707, may not take into 
consideration whether a debtor has made, or continues to make 
charitable contributions, as defined in section 548(d)(3) of 
the Bankruptcy Code, to any qualified religious or charitable 
entity or organization, as defined in section 548(d)(4) of the 
Bankruptcy Code.
    Section 102(a) also requires the Director of the Office for 
United States Trustees to prepare a report containing findings 
with regard to the use of the Internal Revenue Service expense 
standards for determining a debtor's current monthly income.
    Section 102(b) creates two new definitions under section 
101 of the Bankruptcy Code. First, it defines ``current monthly 
income'' as the average monthly income from all sources derived 
that the debtor or, in a joint case, the debtor and the 
debtor's spouse receive, without regard to whether it is 
taxable income, in the 180 days preceding the date of 
determination. It includes any amount paid on a regular basis 
by anyone other than the debtor or, in a joint case, the debtor 
and the debtor's spouse to the household expenses of the debtor 
or the debtor's dependents and, in a joint case, the debtor's 
spouse, if not otherwise a dependent. It excludes compensation 
paid to victims of war crimes or crimes against humanity. 
Second it defines ``estimated administrative expenses and 
reasonable attorneys'' fees as ten percent of projected 
payments under a chapter 13 plan.
    Section 102(c) requires a trustee, after reviewing all 
materials filed by a debtor and considering all information 
presented at the first meeting of creditors, to file a 
statement with the court as to whether or not the filing of the 
chapter 7 case should be presumed to be an abuse under section 
707(b)(2). The court must provide a copy of the statement to 
all creditors within five days of its filing.
    If the trustee determines that the chapter 7 case should be 
presumed to be an abuse under section 707(b)(2) and if the 
debtor's current monthly income and that of the debtor's spouse 
combined is not less than the highest national median family 
income for a family of equal or lesser size (or in the case of 
a household of one person, the national median household income 
for one earner),46 section 102(c) of the bill 
requires the trustee to file within 30 days of filing such 
statement either a motion to dismiss the case under section 
707(b) or a statement explaining why such motion is not 
appropriate.
---------------------------------------------------------------------------
    \46\ For families with more than four members, section 102 provides 
that the national family income shall be the national median family 
income last reported by the Bureau of the Census for a family of four 
individuals plus $583 for each additional family member.
---------------------------------------------------------------------------
    To implement the income and expense screening mechanism of 
this provision, section 102 of the bill amends section 521(a) 
of the Bankruptcy Code to require an individual debtor to file 
a statement of current monthly income together with the 
calculations to permit determination of whether a presumption 
of abuse arises under section 707(b)(2)(A)(i), as amended.
    Other provisions of section 102 amend section 2075 of title 
28 of the United State Code to direct that the Federal Rules of 
Bankruptcy Procedure and the Official Forms be revised to 
implement these additional mandatory disclosure requirements. 
Specifically, the rules must prescribe a form for the statement 
of current monthly income that a debtor is required to file 
under section 521 of the Bankruptcy Code, as amended by section 
102 of this bill. In addition, it provides that general rules 
may be promulgated describing the content of such statement.
    Section 102(d) makes a clerical amendment to the table of 
sections for chapter 7 of title 11.

Section 103. Notice of alternatives

    Under current law, the bankruptcy clerk is required to 
provide written notice of the forms of bankruptcy relief to 
consumer debtors before they file for bankruptcy 
relief.47 Nevertheless, some debtors may not be 
aware that there are alternatives to bankruptcy and the adverse 
consequences that bankruptcy relief may present.
---------------------------------------------------------------------------
    \47\ 11 U.S.C. Sec. 342; Official Form 1--Voluntary Petition. This 
notice requirement is effectuated by requiring the consumer debtor and 
his or her attorney to sign a statement that appears on the petition 
used to commence the bankruptcy case: ``I am aware that I may proceed 
under chapter 7, 11, or 12, or 13 of title 11, United States Code, 
understand the relief available under such chapter, and choose to 
proceed under chapter 7 of such title.''
---------------------------------------------------------------------------
    To ensure that debtors know about alternatives to 
bankruptcy before they file for bankruptcy relief, section 103 
mandates that notice of these alternatives to bankruptcy be 
supplied to these individuals before they file for bankruptcy 
relief.48 The notice must provide a brief 
description of the various forms of bankruptcy relief and the 
general purpose, benefits, and costs of proceeding under each. 
In addition, the notice must briefly describe the services 
available from a credit counseling service approved by the 
United States trustee for that district. The debtor must also 
receive a warning specifying that a person who knowingly and 
fraudulently conceals assets or makes a false oath or statement 
under penalty of perjury shall be subject to fine, 
imprisonment, or both. In addition, the debtor must be advised 
that all information supplied by a debtor in connection with 
the case is subject to examination by the Attorney General.
---------------------------------------------------------------------------
    \48\ This requirement only applies to individuals with primarily 
consumer debts. Section 101(8) of the Bankruptcy Code defines 
``consumer debt'' as debt incurred by an individual primarily for a 
personal, family, or household purpose.
---------------------------------------------------------------------------

Section 104. Debtor financial management training test program

    This provision requires the Director of the Executive 
Office for United States Trustees, after consultation with a 
wide range of individuals who are experts in the field of 
debtor education (such as Chapter 13 trustees who operate 
financial management education programs for debtors), to 
develop a financial management training curriculum to educate 
individual debtors on how to better manage their finances. It 
mandates that the Director select six judicial districts in 
which to test the effectiveness of the financial management 
training curriculum for an 18-month period beginning not later 
than 270days after the bill's enactment date. In addition, the 
Director must evaluate the effectiveness of: (1) the financial 
management training curriculum; and (2) a sample of existing consumer 
education programs described in the Report of the National Bankruptcy 
Review Commission,49 which are representative of consumer 
education programs sponsored by the credit industry, Chapter 13 
trustees, and consumer counseling groups. Not later than 3 months after 
concluding such evaluation, the Director must submit a report to the 
Speaker of the House of Representatives and the President pro tempore 
of the Senate, for referral to the appropriate committees of the 
Congress, containing the findings of the Director regarding the 
effectiveness and cost of such curriculum and programs. The 
instructional course materials that the Director of the Executive 
Office for United States Trustees must make available in the six test 
districts must be the materials described in section 111 of the 
Bankruptcy Code, as enacted by the bill.
---------------------------------------------------------------------------
    \49\ Report of the National Bankruptcy Review Commission, at 293-
94; Recommendations for Reform of Consumer Bankruptcy Law by Four 
Dissenting Commissioners, at 49-51 (1997).
---------------------------------------------------------------------------

              Subtitle B. Consumer Bankruptcy Protections

Section 105. Definitions

    Section 105 of the bill creates several mechanisms designed 
to regulate the activities of a ``debt relief agency.'' As 
defined under this section, a debt relief agency includes any 
person who provides ``bankruptcy assistance'' to ``assisted 
persons.'' 50 It applies to attorneys as well as to 
non-attorneys, such as petition preparers. It does not, 
however, apply to nonprofit organizations, creditors (to the 
extent a creditor assists the debtor to restructure a debt owed 
by the debtor to such creditor), or state and federal credit 
unions. The term ``bankruptcy assistance'' includes the 
provision of any goods or services with the ``express or 
implied purpose of providing information, advice, counsel, 
document preparation, or filing,'' including the provision of 
legal representation.
---------------------------------------------------------------------------
    \50\ H.R. 833 provides that the term, ``assisted person,'' includes 
any person with primarily consumer debts and whose nonexempt assets 
were less than $150,000.
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Section 105A. Requirements for debt relief agencies

    Section 105A of H.R. 833 mandates that a debt relief agency 
perform all services as stated to the assisted person in 
connection with the bankruptcy case. It prohibits a debt relief 
agency from advising any assisted person to make an untrue or 
misleading statement in connection with a bankruptcy case. In 
addition, such agency is prohibited from advising an assisted 
person or prospective assisted person to incur additional debt 
in contemplation of filing for bankruptcy relief or for the 
purpose of paying fees for services rendered by an attorney or 
petition preparer in connection with the filing of a bankruptcy 
case. An exception applies for debts owed directly to the 
attorney or bankruptcy petition preparer for required legal 
fees.

Section 106. Enforcement

    A series of enforcement and penalty mechanisms with regard 
to debt relief agencies are instituted under section 106 of the 
bill. It provides that any waiver by an assisted person of the 
protections and rights as established by this legislation is 
invalid. Section 106 mandates that any debt-relief-agency 
contract that does not comply with the requirements specified 
in the bill are not enforceable against the debtor. A debt 
relief agency may be required to return to the assisted person 
all fees such person paid to agency for any of the following 
reasons:
          (1) the debt relief agency failed to comply with 
        certain specified requirements;
          (2) the debt relief agency provided assistance to a 
        debtor whose case was dismissed or converted because of 
        the agency's failure to file any requisite documents 
        under section 521 of the Bankruptcy Code; or
          (3) the debt relief agency negligently or 
        intentionally disregarded the requirements of the 
        Bankruptcy Code or Federal Rules of Bankruptcy 
        Procedure.
    Section 106 authorizes states to seek various remedies 
51 for violation of the requirements imposed on debt 
relief agencies. It authorizes a federal court, under certain 
circumstances, to issue injunctions and to impose appropriate 
civil penalties. The United States District Court, under this 
provision, has concurrent jurisdiction with the state courts to 
hear such actions.
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    \51\ These include injunctions, actual damages, and the imposition 
of costs, including reasonable attorney's fees.
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Section 107. Sense of the Congress

    This provision states that it is the sense of the Congress 
that States should develop curricula relating to the subject of 
personal finance for use in elementary and secondary schools.

Section 108. Discouraging abusive reaffirmation practices

    This provision adds a further requirement with respect to 
reaffirmation agreements. If the consideration for the 
agreement is based on a wholly unsecured consumer debt, the 
agreement must contain a clear and conspicuous statement 
advising the debtor that the debtor is entitled to a hearing 
before the court at which the debtor shall appear in person. 
The purpose of the hearing is to allow the court to determine 
if the agreement presents an undue hardship to the debtor, 
whether the agreement is in the debtor's best interest, and 
whether the debtor entered into the agreement as the result of 
a threat by the creditorto take any action that it cannot 
legally take or that it does not intend to take. If, however, the 
debtor is represented by counsel, the debtor may waive the right to 
such hearing by signing a statement waiving the hearing, stating that 
the debtor is represented by counsel, and identifying such counsel.
    The provisions in this section do not apply to wholly 
unsecured debts owed to credit unions.

Section 109. Promotion of alternative dispute resolution

    Section 109 of the bill permits the court, on motion of the 
debtor and after a hearing, to reduce an unsecured claim for a 
consumer debt by up to 20 percent, if the debtor can prove by 
clear and convincing evidence that the claim was filed by a 
creditor who unreasonably refused to negotiate an alternative 
repayment schedule proposed by an approved credit counseling 
agency acting on behalf of the debtor. The provision applies 
only if: (1) the offer was made within 60 days of the filing of 
the petition; (2) the offer provided for payment of at least 60 
percent of the amount of the debt over a period not to exceed 
the repayment period of the loan, or a reasonable extension 
thereof; and (3) no portion of the debt is nondischargeable, 
entitled to priority under section 507 of the Bankruptcy Code, 
or would be paid more under a chapter 13 plan than the amount 
offered by the debtor. The debtor has the burden of proving 
that the proposed alternative repayment schedule was made in 
the specified 60-day period and that the creditor unreasonably 
refused to consider the debtor's proposal.
    Section 109 also prevents a trustee from setting aside a 
preferential transfer received by a creditor as part of an 
alternative repayment plan between the debtor and any creditor 
of the debtor created by an approved credit counseling agency.

Section 110. Enhanced disclosure for credit extensions secured by a 
        dwelling

    Section 110 of the bill requires the Board of Governors of 
the Federal Reserve to study the adequacy of information 
provided to a borrower with regard to the tax deductibility of 
interest paid in connection with an open-end credit transaction 
secured by the borrower's principal dwelling.

Section 111. Dual use debit card

    Section 111 requires the Board of Governors of the Federal 
Reserve to study current protections limiting the liability of 
consumers for the unauthorized use of a debit card or similar 
access device.

Section 112. Enhanced disclosures under an open-end credit plan

    Section 112 of the bill amends section 127 of the Truth in 
Lending Act to require certain open-end consumer credit plans 
with minimum monthly or periodic payments to include the 
following language on the billing statement:

        The minimum payment amount shown on your billing 
        statement is the smallest payment which you can make in 
        order to keep the account in good standing. This 
        payment option is offered as a convenience and you may 
        make larger payments at any time. Making only the 
        minimum payment each month will increase the amount of 
        interest you pay and the length of time it takes to 
        repay your outstanding balance.

    If the creditor allows a consumer to forgo making a minimum 
payment during a specified billing cycle, the billing statement 
must state that finance charges will continue to accrue. In 
addition, the billing statement must contain an example that 
utilizes an annual percentage rate and method for determining 
minimum periodic payments recently in effect for that creditor 
based on a $500 outstanding balance. The example must disclose 
the estimated minimum periodic payment and approximate period 
of time it would take to repay the $500 outstanding balance if 
the consumer paid only the minimum periodic payment on each 
monthly or periodic statement and obtained no additional 
extensions of credit. These additional disclosures must be made 
with respect to one billing cycle per calendar year. In 
addition, it requires the creditor to give the consumer a 
worksheet prescribed by the Board of Governors of the Federal 
Reserve to assist the consumer in determining his or her 
household income and debt obligations.
    In addition, section 112 requires the Federal Reserve Board 
to promulgate regulations regarding the above and to issue a 
model disclosure form to accompany the previously described 
example. The statement must advise the consumer that the 
example is intended to illustrate the approximate length of 
time it could take to repay a $500 balance based on the 
assumptions set forth therein without regard to any other 
factors that could impact an approximate repayment period. 
Compliance with such regulations would be enforceable 
exclusively by the Federal agencies. These regulations may not 
take effect for three years following the bill's date of 
enactment.
    Section 114 also requires the Board to conduct a study to 
determine whether consumers have adequate information about 
borrowing activities that may lead to financial problems. In 
studying this issue, the Board must consider the extent to 
which:
          (1) consumers, in establishing new credit 
        arrangements, are aware of their existing payment 
        obligations, the need to consider those obligations in 
        deciding to take on new credit, and how taking on 
        excessive credit can result in financial difficulty;
          (2) minimum periodic payment features offered in 
        connection with open-end creditplans impact consumer 
default rates;
          (3) consumers always make only the minimum payment 
        throughout the life of the plan;
          (4) consumers are aware that making only minimum 
        payments will increase the cost and repayment period of 
        an open-end loan; and
          (5) the availability of low minimum payment options 
        is a cause of consumers experiencing financial 
        difficulty.
The results of the study must be filed with Congress in two 
years.
    Finally, this provision requires the Federal Reserve Board, 
pursuant to its authority under the Truth in Lending Act, to 
promulgate regulations requiring additional disclosures to 
consumers regarding minimum payment features, if the Board 
determines that such disclosures are necessary based on its 
findings. Any such regulations must become effective before 
January 1, 2002.

Section 113. Protection of savings earmarked for the postsecondary 
        education of children

    This provision permits a debtor to exempt funds placed in 
an education individual retirement account (as described in 
section 530(b)(1) of the Internal Revenue Code) not less than 
365 days before the filing of the bankruptcy case if such funds 
have not been pledged or promised to any person in connection 
with any extension of credit. Other restrictions include the 
following:
          (1) the funds are not excess contributions (as 
        described in section 4973(e) of the Internal Revenue 
        Code);
          (2) the designated beneficiary of the account was a 
        dependent child of the debtor for the taxable year in 
        which the funds were placed in the account; and
          (3) the amounts in such postsecondary accounts may 
        not exceed the lesser of $50,000 (in the aggregate) in 
        accounts attributable to each such dependent child or 
        $100,000 (in the aggregate) attributable to all such 
        dependent children.

Section 114. Effect of discharge

    This provision makes the willful failure of a creditor to 
credit payments received under a confirmed chapter 11, 12, or 
13 plan in the manner required by the plan a violation of the 
discharge injunction. It also mandates that an individual 
injured by the willful failure of a creditor to comply with the 
requirements for a reaffirmation agreement, or by any willful 
violation of the discharge injunction, is entitled to recover 
costs and attorneys' fees and the greater of (1) the amount of 
actual damages or (2) $1,000. This provision prevents the 
imposition of punitive damages and prohibits the filing of a 
class action.

Section 115. Limiting trustee liability

    Section 115 of the bill provides that a trustee is not 
liable personally or on the trustee's bond for acts taken 
within the scope of the trustee's duties or authority, except 
to the extent the trustee acted with gross negligence. It 
defines gross negligence as reckless indifference or deliberate 
disregard of a trustee's fiduciary duty. It also prohibits a 
suit against a trustee in his or her personal or representative 
capacity, or against the trustee's bond, for certain actions, 
including the dissemination of statistics and other 
information.

Section 116. Reinforce the fresh start

    This provision makes a technical amendment with respect to 
the nondischargeability of certain court fees under section 
523(a)(17) of the Bankruptcy Code.

Section 117. Discouraging bad faith repeat filings

    Under current law, debtors may file successive bankruptcy 
cases following the dismissal of their prior cases with limited 
exceptions. 52 The filing of a bankruptcy case 
causes the immediate imposition of an automatic stay, which 
prevents creditors from pursuing actions against debtors and 
their property. 53 In light of this, some debtors 
file successive bankruptcy cases to prevent secured creditors 
from foreclosing on their collateral.
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    \52\ Section 109(g) of title 11 only imposes a limited ban on 
repeat filings. Under this provision, a debtor is ineligible for 
bankruptcy relief if, within the preceding 180 days, the prior case was 
dismissed based on the debtor's willful failure to abide by orders of 
the court or ``to appear before the court in proper prosecution of the 
case.'' 11 U.S.C. Sec. 109(g)(1). the preceding 180 days, he or she in 
the prior case sought and obtained its dismissal following the filing 
of a request for relief from the automatic stay.
    \53\ 11 U.S.C. Sec. 362(a). Exceptions to the automatic stay are 
set forth in 11 U.S.C. Sec. 362(b).
---------------------------------------------------------------------------
    Section 117 of the bill remedies this problem by 
terminating the automatic stay with respect to cases where the 
debtor has previously filed for bankruptcy relief, under 
certain circumstances. A case is deemed to be presumptively 
filed in bad faith as to all creditors if:
          (1) the debtor was the subject of a bankruptcy case 
        under chapter 7, 11, or 13 pending within the one-year 
        period preceding the filing of the instant bankruptcy 
        case;
          (2) a prior chapter 7, 11, or 13 case of the debtor 
        was dismissed within such one-year period for the 
        debtor's failure to file any requisite bankruptcy 
        document or to amend any bankruptcy document without 
        substantial excuse; 54
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    \54\ Mere inadvertence or negligence does not constitute 
substantial excuse, unless the dismissal was caused by the debtor's 
attorney.
---------------------------------------------------------------------------
          (3) the prior bankruptcy case was dismissed for the 
        debtor's failure to provide ``adequate protection'' (as 
        defined in section 361 of the Bankruptcy Code); or
          (4) there has not been a substantial change in the 
        debtor's financial or personal affairssince the 
dismissal of the prior case, or there is no reason to conclude that the 
current case will successfully conclude.
In addition, a case is presumptively deemed filed in bad faith 
as to any creditor who sought relief from the automatic stay in 
the prior case if such action was still pending at the time of 
dismissal or had been resolved by the granting of relief from 
the automatic stay.
    On request of a party in interest, the court must promptly 
enter an order confirming that the automatic stay does not 
apply in a bankruptcy case. Section 117 also permits the 
bankruptcy court to consider in reimposing the automatic stay 
in a later-filed bankruptcy case, whether the later case was 
filed in good faith as to the creditors who are stayed by the 
filing, subject to such conditions or limitations as the court 
directs. The presumption of bad faith under this provision may 
be rebutted by clear and convincing evidence.
    If two or more bankruptcy cases were pending in the one-
year preceding the filing of the pending case, the automatic 
stay will not apply in the pending case. A party in interest 
may make a request to the court within 30 days of the filing of 
the later case to reimpose the automatic stay if the party 
demonstrates that the later case was filed in good faith as to 
the creditors who are stayed by the filing. The provision 
provides that a case is presumptively not filed in good faith 
under certain specified circumstances.

Section 118. Curbing abusive filings

    Section 118 of the bill terminates the Bankruptcy Code's 
automatic stay provisions with respect to creditors secured by 
real property if the bankruptcy case was filed as part of a 
scheme to delay, hinder, and defraud creditors involving either 
a transfer of all or part ownership of the real property 
without the consent of the secured creditor or court approval, 
or if the bankruptcy case is one of several other bankruptcy 
filings affecting the real property.
    If recorded in compliance with applicable federal, State, 
or local law governing notices of interests or liens in real 
property, an order entered pursuant to this provision is 
binding in any other bankruptcy case filed within two years 
from the date of such recordation. It permits, however, a 
debtor in a subsequent case to move for relief from this order 
based upon changed circumstances or for good cause shown, after 
notice and a hearing. In addition, it requires any federal, 
State, or local agency that accepts notices of interests or 
liens in property to accept any certified copy of an order 
described in this section. Further, it references the good 
faith standard of section 362(c) of the Bankruptcy Code, as 
amended by the bill. It also responds to another problem 
presented by successive filings. Occasionally, debtors transfer 
their property interests to others who then file for bankruptcy 
relief to invoke the protection of the automatic stay under 
section 362 of the Bankruptcy Code. Under section 121 of the 
bill, this type of abuse is addressed by allowing bankruptcy 
courts to grant prospective in rem relief from the automatic 
stay with respect to real or personal property in future 
bankruptcy cases filed by the debtor. It also extends this 
protection to bankruptcy cases filed by other entities to whom 
the subject property was transferred.55 In addition, 
it requires in rem orders pertaining to real property to be 
recorded. Such recording constitutes notice to all parties 
having or claiming an interest in such property.
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    \55\ Both the majority and minority viewpoints expressed by the 
National Bankruptcy Review Commission's members supported in rem relief 
from the automatic stay. See Report of the National Bankruptcy Review 
Commission at 281-287; Recommendations for Reform of Consumer 
Bankruptcy Law by Four Dissenting Commissioners, at 57-59 (1997).
---------------------------------------------------------------------------
    This provision also excepts from the automatic stay an act 
to enforce any lien against or security interest in real 
property if the debtor is ineligible to be a debtor in a 
bankruptcy case or the debtor filed the bankruptcy case in 
violation of a bankruptcy court order issued in a prior 
bankruptcy case filed by the debtor.

Section 119. Debtor retention of personal property security

    Section 119 of the bill responds to two areas of 
uncertainty in the law with regard to how personal property 
interests are treated under the current law. One concerns the 
unsettled law as to whether a chapter 7 debtor may retain 
personal property without having either to reaffirm the 
underlying obligation 56 or redeem it.57
---------------------------------------------------------------------------
    \56\ 11 U.S.C. Sec. 524(c).
    \57\ 11 U.S.C. Sec. 722. See, e.g., Capital Communications Fed. 
Credit Union v. Boodrow (In re Boodrow), 126 F.3d 43, 53 (2d Cir. 1997) 
(holding that 11 U.S.C. Sec. 521(2) ``does not prevent a bankruptcy 
court from allowing a debtor who is current on loan obligations to 
retain the collateral and keep making payments under the original loan 
agreement.'').
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    Section 129(1) responds to this problem by not allowing an 
individual chapter 7 debtor to retain possession of personal 
property securing, in whole or in part, a purchase money 
security interest unless the debtor, within 45 days after the 
first meeting of creditors, enters into a reaffirmation 
agreement with the creditor or redeems the property. If the 
debtor fails to so act within the prescribed period, the 
subject property is no longer property of the estate, unless 
the court determines on motion of the trustee filed before the 
expiration of the 45-day that the property has consequential 
value or would benefit the bankruptcy estate. Thus, if no 
timely determination is made, a creditor, under this provision, 
would be permitted to take any action with respect to such 
property as permitted by applicable nonbankruptcy law.
    This section also clarifies that the automatic stay 
terminates not only with respect to personal property that is 
property of the estate, but to property of the debtor as well. 
Further, it provides that the court must order appropriate 
adequate protection of the creditor's interest and it directs 
the debtor to deliver the collateral to the trustee if the 
debtor is in possession of such property.
    Subsection 119(2) of the bill also responds to a current 
split in authority regarding the debtor's redemption rights 
under section 722 of the Bankruptcy Code. While most courts 
have interpreted this provision to require chapter 7 debtors to 
pay the redemption value in a lump sum payment, some permit 
debtors to stretch this payment out over time. This section 
specifies that the required payment must be made in full at the 
time of redemption.

Section 120. Relief from the automatic stay when the debtor does not 
        complete intended surrender of consumer debt collateral

    This section of the bill provides that the automatic stay 
in an individual chapter 7, 11, or 13 case terminates with 
respect to property securing, in whole or in part, a claim or 
with respect to leased property if the debtor fails to file a 
statement of intention with respect to such property. The 
debtor must indicate in this statement whether he or she will 
surrender the property or retain it and, if retaining it, 
whether the debtor will (1) redeem the property, (2) reaffirm 
the debt, or (3) assume the obligation if it is an unexpired 
lease, if the trustee does not. This provision also terminates 
the automatic stay if the debtor fails to undertake the actions 
specified in his or her statement of intention, unless the 
statement of intention specifies reaffirmation and the creditor 
refuses to enter into the reaffirmation agreement on the 
original contract terms. An exception pertains where the court 
determines, on the motion of the trustee made within the 
specified 45-day period and after notice and a hearing, that 
such property is of consequential value or benefit to the 
estate.
    This section also makes the requirement with respect to 
filing a statement of intention applicable to all debts, not 
just consumer debts, and it requires the debtor to carry out 
his or her intention within 30 days from the first date set for 
the meeting of creditors. As a result, the debtor's duty to 
surrender property, or to reaffirm or redeem, applies to all 
secured debts.
    In addition, this section provides that a provision in a 
lease or agreement that places the debtor in default on the 
lease or agreement by reason of the debtor's filing for 
bankruptcy relief applies in the bankruptcy case, if otherwise 
valid under applicable nonbankruptcy law.
    Further, section 120 clarifies that, if the debtor does not 
timely file his or her statement of intention or carry out his 
or her stated intention with respect to personal property, the 
property is no longer property of the estate. It also requires 
the court to order appropriate adequate protection of the 
creditor's interest and to direct the debtor to deliver the 
collateral to the trustee if the debtor is in possession of the 
property.

Section 121. Giving secured creditors fair treatment in chapter 13

    This provision requires a chapter 13 plan to provide that a 
secured creditor must retain its lien until the underlying debt 
is paid or the debtor receives a discharge. If the case is 
dismissed or converted prior to completion of the plan, section 
121 of the bill provides that the secured creditor shall retain 
its lien to the extent recognized by applicable nonbankruptcy 
law.

Section 122. Restraining abusive purchases on secured credit

    This provision addresses the following problem. Under 
present law, a debtor, for instance, can finance the purchase 
of a new automobile with a showroom value of $20,000 by giving 
the lender a security interest in the vehicle. If the debtor 
then files for bankruptcy relief one day later, then the value 
of the secured creditor's lien must be determined under section 
506 of the Bankruptcy Code. Even though the vehicle is one day 
old, the amount of the secured creditor's claim is, under 
current law, limited to the value of the automobile taking into 
account the immediate effect of depreciation upon purchase. 
Accordingly, that secured creditor has an allowed secured claim 
in a reduced amount based on the value of a used automobile and 
an allowed unsecured claim for the difference between the 
present value of the automobile and the amount owed to the 
secured creditor.
    Section 122 of the bill prevents the bifurcation of a 
secured claim in an individual chapter 7, 11, 12, or 13 case to 
the extent the claim is attributable in whole or in part to the 
purchase price of personal property acquired by the debtor 
within the five-year period preceding the bankruptcy filing. 
``Personal property'' generally includes all property other 
than real estate. If the claim is secured only by personal 
property, the amount of the claim is the sum of the unpaid 
principal balance of the purchase price together with accrued 
and unpaid interest along with charges at the contract rate. If 
the claim is secured by other property, the amount of the claim 
cannot be not less than the unpaid principal balance of the 
purchase price of the personal property acquired and unpaid 
interest and charges at the contract rate. This amount, 
however, must be reduced by any payments actually received.
    The valuations under section 122 apply to any subsequent 
case filed by or against the debtor in the two-year period 
beginning on date the original bankruptcy case is filed.

Section 123. Fair valuation of collateral

    Section 123 of the bill provides that the value of personal 
property of individual Chapter 7 and 13 debtors is the 
``replacement value of such property'' as of the filing date of 
the bankruptcy case without deduction for costs of sale or 
marketing. With respect to property acquired for personal, 
family, or household purposes, replacement value is the price a 
retail merchant would charge for property of that kind 
considering the age and condition of the property at the time 
its value is determined.

Section 124. Domiciliary requirements for exemptions

    This provision extends the time that a debtor must be 
domiciled in a state before he or she may claim that state's 
exemptions to 730 days. In addition, it clarifies that if the 
debtor's domicile was not located in a single state for the 
730-day period, the state where the debtor was domiciled in the 
180-day period preceding the 730-day period controls, or such 
longer portion of the 180-day period controls.

Section 125. Restrictions on certain exempt property obtained through 
        fraud

    This provision creates an exception to the exempt property 
provisions of the Bankruptcy Code. It provides that the value 
of an interest in (1) real or personal property that the debtor 
or a dependent of the debtor uses as a residence, (2) a 
cooperative that owns property that the debtor or a dependent 
of the debtor uses as a residence, or (3) a burial plot must be 
reduced to the extent such value derived from the conversion of 
nonexempt property in the 730-day period preceding the filing 
of the bankruptcy case, if the conversion was done with the 
intent to hinder, delay, or defraud a creditor.

Section 126. Rolling stock equipment

    Section 126 of the bill amends section 1168 of the 
Bankruptcy Code to better define the rights of parties in 
rolling stock equipment. It also amends section 1110(a)(1) of 
the Bankruptcy Code, which defines the rights of secured 
creditors and lessors having an interest in aircraft and 
aircraft equipment. It clarifies that a default under a 
security agreement, lease, or conditional sale contract with 
respect to both types of property must be cured within 60 days 
from the filing of the bankruptcy case. Section 126 also 
provides that if the default occurs after the expiration of 
this time period, it must be cured in accordance with the terms 
of the underlying security agreement, lease, or conditional 
sales contract.

Section 127. Discharge under chapter 13

    Section 129 of the bill prevents the following debts from 
being discharged in a chapter 13 case:
          (1) debts for money, property, services, or 
        extensions of credit obtained through fraud or a false 
        statement in writing;
          (2) consumer debts owed to a single creditor that 
        aggregate to more than $250 for ``luxury goods or 
        services,'' incurred by an individual debtor within 90 
        days before the filing of the bankruptcy case, and cash 
        advances aggregating more than $250 that are extensions 
        of consumer credit obtained by a debtor under an open-
        end credit plan within 90 days before the order for 
        relief;
          (3) debts resulting from fraud or defalcation by the 
        debtor acting as a fiduciary;
          (4) certain debts that require timely request for a 
        dischargeability determination, if the creditor lacks 
        notice or does not have actual knowledge of the case in 
        time to make such request; and
          (5) debts for restitution or damages, awarded in a 
        civil action against the debtor as a result of willful 
        or malicious conduct by the debtor that caused personal 
        injury to an individual or the death of an individual.

Section 128. Bankruptcy judgeships

    The ever-spiraling number of bankruptcy case filings 
clearly creates a need for additional bankruptcy judgeships. In 
the 105th Congress, the House responded to this need by passing 
H.R. 1596, which would have created additional permanent and 
temporary bankruptcy judgeships and extended an existing 
temporary position. Section 128 of the bill generally 
incorporates H.R. 1596 as it passed the House with provisions 
extending five existing temporary judgeships and requiring that 
bankruptcy judges submit annual reports to their chief 
bankruptcy judges with respect to certain travel expenses.

Section 129. Additional amendments to title 11, United States Code

    Section 129 adds a tenth-level priority for claims based on 
death or personal injuries resulting from the debtor's 
operation of a motor vehicle or vessel while intoxicated.

Section 130. Amendment to section 1325

    Section 130 of the bill excepts from the definition of 
disposable income under section 102 of the bill child support 
payments, foster care payments, or disability payments for a 
dependent child made in accordance with applicable 
nonbankruptcy law and which are reasonably necessary to be 
expended for such purposes. It also clarifies that disposable 
income is determined under the needs-based formula set out in 
section 102 of the bill.

Section 131. Application of codebtor stay only when the stay protects 
        the debtor

    Section 131 of the bill terminates the chapter 13 codebtor 
stay 30 days from the filing of the bankruptcy case where the 
debtor did not receive the consideration for the claim held by 
a creditor. An exception applies where the debtor is primarily 
obligated to pay the creditor with respect to a claim under a 
legally binding separation or property settlement agreement, or 
a divorce or dissolution decree.
    In addition, this section terminates the Chapter 13 
codebtor stay as of the date on which the Chapter 13 plan is 
confirmed if the plan provides that the debtor's interest in 
leased personal property (where the debtor is the lessee) will 
be surrendered or abandoned, or if the plan does not provide 
for payments to be made on account of such lease obligation.

Section 132. Adequate protection for investors

    Section 132 creates an exception to the automatic stay for 
certain enforcement actions by a ``securities self regulatory 
organization,'' a defined term which is defined in this 
provision.

Section 133. Limitation on luxury goods

    This provision establishes a presumption that consumer 
debts owed to a single creditor and aggregating more than $250 
for ``luxury goods or services'' incurred by an individual 
debtor within 90 days before the order for relief under this 
title, or cash advances aggregating more than $250 that are 
extensions of consumer credit under an open-end credit plan 
obtained by an individual debtor within 90 days prepetition, 
are nondischargeable. The term, ``luxury goods or services,'' 
does not apply to goods or services reasonably necessary for 
the support or maintenance of the debtor or a dependent of the 
debtor. In addition, ``an extension of consumer credit under an 
open-end credit plan'' has the same meaning under this 
provision as it has under the Consumer Credit Protection Act.

Section 134. Giving debtors the ability to keep leased personal 
        property by assumption

    Section 134 of the bill provides that if a personal 
property lease is rejected or not timely assumed by the 
trustee, the leased property is no longer property of the 
estate and the automatic stay terminates. With regard to 
individual chapter 7 cases, it allows the debtor to notify the 
creditor in writing of his or her desire to assume the lease. 
Upon being so notified, the creditor may, at its option, notify 
the debtor that it is willing to have the lease assumed and may 
condition such assumption on cure of any outstanding default on 
terms set by the contract. If, within 30 days of such notice, 
the debtor notifies the lessor in writing that the lease is 
assumed, the liability under the lease will be assumed by the 
debtor and not by the bankruptcy estate.
    In an individual chapter 11 or chapter 13 case where the 
debtor is the lessee with respect to personal property and the 
lease is not assumed in the confirmed plan, the lease is deemed 
rejected as of the conclusion of the hearing on confirmation. 
If the lease is rejected, the automatic stay as well as the 
chapter 13 codebtor stay are automatically terminated with 
respect to such property.

Section 135. Adequate protection of lessors and purchase money secured 
        creditors

    This amendment requires a chapter 13 debtor to commence 
making postpetition payments in the ``contract amount'' within 
30 days of the filing of the bankruptcy case to personal 
property lessors and creditors secured by personal property to 
the extent that the claim is attributable to the purchase of 
such property. It requires these payments to be made until the 
creditor receives ``actual payments under the plan'' or the 
debtor surrenders the property. While the court may, after 
notice and a hearing, alter the amount and timing of the 
payments, they must be at least monthly and not less than the 
amount of any weekly, biweekly, monthly, or other periodic 
payment schedule pursuant to the contract between the debtor 
and creditor.
    This requirement is in addition to the debtor's obligation 
to make payments under a plan, which must be commenced within 
30 days after the plan is filed, although the amount of the 
plan payments must be reduced by the amount the debtor pays as 
adequate protection. In addition, section 135 permits a secured 
creditor or lessor to retain possession of property seized 
prepetition until the creditor or lessor receives the first 
required payment under this provision.
    With respect to chapter 13 cases, section 135 requires the 
debtor to provide a secured creditor or lessor, within 60 days 
from the filing of the case, reasonable evidence of the 
maintenance of any required insurance coverage with respect to 
the use or ownership of such property. This requirement 
pertains for as long as the debtor retains possession of such 
property.

Section 136. Automatic stay

    Section 136 of the bill amends the Bankruptcy Code's 
automatic stay provisions to except the following:
          (1) transfers that are not avoidable under section 
        544 (trustee as lien creditor) or section 549 
        (postpetition transfers) of the Bankruptcy Code;
          (2) the continuation of any eviction, unlawful 
        detainer action, or similar proceeding by a lessor 
        against a debtor involving residential real property 
        where the debtor has not paid rent to the lessor 
        pursuant to the terms of the lease agreement or 
        applicable State law after the filing of the bankruptcy 
        case;
          (3) the commencement or continuation of any eviction, 
        unlawful detainer action, or similar proceeding by a 
        lessor against a debtor involving residential real 
        property where the rental agreement has terminated 
        pursuant to the lease agreement or applicable State 
        law;
          (4) any eviction, unlawful detainer action, or 
        similar proceeding, if the debtor has filed for 
        bankruptcy relief within the preceding year and failed 
        to pay postpetition rent during the prior case; and
          (5) eviction actions based on endangerment to 
        property or person, or the use of illegal drugs.

Section 137. Extend period between bankruptcy discharges

    Section 137 of the bill extends the period that a chapter 7 
debtor may receive a subsequent chapter 7 discharge from six to 
eight years. In addition, it prohibits the issuance of a 
discharge in a subsequent chapter 13 case if the debtor 
received a discharge within 5 years preceding the filing of the 
subsequent chapter 13 case.

Section 138. Definition of domestic support obligation

    Section 138 adds a definition to the Bankruptcy Code for 
``domestic support obligation.'' It defines this term as a debt 
that accrues pre- or postpetition and is owed or recoverable by 
a spouse, former spouse, or child of the debtor, or that 
child's legal guardian. It also includes a claim by a 
governmental unit. To qualify as a domestic support obligation, 
the debt must be in the nature of alimony, maintenance, or 
support (including assistance provided by a governmental unit) 
of such spouse, former spouse, or child, without regard to 
whether such debt is expressly so designated. It must be 
established or subject to establishment either pre- or 
postpetition pursuant to a (i) 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. It 
does not apply to a debt assigned to a nongovernmental entity, 
unless it was assigned voluntarily by the spouse, former 
spouse, child, or parent solely for the purpose of collecting 
the debt.

Section 139. Priorities for claims for domestic support obligations

    Section 139 makes domestic support obligations payable 
before all other expenses, including expenses of administration 
(e.g., fees of the trustee and counsel for the trustee). Within 
this priority, allowed claims for domestic support obligations 
must be paid on the condition that funds received under this 
provision by a governmental unit be applied first to claims 
owed directly to a spouse, former spouse, or child of the 
debtor, or the parent of such child, without regard to whether 
the claim is filed by the spouse, former spouse, child, or 
parent, or is filed by a governmental unit on behalf of that 
person. Remaining funds may be used to satisfy claims assigned 
by a spouse, former spouse, child of the debtor, or the parent 
of that child to a governmental unit or which are owed directly 
to a governmental unit under applicable nonbankruptcy law.

Section 140. Requirements to obtain confirmation and discharge in cases 
        involving domestic support obligations

    Section 140 of the bill requires, as a condition of 
confirmation in a chapter 11 or 13 case, the debtor--if 
required by a judicial or administrative order or statute to 
pay a domestic support obligation--pay all postpetition amounts 
payable under such order or statute. It also requires a chapter 
13 debtor to be current with these obligations as a condition 
of obtaining a discharge.

Section 141. Exceptions to automatic stay in domestic support 
        obligation proceedings

    Section 141 of the bill creates the following additional 
exceptions to the automatic stay: the withholding of income 
pursuant to an order as specified in section 466(b) of the 
Social Security Act; the withholding, suspension, or 
restriction of a driver's license, or a professional, 
occupational or recreational license pursuant to State law, as 
specified in section 466(a)(16) of the Social Security Act; the 
reporting of overdue support owed by an absent parent to any 
consumer reporting agency as specified in section 466(a)(7) of 
the Social Security Act; the interception of tax refunds, as 
specified in sections 464 and 466(a)(3) of the Social Security 
Act; and the enforcement of medical obligations as specified 
under title IV of the Social Security Act.

Section 142. Nondischargeability of certain debts for alimony, 
        maintenance and support

    Section 142 of the bill clarifies that ``domestic support 
obligations,'' as defined in section 138 of the bill, are 
nondischargeable. It also makes obligations that are not 
domestic support obligations, but that are incurred in 
connection with a divorce or separation or related action, 
nondischargeable.

Section 143. Continued liability of property

    This section makes exempt property liable for 
nondischargeable tax and domestic support obligations 
``notwithstanding any provision of applicable nonbankruptcy law 
to the contrary.'' It also makes a technical amendment to 
section 522(f)(1)(A) of the Bankruptcy Code, which pertains to 
the avoidability of certain liens.

Section 144. Protection of domestic support claims against preferential 
        transfer motions

    This section makes a technical amendment to section 
547(c)(7), which prohibits a prepetition transfer from being 
avoided as a preferential transfer to the extent it was a bona 
fide payment of a debt for a domestic support obligation.

Section 145. Clarification of meaning of household goods

    Under current law, debtors must list all personal property 
that they own. 58 The applicable official bankruptcy 
form requires inter alia that a description and current market 
valuation of these items be stated. Among the types of personal 
property items that are required to be disclosed by debtors are 
``household goods.'' 59 The Bankruptcy Code, 
however, does not define this term.
---------------------------------------------------------------------------
    \58\ 11 U.S.C. Sec. 521(1); Official Form 6--Schedule B.
    \59\ Official Form 6--Schedule B.
---------------------------------------------------------------------------
    Section 145 defines ``household goods'' as including 
tangible personal property that is normally found in or around 
a residence. The term, however, does not include motorized 
vehicles used for transportation purposes.

Section 146. Nondischargeable debts

    Section 146 of the bill creates two new categories 
ofnondischargeable debts. First, it makes nondischargeable any debt 
incurred to pay a nondischargeable debt, without regard to intent, if 
such subsequent debt was incurred within 90 days of the filing of the 
bankruptcy case. Second, it makes nondischargeable any debt incurred 
with the intent to pay a nondischargeable debt, regardless of when such 
subsequent debt was incurred.

Section 147. Monetary limitation on certain exempt property

    This provision imposes an aggregate monetary limitation of 
$250,000 for exempt property consisting of the following:
          (1) real or personal property of the debtor or that a 
        dependent of the debtor uses as a residence;
          (2) an interest in a cooperative that owns property, 
        which the debtor or the debtor's dependent uses as a 
        residence; or
          (3) a burial plot for the debtor or the debtor's 
        dependent.
Two exceptions apply to this limitation. First, it does not 
apply to a family farmer's principal residence. Second, it does 
not apply to a debtor who resides in a state that enacts 
legislation opting out of this provision.

Section 148. Bankruptcy fees

    This provision of the bill amends section 1930 of title 28 
of the United States Code to permit a bankruptcy court or the 
district court to waive the requisite chapter 7 filing fee for 
an individual debtor who is unable to pay such fee in 
installments. In addition, this provision permits such courts 
to waive other specified fees.

Section 149. Collection of child support

    Section 149 requires a chapter 7 and chapter 13 trustee to 
provide certain notices to child support claimants and certain 
governmental units. First, the trustee must notify the claimant 
in writing of the claimant's right to use the services of a 
state child support enforcement agency established under 
sections 464 and 466 of the Social Security Act located in the 
state where the claimant resides. The notice must include the 
address and telephone number of the child support agency. 
Second, the trustee must supply in writing to the child support 
enforcement agency in the state where the claimant resides the 
name, address, and telephone number of the child support 
claimant.
    Thereafter, the trustee must notify both the child support 
claimant and the state agency that the debtor was granted a 
discharge and supply the debtor's last known address together 
with the name of each creditor holding a debt that is not 
discharged under section 523(a)(2), (4) or (14A) of the 
Bankruptcy Code.
    If a child support claimant or state agency is not able to 
locate the debtor, this section permits them to request such 
information from a creditor holding a nondischargeable debt 
described in the prior paragraph.

Section 150. Excluding employee benefit plan participant contributions 
        and other property from the estate

    Section 150 of the bill excludes as property of the estate 
any interest in property to the extent that an employer has 
withheld it from the wages of employees for the purpose of 
contribution to an employee benefit plan subject to title I of 
the Employee Retirement Income Security Act of 1974. It also 
excludes any interest in property that the employer received as 
the result of payments by participants or beneficiaries to an 
employer for contribution to an employee benefit plan subject 
to title I of the Employee Retirement Income Security Act of 
1974. Section 150 applies to bankruptcy cases commenced 180 
days after the bill's effective date.

Section 151. Clarification of postpetition wages and benefits

    This provision of the bill amends section 503(b)(1)(A) of 
the Bankruptcy Code (which accords administrative expense 
priority to certain claims for wages, salaries or commissions 
for services rendered after the commencement of a bankruptcy 
case) to clarify that it includes claims attributable to any 
period of time that commences after a bankruptcy case is filed 
as a result of the debtor's violation of federal law, without 
regard to when the original unlawful act occurred or whether 
any services were rendered.

Section 152. Exceptions to automatic stay in domestic support 
        obligation proceedings

    This section of the bill clarifies that the withholding of 
the debtor's income for the payment of certain domestic support 
obligations is not enjoined by the automatic stay provisions of 
section 362 of the Bankruptcy Code.

Section 153. Automatic stay inapplicable to certain proceedings against 
        the debtor

    This section excepts the commencement or continuation of 
the following proceedings from the automatic stay: (1) a 
proceeding concerning child custody or visitation; (2) an 
action alleging domestic violence; and (3) a proceeding seeking 
a dissolution of marriage, unless the proceeding concerns 
property of the estate.

                Title II. Discouraging Bankruptcy Abuse

Section 201. Reenactment of Chapter 12

    Chapter 12 is a specialized form of bankruptcy relief 
available only to a ``family farmer with regular annual 
income,'' 60 a defined term. 61 It 
permits eligible family farmers, under the supervision of a 
bankruptcy trustee, 62 to reorganize their debts 
pursuant to a repayment plan. 63 The special 
attributes of chapter 12 make it better suited to meet the 
particularized needs of family farmers in financial distress 
than other forms of bankruptcy relief, such as chapter 11 
64 and chapter 13.65
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    \60\ 11 U.S.C. Sec. 109(f).
    \61\ 11 U.S.C. Sec. 101(19).
    \62\ 11 U.S.C. Sec. 1202.
    \63\ 11 U.S.C. Sec. 1222.
    \64\ For example, chapter 12 is typically less complex and 
expensive than chapter 11, a form of bankruptcy relief generally 
utilized to effectuate large corporate reorganizations.
    \65\ Chapter 13, a form of bankruptcy relief for individuals 
seeking to reorganize their debts, limits its eligibility to debtors 
with debts in lower amounts than permitted for eligibility purposes 
under chapter 12. Cf. 11 U.S.C. Sec. Sec. 109(e), 101(18).
---------------------------------------------------------------------------
    Chapter 12 was enacted on a temporary seven-year basis as 
part of the Bankruptcy Judges, United States Trustees, and 
Family Farmer Bankruptcy Act of 1986 66 in response 
to the farm financial crisis of the early- to mid-
1980's.67 It was subsequently extended on August 6, 
1993 to September 30, 1998.68 Last year, chapter 12 
was further extended until April 1, 1999 as part of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act, 
1999.69
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    \66\ Pub. L. No. 99-554, Sec. 255, 100 Stat. 3088, 3105 (1986).
    \67\ See U.S. Dept. of Agriculture, Info. Bull. No. 724-09, Issues 
in Agricultural and Rural Finance: Do Farmers Need a Separate Chapter 
in the Bankruptcy Code? (Oct. 1997). As one of the principal proponents 
of this legislation explained:

      I doubt there will be anything that we do that will have 
      such an immediate impact in the grassroots of our country 
      with respect to the situation that exists in most of the 
      heartland, and that is in the agricultural sector. . . .
          * * * * * * *
      You know, William Jennings Bryan in his famous speech, the 
      Cross of Gold, almost 60 years ago [sic], stated these 
      words: ``Destroy our cities and they will spring up again 
      as if by magic; but destroy our farms, and the grass will 
      grow in every city in ouir country.''
      This legislation will hopefully stem the tide that we have 
      seen so recently in the massive bankruptcies in the family 
      farm area.

132 Cong Rec. 28,147 (1986) (statement of Rep. Mike Synar (D-Okla.)).
---------------------------------------------------------------------------
    \68\ Pub. L. No. 103-65, 107 Stat. 311 (1993).
    \69\ Pub. L. No. 105-277, Sec. 149 (1998).
---------------------------------------------------------------------------
    Section 201 makes chapter 12 a permanent component of the 
Bankruptcy Code. The National Bankruptcy Review Commission made 
a similar recommendation.70
---------------------------------------------------------------------------
    \70\ See Report of the National Bankruptcy Review Commission, at 
1014-16 (1997).
---------------------------------------------------------------------------
Section 202. Meetings of creditors and equity security holders
    Under current law, all chapter 11 debtors must appear for 
examination under oath pursuant to section 341 of the 
Bankruptcy Code. This examination provides an opportunity for 
the United States Trustee, creditors, and other parties in 
interest to assess the debtor's financial condition.
    On request of a party in interest and after notice and a 
hearing, this section allows the bankruptcy court to dispense 
with this requirement for cause where the chapter 11 debtor 
solicited prepetition acceptances of its plan of 
reorganization.71 This provision particularly 
applies to ``prepackaged chapter 11 plans,'' that is, plans 
where the debtor, before filing for bankruptcy relief, obtained 
the acceptance of creditors and interest holders in its plan of 
reorganization.
---------------------------------------------------------------------------
    \71\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 487-89 (1997).
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Section 203. Protection of retirement savings in bankruptcy
    This provision permits a debtor to exempt certain 
retirement funds to the extent that those funds are in a fund 
or account that is exempt from taxation under section 401, 403, 
408, 408A, 414, 457, or 501(a) of the Internal Revenue Code. It 
also applies to retirement monies in a fund that received a 
favorable determination pursuant to Internal Revenue Code 
section 7805. If the retirement monies are in a retirement fund 
that has not received a favorable determination pursuant to 
section 7805 of the Internal Revenue Code, those funds are 
exempt if the debtor demonstrates that no prior unfavorable 
determination has been made by a court or the Internal Revenue 
Service, and the retirement fund is in substantial compliance 
with the applicable requirements of the Internal Revenue Code. 
This section also applies to certain rollover distributions and 
ensures that certain retirement funds are exempt under state as 
well as federal law.
    In addition, this provision creates an exception to the 
automatic stay for the withholding of income from a debtor's 
wages pursuant to an agreement authorizing such withholding for 
the benefit of a pension, profit-sharing, stock bonus, or other 
employer-sponsored plan established under Internal Revenue Code 
section 401, 403, 408, 408A, 414, 457, or 501(a) to the extent 
that the amounts withheld are used solely to repay a loan from 
a plan as authorized by section 408(b)(1) of the Employee 
Retirement Income Security Act of 1974 or that they are subject 
to Internal Revenue Code section 72(p). It also applies to 
certain thrift savings plan loans.
    Section 203 also excepts from discharge any amount owed to 
a pension, profit-sharing, stock bonus, or other plan 
established under the Internal Revenue Code section 401, 403, 
408, 408A, 414, 457, or 501(c) that is for a loan as authorized 
under section 408(b)(1) of the Employee Retirement Income 
Security Act of 1974 or that is subject to section 72(p) of the 
Internal RevenueCode of 1986. It also applies to certain thrift 
savings plan loans. Section 203 prohibits a Chapter 13 plan from 
including a provision materially altering the terms of a loan described 
above.

Section 204. Protection of refinance of security interest

    Section 204 of the bill amends section 547(e)(2) of the 
Bankruptcy Code to extend the time period for determining when 
a transfer is made based on when it is perfected from ten days 
to 30 days.

Section 205. Unexpired leases of nonresidential real property

    Under current law, a bankruptcy trustee or a chapter 11 
debtor in possession has 60 days to either assume, assign, or 
reject a nonresidential lease of real property in which the 
bankruptcy estate is a lessee.72 In practice, 
however, trustees and chapter 11 debtors typically seek and 
obtain multiple extensions of this period.
---------------------------------------------------------------------------
    \72\ See 11 U.S.C. Sec. 365(d)(4).
---------------------------------------------------------------------------
    Section 205 of the bill amends section 365(d)(4) of the 
Bankruptcy Code to establish finite deadlines by which a 
nonresidential lease of real property must be assumed or 
rejected. It provides that this period is the earlier of 120 
days after the date of the order for relief or the entry of an 
order confirming a plan. The failure to act within that period 
causes the lease to be deemed rejected automatically.
    Section 205 does permit the 120-day period to be extended 
for an additional 120 days on motion of the trustee or lessor 
for cause. If such extension is granted, the court may permit a 
subsequent extension only upon the lessor's written consent.

Section 206. Creditors and equity security holders committees

    An important premise of a chapter 11 case is active 
creditor participation and oversight. This participation 
theoretically fosters the debtor's reorganization and serves an 
oversight function as well. One of the principal means by which 
creditor participation is encouraged and implemented is through 
the appointment of a creditors' committee.73 The 
United States trustee is charged with the responsibility to 
appoint creditors' and equity security holders' committees. The 
membership of a committee ordinarily consists of creditors 
holding the seven largest claims that are representative of the 
types of creditors in the chapter 11 case.
---------------------------------------------------------------------------
    \73\ Correlatively, if the debtor has equity security holders, a 
committee representing these interests can also be appointed. See 11 
U.S.C. Sec. 1102.
---------------------------------------------------------------------------
    Section 206 clarifies that, after notice and a hearing, a 
bankruptcy court may, on its own motion or on motion of a party 
in interest, order a change in a committee's membership to 
ensure adequate representation of other parties in a 
case.74
---------------------------------------------------------------------------
    \74\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 492-01 (1997).
---------------------------------------------------------------------------

Section 207. Amendment to section 546 of title 11, United States Code

    Section 207 of the bill amends section 546 of the 
Bankruptcy Code to provide that a trustee may not avoid a 
warehouse lien for storage, transportation, or other costs 
incidental to the storage and handling of goods, as provided by 
section 7-209 of the Uniform Commercial Code.

Section 208. Limitation

    This section of the bill extends the period in which a 
seller may reclaim goods from 20 to 45 days after receipt of 
such goods by the debtor.

Section 209. Amendment to section 330(a) of title 11, United States 
        Code

    Section 209 of the bill clarifies that the compensation 
provisions of section 330(a)(3)(A) of the Bankruptcy Code apply 
to examiners, chapter 11 trustees, and professional persons. It 
adds a provision requiring the court to treat compensation 
awarded to a trustee as a commission based on results achieved.

Section 210. Postpetition disclosure and solicitation

    Under current law, the acceptance or rejection of a chapter 
11 plan of reorganization may not be solicited from parties 
affected by the plan absent a court-approved disclosure 
statement.75 The disclosure statement is required to 
ensure that these parties receive adequate information about 
the plan and its consequences.
---------------------------------------------------------------------------
    \75\ See 11 U.S.C. Sec. 1125(b).
---------------------------------------------------------------------------
    Section 210 permits postpetition solicitation of creditors 
and equity security holders in chapter 11 cases if they were 
solicited prepetition in compliance with applicable 
nonbankruptcy law.76 This creates an exception to 
the requirement that these parties receive a court-approved 
disclosure statement prior to their solicitation.
---------------------------------------------------------------------------
    \76\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 595-98 (1997).
---------------------------------------------------------------------------

Section 211. Preferences

    One of the linchpins of the Bankruptcy Code is equality of 
treatment among similarly situated creditors. To effectuate 
this goal, section 547 of the Bankruptcy Code permits the 
avoidance of certain prepetition transfers of property made by 
the debtor that effectively prefer some creditors over others. 
While the Bankruptcy Code acknowledges defenses to preferential 
transfer actions,77 defendants cite the difficulty 
of establishing certain defenses as well as the attendant 
inconvenience and costs of litigation.
---------------------------------------------------------------------------
    \77\ See, e.g., 11 U.S.C. Sec. 547(c).
---------------------------------------------------------------------------
    Section 211 of the bill allows a defendant in a preference 
action to establish that the transfer was made in the ordinary 
course of the debtor's financial affairs or business or that 
the transfer was made in accordance with ordinary business 
terms.78 Presently, the Bankruptcy Code requires 
both of these grounds to be established in order to sustain a 
defense to a preferential transfer action.
---------------------------------------------------------------------------
    \78\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 800-03 (1997).
---------------------------------------------------------------------------
    This section also establishes a threshold amount for a 
preferential transfer action.79 To file a 
preferential transfer action in a case where the claims are not 
primarily consumer debts, the aggregate amount of all property 
constituting the transfer must be at least $5,000 or more.
---------------------------------------------------------------------------
    \79\ Id. at 797-98.
---------------------------------------------------------------------------

Section 212. Venue of certain proceedings

    This section of the bill amends the venue provisions for 
preferential transfer actions. A preferential transfer action 
in the amount of $10,000 or less must be filed in the district 
where the defendant resides.80 Currently, this 
amount is fixed at $1,000.81
---------------------------------------------------------------------------
    \80\ Id. at 799-00.
    \81\ See 28 U.S.C. Sec. 1409(b).
---------------------------------------------------------------------------

Section 213. Period for filing plan under chapter 11

    Section 213 of the bill mandates that a chapter 11 debtor's 
exclusive period for filing a plan may not be extended beyond a 
date that is 18 months after the order for relief. It likewise 
provides that the debtor's exclusive period for obtaining 
acceptances of the plan may not be extended beyond 20 months 
after the order for relief.

Section 214. Fees arising from certain ownership interests

    Section 214 of the bill amends section 523(a)(16) of the 
Bankruptcy Code to clarify that it applies to fees or 
assessments arising from the debtor's interest in a 
condominium, cooperative or homeowners association 
(irrespective of whether or not the debtor physically occupies 
such property) for as long as the debtor or the trustee has a 
legal, equitable, or possessory ownership interest in such 
property.

Section 215. Cases relating to insurance deposits in cases ancillary to 
        foreign proceedings

    Section 215 of the bill amends section 304 of the 
Bankruptcy Code to prohibit relief under chapter 15, as enacted 
by this bill, with respect to certain types of property. The 
property interests that are protected under this provision 
include a deposit, escrow, trust fund, or other security 
required or permitted under applicable State insurance law or 
regulation for the benefit of claim holders in the United 
States. Section 215 also defines several relevant terms.

Section 216. Defaults based on nonmonetary obligations

    Section 216 of the bill amends section 365(b) of the 
Bankruptcy Code in response to the Claremont case,82 
which presented the issue of whether the debtors (operators of 
several automobile dealerships) had to cure certain nonmonetary 
defaults that were, in fact, incurable as a condition of their 
assumption and assignment of their dealer agreements to third 
parties, which would generate value for the estate.
---------------------------------------------------------------------------
    \82\ Worthington v. General Motors Corp. (In re Claremont 
Acquisition Corp., Inc.), 113 F.3d 1029 (9th Cir. 1997).
---------------------------------------------------------------------------
    Section 365(b)(2)(D) of the Bankruptcy Code provides that 
the requirement to cure a default prior to assumption and 
assignment does not apply to a default that is a breach of a 
provision relating to ``the satisfaction of any penalty rate or 
provision relating to a default arising from any failure by the 
debtor to perform nonmonetary obligations under the executory 
contract or unexpired lease.'' 83
---------------------------------------------------------------------------
    \83\ 11 U.S.C. Sec. 365(b)(2)(D).
---------------------------------------------------------------------------
    The district court in Claremont, which affirmed the 
bankruptcy court's interpretation of this provision, held that 
section 365(b)(2)(D) means that ``a trustee or debtor in 
possession is not required to cure nonmonetary defaults in 
order to assume and assign executory contracts and leases.'' 
84
---------------------------------------------------------------------------
    \84\ In re Claremont Acquisition Corp., Inc., 186 B.R. 977, 989-90 
(C.D. Cal. 1995).
---------------------------------------------------------------------------
    Although this issue arose in the context of the treatment 
in bankruptcy of an automobile franchise agreement, a broad 
exemption from curing nonmonetary defaults would be 
particularly troublesome to equipment lessors. The failure to 
adhere to a specified maintenance schedule, for instance, could 
cause rapid deterioration or irreparable harm to the leased 
equipment. With personal property leases, the failure to 
perform nonmonetary obligations is an appropriate bar to a 
bankruptcy trustee's assumption of the lease.
    The court of appeals in Claremont concluded that 
``subsection (D) provides an exception from cure for 
satisfaction of ``penalty rates'' and ``penalty provisions,''' 
refuting the argument that the clause following ``or'' in (D) 
is a catch-all provision excepting from cure any ``nonmonetary 
obligations.'' 85 Under this construction, 
therefore, nonmonetary defaults (with very limited exceptions) 
would have to be cured. Such a rule, although reasonable as a 
matter of public policy for a lease of equipment that can lose 
value quickly, might lead to inappropriate results in other 
potential applications. For that reason, the Committee sought 
to give legislative expression to principled approaches that 
would fairly treat the parties to a range of leases and 
executory contracts and protect the interests of creditors 
collectively.
---------------------------------------------------------------------------
    \85\ Worthington v. General Motors Corp. (In re Claremont 
Acquisition Corp., Inc.), 113 F.3d at 1034.
---------------------------------------------------------------------------
    Section 216 accords recognition to different policy 
considerations that are implicated in leasing arrangements and 
executory contracts. For reasons noted above, failure to 
perform nonmonetary obligations under a personal property lease 
bars assumption. With real estate leases, a bankruptcy trustee 
reasonably should be expected to cure defaults that are 
curable, but is not to be required to do the impossible and 
cure incurable defaults before assumption. The debtor's estate 
in the real estate context, for example, should not be deprived 
of a retail lease that is a valuable asset and may be needed 
for reorganization merely because the store has conducted a 
going-out-of-business sale or violated a clause against closing 
for a period of time. With contracts requiring substantial 
future performance on both sides--so-called executory 
contracts--the courts shall determine, based on the equities, 
whether incurable defaults prevent assumption. This would be 
the fairest approach, for example, with franchise agreements.
    In the case of an automobile franchise agreement, for 
instance, the trustee for the estate of the dealer must cure 
curable defaults and may assume or assign the franchise only 
when defaults are impossible to cure and a bankruptcy judge--
based on the equities--determines that the bar to assumption 
and assignment should not apply. It is expected that the court 
would be mindful of the ability of the trustee or debtor in 
possession to meet the manufacturer's contractual requirements 
with regard to quality assurance, warranty service, and 
trademark protection.
    It is not the intention of the Committee to restrict the 
ability of the nondebtor party to a lease or executory contract 
to obtain compensation for any actual pecuniary loss resulting 
from the debtor's incurable nonmonetary default or to obtain 
adequate assurance of future performance under such contract or 
lease.
    Section 216 of the bill also amends section 1124(2) of the 
Bankruptcy Code, which concerns the impairment of claims and 
interests, to provide that the creditor remains entitled to 
compensation for actual pecuniary loss resulting from a default 
for the purpose of determining whether the creditor's claim or 
interest arising from the default is impaired.

Section 217 Sharing of compensation

    Current law prohibits professionals in bankruptcy cases 
from sharing their fees with other persons.86 
Section 217 of the bill carves out a limited exception to this 
prohibition to allow compensation to be shared with bona fide 
public service attorney referral programs.87
---------------------------------------------------------------------------
    \86\ See 11 U.S.C. Sec. 504.
    \87\ This proposal comports with one adopted by the National 
Bankruptcy Review Commission. See Report of the National Bankruptcy 
Review Commission, at 892-94 (1997).
---------------------------------------------------------------------------

Section 218. Priority for administrative expenses

    Section 218 provides that if a lease is assumed under 
section 365 of the Bankruptcy Code and thereafter rejected, the 
resulting claim is equal to all monetary obligations due under 
the lease (excluding penalties and obligations arising from or 
relating to a failure to operate) for a one year period 
commencing the latter of the rejection date or actual turnover 
of the premises. Any claims for the remaining sums due under 
the lease are subject to section 502(b)(6) of the Bankruptcy 
Code.

           Title III. General Business Bankruptcy Provisions

Section 301. Definition of disinterested person

    Section 301 of the bill amends the definition of a 
disinterested person under section 101(14) of the Bankruptcy 
Code by eliminating its references to investment 
bankers.88
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    \88\ Section 101(14) of the Bankruptcy Code provides that an 
investment banker is not a disinterested person nor an attorney for 
such investment banker. See 11 U.S.C. Sec. 101(14)(B), (C), (D).
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Section 302. Miscellaneous Improvements

    Section 302 of the Bankruptcy Code amends section 109 of 
the Bankruptcy Code to create an additional eligibility 
requirement for individuals seeking bankruptcy relief. Under 
this provision, an individual is not eligible for bankruptcy 
relief unless such individual received credit counseling during 
the 90-day period preceding the filing of his or her bankruptcy 
case. The credit counseling must include, at a minimum, 
participation in an individual or group briefing that outlined 
the opportunities for available credit counseling and assisted 
the individual in performing an initial budget analysis.
    This requirement does not apply to an individual who 
resides in a district for which the United States trustee or 
bankruptcy administrator has determined that the approved 
counseling services in that district are not reasonably able to 
provide adequate services. To effectuate this provision, 
section 302(a) requires the United States trustee or bankruptcy 
administrator to annually determine whether counseling services 
in the district are reasonably able to provide these services.
    In addition, this requirement does not apply to a debtor 
who submits to the court a certification (1) describing exigent 
circumstances that merit a waiver of this requirement, and (2) 
stating that the debtor requested credit counseling services 
from an approved credit counseling service, but was unable to 
obtain them within a specified five-day period. Such 
certification mustbe satisfactory to the court. This exemption 
terminates when the debtor meets the requirements for credit counseling 
participation, but not longer than 30 days after the case is filed.
    Section 302(b) of the bill amends section 727(a) of the 
Bankruptcy Code to add, as a ground for denying a debtor a 
discharge, the failure to complete an instructional course 
concerning personal financial management, unless the debtor 
resides in a district for which the United States trustee or 
bankruptcy administrator has determined that the approved 
counseling services in that district are not reasonably able to 
provide adequate services.
    Section 302(c) of the bill provides that the bankruptcy 
court shall not grant a chapter 13 debtor a discharge unless 
the debtor completed an instructional course concerning 
personal financial management. An exception pertains if the 
debtor resides in a district for which the United States 
trustee or bankruptcy administrator has determined that the 
approved counseling services in that district are not 
reasonably able to provide adequate services.
    Section 302(d) of the bill amends section 521 of the 
Bankruptcy Code to mandate that a debtor file a certificate 
from the credit counseling service that rendered the requisite 
services described under section 109(h) of the Bankruptcy Code, 
as amended. In addition, the debtor must file a copy of the 
repayment plan, if any, that was developed through such credit 
counseling service.
    Section 302(e) of the bill institutes a new provision 
requiring the clerk for each district to maintain a list of 
credit counseling services that provide certain services and a 
list of instructional personal financial management courses 
that have been approved by the United States trustee or 
bankruptcy administrator for the district.
    Section 302(g) of the bill defines the term, ``debtor's 
principal residence,'' as a residential structure including 
incidental property that contains up to four units, whether or 
not such structure is attached to real property. The definition 
includes individual condominium or cooperative units as well as 
mobile homes, trailers, and manufactured homes.
    This provision also defines ``incidental property'' as 
property incidental to such residence including, without 
limitation, property commonly conveyed with a principal 
residence in the area where the residence is located, including 
such items as window treatments, carpets, appliances, and 
equipment located in the residence as well as easements, 
appurtenances, fixtures, rents, royalties, mineral rights, oil 
and gas rights, escrow funds and insurance proceeds.
    In addition, Section 302(g) of the bill creates an 
exception to the automatic stay provisions of the Bankruptcy 
Code with respect to the postponement, continuation, or similar 
delay of a prepetition foreclosure proceeding or sale pending 
in a chapter 13 case where the debtor has not fully cured the 
prepetition default with respect to the underlying obligation 
that is the subject of such foreclosure proceeding or sale. It 
also prevents a chapter 13 debtor from modifying the rights of 
a creditor secured by property used as the debtor's principal 
residence within the 180-day period preceding the filing of the 
bankruptcy case.
    Section 302(h) of the bill provides that if a chapter 7, 
11, or 13 case is dismissed due to the creation of a debt 
repayment plan administered by an approved credit counseling 
agency, the presumption under section 362(c)(3) of the 
Bankruptcy Code, as amended, in the subsequent case shall not 
apply.
    Section 302(i) amends section 546(g) of the Bankruptcy Code 
to institute certain protections if the court determines, on 
motion of the trustee made not later than 120 days after the 
order for relief in a chapter 11 case, that a return of goods 
is in the best interests of the estate. It provides that the 
debtor, on consent of the creditor and subject to prior rights 
of third parties, may return goods shipped prepetition and the 
creditor may offset the purchase price of such goods against 
any prepetition claim it has against the debtor.

Section 303. Extensions

    This section of the bill amends section 302(d) of the 
Bankruptcy Judges, United States Trustees, and Family Farmer 
Bankruptcy Act of 1986 to make the Bankruptcy Administrator 
Program permanent.

Section 304. Local filing of bankruptcy cases

    Section 304 of the bill amends section 1408 of title 28, 
which pertains to the venue of bankruptcy cases, to provide 
that if the debtor is a corporation, the domicile and residence 
of the debtor are conclusively presumed to be where the 
debtor's principal place of business in the United States is 
located.

Section 305. Permitting assumption of contracts

    Section 365(c)(1) of the Bankruptcy Code prohibits a 
trustee from assuming or assigning a contract that is, by its 
terms, personal to the debtor and thus, under applicable 
nonbankruptcy law, nonassignable. Section 305 makes a technical 
correction to section 365(c) of the Bankruptcy Code to clarify 
that in a corporate chapter 11 case the trustee or debtor in 
possession may assume an executory contract or unexpired lease 
of the debtor, whether or not the contract or lease prohibits 
or restricts assignment of rights or the delegation of 
duties.89 This section also makes several technical 
amendments to Section 365.
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    \89\ See, e.g., Perlman v. Catapult Entertainment, Inc. (In re 
Catapult Entertainment, Inc.), 165 F.3d 747 (9th Cir. 1999) (holding 
that where applicable nonbankruptcy law makes an executory contract 
nonassignable because the identity of the nondebtor party is material, 
a debtor in possession may not assume the contract absent consent of 
the nondebtor party).
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             Title IV. Small Business Bankruptcy Provisions

Section 401. Flexible rules for disclosure statements and plans

    Under current law, a chapter 11 debtor must obtain court 
approval of a disclosure statement before it can solicit 
acceptances of its reorganization plan.90 The 
disclosure statement must provide creditors and other 
interested parties basic information about the plan, including 
its feasibility and consequences. Typically, court approval is 
obtained after a hearing on 25 days' notice to all creditors 
and parties in interest. The current process can be costly and 
time-consuming.
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    \90\ See 11 U.S.C. Sec. 1125(b).
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    Section 401 of the bill authorizes a bankruptcy court, in 
determining whether a disclosure statement provides adequate 
information, to consider the complexity of the small business 
debtor's case, the benefit of additional information to 
creditors and other parties in interest, and the cost of 
providing such additional information. If, for example, the 
court finds that the plan of reorganization itself provides 
adequate information, it may allow the debtor to solicit 
acceptances of the plan without having to prepare and send a 
disclosure statement along with the plan. In addition, it 
permits the court to approve a disclosure statement submitted 
on standard forms approved by the court or adopted pursuant to 
section 2075 of title 28 of the United States Code. Further, it 
permits a court to conditionally approve a disclosure statement 
subject to final approval after notice and hearing, which would 
then be combined with the confirmation hearing.

Section 402. Definitions

    This section defines a ``small business debtor'' as a 
person (including affiliates that are also debtors) that has 
aggregate noncontingent, liquidated secured and unsecured debts 
in the amount of $4 million or less as of the commencement of 
the case (excluding debts owed to affiliates or insiders of the 
debtor). If a group of affiliate debtors has aggregate 
noncontingent, liquidated secured and unsecured debts in excess 
of this amount, then no member of such group is a small 
business debtor.

Section 403. Standard form disclosure statements and plans

    Section 403 directs the Advisory Committee on Bankruptcy 
Rules of the Judicial Conference of the United States Courts to 
issue standard disclosure statements and plans of 
reorganization forms for small business debtors. The forms are 
designed to achieve a practical balance between the needs of 
the court, those charged with administration of these cases, 
and parties in interest concerning reasonably complete 
information and the need for economy and simplicity.

Section 404. Uniform national reporting requirements

    The United States Trustee Guidelines generally require 
chapter 11 debtors to report their financial circumstances on a 
monthly basis. These reports are used to determine a chapter 11 
debtor's economic viability. If completed accurately, these 
reports can provide valuable information about the case to the 
bankruptcy court, the United States Trustee, and parties in 
interest, such as creditors. In practice, however, some debtors 
fail to file these reports or file incomplete or inaccurate 
reports, thereby frustrating the ability of those charged with 
the oversight of these cases to fulfill their responsibility.
    Section 404 of the bill mandates that a small business 
debtor file periodic financial reports containing the following 
information with regard to:
          (1) the debtor's profitability;
          (2) reasonable approximations of the debtor's 
        projected cash receipts and disbursements;
          (3) comparisons of actual cash receipts and 
        disbursements with projections in prior reports;
          (4) a statement as to whether or not the debtor is in 
        compliance with certain other postpetition 
        requirements; and
          (5) a statement as to whether the debtor has timely 
        filed tax returns and paid taxes and other 
        administrative expenses when due, among other matters.

Section 405. Uniform reporting rules and forms

    This section mandates that the Advisory Committee on 
Bankruptcy Rules of the Judicial Conference of the United 
States propose Federal Rules of Bankruptcy Procedure and 
Official Bankruptcy Forms to be used by small business cases to 
file periodic financial and other information set forth in 
section 404 of the bill.

Section 406. Duties in small business cases

    To implement greater administrative controls over small 
business chapter 11 debtors, section 406 of the bill institutes 
additional duties that these debtors must perform. First, the 
small business debtor must include with the bankruptcy petition 
its most recent financial statements, including a balance 
sheet, statement of operations, cash flow statement, and 
federal income tax return.91
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    \91\ If the debtor lacks such information, then it must file a 
statement under penalty of perjury verifying this fact.
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    Second, the small business debtor is required to attend, 
through its responsible individual, meetings scheduled by the 
bankruptcy court or the United States Trustee. These meetings 
include initial debtor interviews, and scheduling conferences, 
as well as the section 341 meetings of creditors. Scheduling 
conferences provide an opportunity for the court to fix 
deadlines by which aplan must be filed and confirmation 
achieved. ``Initial debtor interviews'' provide an opportunity for the 
United States Trustee to explain to the debtor various requirements 
such as the need to maintain insurance, to file periodic financial 
reports, and to remain current on postpetition obligations. Meetings 
held pursuant to section 341, alternatively known as ``section 341 
meetings'' or the ``first meetings of creditors,'' provide an 
opportunity for the debtor to be examined under oath by the United 
States Trustee and by other parties in interest, such as creditors.
    Section 406 of the bill also requires the small business 
debtor to timely file all requisite schedules and the statement 
of financial affairs, as well as postpetition financial 
reports. In addition, the small business debtor must maintain 
insurance that is customary and appropriate for the industry.
    With respect to the debtor's tax obligations, this section 
establishes special protections. All tax returns must be timely 
filed and all postpetition taxes must be paid, except for those 
that are contested, subject to section 363(c) of the Bankruptcy 
Code.92 Separate bank accounts for the deposit of 
taxes collected or withheld for government authorities must be 
established not later than ten business days following the 
entry of the order for relief. Further, this section permits 
the United States Trustee to inspect the debtor's books and 
records and business premises at reasonable hours and with 
proper notice.
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    \92\ Section 363(c)(2) prohibits the use of cash collateral without 
consent of those having an interest in such collateral or the court 
authorizes such use.
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    Nothing in this section is intended to restrict 
applicability of the court's powers under section 105 of the 
Bankruptcy Code to this provision.

Section 407. Plan filing and confirmation deadlines

    Under current law, a chapter 11 debtor has the exclusive 
right to file a plan within the 120 days following the entry of 
the order for relief.93 The Bankruptcy Court also 
extends to the chapter 11 debtor the exclusive right to effect 
confirmation of the plan within 180 days following the entry of 
the order for relief.94 As a result of amendments 
made in 1994 to the Bankruptcy Code, the exclusive period that 
a small business debtor has to file a plan and achieve 
confirmation were reduced to 100 days and 160 days respectively 
from the entry of the order for relief.95
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    \93\ See 11 U.S.C. Sec. 1121(b).
    \94\ See 11 U.S.C. Sec. 1121(c).
    \95\ See 11 U.S.C. Sec. 1121(e). Under this provision, a party in 
interest may apply for an order reducing or enlarging this period. 11 
U.S.C. Sec. 1121(e)(3).
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    Section 407 reduces the time periods for filing plans and 
achieving confirmation for small business debtors. Under this 
provision, the small business debtor's exclusive period to file 
a plan is 90 days from the entry date of the order for relief, 
unless a trustee has been appointed in the case or the 
bankruptcy court shorts such period on request of a party in 
interest. An exception pertains if a creditors'' committee is 
appointed in the case and is sufficiently active to provide 
effective oversight of the debtor.
    The small debtor's exclusive time period for filing a plan 
and achieving confirmation may be extended by the court on 
request of a party in interest and for cause. Although the 
court may grant one or more extensions, they may not accumulate 
to more than 60 days. To obtain an extension, the movant must 
establish that: (1) no cause exists to dismiss or convert the 
case or to appoint a trustee, and (2) there is a reasonable 
possibility that the court will confirm a plan in a reasonable 
time. Further extensions are available if the movant 
establishes the first ground and that, more likely than not, 
the court will confirm a plan within a reasonable time. The 
court must impose a new deadline whenever an extension is 
granted.

Section 408. Plan confirmation deadline

    This section requires a small business debtor to confirm a 
plan not later than 150 days after the order for relief, unless 
a creditors'' committee, is sufficiently active and 
representative to provide effective oversight of the debtor or 
the 150-day period is extended pursuant to section 407.

Section 409. Prohibition against extension of time

    To ensure that the strict time frames instituted by this 
bill are not eviscerated, section 409 of this bill limits a 
court's authority to avoid the impact of these provisions. This 
section specifically limits the court's authority to use 
section 105(a) of the Bankruptcy Code to extend the time frames 
fixed for filing and confirming the plans of small business 
debtors.

Section 410. Duties of the United States trustee and bankruptcy 
        administrator

    This section mandates that the United States Trustee 
conduct an ``initial debtor interview'' of all small business 
debtors. This interview, which must be held shortly after the 
case is filed, is to be used by the United States Trustee to 
begin its investigation of the debtor's viability and business 
plan. It also provides an opportunity for the United States 
Trustee to explain the debtor's obligation to file monthly 
operating reports and other requirements. During the course of 
the interview, the United States Trustee attempts to obtain an 
agreed scheduling order fixing various time frames, such as the 
date for filing a plan and effecting confirmation.
    Section 410 also authorizes the United States Trustee to 
inspect the debtor's premises, review its books and records, 
and verify that the debtor has filed its tax returns, when 
appropriate.The United States Trustee, under this provision, is 
responsible for diligently monitoring the small business debtor's 
activities and determining its ability to confirm a plan. Should the 
United States Trustee discover material grounds warranting either 
dismissal or conversion of the chapter 11 case to one under chapter 7 
for liquidation, this section requires the United States Trustee to 
apply promptly for such relief.

Section 411. Scheduling conferences

    Under current law, a bankruptcy court may conduct a 
scheduling conference on its own motion or on request of a 
party in interest in any bankruptcy case. In a chapter 11 case, 
for example, a scheduling conference provides an opportunity 
for the court to set certain dates by which the debtor must 
file and confirm a plan, among other matters.
    This section mandates that a bankruptcy court conduct 
scheduling conferences in all bankruptcy cases, if necessary, 
to further the expeditious and economical resolution of such 
cases. Section 411 also amends section 105(d) of the Bankruptcy 
Code to eliminate the restriction on the authority of the court 
to issue an order under this provision. Current law precludes a 
court from issuing an order if it is inconsistent with another 
provision in the Bankruptcy Code or applicable Federal Rule of 
Bankruptcy Procedure.

Section 412. Serial filer provisions

    This section consists of two provisions, the first one of 
which is not limited to business bankruptcies. Section 412(1) 
provides that if an individual is injured by a violation of the 
automatic stay based on a good faith belief, then that 
individual's recovery is limited to actual damages.
    Section 412(2) provides that the automatic stay does not 
apply to four categories of small business chapter 11 debtors 
who have previously sought bankruptcy relief. The effect of 
this provision is to restrict repetitive filings by these 
debtors. The automatic stay does not apply when:
          (1) the small business debtor is simultaneously a 
        debtor in another bankruptcy case pending at the time 
        of the filing of the second case;
          (2) the small business debtor's prior case was 
        dismissed for any reason by an order that became final 
        within two years preceding the filing of the second 
        case;
          (3) the second case was filed within two years 
        following the confirmation of the prior case; or
          (4) an entity that acquired substantially all of the 
        assets or business of a small business debtor described 
        in the prior subparagraphs has itself filed for 
        bankruptcy relief.
Two exceptions pertain. First, Section 412(2) provides that it 
does not apply to an involuntary petition filed by a creditor 
who is not an insider of the debtor. Second, it permits a 
debtor, after notice and a hearing, to demonstrate by a 
preponderance of the evidence that the filing of the subsequent 
case was necessitated by circumstances beyond its control and 
unforeseeable at the time the prior case was filed, and that it 
is more likely than not that it will confirm a plan of 
reorganization (but not a liquidating plan) within a reasonable 
time.

Section 413. Expanded grounds for dismissal or conversion and 
        appointment of trustee

    The Bankruptcy Code currently lists ten grounds that a 
bankruptcy court may consider in determining whether to convert 
a chapter 11 case to one under chapter 7 for liquidation, or to 
dismiss the case.96 This section revises these 
grounds and mandates that the court convert or dismiss a 
chapter 11 case or appoint a chapter 11 trustee, whichever is 
in the best interests of creditors and the estate, if the 
movant establishes cause. An exception to this mandate applies 
if (1) the debtor or other party in interest objects and 
establishes by a preponderance of the evidence that it is more 
likely than not that a plan will be timely confirmed, and (2) 
the cause for dismissal is an act or omission for which there 
exists a reasonable justification and such act or omission will 
be cured within a reasonable time period not to exceed 30 days, 
unless the movant consents to a longer period, or compelling 
circumstances beyond the debtor's control justify such 
extension.
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    \96\ See 11 U.S.C. Sec. 1112(b). The ten grounds enumerated in this 
provision, however, are not exclusive.
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    Cause warranting either mandatory conversion or dismissal 
of a chapter 11 case under section 413 includes the following:
          (1) substantial or continuing loss to or diminution 
        of the estate;
          (2) gross mismanagement of the estate;
          (3) failure to maintain appropriate insurance that 
        poses a material risk to the estate or the public;
          (4) unauthorized use of cash collateral that is 
        harmful to one or more creditors;
          (5) failure to comply with a court order;
          (6) failure to satisfy any filing or reporting 
        requirement under the Bankruptcy Code or applicable 
        rule;
          (7) failure to attend the section 341 meeting of 
        creditors;
          (8) failure to timely provide information or to 
        attend meetings reasonablyrequested by the United 
States Trustee;
          (9) failure to pay postpetition taxes or file tax 
        returns when due;
          (10) failure to file a disclosure statement or to 
        confirm a plan within the time fixed under the 
        Bankruptcy Code or by court order;
          (11) failure to pay any requisite fees or charges;
          (12) revocation of a confirmation order;
          (13) inability to effectuate substantial consummation 
        of a confirmed plan;
          (14) material default by the debtor with respect to a 
        confirmed plan; and
          (15) termination of a plan by reason of the 
        occurrence of a condition specified in the plan.
Section 413 provides that the court may grant relief based on 
certain of the above stated grounds only on its own motion or 
on motion of the United States trustee or bankruptcy 
administrator.
    The bankruptcy court must hold a hearing on a motion 
seeking either conversion or dismissal of the case within 30 
days of the filing of such motion. In addition, the bankruptcy 
court is required to decide this motion within 15 days 
following the commencement of the hearing, unless the moving 
party expressly consents to a continuance or compelling 
circumstances prevent the court from meeting such time limits.
    Section 413(b) creates additional grounds for the 
appointment of a chapter 11 trustee. If grounds exist for 
either conversion or dismissal of the chapter 11 case, the 
bankruptcy court has the authority to appoint a chapter 11 
trustee if this is in the best interests of creditors and the 
bankruptcy estate.

Section 414. Study of the operation of title 11 of the United States 
        Code with respect to small businesses

    This section directs the Administrator of the Small 
Business Administration, in consultation with the Attorney 
General, the Director of the Executive Office for United States 
Trustees, and the Director of the Administrative Office of the 
United States Courts, to conduct a study for the purpose of 
determining certain matters. These include the internal and 
external factors that cause small businesses, especially sole 
proprietorships, to seek bankruptcy relief and factors that 
cause small businesses to successfully complete their chapter 
11 cases. The study must also examine how the bankruptcy laws 
may be made more effective and efficient in assisting small 
business to remain viable.

Section 415. Payment of Interest

    This section amends the automatic stay termination 
provision that applies to single asset real estate debtors. 
Specifically, it allows a debtor in its sole discretion to make 
the requisite interest payments out of rents or other proceeds 
generated by the real property. Such payments must be an amount 
equal to the interest at the then-applicable nondefault 
contract rate based on the value of the creditor's interest in 
the property.

                Title V. Municipal Bankruptcy Provisions

Section 501. Petition and proceedings related to petition

    This section clarifies that a court must enter the order 
for relief for chapter 9 cases.

Section 502. Applicability of other sections to chapter 9

    This section makes certain specified provisions in title V 
of the Bankruptcy Code applicable to chapter 9 cases.

              Title VI. Streamlining the Bankruptcy System

Section 601. Creditor participation at first meeting of creditors

    This section permits pro se creditors to appear and 
participate at the section 341 meeting of creditors in chapter 
7 and 13 cases, and with respect to activities related thereto. 
Currently, some districts require corporate creditors and 
others to be represented by counsel in legal proceedings, such 
as the section 341 meeting of creditors. This amendment allows 
creditors to save the cost of obtaining legal representation to 
participate in the section 341 meeting and like activities.

Section 602. Audit procedures

    This section requires the Attorney General to establish 
procedures for auditing the accuracy and completeness of 
information supplied by individual debtors in connection with 
their bankruptcy cases under chapter 7 and chapter 13 of the 
Bankruptcy Code. The audit must be performed pursuant to 
generally accepted auditing standards by independent certified 
public accountants or independent licensed public accountants. 
One in every 250 cases in a district must be selected randomly 
for audit. In addition, section 602 requires audits in cases 
where the schedules reflect greater than average variances from 
the statistical norm for the district. The percentage of cases 
in which a material misstatement of income or expenditures, 
together with other information, that is obtained as a result 
of these audits by district must be made available to the 
public not less than annually.
    Should an audit disclose a material misstatement with 
regard to a debtor's income, expenses or assets, a statement 
must be filed with the court specifying the facts constituting 
the material misstatement. Notice thereof must also be provided 
to creditors. Where appropriate, thematter could be referred to 
the United States Attorney for possible criminal prosecution.
    In addition, section 602 amends section 521 of the 
Bankruptcy Code to make it a duty of the debtor to supply 
certain information to a auditor. Further, it amends section 
727 of the Bankruptcy Code to add, as grounds for revocation of 
a debtor's discharge, a chapter 7 debtor's failure to 
satisfactorily explain a material misstatement discovered as 
the result of an audit described in section 602 and the failure 
to make available all necessary documents or property belonging 
to the debtor that are requested in connection with such audit.

Section 603. Giving creditors fair notice in chapter 7 and 13 cases

    To ensure that a creditor receives proper notice, section 
603(a)(1) requires debtors to identify in any notices to a 
creditor the account number for any debt held by such creditor 
against the debtor. In addition, the debtor must use the 
address specified by the creditor. It also strikes the 
Bankruptcy Code providing that failure to include certain 
specified information in a notice does not invalidate the legal 
effect of such notice.
    If a creditor in an individual chapter 7 or 13 case has 
specified an address for notice, section 603(a)(2) requires the 
court and the debtor to use such address starting five days 
after receiving the address. Section 603(a)(2) also permits an 
entity to file a noticing address with the court to be used 
generally in chapter 7 and chapter 13 cases.
    Section 603(a)(2) specifies that notice that does not 
comply with these requirements is not effective until it has 
been brought to the creditor's attention. If the creditor has 
designated an entity to be responsible for receiving notices 
concerning bankruptcy cases and has established reasonable 
procedures so that these notices will be delivered to such 
entity, a notice will not be deemed to have been received by 
the creditor until it has been received by such entity. Section 
603(a)(2) prohibits the imposition of any sanctions for 
violation of the automatic stay under section 362 of the 
Bankruptcy Code 97 or for the failure to comply with 
the Bankruptcy Code's turnover provisions in sections 542 and 
543, if a creditor has not received proper notice.
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    \97\ Under present law, an individual injured as a result of any 
willful violation of the automatic stay is entitled to actual damages, 
including costs and attorney's fees, and may recover punitive damages 
in appropriate circumstances. 11 U.S.C. Sec. 362(h).
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    Section 603(b) amends section 521 of the Bankruptcy Code 
(which sets forth the debtor's duties) to add further 
requirements. The debtor must file a schedule of current 
monthly income and current expenditures prepared in compliance 
with section 707(b)(2) of the Bankruptcy Code, as amended by 
section 102. It also requires the attorney for the debtor or 
the bankruptcy petitioner to file a certificate indicating that 
the requisite notices under section 342(b) of the Bankruptcy 
Code, as amended, were provided to the debtor. If the debtor 
lacks counsel or did not use the services of a bankruptcy 
petition preparer, then the debtor must sign a certificate 
stating that he or she obtained and read such notice.
    Under section 603(b), the debtor must also file copies of 
any Federal tax returns (including any schedules and 
attachments) for the three year period preceding the order for 
relief and copies of all payment advices or other evidence of 
payment from any employer within 60 days of the bankruptcy 
filing. As amended by section 603(b), section 521 of the 
Bankruptcy Code additionally requires the debtor to file copies 
of all tax returns (including any schedules and attachments) at 
the time filed with the taxing authority with respect to any 
period during the pendency of the debtor's chapter 7 or chapter 
13 case.
    Section 603(b) also requires the court to make the debtor's 
petition, schedules, statement of financial affairs, or chapter 
13 plan (if applicable), together with any amendments to such 
documents, available to a creditor upon request and at a 
reasonable cost within five days of such request. In addition, 
the debtor must file a statement disclosing any reasonably 
anticipated increase in the debtor's income or expenditures in 
the succeeding 12-month period.
    For a chapter 13 case, section 603(b) requires the debtor 
to file a statement of current monthly income and expenditures 
in accordance with section 707(b)(2) of the Bankruptcy Code, as 
amended. This requirement also pertains to the postconfirmation 
period as well until the case is closed. This statement must 
disclose the amount and sources of the debtor's income, the 
identity of any persons responsible with the debtor for the 
support of the debtor's dependents, the identity of any persons 
who contributed, and the amount contributed to the debtor's 
household.
    With respect to the privacy issue presented by the 
availability of a debtor's tax returns to third parties, 
section 603 mandates that Director of the Administrative Office 
for United States Courts establish procedures for safeguarding 
the confidentiality of these documents. The procedures must 
include reasonable restrictions on creditor access to them that 
include verification of the creditor's identity and that limit 
the use of such information to the case. In addition, the 
Director must, within one year from the date of enactment of 
the bill, prepare and submit to the Congress a report that 
assesses the effectiveness of these procedures in providing 
information to creditors and that includes, if appropriate, 
recommendations for legislation to further protect the 
confidentiality of such tax information and to impose penalties 
for improper use.
    Section 603(b) also requires the debtor to provide proof of 
identity on request of the United States trustee or case 
trustee. Such proof includes a driver's licence, passport, or 
other document that contains a photograph of the debtor.
    Section 603(b)(4) also specifies that the notice of a 
chapter 13 confirmation hearing must include the most recent 
statement filed by the debtor pursuant to section 
521(a)(1)(B)(ii) or (f)(4), as amended.

Section 604. Dismissal for failure to timely file schedules or provide 
        required information

    Should an individual chapter 7 or 13 debtor fail to provide 
any of the information required by section 521 of the 
Bankruptcy Code, as amended, within 45 days after the petition 
filing date, this section requires the debtor's bankruptcy case 
to be automatically dismissed, effective on the 46th day. No 
court order is necessary to effectuate this dismissal, unless a 
party in interest so requests. This 45-day time period may be 
extended on request of the debtor made before its expiration if 
the court finds justification for extending this period. In no 
event, however, may it be extended more than an additional 45 
days.

Section 605. Adequate time to prepare for hearing on confirmation of 
        the plan

    This section requires the chapter 13 confirmation hearing 
to be held not earlier than 20 days following the first date 
set for the meeting of creditors and not later than 45 days 
from this date.

Section 606. Chapter 13 plans to have a five-year duration in certain 
        cases

    Under present law, the duration of a chapter 13 plan is 
three years, unless the court, for cause, extends it to a 
maximum of five years.98 To ensure that creditors 
receive the maximum amount of repayment in a chapter 13 case, 
this section extends the permissible duration of a chapter 13 
plan up to five years, under certain circumstances. If the 
total current monthly income of the debtor and the debtor's 
spouse, when multiplied by 12, is not less than the highest 
national family median income last reported by the Census 
Bureau for a family of equal or lesser size (or, for a 
household of one person, not less than the national median 
household income for one earner),99 then the length 
of the debtor's plan may be as long as five years. If the 
income of the debtor and the debtor's spouse fall below this 
threshold, then the length of the plan may be three years, but 
not longer than five years.
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    \98\ 11 U.S.C. Sec. 1322(d).
    \99\ Section 606 provides that the national median family income 
for a family of more than four individuals shall be the national median 
family income last reported by the Census Bureau for a family of four 
individuals plus $583 for each additional member of the debtor's 
family.
---------------------------------------------------------------------------
    Section 606(b)(2) mandates that the applicable commitment 
period for confirmation of a chapter 13 plan to be not less 
than five years if the current monthly income of the debtor and 
the debtor's spouse exceeds the thresholds stated above. 
Likewise, section 606(b)(3) mandates the same requirement with 
regard to chapter 13 plans modified postconfirmation.

Section 607. Sense of the Congress regarding expansion of rule 9011 of 
        the Federal Rules of Bankruptcy Procedure

    To reaffirm the need for accuracy, completeness and 
truthfulness of documents filed by debtors and their counsel 
(both signed and unsigned), section 607 states that it is the 
sense of the Congress that all such documents may be filed only 
after the debtor or the debtor's attorney has made reasonable 
inquiry to verify that the information they contain is well 
grounded in fact and warranted by existing law or a good faith 
argument for the extension, modification, or reversal of 
existing law. This requirement applies to signed as well as 
unsigned documents. Federal Rule of Bankruptcy Procedure 9011 
presently only applies to signed documents.

Section 608. Elimination of certain fees payable in chapter 11 
        bankruptcy cases

    Section 1930(6) of title 28 of the United States Code 
requires a chapter 11 debtor to pay a quarterly fee to the 
United States Trustee based on the amount of the debtor's 
disbursements made during the quarter. This requirement applies 
until the case is converted or dismissed and applies even after 
confirmation until the case is closed.100
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    \100\ Pub. L. 104-91, Sec. 101 (1996), as amended, Pub. L. No. 104-
99, title II, Sec. 211 (1996).
---------------------------------------------------------------------------
    This section limits this requirement's applicability to 
certain chapter 11 debtors. Specifically, debtors with 
disbursements of less than $300,000 would be required to pay 
this fee only until the case is converted or confirmation is 
obtained, whichever occurs first. For debtors having 
disbursements of $300,000 or more, the requirement to pay these 
quarterly fees would remain the same as under current law.

Section 609. Study of bankruptcy impact of credit extended to dependent 
        students

    This section directs the Comptroller General of the United 
States to conduct a study regarding the impact that the 
extension of credit to dependents (defined under the Internal 
Revenue Code of 1986) who are enrolled in postsecondary 
educational institutions has on the bankruptcy case filing 
rate.

Section 610. Prompt relief from stay in individual cases

    Under current law, Section 362(e) of the Bankruptcy Code 
provides that within 30 days of a request for relief from the 
automatic stay, such stay is terminated unless the bankruptcy 
court orders the stay continued after notice and hearing. The 
hearing, as contemplated under section 362(e), can be 
preliminary or deemed final. If the hearing is preliminary, the 
final hearing must be concluded not later than 30 days from the 
conclusion of the preliminary hearing. This 30-day period can 
be extended by the court with consent of the parties or if the 
court finds that such extension is warranted based on 
compelling circumstances.
    For chapter 7, 11, or 13 cases filed by individuals, this 
section creates an exception tosection 362(e). Specifically, 
this section requires the automatic stay to terminate within 60 days 
following a request for relief from the stay, unless the bankruptcy 
court renders a final decision prior to the expiration of such 60-day 
time period, such 60-day time period is extended pursuant to agreement 
of all parties in interest, or a specific extension of time is required 
for good cause as described in findings made by the court.

Section 611. Stopping abusive conversions from chapter 13

    Section 506 of the Bankruptcy Code provides that a creditor 
secured by a lien on property of the estate has an allowed 
secured claim to the extent of the value of the creditor's 
interest in the property and an unsecured claim to the extent 
that the value of the creditor's interest is less than the 
amount of the claim. A chapter 13 debtor may apply for a 
determination from the bankruptcy court that fixes the value of 
a secured creditor's interest in property of the estate. Under 
present law, if the chapter 13 case is subsequently converted 
to another chapter under the Bankruptcy Code, such valuations 
apply in the converted case, with allowance, of course, for any 
payments made on such secured claims.101
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    \101\ 11 U.S.C. Sec. 348(f)(1)(B).
---------------------------------------------------------------------------
    This section carves out an exception for a chapter 13 case 
converted to chapter 7. It specifies that a secured creditor in 
any bankruptcy case converted from chapter 13 continues to be 
secured unless its claim was paid in full as of the date of 
conversion, notwithstanding any valuation determination made 
during the pendency of the chapter 13 case.

Section 612. Bankruptcy appeals

    Currently, appeals from decisions rendered by the 
bankruptcy court are either heard by the district court or a 
bankruptcy appellate panel. In addition to the time and cost 
factors attendant to the present appellate system, decisions 
rendered by a district court as an appellate court are not 
binding and lack stare decisis value.
    To address these problems, section 612 permits appeals from 
final orders and judgments entered by a bankruptcy court 
decisions to be heard directly by the circuit court of appeals 
if the appellant so elects at the time of filing the notice of 
appeal.102 Any other party may so elect not later 
than ten days after service of the notice of appeal. Absent 
such election, the bankruptcy appellate panel would hear the 
appeal. Direct appeal is also permitted for specified 
interlocutory orders.
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    \102\ The National Bankruptcy Review Commission made a similar 
recommendation. See National Bankruptcy Review Commission Report, at 
752-67 (1997).
---------------------------------------------------------------------------

Section 613. GAO study

    Section 613 of the bill directs the Comptroller General of 
the United States to conduct a study of the feasibility, 
efficacy and cost of requiring pertinent information about 
debtors to be supplied to the Office of Child Support 
Enforcement. The purpose of this requirement would be to 
determine whether a debtor has outstanding child support 
obligations.

                       Title VII. Bankruptcy Data

Section 701. Improved bankruptcy statistics

    Section 701 requires the clerk for each district to compile 
various statistics regarding chapter 7, 11, and 13 cases in a 
form prescribed by the Director of the Administrative Office of 
the United States Courts and to make these data available to 
the public. In addition, the Director is required to report 
annually to the Congress on the information so collected and to 
prepare an analysis of it.
    The statistics required to be compiled must be itemized by 
chapter of the Bankruptcy Code and presented in the aggregate. 
The specific categories of information that must be gathered 
include the following:
          (1) the total assets and liabilities as scheduled by 
        the debtor;
          (2) the debtor's current monthly income, average 
        income, and average expenses;
          (3) the aggregate amount of debt discharged during 
        the reporting period (determined based on the 
        difference between the total amount of debt scheduled 
        by the debtor and the total amount of debt scheduled by 
        the debtor in categories that are predominantly 
        nondischargeable);
          (4) the average time between the filing of the 
        bankruptcy case and the closing of the case;
          (5) specified information regarding reaffirmation 
        agreements;
          (6) for chapter 13 cases, information on the number 
        of (a) orders determining the value of secured property 
        in an amount less than the amount of the secured claim, 
        (b) cases dismissed for failure to make payments under 
        the plan, (c) cases refiled after dismissal of a prior 
        case by the same debtor, (d) cases in which the plan 
        was completed, (e) the number of cases in which the 
        debtor had previously sought bankruptcy relief within 
        the six years preceding the filing of the present case;
          (7) the number of cases in which creditors were fined 
        for misconduct and the amount of any punitive damages 
        awarded by the court for creditor misconduct; and
          (8) the number of cases in which sanctions under 
        Federal Rule of Bankruptcy Procedure 9011 were imposed 
        against a debtor's counsel and the damages awarded in 
        connection therewith.

Section 702. Uniform rules for the collection of bankruptcy data

    To implement the data gathering provisions of section 701, 
this section requires the Attorney General to issue rules 
requiring the establishment of uniform forms for final reports 
filed by bankruptcy trustees and monthly operating reports 
filed by chapter 11 debtors in possession. It also specifies 
what information these reports should contain and that they be 
made publicly available for physical inspection (at one or more 
central filing locations) and by electronic access through the 
Internet or other appropriate media.

Section 703. Sense of the Congress regarding the availability of 
        bankruptcy data

    This section expresses the sense of the Congress that it is 
a national policy of the United States that all data collected 
by the bankruptcy clerks in electronic form (to the extent such 
data relates to public records, as defined in section 107 of 
the Bankruptcy Code) should be made available to the public in 
a usable electronic form in bulk, subject to appropriate 
privacy concerns and safeguards as determined by the Judicial 
Conference of the United States. It also states that a single 
bankruptcy data system should be established that uses a single 
set of data definitions and forms to collect such data and that 
data for any particular bankruptcy case be aggregated in such 
electronic record.

                 Title VIII. Bankruptcy Tax Provisions

Section 801. Treatment of certain liens

    This section makes several amendments to section 724 of the 
Bankruptcy Code to provide greater protection for holders of ad 
valorem tax liens on real or personal property of the estate. 
Although their subordination is still possible under section 
724(b), the purposes are limited to pay for chapter 7 
administrative expenses and priority claims for postpetition 
wages, salaries, and commissions, as well as claims for 
contributions to an employee plan entitled to priority under 
section 507(a)(4) of the Bankruptcy Code. Thus, subordination 
for the purpose of paying chapter 11 administrative expenses is 
not permitted.
    Before subordinating a tax lien on real or personal 
property, the trustee, must exhaust all other unencumbered 
estate assets and, pursuant to section 506(c) of the Bankruptcy 
Code, recover from property securing an allowed secured claim 
the reasonable and necessary costs and expenses of preserving 
or disposing of such property.
    In addition, this section prevents a bankruptcy court from 
determining the amount or legality of an ad valorem tax on real 
or personal property if the applicable period for contesting or 
redetermining the amount of the claim under nonbankruptcy law 
has expired. This amendment addresses those instances where 
debtors or trustees use section 505 of the Bankruptcy Code as a 
means to have bankruptcy courts set aside these types of taxes 
to the detriment of the local communities that depend on them 
for revenue.

Section 802. Effective notice to government

    To ensure that government units receive effective notice, 
section 802(a) requires the debtor to identify in the notice 
the specific department, agency, or instrumentality to which 
the debtor is indebted and to supply to such entity specified 
identifying information (e.g., taxpayer identification number, 
the number of the loan, account or contract, or real estate 
parcel number, if applicable). The debtor must also describe 
the basis of the claim. If the debtor's liability to a 
governmental unit arises from a debt or obligation owed or 
incurred by another entity, the debtor must identify such other 
entity. In addition, section 802(a) requires the bankruptcy 
clerk to maintain a current list, updated quarterly, of 
addresses designated by government units as ``safe harbor'' 
addresses for service of notices in cases pending in the 
district. This list is to be made available to debtors.
    Section 802(b) requires the Advisory Committee on 
Bankruptcy Rules of the Judicial Conference of the United 
States to adopt rules that enhance the provision of notice to 
Federal, State, and local governmental units that have 
regulatory authority over a debtor or who may be creditors in a 
bankruptcy case. The rules must be reasonably calculated to 
ensure that notice will reach the governmental unit by 
requiring that the debtor provide specified information.
    Should the debtor fail to provide notice to governmental 
entities pursuant to the requirements of section 802(c), such 
notice is deemed to be ineffective unless the debtor 
demonstrates by clear and convincing evidence that timely 
notice was given in a manner reasonably calculated to satisfy 
the requirements of section 802(c). In addition, it must be 
established that either the notice was sent to the safe harbor 
address listed in the register maintained by the clerk for the 
district where the bankruptcy case is pending or, if no safe 
harbor address was specified by the governmental unit, an 
officer of such unit who has responsibility for the matter and 
claim had actual knowledge of the case in sufficient time to 
act.

Section 803. Notice of request for a determination of taxes

    This section amends section 505(b) of the Bankruptcy Code 
to require that notice of a request for a determination of 
taxes substantially comply with the taxing authority's notice 
procedures.103
---------------------------------------------------------------------------
    \103\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 951 (1997).
---------------------------------------------------------------------------

Section 804. Rate of interest on tax claims

    This section enacts a new provision in the Bankruptcy Code 
specifying the rate of interest for tax claims. For secured and 
unsecured ad valorem tax claims, other unsecured tax claims for 
which interest must be paid under Section 726(a)(5) of the 
Bankruptcy Code, secured tax claims, and administrative tax 
claims pursuant to section 503(b)(1) of the Bankruptcy Code, 
the rate is determined under applicable nonbankruptcy law.
    For all other tax claims, this section mandates that the 
minimum interest rate shall be the Federal short-term rate 
rounded to the nearest full percent, as determined under 
section 1274(d) of the Internal Revenue Code of 1986, plus 
three percentage points. The rate for Federal income tax claims 
is subject to any adjustment required under section 6621(d) of 
the Internal Revenue Code. As to taxes paid under a confirmed 
plan of reorganization, the rate is determined as of the 
calendar month in which the plan is confirmed.

Section 805. Tolling of priority of tax claim time periods

    This section suspends the applicable time periods 
pertaining to the priority status of tax claims determined. 
Under section 507(a) of the Bankruptcy Code. Specifically, it 
provides that the three-year period in section 507(a)(8)(A)(i) 
is extended for the period during which a stay of proceedings 
was in effect plus six months. This section also amends the 
240-day provisions of section 507(a)(8)(A)(ii) to take into 
account the pendency of an installment agreement and a stay of 
proceedings against collection. Specifically, it tolls this 
period for 30 days plus the time that an installment agreement 
was pending during the240-day period, up to one year. It also 
tolls the period for six months if a stay of proceedings against 
collections was in effect in a prior bankruptcy case during such 240-
day period.

Section 806. Priority property taxes incurred

    This section amends the Bankruptcy Code's priority 
provisions with respect to property taxes. Under section 
507(a)(8)(B) of the Bankruptcy Code, these taxes are determined 
based on date of assessment. At the time a bankruptcy case is 
filed, however, a property tax may not have been assessed. This 
amendment addresses this problem by revising section 
507(a)(8)(B) to make the determination based on when a priority 
tax claim is incurred.

Section 807. Chapter 13 discharge of fraudulent and other taxes

    Debtors who seek bankruptcy relief under chapter 7 of the 
Bankruptcy Code are not able to discharge certain types of tax 
claims as specified in section 523(a)(1) of the Bankruptcy 
Code. Under current law, however, these same tax claims are 
dischargeable in a chapter 13 case.104 This section 
modifies chapter 13's discharge provisions to make these debts 
nondischargeable.
---------------------------------------------------------------------------
    \104\ 11 U.S.C. Sec. 1328(a).
---------------------------------------------------------------------------

Section 808. Chapter 11 discharge of fraudulent taxes

    Where the chapter 11 debtor is a corporation, this section 
amends chapter 11's discharge provisions to prohibit the 
discharge of any debt for a tax or customs duty resulting from 
a fraudulent tax return filed by the debtor. It also prevents 
the discharge of any unpaid tax or customs duty resulting from 
a corporate chapter 11 debtor's willful attempt to evade or 
defeat such obligation.

Section 809. Stay of tax proceedings

    Upon the filing of a bankruptcy case, a broad stay of most 
creditor collection actions immediately and automatically goes 
into effect.105 This section modifies the scope of 
the automatic stay to provide that it only prevents the 
commencement or continuation of tax proceedings for tax 
liabilities incurred for a tax period ending before the date on 
which the order for relief is entered. This section also carves 
out a specific exception from the automatic stay for appeals of 
tax determinations by courts or administrative tribunals. Under 
this provision, the automatic stay does not apply to an appeal 
of a decision in either a court or administrative tribunal that 
determines a tax liability of a debtor, regardless of whether 
such determination was made pre- or postpetition.
---------------------------------------------------------------------------
    \105\ See 11 U.S.C. Sec. 362(a).
---------------------------------------------------------------------------

Section 810. Periodic payment of taxes in chapter 11 cases

    Section 1129(a)(9)(C) of the Bankruptcy Code requires, as a 
condition of confirmation, that a chapter 11 plan must provide 
for payment of priority tax claims over a period that does not 
exceed six years from the date of assessment of such claims. 
This section amends this provision to require that these claims 
must be paid in cash by regular installment payments, not 
longer than three months apart, that begin on the plan's 
effective date. This provision specifically prohibits balloon 
payments. It also requires all payments to be made within five 
years of the petition date or the last date payments are to be 
made to other creditors under the chapter 11 plan.
    For secured claims that would be entitled to priority under 
section 507(a)(8) of the Bankruptcy Code if they were unsecured 
claims, the holder of such claim must receive cash payments in 
accordance with section 1129(a)(9)(C) of the Bankruptcy Code, 
as amended by this provision.

Section 811. Avoidance of statutory tax liens prohibited

    This section creates an exception to section 545(2)'s 
avoidance provisions for statutory liens. Specifically, it 
provides that a statutory lien on property of the debtor that 
is unperfected or unenforceable against a bona fide purchaser 
at the time the case is filed may be avoided unless the 
purchaser qualifies under section 6323 of the Internal Revenue 
Code 106 or similar provision under State or local 
law.
---------------------------------------------------------------------------
    \106\  Section 6323 of the Internal Revenue Code defines 
``purchaser'' as a person who, for adequate consideration, acquires an 
interest (other than a lien or security interest) in property, which is 
valid under local law against subsequent purchasers without notice.
---------------------------------------------------------------------------

Section 812. Payment of taxes in the conduct of business

    This section provides four additional protections to ensure 
the payment of tax obligations in bankruptcy cases. Section 
812(a) requires bankruptcy trustees and chapter 11 debtors in 
possession to pay tax obligations when they are due in the 
course of the debtors' business,107 with only one 
limited exception. 108 This provision does not apply 
if such payment is excused under a provision of the Bankruptcy 
Code. In addition, it permits a chapter 7 trustee to defer this 
payment if the tax was not incurred by the trustee or if the 
court has determined that there are insufficient funds in the 
estate to pay administrative expenses that have the same 
priority in distribution under section 726 as the unpaid tax 
obligation.
---------------------------------------------------------------------------
    \107\ Section 960 of Title 28 of the United States Code presently 
requires bankruptcy trustees and debtors in possession to pay tax 
obligations, but does not state how or when such payments must be made.
    \108\ The exception applies to property of the estate, subject to a 
secured property tax lien, that is abandoned.
---------------------------------------------------------------------------
    Section 812(b) amends section 503(b)(1)(B)(i) of the 
Bankruptcy Code to clarify thatsecured and unsecured tax 
obligations incurred postpetition by a bankruptcy estate, including 
property taxes, are entitled to administrative expense priority. The 
present provisions of the Bankruptcy Code do not so 
specify.109
---------------------------------------------------------------------------
    \109\ See 11 U.S.C. Sec. 503(b)(1)(B). The National Bankruptcy 
Review Commission recommended that postpetition ad valorem real estate 
taxes be entitled to administrative expense status. See Report of the 
National Bankruptcy Review Commission, at 956 (1997).
---------------------------------------------------------------------------
    Section 812(c) amends section 503(b)(1) of the Bankruptcy 
Code to eliminate the need for a governmental unit to file a 
request for payment of an administrative expense relating to a 
tax liability, as specified in section 503(b)(1)(B) or a tax 
penalty, as specified in section 503(b)(1)(C). Under current 
law, holders of administrative expense claims must submit a 
request for payment of such claims.
    Section 812(d) amends section 506(b) of the Bankruptcy Code 
(which determines the entitlement of secured claimants to 
interest, fees, and costs pursuant to the underlying agreement) 
to extend this entitlement to state tax claimants. This 
provision also amends section 506(c) of the Bankruptcy Code 
(which allows a trustee to recover from property securing an 
allowed secured claim certain costs) to include provision for 
payment of ad valorem property taxes relating to such property.

Section 813 Tardily filed priority tax claims

    To receive a payment in an asset chapter 7 case, a creditor 
must file a proof of claim.110 Once the case is 
fully administered, the chapter 7 trustee prepares a final 
report and account,111 which then is noticed to all 
creditors and other parties in interest. Thereafter, the 
chapter 7 trustee can commence making distribution to creditors 
who have filed proofs of claim. Under current law, creditors 
holding priority claims in asset chapter 7 cases must file 
their proofs of claim before the date on which the trustee 
commences making distribution to creditors in the estate. 
Certain types of tax claims are entitled to priority 
status.112
---------------------------------------------------------------------------
    \110\ See 11 U.S.C. Sec. 502.
    \111\ See 11 U.S.C. Sec. 704(9).
    \112\ See, e.g., 11 U.S.C. Sec. 507(a).
---------------------------------------------------------------------------
    This section permits a priority tax claim to be filed 
either before the trustee commences final distribution under 
section 726 or ten days following the mailing to creditors of 
the summary of the trustee's final report, whichever is 
earlier.

Section 814. Income tax returns prepared by tax authorities

    Section 523(a)(1)(B) of the Bankruptcy Code prohibits the 
discharge of certain types of tax claims. This section extends 
these nondischargeability provisions to include obligations 
based on equivalent reports or notices. It also specifies that 
a tax return, for purposes of section 523(a)(1)(B) must satisfy 
the requirements of applicable nonbankruptcy law and that it 
must include a return prepared pursuant to section 6020(a) of 
the Internal Revenue Code of 1986 or similar State or local 
law. A return, under this provision, also includes a written 
stipulation to a judgment entered by a nonbankruptcy tribunal, 
but it does not include a tax return prepared under section 
6020(b) of the Internal Revenue Code or similar State or local 
law.

Section 815. The discharge of the estate's liability for unpaid taxes

    Under certain conditions, section 505(b) of the Bankruptcy 
Code provides for the discharge of tax liability for a 
bankruptcy trustee, debtor, and successor of the debtor after 
the expiration of certain time periods following a request made 
to a government unit for a determination of such liability. 
This section clarifies that this protection extends to the 
bankruptcy estate.

Section 816. Requirement to file tax returns to confirm chapter 13 
        plans

    As a condition of confirming a chapter 13 plan, section 
816(a) requires a chapter 13 debtor to file all Federal, State, 
and local tax returns for the three-year period preceding the 
filing of the case on or before the first meeting of 
creditors.113 If the debtor fails to meet this 
deadline, the trustee may continue the meeting for a reasonable 
period of time to give the debtor additional time to comply 
with this requirement, subject to certain limitations specified 
in section 816(b). A chapter 13 debtor may apply for an 
extension of these time periods upon a showing by clear and 
convincing evidence that the failure to file the returns was 
due to circumstances beyond his or her control.
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    \113\ For purposes of this provision, a ``return'' includes one 
prepared under section 6020(a) or (b) of the Internal Revenue Code or 
similar state or local law. In addition, it also includes a judgment 
entered by a nonbankruptcy tribunal.
---------------------------------------------------------------------------
    Pursuant to section 816(c), if the chapter 13 debtor does 
not file the requisite tax returns, the court on request of a 
party in interest or the United States trustee must dismiss the 
case or convert it to one under chapter 7, whichever is in the 
best interests of creditors.
    Section 816(d) amends section 502(b)(9) to create an 
additional exception to this provision's disallowance of 
tardily filed claims. Specifically, section 816(d) provides 
that in a chapter 13 case, a governmental unit's tax claim with 
respect to a return filed by the debtor pursuant to section 
1308, as codified by section 816(b), is timely filed if it is 
filed on or before 60 days after such return is filed.
    Section 816(e) expresses a sense of the Congress that the 
Advisory Committee on Bankruptcy Rules of the Judicial 
Conference of the United States should, within a reasonable 
period of time after enactment of the bill, propose rules 
setting forth procedures by which a governmental unit may 
object to confirmation of a chapter 13 debtor's plan under 
certain specified circumstances and with respect to the 
necessity to file an objection to certain tax claims relating 
to returns filed pursuant to section 1308, as codified by 
section 816(b).

Section 817. Standards for tax disclosure

    A key component of the plan confirmation process in chapter 
11 cases is the disclosure statement. The disclosure statement 
is a document that must be sent to creditors and other parties 
in interest who are affected by a chapter 11 
plan.114 The purpose of the disclosure statement is 
to provide adequate information about the plan so that those 
who are affected by it can make an informed judgment about the 
plan. 115
---------------------------------------------------------------------------
    \114\ See 11 U.S.C. Sec. 1125(b).
    \115\ See 11 U.S.C. Sec. 1125(a).
---------------------------------------------------------------------------
    This section mandates that the disclosure statement include 
a full discussion of the potential material Federal, State, and 
local tax consequences of the plan to the debtor, any successor 
of the debtor, and a hypothetical investor domiciled in the 
state where the debtor resides or has its principal place of 
business that is typical of creditors and interest holders in 
the case.116
---------------------------------------------------------------------------
    \116\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 960 (1997).
---------------------------------------------------------------------------

Section 818. Set off of tax refunds

    The automatic stay prevents the commencement and 
continuation of various efforts by creditors to collect 
prepetition obligations against either the debtor or the 
debtor's property.117 This section creates an 
exception to allow a governmental unit to set off an income tax 
refund relating to a prepetition tax period against a 
prepetition income tax liability for a prepetition tax 
period.118 This exception does not apply if, prior 
to such setoff, an action to determine the amount or legality 
of the underlying tax liability under section 505(a) was 
commenced. If the setoff is not permitted because of a pending 
action to determine the amount or legality of the underlying 
tax liability is pending, the governmental unit may hold the 
refund pending the resolution of such action.
---------------------------------------------------------------------------
    \117\ See 11 U.S.C. Sec. 362(a).
    \118\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 818-22 (1997).
---------------------------------------------------------------------------

            Title IX--Ancillary and Other Cross-Border Cases

    Title IX adds a new chapter to the Bankruptcy Code for 
transnational bankruptcy cases. This incorporates the Model Law 
on Cross-Border Insolvency to encourage cooperation between the 
United States and foreign countries with respect to 
transnational insolvency cases. Title IX is intended to provide 
greater legal certainty for trade and investment as well as to 
provide for the fair and efficient administration of cross-
border insolvencies, which protects the interests of creditors 
and other interested parties, including the debtor. In 
addition, it serves to protect and maximize the value of 
debtor's assets.

Section 1501. Purpose and Scope of Application

    The chapter introduces into the Bankruptcy Code the Model 
Law on Cross-Border Insolvency (``Model Law''), which was 
promulgated by the United Nations Commission on International 
Trade Law (``UNCITRAL'') at its Thirtieth Session, May 12-30, 
1997.119
---------------------------------------------------------------------------
    \119\ The text of the Model Law and the Report of UNCITRAL on its 
adoption are found at U.N. G.A., 52d Sess., Supp. No. 17 (A/52/17) 
[``Report'']. That Report and the Guide to Enactment of the UNCITRAL 
Model Law on Cross-Border Insolvency, U.N. Gen. Ass., UNCITRAL 30th 
Sess. U.N. Doc. A/CN.9/442 (1997) [``Guide''], which was discussed in 
the negotiations leading to the Model Law and published by UNCITRAL as 
an aid to enacting countries, should be consulted for guidance as to 
the meaning and purpose of its provisions. The development of the 
provisions in the negotiations at UNCITRAL, in which the United States 
was an active participant, is recounted in the interim reports of the 
Working Group that are cited in the Report.
---------------------------------------------------------------------------
    Cases brought under this chapter are intended to be 
ancillary to cases brought in a debtor's home country, unless a 
full United States bankruptcy case is brought under another 
chapter. Even if a full case is brought, the court may decide 
under section 305 of the Bankruptcy Code to stay or dismiss the 
United States case under the other chapter and limit the United 
States'' role to an ancillary case under this 
chapter.120 If the full case is not dismissed, it 
will be subject to the provisions of this chapter governing 
cooperation, communication and coordination with the foreign 
courts and representatives.
---------------------------------------------------------------------------
    \120\ See section 1529 and commentary.
---------------------------------------------------------------------------
    In any case, an order granting recognition is required as a 
prerequisite to the use of sections 301 and 303 by a foreign 
representative. Section 1501 combines the Preamble to the Model 
Law (subsection 1) with its article 1 (subsections 2 and 
3).121
---------------------------------------------------------------------------
    \121\ Guide at 16-19.
---------------------------------------------------------------------------
    It largely follows the language of the Model Law and fills 
in blanks with appropriate United States references. However, 
it adds in subsection 3 an exclusion of certain natural persons 
who may be considered ordinary consumers. Although the consumer 
exclusion is not in the text of the Model Law, the discussions 
at UNCITRAL recognized that some such exclusion would be 
necessary in countries like the United States where there are 
special provisions for consumer debtors in the insolvency 
laws.122
---------------------------------------------------------------------------
    \122\ See id. at 18 para. 60; 19 para. 66.
---------------------------------------------------------------------------
    The reference to section 109(e) essentially defines 
``consumer debtors'' for purposes of the exclusion by 
incorporating the debt limitations of that section, but not its 
requirement of regular income. The exclusion adds a requirement 
that the debtor or debtor couple be citizens or long-term legal 
residents of the United States. This ensures that residents of 
other countries will not be able to manipulate this exclusion 
to avoid recognition of foreign proceedings in their home 
countries or elsewhere.
    The first exclusion in subsection c constitutes for the 
United States the exclusion provided in article 1, subsection 
2, of the Model Law.123 The reference to section 
109(b) interpolates to the entities governed by different 
insolvency regimes under United States law which are therefore 
currently excluded from liquidation proceedings under Title 11.
---------------------------------------------------------------------------
    \123\ Id. at 17.
---------------------------------------------------------------------------

Section 1502. Definitions

    ``Debtor'' is given a special definition for this chapter. 
That definition does not come from the Model Law but is 
necessary to eliminate the need to refer repeatedly to ``the 
same debtor as in the foreign proceeding.'' With certain 
exceptions, the term ``person'' used in the Model Law has been 
replaced with ``entity,'' which is defined broadly in section 
101(15) to include natural persons and various legal entities, 
thus matching the intended breadth of the term ``person'' in 
the Model Law. The exceptions include contexts in which a 
natural person is intended and those in which the Model Law 
language already refers to both persons and entities other than 
persons. The definition of ``trustee'' for this chapter ensures 
that debtors in possession and debtors; as well as trustees, 
are included in the term.124
---------------------------------------------------------------------------
    \124\ See section 1505.
---------------------------------------------------------------------------
    The definition of ``within the territorial jurisdiction of 
the United States'' in subsection (7) is not taken from the 
Model Law. It has been added because the United States, like 
some other countries, asserts insolvency jurisdiction over 
property outside its territorial limits under appropriate 
circumstances. Thus a limiting phrase is useful where the Model 
Law and this chapter intend to refer only to property within 
the territory of the enacting state.
    Two key definitions of ``foreign proceeding'' and ``foreign 
representative,'' are found in subsections 101(24)-(25), which 
have been amended consistent with Model Law article 
2.125
---------------------------------------------------------------------------
    \125\ Guide at 19-21 paras. 67-68.
---------------------------------------------------------------------------
    The definitions of ``establishment,'' ``foreign court,'' 
``foreign main proceeding,'' and ``foreign non-main 
proceeding'' have been taken from Model Law article 2, with 
only minor language variations necessary to comport with United 
States terminology. Additionally, defined terms have been 
placed in alphabetical order.126
---------------------------------------------------------------------------
    \126\ See Guide at 19, (Model Law) 21 para. 75 (concerning 
establishment) 21 para. 74 (concerning foreign court) 21 paras. 72, 73 
and 75 (concerning foreign main and non-main proceedings).
---------------------------------------------------------------------------
    In order to at least be recognized as a foreign non-main 
proceeding, the debtor must at least have an establishment in 
that foreign country.127
---------------------------------------------------------------------------
    \127\ See id. at 21 para. 75.
---------------------------------------------------------------------------

Section 1503. International obligations of the United States

    This section is taken exactly from the Model Law with only 
minor adaptations of terminology.128 Although this 
section makes an international obligation prevail, the courts 
will attempt to read the Model Law and the international 
obligation so as not to con-

flict, especially if the international obligation addresses a 
subject matter less directly related than the Model Law to a 
case before the court.
---------------------------------------------------------------------------
    \128\ See id. at 22 Art. 3.
---------------------------------------------------------------------------

Section 1504. Commencement of ancillary case

    This section paraphrases current section 304(a), which is 
repealed. Article 4 of the Model Law is designed for 
designation of the competent court which will exercise 
jurisdiction under the Model Law. In United States law, 
subsection 1334(a) of title 28, gives exclusive jurisdiction to 
the district courts in a ``case'' under this 
title.129
---------------------------------------------------------------------------
    \129\ See id. at 23 (Article 4).
---------------------------------------------------------------------------
    Therefore, since the competent court has been determined in 
title 28, this section instead provides that a petition for 
recognition opens a ``case,'' an approach that also invokes a 
number of other useful procedural provisions. In addition, a 
new subsection (P) of section 157 of title 28 makes cases under 
this chapter part of the core jurisdiction of bankruptcy courts 
when referred to them by the district courts, thus completing 
the designation of the competent court. Finally, the particular 
bankruptcy court that will rule on the petition is determined 
pursuant to section 1410 of title 28 governing venue and 
transfer.
    The title ``ancillary'' in this section and in the title of 
this chapter emphasizes the United States policy in favor of a 
general rule that countries other than the home country of the 
debtor, where a main proceeding would be brought, should 
usually act through ancillary proceedings in aid of the main 
proceedings, in preference to a system of full bankruptcies 
(often called ``secondary'' proceedings) in each state where 
assets are found. Under the Model Law, notwithstanding the 
recognition of a foreign main proceeding full bankruptcy cases 
are permitted in each country (see sections 1528 and 1529). In 
the United States, the court will have the power to suspend or 
dismiss such cases where appropriate under section 305.
    Additional assistance under the successor provision to 
current section 304 is set forth in section 1507.

Section 1505. Authorization to act in a foreign country

    The language in this section varies from the wording of 
article 5 of the Model Law as necessary to comport with United 
States law and terminology. The slight alteration to the 
language in the last sentence is meant to emphasize that the 
identification of the entity entitled to act is under United 
States law, while the scope of actions that may be taken by 
[that entity] under foreign law is limited by the foreign 
law.130
---------------------------------------------------------------------------
    \130\ Id. at 24.
---------------------------------------------------------------------------
    The related amendments to chapters 7 and 11 make acting 
pursuant to authorization under this section an additional 
power of a trustee or debtor in possession.
    While the Model Law automatically authorizes an 
administrator to act abroad, this section requires all trustees 
and debtors to obtain court approval before acting abroad. That 
requirement is a change from the language of the Model Law, but 
one that is purely internal to United States law.131
---------------------------------------------------------------------------
    \131\ See id. at 24 (Article 5).
---------------------------------------------------------------------------
    Its main purpose is to ensure that the court has knowledge 
and control of possibly expensive activities, but it will have 
the collateral benefit of providing further assurance to 
foreign courts that the United States debtor or representative 
is under judicial authority and supervision. This requirement 
means that the first-day orders in reorganization cases should 
include authorization to act under this section where 
appropriate.
    This section also contemplates the designation of an 
examiner or other natural person to act for the estate in one 
or more foreign countries where appropriate. One instance might 
be a case in which the designated person had a special 
expertise relevant to that assignment. Another might be where 
the foreign court would be more comfortable with a designated 
person than with an entity like a debtor in possession. Either 
are to be recognized under the Model Law.132
---------------------------------------------------------------------------
    \132\ See id. at 23-24 and para. 82.
---------------------------------------------------------------------------

Section 1506. Public policy exception

    This provision follows the Model Law article 5 exactly, is 
standard in UNCITRAL texts and has been narrowly interpreted on 
a consistent basis in courts around the world. The word 
``manifestly'' in international usage restricts the public 
policy exception to the most fundamental policies of the United 
States.133
---------------------------------------------------------------------------
    \133\ See id. at 25.
---------------------------------------------------------------------------

Section 1507. Additional assistance

    Subsection 1 follows the language of Model Law article 
7.134
---------------------------------------------------------------------------
    \134\ Id. at 26.
---------------------------------------------------------------------------
    Subsection 2 makes the authority for additional relief 
subject to [the conditions for relief in] existing United 
States law under section 304, which is repealed. This section 
is intended to permit the further development of international 
cooperation begun under section 304, but is not to be the basis 
for denying or limiting relief otherwise available under this 
chapter. The additional assistance is made conditional upon the 
court's consideration of the factors set forth in the current 
subsection 304(c) in a context of a reasonable balancing of 
interests following current case law. The references to 
``estate'' in the current subsection have been changed to refer 
to the debtor's property, because many foreign systems do not 
create an estate in insolvency proceedings of the sort 
recognized under this chapter. Although the case law construing 
section 304 clearly makescomity the central consideration, its 
physical placement as one of six factors in subsection (c) of section 
304 is misleading. Therefore, in subsection 2 of this section, comity 
is raised to the introductory language to make it clear that it is the 
central concept to be addressed.\135\
---------------------------------------------------------------------------
    \135\ Id. at 26.
---------------------------------------------------------------------------

Section 1508. Interpretation

    This section follows conceptually Model Law article 8 and 
is a standard one in recent UNCITRAL treaties and model laws. 
Language changes were made to express the concepts more clearly 
in United States vernacular.\136\
---------------------------------------------------------------------------
    \136\ Id. at 26 paras. 91.
---------------------------------------------------------------------------
    Interpretation of this chapter on a uniform basis will be 
aided by reference to the Guide and the Reports cited therein, 
which explain the reasons for the terms used and often cite 
their origins as well. Uniform interpretation will also be 
aided by reference to CLOUT, the UNCITRAL Case Law On Uniform 
Texts, which is a service of UNCITRAL. CLOUT receives reports 
from national reporters all over the world concerning court 
decisions interpreting treaties, model laws, and other texts 
promulgated by UNCITRAL. Not only are these sources persuasive, 
but they are important to the crucial goal of uniformity of 
interpretation. To the extent that the United States courts 
rely on these sources, their decisions will more likely be 
regarded as persuasive elsewhere.

Section 1509. Right of direct access

    This section implements the purpose of article 9 of the 
Model Law, enabling a foreign representative to commence a case 
under this chapter by filing a petition directly with the court 
without preliminary formalities that may delay or prevent 
relief. It varies the language to fit United States procedural 
requirements and it imposes recognition of the foreign 
proceeding as a condition to further rights and duties of the 
foreign representative. Only if recognition is granted; the 
foreign representative will have full capacity under U.S. law 
(subsection (b)(1)), may request such relief in a state or 
federal court other than the bankruptcy court (subsection 
(b)(2)) and may be granted comity or cooperation by such a non-
bankruptcy court (subsection (b)(3) and (c)). Subsections 
(b)(2), (b)(3) and (c) make it clear that chapter 15 is 
intended to be the exclusive door to ancillary assistance to 
foreign proceedings. The goal is to concentrate control of 
these questions in one court. That goal is important in a 
federal system like the United States with many different 
courts, state and federal, that may have pending actions 
involving the debtor or the debtor's property. This section, 
therefore, completes for the United States the work of article 
4 of the Model Law (``competent court'') as well as article 
9.\137\
---------------------------------------------------------------------------
    \137\ See id. at 23, (Article 4, paras. 79-83) 27 (Article 9, para. 
93).
---------------------------------------------------------------------------
    Although a petition under current section 304 is the proper 
method for achieving deference by a United States court to a 
foreign insolvency under present law, some cases in state and 
federal courts under current law have granted comity suspension 
or dismissal of cases involving foreign proceedings without 
requiring a section 304 petition or even referring to the 
requirements of that section. Even if the result is correct in 
a particular case, the procedure is undesirable, because there 
is room for abuse of comity. Parties would be free to avoid the 
requirements of this chapter and the expert scrutiny of the 
bankruptcy court by applying directly to a state or federal 
court unfamiliar with the statutory requirements. Such an 
application could be made after denial of a petition under this 
chapter. This section concentrates the recognition and 
deference process in one United States court, ensures against 
abuse, and empowers a court that will be fully informed of the 
current status of all foreign proceedings involving the 
debtor.\138\
---------------------------------------------------------------------------
    \138\ See id. at 27 (Article 9), 34-35 (Article 15 and paras. 116-
119, 35), 39-40 (Article 18, paras. 133-134); see also subsection 
1515(3) and Section 1518.
---------------------------------------------------------------------------
    Subsection (d) has been added to ensure that a foreign 
representative cannot seek relief in courts in the United 
States after being denied recognition by the court under this 
chapter.
    Subsection (e) makes operations in the United States by a 
foreign representative subject to applicable United States law, 
just as 28 U.S.C. 959 does for a domestic trustee in 
bankruptcy.\139\
---------------------------------------------------------------------------
    \139\ Id. at 27, para. 93.
---------------------------------------------------------------------------
    Subsection (f) provides a limited exception to the prior 
recognition requirement so that collection of a claim which is 
property of the debtor, for example an account receivable, by a 
foreign representative may proceed without commencement of a 
case or recognition under this chapter.

Section 1510. Limited jurisdiction

    Section 1510, article 10 of the Model Law, is modeled on 
section 306 of the Code. Although the language referring to 
conditional relief in section 306 is not included, the court 
has the power under section 1522 to attach appropriate 
conditions to any relief it may grant. Nevertheless, the 
authority in section 1522 is not intended to permit the 
imposition of jurisdiction over the foreign representative 
beyond the boundaries of the case under this chapter and any 
related actions the foreign representative may take, such as 
commencing a case under another chapter of this title.

Section 1511. Commencement of case under section 301 or 303

    This section follows the intent of article 11 of the Model 
Law, but adds language that conforms to United States law or 
that is otherwise necessary in the United States given its many 
bankruptcy court districts and the importance of full 
information-sharing and coordination among them.\140\ Article 
11 does not distinguish between voluntary and involuntary 
proceedings, but seems to have implicitly assumed an 
involuntary proceeding.\141\
---------------------------------------------------------------------------
    \140\ See id. at 28 (Article 11).
    \141\ Id. at 28 paras. 97-99.
---------------------------------------------------------------------------
    Subsection 1(a)(2) goes farther and permits a voluntary 
filing, with its much simpler requirements, if the foreign 
proceeding is a main proceeding.

Section 1512. Participation of a foreign representative in a case under 
        this title

    This section follows article 12 of the Model Law with a 
slight alteration to tie into United States procedural 
terminology.\142\ The effect of this section is to make the 
recognized foreign representative a party in interest in any 
pending or later commenced United States bankruptcy case.\143\
---------------------------------------------------------------------------
    \142\ Id. at 29 (Article 12).
    \143\ Id. at 29 paras. 10-102.
---------------------------------------------------------------------------
    Throughout this chapter, the word ``case'' has been 
substituted for the word ``proceeding'' in the Model Law when 
referring to cases under the United States Bankruptcy Code, to 
conform to United States usage.

Section 1513. Access of foreign creditors to a case under this title

    This section mandates nondiscriminatory or ``national'' 
treatment for foreign creditors, except as provided in 
subsection (b) and section 1514. It follows the intent of Model 
Law article 13, but the language has been altered to conform 
with the Bankruptcy Code.\144\
---------------------------------------------------------------------------
    \144\ Id. at 30 para. 103.
---------------------------------------------------------------------------
    The law as to priority for foreign claims that fit within a 
class given priority treatment under section 507 (for example, 
foreign employees or spouses) is unsettled. This section 
permitsthe continued development of case law on that subject 
and its general principle of national treatment should be an important 
factor to be considered. At a minimum, under this section, foreign 
claims must receive the treatment given to general unsecured claims 
without priority, unless they are in a class of claims in which 
domestic creditors would also be subordinated.\145\
---------------------------------------------------------------------------
    \145\ See id. at 30 para. 104.
---------------------------------------------------------------------------
    The Model Law allows for an exception to nondiscrimination 
as to foreign revenue and other public law claims.\146\ Such 
claims (such as tax and social security claims) have been 
denied enforcement in the United States traditionally, inside 
and outside of bankruptcy. The Bankruptcy Code is silent on 
this point, so the rule is purely a matter of traditional case 
law. It is not clear if this policy should be maintained or 
modified, so this section leaves it to developing case law. It 
also allows the Department of Treasury to negotiate reciprocal 
arrangements with our tax treaty partners in this regard, 
although it does not mandate any restriction of the evolution 
of case law pending such negotiations.
---------------------------------------------------------------------------
    \146\ See Id. at 31 para. 105.
---------------------------------------------------------------------------

Section 1514. Notification of foreign creditors concerning a case under 
        title 11

    This section ensures that foreign creditors receive proper 
notice of cases in the United States.\147\ As ``foreign 
creditor'' is not a defined term; foreign addresses are used as 
the distinguishing factor. The Federal Rules of Bankruptcy 
Procedure should be amended to conform to the requirements of 
this section, including a special form for notice to such 
creditors. In particular, the rules must provide for additional 
time for such creditors to file proofs of claim where 
appropriate and must provide for the court to make specific 
orders in that regard in proper circumstances. Of course, if a 
foreign creditor has made an appropriate request for notice, it 
will receive notices in every instance where notices would be 
sent to other creditors who have made such requests. The notice 
must specify that secured claims must be asserted, because in 
many countries such claims are not affected by an insolvency 
proceeding and need not be filed.\148\
---------------------------------------------------------------------------
    \147\ See Model Law Article 14 and Guide at 31-32 paras. 106-109.
    \148\ Guide at 33 para 111.
---------------------------------------------------------------------------
    Subsection (d) replaces the reference to ``a reasonable 
time period'' in Model Law article 14(3)(a).\149\ It makes 
clear that the Federal Rules of Bankruptcy Procedure, local 
rules, and court orders must make appropriate adjustments in 
time periods and bar dates so that foreign creditors have a 
reasonable time within which to receive notice or take an 
action.
---------------------------------------------------------------------------
    \149\ Id. at 31 (Article 14(3)(a)).
---------------------------------------------------------------------------

Section 1515. Application for recognition of a foreign proceeding

    This section follows article 15 of the Model Law with minor 
changes.\150\ The rules will require amendment to provide forms 
for some or all of the documents mentioned in this section, to 
make necessary additions to rules 1000 and 2002 of the Federal 
Rules of Bankruptcy Procedure to facilitate appropriate notices 
of the hearing on the petition for recognition, and to require 
filing of lists of creditors and other interested persons who 
should receive notices. Throughout the Model Law, the question 
of notice procedure is left to the law of the enacting 
state.\151\
---------------------------------------------------------------------------
    \150\ Id. at 33.
    \151\ See id. at 36 para. 121.
---------------------------------------------------------------------------

Section 1516. Presumptions concerning recognition

    This section follows article 16 of the Model Law with minor 
changes.\152\
---------------------------------------------------------------------------
    \152\ Id. at 36.
---------------------------------------------------------------------------
    Although sections 1515 and 1516 are designed to make 
recognition as simple and expedient as possible, the court may 
hear proof on any element stated. The ultimate burden as to 
each element is on the foreign representative, although the 
court is entitled to shift the burden to the extent indicated 
in section 1516. The word ``proof'' in subsection 3 has been 
changed to ``evidence'' to make it clearer using United States 
terminology that the ultimate burden is on the foreign 
representative.\153\
---------------------------------------------------------------------------
    \153\ Id. at 36 (Article 16(3)).
---------------------------------------------------------------------------
    ``Registered office'' is the term used in the Model Law to 
refer to the place of incorporation or the equivalent for an 
entity that is not a natural person.\154\
---------------------------------------------------------------------------
    \154\ Id. at 36 (Article 16(3)).
---------------------------------------------------------------------------
    The presumption that the place of the registered office is 
also the center of the debtor's main interest is included for 
speed and convenience of proof where there is no serious 
controversy.

Section 1517. Order recognizing a foreign proceeding

    This section closely follows article 17 of the Model Law, 
with a few exceptions.\155\ The decision to grant recognition 
is not dependent upon any findings about the nature of the 
foreign proceedings of the sort previously mandated by section 
304(c). The requirements of this section, which incorporates 
the definitions in section 1502 and subsections 101(23) and 
(24), are all that must be fulfilled to attain recognition.
---------------------------------------------------------------------------
    \155\ Id. at 37.
---------------------------------------------------------------------------
    The drafters of the Model Law understood that only a main 
proceeding or a non-main proceeding meeting the standards of 
section 1502 (that is, one brought where the debtor has an 
establishment) were entitled to recognition under this section. The 
Model Law has been slightly modified to make this point clear by 
referring to the section 1502 definition of main and non-main 
proceedings, as well as to the general definition of a foreign 
proceeding in section 101(23). Naturally, a petition under section 1515 
must show that proceeding is a main or a qualifying non-main proceeding 
in order to win recognition under this section.
    Consistent with the position of various civil law 
representatives in the drafting of the Model Law, recognition 
creates a status with the effects set forth in section 1520, so 
those effects are not viewed as orders to be modified, as are 
orders granting relief under sections 1519 and 1521. Subsection 
4 states the grounds for modifying or terminating recognition. 
On the other hand, the effects of recognition are subject to 
modification under section 362(d), made applicable by section 
1520(2), which permits lifting the stay of section 1520 for 
cause.
    Paragraph 1(d) of section 17 of the Model Law has been 
omitted as an unnecessary requirement for United States 
purposes, because a petition submitted to the wrong court will 
be dismissed or transferred under other provisions of United 
States law.156
---------------------------------------------------------------------------
    \156\ Id. at 37 (Article 17(1)(d)).
---------------------------------------------------------------------------
    The reference to section 350 refers to the routine closing 
of a case that has been completed and will invoke requirements 
including a final report from the foreign representative in 
such form as the rules or a court order may 
provide.157
---------------------------------------------------------------------------
    \157\ Id. at 37 (Article 17(1)(d)).
---------------------------------------------------------------------------

Section 1518. Subsequent information

    This section follows the Model Law, except to eliminate the 
word ``same'' which is rendered unnecessary by the definition 
of ``debtor'' in section 1502 and to provide for a formal 
document to be filed with the court.158
---------------------------------------------------------------------------
    \158\ Id. at 39-40 paras. 133-134.
---------------------------------------------------------------------------
    Judges in several jurisdictions, including the United 
States, have reported the need for a requirement of complete 
and candid reports to the court of all proceedings, worldwide, 
involving the debtor. This provision will ensure that such 
information is provided to the court on a timely basis. Any 
failure to comply with this section will be subject to the 
sanctions available to the court for violations of the statute. 
The section leaves to the Rules the form of the required notice 
and related questions of notice to parties in interest, the 
time for filing, and the like.

Section 1519. Relief that may be granted upon petition for recognition 
        of a foreign proceeding

    This section generally follows article 19 of the Model 
Law.159 The bankruptcy court will have jurisdiction 
to grant emergency relief under Rule 7065 pending a hearing on 
the petition for recognition. This section does not expand or 
reduce the scope of section 105 as determined by cases under 
section 105 nor does it modify the sweep of sections 555 to 
560.
---------------------------------------------------------------------------
    \159\ Id. at 40.
---------------------------------------------------------------------------

Section 1520. Effects of recognition of a foreign main proceeding

    In general, this section sets forth all the relief that is 
available as a matter of right based upon recognition 
hereunder, although additional assistance may be provided under 
section 1507. This chapter has no effect on any relief 
currently available under section 105 of the Bankruptcy Code.
    The stay created by article 20 of the Model Law is imported 
to chapter 15 from elsewhere in the Bankruptcy Code. Subsection 
(a)(1) combines subsection 1(a) and (b) of article 20 of the 
Model Law, because section 362 imposes the restrictions 
required by those two subsections and additional restrictions 
as well.160
---------------------------------------------------------------------------
    \160\ Id. at 42 (Article 20 1(a)(b)).
---------------------------------------------------------------------------
    Subsection (a)(2) and (4) apply the Bankruptcy Code 
sections that impose the restrictions called for by subsection 
1(c) of the Model Law. In both cases, the provisions are 
broader and more complete than those contemplated by the Model 
Law, but include all the restraints the Model Law provisions 
would impose.161
---------------------------------------------------------------------------
    \161\ Id. at 42, 45.
---------------------------------------------------------------------------
    As the foreign proceeding may or may not create an 
``estate'' similar to that created in cases under this title, 
the restraints are applicable to actions against the debtor 
under section 362(a) and with respect to the property of the 
debtor under the remaining sections. The only property covered 
by this section is property within the territorial jurisdiction 
of the United States as defined in section 1502. To achieve 
effects on property of the debtor which is not within the 
territorial jurisdiction of the United States, the foreign 
representative would have to commence a case under another 
chapter of this title.
    By applying section 362, subsection (a) makes applicable 
the United States exceptions and limitations to the restraints 
imposed on creditors, debtors, and others in a case under this 
title, as stated in article 20(2) of the Model 
Law.162
---------------------------------------------------------------------------
    \162\ Id. at 42 (Article 20(2)); 44, paras. 148, 150.
---------------------------------------------------------------------------
    These exceptions and limitations include those set forth in 
subsections 362(b), (c), and (d). As one result, the court has 
the power to terminate the stay pursuant to section 362(d), for 
cause.163
---------------------------------------------------------------------------
    \163\ Id. at 42 (Article 20(3)); 44, 45 paras. 151, 152.
---------------------------------------------------------------------------
    Subsection (a)(2), by its reference to sections 363 and 552 
adds to the powers of a foreign representative of a foreign 
main proceeding an automatic right to operate the debtor's 
business and exercise the power of a trustee under sections 363 
and 542, unless the court orders otherwise. A foreign representative of 
a foreign main proceeding may need to continue a business operation to 
maintain value and granting that authority automatically will eliminate 
the risk of delay. If the court is uncomfortable about this authority 
in a particular situation it can ``order otherwise'' as part of the 
order granting recognition.
    Two special exceptions to the automatic stay are embodied 
in subsections (b) and (c). To preserve a claim in certain 
foreign countries, it may be necessary to commence an action. 
Subsection (b) permits the commencement of such an action, but 
would not allow for its further prosecution. Subsection (c) 
provides that there is no stay of the commencement of a full 
United States bankruptcy case. This essentially provides an 
escape hatch through which any entity, including the foreign 
representative, can flee into a full case. The full case, 
however, will remain subject to subchapters IV and V on 
cooperation and coordination of proceedings. Section 108 of the 
Bankruptcy Code provides the tolling protection intended by 
Model Law article 20(3), so no exception is necessary as to 
claims that might be extinguished under United States 
law.164
---------------------------------------------------------------------------
    \164\ Id. at 42 (Article 20(3)); 44, 45 paras. 151, 152.
---------------------------------------------------------------------------
    Subsection 3 permits suits in other countries to the extent 
such suits are required to preserve the existence of a claim.

Section 1521. Relief that may be granted upon recognition of a foreign 
        proceeding

    This section follows article 21 of the Model Law, with 
detailed changes to fit United States law.165 The 
exceptions in subsection (a)(7) relate to avoiding powers. The 
foreign representative's status as to such powers is governed 
by section 1523 below. The avoiding power in section 549 and 
the exceptions to that power are covered by section 1520(1)(b).
---------------------------------------------------------------------------
    \165\ Id. at 45-46 (Article 21).
---------------------------------------------------------------------------
    The word ``adequately'' in the Model Law, articles 21(2)and 
22(1), has been changed to ``sufficiently'' in subsection 
1521(b) and 1522(a) to avoid confusion with a very specialized 
legal term in United States bankruptcy, ``adequate 
protection.''166
---------------------------------------------------------------------------
    \166\ Id. at 46 (Article 21(2), 47 (Article 22(1)).
---------------------------------------------------------------------------
    Subsection (c) is designed to limit relief to assets having 
some direct connection with a non-main proceeding, for example 
where they were part of an operating division in the 
jurisdiction of the non-main proceeding when they were 
fraudulently conveyed and then brought to the United 
States.167
---------------------------------------------------------------------------
    \167\ See id. at 46, 47, paras. 158, 160.
---------------------------------------------------------------------------
    This section does not expand or reduce the scope of relief 
currently available in ancillary cases under sections 105 and 
304 of the Bankruptcy Code nor does it modify the sweep of 
sections 555 through 560.

Section 1522. Protection of creditors and other interested persons

    This section follows article 22 of the Model Law with 
change for United States usage and references to relevant 
Bankruptcy Code sections.168 It gives the bankruptcy 
court broad latitude to mold relief to circumstances, including 
appropriate responses if it is shown that the foreign 
proceeding is seriously and unjustifiably injuring United 
States creditors. For a response to a showing that the 
conditions necessary to recognition did not actually exist or 
have ceased to exist, see section 1517. Concerning the change 
of ``adequately'' in the Model Law to ``sufficiently'' in this 
section, see section 1521. At the end, subsection (d) is new 
and simply makes clear that an examiner appointed in a case 
under chapter 15 shall be subject to certain duties and bonding 
requirements based on those imposed on trustees and examiners 
under other chapters of this title.
---------------------------------------------------------------------------
    \168\ Id. April 26, 1999 at 47..
---------------------------------------------------------------------------

Section 1523. Actions to avoid acts detrimental to creditors

    This section follows article 23 of the Model Law, with 
wording to fit it within procedure under this 
title.169 It confers standing on a recognized 
foreign representative to assert an avoiding action but only in 
a pending case under another chapter of this title. The Model 
Law would grant such standing in a recognized foreign 
proceeding if no full case were pending. This limitation 
reflects concerns raised by the United States delegation during 
the UNCITRAL debates that simply granting standing to bring 
avoidance actions neglected to address very difficult choice of 
law and forum issues. This limited grant of standing in section 
1523 does not create or establish any legal right of avoidance 
nor does it create or imply any legal rules with respect to the 
choice of applicable law as to the avoidance of any transfer or 
obligation.170
---------------------------------------------------------------------------
    \169\ Id. at 48, 49.
    \170\ See id. at 49, para. 166.
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    The courts will determine the nature and extent of any such 
action and what national law may be applicable to such action.

Section 1564. Intervention by a foreign representative

    This section is worded the same as the Model Law, except 
for a few clarifying words.171 This section gives 
the foreign representative the right to intervene in United 
States cases, state or federal, where the debtor is a party. 
Recognition being an act under federal bankruptcy law, it must 
take effect in state as well as federal courts. This section 
does not require substituting the foreign representative for 
the debtor, although that result may be appropriate in some 
circumstances.
---------------------------------------------------------------------------
    \171\ Id. at 49.
---------------------------------------------------------------------------

Section 1525. Cooperation and direct communication between the court 
        and foreign courts or foreign representatives

    The wording of this section is almost exactly that of the 
Model Law.172 The right of courts to communicate 
with other courts in worldwide insolvency cases is of central 
importance. This section authorizes courts to do so. This right 
must be exercised, however, with due regard to the rights of 
the parties. Guidelines for such communications should be 
promulgated.
---------------------------------------------------------------------------
    \172\ Id. at 50.
---------------------------------------------------------------------------

Section 1526. Cooperation and direct communication between the trustee 
        and foreign courts or foreign representatives

    This section follows the Model Law almost 
exactly.173 The language in Model Law article 26 
concerning the trustee's function was eliminated as unnecessary 
because it is always implied under United States law. The 
section authorizes the trustee, including a debtor in 
possession, to cooperate with other proceedings.
---------------------------------------------------------------------------
    \173\ Id. at 51.
---------------------------------------------------------------------------
    Subsection (3) is not taken from the Model Law but is added 
so that any examiner appointed under this chapter will be 
designated by the United States Trustee and will be bonded.

Section 1527. Forms of cooperation

    This section follows the Model Law exactly. Guide at 51-53. 
United States bankruptcy courts have already engaged in most of 
the forms of cooperation mentioned here, but they now have 
explicit statutory authorization for acts like the approval of 
protocols of the sort used in cases.174
---------------------------------------------------------------------------
    \174\ See e.g. Inre Maxwell Communication Corp., 93 F.2d 1036 12d 
Cir. 1966).
---------------------------------------------------------------------------

Section 1528. Commencement of a case under title 11 after recognition 
        of a foreign main proceeding

    This section follows the Model Law, with specifics of 
United States law replacing the general clause at the end to 
cover assets normally included within the jurisdiction of the 
United States courts in bankruptcy cases, except where assets 
are subject to the jurisdiction of another recognized 
proceeding.\175\
---------------------------------------------------------------------------
    \175\ Guide at 54, 55.
---------------------------------------------------------------------------
    In a full bankruptcy case, the United States bankruptcy 
court generally has jurisdiction over assets outside the United 
States. Here that jurisdiction is limited where those assets 
are controlled by another recognized proceeding.
    The court may use section 305 of this title to dismiss, 
stay, or limit a case as necessary to promote cooperation and 
coordination in a cross-border case. In addition, although the 
jurisdictional limitation applies only to United States 
bankruptcy cases commenced after recognition of a foreign 
proceeding, the court has ample authority under section 629 of 
the bill and section 305 of the Bankruptcy Code to exercise its 
discretion to dismiss, stay, or limit a United States case that 
was filed after a petition for recognition of a foreign main 
proceeding has been filed but before it has been approved, if 
recognition is ultimately granted.

Section 1529. Coordination of a case under title 11 and a foreign 
        proceeding

    This section follows the Model Law almost exactly, but 
subsection (d) adds a reference to section 305 to make it clear 
that the bankruptcy court may continue to use that section, as 
under present law, to dismiss or suspend a United States case 
as part of coordination and cooperation with foreign 
proceedings.\176\
---------------------------------------------------------------------------
    \176\ Id. at 55, 56.
---------------------------------------------------------------------------
    This provision is consistent with United States policy to 
act ancillary to a foreign main proceeding whenever possible.

Section 1530. Coordination of more than one foreign proceeding

    This section exactly follows article 30 of the Model 
Law.\177\ It ensures that a foreign main proceeding will be 
given primacy in the United States, consistent with the overall 
approach of the United States favoring assistance to foreign 
main proceedings.
---------------------------------------------------------------------------
    \177\ Id. at 57.
---------------------------------------------------------------------------

Section 1531. Presumption of insolvency based on recognition of a 
        foreign main proceeding

    This section follows the Model Law exactly, inserting a 
reference to the standard for an involuntary case under this 
title.\178\ Where an insolvency proceeding has begun in the 
home country of the debtor, and in the absence of contrary 
evidence, the foreign representative should not have to make a 
new showing that the debtor is in the sort of financial 
distress requiring a collective judicial remedy. The word 
``proof'' here means ``presumption.'' The presumption does not 
arise for any purpose outside this section.
---------------------------------------------------------------------------
    \178\ Id. at 58.
---------------------------------------------------------------------------

Section 1532. Rule of payment in concurrent proceeding

    This section follows the Model Law exactly and is very 
similar to prior section 508(a), which is repealed. The Model 
Law language is somewhat clearer and broader than the 
equivalent language of prior section 508(a).\179\
---------------------------------------------------------------------------
    \179\ Id. at 59.
---------------------------------------------------------------------------
    This section provides that the bankruptcy court in any 
district in which there has been a reference under subsection 
157(a) will have core jurisdiction over cases commenced under 
chapter 15, and ancillary cross-border cases.
    Although the United States will continue to assert 
worldwide jurisdiction over property of a domestic or foreign 
debtor in a full bankruptcy case under chapters 7 and 13 of 
this title, subject to deference to foreign proceedings under 
chapter 15 and section 305, the situation is different in a 
case commenced under chapter 15. There, the United States is 
acting solely in an ancillary position, so jurisdiction over 
property is limited to that stated in chapter 15.
     The third provision complements the automatic inclusion of 
chapter 15 in the U.S. Trustee's language of prior section 
508(a).\180\
---------------------------------------------------------------------------
    \180\ Id. at 59.
---------------------------------------------------------------------------

Amendments to other chapters in title 11, United States Code

    The first amendment provides that the bankruptcy court in 
any district in which there has been a reference under 
subsection 157(a) will have core jurisdiction over cases 
commenced under chapter 15, ancillary cross-border cases.
    Although the United States will continue to assert 
worldwide jurisdiction over property of a domestic or foreign 
debtor in a full bankruptcy case under chapter 7 and 13 of this 
title, subject to deference to foreign proceedings under 
chapter 15 and section 305, the situation is different in a 
case commenced under chapter 15. There the United States is 
acting solely in an ancillary position, so jurisdiction over 
property is limited to that stated in chapter 15.
    The third provision complements the automatic inclusion of 
chapter 15 in the United States trustee's standing under 
section 307 and provides authority for the United States 
trustee to act as necessary under section 626(3).

              Title X. Financial Contract Provisions \181\
---------------------------------------------------------------------------

    \181\ As title X is substantively very similar to H.R. 4393, the 
Financial Contract Netting Improvement Act of 1998, the Committee has 
relied on the report accompanying that bill. H.R. Rep. No. 105-688, Pt. 
1 (1998).
---------------------------------------------------------------------------

Section 1001. Treatment of certain agreements by conservators or 
        receivers of insured depository institutions

    Subsections (a) through (f) of section 1001 amend the 
Federal Deposit Insurance Act's definitions of ``qualified 
financial contract,'' ``securities contract,'' ``commodity 
contract,'' ``forward contract,'' ``repurchase agreement'' and 
``swap agreement'' to make them consistent with the definitions 
in the Bankruptcy Code, as amended by title X of H.R. 833.
    Subsection (a) amends the definition of ``qualified 
financial contract'' to include a reference to a resolution or 
order.
    Subsection (b) amends the definition of ``securities 
contract'' to encompass options on securities and margin loans. 
The inclusion of ``margin loans'' in the definition is intended 
to encompass only those loans commonly known in the securities 
industry as ``margin loans'' and does not include other loans 
utilizing securities as collateral, however documented. This 
provision also specifies that purchase, sale and repurchase 
obligations under a participation in a commercial mortgage loan 
do not constitute ``securities contracts.'' While a contract 
for the purchase or sale or a participation may constitute a 
``securities contract,'' the purchase, sale or repurchase 
obligation embedded in a participation agreement does not make 
that agreement a ``securities contract.''
    Subsection (c) amends the definition of ``commodity 
contract'' to conform it with section 761(4) of the Bankruptcy 
Code, as amended by title X of the bill. Likewise, subsection 
(d) amends the definition of ``forward contract'' to conform it 
with section 101(25) of the Bankruptcy Code, as amended by 
title X of the bill.
    Subsection (e) amends the definition of ``repurchase 
agreement'' to codify the substance of the Federal Deposit 
Insurance Corporation's 1995 regulation defining repurchase 
agreement to include those on qualified foreign government 
securities. \182\ For purposes of this provision, the term 
``qualified foreign government securities'' is defined to 
include securities that are direct obligations of, or fully 
guaranteed by, central governments of members of the 
Organization for Economic Cooperation and Development (OECD). 
Subsection (e) reflects developments in the repurchase 
agreement markets which increasingly use foreign government 
securities as the underlying assets. Any risk presented by this 
modification is addressed by limiting it to those obligating or 
guaranteed by OECD member states.
---------------------------------------------------------------------------
    \182\ See 12 C.F.R. 360.5.
---------------------------------------------------------------------------
    Subsection (e), like subsection (b) for ``securities 
contracts,'' specifies that repurchase obligations under a 
participation in an commercial mortgage loan do not make the 
participation agreement a ``repurchase agreement.'' Such 
repurchase obligations embedded in participations in commercial 
loans (such as recourse obligations) do not constitute a 
``repurchase agreement.'' Nevertheless, a repurchase agreement 
involving the transfer of participations in commercial mortgage 
loans with a simultaneous agreement to repurchase the 
participation on demand or at a date certain one year or less 
after such transfer could constitute a ``repurchase 
agreement.''
    Subsection (f) amends the definition of ``swap agreement'' 
to include an interest rate swap, option, future, or forward 
agreement, including a rate floor, rate cap, rate collar, 
cross-currency rate swap, and basis swap; a spot, same day-
tomorrow, tomorrow-next forward or other foreign exchange 
agreement; a currency swap, option, future, or forward 
agreement; an equity index or equity swap, option, future, or 
forward agreement; a debt index or debt swap, option, future, 
or forward agreement; a credit swap, option, future, or forward 
agreement; a commodity swap, option, future, or forward 
agreement or any other similar agreement. This amendment would 
achieve contractual netting across economically similar over-
the-counter products that can be terminated and closed out on a 
mark-to-market basis.
    The definition of ``swap agreement'' does not include 
transactions that are, in substance, commercial, consumer or 
industrial loans. Traditional commercial and lending 
arrangements, or other non-financial market transactions, such 
as commercial, residential or consumer loans, cannot be treaded 
as ``swaps'' under either the Federal Deposit Insurance Act or 
the Bankruptcy Code because the parties purport to document or 
label the transactions as ``swap agreements.'' In addition, 
these definitions apply only for purposes of the Federal 
Deposit Insurance Act and the Bankruptcy Code. These 
definitions, and the characterization of a certain transaction 
as a ``swap agreement'' are not intended to effect the 
characterization, definition, or treatment of any instruments 
under any other statute, regulation, or rule including, but not 
limited to, the statutes, regulations or rules enumerated in 
subsection (f).
    Subsection (g) amends the Federal Deposit Insurance Act by 
adding a definition of ``transfer,'' which is a key term used 
in the Act, to ensure that it is broadly construed to encompass 
dispositions of property or interests in property. The 
definition mirrors that in section 101(54) of the Bankruptcy 
Code.
    Subsection (h) makes clarifying technical changes to 
conform the receivership and conservatorship provisions of the 
Federal Deposit Insurance Act. This subsection also clarifies 
that the Act expressly protects rights under security 
agreements, arrangements or other credit enhancement related to 
one or more qualified financial contracts (QFCs). An example of 
a security arrangement is a right of set off, and examples of 
other credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
    Subsection (i) clarifies that no provision of Federal or 
State law relating to the avoidance or preferential or 
fraudulent transfer (including the anti-preference provision of 
the National Bank Act) can be invoked to avoid a transfer made 
in connection with any QFC of an insured depository institution 
in conservatorship or receivership, absent actual fraudulent 
intent on the part of the transferee.

Section 1002. Authority of the corporation with respect to failed and 
        failing institutions

    Section 1002 provides that no provision of law, including 
FDICIA, shall be construed to limit the power of the FDIC to 
transfer or to repudiate any QFC in accordance with its powers 
under the FDIA. As discussed below, there has been some 
uncertainty regarding whether or not FDICIA limits the 
authority of the FDIC to transfer or to repudiate QFCs of an 
insolvent financial institution. Section 1002, as well as other 
provisions in the Act, clarify that FDICIA does not limit the 
transfer powers of the FDIC with respect to QFC.
    In addition, Section 1002 denies enforcement to 
``walkaway'' clauses in QFCs. A walkaway clause is defined as a 
provision that, after calculation of a value of a party's 
position or an amount due to or from one of the parties upon 
termination, liquidation or acceleration of the QFC, either 
does not create a payment obligation of a party or extinguishes 
a payment obligation of a party in whole or in part solely 
because of such party's status as a non-defaulting party.

Section 1003. Amendments relating to transfers of qualified financial 
        contracts

    Subsection (a) amends the FDIA to expand the transfer 
authority of the FDIC to permit transfer of QFCs to ``financial 
institutions'' as defined in FDICIA or in regulations. This 
provision will allow the FDIC to transfer QFCs to a non-
depository financial institution, provided the institution is 
not subject to bankruptcy or insolvency proceedings. The new 
FDIA provisions specify that when the FDIC transfers QFCs that 
are subject to the rules of a particular clearing organization, 
the transfer will not require the clearing organization to 
accept the transferee as a member of the organization. This 
provision gives the FDIC flexibility in resolving QFCs subject 
to the rules of a clearing organization, while preserving the 
ability of such organizations to enforce appropriate risk 
reducing membership requirements.
    The new FDIA provision also permits transfers to an 
eligible financial institution that is a non-U.S. person, or 
the branch or agency of a non-U.S. person if, following the 
transfer, the contractual rights of the parties would be 
enforceable substantially to the same extent as under the FDIA.
    Subsection (b) amends the notification requirements 
following a transfer of the QFCs of a failed depository 
institution to require the FDIC to notify any party to a 
transferred QFC of such transfer by 5:00 p.m. (Eastern Time) on 
the business day following the date of the appointment of the 
FDIC acting as a receiver or following the date of such 
transfer by the FDIC acting as a conservator. This amendment is 
consistent with the policy statement on QFCs issued by the FDIC 
on December 12, 1989.
    Subsection (c) amends the FDIA to clarify the relationship 
between the FDIA and FDICIA. There has been some uncertainty 
whether FDICIA permits counterparties to terminate or liquidate 
a QFC before the expiration of the time period provided by the 
FDIA during which the FDIC mayrepudiate or transfer a QFC in a 
conservatorship or receivership. Subsection (c) provides that a party 
may not terminate a QFC based solely on the appointment of the FDIC as 
receiver until 5:00 p.m. (Eastern Time) on the business day following 
the appointment of the receiver or after the person has received notice 
of a transfer under FDIA section 11(d)(9), or based solely on the 
appointment of the FDIC as conservator, notwithstanding the provisions 
of FDICIA. This provides the FDIC with an opportunity to undertake an 
orderly of the insured depository institution.
    The amendment also prohibits the enforcement of rights of 
termination or liquidation that are based solely on the 
``financial condition'' of the depository institution in 
receivership or conservatorship. For example, termination based 
on a cross-default provision in a QFC that is triggered upon a 
default under another contract could be stayed if such other 
default was caused by an acceleration of amounts due under that 
other contract, and such acceleration was based solely on the 
appointment of a conservator or receiver for that depository 
institution. Similarly, a provision in a QFC permitting 
termination of the QFC based solely on a downgraded credit 
rating of a party will not be enforceable in an FDIC 
receivership or conservatorship because the provision is based 
solely on the financial condition of the depository institution 
in default. Nevertheless, any payment, delivery or other 
performance-based default, or breach of a representation or 
covenant putting in question the enforceability of the 
agreement, will not be deemed to be based solely on financial 
condition for purposes of this provision. The amendment is not 
intended to prevent counterparties from taking all actions 
permitted and recovering all damages authorized upon 
repudiation of any QFC by a conservator or receiver.
    The amendment allows the FDIC to meet its obligation to 
provide notice to parties to transferred QFCs by taking steps 
reasonably calculated to provide notice to such parties by the 
required time. This is consistent with the existing policy 
statement on QFCs issued by the FDIC on December 12, 1989.
    Finally, the amendment permits the FDIC to transfer QFCs of 
a failed depository institution to a bridge bank or a 
depository institution organized by the FDIC for which a 
conservator is appointed either (i) immediately upon the 
organization of such institution or (ii) at the time of a 
purchase and assumption transaction between the FDIC and the 
institution. This provision clarifies that such institutions 
are not to be considered financial institutions that are 
ineligible to receive such transfers under FDIA section 
11(e)(9). This is consistent with the existing policy statement 
on QFCs issued by the FDIC on December 12, 1989.

Section 1004. Amendments relating to disaffirmance or repudiation of 
        qualified financial contracts

    Section 1004 limits the disaffirmance and repudiation 
authority of the FDIC with respect to QFCs so that such 
authority is consistent with the FDIC's transfer authority 
under FDIA section 11(e)(9). This ensures that no 
disaffirmance, repudiation or transfer authority of the FDIC 
may be exercised to ``cherry-pick'' or otherwise treat 
independently all the QFCs between a depository institution in 
default and a person or any affiliate of such person. The FDIC 
has announced that its policy is not to repudiate or disaffirm 
QFCs selectively. This unified treatment is fundamental to the 
reduction of systemic risk.

Section 1005. Clarifying amendment relating to master agreements

    Section 1005 states that a master agreement for one or more 
securities contracts, commodity contracts, forward contracts, 
repurchase agreements or swap agreements will be treated as a 
single QFC under the FDIA. This provision ensures that cross-
product netting pursuant to a master agreement will be 
enforceable under the FDIA. Cross-product netting permits a 
wide variety of financial transactions between two parties to 
be netted, thereby maximizing the present and potential future 
risk-reducing benefits of the netting arrangement between the 
parties.
    Express recognition of the enforceability of such cross-
product master agreements furthers the policy of increasing 
legal certainty and reducing systemic risks in the case of an 
insolvency of a large financial participant. Similar Bankruptcy 
Code clarifications to recognize cross-product netting both 
under a master agreement and in the absence of a master 
agreement are described below.

Section 1006. Federal Deposit Insurance Corporation Improvement Act of 
        1991

    The FDICIA provides that a netting arrangement will be 
enforced pursuant to its terms, notwithstanding the failure of 
a party to the agreement. However, the current netting 
provisions of FDICIA limit this protection to ``financial 
institutions,'' which include depository institutions. 
Subsection (a)(1) amends the FDICIA definition of covered 
institutions to include (i) uninsured national and State member 
banks, irrespective of their eligibility for deposit insurance 
and (ii) foreign banks (including the foreign bank and its 
branches or agencies as a combined group or only the foreign 
bank parent of a branch or agency). The Federal Reserve Board 
already has by regulation included certain foreign banks in the 
definition of a ``financial institution'' for purposes of 
FDICIA and the latter change will statutorily extend the 
protections of FDICIA to ensure that U.S. financial 
organizations participating in netting agreements with foreign 
banks are covered by the Act, thereby enhancing the safety and 
soundness of these arrangements.
    Subsection (a)(2) amends FDICIA to provide that, for 
purposes of FDICIA, two or more clearing organizations that 
enter into a netting contract are considered ``members'' of 
each other. This assures the enforceability of netting 
arrangements involving two or more clearing organizations and a 
member common to all such organizations, thus reducing systemic 
risk in the event of the failure of such a member. Under the 
current FDICIA provisions, the enforceability of such 
arrangements depends on a case-by-case determination that 
clearing organizations could be regarded as members of each 
other for purposes of FDICIA.
    Subsection (a)(3) amends the FDICIA definition of netting 
contract and the general rules applicable to netting contracts. 
The current FDICIA provisions require that the netting 
agreement must be governed by the law of the United States or a 
State to receive the protections of FDICIA. Many of these 
agreements, particularly netting arrangements covering 
positions taken in foreign exchange dealings, however, are 
governed by the laws of a foreign country. This subsection 
broadens the definition of ``netting contract'' to include 
those agreements governed by foreign law, and preserves the 
FDICIA requirement that a netting contract is not invalid 
under, or precluded by, Federal law.
    Subsections (b) and (c) establish two exceptions to 
FDICIA's protection of the enforceability of the provisions of 
netting contracts between financial institutions and among 
clearing organization members. First, the termination 
provisions of netting contracts will not be enforceable based 
solely on (i) the appointment of a conser-

vator for an insolvent depository institution under the FDIA or 
(ii) the appointment of a receiver for such institution under 
the FDIA, if such receiver transfers or repudiates QFCs in 
accordance with the FDIA and gives notice of a transfer by 5:00 
p.m. on the business day following the appointment of a 
receiver. This change is made to confirm the FDIC's flexibility 
to transfer or repudiate the QFCs of an insolvent depository 
institution in accordance with the terms of the FDIA. This 
modification also provides important legal certainty regarding 
the treatment of QFCs under the FDIA, because the current 
relationship between the FDIA and FDICIA is unclear.
    The second exception provides that FDICIA does not override 
a stay order under SIPA with respect to foreclosure on 
securities (but not cash) collateral of a debtor.
    Subsections (b) and (c) also clarify that a security 
agreement or other credit enhancement related to a netting 
contract is enforceable to the same extent as the underlying 
netting contract.
    Subsection (d) adds a new section 407 to FDICIA. This new 
section provides that, notwithstanding any other law, QFCs with 
uninsured national banks or uninsured Federal branches or 
agencies that are placed in receivership or conservatorship 
will be treated in the same manner as if the contract were with 
an insured national bank or insured Federal branch for which a 
receiver or conservator was appointed. This provision will 
ensure that parties to QFCs with uninsured national banks or 
uninsured Federal branches or agencies will have the same 
rights and obligations as parties entering into the same 
agreements with insured depository institutions. The new 
section also specifically limits the powers of a receiver or 
conservator for an uninsured national bank or uninsured Federal 
branch or agency to those contained in 12 U.S.C. 1821(e) (8), 
(9), and (11), which address QFCs. While the amendment would 
apply the same rules to uninsured national banks and Federal 
branches and agencies that apply to insured institutions, the 
provision would not change the rules that apply to insured 
institutions. Nothing in this section would amend the 
International Banking Act, the Federal Deposit Insurance Act, 
the National Bank Act, or other statutory provisions with 
respect to receivership of insured national banks or Federal 
branches. It is noted that new section 407 may need to be 
amended if legislation is enacted to permit the creation of so-
called ``wholesale financial institutions.''

Section 1007. Bankruptcy Code amendments

    Subsection (a)(1) amends the Bankruptcy Code definitions of 
``repurchase agreement'' and ``swap agreement'' to conform with 
the amendments to the FDIA contained in sections 1001. In 
connection with the definition of ``repurchase agreement,'' the 
term, ``qualified foreign government securities'' is defined to 
include securities that are direct obligations of, or fully 
guaranteed by, central governments of members of the 
Organization for Economic Cooperation and Development (OECD). 
This language reflects developments in the repurchase agreement 
markets, which increasingly use foreign government securities 
as the underlying asset. Any risk presented by this 
modification is addressed by limiting it to those obligating or 
guaranteed by OECD member states.
    Subsection (a)(1) specifies that repurchase obligations 
under a participation in a commercial mortgage loan do not make 
the participation agreement a ``repurchase agreement.'' Such 
repurchase obligations embedded in participations in commercial 
loans (such as recourse obligations) do not constitute a 
``repurchase agreement.'' A repurchase agreement involving the 
transfer of participations in commercial mortgage loans with a 
simultaneous agreement to repurchase the participation on 
demand or at a date certain one year or less after such 
transfer, however, could constitute a ``repurchase agreement.''
    The amendments to the definition of ``repurchase 
agreement'' are not intended to affect the interpretation of 
the definition of ``securities contract.'' The definition of 
``swap agreement,'' in conjunction with the addition of ``spot 
foreign exchange transactions'' that was added to the 
definition in 1994, will achieve contractual netting across 
economically similar over-the-counter products that can be 
terminated and closed out on a mark-to-market basis.
    The definition of ``swap agreement'' originally was 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and use of swap transactions 
matured. For that reason, the phrase ``or any other similar 
agreement'' was included in the definition. The phrase ``other 
similar agreement'' encompasses any agreement that is, or in 
the future becomes, regularly entered into in the swap market 
that is a forward, swap or option on one or more rates, 
currencies, commodities, equity or debt securities or 
instruments, economic indices or measures of economic risk or 
value. Traditional commercial and lending arrangements, or 
other non-financial market transactions, such as commercial, 
residential or consumer loans, however, cannot be treated as 
``swaps'' under either the FDIA or the Bankruptcy Code because 
the parties purport to document or label the transactions as 
``swap agreements.''
    Subsection (a)(1)(C) specifies that this definition of swap 
agreement applies only for purposes of the Bankruptcy Code and 
is inapplicable to the other statutes, rules and regulations 
enumerated in that section. The definition also includes any 
security agreement or arrangement, or other credit enhancement, 
related to a swap agreement. This ensures that any such 
agreement, arrangement or enhancement is itself deemed to be a 
swap agreement, and therefore eligible for treatment as such 
for purposes of termination, liquidation, acceleration, offset 
and netting under the Bankruptcy Code and the FDIA. Similar 
changes are made in the definition of ``forward contract, 
``commodity contract'' and ``repurchase agreement.'' An example 
of a security arrangement is a right of set off; examples of 
other credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
    Subsections (a)(2) and (a)(3) amend the Bankruptcy Code 
definitions of ``securities contract'' and ``forward 
contract,'' respectively, to conform them to the definition in 
the FDIA, and also to include any security agreements or 
arrangements or other credit enhancements related to one or 
more such contracts.
    Subsection (a)(2), like the amendments to the FDIA amends 
the definition of ``securities contract'' to encompass options 
on securities and margin loans. The inclusion of ``margin 
loans'' in the definition is intended to encompass only those 
loans commonly known in the securities industry as ``margin 
loans'' and does not include other loans utilizing securities 
as collateral, however, documented.
    Subsection (a)(2) also specifies that purchase, sale and 
repurchase obligations under a participation in a commercial 
mortgage loan do not constitute ``securities contracts.'' While 
a contract for the purchase or sale or a participation may 
constitute a ``securities contract,'' the purchase, sale or 
repurchase obligation embedded in a participation agreement 
does not make that agreement a ``securities contract.''
    Subsection (b) amends the Bankruptcy Code definitions of 
``financial institution'' and ``forward contract merchant.'' 
The definition for ``financial institution'' includes Federal 
Reserve Banks and the receivers or conservators of insolvent 
depository institutions. Subsection (b) also adds a new 
definition of ``financial participant'' to limit the potential 
impact of insolvencies upon other major market participants. 
This definition will allow such market participants to close-
out and net agreements with insolvent entities under sections 
362(b)(6), 546, 548, 555, and 556 even if the creditor could 
not qualify as, for example, a commodity broker. The new 
subsection preserves the limitations of the right to close-out 
and net such contracts, in most cases, to entities who qualify 
under the Bankruptcy Code's counterparty limitations. Where the 
counterparty, however, has transactions with a total gross 
dollar value of at least $1 billion in notional principal 
amount outstanding on any day during the previous 15-month 
period, or has gross mark-to-market positions of at least $100 
million (aggregated across counterparties) in one or more 
agreements or transactions on any day during the previous 15-
month period, the new subsection and corresponding amendments 
would permit it to exercise netting rights irrespective of its 
inability otherwise to satisfy those counterparty limitations. 
This change will help prevent systemic impacts upon the markets 
from a single failure.
    Subsection (c) adds to the Bankruptcy Code new definitions 
for the terms ``master netting agreement'' and ``master netting 
agreement participant.'' The definition of ``master netting 
agreement'' is designed to protect the termination and close-
out netting provisions of cross-product master agreements 
between parties. Such an agreement may be used (i) to document 
a wide variety of securities contracts, commodity contracts, 
forward contracts, repurchase agreements and swap agreements, 
or (ii) as an umbrella agreement for separate master agreements 
between the same parties, each of which is used to document a 
discrete type of transaction. The definition includes security 
agreements or arrangements or other credit enhancements related 
to one or more such agreements and clarifies that a master 
netting agreement will be treated as such even if it documents 
transactions that are not within the enumerated categories of 
qualifying transactions (but the provisions of the Bankruptcy 
Code relating to master netting agreements and the other 
categories of transactions will not apply to such other 
transactions).
    A ``master netting agreement participant'' is any entity 
that is a party to an outstanding master netting agreement with 
a debtor before the filing of a bankruptcy petition.
    Subsection (d) amends section 362(b) of the Bankruptcy Code 
to protect enforcement, free from the automatic stay, of setoff 
or netting provisions in swap agreements and in master netting 
agreements and security agreements or arrangements related to 
one or more swap agreements or master netting agreements. This 
provision parallels the other provisions of the Bankruptcy Code 
that protect netting provisions of securities contracts, 
commodity contracts, forward contracts, and repurchase 
agreements. Because the relevant definitions include related 
security agreements, the reference to ``setoff'' in this 
provisions, as well as in section 362(b) (6) and (7) of the 
Bankruptcy Code, are intended to refer also to rights to 
foreclose on, and to set off against, obligations to return 
collateral security swap agreements, master netting 
arrangements, repurchase agreements, securities contracts, 
commodity contracts, or forward contracts. Collateral may be 
pledged to cover the cost of replacing the defaulted 
transactions in the relevant market, as well as other costs and 
expenses incurred or estimated to be incurred for the purpose 
of hedging or reducing the risks arising out of such 
termination. Enforcement of these agreements and arrangements 
is consistent with the policy goal of minimizing systemic risk.
    Subsection (d) also clarifies that the provisions 
protecting setoff and foreclosure in relation to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, and master netting agreements free 
from the automatic stay apply to collateral pledged by the 
debtor that is under the control of the creditor but that 
cannot technically be ``held by'' the creditor, such as 
receivables and book-entry securities, and to collateral that 
has been repledged by the creditor.
    Subsection (e) amends section 546 of the Bankruptcy Code to 
provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This section also clarifies the limitations on a 
trustee's power to avoid transfers made under swap agreements. 
In addition subsection (e) makes a technical correction to 
section 546 of the Bankruptcy Code to redesignate the second 
``(g)'' subsection as ``(h)''.
    Subsection (f) amends section 548(d) of the Bankruptcy Code 
to provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This amendment provides the same protections for 
transfers made under, or in connection with, master netting 
agreements as currently is provided for margin payments and 
settlement payments received by commodity brokers, forward 
contract merchants, stockbrokers, financial institutions, 
securities clearing agencies, repo participants, and swap 
participants under paragraphs (B), (C) and (D) of section 
548(d).
    Subsections (g), (h), (i) and (j) clarify that the 
provisions of the Bankruptcy Code that protect (i) rights of 
liquidation under securities contracts, commodity contracts, 
forward contracts and repurchase agreements also protect rights 
of termination or acceleration under such contracts, and (ii) 
rights to terminate under swap agreements also protect rights 
of liquidation and acceleration.
    Subsection (k) adds a new section 561 to the Bankruptcy 
Code to protect the contractual right of a master netting 
agreement participant to enforce any rights of termination, 
liquidation, acceleration, offset or netting under a master 
netting agreement. Such rights include rights arising (i) from 
the rules of a securities exchange or clearing organization, 
(ii) under common law, law merchant or (iii) by reason of 
normal business practice. This is con-

sistent with the current treatment of rights under swap 
agreements under section 560 of the Bankruptcy Code.
    For the purposes of Bankruptcy Code sections 555, 556, 559, 
560 and 561, it is intended that the normal business practice 
in the event of a default of a party based on bankruptcy or 
insolvency is to terminate, liquidate or accelerate securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements and master netting agreements with 
the bankruptcy or insolvent party. The protection of netting 
and offset rights in sections 560 and 561 is in addition to the 
protections afforded in section 362(b)(6), (b)(7) and (b)(17). 
For example, cross-product netting will be protected from the 
automatic stay under section 561 even in the absence of a 
master netting agreement.
    Sections 561(b) (2) and (3) limit the exercise of 
contractual rights to net or to offset obligations where one 
leg of the obligations sought to be netted relates to commodity 
contracts. Under subsection (b)(2), netting or offset is not 
permitted if the obligations are not mutual. This means, for 
example, that proprietary obligations cannot be netted or 
offset against obligations held for, or on behalf of, some 
other party. Even if the obligations are mutual, under 
subsection (b)(3) netting or offset is not permitted in a 
commodity broker bankruptcy if the party seeking to net or to 
offset has no positive net equity in the commodity account at 
the debtor. Subsections (b)(2) and (b)(3) limit the depletion 
of assets available for distribution to customers of commodity 
brokers. This is consistent with the principle of subchapter IV 
of chapter 7 of the Bankruptcy Code, which gives priority to 
customer claims in the bankruptcy of a commodity broker.
    Under title X of H.R. 833, the termination, liquidation or 
acceleration rights of a master netting agreement participant 
are subject to limitations contained in other provisions of the 
Bankruptcy Code relating to securities contracts and repurchase 
agreements. In particular, if a securities contract or 
repurchase agreement is documented under a master netting 
agreement, a party's termination, liquidation and acceleration 
rights would be subject to the provisions of the Bankruptcy 
Code relating to orders authorized under the provisions of SIPA 
or any statute administered by the SEC. In addition, the 
netting rights of a party to a master netting agreement would 
be subject to any contractual terms between the parties 
limiting or waiving netting or set off rights. Similarly, a 
waiver by a bank or a counterparty of netting or set off rights 
in connection with QFCs would be enforceable under the FDIA.
    Subsection (l) clarifies that, with respect to municipal 
bankruptcies, all the provisions of the Bankruptcy Code 
relating to securities contracts, commodity contracts, forward 
contracts, repurchase agreements, swap agreements and master 
netting agreements (which by their terms are intended to apply 
in all cases under the Bankruptcy Code) apply to a chapter 9 
case.
    Subsection (m) clarifies that the provisions of the 
Bankruptcy Code related to securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements and master netting agreements apply in a section 304 
proceeding ancillary to a foreign insolvency proceeding.
    Subsections (n) and (o) amend those provisions in the 
Bankruptcy Code concerning the liquidation of commodity brokers 
183 and stockbrokers.184 These provisions 
of the Bankruptcy Code are designed to protect customers and 
customer property of an insolvent stockbroker or commodity 
broker. Subsections (n) and (o) clarify the rights of parties 
to commodity contracts, securities contracts, forward 
contracts, swap agreements, repurchase agreements and master 
netting agreements with an insolvent commodity broker or 
stockbroker. They ensure that noncustomers will not defeat the 
priority scheme of subchapter III or IV by gaining access to 
assets held in segregated customer accounts. The amendment also 
clarifies that the exercise of termination and netting rights 
will not otherwise affect customer property or distributions by 
the trustee of the insolvent commodity broker or stockbroker 
after the exercise of such rights.
---------------------------------------------------------------------------
    \183\ Subchapter IV of chapter 7 of the Bankruptcy Code and 
regulations of the CFTC detail specific rules for the liquidation of 
commodity brokers.
    \184\ Subchapter III of chapter 7 of the Bankruptcy Code details 
specific rules for the liquidation of stockbrokers.
---------------------------------------------------------------------------
    Subsection (p) amends section 553 of the Bankruptcy Code to 
clarify that the acquisition by a creditor of set off rights in 
connection with swap agreements, repurchase agreements, 
securities contracts, forward contracts, commodity contracts 
and master netting agreements may not be avoided as a 
preference. This subsection also adds setoff provisions of the 
kinds described in sections 555, 556, 559, 560, and 561 of the 
Bankruptcy Code to the types of setoffs excepted from section 
553(b).
    Subsection (q) makes a series of conforming amendments to 
sections 362(b)(6), 546(e), 548(d)(2)(B), 555, and 556 to 
include references to ``financial participant''.
    Subsection (r) makes technical and conforming amendments to 
the Bankruptcy Code's table of sections, as amended by title X.

Section 1008. Recordkeeping requirements

    Section 1008 amends section 11(e)(8) of the Federal Deposit 
Insurance Act to explicitly authorize the FDIC, in consultation 
with appropriate Federal banking agencies, to prescribe 
regulations on recordkeeping with respect to QFCs. Adequate 
recordkeeping for such transactions is essential to effective 
risk management and to the reduction of systemic risk permitted 
by the orderly resolution of depository institutions utilizing 
QFCs.

Section 1009. Exemptions from contemporaneous execution requirement

    Section 1009 amends FDIA section 13(e)(2) to provide that 
an agreement for the collateralization of governmental 
deposits, bankruptcy estate funds, Federal Reserve Bank or 
Federal Home Loan Bank extensions of credit or one or more QFCs 
shall not be deemed invalid solely because such agreement was 
not entered into contemporaneously with the acquisition of the 
collateral or because of pledges, delivery or substitution of 
the collateral made in accordance with such agreement. The 
amendment codifies portions of policy statements issued by the 
FDIC regarding the application of section 13(e), which codifies 
the ``D'Oench Duhme'' doctrine.
    With respect to QFCs, this codification recognizes that 
QFCs often are subject to collateral and other security 
arrangements that may require posting and return of collateral 
on an ongoing basis based on the mark-to-market values of the 
collateralized transactions. The codification of only portions 
of the existing FDIC policy statements on these and related 
issues should not give rise to any negative implication 
regarding the continued validity of these policy statements.

Section 1010. Damage measure

    Section 11 adds a new section 562 to the Bankruptcy Code to 
provide that damages under any swap agreement, securities 
contract, forward contract, commodity contract, repurchase 
agreement or master netting agreement will be calculated as of 
the earlier of (i) the date of rejection of such agreement by a 
trustee or (ii) the date of liquidation, termination or 
acceleration of such contract or agreement. New section 562 
provides important legal certainty and makes the Bankruptcy 
Code consistent with the current provisions related to the 
timing of the calculation of damages under QFCs in the FDIA.
    Section 1010 also clarifies the treatment of damage claims 
arising from rejection.

Section 1011. SIPC stay

    Section 1011 amends the Securities Investment Protection 
Act (SIPA) to provide that an order or decree issued pursuant 
to SIPA shall not operate as a stay of any right of 
liquidation, termination, acceleration, offset or netting under 
one or more securities contracts, commodity contracts, forward 
contracts, repurchase agreements, swap agreements or matter 
netting agreements (as defined in the Bankruptcy Code and 
including rights of foreclosure on collateral), except that 
such order or decree may stay any right to foreclose on 
securities (but not cash) collateral pledged by the debtor or 
sold by the debtor under a repurchase agreement. A creditor 
stayed in exercising rights against securities collateral would 
be entitled to post-insolvency interest to the extent of the 
collateral.

Section 1012. Asset-backed securitizations

    Section 1012 amends section 541 of the Bankruptcy Code to 
provide that certain assets transferred to an eligible entity 
in connection with an asset-backed securitization generally 
will not be included within the bankruptcy estate. This 
provision recognizes that a valid transfer of such assets to 
the eligible entity, which is defined as an issuer or an entity 
engaged exclusively in such securitization transactions, 
generally eliminates the debtor's legal or equitable interests 
in those assets. Accordingly, subject to the avoidance powers 
in section 548(a), the transfer will be treated as a sale of 
those assets not subject to avoidance. A significant exception 
to this provision is that if the trustee avoids the transfer 
from the debtor under section 548(a), then those assets will be 
included within the bankruptcy estate.

Section 1013. Federal Reserve collateral requirements

    Section 16 of the Federal Reserve Act (FRA) specifies the 
types of assets the Federal Reserve may use to back the 
currency. These assets include U.S. Treasury and agency 
securities that the Federal Reserve holds in its portfolio and, 
among other things, discount window loans extended under the 
provisions of section 13 of the FRA. Over the years, sections 
were added to the FRA that permit lending under provisions 
other than section 13 and against a broader range of collateral 
than allowed under that section.
    This amendment broadens the range of discount window loans 
eligible to back currency to include not only those extended 
under section 13 but also those extended under section 10A of 
the FRA relating to emergency advances to groups of member 
banks, section 10B relating to emergency advances to individual 
member banks, and section 13A relating to the discount of 
agricultural paper.

Section 1014. Effective date; application of amendments

    Subsection (a) provides that the amendments under this 
title take effect on the date of H.R. 833's enactment. 
Subsection (b) provides that the amendments made by this title 
shall not apply with respect to cases commenced, or to 
conservator/receiver appointments made, before the date of 
enactment.

                    Title XI. Technical Corrections

Section 1101. Definitions

    Section 1101 amends the definitions contained in section 
101 of title 11 of the United States Code. Paragraphs (1), (2), 
(4), (7), and (8) of section 1101 make technical changes to 
section 101 to convert each definition into a sentence (thereby 
facilitating future amendments to the separate paragraphs) and 
to redesignate the definitions in correct and completely 
numerical sequence. Paragraph (3) of section 1101 makes the 
necessary conforming amendment to cross references to the newly 
redesignated definitions and simplifies these references to 
avoid future reference errors.
    Paragraph (5) of section 1101 concerns single asset real 
estate debtors. A single asset real estate chapter 11 case 
presents special concerns. As the name implies, the principal 
asset in this type of case consists of some form of real 
estate, such as undeveloped land. Typically, the form of 
ownership of a single asset real estate debtor is a corporation 
or limited partnership. For tax planning purposes, the limited 
partnership is formed to acquire the underlying asset. The 
largest creditor in a single asset real estate case is usually 
the secured lender who advanced the funds to the debtor to 
acquire the real property. Often, a single asset real estate 
debtor resorts to filing for bankruptcy relief for the sole 
purpose of staying an impending foreclosure proceeding or sale 
commenced by the secured lender. Foreclosure actions are filed 
when the debtor lacks sufficient cash flow to service the debt 
and maintain the property. Taxing authorities may also have 
liens against the property.
    Based on the nature of its principal asset, a single asset 
real estate debtor often has few, if any, unsecured creditors. 
If unsecured creditors exist, they may have only nominal claims 
against the single asset real estate debtor. Depending on the 
nature and ownership of any business operating on the debtor's 
real property, the debtor may have few, if any, employees. 
Accordingly, there may be little interest on behalf of 
unsecured creditors in a single asset real estate case to serve 
on a creditors' committee.
    In 1994, the Bankruptcy Code was amended to accord special 
treatment for a single asset real estate debtor. It defined 
this type of debtor as a bankruptcy estate comprised of a 
single piece of real property or project, other than 
residential real property with fewer than four residential 
units. The property or project must generate substantially all 
of the debtor's gross income. A debtor that conducts 
substantial business on the property beyond that relating to 
its operation is excluded from this definition. In addition, 
the definition fixed a monetary cap. To qualify as a single 
asset real estate debtor, the debtor could not have 
noncontingent, liquidated secured debts in excess of $4 
million.185
---------------------------------------------------------------------------
    \185\ See 11 U.S.C. Sec. 101(51B).
---------------------------------------------------------------------------
    Subparagraph (5)(A) amends the definition of ``single asset 
real estate'' to exclude family farmers from this definition. 
Paragraph (5)(B) amends section 101(51B) (renumbered section 
101(57)) of the Bankruptcy Code to eliminate the $4 million 
debt limitation on single asset real estate. The present $4 
million cap prevents the use of the expedited relief procedure 
in many commercial property reorganizations, and effectively 
provides an opportunity for a number of debtors to abusively 
file for bankruptcy in order to obtain the protection of the 
automatic stay against their creditors. As a result of this 
amendment, creditors in more cases will be able to obtain the 
expedited relief from the automatic stay which is made 
available under section 362(d)(3) of the Bankruptcy Code.
    Paragraph (6) of section 1101, together with section 1118 
respond to a 1997 Ninth Circuit case,186 in which 
two purchase money lenders (without knowledge that the debtor 
had recently filed an undisclosed chapter 11 case that was 
later converted to chapter 7), funded the debtor's acquisition 
of an apartment complex and recorded their purchase-money deed 
of trust immediately following recordation of the deed to the 
debtors. Specifically, it amends the definition of ``transfer'' 
to include the ``creation of a lien.'' This amendment gives 
expression to a widely held understanding since the enactment 
of the Bankruptcy Reform Act of 1978,187 that is, a 
transfer includes the creation of a lien.
---------------------------------------------------------------------------
    \186\ In re McConville, 110 F.3d 47 (9th Cir. 1997). The bankruptcy 
trustee sought to avoid the lien created by the lenders' deed of trust 
by asserting that the deed was an unauthorized, postpetition transfer 
under section 549(a) of the Bankruptcy Code. The lenders claimed that 
the voluntary transfer to them was a transfer of real property to good 
faith purchasers for value, which was thereby excepted it, under 
section 549(c) of the Bankruptcy Code, from avoidance. The bankruptcy 
court held that the postpetition recordation of the lenders' deed of 
trust was without authorization under the Bankruptcy Code or by the 
court and was therefore avoidable under section 549(a), and that the 
lenders did not quality under the section 549(c) exception as good 
faith purchasers of real property for value. The District Court 
subsequently affirmed the bankruptcy court's ruling granting the 
trustee the authority to avoid the lenders' lien. In re McConville, 
D.C. No. CV 94 03308 FMS (N.D. Cal. 1994). On appeal, the lower court's 
decision in McConville was initially affirmed. The Ninth Circuit, 
however, subsequently issued an amended opinion, also affirming the 
lower court, and finally issued an opinion withdrawing its prior 
opinion and deciding the case on other grounds. It held that by 
obtaining secured credit from the lenders, after filing but before the 
appointment of a trustee, the debtors violated their fiduciary 
responsibility to their creditors.
    \187\ Pub. L. 95 598, 92 Stat. 2549 (1978).
---------------------------------------------------------------------------

Section 1102. Adjustment of dollar amounts

    Section 1102 corrects an omission in section 104(b) of 
title11 of the United States Code, as added by Public Law 103-
394, by including references to section 522(f)(3) so that the 
triennial adjustment required by section 104(b) extends to the 
figure representing an aggregate value of certain implements, 
professional books, tools of the trade, farmanimals, and crops 
which the debtor may exempt from the property of the estate and thereby 
protect from creditors' liens. Section 522(f)(3) now sets the total 
permissible value of such property at $5,000.

Section 1103. Extension of time

    Section 1103 of the bill makes a technical amendment to 
correct a reference error described in amendment notes 
contained in the United States Code. As specified in the 
amendment note relating to subsection (c)(2) of section 108 of 
title 11 of the United States Code, the amendment made by 
section 257(b)(2)(B) of Public Law 99-554 could not be executed 
as stated.

Section 1104. Technical amendments

    Section 1104 makes technical amendments to sections 
109(b)(2) (to strike an statutory cross reference), 541(b)(2) 
(to add ``or'' to the end of this provision), and 522(b)(1) (to 
replace ``product'' with ``products'').

Section 1105. Penalty for persons who negligently or fraudulently 
        prepare bankruptcy petitions

    Section 1105 makes a technical correction to change from 
the singular possessive to the plural possessive the reference 
to the fees payable to attorneys.

Section 1106. Limitation on compensation of professional persons

    Section 328(a) of the Bankruptcy Code provides that a 
trustee or a creditors' and equity security holders' committee 
may, with court approval, obtain the services of a professional 
person on any reasonable terms and conditions of employment, 
including on a retainer, on an hourly basis, or on a contingent 
fee basis. Section 1106 amends section 328(a) to include 
compensation ``on a fixed or percentage fee basis'' in addition 
to the other specified forms of reimbursement.

Section 1107. Special tax provisions

    Section 1107 makes a technical correction in section 
346(g)(1)(C) of title 11 of the United States Code to delete 
language referring to a repealed section of the Internal 
Revenue Code of 1986. Additional information regarding the 
repealed section is indicated in the appropriate footnote, and 
contained in the notes under the heading ``References in 
Text,'' found in the United States Code.

Section 1108. Effect of conversion

    Section 1108 makes a technical correction in section 
348(f)(2) of title 11 of the United States Code to clarify that 
the first reference to property, like the subsequent reference 
to property, is a reference to property of the estate.

Section 1109. Amendment to table of sections

    Section 1109 of the bill makes a technical amendment to 
conform the wording of an item in the table of sections to the 
wording of the section heading represented by that item.

Section 1110. Allowance of administrative expenses

    Section 1110 amends section 503(b)(4) of the Bankruptcy 
Code to limit the types of compensable professional services 
rendered by an attorney or accountant that can qualify as 
administrative expenses in a bankruptcy case. Expenses for 
attorneys or accountants incurred by individual members of 
creditors' and equity security holders' committee would not be 
recoverable, but expenses incurred for such professional 
services by the committees themselves would be.

Section 1111. Priorities

    Section 1111 of the bill makes technical amendments to 
section 507(a) of title 11 of the United States Code. The 
amendment made by section 1111(1) corrects an error in the 
punctuation at the end of section 507(a)(3). The amendment made 
by section 1111(2) corrects an omission in paragraph (7) of 
section 507(a) and conforms this paragraph with section 
507(a)'s other paragraphs that provide priority only to 
unsecured claims.

Section 1112. Exemptions

    This section makes grammatical and clarifying amendments to 
section 522(f)(1)(A) and a conforming amendment to section 
522(g)(2) of the Bankruptcy Code.

Section 1113. Exceptions to discharge

    Section 1113 of the bill amends section 523 of the 
Bankruptcy Code, relating to the discharge of debts, to correct 
the inadvertent omission of a cross-reference to paragraph (15) 
in paragraph (3)(A), to correct a technical error in the 
placement of paragraph (15), which was added to section 523 by 
section 304(e)(1) of the Bankruptcy Reform Act of 1994, and to 
require that the debt must be owed to a spouse, former spouse, 
or child of the debtor. The effect of this amendment is to 
fulfill Congress's original intention to exclude from discharge 
certain family obligations if the debtor has the ability to pay 
them and the benefit of a discharge to the debtor does not 
outweigh the detriment to the spouse, former spouse, or child.
    This section also amends section 523(a)(9), which makes 
nondischargeable any debt resulting from death or personal 
injury arising from the debtor's unlawful operation of a motor 
vehicle while intoxicated, to add ``watercraft, or aircraft'' 
after ``motor vehicle.'' Neither additional term should be 
defined or included as a ``motor vehicle'' in section 523(a)(9) 
and each is intended to comprise unpowered as well as motor-
powered craft. Congress previously made the policy judgment 
that the equities of persons injured by drunk drivers outweigh 
the responsible debtor's interest in a fresh start, and here 
clarifies that the policy applies not only on land but also on 
the water and in the air. Viewed from a practical standpoint, 
this provision closes a loophole that gives intoxicated 
watercraft and aircraft operators preferred treatment over 
intoxicated motor vehicle drivers and denies victims of alcohol 
and drug related boat and plane accidents the same rights 
accorded to automobile accident victims under current law.
    Finally, this section amends section 523(a)(17), added by 
the Omnibus Consolidated Rescissions and Appropriations Act of 
1996,188 to narrow its application in accordance 
with its original intent. Paragraph (17), enacted in the 
context of prison litigation reform, excepts from discharge the 
filing fees or related costs or expenses assessed by a court in 
a civil case or appeal. Because of a drafting error, however, 
this section might be construed to apply to filing fees, costs 
or expenses incurred by any debtor, not solely by those who are 
prisoners. This amendment eliminates the ambiguity and makes 
other conforming changes.
---------------------------------------------------------------------------
    \188\ Pub. L. No. 104-134, sec. 804(b).
---------------------------------------------------------------------------

Section 1114. Effect of discharge

    Section 1114 of the bill makes technical amendments to 
correct errors in section 524(a)(3) of title 11 of the United 
States Code, caused by section 257(o)(2) of Public Law 99-554 
and section 501(d)(14)(A) of Public Law 103-394.189
---------------------------------------------------------------------------
    \189\ For a description of these errors, see the appropriate 
footnote and amendment notes in the United States Code.
---------------------------------------------------------------------------

Section 1115. Protection against discriminatory treatment

    Section 1115 of the bill amends section 525(c) of the 
Bankruptcy Code to make a technical amendment to conform a 
reference to its antecedent reference. The omission of 
``student'' before ``grant'' in the second place it appears 
insection 525(c) made possible the interpretation that a broader 
limitation on lender discretion was intended, so that no loan could be 
denied because of a prior bankruptcy if the lending institution was in 
the business of making student loans. Section 1115 is intended to make 
clear that lenders involved in making government guaranteed or insured 
student loans are not barred by this Bankruptcy Code provision from 
denying other types of loans based on an applicant's bankruptcy 
history; only student loans and grants, therefore, cannot be denied 
under section 525(c) because of a prior bankruptcy.

Section 1116. Property of the estate

    Production payments are royalties tied to the production of 
a certain volume or value of oil or gas, determined without 
regard to production costs. They typically would be paid by an 
oil or gas operator to the owner of the underlying property on 
which the oil or gas is found. Under section 541(b)(4)(B)(ii) 
of the Bankruptcy Code, added by the Bankruptcy Reform Act of 
1994, production payments are generally excluded from the 
debtor's estate, provided they could be included only by virtue 
of section 542 of the Bankruptcy Code, which relates generally 
to the obligation of those holding property which belongs in 
the estate to turn it over to the trustee. Section 1116 adds to 
this proviso a reference to section 365 of the Bankruptcy Code, 
which authorizes the trustee to assume or reject an executory 
contract or unexpired lease. It thereby clarifies the original 
Congressional intent to generally exclude production payments 
from the debtor's estate.

Section 1117. Preferences

    Section 547 of the Bankruptcy Code authorizes trustees to 
avoid preferential payments made to creditors by a debtor 
within 90 days of filing, whether the creditor is an insider or 
an outsider. Because of the concern that corporate insiders 
(such as officers and directors) who are creditors of their own 
corporation have an unfair advantage over outside creditors, 
section 547 also authorizes trustees to avoid preferential 
payments made to insider creditors between 90 days and one year 
before filing. Several recent cases, including 
DePrizio,190 allowed the trustee to ``reach-back'' 
and avoid a transfer to a noninsider creditor which fell within 
the 90-day to one year time frame if an insider benefitted from 
the transfer in some way. This had the effect of discouraging 
lenders from obtaining loan guarantees, lest transfers to the 
lender be vulnerable to recapture by reason of the debtor's 
insider relationship with the loan guarantor.
---------------------------------------------------------------------------
    \190\ In re V.N. DePrizio Constr. Co., 874 F.2d 1186 (7th Cir. 
1989); see, e.g., Ray v. City Bank & Trust Co. (In re C&L Cartage Co.), 
899 F.2d 1490 (6th Cir. 1990); Manufacturers Hanover Leasing Cor. v. 
Lowrey (In re Robinson Bros. Drilling), 892 F.2d 850 (10th Cir. 1989).
---------------------------------------------------------------------------
    Section 202 of the Bankruptcy Reform Act of 1994 addressed 
the DePrizio problem by inserting a new section 550(c) into the 
Bankruptcy Code to prevent avoidance or recovery from a 
noninsider creditor during the 90-day to one year period even 
though the transfer to the noninsider benefitted an insider 
creditor. The 1994 amendments, however, failed to make a 
corresponding amendment to section 547, which deals with the 
avoidance of preferential transfers. As a result, a trustee 
could still utilize section 547 to avoid a preferential lien 
given to a noninsider bank, more than 90 days but less than one 
year before bankruptcy, if the transfer benefitted an insider 
guarantor of the debtor's debt.
    Accordingly, section 1117 makes a perfecting amendment to 
section 547 to provide that if the trustee avoids a transfer 
given by the debtor to a noninsider for the benefit of an 
insider creditor between 90 days and one year before filing, 
that avoidance is valid only with respect to the insider 
creditor. Thus both the previous amendment to section 550 and 
the perfecting amendment to section 547 protect the noninsider 
from the avoiding powers of the trustee exercised with respect 
to transfers made during the 90-day to one year pre-filing 
period.

Section 1118. Postpetition transactions

    Section 1118 amends section 549(c) to clarify its 
application to an interest in real property. This amendment 
should be construed in conjunction with section 1101 of the 
bill.

Section 1119. Disposition of property of the estate

    Section 1119 of the bill amends section 726(b) of title 11 
of the United States Code to strike an erroneous reference to a 
nonexistent section.191
---------------------------------------------------------------------------
    \191\ For a description of the error, see the appropriate footnote 
and amendment notes in the United States Code.
---------------------------------------------------------------------------

Section 1120. General provisions

    Section 1120 of the bill amends section 901(a) of title 11 
of the United States Code to correct an omission in a list of 
sections applicable to cases under chapter 9 of title 11.

Section 1121. Appointment of elected trustee

    This section refines existing law by clarifying the 
procedure for giving effect to the election of a private 
trustee in a chapter 11 reorganization case. Section 702(b) of 
the Bankruptcy Code permits creditors at the meeting of 
creditors to elect one person to serve as trustee in the case, 
provided certain conditions are met. Section 1104(b) of the 
Bankruptcy Code relates to the convening of the meeting of 
creditors for this purpose and the conduct of the election. 
Section 1121 of the bill renumbers section 1104(b) as section 
1104(b)(1) and adds a new subsection 1104(b)(2) requiring the 
United States trustee to file a report certifying the election 
when an eligible, disinterested trustee is elected under 
paragraph (1). The effect of such filing would be to consider 
such elected trustee as selected and appointed for purposes of 
section 1104 and to terminate the service of any trustee 
appointed under subsection (d), which provides for the 
appointment of a trustee or examiner by the United States 
trustee, subject to court approval, if the court orders such an 
appointment or in the event of a trustee or examiner's death, 
resignation, removal or failure to qualify.

Sections 1122 and 1123. Abandonment of railroad line; contents of plan

    Sections 1122 and 1123 of the bill amend sections 
1170(e)(1) and 1172(c)(1) of title 11 of the United States Code 
to reflect the facts that section 11347 of title 49 of the 
United States Code was repealed by section 102(a) of Public Law 
104-88 and that provisions comparable to section 11347 appear 
in section 11326(a) of title 49 of the United States Code.

Section 1124. Discharge under chapter 12

    Section 29 of the bill amends section 1228 of the 
Bankruptcy Code, dealing with discharge under chapter 12, to 
correct erroneous references.

Section 1125. Bankruptcy cases and proceedings

    Section 1125 of the bill amends section 1334(d) of title 28 
of the United States Code to correct erroneous 
references.192
---------------------------------------------------------------------------
    \192\ For a description of the errors, see the appropriate footnote 
and amendment notes in the United States Code.
---------------------------------------------------------------------------

Section 1126. Knowing disregard of bankruptcy law or rule

    This section amends section 156(a) of title 18 of the 
United States Code, which defined ``bankruptcy petition 
preparer'' and ``document for filing,'' by making stylistic 
changes and correcting a reference to title 11 of the United 
States Code.

Section 1127. Transfers made by nonprofit charitable corporations.

    Section 1127 amends section 363(d) of the Bankruptcy Code 
to restrict the right of a trustee to use, sell, or lease 
property by a nonprofit corporation or trust. First, the use, 
sell or lease must be in accordance with applicable 
nonbankruptcy law and to the extent it is not inconsistent with 
any relief granted under certain specified provisions of 
section 362 of the Bankruptcy Code concerning the applicability 
of the automatic stay. Second, section 1127 imposes similar 
restrictions with regard to chapter 11's plan confirmation 
requirements. Third, it amends section 541 of the Bankruptcy 
Code to provide that any property of a bankruptcy estate where 
the debtor is a nonprofit corporation (as described in certain 
provisions of the Internal Revenue Code) may not be transferred 
to an entity that is not a corporation, but only under the same 
conditions that would apply if the debtor was not in 
bankruptcy.
    The amendments made by this section apply to cases pending 
on the date of H.R. 833's enactment. An limited exception 
pertains with confirmation of a chapter 11 plan.

Section 1128. Prohibition on certain actions for failure to incur 
        finance charges

    Section 1128 amends section 127 of the Truth in Lending Act 
to prohibit a creditor to terminate an open-end consumer credit 
plan prior to its expiration date solely because the consumer 
has not incurred finance charges on the account. This 
restriction does not prevent a creditor from terminating an 
account for inactivity for three or more consecutive months.

Section 1129. Protection of valid purchase money security interests

    Section 1129 of the bill extends the applicable perfection 
period for a security interest in property of the debtor in 
section 547(c)(3)(B) of the Bankruptcy Code from 20 to 30 days.

Section 1130. Trustees

    Section 1130(a) sets up a series of procedural protections 
for chapter 7 and chapter 13 trustees (appointed respectively 
under section 586(a)(1) and (b)) concerning decisions relating 
to their appointment and future case assignments. It allows a 
trustee to obtain judicial review of final agency decisions by 
commencing an action in the United States district court after 
such trustee exhausts all available administrative remedies. It 
provides that the agency's decision shall be affirmed by the 
district court unless it is unreasonable and without cause.
    Section 1130(b) requires a chapter 13 to obtain judicial 
review of certain final agency action relating to expenditures 
by such chapter 13 trustee. The decision of the agency shall be 
affirmed by the district court if is unreasonable and without 
cause based on the administrative record before the agency.

         XII. General Effective Date: Application of Amendments

Section 1201. Effective date; application of amendments

    Section 1201 provides that the bill shall take effect 180 
days after the date of its enactment. Except as otherwise 
provided in the bill, the amendments made by H.R. 833 shall not 
apply to cases commenced under the Bankruptcy Code before the 
bill's effective date.

                              Agency Views

                             Department of Justice,
                             Office of Legislative Affairs,
                                    Washington, DC, April 19, 1999.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: We understand that the Judiciary 
Committee will mark up H.R. 833, the Bankruptcy Reform Act of 
1999, during the week of April 19, 1999. This letter 
supplements and incorporates by reference the views of the 
Justice Department on H.R. 833 set forth in our letter of March 
24, 1999, to the Chairman of the Subcommittee on Commercial and 
Administrative Law. A copy of that letter is enclosed for your 
convenience. We would be pleased to meet with you to discuss 
our concerns in more detail.

Section 102. Dismissal or conversion

    The Department continues to oppose this provision for the 
reasons stated in our earlier letter, but notes certain changes 
in the wording of proposed section 707(b)(2)(A)(ii) which cause 
additional concerns. Specifically, the new reference to ``the 
debtor's applicable monthly expenses for the categories 
specifically listed as Other Necessary Expenses issued by the 
Internal Revenue Service'' appears to limit what the debtor can 
claim to certain categories and no others. This limitation is 
too restrictive.
    In addition, a new statement has been added that 
``[n]otwithstanding the foregoing, the debtor's monthly 
expenses shall not include any payments for debts.'' The 
purpose of this statement is unclear. This provision would, for 
example, appear to preclude a debtor from factoring in any 
payments on nondischargeable debt. We recommend that this 
sentence be deleted.

Section 117. Trustee liability

    Section 117 of H.R. 833 is new, and was incorporated as 
part of the Amendment in Nature of a Substitute approved by the 
Subcommittee. This section establishes a uniform standard of 
trustee personal liability. We strongly oppose Section 117 as 
currently drafted, because it could seriously undermine the 
ability of innocent victims of a trustee's negligent conduct to 
obtain redress. It also contradicts the requirements of 28 
U.S.C. Sec. 959 (``trustees and receivers suable'') for 
trustees and receivers conducting business operations.
    Subsection (a) would amend section 322 of the Bankruptcy 
Code (title 11, U.S.C.) to provide that a trustee is not liable 
personally or on such trustee's bond except to the extent that 
the trustee acted with gross negligence. This standard is 
designed to insulate a trustee from any liability arising from 
the trustee's negligence and could leave victims, whether 
creditors or innocent third parties, without recourse. Although 
a trustee's bond is conditioned upon a trustee's ``faithful 
performance,'' 11 U.S.C. Sec. 322(a), this provision could 
permit the surety on the bond to avoid payment on a negligence 
claim, because the principal on the claim, the trustee, would 
not be personally liable.
    The risk of harm to innocent third parties is especially 
great when a trustee operates a business. Currently, 28 U.S.C. 
Sec. 959 requires all trustees engaged in business to comply 
with the requirements of the laws of the state in which the 
property is situated. Granting immunity for acts of negligence 
eviscerates the requirements of 959, and could create a safe 
haven from having to comply with applicable law in carrying on 
a business. The consequences of this change would be 
particularly severe in cases where trustees operate a hazardous 
enterprise such as a chemical weapons business or waste 
recycling business. If trustees elect to seek short-term 
profits for estate creditors through operation of an insolvent 
and hazardous business prior to liquidation, it is critical 
that innocent parties that may bear any costs of such profit-
making activity be protected.
    Trustees may currently protect themselves from negligence 
claims by purchasing insurance. Yet because the insurance 
protects the trustee personally asopposed to the estate, 
reimbursement of the premiums from estate funds has traditionally been 
disallowed. This provision would eliminate the trustee's incentive to 
carry any insurance.
    To protect both the estate and innocent third parties, the 
Department would not object, in lieu of this provision, to 
amendments requiring trustees to obtain adequate insurance and 
permitting them to obtain reimbursement of their premiums as an 
``actual, necessary expense'' of the estates, See 11 U.S.C. 
Sec. 330(a)(1)(B). If this provision remains, however, we 
strongly recommend that any immunity provided by Section 117(a) 
be made inapplicable to a trustee ``that is carrying on 
business,'' in order to conform to the requirements of 28 
U.S.C. Sec. 959. Moreover, nothing in this provision should 
compromise a court's ability to consider the trustee's 
negligent acts in awarding compensation to the trustee, or in 
considering whether the trustee should be removed from the case 
under 11 U.S.C. Sec. 324. This is particularly important since 
section 209 of the bill, which we oppose, would create an 
entitlement for the trustee to recover maximum compensation.
    Subsection (b) would amend section 323 the Bankruptcy Code 
to further immunize trustees from the consequences of their 
acts by stating that a trustee may not be sued, either 
personally or in a representative capacity, ``for acts taken in 
furtherance of the trustee's duties or authority in a case in 
which the debtor is subsequently determined to be ineligible 
for relief.'' This provision could be interpreted to insulate a 
trustee from acts of gross negligence based on the mere 
fortuity that a bankruptcy case is later dismissed. We also 
oppose this provision because it fails to protect innocent 
third parties as discussed above.
    Subsection (b) would also amend the Bankruptcy Code to 
immunize a trustee from liability ``for the dissemination of 
statistics and other information regarding a case or cases, 
unless the trustee has actual knowledge that the information is 
false.'' Congress has recognized the need for data as well as 
the establishment of adequate safeguards. Sections 701-703 of 
this bill evidence a congressional mandate for uniform data 
collection standards, including final reports in chapter 7, 11 
and 13 cases. Acting pursuant to this mandate, the United 
States Trustees and the bankruptcy clerks will be developing 
and compiling uniform standards and statistical information. 
Since the data maintained by the trustees will be collected by 
the United States Trustees and clerks for purposes of meeting 
these requirements, this amendment appears unnecessary and may 
be redundant of other provisions.
    Nevertheless, we would not oppose this provision if it were 
amended to address the following concerns:
          No dissemination should violate protected privacy 
        interests of an individual.
          The trustee should not be permitted to disseminate 
        statistics for the personal benefit or gain of the 
        trustee or of any organization in which the trustee is 
        a member.
          The trustee should not be permitted to discriminate 
        in the way statistics or information are disseminated.
          Nothing in this provision should abrogate the 
        trustee's fiduciary duty under 11 U.S.C. Sec. 704 to 
        provide information to parties in interest in a case 
        or, upon request, to furnish statistics and information 
        to the United States trustee or clerk of court.
    Finally, subsection (b) further amends 11 U.S.C. Sec. 323 
to provide that a trustee ``may not be sued in a personal 
capacity without leave of the bankruptcy court in which the 
case is pending.'' We oppose this provision as written, because 
it is inconsistent with section 959 of title 28, United States 
Code, which specifically provides that leave of court is not 
required for actions against trustees for acts arising from 
their operation of a business. Victims should not be forced to 
conduct litigation in forums that are distant from where the 
trustee has chosen to conduct business in a negligent, grossly 
negligent or intentionally wrongful manner.
    With regard to non-operating cases, this provision appears 
to codify what is commonly known as the ``Barton doctrine.'' 
Under that doctrine, a trustee who does not operate a business 
cannot be sued in a forum other than where the underlying 
bankruptcy case is pending, absent leave of court. See DeLorean 
Motor Co. v. Weitzman, 991 F.2d 1236 (6th Cir. 1993). If this 
provision is intended to insulate the trustee from personal 
liability actions, we oppose it for the reasons noted above, 
but if it is intended solely as a venue issue, we would not 
oppose codification of the ``Barton doctrine'' provided it 
applies only to non-operating cases and is inserted as an 
amendment to section 1409 of title 28, United States Code, 
instead of the Bankruptcy Code.

Section 132. Amendment to section 1325 of title 11, United States Code

    Section 132 modifies what is commonly called the 
``disposable income'' objection to confirmation of a chapter 13 
plan. Under current law, a trustee or unsecured creditor may 
object to confirmation of a plan unless the plan provides that 
all of the debtor's disposable income for a three-year period 
is applied to payments under the plan. We oppose section 132 
because it seriously weakens the effectiveness of chapter 13.
    This section would require the use of the ``means test'' 
found in section 102 of the bill to determine a debtor's 
disposable income, instead of a personalized review of a 
debtor's necessary expenses. We oppose the application of the 
means test in chapter 13 for the same reasons that we oppose 
the means test in section 102. The rigid application of 
formulaic expenses could significantly reduce the ability of a 
debtor to successfully complete a chapter 13 plan because the 
plan is not based upon a debtor's actual expenses. We believe 
that the current ``disposable income'' test as applied by the 
courts is effective in protecting both the debtor and 
creditors.
    In addition, section 132 eliminates payments received by 
the debtor for child support and other related payments from 
the determination of current monthly income. This could lead to 
double counting, insofar as income attributable to support is 
not recognized but support-related expenses are still deducted. 
Under the present disposable income test, such income and 
associated expenses are taken into account by the courts.

Section 126. Residency requirement for State exemptions

    Section 126 specifies that, if a debtor has not been 
domiciled in a state for the entire 730-day period prior to 
filing, the debtor can claim exemptions under the laws of the 
state where the debtor was domiciled in the 180-day period 
prior to the 730-day period. We support the effort to address 
this problem, but have serious concerns about whether this 
provision will be effective. Much of this will depend on how 
states limit their exemptions or permit individuals to claim 
exemptions. Without a full understanding of how state exemption 
laws are applied, unintended gaps will still arise under this 
proposal as debtors attempt to claim exemptions under the laws 
of another state in which they no longer reside or have 
property. It is unlikely, for example, that a Missouri debtor 
could claim the Texas homestead for the debtor's new Missouri 
residence--two years after the debtor has moved himself and his 
property from Texas--thus leaving the debtor with no homestead 
exemption to claim.

Section 150. Monetary limitation on certain exempt property

    Section 150 would limit the amount of the exemption a 
debtor can claim in homestead property to $250,000. Presently, 
a few states allow a debtor to claim an unlimited exemption in 
homestead property, which has led to highly visible cases of 
abuse by debtors who are clearly able to repay their debts but 
instead avoid repayment by using the unlimited exemptions in 
these states. The Department strongly supports the move to cap 
exemptions but urges the Committee to consider a lower ceiling 
such as $100,000.

Section 402 and 407. Small business chapter 11 cases

    The Department commented in its earlier letter that the 
definition of a small business debtor set out in section 402 of 
the bill could lead to unnecessary litigation over whether a 
debtor is subject to the small business provisions that are 
being proposed. The delay resulting from such litigation could 
jeopardize a small business's ability to reorganize and defeat 
the purpose of these provisions--which is to provide a fair but 
expeditious way to shepherd small business cases through the 
system. We appreciate the change in section 402 to resolve the 
definition problem and support it.
    The substitute bill, however, appears to have moved the 
language in section 402 that we objected to earlier and 
inserted it in section 407 as an amendment to 11 U.S.C. 
Sec. 1121(e). As presently drafted, a small business debtor is 
required to file a plan within 90 days unless the court makes a 
determination within the 90 days that the creditors committee 
``is sufficiently active and representative to provide 
effective oversight of the debtor.'' While we appreciate the 
intent to provide the debtor with more time to file a plan in 
certain circumstances, this provision seems to compromise the 
point of having a 90-day deadline. It will require extra 
hearings during a particularly crucial period when the debtor 
should not be distracted by collateral issues from working on 
the reorganization. We would be pleased to work with the 
Committee on appropriate changes.
    We look forward to working with the Committee as it 
considers these and other issues raised by H.R. 833. The Office 
of the Management and Budget advises that there is no objection 
to the submission of this letter from the standpoint of the 
Administration's program.
            Sincerely,
                                           Dennis K. Burke,
                                 Acting Assistant Attorney General.
                                ------                                

                        U.S. Department of Justice,
                             Office of Legislative Affairs,
                                    Washington, DC, March 24, 1999.
Hon. George W. Gekas
Chairman, Subcommittee on Commercial and Administrative Law, Committee 
        on the Judiciary, House of Representatives, Washington, DC.
    Dear Mr. Chairman: We understand that the House Judiciary 
Subcommittee on Commercial and Administrative Law is scheduled 
to mark up H.R. 833, the Bankruptcy Reform Act of 1999, on 
March 24, 1999. This letter provides the position of the 
Administration on consumer bankruptcy reform, and outlines the 
Justice Department's views on H.R. 833 as a whole. While we 
understand that this letter comes too late for your 
consideration before the markup of H.R. 833 by the 
Subcommittee, we hope you will take our comments into 
consideration prior to the markup by the full Committee. We 
would be pleased to meet with you to discuss these issues in 
more detail.

General Administration Perspectives

    The President supports responsible bankruptcy reform that 
is balanced, would reduce abuses of the bankruptcy system, and 
would require debtors and creditors alike to act responsibly. 
The President remains hopeful that bipartisan consultation and 
compromise will result in legislation that he can 
enthusiastically sign this year.
    Last year the Administration expressed its strong 
opposition to the House-passed version of H.R. 3150. We 
encouraged passage of the Senate bill ``as an important step 
toward balanced bankruptcy reform,'' but noted that the 
Administration would support its enactment ``only if the 
essential reforms incorporated by the Senate managers' 
amendment [were] preserved and strengthened and the unbalanced 
and arbitrary elements of the current House bill [were] 
omitted.'' Although we thought that the Senate bill could be 
further improved, we believed that the extraordinary bipartisan 
support for the Senate bill was an endorsement of balance and 
moderation.
    During this year's debate, the Administration will continue 
to encourage Congress to find an appropriate balance. Among the 
issues that must be addressed are:
    Access to Chapter 7: Any ``means test'' imposed should deny 
access to Chapter 7 only to those who genuinely have the 
capacity to repay a portion of their debts successfully under a 
Chapter 13 repayment plan. Thus, debtors affected by a means 
test must be given a meaningful opportunity to have their 
specific circumstances considered by bankruptcy courts with 
discretion to determine whether they genuinely have the 
capacity to repay a portion of their debts. In addition, the 
time periods and thresholds used in any means test should be 
set to ensure that only those with a strong likelihood of 
success are affected.
    Nondischargeable Debts: It is generally inappropriate to 
make post-bankruptcy credit card debt a new category of 
nondischargeable debt. The Bankruptcy Code makes debts 
nondischargeable only where there is an overriding public 
purpose, such as in the cases of educational loans, tax 
obligations, or debts incurred by fraud. We remain skeptical 
that the current protections against fraud and debt run-up 
prior to bankruptcy are ineffective and that the additional 
debts made nondischargeable by this bill meet the standard of 
an overrding public purpose. If categories of nondischargeable 
debt are to be created, they should be narrowly tailored and 
limited to situations where the debtor is clearly abusing the 
system, such as when the debtor: (1) incurred the debt to pay 
nondischargeable debt with an intent to avoid the debt in 
bankruptcy; or (2) incurred the debt on the eve of bankruptcy 
for goods and services that are not reasonably acquired to 
support the debtor's household.
    Coercive Creditor Practices: Particularly if we are to 
provide new opportunities for creditors to challenge debtors' 
use of the bankruptcy system under the 707(b) abuse test, it is 
imperative that we adequately limit prevalent abusive creditor 
practices such as coercive reaffirmations and violations of the 
automatic stay. While last year's Senate bill initially took 
laudable steps in this direction, the Conference Report rolled 
back existing consumer protections by denying consumers an 
effective means for remedying the harm from such practices and 
eliminating the current authorization for penalties for 
intentional violations of debtor rights.
    Consumer Information and Protection: The challenge posed by 
the unprecedented level of bankruptcy filings requires us to 
ask greater responsibility of debtors and creditors both.Credit 
card companies must give consumers more and better information so that 
they can understand and better manage their debts.
    Homestead Exemptions: At the same time that we are creating 
a system that will deny certain moderate-income Americans 
access to the traditional ``fresh start,'' we should also close 
the loopholes that allow the wealthy to shield hundreds of 
thousands of dollars of wealth from their creditors.

Justice Department Comments

                Title I: Consumer Bankruptcy Provisions

                   SUBTITLE A: NEEDS BASED BANKRUPTCY

Section 102. Dismissal or conversion

    Section 102 of H.R. 833 amends section 707(b) of the 
Bankruptcy Code (the ``Code'). Under this amendment, a chapter 
7 case filed by an individual with primarily consumer debts may 
be dismissed for abuse upon the motion of any party in 
interest, with certain limitations. Abuse is presumed when the 
debtor is able to repay at least 25 percent of non-priority 
unsecured debts or $5000 over 60 months, applying IRS expense 
guidelines. The debtor may rebut the presumption of abuse by 
demonstrating extraordinary circumstances that require 
additional expenses or an adjustment of current monthly income. 
In deciding whether a case is abusive, the court must also 
consider whether the case was filed in bad faith or whether the 
``totality of the circumstances'' demonstrates abuse.
    The Department supports strengthening the provisions of 
section 707 of the Code to ensure that debtors with an ability 
to repay their debts do not obtain a chapter 7 discharge. 
However, the proposed amendments raise a number of concerns, 
and for these reasons, we oppose section 102.
    First, we are concerned that the ``thresholds'' are too 
low, and will have the effect of denying some debtors Chapter 7 
relief who in fact have no significant ability to repay their 
debts. In addition, we believe that these thresholds 
unnecessarily saddle the bankruptcy system with extra costs, 
such as reviewing the income and expenses of low income debtors 
who are not able to repay their debts. We believe that changes 
should be made to minimize the costs to the bankruptcy system. 
And, as a technical matter, this section does not make clear 
whether the ability-to-repay standards apply only to an 
individual debtor, or also to joint debtors.
    Second, the use of the Internal Revenue Service (IRS) 
Standards for allowable expenses is inappropriate because those 
standards were not intended for these purposes. The IRS 
standards were meant to provide guidelines for determining 
appropriate expenses. Last year during its consideration of the 
Internal Revenue Service Restructuring and Reform Act of 1998, 
Pub. L. 105-206, Congress criticized the inflexible application 
of those guidelines and directed the IRS to also consider the 
taxpayer's facts and circumstances. The Joint Committee on 
Taxation explained the attitude of Congress regarding the 
guidelines in the following terms:

          The IRS is * * * required to consider the facts and 
        circumstances of a particular taxpayer's case in 
        determining whether the national and local schedules 
        are adequate for that particular taxpayer. If the facts 
        indicate that use of scheduled allowances would be 
        inadequate under the circumstances, the taxpayer is not 
        limited by the national or local allowances.

See General Explanation of Tax Legislation Enacted in 1998 at 
107 (1998) (emphasis added).
    Bankruptcy courts should be given as much discretion in 
applying the IRS guidelines. In particular, the ``extraordinary 
circumstances'' standard in section 102 of H.R. 833 is much 
stricter than the standard of ``inadequate under the 
circumstances'' which the IRS now applies for collecting tax 
debt, which is a higher public priority than debt that can be 
discharged in bankruptcy.
    Third, the multiple hurdles for rebutting the presumption 
of abuse--``only'' if the debtor can demonstrate 
``extraordinary circumstances'' that make additional expenses 
or adjustments of income ``necessary'' and reasonable--are 
conflicting and so strict as to effectively preclude the debtor 
from proving the existence of reasonable expenses that are not 
included within the IRS standards. We believe that the words 
``only,'' ``extraordinary'' and ``necessary'' should be deleted 
from proposed section 707(b)(2)(B). The debtor still would be 
required to prove to the court that additional expenses are 
both warranted and reasonable.
    Fourth, the procedures set forth in Section 102 would 
impose a substantial burden on the courts and the trustees. As 
a general matter, chapter 7 cases flow through the bankruptcy 
system fairly quickly. Any delays that are built in (including 
the trustees'' statement, the extension of time to file 
paperwork, etc.) will slow that process accordingly. More 
specifically,section 102(b)(2) of the H.R. 833 would amend 11 
U.S.C. 704 to expand the duties of a chapter 7 trustee to require the 
trustee to file a statement with the court 10 days before the meeting 
required under section 341 of the Code as to whether the debtor's case 
should be presumed to be an abuse under the means-test formulation. The 
court must then notice the statement to all creditors within 5 days. If 
the debtor makes more than the highest national median family income 
for a family of equal or lesser size, the trustee must file a motion to 
dismiss within 30 days or file a statement explaining why a motion 
would not be appropriate.
    Since the section 341 meeting occurs within 20-40 days of 
filing, Fed. R. Bankr. P. 2003(a), the trustee's statement must 
be filed within 10 to 30 days after filing depending on when 
the 341 meeting is held. This means the trustee must make the 
determination before she even questions the debtor at the 341 
meeting or before the documents are even filed. This is 
impractical, and is at odds with Section 604 of the bill, which 
appears to give debtors a 45-day grace period to file the 
requisite documents (under current law, 11 U.S.C. 707(a)(3) 
debtors have only 15 days to file the documents required by 11 
U.S.C. 521(1)). It is not clear how the trustee can perform 
this assessment with any degree of due diligence in the time 
required. These problems threaten to significantly clog the 
formal bankruptcy processes. We stand ready to work with the 
Committee to craft proposals that minimize the costs to the 
bankruptcy system.
    Fifth, we do not think it appropriate for Section 102 to 
impose a higher duty on debtor's counsel than that set forth in 
Rule 9011. We believe that the standards in Rule 9011 are 
appropriate and we are concerned that the formulation set forth 
in Section 102 adds unnecessary complexity and confusion to the 
Bankruptcy Code.
    Sixth, we do not believe it is appropriate to remove the 
risk of sanctions from all creditors who bring unjustified Rule 
707(b) motions just because those creditors' claims may be less 
than $1000. If the goal is to encourage small business 
creditors to bring appropriate Rule 707(b) motions, then the 
legislation should be drafted more narrowly to address those 
entities, while excluding large creditors with many small 
claims. Otherwise the bill will serve to protect large 
creditors with sub-$1000 claims who, due to their size and 
efficiencies of scale, do not merit this protection and who 
could use such protection to coerce debtors to reaffirm debts.
    Seventh, section 102 also amends section 704 to require the 
trustee to file a statement with the court 10 days before the 
meeting of creditors, stating whether the debtor's case should 
be presumed abusive based upon ability to repay, and file a 
motion to dismiss within 30 days of filing the statement. It is 
impractical to require the trustee to file such a statement 
before the meeting of creditors, especially when section 604 of 
this bill gives debtors up to 45 days to complete their 
schedules, and liberal amendments to schedules are permitted. 
The necessity of such a statement is also doubtful insofar as 
section 102 requires the debtor to file a statement containing 
the necessary ability to repay calculations.

Section 103. Notice of alternatives

    Section 103 of H.R. 833 would, in part, amend section 342 
of the Code to ensure that consumer debtors receive information 
about debt counseling services and their options before filing 
bankruptcy. The form of the notice would be prescribed by the 
United States Trustee for the district and would contain a 
brief description of the bankruptcy chapters, the benefits and 
costs of each chapter and services available from a credit 
counseling service approved by the United States Trustee for 
that district. We support the concept of consumer education 
that underlies section 103.

Section 104. Debtor financial management test program

    Section 104 of H.R. 833 would require the Executive Office 
for United States Trustees, in consultation with experts, to 
develop a financial management training curriculum for debtor 
education in three pilot districts for a one year period. The 
materials would also be made available to individual debtors on 
request. The courts in the pilot districts would be authorized 
to make attendance at the debtor education program a condition 
of discharge. The Director of the Executive Office would also 
be required to evaluate the effectiveness of the pilots and 
existing debtor education programs and to submit a report of 
his findings to Congress.
    Provided that adequate resources are appropriated for the 
test program, the Department supports this as the best way to 
refine effective debtor education programs before they are 
extended nationwide. However, H.R. 833 creates confusion as to 
whether debtor education is to be a test or a permanent 
program. Section 302(b) and (c) of H.R. 833 condition the 
debtor's discharge upon completion of ``an instructional course 
concerning personal financial management described in section 
111.'' This language suggests a permanent program. Moreover, 
section 111 does not address such courses. We believe these 
provisions may have been carried over inadvertently from an 
earlier draft, and suggest they be deleted.

              SUBTITLE B: CONSUMER BANKRUPTCY PROTECTIONS

Sections 105 to 108. Disclosures (Debt relief agencies)

    Sections 105 to 108 of H.R. 833 deal with debt relief 
agencies. Section 105 defines covered debt relief agencies. 
Section 106 would require such agencies to provide the person 
they are assisting in filing bankruptcy with written notice of 
the requirements that all bankruptcy schedules must be 
accurate, that the information is subject to audit, and that 
the failure to provide accurate information may result in 
dismissal of the bankruptcy case, sanctions or criminal 
prosecution. Debt relief agencies would be required to provide 
a separate notice advising the assisted person that the debt 
relief agency is required, inter alia, to enter a written 
contract. Finally, debt relief agencies would be required to 
inform assisted individuals on matters such as ``how to 
determine what property is exempt and how to value exempt 
property at replacement value.''
    The Department opposes section 106 as currently drafted, 
because it would undercut the consumer protections currently 
contained in section 110 of the Code and state law. These 
provisions impose penalties on persons who negligently or 
fraudulently prepare bankruptcy petitions. Because debt relief 
agencies would be defined to include petition-preparers and 
other non-attorneys, the advice required to be given by a 
counseling agency could constitute the unauthorized practice of 
law. To avoid this problem, section 106 of H.R. 833 should be 
amended to exclude non-attorneys from the provisions of new 
section 526(c), and to add to the form notice outlined in 
section 526(b) a statement that the debt relief counseling 
agency employee cannot provide legal advice if he or she is not 
an attorney.
    Section 107 of H.R. 833 would provide the assisted person 
certain substantive rights when using a debt relief agency, 
including the right to a written contract that fully discloses 
all services and all charges. We do not oppose this concept, 
but believe that the standard of liability in the provisions 
should be changed. Section 107(b)(2) provides that a debt 
relief agency shall not ``make any statement * * * which is 
untrue and misleading or which upon the exercise of reasonable 
care, should be known by the debt relief agency to be 
untruthful or misleading.'' (emphasis added). The underlined 
disjunctive ``or'' would impose strict liability upon a debt 
relief agency by imposing liability if the statement is untrue 
and misleading, even if the agency had no reason to know of the 
untruthful or misleading nature of the statement. The 
Department suggests replacing the underlined ``or'' with 
``and'' to establish a more appropriate standard of liability.
    Finally, section 108 of H.R. 833 would provide penalties 
and other remedies on debt relief agencies for failing to 
comply with the requirements of section 106 and 107, or for 
providing bankruptcy assistance in a case which is dismissed or 
converted for a failure to file bankruptcy papers. Section 108 
should be clarified to allow a debtor, as well as the trustee, 
to bring an action for a violation, and to clarify that the 
remedies are in addition to any remedies provided in section 
110 of the Code.

Section 110. Discouraging abus[ive] reaffirmation practices

    Section 110 addresses a problem of great significance: 
unscrupulous creditor practices designed to coerce debtors into 
reaffirming debts, particularly unsecured debts, even when 
doing so clearly is not in the best interests of the debtor. 
Currently, section 524(c) of the Code imposes a number of 
limitations on reaffirmation agreements, but the extant 
evidence suggests that abusive reaffirmation practices 
continue. The National Bankruptcy Review Commission recommended 
even stricter rules regarding reaffirmation of secured debt, 
and the complete elimination of reaffirmations of unsecured 
debt.
    Section 110 attempts to address this problem by requiring 
that creditors who seek reaffirmation of wholly unsecured 
consumer debt provide a disclosure that the debtor is entitled 
to a hearing. The debtor also can waive his right to a hearing 
if represented by counsel.
    We believe that a far more effective approach would (1) 
require disclosure of the component amounts of any debt to be 
reaffirmed; (2) require court review for reaffirmations of 
relatively small amounts where the creditor claims a purchase 
money security interest; (3) prohibit the addition of costs and 
attorneys fees on at least these smaller claims. We would be 
happy to work with the Committee to develop stronger, more 
effective rules to discourage abusive reaffirmation practices.

Section 111. Promoting alternative dispute resolution

    Section 111 would create an incentive for the parties to 
use alternative dispute resolution prior to the filing of a 
petition. We wholeheartedly support efforts to encourage the 
use of alternative dispute resolution in this context, but 
believe Section 111 is too restrictive because it applies only 
in limited circumstances. Under this section, alternative 
dispute resolution would be encouraged by imposing a penalty in 
cases where a creditor unreasonably refused to negotiate an 
alternative repayment schedule proposed by an approved credit 
counseling agency. The penalty applies only if the debtor's 
offer was made at least 60 days prior to the filing of the 
petition; and the offer provided a specified percentage payment 
(60% over aspecified time). A more effective approach would be 
to encourage parties to use any appropriate neutral, and give them 
leeway to determine when it is appropriate to settle and for what 
amount. We would be happy to work with the Committee to draft a more 
effective rule.

Sections 116 to 117. Effect of discharge; automatic stay

    Section 116 addresses several issues. First, it states that 
the willful failure of a creditor to credit payments received 
under a confirmed plan shall constitute a violation of a 
discharge injunction under subsection 524(a)(2) of the Code. We 
support this provision but suggest two modifications. First, 
the court should be given discretionary, rather than mandatory, 
authority to grant sanctions, so as to allow the court to 
consider situations where the creditor had a good faith basis 
to believe the debt was not discharged. Second, we suggest the 
provision be amended to require the debtor first to exhaust 
efforts to obtain administrative relief where applicable.
    Next, section 116 bars debtors who are injured by the 
failure of a creditor to comply with the law regarding 
reaffirmation agreements or the crediting of plan payments from 
bringing a class action suit. In addition, the provision would 
limit recovery to actual damages or $1000, whichever is 
greater, plus costs and attorneys' fees. Recent litigation has 
demonstrated that these kinds of violations do in fact occur, 
at times, on a class-wide basis in circumstances where 
individual damages may be too small to encourage a debtor to 
bring a claim. Moreover, we believe that treble damages would 
be a more effective incentive to debtors to bring these claims. 
Accordingly, we strongly oppose this provision.
    Section 117 bars class actions for violations of the 
automatic stay, and limits debtor recovery to actual damages 
and reasonable costs, including attorneys fees. Once again, we 
strongly oppose the limitation on class actions, and support a 
treble damages provision as a more effective incentive to 
obtain compliance with the provisions of the automatic stay 
rules.

Section 119. Discouraging bad faith repeat filings

    In cases of refiling within a year, section 119 would 
provide a 30-day limit on the application of the automatic stay 
of section 362 of the Code. This section would not apply if, 
prior to termination and upon request of a party-in-interest, 
the court provides notice and a hearing to affected parties 
regarding the potential extension of the stay. Serial filings 
are a serious problem in many jurisdictions and, accordingly, 
we endorse the adoption of firm measures to address this issue. 
Repeat filings--whether to obtain multiple discharges or to 
hold creditors at bay temporarily--should not be encouraged or 
abided. This provision would provide a welcome limitation to 
abuse of the automatic stay provision of the Code by serial 
filers who have no hope or intention of ever being granted a 
discharge in bankruptcy.

Section 123. Giving secured creditors fair treatment in chapter 13

    Section 123 would amend section 1325(a)(5)(B)(i) of the 
Bankruptcy Code to protect the lien of a secured creditor from 
release by a chapter 13 plan if the debtor fails to complete 
the plan. This provision would resolve an issue on which the 
bankruptcy courts are split. The issue arises when the debtor 
confirms a chapter 13 plan that reduces a creditor's lien to 
the current value of the collateral (so-called ``lien 
stripping'') and then, after completing the payments due on the 
secured portion of the claim, but before the plan is completed, 
the debtor seeks to discharge the lien. Some courts hold that 
the collateral does not vest in the debtor until the entire 
plan is completed. See, e.g., In re Pruitt, 203 B.R. 134 
(Bankr. N.D. Ind. 1996); In re Schieirl, 186 B.R. 498 (Bankr. 
D. Minn. 1995). Other courts have held that, upon payment of 
the secured portion of the creditor's claim, the collateral is 
released. See, e.g., In re Lee, 156 B.R. 628 (Bankr. D. Minn.), 
aff'd, 162 B.R. 217 (D. Minn. 1993); In re Nicewonger, 192 B.R. 
886 (Bankr. N.D. Ohio 1996).
    We support the limitations on lien discharge contained in 
section 123. A key advantage that chapter 13 offers debtors 
over chapter 7 is that a larger universe of property is subject 
to lien ``strip down.'' Furthermore, in a chapter 13 plan, the 
debtor can redeem collateral with payment over time from future 
income. These advantages are often the debtor's chief reason 
for undertaking a chapter 13 plan. But because debtors may 
allocate their plan payments preferentially to pay secured 
indebtedness sooner than unsecured debt, the result can be a 
disincentive for debtors to finish their plans after paying 
enough to redeem the collateral. Debtors should not be 
permitted to obtain the benefits of chapter 13 without bearing 
its burdens.

Section 124. Restraining abusive purchases on secured credit

    Section 124 amends Section 506 of the Code in individual 
cases by barring the stripping of liens for personal property 
acquired by the debtor within 5 years of filing the bankruptcy 
petition. Currently, the debtor's power to strip liens to the 
value of the collateral in plans under chapters 11, 12 and 13 
is not limited by the time lapsed since purchase.
    Expanding the ``look back'' to 5 years changes its 
character, and creates a significant limitation on the 
attractiveness of reorganizations for debtors, especially under 
chapter 13. A key advantage of chapter 13 for debtors is the 
expanded ability it affords to retain property subject to 
liens. Not only can debtors reduce the payments down to the 
value of the collateral, but they can also pay the liens off 
over time from the plan payments. Many courts allow debtors to 
``front load'' the payments for their secured debt; in such 
cases, debtors who retire their secured debts under their plans 
may have no incentive to finish their plans, and may default 
without making substantial payments to their unsecured 
creditors. (The latter result is addressed by section 123, 
which precludes a strip down where the debtor fails to complete 
the plan; we support this provision.) This provision therefore 
may reduce substantially the number of debtors who voluntarily 
file chapter 13. This change benefits lenders who take personal 
property, such as cars, as collateral. The lack of strip down 
means that debtors must devote a greater percentage of their 
limited assets to secured creditors.
    Although this modification may generally benefit the 
federal government, we believe a more balanced approach would 
be to return to the 180 day look back that was considered in 
the last year's legislative proposals.

Section 126. Exemptions

     Section 126 would amend section 522(b)(2)(A) of the Code 
to permit the use of state exemptions only if the debtor has 
been domiciled in the respective state for at least two years 
before filing. As written, this amendment could deny a debtor 
who has not resided in a state for at least two years, but is 
otherwise a resident of that state, the use of any state's 
exemption because many states prohibit the use of federal 
exemption law under so- called ``opt out'' laws. To prevent 
this situation from resulting in the debtor being unable to 
claim any homestead, the opt-out language of section 522 should 
also be modified. Alternatively, this provision could be 
amended to permit the use of a state's exemption law where the 
debtor's domicile has been located for the last two years, or 
for a longer portion of the last two years than in any other 
place.
    Moreover, we urge that the homestead exemption be limited 
uniformly to $100,000 for the reasons set forth in the General 
Administration Perspectives section of this letter.

Section 129. Discharge under chapter 13

     Section 129 governs the scope of discharge in Chapter 13 
cases. Section 129 would limit the dischargeability of certain 
kinds of debt under section 523 of the code. We support this 
limitation. However, section 129 omits section 523(a)(3)(A) of 
the Code from its list of non-dischargeable debt, while it 
includes section 523(a)(3)(B). We see no basis for this 
bifurcation and suggest that entire section 523(a)(3) be 
included. Both subsections deal with a debtor's failure to 
schedule known debts. Subsection A deals with the unnotified 
creditor's ability to file a proof of claim. Subsection B deals 
with the unnotified creditor's ability to object to discharge 
on various grounds. As a matter of due process, the claims of 
such creditors who had no opportunity to participate in the 
bankruptcy should not be discharged.

Section 135. Limitations on luxury goods

     Section 135 would amend Section 523(a)(2)(C) of the Code 
to change the non-dischargeability rules for certain so-called 
luxury goods. First, it defines ``luxury goods or services'' so 
as to exclude those ``reasonably necessary for the support or 
maintenance of the debtor or a dependent of the debtor.'' We 
prefer the formulation ``reasonably required.'' Moreover, by 
including the word ``necessary'' the burden inappropriately 
shifts to the debtor to demonstrate that he or she ``needed'' 
the items expended. Second, it would establish a cap on 
dischargeable luxury goods or services of $250, or cash 
advances of $250, incurred within 90 days of filing the 
petition. We oppose the limitation. This would be a substantial 
change from the current law, which sets forth limits of $1075 
during the preceding 60 day period. Moreover, it is important 
to bear in mind that cash advances are not always obtained for 
frivolous expenses; debtors sometimes use cash advances to buy 
absolute necessities such as groceries.

Sections 141 to 147. Domestic support obligation

    Sections 141 defines domestic support obligations, and 
Section 142 establishes domestic support obligation as the 
first priority. We generally support this recognition of the 
critical societal importance of ensuring that domestic support 
obligations are not unduly reduced as a result of a debtor's 
bankruptcy. Without payments from domestic support obligations, 
the recipients of those payments may become destitute; it is 
therefore appropriate to give them a high priority. However, if 
an appropriate mechanism for funding the administrative costs 
of bankruptcy is not provided, too many debtors will go 
unrepresented. We would like to work with the Committee 
toensure that there are no unintended consequences of this priority for 
domestic support obligations.
     Sections 143 to 147 establish other special rules in the 
domestic support obligation context. Sections 143 and 144 
establish special rules regarding confirmation and discharge, 
and exceptions to the automatic stay, in cases involving 
domestic support obligations. Section 145 makes certain 
domestic support obligations non-dischargeable. We support 
these provisions for the reasons stated above.

Section 149. Nondischargeable debts

     Section 149 amends Section 523(a) of the Code in two ways. 
First, it would make non-dischargeable any debt that was 
incurred to pay an otherwise non-dischargeable debt with the 
intent to discharge the newly acquired debt. We support this 
change.
    Second, Section 149 would also make non-dischargeable all 
debts incurred to pay non-dischargeable debts, without regard 
to intent, if incurred within 90 days of the petition. 
Proponents of this provision argue that one can presume that 
the debtor had the intent to avoid the debt in bankruptcy if 
they paid the nondischargeable debt with a dischargeable debt 
within 90 days of bankruptcy. Unfortunately, that is not a fair 
assumption. In the final months before filing a bankruptcy 
petition, a debtor may be struggling to retain a house or a car 
or feed a family. Accordingly, he or she may put debts on their 
credit card in a last attempt to meet their obligations. A 
review of the debtor's intent (for example, by looking at 
whether the debtor had yet consulted with bankruptcy counsel or 
whether the debtor had previously filed for bankruptcy and 
therefore was familiar with the rules) could uncover whether 
the payment in fact was abusive or not. By failing to weigh the 
intent of the debtor, this rule is overbroad and we strongly 
oppose its inclusion.

                Title II: Discouraging Bankruptcy Abuse

Section 201. Reenactment of Chapter 12

     Section 201 reenacts Chapter 12 of the Code, pertaining to 
family farmers. We support this provision.

Section 202. Meetings of creditors and equity security holders

     Section 202 would amend section 341 of the Code to allow a 
court to direct the United States Trustee to dispense with the 
meeting of creditors in a case with a so-called ``pre-packaged 
plan'', i.e., a reorganization plan worked out with creditors 
in advance of the filing of a Chapter 11 petition. We oppose 
this provision, which would significantly hinder the ability of 
creditors and the United States Trustee to examine a debtor's 
affairs under oath. Dispensing with the meeting could also 
increase the possibility of fraud and collusion by a debtor and 
its major creditors. We suggest this provision be deleted.

Section 203. Protection of retirement savings in bankruptcy

     Section 203 exempts from the bankruptcy estate a qualified 
retirement fund, pursuant to certain standards set forth in 
this section. The effect of the amendments would be to enhance 
debtors'' ability to prevent their interests in retirement 
accounts and funds, including Individual Retirement Accounts, 
from being used to satisfy their debts. The Administration has 
made encouraging adequate retirement savings a singular 
priority. We recognize that a fresh start is not meaningful if 
it requires the debtor to accept an impoverished retirement. 
However, a debtor should not be able to shield abundant 
resources from creditors, including federal, state and local 
governments, in the form of retirement savings. We look forward 
to working with the Committee to find the appropriate balance 
of these considerations.

Section 205. Executory contracts and unexpired leases

     This section requires a debtor to assume an unexpired 
lease of non-residential real property within 180 days after 
filing the petition or the lease is deemed rejected. We support 
this provision.

Section 206. Creditor and equity security holders committees

     Section 206 would amend section 1102 of the Code to allow 
a court to order changes in the membership of creditor and 
equity security holder committees. We strongly oppose this 
provision. Under section 1102 of the Code, United States 
Trustees are responsible for creating committees and appointing 
their members, while courts are called upon to resolve 
controversies arising from the committees. Section 206 would 
upset this balance and improperly involve the court in the 
administration of cases. This could create an appearance of 
favoritism if a court were called upon to resolve a controversy 
involving a committee it had constituted. The proposal could 
also result in increased cost and delay because early 
litigation over committee membership would inevitably decrease 
the ability of committees to participate at the early, critical 
stages of cases.
     Nevertheless, the Department recognizes the desirability 
of revising section 1102 to ensure that effective and 
representative committees are appointed. Accordingly, we would 
suggest that this section be amended to require that any 
request to create oralter the membership of a committee be 
first directed to the United States Trustee and to permit the court, 
upon a request of a party in interest after an adverse decision by the 
United States Trustee, to make the requisite findings and order the 
United States Trustee to alter a committee. Such an amendment should 
also reaffirm the United States Trustee's authority to alter a 
committee. We would be happy to work with the Committee to draft 
language to accomplish this objective.

Section 209. Amendment to section 330(a)

     Section 209 would provide that in determining the amount 
of reasonable compensation to be awarded to a trustee, the 
court shall treat such compensation as a commission based on 
the results achieved. We oppose this provision, which would 
create a singular incentive that could lead to abuses, or the 
perception of abuses, on the part of the trustee. We prefer the 
current multifactor analysis set forth in section 330(a)(3) of 
the Code.

Section 211. Preferences

     Section 211 would amend section 547(c) of the Code, which 
deals with preferential transfers of property to creditors 
after the filing of a bankruptcy petition. Section 207 would 
eliminate the ability of a trustee to avoid such a transfer in 
a case filed by a debtor whose debts are not primarily consumer 
debts, where all the property that constitutes or is affected 
by the transfer is worth less than $5,000.
     We oppose this provision. Although this provision is 
apparently designed to protect the interests of smaller 
creditors, this section, without appropriate supervision, could 
lead to abuse and manipulation by debtors wishing to pay 
preferred creditors. For example, nothing in the provision 
would prohibit a debtor from breaking a larger payment into 
several smaller ones that each total less than $5,000. If such 
preferential payments are not avoidable, the result could be a 
substantial diminution of the property available to pay 
priority claims.

Section 215 (listed in table of contents as section 216). Defaults 
        based on nonmonetary obligations

     Section 215 amends Section 365 of the Bankruptcy Code to 
allow the debtor to reinstate a lease of real property under 
which the debtor is in default if the default is not curable by 
paying money. In addition, the debtor is allowed the same power 
for an executory contract with the additional requirement that 
the court find that the ``equities'' excuse the debtor's usual 
obligation to cure. We oppose this provision for the reasons 
outlined below, and suggest that it be deleted.
     Currently, Section 365 of the Code allows a debtor to 
resume performance of (or ``assume'') an executory contract or 
an unexpired lease, notwithstanding a default that would 
normally cost the debtor that right. To do so, the debtor must 
cure the default, compensate for the monetary loss, and assure 
adequately its future performance. Waiving the debtor's 
obligation to cure if the default is not curable by money 
ignores that many defaults going to the essence of the 
agreement are not curable by money. The non-debtor party should 
not be forced to perform where deprived of the full benefit of 
the bargain.
     If section 215 is intended to address the problem that 
minor contractual breaches could otherwise be an obstacle to 
the debtor's power to assume, then this fear is misplaced. The 
common law has long distinguished between defaults that are 
minor (entitling only damages) and major (voiding the 
agreement). This proposal replaces, in the case of executory 
contracts, this familiar concept with the wholly novel notion 
of ``equities.'' This gives no guidance to the judge or parties 
as to what factors should be weighed, and will therefore 
generate confusion and litigation.

           Title III: General Business Bankruptcy Provisions

Section 302. Miscellaneous improvements

     Section 302 bars any debtor from filing a petition unless 
they have sought the assistance of credit counseling during the 
90-day period prior to the filing of the petition. This 
provision does not apply in certain circumstances, such as 
filings due to exigent circumstances. Section 302 also requires 
debtors to attend educational courses prior to discharge in 
Chapter 7 and 13 cases. Section 302 requires the clerk of the 
court to maintain a list of credit counseling services and 
educational courses that have been approved by the U.S. 
Trustee.
     We support the concept of credit counseling but question 
whether the utility of making it mandatory in chapter 13 where 
individuals will already be seeking to repay their creditors 
through a debt repayment plan. We also have concern about the 
requirement for United States Trustees to approve credit 
counseling agencies because it is a large, unstructured and 
unregulated segment of the financial services industry. The 
list of approved agencies will serve as a Federal guide for 
would-be debtors, and we expect it will attract applicants of 
varying degrees of character and quality. It is important that 
the United States Trustees have sufficient tools and discretion 
to address the problems that will undoubtedly emerge. With 
oneexception discussed below, the provision appears adequate, but 
sufficient resources must also be made available. We might also 
suggest, as an alternative, that a pilot program be created first in 
several districts to test the usefulness of credit counseling and its 
impact on filings.
     One issue appears to have been overlooked and should be 
addressed. There is no automatic dismissal to enforce this 
provision if a debtor fails to file a certificate from a 
counselor pre- or post-petition. Assuming the petition gets 
filed without a certificate, a party would then have to move to 
dismiss the case under 707(a), 1112(b), 1208(c), or 1307(c) 
based on the debtor's ineligibility.
     Section 302(b)-(c) provides that a chapter 7 and a chapter 
13 discharge are conditioned upon the debtor's completion of a 
post-filing instructional course. As noted above in comments to 
section 104, H.R. 833 appears to contain provisions for a pilot 
program, but this provision seems to assume a permanent 
program. There is a need to clarify this provision. A pilot 
program is preferable.

Section 303. Extensions

     Section 303 of H.R. 833 would amend section 302(d)(3) of 
the Bankruptcy Judges, United States Trustees, and Family 
Farmer Bankruptcy Act of 1986 to eliminate the deadline for 
including the judicial districts in the States of Alabama and 
North Carolina within the United States Trustee system. The 
Department strongly opposes the amendment because it would 
retain two separate systems of bankruptcy administration within 
the country and may be vulnerable to Constitutional attack 
under the Uniformity Clause.
     When Congress made the United States Trustee Program 
(USTP) a nationwide program in 1986, the date the program was 
to commence varied in different judicial districts. Six federal 
judicial districts in the States of North Carolina and Alabama 
remain outside the program, and the date for the inclusion of 
these districts has been postponed until October 1, 2002--
sixteen years after the United States Trustee Program's 
nationwide expansion. Pub. L. No. 101-650, 317(a), (c), 104 
Stat. 5115, 5116 (1992). In these six districts, ``Bankruptcy 
Administrators'' and court clerks employed by the judicial 
branch perform many of the functions that are performed by 
United States Trustees in USTP districts.
     This arrangement may not comply with Article I's mandate 
to ``establish * * * uniform Laws on the subject of 
Bankruptcies throughout the United States.'' U.S. Const. Art 
I., Sec. 8., cl. 4. Supreme Court precedent on what 
``uniformity'' means in this context is ambiguous. The leading 
case on the issue is Hanover National Bank v. Moyses, 186 U.S. 
181 (1902), where the court rejected a challenge to the 
Bankruptcy Act of 1898, which recognized state exemptions 
instead of establishing a system of uniform federal exemptions. 
The opinion suggests that Congress can account for differences 
in state law in the bankruptcy laws without violating the 
requirement of uniformity. More recently, in Railway Labor 
Executives' Ass'n v. Gibbons, 455 U.S. 457 (1982), the Supreme 
Court struck down, as violative of Article I's uniformity 
requirement, a statute requiring employees of the bankrupt Rock 
Island and Pacific Railroad Co. estate to receive certain 
benefits if not rehired by other carriers. According to the 
Court, ``to survive scrutiny under the Bankruptcy Clause, a law 
must at least apply uniformly to a defined class of 
creditors.'' Gibbons, 455 U.S. at 473.
     Given the lack of clarity on Article I's uniformity 
requirement and the doubts raised about the justification for 
maintaining both the USTP and Bankruptcy Administrator 
programs, additional challenges to the constitutionality of 
this dual system seem likely. See, e.g., St. Angelo v. Victoria 
Farms, Inc. 38 F.3d 1525, 1532 (1994); Joelson v. United 
States, 179 B.R. 857, 864 (N.D. Ohio 1995). In any event, 
maintaining a special system of bankruptcy administration for 
just six of the nation's 94 judicial districts is imprudent. No 
articulated policy justified maintaining the Bankruptcy 
Administrator program, and its continued existence not only 
threatens to inspire additional constitutional challenge, but 
is also contrary to the fair, effective and uniform 
administration of the bankruptcy laws.
    Finally, we note that section 303 is not referenced in the 
table of contents set out in section 1 of H.R. 833.

             Title IV: Small Business Bankruptcy Provisions

Sections 401 and 403. Flexible rules for disclosure statement and plan; 
        standard form disclosure statements and plans

    Section 401 would add a new section 1125(f) to the Code to 
allow the court to relax the plan confirmation procedures in 
small business bankruptcies. Specifically, for a small business 
case, the court would be empowered to: (i) waive the disclosure 
statement; (ii) use a form disclosure statement; (iii) allow 
plan solicitation based on a ``conditionally approved'' 
disclosure statement; or (iv) combine the confirmation and 
disclosure statement hearing. Section 403 would require the 
Judicial Conference to adopt ``standard form'' disclosure 
statements and plans of reorganization that balance the need 
for ``reasonably complete information'' with ``economy and 
simplicity.''
     These provisions would remove procedural barriers to early 
confirmation and, to the extent they encourage quicker 
confirmations, are advantageous to debtors and creditors alike. 
Care will be need-

ed lest the execution of these provisions lead to confirmations 
without adequate disclosure to creditors and other affected 
parties. We believe, however, that this risk is manageable. 
Accordingly, we support this provision.

Section 402. Definition of small business debtor

     Section 402(a) defines the terms ``small business debtor'' 
and ``small business case.'' The definition of small business 
case is apparently missing some words, but it appears that the 
definition excepts cases where a creditors' committee is formed 
and the court determines that it is ``sufficiently active and 
representative to provide effective oversight of the debtor.'' 
This apparent exception defeats the purpose of the small 
business provisions to minimize the time a case remains in 
bankruptcy because it could lead to litigation over the 
exception. See section 407. The exception should be eliminated 
so that there is certainty at the commencement of the case 
whether it involves a small business or debtor.
     Section 402(b), concerning penalties for violation of the 
discharge injunction, is unrelated to small business cases and 
is identical to section 116. It should be eliminated as 
duplicative.

Section 404. Uniform national reporting requirements

     Section 404 would add a new section 308 to the Code 
requiring a small business debtor to file periodic reports 
explaining: (i) its profitability; (ii) projected income and 
expenses; (iii) how prior projections compare with actuality; 
(iv) compliance with bankruptcy requirements; (v) whether taxes 
returns are timely filed; (vi) what taxes and other 
administrative claims are in default and when remedied; and 
(vii) ``other matters'' needed in the creditors' and the 
public's interest.
     We support these disclosure requirements and the need for 
consistent financial reporting standards. By helping to 
identify faltering cases, financial reports prevent undue delay 
in the administration of chapter 11 cases. We further urge 
extending this section to all chapter 11 debtors, not just 
small business debtors.

Section 405. Uniform reporting rules and forms

    Section 405 would require the Judicial Conference of the 
United States to propose for adoption amended Federal Rules of 
Bankruptcy Procedure and Official Bankruptcy Forms to be used 
by small business debtors to comply with the provisions added 
by Section 404 of the bill. We support this provision, with one 
exception: it should be amended to indicate that the Attorney 
G