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113th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     113-630

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



 
              FINANCIAL INSTITUTION BANKRUPTCY ACT OF 2014

                                _______
                                

December 1, 2014.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                        [To accompany H.R. 5421]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 5421) to amend title 11 of the United States Code in 
order to facilitate the resolution of an insolvent financial 
institution in bankruptcy, having considered the same, reports 
favorably thereon without amendment and recommends that the 
bill do pass.

                                CONTENTS

                                                                   Page
Purpose and Summary..............................................     1
Background and Need for the Legislation..........................     2
Hearings.........................................................     6
Committee Consideration..........................................     7
Committee Votes..................................................     7
Committee Oversight Findings.....................................     7
New Budget Authority and Tax Expenditures........................     7
Congressional Budget Office Cost Estimate........................     7
Duplication of Federal Programs..................................     9
Disclosure of Directed Rule Makings..............................    10
Performance Goals and Objectives.................................    10
Advisory on Earmarks.............................................    10
Section-by-Section Analysis......................................    10
Changes in Existing Law Made by the Bill, as Reported............    16

                          Purpose and Summary

    The U.S. bankruptcy process is not optimally designed for 
the orderly resolution of financial institutions for many 
reasons, including these institutions' interconnectedness and, 
in the case of larger and more interconnected institutions, a 
potential to pose ``systemic risk'' to the broader financial 
system. H.R. 5421, the ``Financial Institution Bankruptcy Act 
of 2014,'' amends chapter 11 of the Bankruptcy Code to address 
better the unique challenges presented by the insolvency of a 
financial institution and better allow such an institution to 
be resolved through the bankruptcy process.

                Background and Need for the Legislation

                    A. BRIEF OVERVIEW OF CHAPTER 11

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

 B. THE EXISTING BANKRUPTCY CODE AND ADDRESSING FINANCIAL INSTITUTION 
                              INSOLVENCIES

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

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

    There are a number of challenges posed by the insolvency of 
a financial institution, particularly the insolvency of a 
large, multi-national financial institution. The resolution of 
a financial institution must be swift, transparent, and account 
for the potential impact on the general financial system, due 
to the typically liquid and quickly transferable assets of a 
financial institution. While the existing Bankruptcy Code 
possesses many of the provisions necessary to resolve a large, 
failing firm, commentators have suggested that improvements are 
necessary to resolve effectively a financial institution.\10\
---------------------------------------------------------------------------
    \10\See, e.g., Too Big To Fail: The Role for Bankruptcy and 
Antitrust Law in Financial Regulation Reform (Part I): Hearing before 
the Subcomm. on Commercial and Administrative Law of the H. Comm. on 
the Judiciary, 111th Cong. 64-79 (2009) (statement of Harvey R. 
Miller).
---------------------------------------------------------------------------
    As explained above, commentators generally agree that the 
``single point of entry'' approach is the most efficient 
proposal to provide for an expeditious resolution of a 
financial firm.\11\ H.R. 5421, the ``Financial Institution 
Bankruptcy Act of 2014'' (referred to herein as ``Subchapter 
V'') adopts the proposed method of creating a new subchapter 
within chapter 11 of the Bankruptcy Code to allow the ``single 
point of entry'' approach to be utilized in the bankruptcy 
process. H.R. 5421 allows the debtor holding company that sits 
atop the financial firm's corporate structure to transfer its 
assets, including the equity in all of its operating 
subsidiaries, to a newly-formed bridge company over a single 
weekend.\12\ The debt, any remaining assets, and equity of the 
holding company will remain in the bankruptcy process and 
absorb the losses of the financial institution. Identifying the 
debt and equity to remain in the bankruptcy process allows 
existing creditors of the debtor to price appropriately their 
dealings and investment with the debtor prior to any bankruptcy 
proceeding.
---------------------------------------------------------------------------
    \11\See, e.g., H.R. ____, the ``Financial Institution Bankruptcy 
Act of 2014'': Hearing Before the Subcomm. on Regulatory Reform, 
Commercial and Antitrust Law of the H. Comm. on the Judiciary, 113th 
Cong. (2014) (statements of Donald Bernstein and Thomas Jackson).
    \12\Given the sensitivity of banking relationships and the 
financial marketplace, practicalities dictate that this transfer must 
be performed over the course of a period when the financial markets are 
not open.
---------------------------------------------------------------------------
    Furthermore, the Subchapter V ``single point of entry'' 
approach allows all of the financial institution's operating 
subsidiaries to remain out of the bankruptcy process. Keeping 
these entities out of an insolvency proceeding is particularly 
helpful for multi-national firms that otherwise could be 
required to comply with multiple, and potentially conflicting, 
insolvency jurisdictions.
    The amendments to the Bankruptcy Code contained in H.R. 
5421 also account for the potential of a financial firm's 
insolvency to impact the general financial markets, often 
referred to as systemic risk. One such amendment included in 
H.R. 5421 is the ability of the Federal Reserve to initiate a 
bankruptcy case. In order to commence a case over the objection 
of the subject financial institution, the Federal Reserve must 
demonstrate to the presiding bankruptcy court, which must agree 
with the Federal Reserve's assessment, that initiation of a 
Subchapter V case is ``necessary to prevent serious adverse 
effects on financial stability in the United States.''\13\ By 
allowing the Federal Reserve to commence a Subchapter V case, 
subject to careful judicial oversight, a near-failing financial 
firm may be resolved quickly and potentially in advance of its 
losses spreading to the financial markets.
---------------------------------------------------------------------------
    \13\Subchapter V, Sec. 1183.
---------------------------------------------------------------------------
    An additional element of H.R. 5421 intended to address 
systemic risk is Bankruptcy Code amendments designed to deal 
with the types of transactions through which systemic contagion 
can most readily spread and that financial institutions engage 
in routinely--derivative and similarly-structured transactions. 
Currently, the Bankruptcy Code contains exemptions for 
counterparties to derivative and similarly-structured 
transactions to collect on outstanding debts notwithstanding 
the commencement of a chapter 11 case and the consequent 
``automatic stay.'' This exemption stands in contrast to the 
treatment of other contracts and debts under the Bankruptcy 
Code, which typically requires creditors to wait until a 
chapter 11 plan is approved before they receive a recovery on 
account of their relationship with the debtor. H.R. 5421 
overrides the exemption for derivative and similarly-structured 
transactions contained in the Bankruptcy Code by imposing a 
temporary 2-day stay that would allow for the effective 
transfer of the financial institution's operations to a bridge 
company. Without this override of the existing exemption, 
counterparties to derivatives and similarly-structured 
transactions could terminate their relationships with a 
financial institution debtor upon the commencement of a 
bankruptcy case, which likely would endanger the successful 
transfer and continued operation of the bridge company and 
potentially threaten other entities within the broader 
financial system.\14\
---------------------------------------------------------------------------
    \14\See H.R. ____, the ``Financial Institution Bankruptcy Act of 
2014'': Hearing Before the Subcomm. on Regulatory Reform, Commercial 
and Antitrust Law of the H. Comm. on the Judiciary, 113th Cong. 12 
(2014) (statement of Stephen E. Hessler).
---------------------------------------------------------------------------
    H.R. 5421 also expressly acknowledges the speed by which a 
financial institution must be resolved in order to mitigate 
financial contagion. To that end, the legislation includes 
specific and expedient timeframes for the commencement of a 
case as well as court approval of the transfer of assets to the 
bridge company.
    The bill also recognizes that overseeing a Subchapter V 
case requires a presiding bankruptcy judge or a judge sitting 
on appeal in such a case to have a certain level of expertise 
and experience with either financial industry cases or large 
corporate reorganizations. To that end, H.R. 5421 contains 
provisions that require the advance designation of select 
bankruptcy and appellate judges who can be available to hear 
these cases and appeals from them.

                                Hearings

    The Committee conducted two separate hearings on the topic 
of enhancing the Bankruptcy Code to address the resolution of a 
financial institution through the bankruptcy process. On 
December 3, 2013, the Subcommittee on Regulatory Reform, 
Commercial and Antitrust Law (hereinafter, the 
``Subcommittee'') conducted a hearing entitled ``The Bankruptcy 
Code and Financial Institution Insolvencies.''\15\ The 
witnesses at the hearing were: the Honorable Jeffrey M. Lacker, 
President of the Federal Reserve Bank of Richmond; Professor 
Mark J. Roe, David Berg Professor of Law, Harvard Law School; 
and Donald S. Bernstein, Esq., partner and head of Davis Polk & 
Wardwell LLP's Insolvency and Restructuring Practice and past 
chair of the National Bankruptcy Conference. At the hearing, 
witnesses testified that a financial institution's bankruptcy 
presents unique issues that the existing Bankruptcy Code could 
be equipped better to address. On March 26, 2014, the 
Subcommittee conducted a hearing entitled ``Exploring Chapter 
11 Reform: Corporate and Financial Institution Insolvencies; 
Treatment of Derivatives.''\16\ The witnesses at the hearing 
were: Professor Michelle Harner, Reporter for the American 
Bankruptcy Institute Commission to Study the Reform of Chapter 
11, University of Maryland; Professor Thomas H. Jackson, 
William E. Simon School of Business, University of Rochester; 
the Honorable Christopher Sontchi, U.S. Bankruptcy Court for 
the District of Delaware; Seth Grosshandler, Esq., Partner, 
Cleary Gottlieb Steen & Hamilton, LLP; and Jane Vris, Millstein 
& Co, on behalf of the National Bankruptcy Conference. During 
this hearing, the Committee received testimony in support of 
amending the Bankruptcy Code to create a subchapter V under 
chapter 11 to allow the resolution of a financial institution 
through the bankruptcy process, using the single-point-of-entry 
approach.\17\
---------------------------------------------------------------------------
    \15\December Bankruptcy Hearing.
    \16\Exploring Chapter 11 Reform: Corporate and Financial 
Institution Insolvencies; Treatment of Derivatives: Hearing Before the 
Subcomm. on Regulatory Reform, Commercial and Antitrust Law of the H. 
Comm. on the Judiciary, 113th Cong. (2014).
    \17\Id. (testimony of Prof. Jackson).
---------------------------------------------------------------------------
    In addition, on July 15, 2014, the Subcommittee conducted a 
hearing on a discussion draft of the Financial Institution 
Bankruptcy Act. The witnesses at the hearing were: Donald S. 
Bernstein, Esq., partner and head of Davis Polk & Wardwell 
LLP's Insolvency and Restructuring Practice and past chair of 
the National Bankruptcy Conference; Stephen E. Hessler, Esq., 
Partner, Kirkland & Ellis, LLP; Professor Thomas H. Jackson, 
William E. Simon School of Business, University of Rochester; 
and, Professor Stephen J. Lubben, Seton Hall University School 
of Law. All four witnesses, including the Minority witness, 
testified that they believed the Financial Institution 
Bankruptcy Act, subject to certain modifications, should be 
enacted into law.
    Following the hearing, the Committee received informal 
staff-level comments on the discussion draft of the Financial 
Institution Bankruptcy Act from, among others, the Federal 
Reserve, the FDIC, the Office of the Comptroller of the 
Currency, the Administrative Office of the U.S. Courts, the 
National Conference of Bankruptcy Judges, the National 
Bankruptcy Conference, and the International Swaps and 
Derivatives Association. The comments received from these 
parties served as the basis for revisions to the discussion 
draft that was the subject of the July 15 Subcommittee hearing, 
and which ultimately became H.R. 5421.

                        Committee Consideration

    On September 10, 2014, the Committee met in open session 
and ordered the bill H.R. 5421 favorably reported without 
amendment, by voice vote, a quorum being present.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, the Committee advises that there 
were no recorded votes during the Committee's consideration of 
H.R. 5421.

                      Committee Oversight Findings

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

               New Budget Authority and Tax Expenditures

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

               Congressional Budget Office Cost Estimate

    In compliance with clause 3(c)(3) of rule XIII of the Rules 
of the House of Representatives, the Committee sets forth, with 
respect to the bill, H.R. 5421, the following estimate and 
comparison prepared by the Director of the Congressional Budget 
Office under section 402 of the Congressional Budget Act of 
1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                  Washington, DC, November 7, 2014.
Hon. Bob Goodlatte, Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman:
    The Congressional Budget Office has prepared the enclosed 
cost estimate for H.R. 5421, the ``Financial Institution 
Bankruptcy Act of 2014.''
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Daniel 
Hoople, who can be reached at 226-2800.
            Sincerely,
                                      Douglas W. Elmendorf,
                                                  Director.

Enclosure

cc:
        Honorable John Conyers, Jr.
        Ranking Member




        H.R. 5421--Financial Institution Bankruptcy Act of 2014.

      As ordered reported by the House Committee on the Judiciary 
                         on September 10, 2014.




    H.R. 5421 would modify the bankruptcy process for certain 
large financial institutions. Pay-as-you-go procedures apply 
because enacting the legislation would lower the probability 
that such an institution would be liquidated by the Federal 
Government upon failure, potentially having a small effect on 
direct spending and revenues. However, CBO expects that 
failures handled through the bankruptcy code under the bill 
would not affect the net cash flows of the Federal Government 
under current law. Thus, we estimate that H.R. 5421 would have 
no significant effect on the budget, including discretionary 
spending, over the next 10 years.
    Under current law, the Federal Government may place certain 
large and interconnected financial institutions, upon failure, 
into receivership of the Federal Deposit Insurance Corporation 
(FDIC). Similar to its historical role as receiver of 
commercial banks and thrifts, the FDIC may sell the failed 
institution's assets, merge it with a healthy institution, 
continue operations through a bridge company, or some 
combination thereof. Most likely, the receivership will require 
short-term (and in some cases long-term) financing to quell the 
liquidity and insolvency concerns that result in the 
institution's failure. Under current law, such funding is 
available through the Treasury. While this borrowing must be 
repaid in full, CBO believes that repayment generally will 
occur over multiple years. As such, CBO estimates that this 
authority (also known as Orderly Liquidation Authority, or OLA) 
will have no net budget effect over time, but will increase 
deficits in some years. CBO's most recent baseline projects 
that use of OLA will increase deficits by about $19 billion 
over the 2015-2024 period. (This projection assumes a low 
probability that OLA will be triggered in each year. Actual 
cash flows will be zero in most years and much higher in years 
when OLA is used.)
    H.R. 5421 would establish a separate bankruptcy process for 
bank holding companies and certain large financial 
institutions. This process would differ from current law in 
several ways. First, the court would have the authority to 
transfer certain property, contracts, and leases of the estate 
to a bridge company, if necessary to prevent serious adverse 
effects on the financial stability of the United States (That 
property could not include unsecured debt or equity, which 
instead would remain with the estate.) The legislation also 
would allow for a temporary stay of certain contractual rights 
tied to the financial condition of the failed institution--for 
example, collection of collateral, acceleration of debt, or 
close-out netting of derivatives. Similarly, other leases, 
contracts, licenses, permits, or registration could not be 
modified or terminated upon failure, instead transferring to 
the bridge company.
    CBO believes that the changes made by H.R. 5421 would 
establish a viable alternative to the use of OLA in some 
circumstances and would increase the probability that a failure 
would be handled through the bankruptcy code rather than by the 
FDIC, causing a small change in the FDIC's workload. However, 
those circumstances are likely to occur when the use of OLA 
under current law would have generated little to no Federal 
cash flows--for example, the failure of a single entity during 
a relatively stable economy. More severe situations requiring 
significant capital or liquidity to proceed probably would 
continue to be handled by the FDIC under the bill because 
private debtor-in-possession financing would be difficult to 
obtain, particularly during economic contractions. Because we 
expect H.R. 5421 to only affect failures that would otherwise 
have no budgetary impact under current law, CBO estimates that 
enacting this legislation would have no significant effect on 
the Federal budget.
    H.R. 5421 contains no intergovernmental mandates as defined 
in the Unfunded Mandates Reform Act (UMRA).
    H.R. 5421 would impose a private-sector mandate, as defined 
in UMRA, on entities that have certain types of contracts with 
a bank holding company or a large financial institution that 
has entered the bankruptcy process established under the bill. 
The bill would limit the contractual rights that those entities 
have under current law by imposing a temporary stay on actions 
to terminate or modify such contracts for 48 hours after a 
bankruptcy petition is filed. The cost of the mandate would 
amount to any losses sustained by such parties as result of the 
stay. Because of uncertainty about both the number and size of 
contracts that would be affected and the amount of losses that 
would occur as a result of this provision, CBO cannot determine 
whether the cost of the mandate would exceed the annual 
threshold established in UMRA for private-sector mandates ($152 
million in 2014, adjusted annually for inflation).
    The CBO staff contacts for this estimate are Daniel Hoople 
(for Federal costs) and Paige Piper-Bach (for the private-
sector impact). The estimate was approved by Theresa Gullo, 
Deputy Assistant Director for Budget Analysis.

                    Duplication of Federal Programs

    No provision of H.R. 5421 establishes or reauthorizes a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from GAO to Congress pursuant to section 21 of Public 
Law 111-139, or a program related to a program identified in 
the most recent Catalog of Federal Domestic Assistance.

                  Disclosure of Directed Rule Makings

    The Committee estimates that H.R. 5421 specifically directs 
to be completed no specific rule makings within the meaning of 
5 U.S.C. 551.

                    Performance Goals and Objectives

    The Committee states that pursuant to clause 3(c)(4) of 
rule XIII of the Rules of the House of Representatives, H.R. 
5421 amends title 11 of the United States Code in order to 
facilitate the resolution of an insolvent financial institution 
in bankruptcy.

                          Advisory on Earmarks

    In accordance with clause 9 of rule XXI of the Rules of the 
House of Representatives, H.R. 5421 does not contain any 
congressional earmarks, limited tax benefits, or limited tariff 
benefits as defined in clause 9(e), 9(f) or 9(g) of Rule XXI.

                      Section-by-Section Analysis

    The following discussion describes the bill as reported by 
the Committee.
Section 1. Short Title.
    Sets forth the short title of the legislation as the 
``Financial Institution Bankruptcy Act of 2014.''
Section 2. General Provisions Relating to Covered Financial 
        Corporations.
    Subsection (a) amends Bankruptcy Code section 101, which 
defines various terms used throughout the Bankruptcy Code, to 
add the definition of ``covered financial corporation.'' In 
sum, the term is defined as a bank holding company, as defined 
in the Bank Holding Company Act of 1956 (BHCA),\18\ or a 
corporation that: exists for the primary purpose of owning 
subsidiaries; has consolidated assets of $50 billion or more; 
and derives annual gross revenues from activities that are 
financial in nature as defined in the BHCA or with respect to 
which at least 85% of the company's consolidated assets are 
financial in nature as defined in the BHCA.\19\
---------------------------------------------------------------------------
    \18\See 12 U.S.C. Sec. 1841(a) (2014).
    \19\See 12 U.S.C. Sec. 1843(k) (2014).
---------------------------------------------------------------------------
    Subsection (b) provides that subchapter V of chapter 11 (as 
added by the legislation) will only apply to chapter 11 cases 
in which a covered financial corporation is the debtor. To be 
clear, to the extent a covered financial corporation could 
utilize the chapter 11 process and chooses not to invoke the 
subchapter V process, that covered financial corporation can 
still choose to pursue a ``traditional'' chapter 11 case.
    Subsection (c) amends Bankruptcy Code section 109, which 
sets forth the eligibility criteria for a bankruptcy debtor, to 
provide that a covered financial corporation is eligible to be 
a chapter 11 debtor.
    Subsection (d) amends Bankruptcy Code section 1112, which 
authorizes conversion of a chapter 11 case to chapter 7 or 
dismissal of the chapter 11 case, under certain, specified 
circumstances. This subsection adds new subsection (g) to 
section 1112 to permit the conversion of a subchapter V case to 
a chapter 7 case, if: (1) a transfer approved under section 
1185 (as added by the bill) has been consummated; (2) the court 
has ordered the appointment of a special trustee under section 
1186 (as added by the bill); and (3) the court finds that such 
conversion is in the best interest of creditors and the estate.
    Subsection (e)(1) amends Bankruptcy Code section 726(a)(1) 
to accord first payment priority to the fees, costs and 
expenses of a special trustee appointed under section 1186. 
Subsection (e)(2) makes two amendments to Bankruptcy Code 
section 1129(a), which sets forth the requirements for 
confirmation of a chapter 11 case. First, it requires the fees, 
costs and expenses of a special trustee to have been paid or 
for the subchapter V plan to provide for such payment. Second, 
it requires the court to find that confirmation of a subchapter 
V plan is not likely to cause adverse effects on financial 
stability in the United States.
    Subsection (f) provides that a U.S. Trustee will recommend 
to the court the amount of a bond necessary in the event of a 
trustee appointment in a subchapter V case.
Section 3. Liquidation, Reorganization, or Recapitalization of a 
        Covered Financial Corporation.
    Section 3 inserts a new subchapter V into chapter 11 
designed to address a bankruptcy of a covered financial 
corporation. All further references are to the new sections 
added to chapter 11 by the bill.
            Sec. 1181. Inapplicability of other sections.
    Specifies that Bankruptcy Code sections 303 (authorizing 
the commencement of an involuntary bankruptcy case, under 
certain circumstances) and 321(c) (which permits the United 
States Trustee to serve as a trustee in a bankruptcy case) do 
not apply to a subchapter V case.
            Sec. 1182. Definitions for this chapter.
    Defines the following terms: Board; bridge company; capital 
structure debt; contractual right; qualified financial 
contract; and special trustee.
            Sec. 1183. Commencement of a case concerning a covered 
                    financial corporation.
    Subsection (a) authorizes the voluntary commencement of a 
subchapter V case if the debtor states under penalty of perjury 
that it is a covered financial corporation. In addition, it 
allows the involuntary commencement of such a case by the 
Federal Reserve against a covered financial corporation if the 
Federal Reserve states under penalty of perjury that the 
corporation: (1) has incurred losses that will deplete all or 
substantially all of the corporation's capital and there is no 
reasonable prospect for the corporation to avoid such 
depletion; (2) is insolvent; (3) is not, or is unable, to pay 
its debts as they become due; or (4) is likely to experience 
any of these conditions sufficiently soon. The Federal Reserve 
must also certify that the bankruptcy filing is necessary to 
effect a transfer of the debtor's assets under section 1185 to 
prevent imminent substantial harm to financial stability in the 
United States.
    If the debtor does not consent to an order for relief, 
subsection (b) requires the bankruptcy court to hold a hearing 
as soon as practicable, but no later than within 16 hours of 
the filing of an involuntary petition, with notice provided to 
the debtor, the FDIC, the OCC, and the Treasury Secretary, 
which entities, in addition to the Federal Reserve, are the 
only ones authorized to participate at such hearing. Subsection 
(b) further provides that the Federal Reserve or the debtor may 
request that pleadings, hearings, transcripts, and orders be 
sealed if their disclosure could create financial instability 
in the United States. Access to such documents is only given to 
the bankruptcy court, the appellate panel, the debtor, the 
FDIC, the OCC, the Treasury Secretary, and the Federal Reserve. 
If the case is dismissed, all such documents are permanently 
sealed.
    A subchapter V case commenced by the debtor constitutes an 
order for relief. With respect to a case involuntarily 
commenced by the Federal Reserve, subsection (c)(2) requires 
the bankruptcy court, within 18 hours after the filing of the 
Federal Reserve's involuntary petition, to either: (1) enter an 
order of relief, if the Federal Reserve has shown by a 
preponderance of the evidence that the criteria specified in 
its petition have been satisfied, or the debtor consents to the 
Federal Reserve's petition; or (2) enter an order dismissing 
the case.
    Subsection (d)(1) authorizes the debtor and the Federal 
Reserve to appeal directly to the presiding court of appeals an 
order granting relief under subchapter V or dismissing a case. 
The appeal must be filed within 1 hour after such order has 
been entered, with notice to the debtor, the FDIC, the OCC, the 
Treasury Secretary, and the Federal Reserve. Such order is 
stayed pending appeal. Subsection (d)(2) requires the appellate 
panel to hear the appeal within 12 hours of the filing of the 
notice of appeal. It specifies that the standard of review is 
abuse of discretion. Such panel must enter an order determining 
the appeal within 14 hours after the notice of appeal is filed. 
Subsection (d)(3) specifies that the court may not delay any 
proceeding pertaining to the transfer of the debtor's assets 
pursuant to section 1185 because of a pending appeal, except 
that the transfer may not be authorized before determination of 
such appeal. This allows the bankruptcy court to hear the 
motions related to the section 1185 transfer while the appeal 
is pending.
    Subsection (e) shields a debtor's board of directors from 
any liability to shareholders, creditors or other parties in 
interest for a good faith filing or consent in good faith to a 
subchapter V petition or with respect to a transfer under 
sections 1185 and 1186, as added by the bill.
    Subsection (f) requires the debtor's counsel or the Federal 
Reserve to give confidential notice to the courts regarding the 
potential commencement of a subchapter V case in order to allow 
the court and the potential bankruptcy judge to make any 
necessary preparations in advance of a potential filing.
            Sec. 1184. Regulators.
    Provides the Federal Reserve, the Securities and Exchange 
Commission, the Office of the Comptroller of the Currency of 
the Department of Treasury, and the FDIC with standing in a 
subchapter V bankruptcy case.
            Sec. 1185. Special transfer of property of the estate.
    On request of the debtor or Federal Reserve, subsection (a) 
authorizes the bankruptcy court to order a transfer of estate 
property and the assignment of executory contracts and 
unexpired leases to a bridge company after notice and a hearing 
that must occur not less than 24 hours after commencement of 
the case. This subsection also clarifies that all property 
transferred is no longer property of the estate. Subsection (a) 
further provides that Bankruptcy Code sections 363 (concerning 
sales of bankruptcy case assets) and 365 (executory contracts 
and unexpired leases) apply to such transfer, unless otherwise 
specified.
    Subsection (b) requires not less than 24 hours' notice of 
the hearing under subsection (a), to be provided either by 
electronic or telephonic means, and identifies who must receive 
such notice.
    Subsection (c) provides that the court may not order a 
transfer unless it determines by a preponderance of the 
evidence that: (1) the transfer is necessary to prevent serious 
adverse effects on financial stability in the United States; 
(2) the transfer does not provide for the assumption of any 
capital structure debt by the bridge company; (3) the transfer 
does not provide for the transfer of the debtor's equity; (4) 
the party requesting the transfer has demonstrated that the 
bridge company is not likely to fail to meet the obligations of 
any debt, executory contract, qualified financial contract or 
unexpired lease assumed and assigned to such company; (5) the 
bridge company after the transfer has adequate provision for 
fees, costs and expenses of the special trustee; (6) all of the 
bridge company's equity securities are transferred to a special 
trustee; (7) adequate provision has been made for the payment 
of the expenses of the bankruptcy estate and the special 
trustee; and (8) the bridge company has governing documents and 
initial directors and senior officers that are in the best 
interests of creditors and the estate.
    With respect to property of the estate that is subject to a 
lien securing a debt, executory contract, unexpired lease, or 
agreement of the debtor, subsection (c)(3) specifies that the 
transfer of this secured property may not be authorized unless:

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

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

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

         Changes in Existing Law Made by the Bill, as Reported

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

                      TITLE 11, UNITED STATES CODE



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

           *       *       *       *       *       *       *


Sec. 101. Definitions

     In this title the following definitions shall apply:
            (1) * * *

           *       *       *       *       *       *       *

            (9A) The term ``covered financial corporation'' 
        means any corporation incorporated or organized under 
        any Federal or State law, other than a stockbroker, a 
        commodity broker, or an entity of the kind specified in 
        paragraph (2) or (3) of section 109(b), that is--
                    (A) a bank holding company, as defined in 
                section 2(a) of the Bank Holding Company Act of 
                1956; or
                    (B) a corporation that exists for the 
                primary purpose of owning, controlling and 
                financing its subsidiaries, that has total 
                consolidated assets of $50,000,000,000 or 
                greater, and for which, in its most recently 
                completed fiscal year--
                            (i) annual gross revenues derived 
                        by the corporation and all of its 
                        subsidiaries from activities that are 
                        financial in nature (as defined in 
                        section 4(k) of the Bank Holding 
                        Company Act of 1956) and, if 
                        applicable, from the ownership or 
                        control of one or more insured 
                        depository institutions, represents 85 
                        percent or more of the consolidated 
                        annual gross revenues of the 
                        corporation; or
                            (ii) the consolidated assets of the 
                        corporation and all of its subsidiaries 
                        related to activities that are 
                        financial in nature (as defined in 
                        section 4(k) of the Bank Holding 
                        Company Act of 1956) and, if 
                        applicable, related to the ownership or 
                        control of one or more insured 
                        depository institutions, represents 85 
                        percent or more of the consolidated 
                        assets of the corporation.

           *       *       *       *       *       *       *


Sec. 103. Applicability of chapters

    (a) * * *

           *       *       *       *       *       *       *

    (l) Subchapter V of chapter 11 of this title applies only 
in a case under chapter 11 concerning a covered financial 
corporation.

           *       *       *       *       *       *       *


Sec. 109. Who may be a debtor

    (a) * * *
    (b) A person may be a debtor under chapter 7 of this title 
only if such person is not--
            (1) * * *
            (2) a domestic insurance company, bank, savings 
        bank, cooperative bank, savings and loan association, 
        building and loan association, homestead association, a 
        New Markets Venture Capital company as defined in 
        section 351 of the Small Business Investment Act of 
        1958, a small business investment company licensed by 
        the Small Business Administration under section 301 of 
        the Small Business Investment Act of 1958, credit 
        union, or industrial bank or similar institution which 
        is an insured bank as defined in section 3(h) of the 
        Federal Deposit Insurance Act, except that an uninsured 
        State member bank, or a corporation organized under 
        section 25A of the Federal Reserve Act, which operates, 
        or operates as, a multilateral clearing organization 
        pursuant to section 409 of the Federal Deposit 
        Insurance Corporation Improvement Act of 1991 may be a 
        debtor if a petition is filed at the direction of the 
        Board of Governors of the Federal Reserve System; [or]
            (3)(A) * * *
            (B) a foreign bank, savings bank, cooperative bank, 
        savings and loan association, building and loan 
        association, or credit union, that has a branch or 
        agency (as defined in section 1(b) of the International 
        Banking Act of 1978) in the United States[.]; or
            (4) a covered financial corporation.

           *       *       *       *       *       *       *

    (d) Only a railroad, a person that may be a debtor under 
chapter 7 of this title (except a stockbroker or a commodity 
broker), [and] an uninsured State member bank, [or] a 
corporation organized under section 25A of the Federal Reserve 
Act, which operates, or operates as, a multilateral clearing 
organization pursuant to section 409 of the Federal Deposit 
Insurance Corporation Improvement Act of 1991, or a covered 
financial corporation may be a debtor under chapter 11 of this 
title.

           *       *       *       *       *       *       *


CHAPTER 3--CASE ADMINISTRATION

           *       *       *       *       *       *       *


SUBCHAPTER II--OFFICERS

           *       *       *       *       *       *       *


Sec. 322. Qualification of trustee

    (a) * * *
    (b)(1) * * *
    (2) [The] In cases under subchapter V, the United States 
trustee shall recommend to the court, and in all other cases, 
the United States trustee shall determine--
            (A) * * *

           *       *       *       *       *       *       *


CHAPTER 7--LIQUIDATION

           *       *       *       *       *       *       *


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

           *       *       *       *       *       *       *


Sec. 726. Distribution of property of the estate

    (a) Except as provided in section 510 of this title, 
property of the estate shall be distributed--
            (1) first, in payment of any unpaid fees, costs, 
        and expenses of a special trustee appointed under 
        section 1186, and then in payment of claims of the kind 
        specified in, and in the order specified in, section 
        507 of this title, proof of which is timely filed under 
        section 501 of this title or tardily filed on or before 
        the earlier of--
                    (A) * * *

           *       *       *       *       *       *       *


                       CHAPTER 11--REORGANIZATION

SUBCHAPTER I--OFFICERS AND ADMINISTRATION

           *       *       *       *       *       *       *


Sec. 1112. Conversion or dismissal

    (a) * * *

           *       *       *       *       *       *       *

    (g) Notwithstanding section 109(b), the court may convert a 
case under subchapter V to a case under chapter 7 if--
            (1) a transfer approved under section 1185 has been 
        consummated;
            (2) the court has ordered the appointment of a 
        special trustee under section 1186; and
            (3) the court finds, after notice and a hearing, 
        that conversion is in the best interest of the 
        creditors and the estate.

           *       *       *       *       *       *       *


SUBCHAPTER II--THE PLAN

           *       *       *       *       *       *       *


Sec. 1129. Confirmation of plan

    (a) The court shall confirm a plan only if all of the 
following requirements are met:
            (1) * * *

           *       *       *       *       *       *       *

            (17) In a case under subchapter V, all payable 
        fees, costs, and expenses of the special trustee have 
        been paid or the plan provides for the payment of all 
        such fees, costs, and expenses on the effective date of 
        the plan.
            (18) In a case under subchapter V, confirmation of 
        the plan is not likely to cause serious adverse effects 
        on financial stability in the United States.

           *       *       *       *       *       *       *


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

Sec. 1181. Inapplicability of other sections

    Sections 303 and 321(c) do not apply in a case under this 
subchapter concerning a covered financial corporation.

Sec. 1182. Definitions for this subchapter

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

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

    (a) A case under this subchapter concerning a covered 
financial corporation may be commenced by the filing of a 
petition with the court--
            (1) by the debtor under section 301 only if the 
        debtor states to the best of its knowledge under 
        penalty of perjury in the petition that it is a covered 
        financial corporation; or
            (2) by the Board only if the Board states to the 
        best of its knowledge under penalty of perjury in the 
        petition that--
                    (A) the debtor is a covered financial 
                corporation that--
                            (i) has incurred losses that will 
                        deplete all or substantially all of the 
                        capital of the covered financial 
                        corporation, and there is no reasonable 
                        prospect for the covered financial 
                        corporation to avoid such depletion;
                            (ii) is insolvent;
                            (iii) is not paying, or is unable 
                        to pay, the debts of the covered 
                        financial corporation (other than debts 
                        subject to a bona fide dispute as to 
                        liability or amount) as they become 
                        due; or
                            (iv) is likely to be in a financial 
                        condition specified in clause (i), 
                        (ii), or (iii) sufficiently soon such 
                        that the immediate commencement of a 
                        case under this subchapter is necessary 
                        to prevent serious adverse effects on 
                        financial stability in the United 
                        States; and
                    (B) the commencement of a case under this 
                title and effecting a transfer under section 
                1185 is necessary to prevent serious adverse 
                effects on financial stability in the United 
                States.
    (b)(1) Unless the debtor consents to an order for relief, 
the court shall hold a hearing on the Board's petition under 
subsection (a)(2) as soon as practicable but not later than 16 
hours after the Board files such a petition, with notice only 
to--
            (A) the covered financial corporation;
            (B) the Federal Deposit Insurance Corporation;
            (C) the Office of the Comptroller of the Currency 
        of the Department of the Treasury; and
            (D) the Secretary of the Treasury.
    (2) Only the Board and the entities specified in paragraph 
(1) and their counsel may participate in a hearing described in 
this subsection. The Board or the trustee may request that 
pleadings, hearings, transcripts, and orders in connection with 
a hearing described in this subsection be sealed if their 
disclosure could create financial instability in the United 
States.
    (3) All pleadings, hearings, transcripts, and orders sealed 
under paragraph (2) shall be available to only the court, the 
appellate panel, the covered financial corporation, the Federal 
Deposit Insurance Corporation, the Office of the Comptroller of 
the Currency of the Department of the Treasury, the Secretary 
of the Treasury, and the Board. Notwithstanding paragraph (2), 
if the case is dismissed, all court documents, including 
pleadings, hearings, transcripts, and orders, shall be 
permanently sealed.
    (c)(1) The commencement of a case under subsection (a)(1) 
constitutes an order for relief under this subchapter.
    (2) In a case commenced under subsection (a)(2), after 
notice and hearing required under subsection (b) and not later 
than 18 hours after the filing of the Board's petition, the 
court shall enter--
            (A) an order for relief--
                    (i) if the Board has shown at the hearing 
                under this subsection that the requirements 
                under subsection (a)(2) are supported by a 
                preponderance of the evidence; or
                    (ii) if the debtor consents to the Board's 
                petition under subsection (a)(2); or
            (B) an order dismissing the case.
    (d)(1) The covered financial corporation or the Board may 
appeal to the court of appeals from an order entered by the 
court under subsection (c)(2) not later than 1 hour after the 
court enters such order, with notice only to the entities 
specified in subsection (b)(1) and the Board. Such order shall 
be stayed pending such appeal.
    (2) The appellate panel specified under section 298(c)(1) 
of title 28 for the judicial circuit in which the case is 
pending shall hear the appeal under paragraph (1) within 12 
hours of the filing of the notice of appeal under this 
subsection. The standard of review shall be abuse of 
discretion. The appellate panel shall enter an order 
determining the matter that is the subject of the appeal not 
later than 14 hours after the notice of appeal is filed.
    (3) The court may not, on account of an appeal from an 
order for relief under section 1183(d)(1), delay any proceeding 
under section 1185, except that the court shall not authorize a 
transfer under section 1185 before the determination of the 
appeal.
    (e) The members of the board of directors (or body 
performing similar functions) of a covered financial company 
shall have no liability to shareholders, creditors or other 
parties in interest for a good faith filing or consenting in 
good faith to a petition with respect to a case under this 
subchapter, or for any reasonable action taken in good faith in 
contemplation of or in connection with such a petition or a 
transfer under section 1185 or section 1186, whether prior to 
or after commencement of the case.
    (f) Counsel to the debtor or the Board shall provide, to 
the greatest extent practicable, sufficient confidential notice 
to the Office of Court Services of the Administrative Office of 
the United States Courts regarding the potential commencement 
of a subchapter V case without disclosing the identity of the 
potential debtor in order to allow such office to randomly 
designate and ensure the ready availability of one of the 
bankruptcy judges designated under section 298(b)(1) of title 
28 to be available to preside over such subchapter V case.

Sec. 1184. Regulators

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

Sec. 1185. Special transfer of property of the estate

    (a) On request of the trustee or the Board, and after 
notice and a hearing that shall occur not less than 24 hours 
after the order for relief, the court may order a transfer 
under this section of property of the estate, and the 
assignment of executory contracts, unexpired leases, and 
qualified financial contracts of the debtor, to a bridge 
company. Upon the entry of an order approving such transfer, 
any property transferred, and any executory contracts, 
unexpired leases, and qualified financial contracts assigned 
under such order shall no longer be property of the estate. 
Except as provided under this section, the provisions of 
sections 363 and 365 shall apply to a transfer and assignment 
under this section.
    (b) Unless the court orders otherwise, notice of a request 
for an order under subsection (a) shall consist of electronic 
or telephonic notice of not less than 24 hours to--
            (1) the debtor;
            (2) the holders of the 20 largest secured claims 
        against the debtor;
            (3) the holders of the 20 largest unsecured claims 
        against the debtor;
            (4) counterparties to any debt, executory contract, 
        unexpired lease, and qualified financial contract 
        requested to be transferred under this section;
            (5) the Board;
            (6) the Federal Deposit Insurance Corporation;
            (7) the Secretary of the Treasury and the Office of 
        the Comptroller of the Currency of the Treasury;
            (8) the Securities and Exchange Commission;
            (9) the United States trustee or bankruptcy 
        administrator; and
            (10) each primary financial regulatory agency, as 
        defined in section 2(12) of the Dodd-Frank Wall Street 
        Reform and Consumer Protection Act, with respect to any 
        affiliate the equity securities of which are proposed 
        to be transferred under this section.
    (c) The court may not order a transfer under this section 
unless the court determines, based upon a preponderance of the 
evidence, that--
            (1) the transfer under this section is necessary to 
        prevent serious adverse effects on financial stability 
        in the United States;
            (2) the transfer does not provide for the 
        assumption of any capital structure debt by the bridge 
        company;
            (3) the transfer does not provide for the transfer 
        to the bridge company of any property of the estate 
        that is subject to a lien securing a debt, executory 
        contract, unexpired lease or agreement of the debtor 
        unless--
                    (A)(i) the bridge company assumes such 
                debt, executory contract, unexpired lease or 
                agreement, including any claims arising in 
                respect thereof that would not be allowed 
                secured claims under section 506(a)(1) and 
                after giving effect to such transfer, such 
                property remains subject to the lien securing 
                such debt, executory contract, unexpired lease 
                or agreement; and
                    (ii) the court has determined that 
                assumption of such debt, executory contract, 
                unexpired lease or agreement by the bridge 
                company is in the best interests of the estate; 
                or
                    (B) such property is being transferred to 
                the bridge company in accordance with the 
                provisions of section 363;
            (4) the transfer does not provide for the 
        assumption by the bridge company of any debt, executory 
        contract, unexpired lease or agreement of the debtor 
        secured by a lien on property in which the estate has 
        an interest unless the transfer provides for such 
        property to be transferred to the bridge company in 
        accordance with paragraph (3)(A) of this subsection;
            (5) the transfer does not provide for the transfer 
        of the equity of the debtor;
            (6) the party requesting the transfer under this 
        subsection has demonstrated that the bridge company is 
        not likely to fail to meet the obligations of any debt, 
        executory contract, qualified financial contract, or 
        unexpired lease assumed and assigned to the bridge 
        company;
            (7) the transfer provides for the transfer to a 
        special trustee all of the equity securities in the 
        bridge company and appointment of a special trustee in 
        accordance with section 1186;
            (8) after giving effect to the transfer, adequate 
        provision has been made for the fees, costs, and 
        expenses of the estate and special trustee; and
            (9) the bridge company will have governing 
        documents, and initial directors and senior officers, 
        that are in the best interest of creditors and the 
        estate.
    (d) Immediately before a transfer under the section, the 
bridge company that is the recipient of the transfer shall--
            (1) not have any property, executory contracts, 
        unexpired leases, or debts, other than any property 
        acquired or executory contracts, unexpired leases, or 
        debts assumed when acting as a transferee of a transfer 
        under this section; and
            (2) have equity securities that are property of the 
        estate, which may be sold or distributed in accordance 
        with this title.

Sec. 1186. Special trustee

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

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

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

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

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

Sec. 1189. Licenses, permits, and registrations

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

Sec. 1190. Exemption from securities laws

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

Sec. 1191. Inapplicability of certain avoiding powers

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

Sec. 1192. Consideration of financial stability

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

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                      TITLE 28, UNITED STATES CODE



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PART I--ORGANIZATION OF COURTS

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            CHAPTER 13--ASSIGNMENT OF JUDGES TO OTHER COURTS

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

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

    (a) Notwithstanding section 295, the Chief Justice of the 
United States shall designate not fewer than 3 judges of the 
courts of appeals in not fewer than 4 circuits to serve on an 
appellate panel to be available to hear an appeal under section 
1183 of title 11 in a case under such title concerning a 
covered financial corporation. Appellate judges may request to 
be considered by the Chief Justice of the United States for 
such designation.
    (b)(1) Notwithstanding section 295, the Chief Justice of 
the United States shall designate not fewer than 10 bankruptcy 
judges to be available to hear a case under subchapter V of 
chapter 11 of title 11. Bankruptcy judges may request to be 
considered by the Chief Justice of the United States for such 
designation.
    (2) Notwithstanding section 155, a case under subchapter V 
of chapter 11 of title 11 shall be heard under section 157 by a 
bankruptcy judge designated under paragraph (1), who shall be 
assigned to hear such case by the chief judge of the court of 
appeals for the circuit embracing the district in which the 
case is pending. To the greatest extent practicable, the 
approvals required under section 155 should be obtained.
    (3) If the bankruptcy judge assigned to hear a case under 
paragraph (2) is not assigned to the district in which the case 
is pending, the bankruptcy judge shall be temporarily assigned 
to the district.
    (c)(1) The court of appeals shall have jurisdiction of 
appeals from all orders for relief and orders of dismissal 
under section 1183 of title 11.
    (2) Notwithstanding section 295, in an appeal under 
paragraph (1) in a case under title 11 concerning a covered 
financial corporation shall be heard by--
            (A) 3 judges selected from the appellate panel 
        designated under subsection (a); or
            (B) if the 3 judges of such panel are not 
        immediately available to hear the case, 3 judges 
        designated under subsection (a) from another circuit 
        and assigned by the Chief Justice of the United States 
        to hear the case.
    (3) If any of the judges of the appellate panel specified 
in paragraph (2) is not assigned to the circuit in which the 
appeal is pending, the judges shall be temporarily assigned to 
the circuit.
    (4) A case under subchapter V of chapter 11 of title 11, 
and all proceedings in the case, shall take place in the 
district in which the case is pending.
    (d) In this section, the term ``covered financial 
corporation'' has the meaning given that term in section 
101(9A) of title 11.

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PART IV--JURISDICTION AND VENUE

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CHAPTER 85--DISTRICT COURTS; JURISDICTION

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Sec. 1334. Bankruptcy cases and proceedings

    (a) * * *

           *       *       *       *       *       *       *

    (f) This section does not grant jurisdiction to the 
district court after a transfer pursuant to an order under 
section 1185 of title 11 of any proceeding related to a special 
trustee appointed, or to a bridge company formed, in connection 
with a case under subchapter V of chapter 11 of title 11.

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