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107th Congress                                              Rept. 107-3
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1
_______________________________________________________________________

                                     




    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2001

                               __________

                              R E P O R T

                                 of the

                       COMMITTEE ON THE JUDICIARY

                        HOUSE OF REPRESENTATIVES

                              to accompany

                                H.R. 333

                             together with

                            DISSENTING VIEWS

<GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT>


 February 26, 2001.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed
                               __________

                    U.S. GOVERNMENT PRINTING OFFICE
89-000                     WASHINGTON : 2001


107th Congress                                              Rept. 107-3
                        HOUSE OF REPRESENTATIVES
 1st Session                                                     Part 1

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



 
    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2001

                                _______
                                

 February 26, 2001.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

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

                              R E P O R T

                             together with

                            DISSENTING VIEWS

                        [To accompany H.R. 333]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 333) amending title 11, United States Code, and for 
other purposes, having considered the same, report favorably 
thereon with amendments and recommend that the bill as amended 
do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................     2
Purpose and Summary..............................................     2
Background and Need for the Legislation..........................     3
Hearings.........................................................    15
Committee Consideration..........................................    16
Votes of the Committee...........................................    16
Committee Oversight Findings.....................................    23
Performance Goals and Objectives.................................    24
New Budget Authority and Tax Expenditures........................    24
Committee Cost Estimate..........................................    24
Committee Jurisdiction Letters...................................    25
Constitutional Authority Statement...............................    26
Preemption of State Law..........................................    26
Section-by-Section Analysis and Discussion.......................    27
Changes in Existing Law Made by the Bill, as Reported............   118
Markup Transcript................................................   300
Dissenting Views.................................................   455
Additional Dissenting Views......................................   488

    The amendments (stated in terms of the page and line 
numbers of the introduced bill) are as follows:

    Page 174, line 5, strike ``30.76'' and insert ``33.87''.

    Page 316, strike line 16 and insert the following:

            (1) by redesignating section 407 as 407A;

    Beginning on page 330, strike line 19 and all that follows 
through line 10 on page 331 (and make such technical and 
conforming changes as may be appropriate).

    Page 356, beginning on line 5, strike ``and amended by this 
Act, is reenacted.'' and insert ``is hereby reenacted, and as 
here reenacted is amended by this Act.''.

    Page 356, line 20, strike ``2001'' and insert ``2004''.

    Page 368, line 4, strike ``and (38)'' and insert ``, (38), 
and (54A)''.

    Page 380, strike lines 19 through 21, and insert the 
following:

    (e) Effective Dates.--(1) Except as provided in paragraph 
(2), this section and the amendments made by this section shall 
take effect on the date of the enactment of this Act.
    (2) With respect to the temporary bankruptcy judgeship 
authorized for the district of South Carolina under paragraph 
(8) of the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152 
note), subsection (c)(1) as it applies to the extension 
specified in subparagraph (D) of such subsection shall take 
effect immediately before December 31, 2000.

                             The Amendment

    H.R. 333, the Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2001, was ordered reported with an amendment. 
The amendment made conforming revisions to the bill.

                          Purpose and Summary

    H.R. 333, the Bankruptcy Abuse Prevention and Consumer 
Protection Act of 2001, is a comprehensive package of reform 
measures pertaining to both consumer and business bankruptcy 
cases. The purpose of the bill is to improve bankruptcy law and 
practice by restoring personal responsibility and integrity in 
the bankruptcy system and by ensuring that the system is fair 
for both debtors and creditors.
    The heart of H.R. 333's consumer bankruptcy reforms is the 
implementation of an income/expense screening mechanism 
(``needs-based bankruptcy relief'') to ensure that debtors 
repay creditors the maximum they can afford. In addition to 
implementing needs-based bankruptcy relief, H.R. 333 institutes 
a panoply of other consumer bankruptcy reforms. These include 
new eligibility standards for bankruptcy relief, additional 
financial disclosure requirements for consumer debtors, and 
enhanced responsibilities for those charged with administering 
consumer bankruptcy cases. H.R. 333, likewise, institutes 
significant consumer protection reforms, including mandatory 
credit counseling requirements, required disclosures in 
connection with certain credit transactions, and protections 
against abusive practices with respect to reaffirmation 
agreements.
    The bill also includes extensive reforms pertinent to 
business bankruptcies. Many of these provisions are intended to 
heighten administrative scrutiny and judicial oversight of 
small business bankruptcy cases. In addition, the bill includes 
provisions designed to reduce systemic risk in the financial 
marketplace and clarify the treatment of tax claims in 
bankruptcy cases. H.R. 333 also creates a new form of 
bankruptcy relief for transnational insolvencies and includes 
provisions regarding family farmer debtors and health care 
providers.

                Background and Need for the Legislation

    Congressman George W. Gekas (for himself and 56 original 
cosponsors) introduced H.R. 333 on January 31, 2001. H.R. 333 
is the product of more than 3 years of Congressional 
consideration of bankruptcy reform legislation. As introduced, 
H.R. 333 is virtually identical to the conference report on 
H.R. 2415,\1\ the Gekas-Grassley Bankruptcy Reform Act of 2000, 
which passed the House by voice vote on October 12, 2000,\2\ 
and passed the Senate on December 7, 2000 by a vote of 70 to 
28.\3\ On December 19, 2000, the conference report was pocket-
vetoed by President Clinton.
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    \1\ H. Rep. No. 106-970 (2000). The only differences are H.R. 333's 
title and the deletion of section 1224 (pertaining to the Bankruptcy 
Administrator Program) from the conference report, as this provision 
was enacted into law. Federal Courts Improvement Act of 2000, Pub. L. 
No. 106-518, Sec. 501, 114 Stat. 2410, 2422 (2000).
    \2\ 146 Cong. Rec. H9840 (daily ed. Oct. 12, 2000)
    \3\ 146 Cong. Rec. S11730 (daily ed. Dec. 7, 2000). On October 19, 
2000, the Senate, by a vote of 89 to 0, agreed to a motion to proceed 
to consideration of the conference report on H.R. 2415. 146 Cong. Rec. 
S10770 (daily ed. Oct. 19, 2000). A further motion to proceed was 
agreed to in the Senate on October 27, 2000 by a vote of 87 to 1. 146 
Cong. Rec. S11205 (daily ed. Oct. 27, 2000). After a cloture motion 
failed by a vote of 53 to 30 on November 1, 2000, Senate Majority 
Leader Trent Lott moved to reconsider the vote. 146 Cong. Rec. S11450 
(daily ed. Nov. 1, 2000). On December 5, 2000, the Senate agreed to a 
cloture motion by a vote of 67 to 31 and passed the conference report 2 
days later. 146 Cong. Rec. S11553 (daily ed. Dec. 5, 2000).
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    Support for bankruptcy reform legislation in the last two 
Congresses has been overwhelming and bipartisan. In the 105th 
Congress, for example, the House passed both H.R. 3150, the 
Bankruptcy Reform Act of 1998, and the conference report on 
that bill by a veto-proof margins.\4\ In the last Congress, the 
House passed H.R. 833, the predecessor to H.R. 2415, by a veto-
proof margin of 313 to 108.\5\ Bankruptcy reform legislation 
has also enjoyed broad bipartisan support in the Senate.\6\
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    \4\ 144 Cong. Rec. H4442 (daily ed. June 10, 1998) (vote on final 
passage of H.R. 3150 was 306 to 118); 144 Cong. Rec. H10239-40 (daily 
ed. Oct. 9, 1998) (vote on final passage of the conference report on 
H.R. 3150 was 300 to 125).
    \5\ 145 Cong. Rec. H2771 (daily ed. May 5, 1999).
    \6\ On February 2, 2000, H.R. 833 was laid before the Senate by 
unanimous consent. The Senate struck all of H.R. 833's language after 
its enacting clause and substituted the text of S. 625, as amended. 
H.R. 833, as amended, was then passed by the Senate in lieu of S. 625 
by a recorded vote of 83 to 14. 146 Cong. Rec. S255 (daily ed. Feb. 2, 
2000).
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    The Judiciary Committee commenced its consideration of 
bankruptcy reform early in 105th Congress. On April 16, 1997, 
the Subcommittee on Commercial and Administrative Law conducted 
a hearing on the operation of the bankruptcy system that was 
combined with a status report from the National Bankruptcy 
Review Commission.\7\ This would be the first of 17 hearings on 
bankruptcy reform over the ensuing 4 years.\8\ Ten of these 
hearings were devoted solely to consideration of H.R. 333 and 
its predecessors, H.R. 3150 (the Bankruptcy Reform Act of 1998) 
and H.R. 833 (the Bankruptcy Reform Act of 1999). Over the 
course of these hearings, nearly 130 witnesses, representing 
nearly every major constituency in the bankruptcy community, 
testified. With regard to H.R. 833 alone, testimony was 
received from 69 witnesses, representing 23 organizations, with 
additional material submitted by other groups. In fact, the 
subcommittee's inaugural hearing on H.R. 833 was held jointly 
with the Senate Subcommittee on Administrative Oversight and 
the Courts on March 11, 1999.\9\ This marked the first time in 
more than 60 years that a bicameral hearing was held on the 
subject of bankruptcy reform.\10\
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    \7\ Operation of the Bankruptcy System and Status Report from the 
National Bankruptcy Review Commission: Hearing Before the Subcomm. on 
Commercial and Administrative Law of the House Comm. on the Judiciary, 
105th Cong. (1997).
    \8\ The dates and subject matters of these hearings were as 
follows:

      April 16, 1997--Hearing on the operation of the bankruptcy 
      system and status report from the National Bankruptcy 
---------------------------------------------------------------------------
      Review Commission.

      April 30, 1997--Hearing on H.R. 764, ``Bankruptcy 
      Amendments of 1997,'' and H.R. 120, ``Bankruptcy Law 
      Technical Corrections Act of 1997.''

      October 9, 1997--Hearing on H.R. 2592, ``Private Trustee 
      Reform Act of 1997'' and review of post-confirmation fees 
      in chapter 11 cases.

      November 13, 1997--Hearing on the Report of the National 
      Bankruptcy Review Commission.

      February 12, 1998--Hearing on H.R. 2604, ``Religious 
      Liberty and Charitable Donation Protection Act of 1997.''

      March 10-11, 18-19, 1998--Hearings on H.R. 3150, 
      ``Bankruptcy Reform Act of 1998,'' H.R. 3146, ``Consumer 
      Lenders and Borrowers Bankruptcy Accountability Act of 
      1998,'' and H.R. 2500, ``Responsible Borrower Protection 
      Bankruptcy Act.''

      March 11-12, 18-19, 1999--Hearings on H.R. 833, 
      ``Bankruptcy Reform Act of 1999.''

      November 2, 1999--Joint oversight hearing on additional 
      bankruptcy judgeship needs.

      April 11, 2000--Oversight hearing on the limits on 
      regulatory powers under the Bankruptcy Code.''

      February 7-8, 2001--Hearings on H.R. 333, the ``Bankruptcy 
      Abuse Prevention and Consumer Protection Act of 2001.''
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    \9\ Representatives on behalf of the Commercial Law League of 
America, the Credit Union National Association, MBNA America Bank, 
N.A., National Retail Federation, and the National Consumer Law Center 
also testified. Some of the nation's leading jurists and academics 
presented testimony as well. Bankruptcy Reform: Joint Hearing Before 
the Subcomm. on Commercial and Administrative Law of the House Comm. on 
the Judiciary and the Subcomm. on Administrative Oversight and the 
Courts of the Senate Comm. on the Judiciary, 106th Cong. (1999).
    \10\ Senators testifying at the hearing included Charles Grassley 
(R-Iowa), Joseph Biden (D-Del.) and Christopher Dodd (D-Conn.). House 
Members included Jim Moran (D-Va.), Pete Sessions (R-Texas) and Nick 
Smith (R-Mich.). Id. The March 16, 1999 hearing provided an opportunity 
for the subcommittee to hear divergent historical perspectives of 
consumer bankruptcy reform. Specific topics included an analysis of the 
history and significance of the ``fresh start'' discharge under 
American bankruptcy law, the impact of the Bankruptcy Reform Act of 
1978, the historical underpinnings of needs-based bankruptcy relief, 
and how bankruptcy affects the rights of creditors. Another panel 
examined the need for consumer bankruptcy reform from various 
perspectives. Bankruptcy Reform Act of 1999 (Pt. I): Hearing before the 
Subcomm. on Commercial and Administrative Law of the House Comm. on the 
Judiciary, 106th Cong. (1999).
    At its third hearing, on March 17, 1999, the subcommittee heard 
from many of the major organizations in the bankruptcy community, 
including the American Bankruptcy Institute, the American Financial 
Services Association, the National Association of Consumer Bankruptcy 
Attorneys, the National Bankruptcy Conference, the National Consumer 
Bankruptcy Coalition, the National Governors' Association, and the 
National Retail Federation, on the topic of consumer bankruptcy reform. 
A separate panel was devoted to judicial and administrative aspects of 
consumer bankruptcy reform. The hearing concluded with a statistical 
analysis of the needs-based reforms in H.R. 833. Bankruptcy Reform Act 
of 1999 (Pt. II): Hearing before the Subcomm. on Commercial and 
Administrative Law of the House Comm. on the Judiciary, 106th Cong. 
(1999).
    The fourth and final hearing on H.R. 833 was held on March 18, 
1999. One panel focused on the treatment of domestic support 
obligations under the bill. Another panel offered various perspectives 
on business bankruptcy reform provisions in the bill from some of the 
major organizations in the bankruptcy community, including the AFL-CIO, 
American Bankers Association, American Bar Association/Business 
Bankruptcy Section, Commercial Law League of America, National 
Association of Credit Managers, and the Office of Chief Counsel for 
Advocacy at the Small Business Administration. The final panel examined 
a variety of other provisions in H.R. 833, including the treatment of 
tax claims in bankruptcy cases, international insolvencies, financial 
contracts, and chapter 12 (family farmer bankruptcy relief). Bankruptcy 
Reform Act of 1999 (Pt. III): Hearing before the Subcomm. on Commercial 
and Administrative Law of the House Comm. on the Judiciary, 106th Cong. 
(1999).
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    It is also important to note that H.R. 333 is the product 
of extensive negotiation and compromise. Shortly after its 
predecessor, H.R. 833, was passed by the Senate last year, 
Members of the House and Senate, together with their staffs, 
spent nearly 7 months engaged in what was initially an informal 
conference to reconcile differences between the House and 
Senate passed versions of this bill. The product of these 
exhaustive efforts was the conference report on H.R. 2415, 
which is virtually identical to H.R. 333.
Consumer Bankruptcy
    Overview. With respect to its consumer provisions, H.R. 333 
responds to several significant developments. One of these 
developments was the exponential increase in consumer 
bankruptcy filings and the losses associated with these 
filings. Based on data released by the Administrative Office of 
the United States Courts, bankruptcy filings increased by more 
than 72 percent between 1994 and 1998.\11\ For the first time 
in our nation's history, bankruptcy filings exceeded one 
million in 1996.\12\ In calendar year 1997 alone, bankruptcy 
filings increased by more than 19 percent over the prior year. 
By 1998, the number of bankruptcy filings, according to the 
Administrative Office, reached an ``all-time high'' of more 
than 1.4 million cases.\13\ Although the most recent reporting 
periods indicate that filings have somewhat decreased, the 
Administrative Office states that they ``remain well above the 
one million mark.'' \14\ Paradoxically, this dramatic increase 
in bankruptcy filing rates has occurred during a period when 
the economy was generally robust, with relatively low 
unemployment and high consumer confidence.\15\
---------------------------------------------------------------------------
    \11\ Administrative Office for United States Courts News Release, 
Bankruptcy Filings Decrease in Fiscal Year 2000, at 1 (Nov. 21, 2000).
    \12\ Administrative Office for United States Courts News Release, 
Increase in Bankruptcy Filings Slowed in Calendar Year 1998, at 1 (Mar. 
1, 1999).
    \13\ Id.
    \14\ Administrative Office for United States Courts News Release, 
Bankruptcy Filings Decrease in Fiscal Year 2000, at 1 (Nov. 21, 2000). 
For example, the number of bankruptcy cases filed in fiscal year 2000 
exceeded 1.3 million. Id.
    \15\ See, e.g., Congressional Budget Office, Personal Bankruptcy: A 
Literature Review (Sept. 2000); Bankruptcy Reform: Joint Hearing Before 
the Subcomm. on Commercial and Administrative Law of the House Comm. on 
the Judiciary and the Subcomm. on Administrative Oversight and the 
Courts of the Senate Comm. on the Judiciary, 106th Cong. 97 (1999); 
Bankruptcy Reform Act of 1998: Hearings on H.R. 3150 Before the 
Subcomm. on Commercial and Administrative Law of the House Comm. on the 
Judiciary, 105th Cong. 141 (1998).
---------------------------------------------------------------------------
    Coupled with this development was the release of a study 
estimating that financial losses attributable to bankruptcy 
filings in 1997 exceeded $44 billion.\16\ The committee 
received testimony in the last Congress stating that this 
figure, when amortized on a daily basis, amounts to a loss of 
``at least $110 million every day.'' \17\ Various other 
studies, which thereafter became available, concluded that some 
bankruptcy debtors can, in fact, repay a significant portion of 
their debts.\18\
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    \16\ Bankruptcy Reform Act of 1998: Hearings on H.R. 3150 Before 
the Subcomm. on Commercial and Administrative Law of the House Comm. on 
the Judiciary, 105th Cong. 147 (1998).
    \17\ Bankruptcy Reform: Joint Hearing Before the Subcomm. on 
Commercial and Administrative Law of the House Comm. on the Judiciary 
and the Subcomm. on Administrative Oversight and the Courts of the 
Senate Comm. on the Judiciary, 106th Cong. 26 (1999). This estimated 
loss has been calculated to be $400 per household. Id.
    \18\ See, e.g., Bankruptcy Reform Act of 1999 (Part II): Hearing on 
H.R. 833 Before the Subcomm. on Commercial and Administrative Law of 
the House Comm. on the Judiciary, 106th Cong. 298 (1999) (statement of 
Thomas S. Neubig, Ernst & Young LLP--Policy Economics and Quantitative 
Analysis Group, concluding that ``large numbers of 1997 U.S. chapter 7 
filers had the ability to repay large portions of their debts''); Id. 
at 228-29 (statement of Michael E. Staten, Credit Research Center, 
concluding that ``about 25 percent of chapter 7 debtors could have 
repaid at least 30 percent of their non-housing debts over a 5-year 
repayment plan, after accounting for monthly expenses and housing 
payments'' and that ``[a]bout 5 percent of chapter 7 filers appeared 
capable of repaying all of their non-housing debt over a 5-year plan,'' 
although these ``calculations assumed income would remain unchanged 
relative to expenses over the 5 years''); Marianne B. Culhane & 
Michaela M. White, Taking the New Consumer Bankruptcy Model for a Test 
Drive: Means-Testing Real Chapter 7 Debtors, 7 Am. Bankr. L. J. 27, 31 
(1999) (concluding that 3.6% of sampled debtors ``emerged as apparent 
can-pays'').
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    The consumer bankruptcy provisions of H.R. 333 address the 
needs of creditors as well as debtors. With respect to the 
interests of creditors, this legislation responds to many of 
the factors contributing to the increase in consumer bankruptcy 
filings, such as lack of personal financial accountability,\19\ 
the proliferation of serial filings, and the absence of 
effective oversight to eliminate abuse in the system. The 
bill's debtor protections consist of provisions allowing 
debtors to exempt certain education IRA plans, fortifying the 
Bankruptcy Code's exemptions for certain retirement pension 
funds, enhancing the professionalism standards for attorneys 
and others who assist consumer debtors with their bankruptcy 
cases, ensuring that debtors receive notice of alternatives to 
bankruptcy relief, requiring debtors to participate in debt 
repayment programs, and instituting a pilot program to study 
the effectiveness of consumer financial management programs.
---------------------------------------------------------------------------
    \19\ As one academic explained:

      [S]hoplifting is wrong; bankruptcy is also a moral act. 
      Bankruptcy is a moral as well as an economic act. There is 
      a conscious decision not to keep one's promises. It is a 
      decision not to reciprocate a benefit received, a good deed 
      done on the promise that you will reciprocate. Promise-
      keeping and reciprocity are the foundation of an economy 
---------------------------------------------------------------------------
      and healthy civil society.

Bankruptcy Reform: Joint Hearing Before the Subcomm. on Commercial and 
Administrative Law of the House Comm. on the Judiciary and the Subcomm. 
on Administrative Oversight and the Courts of the Senate Comm. on the 
Judiciary, 106th Cong. (1999) 98 (statement of Prof. Todd Zywicki).
    Consumer creditor protections: needs-based reforms. Chapter 
7 is a form of bankruptcy relief where an individual debtor 
receives an immediate unconditional discharge of personal 
liability for certain debts in exchange for turning over his or 
her nonexempt assets to a bankruptcy trustee for liquidation 
and distribution to creditors.\20\ This ``unconditional 
discharge'' in chapter 7 contrasts with the ``conditional 
discharge'' provisions of chapter 13, under which a debtor 
commits to repay some portion of his or her financial 
obligations in exchange for retaining nonexempt assets and 
receiving a broader discharge of debt than is available under 
chapter 7.
---------------------------------------------------------------------------
    \20\ Under the Bankruptcy Code, only an individual may obtain a 
chapter 7 discharge. Thus, a corporation is not eligible to receive a 
discharge under chapter 7. 11 U.S.C. Sec. 727(a)(1).
---------------------------------------------------------------------------
    Allowing consumer debtors in financial distress to choose 
voluntarily an ``unconditional discharge'' has been a part of 
American bankruptcy law since the enactment of the Bankruptcy 
Act of 1898.\21\ The rationale of an unconditional discharge 
was explained by Congress more than 100 years ago:
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    \21\ Bankruptcy Act of 1898, 30 Stat. 544 (1898) (repealed 1978).

        [W]hen an honest man is hopelessly down financially, 
        nothing is gained for the public by keeping him down, 
        but, on the contrary, the public good will be promoted 
        by having his assets distributed ratably as far as they 
        will go among his creditors and letting him start 
        anew.\22\
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    \22\ H.R. Rep. No. 55-65, at 43 (1897).

    The heart of H.R. 333's consumer bankruptcy reforms is the 
implementation of a needs-based screening mechanism, which uses 
the debtor's income and expenses to assess repayment ability. 
The concept of needs-based bankruptcy relief has long been 
debated in the United States. In 1932, President Herbert 
Hoover, for instance, recommended to the Congress the 
---------------------------------------------------------------------------
following:

        The discretion of the courts in granting or refusing 
        discharges should be broadened, and they should be 
        authorized to postpone discharges for a time and 
        require bankrupts, during the period of suspension, to 
        make some satisfaction out of after-acquired property 
        as a condition to the granting of a full discharge.\23\
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    \23\ President's Special Message to the Congress on Reform of 
Judicial Procedure, 69 Pub. Papers 83, 90 (Feb. 29, 1932).

    Congressional recognition of needs-based relief has been 
gradual. In 1938, chapter XIII (the predecessor to chapter 13 
of the Bankruptcy Code) was enacted as a purely voluntary form 
of bankruptcy relief that allowed a debtor to voluntarily 
propose a plan to repay creditors out of future earnings.\24\ 
Over the ensuing years, there continued to be repeated 
expressions of support for and opposition to needs-based 
bankruptcy reform.\25\ The Bankruptcy Reform Act of 1978,\26\ 
however, retained the principle that a debtor's decision to 
choose relief premised on repayment to creditors had to be 
``completely voluntary.'' \27\
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    \24\ Chandler Act of 1938, 52 Stat. 840 (1938); Bankruptcy Reform 
Act of 1999 (Part II): Hearing on H.R. 833 Before the Subcomm. on 
Commercial and Administrative Law of the House Comm. on the Judiciary, 
106th Cong. 100 (1999) (statement of Prof. Lawrence P. King).
    \25\ See, e.g., Report of the Commission on the Bankruptcy Laws of 
the United States--July 1973, H.R. Doc. No. 93 137, pt. I, at 158 
(1973) (observing that ``proposals have been made to Congress from time 
to time that a debtor able to obtain relief under chapter XIII 
[predecessor of chapter 13] should be denied relief in straight 
bankruptcy''); Hearings on H.R. 1057 and H.R. 5771 Before the Subcomm. 
No. 4 of the House Committee on the Judiciary, 90th Cong. (1967). 
Organizations that testified before Congress in 1967 in support of such 
reform included the American Bar Association, the American Bankers 
Association, the Chamber of Commerce of the United States, Credit Union 
National Association, Inc., the National Federation of Independent 
Businesses, and the American Industrial Bankers Association. Id. The 
Commission on the Bankruptcy Laws of the United States, while 
supporting the concept that repayment plans should be ``fostered,'' 
nevertheless concluded in 1973 that ``forced participation by a debtor 
in a plan requiring contributions out of future income has so little 
prospect for success that it should not be adopted as a feature of the 
bankruptcy system.'' Id. at 159.
    \26\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).
    \27\ H.R. Rep. No. 95-595, at 120 (1977) (observing that ``[t]he 
thirteenth amendment prohibits involuntary servitude'' and suggesting 
that ``a mandatory chapter 13, by forcing an individual to work for 
creditors, would violate this prohibition'').
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    Although as originally enacted, the Bankruptcy Code 
provided that a chapter 7 case could only be dismissed for 
``cause,'' the Code was in 1984 amended to permit the court to 
dismiss a chapter 7 case for ``substantial abuse.'' \28\ This 
provision, codified in section 707(b) of the Bankruptcy 
Code,\29\ was added ``as part of a package of consumer credit 
amendments designed to reduce perceived abuses in the use of 
chapter 7.'' \30\ It was intended to respond ``to concerns that 
some debtors who could easily pay their creditors might resort 
to chapter 7 to avoid their obligations.'' \31\ In 1986, 
section 707(b) was further amended to allow a United States 
trustee (a Department of Justice official) to move for 
dismissal.\32\
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    \28\ Bankruptcy Amendments and Federal Judgeship Act of 1984, Pub. 
L. No. 98-353, 98 Stat. 333.
    \29\ 11 U.S.C. Sec. 707(b).
    \30\ 6 Lawrence P. King et al., Collier on Bankruptcy para. 
707.LH[2], at 707-30 (15th ed. rev. 2000).
    \31\ Id. para. 707.04, at 707-15.
    \32\ Bankruptcy Judges, United States Trustees, and Family Farmer 
Bankruptcy Act of 1986, Pub. L. No. 99-554, 100 Stat. 3008.
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    Under current practice, section 707(b) motions are 
infrequently made for several reasons. First, neither the court 
nor the United States trustee is required to make these 
motions, even in cases evidencing obvious abuse of the 
bankruptcy system. Second, other parties in interest, such as 
chapter 7 trustees and creditors, are prohibited from filing 
these motions. In fact, section 707(b) provides that a motion 
under that provision may not even be made ``at the request or 
suggestion of any party in interest.'' \33\ Third, the standard 
for dismissal--substantial abuse--is inherently vague, which 
has lead to its disparate interpretation and application by the 
bankruptcy bench.\34\ Some courts, for example, hold that a 
debtor's ability to repay a significant portion of his or her 
debts out of future income constitutes substantial abuse and 
therefore is cause for dismissal; \35\ others require some 
evidence of moral turpitude.\36\ A fourth reason militating 
against filing section 707(b) motions is that the Bankruptcy 
Code codifies a presumption that favors granting a debtor a 
discharge.\37\
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    \33\ 11 U.S.C. Sec. 707(b).
    \34\ See, e.g., David White, Disorder in the Court: Section 707(b) 
of the Bankruptcy Code, 1995-96 Ann. Survey of Bankr. L. 333, 355 
(1996) (noting that the courts ``have taken divergent views in an 
attempt to define the term'' and have resorted to ``a variety of 
methods'' in applying it to specific cases).
    \35\ See, e.g., In re Kelly , 841 F.2d 908, 913-14 (9th Cir. 1988) 
(observing that the ``principal factor to be considered in determining 
substantial abuse is the debtor's ability to repay debts for which a 
discharge is sought'').
    \36\ See, e.g., In re Braley, 103 B.R. 758 (Bankr. E.D. Va. 1989), 
aff'd, 110 B.R. 211 (E.D. Va. 1990). Notwithstanding the fact that the 
debtors in Braley had disposable monthly income of nearly $2,700, the 
bankruptcy court did not dismiss the case for substantial abuse. Id. at 
760. The court concluded, ``Based upon this legislative history, we are 
persuaded that no future income tests exists in 707(b) and if it did, 
as a finding of fact, the Braley family has insufficient future income 
to merit barring the door in light of the circumstances of this Navy 
family.'' Id. at 762.
    \37\ Section 707(b) of the Bankruptcy Code mandates that ``[t]here 
shall be a presumption in favor of granting the relief requested by the 
debtor.'' 11 U.S.C. Sec. 707(b).
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    Over the course of its hearings in the last two Congresses, 
the committee received testimony explaining that if needs-based 
reforms and other measures were implemented, the rate of 
repayment to creditors would increase as more debtors are 
shifted into chapter 13 (a form of bankruptcy relief where the 
debtor commits to repay a portion or all of his debts in 
exchange for receiving a broad discharge of debt) as opposed to 
chapter 7 (a form of bankruptcy relief where the debtor 
receives an immediate discharge of personal liability on 
certain debts in exchange for turning over his or her nonexempt 
assets to the bankruptcy trustee for distribution to 
creditors).
    Section 102 implements the act's needs-based bankruptcy 
reforms. Subsection (a) amends section 707(b) of the Bankruptcy 
Code to permit a court, on its own motion, or on motion of the 
United States trustee, private trustee, bankruptcy 
administrator, or party in interest, to dismiss a chapter 7 
case for abuse if it was filed by an individual debtor whose 
debts are primarily consumer debts. Alternatively, section 
102(a) permits a chapter 7 case to be converted to a case under 
chapter 11 or chapter 13 on consent of the debtor.
    In addition, section 102(a) replaces the current law's 
presumption in favor of the debtor with a mandatory presumption 
of abuse that is triggered under certain conditions. Section 
102(a) requires a court to presume that abuse exists if the 
amount of the debtor's income remaining, after certain expenses 
and other specified amounts are deducted from the debtor's 
current monthly income (a defined term),\38\ when multiplied by 
60, exceeds the lower of the following: (1) 25 percent of the 
debtor's nonpriority unsecured claims, or $6000 (whichever is 
greater); or (2) $10,000. In addition to other specified 
expenses,\39\ the debtor's monthly expenses--exclusive of any 
payments for debts (unless otherwise permitted)--must be the 
applicable monthly amounts set forth in the Internal Revenue 
Service Financial Analysis Handbook as Necessary Expenses under 
the National and Local Standards categories and the debtor's 
actual monthly expenditures for items categorized as Other 
Necessary Expenses. For purposes of this provision, the 
expenses include those of the debtor, the debtor's dependents, 
and the debtor's spouse, if not otherwise a dependent. For 
purposes of determining whether the mandatory presumption of 
abuse applies under the needs-based test, section 102(a) 
permits the debtor to deduct certain other liabilities.
---------------------------------------------------------------------------
    \38\ Section 102(b) defines ``current monthly income'' as the 
average monthly income from all sources that the debtor receives (or, 
in a joint case, the debtor and the debtor's spouse receive), without 
regard to whether it is taxable income, in the 6-month period preceding 
the date of determination. It includes any amount paid on a regular 
basis by any entity (other than the debtor or, in a joint case, the 
debtor and the debtor's spouse) to the household expenses of the debtor 
or the debtor's dependents and, in a joint case, the debtor's spouse, 
if not otherwise a dependent. It excludes Social Security Act benefits 
and payments to victims of war crimes or crimes against humanity on 
account of their status as victims of such crimes.
    \39\ Section 102(a) mandates that the debtor's monthly expenses 
also include reasonably necessary expenses incurred to maintain the 
safety of the debtor and the debtor's family from family violence as 
identified in section 309 of the Family Violence Prevention and 
Services Act or other applicable law. In addition, the debtor may 
deduct up to an additional 5 percent of the food and clothing expense 
allowances under the National Standards category, if demonstrated to be 
reasonable and necessary.
    Other liabilities that may be deducted include the debtor's average 
monthly payments on account of secured debts, calculated as the total 
of all amounts scheduled as contractually due over the 60-month period 
following the filing of the bankruptcy, divided by 60 months. This 
amount may include any additional payments to secured creditors that a 
chapter 13 debtor must make to retain possession of a primary 
residence, motor vehicle, or other property necessary for the support 
of the debtor and the debtor's dependents. With respect to claims and 
expenses entitled to priority under section 507 of the Bankruptcy Code, 
section 102(a) specifies that the debtor may deduct payments for these 
obligations, calculated as the total amount of all priority debts, 
divided by 60. If applicable, the debtor may deduct the following 
additional expenses:

      (1) the continuation of actual expenses paid by the debtor 
      that are reasonable and necessary for the care and support 
      of an elderly, chronically ill, or disabled household 
      member or member of the debtor's immediate family who is 
---------------------------------------------------------------------------
      unable to pay such expenses;

      (2) the actual administrative expenses (including 
      reasonable attorneys' fees) of administering a chapter 13 
      plan for the district in which the debtor resides, up to 10 
      percent of projected plan payments, as determined under 
      schedules issued by the Executive Office for United States 
      Trustees; and

      (3) the actual expenses for each dependent child under the 
      age of 18 years up to $1,500 per year per child to attend a 
      private elementary or secondary school, if the debtor 
      documents these expenses and provides a detailed 
      explanation of why they are reasonable and necessary.
    The mandatory presumption of abuse may only be rebutted if: 
(1) the debtor demonstrates special circumstances that justify 
any additional expense or adjustment to the debtor's current 
monthly income for which there is no reasonable alternative; 
and (2) such additional expense or income adjustment causes the 
debtor's current monthly income (reduced by various amounts) 
when multiplied by 60 to be less than the lesser of either (i) 
25 percent of the debtor's nonpriority unsecured claims, or 
$6,000 (whichever is greater), or (ii) $10,000.\40\
---------------------------------------------------------------------------
    \40\ The debtor must itemize and provide documentation of each 
additional expense or income adjustment and an explanation of the 
special circumstances that make such expense or income adjustment 
reasonable and necessary. In addition, the debtor must attest under 
oath to the accuracy of any information provided to demonstrate that 
such additional expenses or adjustments to income are required.
---------------------------------------------------------------------------
    Where the mandatory presumption of abuse does not apply or 
has been rebutted, the court, in order to determine whether the 
granting of relief under chapter 7 would be an abuse of such 
chapter, must consider: (1) whether the debtor filed the 
chapter 7 case in bad faith; or (2) whether the totality of 
circumstances of the debtor's financial situation (including 
whether the debtor seeks to reject a personal services contract 
and the financial need for such rejection) demonstrates abuse.
    Should a court grant a section 707(b) motion made by a 
trustee and find that the action of debtor's counsel in filing 
the chapter 7 case violated Federal Rule of Bankruptcy 
Procedure 9011, section 102(a) mandates that the court order 
the attorney to reimburse the trustee for all reasonable costs 
in prosecuting the motion, including reasonable attorneys' 
fees. In addition, the court must assess an appropriate civil 
penalty, payable to the private trustee, bankruptcy 
administrator, or the United States trustee.\41\
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    \41\ Section 102(a) specifies that the signature of an attorney on 
a bankruptcy petition, pleading, or written motion constitutes a 
certification that the attorney has (1) performed a reasonable 
investigation into the circumstances giving rise to such petition, 
pleading or motion; and (2) determined that the document is well 
grounded in fact or warranted by existing law or a good faith argument 
for the extension, modification, or reversal of existing law; and does 
not constitute an abuse under section 707(b)(1) of the Bankruptcy Code. 
Pursuant to section 102(a), the signature of an attorney on a 
bankruptcy petition constitutes a certification that the attorney has 
no knowledge after an inquiry that the information in the schedules 
filed with such petition is incorrect.
---------------------------------------------------------------------------
    Two types of ``safe harbors'' are recognized under section 
102(a). One provides that only a judge, United States trustee, 
bankruptcy administrator, or private trustee may bring a motion 
under section 707(b) of the Bankruptcy Code if the chapter 7 
debtor's income (or in a joint case, the income of debtor and 
the debtor's spouse) does not exceed the State median family 
income for a family of equal or lesser size (adjusted for 
larger sized families), or the State median family income for 
one earner in the case of a one-person household. The second 
safe harbor provides that no motion under section 707(b)(2) 
(dismissal based on the debtor's ability to repay) may be filed 
by a judge, United States trustee, bankruptcy administrator, 
private trustee, or other party in interest if the debtor and 
the debtor's spouse combined have income that does not exceed 
the State median family income for a family of equal or lesser 
size (adjusted for larger sized families), or the State median 
family income for one earner in the case of a one-person 
household.
    Provisions of the bill that are directed to other forms of 
abuse include Section 102(f), which amends section 707 of the 
Bankruptcy Code to provide that a court may dismiss a chapter 7 
case filed by an individual debtor convicted of a crime of 
violence (as defined in 18 U.S.C. Sec. 16), or a drug 
trafficking crime (as defined in 18 U.S.C. Sec. 924(c)(2)) on 
motion of the victim, under certain circumstances. Section 
102(g) amends section 1325(a) of the Bankruptcy Code to require 
the court to find, as a condition of confirmation, that the 
debtor filed the chapter 13 case in good faith.
    Protections for creditors--in general. H.R. 333 contains a 
broad range of reforms to provide greater protections for 
creditors, while ensuring that the claims of those creditors 
entitled to priority treatment, such as spousal and child 
support claims, are not adversely impacted. The bill 
accomplishes this goal by: (1) ensuring that creditors receive 
proper and timely notice of important events and proceedings in 
a bankruptcy case; (2) prohibiting abusive serial filings and 
extending the period between successive discharges; (3) 
implementing various provisions designed to improve the 
accuracy of the information contained in debtors' schedules, 
statements of financial affairs, and other documents; and (4) 
limiting abusive use of homestead exemptions. It also clarifies 
that creditors holding consumer debts may participate without 
counsel at the section 341 meeting of creditors (which provides 
an opportunity for creditors to examine the debtor under oath).
    Protection of family support obligations. Domestic support 
claimants receive a broad spectrum of special protections under 
H.R. 333. According to one law enforcement official who 
testified before this committee earlier this year:

        It is my opinion, and the opinion of every professional 
        support collector with whom I have discussed the issue, 
        that the support amendments contained in Sections 211 
        through 219 of H.R. 333 will enhance substantially the 
        enforcement of support obligations against debtors in 
        bankruptcy. These enhancements will also result in a 
        more efficient and economical use of attorney and court 
        resources.\42\
---------------------------------------------------------------------------
    \42\ Bankruptcy Abuse Prevention and Consumer Protection Act of 
2001: Hearing Before the Subcomm. on Commercial and Administrative Law 
of the House Comm. on the Judiciary, 107th Cong.____(2001) (statement 
of Philip L. Strauss on behalf of the California District Attorneys 
Association and the California Family Support Council).

    The bill creates a uniform and expanded definition of 
domestic support obligations to include debts that accrue both 
before or after a bankruptcy case is filed. H.R. 333 accords 
the highest payment priority for these debts and gives new 
priority treatment to certain claims assigned to governmental 
units by a spouse, former spouse, child of the debtor, or 
parent of a child. In addition, the bill mandates that a 
chapter 13 or chapter 11 debtor must be current on postpetition 
domestic support obligations to confirm a plan of 
reorganization. The same obligation is imposed as a 
prerequisite for a chapter 13 debtor to receive a discharge. To 
facilitate the domestic support collection efforts by 
governmental units, H.R. 333 creates various exceptions to 
automatic stay provisions of the Bankruptcy Code (which enjoin 
many forms of creditor collection activities). It also broadens 
the categories of nondischargeable family support obligations 
with the result that these debts will not be extinguished at 
the end of the bankruptcy process. H.R. 333, in addition, 
mandates that spousal and child support claimants as well as 
State child support agencies receive specified information and 
notices relevant to pending bankruptcy cases.
    Protections for secured creditors. H.R. 333 gives secured 
creditors a broad variety of enhanced protections. These 
include a prohibition against bifurcating a secured debt 
incurred within the 5-year period preceding the filing of a 
bankruptcy case if the debt is secured by a purchase money 
security interest in a motor vehicle acquired for the debtor's 
personal use. Where the collateral consists of any other type 
of property having value, H.R. 333 prohibits bifurcation of 
specified secured debts if incurred during the 1-year period 
preceding the filing of the bankruptcy case. The bill clarifies 
current law to specify that the value of a claim secured by 
personal property is the replacement value of such property 
without deduction for the secured creditor's costs of sale or 
marketing. In addition, the bill terminates the automatic stay 
with respect to personal property if the debtor does not timely 
reaffirm the underlying obligation or redeem the property. H.R. 
333 also specifies that a secured claimant retains its lien in 
a chapter 13 case until the underlying debt is paid or the 
debtor receives a discharge.
    Protections for unsecured creditors. H.R. 333 contains 
various reforms tailored to remedy certain types of fraud and 
abuse within the present bankruptcy system. For example, the 
bill substantially limits a debtor's ability to file successive 
bankruptcy cases. It also addresses abusive practices by 
consumer debtors who, for example, knowingly load up with 
credit card purchases or recklessly obtain cash advances and 
then file for bankruptcy relief. In addition, H.R. 333 prevents 
the discharge of debts based on fraud, embezzlement, and 
malicious injury in a chapter 13 case.
    Protections for lessors. With respect to the interests of 
lessors, H.R. 333 requires chapter 13 debtors to remain current 
on their personal property leases and provide proof of adequate 
insurance. The bill specifies that a lessor may condition 
assumption of a personal property lease on cure of any 
outstanding default and it provides that a lessor is not 
required to permit such assumption. The bill also addresses a 
problem faced by thousands of small landlords across the nation 
whose tenants file for bankruptcy relief solely for the purpose 
of staying pending eviction proceedings so that they can live 
``rent free.''
    Consumer debtor protections. The bill's consumer 
protections include provisions strengthening the 
professionalism standards for attorneys and others who assist 
consumer debtors with their bankruptcy cases. H.R. 333 mandates 
that certain services and specified notices be provided to 
consumers by professionals and others who render bankruptcy 
assistance. To ensure compliance with these provisions, the 
bill institutes various enforcement mechanisms.
    In addition, H.R. 333 amends the Truth in Lending Act to 
require certain credit card solicitations, monthly billing 
statements, and related materials to include important 
disclosures and explanatory statements regarding introductory 
interest rates and minimum payments, among other matters. These 
additional disclosures are intended to give debtors important 
information to enable them to better manage their financial 
affairs.
    Reforms aimed to help debtors understand their rights and 
obligations with respect to reaffirmation agreements are also 
included in the legislation. To enforce these protections, for 
example, H.R. 333 requires the Attorney General to designate a 
U.S. Attorney for each judicial district and a FBI agent for 
each field office to have primary law enforcement 
responsibility regarding abusive reaffirmation practices.
    In addition, the legislation substantially expands a 
debtor's ability to exempt certain tax-qualified retirement 
accounts and pensions. It also creates a new provision that 
allows a consumer debtor to exempt certain education IRA and 
State tuition plans for his or her child's postsecondary 
education from the claims of creditors.
    Most importantly, H.R. 333 requires debtors to participate 
in credit counseling programs before filing for bankruptcy 
relief (unless special circumstances do not permit such 
participation). The legislation's credit counseling provisions 
are intended to give consumers in financial distress an 
opportunity to learn about the consequences of bankruptcy--such 
as the potentially devastating effect it can have on their 
credit rating--and guidance about how to manage their finances, 
so that they can avoid future financial difficulties.
    Other debtor protections include expanded notice 
requirements for consumers. Under the bill, individuals with 
primarily consumer debts must receive notice of alternatives to 
bankruptcy relief before they file for bankruptcy and it 
requires them to be informed of other matters pertaining to the 
integrity of the bankruptcy system. The legislation also 
permits certain filing fees and related charges to be waived, 
in appropriate cases, for individuals who lack the ability to 
pay these costs.
    Business Bankruptcy. H.R. 333 contains a comprehensive set 
of reforms pertinent to business bankruptcies. They include 
provisions addressing the special problems presented by small 
business bankruptcies and single asset real estate debtors as 
well as provisions dealing with business bankruptcy cases in 
general. H.R. 333 establishes a new form of bankruptcy relief 
for transnational insolvencies that is intended to promote 
international comity and greater certainty. It also includes 
provisions concerning the treatment of certain financial 
contracts under the banking laws as well as under the 
Bankruptcy Code. H.R. 333 responds to the special needs of 
family farmers by making chapter 12 of the Bankruptcy Code (a 
form of bankruptcy relief available only to eligible family 
farmers) permanent.
    Small business/single asset real estate debtors. Most 
chapter 11 cases are filed by small business debtors. Although 
the Bankruptcy Code envisions that creditors should play a 
major role in the oversight of chapter 11 cases, this often 
does not occur with respect to small business debtors. The main 
reason is that creditors in these smaller cases do not have 
claims large enough to warrant the time and money to 
participate actively in these cases. The resulting lack of 
creditor oversight creates a greater need for the United States 
trustee to monitor these cases closely. Nevertheless, the 
monitoring of these debtors by United States trustees varies 
throughout the nation.
    H.R. 333 addresses the special problems presented by small 
business cases by instituting a variety of time frames and 
enforcement mechanisms designed to weed out small business 
debtors who are not likely to reorganize. It also requires 
these cases to be more actively monitored by United States 
trustees and the bankruptcy courts. The small business and 
single asset real estate provisions of H.R. 333 are largely 
derived from consensus recommendations of the National 
Bankruptcy Review Commission.\43\ These provisions have also 
received broad support from many in the business community.\44\
---------------------------------------------------------------------------
    \43\ See generally Report of the National Bankruptcy Review 
Commission, at 303-706 (Oct. 20, 1997).
    \44\ See, e.g., Bankruptcy Abuse Prevention and Consumer Protection 
Act of 2001: Hearing Before the Subcomm. on Commercial and 
Administrative Law of the House Comm. on the Judiciary, 107th 
Cong.____(2001) (statement of R. Bruce Josten on behalf of the U.S. 
Chamber of Commerce).
---------------------------------------------------------------------------
    With regard to the Bankruptcy Code's treatment of single 
asset real estate debtors, H.R. 333 makes several amendments. 
First, it eliminates the monetary cap from the single asset 
real estate debtor definition. Second, it makes these debtors 
subject to the bill's small business reforms. Third, H.R. 333 
amends the automatic stay provisions by permitting a single 
asset real estate debtor to make requisite interest payments 
out of rents or other proceeds generated by the real property.
    Financial contracts. H.R. 333 contains a series of 
provisions pertaining to the treatment of certain financial 
transactions under the Bankruptcy Code and relevant banking 
laws. These provisions are intended to reduce ``systemic risk'' 
in the banking system and financial marketplace. To minimize 
the risk of disruption when parties to these transactions 
become bankrupt or insolvent, the bill amends provisions of the 
banking and investment laws, as well as the Bankruptcy Code, 
applicable to certain types of financial transactions.\45\ In 
addition to the Bankruptcy Code, the bill amends the Federal 
Deposit Insurance Act; Financial Institutions Reform, Recovery 
and Enforcement Act of 1989; Federal Deposit Insurance 
Corporation Improvement Act of 1991; Federal Reserve Act; and 
Securities Investor Protection Act of 1971.
---------------------------------------------------------------------------
    \45\ The report on H.R. 4393, a bill substantially similar to title 
X of H.R. 833 that was introduced in the 106th Congress by Banking and 
Financial Services Committee Chair James Leach (R-Iowa), explained as 
follows:

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

H. Rep. No. 105-688, Part 1, at 2 (1998).
    Many of these provisions are derived from recommendations 
issued by a presidential interagency working group \46\ and 
revisions espoused by the financial industry. Other provisions 
would treat certain asset-backed securitizations as valid 
transfers and limit the authority of a court or administrative 
agency to enjoin certain actions.
---------------------------------------------------------------------------
    \46\ The Working Group's members included representatives from the 
Commodity Futures Trading Commission, the Federal Deposit Insurance 
Corporation, the Board of Governors of the Federal Reserve System, the 
Federal Reserve Bank of New York, the Securities and Exchange 
Commission, and the Department of the Treasury, including the Office of 
the Comptroller of the Currency. Id. at 1.
---------------------------------------------------------------------------
    Transnational insolvencies. In response to the increasing 
globalization of business dealings and operations, the bill 
establishes a separate chapter under the Bankruptcy Code 
devoted to transnational insolvencies. These provisions are 
intended to provide greater legal certainty for trade and 
investment as well as to provide for the fair and efficient 
administration of these cases.
    Health care providers. H.R. 333 adds a provision to the 
Bankruptcy Code specifying requirements for the disposal of 
patient records in a chapter 7, 9, or 11 case of a health care 
business where the trustee lacks sufficient funds to pay for 
the storage of such records in accordance with applicable 
Federal or State law. These requirements are intended to 
protect the privacy and confidentiality of a patient's medical 
records when they are in the custody of a health care business 
in bankruptcy.
    In addition, the bill includes a provision according 
administrative expense priority to the actual, necessary costs 
and expenses of closing a health care business (including the 
disposal of patient records or transferral of patients) 
incurred by a trustee, Federal agency, or a department or 
agency of a State. It also requires the court to order the 
appointment of an ombudsman within 30 days after the 
commencement of a chapter 7, 9 or 11 case by a health care 
provider, unless the court finds that such appointment is not 
necessary for the protection of patients under the specific 
facts of the case. The ombudsman is responsible for monitoring 
the quality of patient care and to represent the interests of 
the patients. Other provisions include the requirement that a 
bankruptcy trustee use all reasonable and best efforts to 
transfer patients from a health care business that is being 
closed to an appropriate alternative facility that meets 
certain specified criteria.
    Other Provisions Having General Impact. H.R. 333 contains 
several provisions having general impact with respect to 
bankruptcy law and practice. For example, it requires the 
Executive Office for United States Trustees to compile various 
statistics regarding chapter 7, 11 and 13 cases and to make 
these data available to the public. Other general provisions 
include allowing compensation to be shared with bona fide 
public service attorney referral programs, and mandating that a 
bankruptcy court conduct scheduling conferences in bankruptcy 
cases if necessary to further the expeditious and economical 
resolution of such cases.
    The bill makes several revisions to the Bankruptcy Code's 
preference provisions. Under H.R. 333, a defendant in a 
preference action may establish that the transfer was made in 
the ordinary course of the debtor's financial affairs or 
business, or that the transfer was made in accordance with 
ordinary business terms. The bill also establishes a threshold 
amount as a prerequisite to the commencement of a preferential 
transfer proceeding. In addition, H.R. 333 amends the venue 
provisions for preferential transfer actions. A preferential 
transfer action in the amount of $10,000 or less would have to 
be filed in the district where the defendant resides. 
Currently, this amount is fixed at $1,000.

                                Hearings

    The committee held 2 days of hearings on H.R. 333 on 
February 7 and 8, 2001. Testimony was received from eight 
witnesses, representing seven organizations. During the course 
of the first hearing, the committee received testimony from 
Kenneth Beine on behalf of the Credit Union National 
Association who explained how the current bankruptcy system 
impacts small businesses and non-profits. The committee also 
received testimony from R. Bruce Josten on behalf of the U.S. 
Chamber of Commerce who described the current consumer 
bankruptcy law's adverse impact on businesses. In addition, the 
committee heard from Phillip Strauss, a professional with more 
than 25 years of experience in child support enforcement. 
Speaking on behalf of the California District Attorneys 
Association and the California Family Support Council, Mr. 
Strauss described the ways in which H.R. 333 would help ensure 
payment of these obligations. George Wallace, the final witness 
appeared on behalf of The Coalition for Responsible Bankruptcy 
Laws. He explained the differences between the version of the 
bill as reported by the committee in the 106th Congress and 
H.R. 333.
    The second day of hearings provided a different 
perspective. The witnesses included Charles Trapp, who was a 
former chapter 7 debtor. He was joined by Ralph Mabey, who 
appeared on behalf of the National Bankruptcy Conference and 
Professor Karen Gross of New York Law School. The final witness 
was Damon Silvers, who testified on behalf of the AFL-CIO. 
Although each of these witnesses acknowledged that H.R. 333 did 
make needed improvements to current bankruptcy law, they 
questioned the efficacy of certain provisions of the bill.

                        Committee Consideration

    On February 14, 2001, the committee met in open session and 
ordered favorably reported the bill H.R. 333 with amendment by 
a recorded vote of 19 to 8, a quorum being present.

                         Votes of the Committee

    1. An amendment offered by Mr. Conyers and Ms. Waters to 
create an exception to the nondischargeability of certain 
specified debts if the debtor's ability to pay domestic support 
obligations is impaired by such limitation on the debtor's 
discharge. Defeated 10 to 14.

        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Nadler                          Mr. Gekas
Mr. Watt                            Mr. Smith (TX)
Mr. Lofgren                         Mr. Goodlatte
Ms. Jackson Lee                     Mr. Chabot
Ms. Waters                          Mr. Barr
Mr. Meehan                          Mr. Hutchinson
Mr. Delahunt                        Mr. Cannon
Mr. Baldwin                         Mr. Graham
Mr. Weiner                          Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Ms. Hart

    2. An amendment offered by Mr. Watt to specify that the 
terms ``cash advances'' and ``extensions of consumer credit 
under an open end credit plan'' do not include expenditures 
reasonably necessary for the support or maintenance of the 
debtor or a dependent of the debtor with respect to determining 
the dischargeability of these debts. Defeated 8 to 15.

        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Nadler                          Mr. Gekas
Mr. Watt                            Mr. Smith (TX)
Mr. Lofgren                         Mr. Gallegly
Ms. Jackson Lee                     Mr. Goodlatte
Ms. Waters                          Mr. Chabot
Mr. Weiner                          Mr. Barr
Mr. Schiff                          Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Ms. Hart

    3. An amendment offered by Mr. Conyers (1) to permit the 
extension of certain time periods pertaining to the assumption 
and rejection of unexpired leases of nonresidential real 
property, the filing of chapter 11 plans of reorganization and 
the obtaining of acceptances, the provision of adequate 
assurance of payment for utility service in a chapter 11 case, 
the performance of specified duties of trustees and debtors in 
possession in small business cases, and plan filing and 
confirmation in small business cases; and (2) to create an 
exception to the exclusion of asset-backed securitizations as 
property of the estate in section 912. Defeated 6 to 18.

        AYES                          NAYS
Mr. Nadler                          Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Jackson Lee                     Mr. Smith (TX)
Ms. Waters                          Mr. Gallegly
Mr. Weiner                          Mr. Goodlatte
Mr. Schiff                          Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    4. An amendment offered by Mr. Nadler to make specified 
debts relating to violations of law concerning certain health 
care facilities and the provision of health services 
nondischargeable. Defeated 9 to 20.

        AYES                          NAYS
Mr. Nadler                          Mr. Sensenbrenner
Mr. Scott                           Mr. Gekas
Mr. Watt                            Mr. Coble
Mr. Lofgren                         Mr. Smith (TX)
Ms. Jackson Lee                     Mr. Gallegly
Ms. Waters                          Mr. Goodlatte
Ms. Baldwin                         Mr. Chabot
Mr. Weiner                          Mr. Barr
Mr. Schiff                          Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    5. An amendment offered by Ms. Jackson Lee to prohibit a 
creditor in a bankruptcy case from asserting any claim if the 
creditor failed to comply with certain requirements of the 
Consumer Credit Protection Act for the amount of the debt that 
a debtor incurred on a credit card issued in violation of such 
requirements. Defeated 6 to 18.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Jackson Lee                     Mr. Coble
Ms. Waters                          Mr. Smith (TX)
Ms. Baldwin                         Mr. Gallegly
Mr. Schiff                          Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Ms. Hart
                                    Mr. Flake

    6. An amendment offered by Mr. Watt to an amendment by Ms. 
Waters to exempt certain debtors from specified filing 
requirements. Defeated 9 to 13.

        AYES                          NAYS
Mr. Scarborough                     Mr. Sensenbrenner
Mr. Conyers                         Mr. Gekas
Mr. Frank                           Mr. Coble
Mr. Scott                           Mr. Goodlatte
Mr. Watt                            Mr. Chabot
Ms. Waters                          Mr. Hutchinson
Mr. Delahunt                        Mr. Bachus
Ms. Baldwin                         Mr. Hostettler
Mr. Schiff                          Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    7. An amendment offered by Ms. Waters to provide that the 
exceptions to the automatic stay do not apply to certain types 
of debtors. Defeated 9 to 13.

        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Frank                           Mr. Gekas
Mr. Scott                           Mr. Smith (TX)
Ms. Jackson Lee                     Mr. Chabot
Ms. Waters                          Mr. Barr
Mr. Meehan                          Mr. Hutchinson
Ms. Baldwin                         Mr. Graham
Mr. Weiner                          Mr. Bachus
Mr. Schiff                          Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart

    8. An amendment offered by Mr. Meehan to require the 
applicable State median income amount specified in sections 102 
(needs-based reforms) and 318 (duration of chapter 13 plans) to 
be adjusted, under certain circumstances, to reflect the 
percentage change in the Consumer Price Index for All Urban 
Consumers for each subsequent year during which median income 
is not reported by the Bureau of the Census. Defeated 9 to 13.

        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Frank                           Mr. Gekas
Mr. Scott                           Mr. Smith (TX)
Mr. Watt                            Mr. Barr
Ms. Jackson Lee                     Mr. Hutchinson
Mr. Meehan                          Mr. Graham
Mr. Delahunt                        Mr. Bachus
Ms. Baldwin                         Mr. Scarborough
Mr. Schiff                          Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Ms. Hart
                                    Mr. Flake

    9. An amendment offered by Mr. Delahunt to eliminate the 2-
year reachback period applicable to the exemption limitation in 
section 322 and to increase the exemption amount to $500,000. 
Defeated 6 to 18.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Waters                          Mr. Coble
Mr. Delahunt                        Mr. Smith (TX)
Ms. Baldwin                         Mr. Chabot
Mr. Schiff                          Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake
                                    Ms. Jackson Lee
                                    Mr. Wexler

    10. An amendment offered by Ms. Baldwin to accord 
administrative expense priority under section 503(b)(1)(A) of 
the Bankruptcy Code to wages and benefits attributable to any 
period of time after a bankruptcy case is filed as a result of 
the debtor's violation of Federal or State law, without regard 
to when the original unlawful act occurred or to whether any 
services were rendered. Defeated 3 to 15.

        AYES                          NAYS
Mr. Watt                            Mr. Sensenbrenner
Ms. Baldwin                         Mr. Gekas
Mr. Schiff                          Mr. Coble
                                    Mr. Smith (TX)
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    11. An amendment offered by Ms. Baldwin to expand the 
Bankruptcy Code's definition of ``family farmer''. Defeated 4 
to 13.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Baldwin                         Mr. Coble
Mr. Schiff                          Mr. Smith (TX)
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    12. An amendment offered by Mr. Schiff to amend a safe 
harbor provision in section 102 with respect to the treatment 
of spousal income. Defeated 5 to 13.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Waters                          Mr. Coble
Ms. Baldwin                         Mr. Chabot
Mr. Schiff                          Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    13. An amendment offered by Mr. Schiff to require the 
Comptroller General of the United States to study and file a 
report containing the results of the study to determine any 
effect that H.R. 333 has on the ability of a parent to pay 
child support or the ability of a parent to collect child 
support. Defeated 5 to 16.

        AYES                          NAYS
Mr. Scott                           Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Waters                          Mr. Coble
Ms. Baldwin                         Mr. Smith (TX)
Mr. Schiff                          Mr. Chabot
                                    Mr. Barr
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Hostettler
                                    Mr. Green
                                    Mr. Keller
                                    Mr. Issa
                                    Ms. Hart
                                    Mr. Flake

    14. Part one of an amendment offered by Mr. Sensenbrenner, 
which conforms the fee allocation percentage in section 325 
with that specified under Section 406(b) of the Judiciary 
Appropriations Act, as amended. Passed 22 to 0.

        AYES                          NAYS
Mr. Sensenbrenner
Mr. Gekas
Mr. Smith (TX)
Mr. Goodlatte
Mr. Chabot
Mr. Barr
Mr. Hutchinson
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Baldwin
Mr. Schiff

    15. Part two of an amendment by Mr. Sensenbrenner to 
conform a statutory cross reference necessitated by the 
enactment of the Commodity Futures Modernization Act of 2000. 
Passed 21 to 0.

        AYES                          NAYS
Mr. Sensenbrenner
Mr. Gekas
Mr. Goodlatte
Mr. Chabot
Mr. Barr
Mr. Hutchinson
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Baldwin
Mr. Schiff

    16. Motion to move the previous question. Passed 18 to 5.

        AYES                          NAYS
Mr. Sensenbrenner                   Mr. Conyers
Mr. Gekas                           Mr. Scott
Mr. Coble                           Mr. Watt
Mr. Goodlatte                       Ms. Baldwin
Mr. Chabot                          Mr. Schiff
Mr. Barr
Mr. Hutchinson
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake
Mr. Nadler

    17. Motion to table the motion to reconsider the vote 
ordering the previous question. Passed 18 to 7.

        AYES                          NAYS
Mr. Sensenbrenner                   Mr. Conyers
Mr. Gekas                           Mr. Nadler
Mr. Coble                           Mr. Scott
Mr. Smith (TX)                      Mr. Watt
Mr. Goodlatte                       Ms. Jackson Lee
Mr. Chabot                          Ms. Baldwin
Mr. Barr                            Mr. Schiff
Mr. Hutchinson
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake

    18. Motion to report favorably H.R. 333, as amended. Passed 
19 to 8.

        AYES                          NAYS
Mr. Sensenbrenner                   Mr. Conyers
Mr. Gekas                           Mr. Nadler
Mr. Coble                           Mr. Scott
Mr. Smith (TX)                      Mr. Watt
Mr. Goodlatte                       Ms. Jackson Lee
Mr. Chabot                          Ms. Waters
Mr. Barr                            Ms. Baldwin
Mr. Hutchinson                      Mr. Schiff
Mr. Cannon
Mr. Graham
Mr. Bachus
Mr. Scarborough
Mr. Hostettler
Mr. Green
Mr. Keller
Mr. Issa
Ms. Hart
Mr. Flake
Mr. Boucher

                      Committee Oversight Findings

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

                    Performance Goals and Objectives

    The bill is intended to improve the bankruptcy system by 
deterring abuse, setting enhanced standards for bankruptcy 
professionals, and streamlining case administration.

               New Budget Authority and Tax Expenditures

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

                        Committee Cost Estimate

    The estimate of the Congressional Budget Office (CBO) was 
not available at the time of the filing of this report. In 
compliance with clause 3(d)(2) of rule XIII of the Rules of the 
House of Representatives, the committee believes that the bill 
will have a budget effect for fiscal year 2001 and subsequent 
years comparable to that projected by the CBO for H.R. 833, the 
Bankruptcy Reform Act of 1999, a bill substantively similar to 
H.R. 333 that was passed by the House during the 106th 
Congress, with some differences. Although H.R. 333 and H.R. 833 
both authorize the extension of five existing temporary 
bankruptcy judgeships, H.R. 333 authorizes 23 new temporary 
bankruptcy judges (five more than H.R. 833). With salaries and 
benefits considered as mandatory costs, the committee estimates 
that these costs may approximate $ 14 million a year over 5 
years. The committee believes that this provision is necessary 
to facilitate the improvements proposed by the legislation and 
will enhance the efficiency of the system.
    As indicated, H.R. 333 is substantially similar to H.R. 
833. In a letter dated May 5, 1999, the CBO prepared an initial 
Federal cost estimate and an assessment of H.R. 833's impact on 
state, local, and tribal governments. \1\ In that cost 
estimate, the CBO stated that implementing H.R. 833 would 
``cost $333 million over the 2000-2004 period--$322 million in 
discretionary spending, subject to appropriation of the 
necessary funds''. In addition, the CBO observed that because 
H.R. 833 would have decreased ``receipts by about $4 million 
over the next 5 years,'' the bill would have affected direct 
spending and governmental receipts and pay-as-you-go procedures 
would apply. With regard to the Unfunded Mandates Reform Act 
(UMRA), the CBO noted that H.R. 833 contained an 
intergovernmental mandate, but that the bill's ``costs would be 
insignificant and would not exceed the threshold established in 
that act ($50 million in 1996, adjusted annually for 
inflation).'' As to new private-sector mandates (as defined in 
UMRA) that H.R. 833 would impose on bankruptcy attorneys, 
creditors, and credit and charge-card companies, CBO estimated 
that the costs of these mandates would exceed the $100 million 
(in 1996 dollars) threshold established in UMRA. ``Overall,'' 
the CBO expected that ``enacting this bill would benefit state 
and local governments by enhancing their ability to collect 
outstanding obligations in bankruptcy cases.''
---------------------------------------------------------------------------
    \1\ 145 Cong. Rec. H2656 (daily ed. May 5, 1999).
---------------------------------------------------------------------------
    The committee notes that H.R. 333 could result in some 
increased discretionary expenditures with regard to such 
matters integral to the reforms proposed as: a debtor financial 
management training test program; mandatory case auditing; and 
the compilation and publication of bankruptcy data and 
statistics as well as other provisions. However, costs related 
to some of these expenditures, such as increased auditing, are 
subject to appropriations and likely to be offset by enhanced 
collections resulting from greater protections accorded to 
Federal taxing authorities in Title VII of H.R. 333, as 
amended.

                     Committee Jurisdiction Letters

                     House Committee on Financial Services,
                                 Washington, DC, February 21, 2001.
Hon. F. James Sensenbrenner, Jr., Chairman,
Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Jim: On February 14, 2001, the Committee on the 
Judiciary ordered reported H.R. 333, the Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2001. As you know, 
the Committee on Financial Services was granted an additional 
referral upon the bill's introduction pursuant to the 
Committee's jurisdiction under Rule X of the Rules of the House 
of Representatives over banks and banking, credit, and 
securities and exchanges.
    Because of your willingness to consult with the Committee 
on Financial Services regarding this matter, your continuing 
support for our requested changes, and the need to move this 
legislation expeditiously, I will waive consideration of the 
bill by the Financial Services Committee. By agreeing to waive 
its consideration of the bill, the Financial Services Committee 
does not waive its jurisdiction over H.R. 333. In addition, the 
Committee on Financial Services reserves its authority to seek 
conferees on any provisions of the bill that are within the 
Financial Services Committee's jurisdiction during any House-
Senate conference that may be convened on this legislation. I 
ask your commitment to support any request by the Committee on 
Financial Services for conferees on H.R. 333 or related 
legislation.
    I request that you include this letter and your response as 
part of your committee's report on the bill and the 
Congressional Record during consideration of the legislation on 
the House floor.
    Thank you for your attention to these matters.
            Sincerely,
                                Michael G. Oxley, Chairman.

MGO/hnh

cc:
        The Honorable J. Dennis Hastert, Speaker
        The Honorable John J. LaFalce
        The Honorable Spencer Baccus
        The Honorable Richard H. Baker
        The Honorable Charles W. Johnson, III, Parliamentarian

                        Committee on the Judiciary,
                                  House of Representatives,
                                 Washington, DC, February 22, 2001.
Hon. Michael G. Oxley, Chairman,
House Committee on Financial Services,
Washington, DC.
    Dear Mike: This letter responds to your letter dated 
February 21, 2001, concerning H.R. 333, the ``Bankruptcy Abuse 
Prevention and Consumer Protection Act of 2001'' which was 
favorably reported by the House Committee on the Judiciary on 
February 14, 2001.
    I agree that the bill contains matters within the Financial 
Services Committee's jurisdiction and appreciate your 
willingness to be discharged from further consideration of H.R. 
333 so that we may proceed to the floor.
    Pursuant to your request, a copy of your letter and this 
letter will be included in the report of the Committee on the 
Judiciary on H.R. 333.
            Sincerely,
                     F. James Sensenbrenner, Jr., Chairman.

cc:
        The Honorable J. Dennis Hastert
        The Honorable John Conyers, Jr.
        The Honorable John J. LaFalce
        The Honorable Charles W. Johnson, III

                   Constitutional Authority Statement

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

                        Preemption of State Law

    Pursuant to section 423(e) of the Congressional Budget and 
Impoundment Act, the committee states that the following 
provisions of H.R. 333 may preempt state law to the extent 
described herein.
    Section 219(b) provides that, notwithstanding any other 
provision of law, a creditor who discloses a debtor's last 
known address in connection with such request is not liable to 
the debtor or any other person by reason of making that 
disclosure.
    Section 227 contains provisions delineating the 
responsibilities that a ``debt relief agency'' must perform 
with respect to an ``assisted person'' and specifies the 
procedures for their enforcement. Section 227(a), in pertinent 
part, states that ``[n]o provision of this section, section 
527, or section 528 shall . . . annul, alter, affect, or exempt 
any person subject to such sections from complying with any law 
of any State except to the extent that such law is inconsistent 
with those sections, and then only to the extent of the 
inconsistency[.]''
    Section 417 permits a utility to recover or set off against 
a security deposit provided prepetition by the debtor to the 
utility without notice or court order, notwithstanding any 
other provision of law.
    Section 906 includes a number of provisions pertaining to 
the enforceability of certain bilateral netting contracts and 
clearing organization netting contracts, notwithstanding any 
other provision of state law.
    Section 1310(a) provides that notwithstanding any other 
provision of law or contract, a court within the United States 
shall not recognize or enforce certain judgments rendered by 
foreign courts under specified circumstances.

               Section-by-Section Analysis and Discussion

Section 1. Short Title; References; Table of Contents
    The title of the bill is the Bankruptcy Abuse Prevention 
and Consumer Protection Act of 2001 (hereinafter the ``Act'').

                    TITLE I. NEEDS-BASED BANKRUPTCY

Section 101. Conversion
    Section 101 amends section 706(c) of the Bankruptcy Code to 
allow a chapter 7 case to be converted to a case under chapter 
12 or chapter 13 on consent of the debtor.
Section 102. Dismissal or conversion
    Section 102 implements the Act's needs-based bankruptcy 
reforms. Subsection (a) amends section 707(b) of the Bankruptcy 
Code to permit a court, on its own motion, or on motion of the 
United States trustee, trustee, bankruptcy administrator, or 
party in interest, to dismiss on the basis of abuse a chapter 7 
case filed by an individual debtor whose debts are primarily 
consumer debts. Alternatively, it permits the United States 
trustee, trustee, bankruptcy administrator, or party in 
interest to seek conversion of a chapter 7 case to a case under 
chapter 11 or chapter 13 on consent of the debtor. Under 
current law, only the court or the United States Trustee may 
seek dismissal of a chapter 7 case under section 707(b) for 
substantial abuse.
    In addition, section 102(a) replaces the current law's 
presumption in favor of the debtor with a mandatory presumption 
of abuse that is triggered under certain conditions. Section 
102(a) requires a court to presume that abuse exists if the 
amount remaining, after certain expenses and other specified 
amounts are deducted from the debtor's current monthly income 
(a defined term), when multiplied by 60, exceeds (1) 25 percent 
of the debtor's nonpriority unsecured claims, or $6000 
(whichever is greater); or (2) $10,000, whichever is lower. 
Under section 102(a), the debtor's monthly expenses--exclusive 
of any payments for debts (unless otherwise permitted)--must be 
the applicable monthly amounts set forth in the Internal 
Revenue Service Financial Analysis Handbook as Necessary 
Expenses under the National and Local Standards categories and 
the debtor's actual monthly expenditures for items categorized 
as Other Necessary Expenses in the Internal Revenue Service 
Financial Analysis Handbook. For purposes of this provision, 
the expenses include those of the debtor, the debtor's 
dependents, and the debtor's spouse, if not otherwise a 
dependent.
    Section 102(a) mandates that the debtor's monthly expenses 
include reasonably necessary expenses incurred to maintain the 
safety of the debtor and the debtor's family from family 
violence as identified in section 309 of the Family Violence 
Prevention and Services Act or other applicable law. In 
addition, the debtor may deduct up to an additional 5 percent 
of the food and clothing expense allowances under the National 
Standards category, if demonstrated to be reasonable and 
necessary.
    For purposes of determining whether the mandatory 
presumption of abuse applies under the needs-based test, 
section 102(a) permits the debtor to deduct certain other 
liabilities. These include the debtor's average monthly 
payments on account of secured debts, calculated as the total 
of all amounts scheduled as contractually due over the 60-month 
period following the filing of the bankruptcy, divided by 60 
months. This amount may include any additional payments to 
secured creditors that a chapter 13 debtor must make to retain 
possession of a primary residence, motor vehicle, or other 
property necessary for the support of the debtor and the 
debtor's dependents. With respect to claims and expenses 
entitled to priority under section 507 of the Bankruptcy Code, 
section 102(a) specifies that the debtor may deduct payments 
for these obligations, calculated as the total amount of all 
priority debts, divided by 60. If applicable, the debtor may 
deduct the following additional expenses:

        (1) the continuation of actual expenses paid by the 
        debtor that are reasonable and necessary for the care 
        and support of an elderly, chronically ill, or disabled 
        household member or member of the debtor's immediate 
        family who is unable to pay such expenses;
        (2) the actual administrative expenses (including 
        reasonable attorneys' fees) of administering a chapter 
        13 plan for the district in which the debtor resides, 
        up to 10 percent of projected plan payments, as 
        determined under schedules issued by the Executive 
        Office for United States Trustees; and
        (3) the actual expenses for each dependent child under 
        the age of 18 years up to $1,500 per year per child to 
        attend a private elementary or secondary school, if the 
        debtor documents these expenses and provides a detailed 
        explanation of why they are reasonable and necessary.

    The mandatory presumption of abuse may only be rebutted if 
(1) the debtor demonstrates special circumstances that justify 
any additional expense or adjustment to the debtor's current 
monthly income for which there is no reasonable alternative; 
and (2) such additional expense or income adjustment causes the 
debtor's current monthly income (reduced by various amounts) 
when multiplied by 60 to be less than the lesser of either (i) 
25 percent of the debtor's nonpriority unsecured claims, or 
$6,000 (whichever is greater), or (ii) $10,000. The debtor must 
itemize and provide documentation of each additional expense or 
income adjustment and an explanation of the special 
circumstances that make such expense or income adjustment 
reasonable and necessary. In addition, the debtor must attest 
under oath to the accuracy of any information provided to 
demonstrate that such additional expenses or adjustments to 
income are required.
    Section 102(a) specifies that the debtor file a statement 
of current monthly income and the calculations that determine 
whether a presumption arises under this provision as part of 
the schedules that the debtor must file pursuant to section 521 
of the Bankruptcy Code. The statement must also explain how 
each amount is calculated.
    Where the mandatory presumption of abuse does not apply or 
has been rebutted, the court, in order to determine whether the 
granting of relief under chapter 7 would be an abuse of such 
chapter, must consider (1) whether the debtor filed the chapter 
7 case in bad faith; or (2) whether the totality of 
circumstances of the debtor's financial situation (including 
whether the debtor seeks to reject a personal services contract 
and the financial need for such rejection) demonstrates abuse.
    Should a court grant a section 707(b) motion made by a 
trustee and find that the action of debtor's counsel in filing 
the chapter 7 case violated Federal Rule of Bankruptcy 
Procedure 9011, section 102(a) mandates that the court order 
the attorney to reimburse the trustee for all reasonable costs 
in prosecuting the motion, including reasonable attorneys' 
fees. In addition, if the court finds that the debtor's 
attorney violated rule 9011, the court, at a minimum, must 
assess an appropriate civil penalty, payable to the trustee, 
bankruptcy administrator, or the United States trustee.
    Section 102(a) specifies that the signature of an attorney 
on a bankruptcy petition, pleading, or written motion 
constitutes a certification that the attorney has (1) performed 
a reasonable investigation into the circumstances giving rise 
to such petition, pleading or motion; and (2) determined that 
the document is well grounded in fact or warranted by existing 
law or a good faith argument for the extension, modification, 
or reversal of existing law; and does not constitute an abuse 
under section 707(b)(1) of the Bankruptcy Code. Pursuant to 
section 102(a), the signature of an attorney on a bankruptcy 
petition constitutes a certification that the attorney has no 
knowledge after an inquiry that the information in the 
schedules filed with such petition is incorrect.
    A court may award a debtor all reasonable costs, including 
reasonable attorneys' fees, incurred by the debtor in 
successfully contesting a section 707(b) motion brought by a 
party in interest (other than a trustee, United States trustee 
or bankruptcy administrator) if the court finds that either (1) 
the action of the party in filing the motion violated rule 9011 
or (2) the party filed the motion solely for the purpose of 
coercing the debtor into waiving a right guaranteed to the 
debtor under the Bankruptcy Code. An exception with respect to 
the rule 9011 ground applies to a small business having an 
aggregate claim of less than $1,000. For purposes of this 
provision, a small business is defined as an unincorporated 
business, partnership, corporation, association, or 
organization with less than 25 full-time employees that is 
engaged in commercial or business activity. The number of 
employees of a wholly-owned subsidiary of a corporation 
includes the employees of the subsidiary's parent corporation 
and any other subsidiary corporation of the parent corporation.
    Two forms of ``safe harbors'' are recognized under section 
102(a). One provides that only a judge, United States trustee, 
bankruptcy administrator, or trustee may bring a motion under 
section 707(b) of the Bankruptcy Code if the chapter 7 debtor's 
income (or in a joint case, the income of debtor and the 
debtor's spouse) does not exceed the State median family income 
for a family of equal or lesser size (adjusted for larger sized 
families), or the State median family income for one earner in 
the case of a one-person household. The second safe harbor 
provides that no motion under section 707(b)(2) may be filed by 
a judge, United States trustee, bankruptcy administrator, 
trustee, or other party in interest if the debtor and the 
debtor's spouse combined have income that does not exceed the 
State median family income for a family of equal or lesser size 
(adjusted for larger sized families), or the State median 
family income for one earner in the case of a one-person 
household.
    Section 102(b) defines ``current monthly income'' as the 
average monthly income from all sources that the debtor 
receives (or, in a joint case, the debtor and the debtor's 
spouse receive), without regard to whether it is taxable 
income, in the 6-month period preceding the date of 
determination. It includes any amount paid on a regular basis 
by any entity (other than the debtor or, in a joint case, the 
debtor and the debtor's spouse) to the household expenses of 
the debtor or the debtor's dependents and, in a joint case, the 
debtor's spouse, if not otherwise a dependent. It excludes 
Social Security Act benefits and payments to victims of war 
crimes or crimes against humanity on account of their status as 
victims of such crimes.
    Section 102(c) amends section 704 to require the United 
States trustee or bankruptcy administrator to review all 
materials filed by an individual chapter 7 debtor and to file 
with the court not later than 10 days after the date of the 
first meeting of creditors a statement as to whether or not the 
case should be presumed to be an abuse under section 707(b). 
The court, in turn, must provide a copy of such statement 
within 5 days of its filing to all creditors.
    If the United States trustee or bankruptcy administrator 
determines that the debtor's case should be presumed to be an 
abuse under section 707(b) and the debtor's current monthly 
income is not less than the applicable State median income, 
such United States trustee or bankruptcy administrator must 
file within 30 days after the filing of the statement 
(described in the preceding paragraph) either a (1) motion to 
dismiss or convert the case under section 707(b); or (2) a 
statement setting forth the reasons why such a motion is not 
appropriate. In a case where a motion to dismiss or convert or 
a statement is required to be filed under section 704(b)(2), 
the United States trustee or bankruptcy administrator may 
decline to file such a motion if (1) the debtor's current 
monthly income (when multiplied by 12) exceeds 100 percent, but 
does not exceed 150 percent of the applicable State median 
income; and (2) after subtracting certain deductions, the 
debtor's remaining income when multiplied by 60 is less than 
the lesser of (i) 25 percent of the debtor's nonpriority 
unsecured claims or $6,000 (whichever is greater); or (ii) 
$10,000.
    Section 102(d) amends section 342 of the Bankruptcy Code to 
require the clerk to give written notice to all creditors not 
later than 10 days after the filing of a chapter 7 case in 
which the presumption of abuse applies. It is anticipated that 
the Judicial Conference of the United States will develop an 
official form to implement this provision.
    Section 102(e) specifies that no provision of the 
Bankruptcy Code shall limit the ability of a creditor to supply 
information to a judge (except for information communicated ex 
parte, unless otherwise permitted by applicable law), United 
States trustee, bankruptcy administrator, or trustee.
    Section 102(f) amends section 707 of the Bankruptcy Code to 
provide that a court may dismiss a chapter 7 case filed by an 
individual debtor convicted of a crime of violence (as defined 
in 18 U.S.C. Sec. 16), or a drug trafficking crime (as defined 
in 18 U.S.C. Sec. 924(c)(2)) on motion of the victim, if 
dismissal is in the best interest of such victim. The court, 
however, may not dismiss a case under this provision if the 
debtor establishes by a preponderance of the evidence that the 
filing of the chapter 7 case is necessary to satisfy a domestic 
support obligation.
    Section 102(g) amends section 1325(a) of the Bankruptcy 
Code to require the court to find, as a condition of 
confirmation, that the debtor filed the chapter 13 case in good 
faith.
    Section 102(h) amends section 1325(b) of the Bankruptcy 
Code to revise the definition of disposable income. As revised, 
the term means current monthly income received by the debtor 
(exclusive of child support payments, foster care payments, or 
disability payments for a dependent child made in accordance 
with applicable nonbankruptcy law to the extent reasonably 
necessary to be expended for such child), less amounts 
reasonably necessary to be expended for (1) the maintenance or 
support of the debtor or dependent of the debtor; (2) a 
domestic support obligation that first becomes due after the 
petition is filed; (3) certain charitable contributions; and 
(4) if the debtor is engaged in business, the payment of 
expenditures necessary for the continuation, preservation, and 
operation of such business. If the debtor's income exceeds the 
applicable State median income threshold, then the expenses of 
the debtor under this provision are determined in accordance 
with section 707(b)(2)(A) and (B), which specifies what monthly 
expenses a debtor may claim.
    Section 102(i) makes a clerical amendment to the table of 
sections.
Section 103. Sense of Congress and study
    Section 103(a) states that it is the sense of Congress that 
the Secretary of the Treasury has the authority to alter the 
Internal Revenue Service expense standards established to set 
guidelines for repayment plans as needed to accommodate their 
use under section 707(b) of the Bankruptcy Code.
    Section 103(b) requires the Director of the Executive 
Office for United States Trustees to submit a report, not later 
than 2 years from the enactment date of the Act, containing 
findings with regard to the use of the Internal Revenue Service 
expense standards for determining a debtor's current monthly 
expenses under section 707(b) of the Bankruptcy Code and the 
impact that these standards have on debtors and the bankruptcy 
courts. The report may include recommendations for amendments 
to the Bankruptcy Code consistent with the Director's findings.
Section 104. Notice of alternatives
    Section 104 amends section 342(b) of the Bankruptcy Code to 
require the clerk to give an individual with primarily consumer 
debts--before he or she files for bankruptcy relief--notice of 
the following:

        (1) a brief description of the various forms of 
        bankruptcy relief, including an explanation of the 
        general purpose, benefits, and costs of proceeding 
        under each form of relief;
        (2) a brief description of the services available from 
        credit counseling agencies;
        (3) a statement explaining that a person who knowingly 
        and fraudulently conceals assets or makes a false oath 
        or statement under penalty of perjury shall be subject 
        to fine, imprisonment, or both; and
        (4) a statement explaining that all information 
        supplied by a debtor in connection with the case is 
        subject to examination by the Attorney General.
Section 105. Debtor financial management training test program
    Section 105(a) requires the Director of the Executive 
Office for United States trustees to (1) consult with debtor 
education experts and others who operate financial management 
education programs; and (2) develop a financial management 
training curriculum and materials to teach individual debtors 
how to manage their personal finances better.
    Section 105(b) requires the Director to select six judicial 
districts to test the effectiveness of such curriculum and 
materials for an 18-month period beginning not later than 270 
days after the Act's enactment date. The curriculum and 
materials shall be used in these six districts as the personal 
financial management instructional course required by section 
111 of the Bankruptcy Code, as added by the Act.
    Section 105(c) requires the Director to evaluate the 
effectiveness of the curriculum and materials as well as to 
assess the effectiveness of a sample of existing consumer 
education programs (such as those described in the Report of 
the National Bankruptcy Review Commission) that are 
representative of consumer education programs sponsored by the 
credit industry, chapter 13 trustees, and consumer counseling 
groups. Not later than 3 months after concluding such 
evaluation, the Director must submit a report on the 
effectiveness and cost of such curriculum, materials, and 
programs.
Section 106. Credit counseling
    Section 106(a) amends section 109 of the Bankruptcy Code to 
require, as a condition for eligibility to be a debtor, that an 
individual receive credit counseling within the 180-day period 
preceding the filing of a bankruptcy case by such individual. 
The credit counseling must be provided by an approved nonprofit 
budget and credit counseling agency consisting of either an 
individual or group briefing (which may include a briefing 
conducted telephonically or via the Internet) that outlines 
opportunities for available credit counseling and assists the 
individual in performing a budget analysis.
    The determination by the United States trustee or 
bankruptcy administrator with regard to whether approved 
nonprofit budget and credit counseling agencies in that 
district are not reasonably able to provide adequate services 
must be reviewed annually. The United States trustee or 
bankruptcy administrator, however, may disapprove a nonprofit 
budget and credit counseling service at any time.
    The mandatory credit counseling requirement does not apply 
if the debtor resides in a district where the United States 
trustee or bankruptcy administrator determines that the 
approved nonprofit budget and credit counseling agencies in 
that district are not reasonably able to provide adequate 
services.
    In addition, this requirement does not apply if the debtor 
files a certification that: (1) describes exigent circumstances 
meriting a waiver of this requirement; (2) states that the 
debtor requested credit counseling services from an approved 
nonprofit budget and credit counseling agency, but was unable 
to obtain such services within the 5-day period beginning on 
the date the debtor made the request; and (3) is satisfactory 
to the court. This exemption terminates when the debtor meets 
the requirements for credit counseling participation, but not 
longer than 30 days after the case is filed, unless the court, 
for cause, extends this period for an additional 15 days.
    Section 106(b) amends section 727(a) of the Bankruptcy Code 
to provide that a chapter 7 debtor's discharge must be denied 
if the debtor fails to complete a personal financial management 
instructional course after the filing of the bankruptcy case. 
This provision, however, does not apply if the debtor resides 
in a district where the United States trustee or bankruptcy 
administrator has determined that the approved instructional 
courses in that district are not adequate. Such determination 
must be reviewed annually by the United States trustee or 
bankruptcy administrator.
    Section 106(c) amends section 1328 of the Bankruptcy Code 
to add a chapter 13 debtor's failure to complete an 
instructional course concerning personal financial management 
as a ground for denying a discharge, unless the debtor resides 
in a district where the United States trustee or bankruptcy 
administrator has determined that the approved instructional 
courses in that district are not adequate. Such determination 
must be reviewed annually by the United States trustee or 
bankruptcy administrator.
    Section 106(d) amends section 521 of the Bankruptcy Code to 
mandate that an individual debtor file with the court a 
certificate from the approved nonprofit budget and credit 
counseling agency that rendered the requisite services 
described under section 109(h), as added by this act. The 
debtor must file a copy of the repayment plan, if any, that was 
developed by the agency together with the certificate, which 
must describe the services rendered.
    Section 106(e) adds a new provision to the Bankruptcy Code 
requiring the clerk for each district to maintain for the 
public's use a list of approved (1) credit counseling agencies 
that provide the services described in section 109(h) of the 
Bankruptcy Code, as added by this Act; and (2) personal 
financial management instructional courses. Under this 
provision, the United States trustee or bankruptcy 
administrator may only approve a credit counseling agency or 
personal financial management instructional course that 
satisfies certain specified criteria. If such agency or 
instruction course is approved, the approval may only be for a 
probationary period of up to 6 months. At the conclusion of the 
probationary period, the United States trustee or bankruptcy 
administrator may only approve such agency or instructional 
course for an additional 1-year period and thereafter for 
successive 1-year periods. Within 30 days after any final 
decision occurring after the expiration of the initial 
probationary period or after any 2-year period thereafter, an 
interested person may seek judicial review of such decision in 
the appropriate United States district court.
    In addition, section 106(e) provides that the United States 
district court may, at any time, investigate the qualifications 
of a credit counseling agency and request it to produce 
documents to ensure the agency's integrity and effectiveness. 
The district court may remove a credit counseling agency from 
the approved list that does not meet the specified 
qualifications. Section 106(e) prohibits a credit counseling 
agency from providing information as to whether an individual 
debtor has received or sought personal financial management 
instruction from such agency to a credit reporting entity.
    A credit counseling agency that willfully or negligently 
fails to comply with any requirement under the Bankruptcy Code 
with respect to a debtor shall be liable to the debtor for 
damages in an amount equal to (1) actual damages sustained by 
the debtor as a result of the violation and (2) any court costs 
or reasonable attorneys' fees incurred to recover such damages.
    Section 106(f) amends section 362 of the Bankruptcy Code in 
two respects. First, it provides that if a chapter 7, 11, or 13 
case is dismissed due to the creation of a debt repayment plan, 
the presumption under section 362(c)(2) shall not apply to any 
subsequent bankruptcy case commenced by the debtor. Second, it 
directs that the court, on request of a party in interest, must 
issue an order under section 362(c) confirming that the 
automatic stay has terminated.
Section 107. Schedules of reasonable and necessary expenses
    Section 107 requires the Director of the Executive Office 
for United States Trustees to issue schedules of reasonable and 
necessary administrative expenses (including reasonable 
attorneys' fees) relating to the administration of a chapter 13 
plan for each judicial district.

                 TITLE II. ENHANCED CONSUMER PROTECTION

          SUBTITLE A. PENALTIES FOR ABUSIVE CREDITOR PRACTICES

Section 201. Promotion of alternative dispute resolution
    Section 201(a) amends section 502 of the Bankruptcy Code to 
permit the court, after a hearing on motion of the debtor, to 
reduce a wholly unsecured consumer claim by up to 20 percent if 
the debtor can establish by clear and convincing evidence that 
the claim was filed by a creditor who unreasonably refused to 
negotiate a reasonable alternative repayment schedule proposed 
by an approved credit counseling agency on behalf of the 
debtor. The debtor must also establish by clear and convincing 
evidence that the offer was made at least 60 days before the 
filing of the petition. In addition, the offer must have 
provided for payment of at least 60 percent of the amount of 
the claim over a period not exceeding the loan's repayment 
period, or a reasonable extension thereof. Further, no part of 
the claim under the alternative repayment schedule may be 
nondischargeable.
    Section 201(b) amends section 547 of the Bankruptcy Code to 
prohibit the avoidance as a preferential transfer a payment by 
a debtor to a creditor pursuant to an alternative repayment 
plan created by an approved credit counseling agency.
Section 202. Effect of discharge
    Section 202 amends section 524 of the Bankruptcy Code in 
two respects. First, it makes the willful failure of a creditor 
to credit payments received under a confirmed chapter 11, 12, 
or 13 plan a violation of the discharge injunction if the 
creditor's action to collect and failure to credit payments 
caused material injury to the debtor. This provision does not 
apply if the plan is dismissed or in default, or where the 
creditor did not receive payments pursuant to the plan.
    Second, section 202 amends section 524 of the Bankruptcy 
Code to provide that the discharge injunction does not apply to 
an act by a creditor having a claim secured by an interest in 
real property that is the debtor's principal residence if such 
act is (1) in the ordinary course of business between the 
creditor and the debtor; and (2) limited to seeking or 
obtaining periodic payments associated with a valid security 
interest in lieu of the creditor pursuing in rem relief to 
enforce the underlying lien.
Section 203. Discouraging abuse of reaffirmation practices
    Section 203 consists of a comprehensive overhaul of the law 
applicable to reaffirmation agreements. Section 203(a) mandates 
the provision of certain specified disclosures, which are the 
only disclosures required in connection with a reaffirmation 
agreement. These disclosures must be in written form and be 
made clearly and conspicuously. In addition, the disclosure 
statement must include certain advisories and explanations. At 
the election of the creditor, the disclosure statement may 
include a repayment schedule. If the debtor is represented by 
counsel, section 203(a) mandates that the attorney file a 
certification stating, inter alia, that the agreement 
represents a fully informed and voluntary agreement by the 
debtor, that the agreement does not impose an undue hardship on 
the debtor or any dependent of the debtor, and that the 
attorney advised the debtor of the legal effect and 
consequences of such agreement. Where the presumption of undue 
hardship applies, the attorney must also certify that it is his 
or her opinion that the debtor is able to make the payments 
required under the reaffirmation agreement. Further, the debtor 
must submit a statement setting forth the debtor's monthly 
income and expenditures. If the debtor is represented by 
counsel and the debt being reaffirmed is owed to a credit 
union, a modified version of this statement may be used.
    Notwithstanding any other provision of the Bankruptcy Code, 
section 203(a) permits a creditor to (1) accept payments from a 
debtor before and after the filing of a reaffirmation agreement 
with the court; and (2) accept payments from a debtor pursuant 
to a reaffirmation agreement that the creditor believes in good 
faith to be effective. It further provides that certain 
specified disclosure requirements shall be satisfied if such 
disclosures are given in good faith.
    If the amount of the scheduled payment due on the 
reaffirmed debt (as disclosed in the debtor's statement) is 
greater than the debtor's available income, it is presumed for 
60 days from the date on which the reaffirmation agreement is 
filed with the court that the agreement presents an undue 
hardship. Section 203(a) requires the court to review such 
presumption, which can be rebutted if the debtor identifies in 
writing additional sources of funds that would enable the 
debtor to make the required payments on the reaffirmed debt. If 
the presumption is not rebutted to the satisfaction of the 
court, the court may disapprove the reaffirmation agreement. No 
reaffirmation agreement may be disapproved without notice and 
hearing to the debtor and creditor. The hearing must be 
concluded before the entry of the debtor's discharge. The 
requirements set forth in this paragraph do not apply to 
reaffirmation agreements where the creditor is a credit union, 
as defined.
    Section 203(b) requires the Attorney General to designate a 
U.S. attorney for each judicial district and an Federal Bureau 
of Investigation agent for each field office to have primary 
law enforcement responsibility for violations of sections 152 
and 157 of title 18 of the United States Code with respect to 
abusive reaffirmation agreements and materially fraudulent 
statements in bankruptcy schedules that are intentionally false 
or misleading. The U.S. attorney designated under this 
provision has primary responsibility with respect to bankruptcy 
investigations under section 3057 of title 18, United States 
Code. The bankruptcy courts must establish procedures for 
referring any case in which a materially fraudulent bankruptcy 
schedule has been filed. The provision also makes a clerical 
amendment to the table of sections in title 18.

                   SUBTITLE B. PRIORITY CHILD SUPPORT

Section 211. Definition of domestic support obligation
    Section 211 amends section 101 of the Bankruptcy Code to 
define a domestic support obligation as a debt that accrues 
pre- or postpetition (including interest that accrues pursuant 
to applicable nonbankruptcy law) and is owed to or recoverable 
by a spouse, former spouse, or child of the debtor, or that 
child's parent or legal guardian, or a responsible relative. It 
also includes a debt owed to or recoverable by a governmental 
unit. To qualify as a domestic support obligation, the debt 
must be in the nature of alimony, maintenance, or support, 
without regard to whether such debt is expressly so designated. 
It must be established or subject to establishment either pre- 
or postpetition pursuant to a: (i) separation agreement, 
divorce decree, or property settlement agreement; (ii) an order 
of a court of record; or (iii) a determination made in 
accordance with applicable nonbankruptcy law by a governmental 
unit. It does not apply to a debt assigned to a nongovernmental 
entity, unless it was assigned voluntarily by the spouse, 
former spouse, child, or parent solely for the purpose of 
collecting the debt.
Section 212. Priorities for claims for domestic support obligations
    Section 212 amends 507(a) of the Bankruptcy Code to make 
domestic support obligations owed to or recoverable by a 
spouse, former spouse, or child of the debtor, or the parent, 
legal guardian, or responsible relative of such child or filed 
by a governmental unit on behalf of such person payable before 
all other expenses and claims, including expenses of 
administration from the assets of a bankruptcy estate. Within 
this priority, allowed claims for domestic support obligations 
filed by a governmental unit must be paid on the condition that 
funds received by such unit under this provision be applied and 
distributed in accordance with nonbankruptcy law. Remaining 
funds may be used to pay a domestic support obligation assigned 
to a governmental unit (unless such obligation is assigned 
voluntarily by a spouse, former spouse, child, parent, legal 
guardian, or responsible relative of the child for the purpose 
of collecting the debt) or owed directly to such entity if the 
funds are applied and distributed in accordance with applicable 
nonbankruptcy law.
Section 213. Requirements to obtain confirmation and discharge in cases 
        involving domestic support obligations
    Section 213(1) amends section 1129(a) of the Bankruptcy 
Code to mandate the payment of certain postpetition domestic 
support obligations as a condition of confirmation in a chapter 
11 case. Section 213(2) amends section 1208(c) of the 
Bankruptcy Code to provide that the failure of a chapter 12 
debtor to pay a postpetition domestic support obligation 
constitutes cause for conversion or dismissal of the debtor's 
case. Section 213(3) amends section 1222(a) of the Bankruptcy 
Code to permit a chapter 12 debtor to propose a plan that 
provides for less than full payment of all amounts owed for a 
claim entitled to priority under section 507(a)(1)(B) if all of 
the debtor's projected disposable income for a 5-year period is 
applied to make payments under the plan. Section 213(4) amends 
section 1222(b) of the Bankruptcy Code to permit a chapter 12 
debtor, pursuant to a plan, to pay postpetition interest on 
claims that are nondischargeable under Section 1328(a), but 
only to the extent that the debtor has disposable income 
available to pay such interest after payment of all allowed 
claims. Section 213(5) amends section 1225(a) of the Bankruptcy 
Code to require a chapter 12 debtor to be current with certain 
postpetition domestic support obligations as a condition of 
confirmation. Section 213(6) amends section 1228(a) to 
condition the granting of a chapter 12 discharge on the 
debtor's payment of certain postpetition domestic support 
obligations. Section 213(7) amends section 1307 of the 
Bankruptcy Code to add nonpayment of a postpetition domestic 
support obligation as a ground for conversion or dismissal of a 
chapter 13 case. Section 213(8) amends section 1322(a) to 
permit a chapter 13 debtor, pursuant to a plan, to pay less 
than the full amount of a claim entitled to priority under 
section 507(a)(1)(B) if the plan provides that all of the 
debtor's projected disposable income over a 5-year period will 
be applied to make payments under the plan. Section 213(9) 
amends section 1322(b) to permit a chapter 13 debtor, pursuant 
to a plan, to pay postpetition interest on claims that are 
nondischargeable under section 1328(a), but only to the extent 
that the debtor has disposable income available to pay such 
interest after payment of all allowed claims. Section 213(10) 
amends section 1325(a) of the Bankruptcy Code to require, as a 
condition of confirmation, that a chapter 13 debtor pay certain 
postpetition domestic support obligations. Section 213(11) 
amends section 1328(a) of the Bankruptcy Code to condition the 
granting of a chapter 13 discharge on the debtor's payment of 
certain postpetition domestic support obligations.
Section 214. Exceptions to automatic stay in domestic support 
        proceedings
    Section 214 amends section 362(b) of the Bankruptcy Code to 
except from the automatic stay actions or proceedings 
pertaining to child custody and visitation, domestic violence, 
and marriage dissolution to the extent that they do not pertain 
to property determinations concerning property of the estate. 
In addition, section 214 amends section 362(b) to except from 
the automatic stay the withholding, suspension, or restriction 
of a driver's license, or a professional, occupational or 
recreational license under State law pursuant to section 
466(a)(16) of the Social Security Act. Further, section 214 
excepts from the automatic stay the reporting of overdue 
support owed by a parent to any consumer reporting agency 
pursuant to section 466(a)(7) of the Social Security Act; the 
interception of tax refunds as authorized by sections 464 and 
466(a)(3) of the Social Security Act; and the enforcement of 
medical obligations as specified under title IV of the Social 
Security Act.
Section 215. Nondischargeability of certain debts for alimony, 
        maintenance, and support
    Section 215 amends section 523(a)(5) of the Bankruptcy Code 
to provide that a ``domestic support obligation'' (as defined 
in section 211 of the Act) is nondischargeable. With respect to 
obligations that are not domestic support obligations, but 
incurred in connection with a divorce or separation or related 
action, section 215 provides that these obligations are also 
nondischargeable irrespective of the debtor's inability to pay 
such debts. In addition, section 215 amends section 523(c) of 
the Bankruptcy Code to delete the reference to section 
523(a)(15).
Section 216. Continued liability of property
    Section 216 amends section 522(c) of the Bankruptcy Code to 
make exempt property liable for nondischargeable domestic 
support obligations notwithstanding any contrary provision of 
applicable nonbankruptcy law. It also makes a conforming 
amendment to section 522(f)(1)(A) of the Bankruptcy Code and 
corrects an erroneous statutory reference in section 522(g)(2).
Section 217. Protection of domestic support claims against preferential 
        transfer motions
    Section 217 makes a conforming amendment to section 
547(c)(7) of the Bankruptcy Code, which provides that a bona 
fide payment of a debt for a domestic support obligation may 
not be avoided as a preferential transfer.
Section 218. Disposable income defined
    Section 218(a) amends section 1225(b)(2)(A) of the 
Bankruptcy Code to provide that disposable income in a chapter 
12 case does not include payments for postpetition domestic 
support obligations.
    Section 218(b) amends section 1325(b)(2)(A) of the 
Bankruptcy Code to provide that disposable income in a chapter 
13 case does not include payments for postpetition domestic 
support obligations.
Section 219. Collection of child support
    Section 219 amends sections 704, 1106, 1202, and 1302 of 
the Bankruptcy Code to require trustees in chapter 7, 11, 12, 
and 13 cases to provide certain types of notices to child 
support claimants and governmental enforcement agencies. First, 
the trustee must notify the claimant in writing of the right to 
use the services of a State child support enforcement agency 
established under sections 464 and 466 of the Social Security 
Act in the State where the claimant resides and include the 
agency's address and telephone number. The notice must also 
explain the claimant's right to payment under the applicable 
chapter of the Bankruptcy Code. Second, the trustee must 
provide written notice to the governmental enforcement agency 
of the name, address, and telephone number of the child support 
claimant. Third, the trustee must notify both the child support 
claimant and the State agency that the debtor was granted a 
discharge as well as supply them with the debtor's last known 
address, the last known name and address of the debtor's 
employer, and the name of each creditor holding a debt that is 
not discharged under section 523(a)(2), (4) or (14A), or 
holding a debt that is reaffirmed pursuant to section 524 of 
the Bankruptcy Code. If a child support claimant or State 
agency is not able to locate the debtor, such claimant or 
agency may request such information from a creditor holding a 
debt that is not discharged under section 523(a)(2), (4) or 
(14A) or that is reaffirmed pursuant to section 524 of the 
Bankruptcy Code. Section 219, in addition, provides that, 
notwithstanding any other provision of law, a creditor who 
discloses a debtor's last known address in connection with such 
request is not liable to the debtor or any other person by 
reason of making that disclosure.
Section 220. Nondischargeability of certain educational benefits and 
        loans
    Section 220 amends section 523(a)(8) of the Bankruptcy Code 
to provide that a debt for a qualified education loan (as 
defined in section 221(e)(1) of the Internal Revenue Code) is 
nondischargeable, unless excepting such debt from discharge 
would impose an undue hardship on the debtor and the debtor's 
dependents.

                 SUBTITLE C. OTHER CONSUMER PROTECTIONS

Section 221. Amendments to discourage abusive bankruptcy filings
    Section 221 makes a series of amendments to section 110 of 
the Bankruptcy Code. First, it clarifies the definition of a 
bankruptcy petition preparer with respect to persons under the 
direct supervision of an attorney. Second, it amends 
subsections (b)(1) and (c)(2) of section 110 to provide that if 
a bankruptcy petition preparer is not an individual, then an 
officer, principal, responsible person, or partner of the 
preparer must sign certain documents filed in connection with 
the bankruptcy case as well as state the person's name and 
address on such documents. Third, it requires a bankruptcy 
petition preparer to give the debtor written notice explaining 
that the preparer is not an attorney and may not practice law 
or give legal advice. The notice may include examples of legal 
advice that a preparer may not provide. The notice, which must 
be signed by the preparer under penalty of perjury and the 
debtor, is required to be filed with any document for filing. 
Fourth, it requires the Supreme Court to promulgate rules or 
the Judicial Conference of the United States to issue 
guidelines for setting maximum fees. Fifth, it specifies that 
the bankruptcy petition preparer file a declaration certifying 
that the preparer complied with the notification requirements 
concerning the preparer's fees. Sixth, it requires the court to 
order the turnover of specified fees for services rendered 
within 12 months of the filing if such fees violate any rule or 
guideline. Seventh, it allows a debtor to exempt fees recovered 
under this provision pursuant to section 522(b) of the 
Bankruptcy Code. Eighth, it specifically authorizes the court 
to enjoin a bankruptcy petition preparer who has failed to 
comply with a prior order issued under section 110. Ninth, it 
generally revises section 110's penalty provisions and 
specifies that the penalties are to be paid to a special fund 
of the United States trustee to pay for enforcement of this 
provision.
Section 222. Sense of Congress
    Section 222 expresses the sense of Congress that the States 
should develop personal finance curricula for use in elementary 
and secondary schools.
Section 223. Additional amendments to title 11, United States Code
    Section 223 amends section 507(a) to add a tenth-level 
priority for claims based on death or personal injuries 
resulting from the debtor's operation of a motor vehicle or 
vessel while intoxicated.
Section 224. Protection of retirement savings in bankruptcy
    Section 224(a) amends section 522 to permit a debtor to 
exempt certain retirement funds to the extent that those monies 
are in a fund or account that is exempt from taxation under 
section 401, 403, 408, 408A, 414, 457, or 501(a) of the 
Internal Revenue Code and that have received a favorable 
determination pursuant to Internal Revenue Code section 7805. 
If the retirement monies are in a retirement fund that has not 
received a favorable determination, those monies are exempt if 
the debtor demonstrates that no prior unfavorable determination 
has been made by a court or the Internal Revenue Service, and 
the retirement fund is in substantial compliance with the 
applicable requirements of the Internal Revenue Code. If the 
retirement fund fails to be in substantial compliance with 
applicable law, the debtor may claim the retirement funds as 
exempt if the debtor is not materially responsible for such 
failure. This section also applies to certain direct transfers 
and rollover distributions. In addition, this provision ensures 
that the specified retirement funds are exempt under State as 
well as Federal law.
    Section 224(b) amends section 362(b) of the Bankruptcy Code 
to except from the automatic stay the withholding of income 
from a debtor's wages pursuant to an agreement authorizing such 
withholding for the benefit of a pension, profit-sharing, stock 
bonus, or other employer-sponsored plan established under 
Internal Revenue Code section 401, 403, 408, 408A, 414, 457, or 
501(a) to the extent that the amounts withheld are used solely 
to repay a loan from a plan as authorized by section 408(b)(1) 
of the Employee Retirement Income Security Act of 1974 or that 
they are subject to Internal Revenue Code section 72(p). The 
exception also applies to certain thrift savings plan loans.
    Section 224(c) amends section 523(a) of the Bankruptcy Code 
to except from discharge any amount owed by the debtor to a 
pension, profit-sharing, stock bonus, or other plan established 
under Internal Revenue Code section 401, 403, 408, 408A, 414, 
457, or 501(c) under a loan authorized under section 408(b)(1) 
of the Employee Retirement Income Security Act of 1974 or 
subject to Internal Revenue Code section 72(p). The exception 
also pertains to a loan from a thrift savings plan made under a 
governmental plan pursuant to section 414(d) or a contract or 
account under section 403(b) of the Internal Revenue Code.
    Section 224(d) amends section 1322 of the Bankruptcy Code 
to provide that a chapter 13 plan may not materially alter the 
terms of a loan owed to a pension, profit-sharing, stock bonus, 
or other plan established under the Internal Revenue Code 
section 401, 403, 408, 408A, 414, 457, or 501(a). In addition, 
it specifies that any amounts required to repay such loan shall 
not constitute ``disposable income'' under section 1325 of the 
Bankruptcy Code.
    Section 224(e) amends section 522 of the Bankruptcy Code to 
impose a $1 million cap (periodically adjusted pursuant to 
section 104 of the Bankruptcy Code to reflect changes in the 
Consumer Price Index) on the value of the debtor's interest in 
an individual retirement account established under either 
section 408 or 408A of the Internal Revenue Code (other than a 
simplified employee pension account under section 408(k) or a 
simple retirement account under section 408(p) of the Internal 
Revenue Code) that a debtor may claim as exempt property. This 
limit applies without regard to amounts attributable to 
rollover contributions made pursuant to section 402(c), 
402(e)(6), 403(a)(4), 403(a)(5), or 403(b)(8) of the Internal 
Revenue Code and earnings thereon. The cap may be increased if 
required in the interest of justice.
Section 225. Protection of education savings in bankruptcy
    Section 225(a) amends section 541 of the Bankruptcy Code to 
provide that funds placed not less than 365 days before the 
filing of the bankruptcy case in a education individual 
retirement account are not property of the estate if certain 
criteria are met. First, the designated beneficiary of such 
account must be a child, stepchild, grandchild or step-
grandchild of the debtor for the taxable year during which 
funds were placed in the account. A legally adopted child or a 
foster child, under certain circumstances, may also qualify as 
a designated beneficiary. Second, such funds may not be pledged 
or promised to an entity in connection with any extension of 
credit and they may not be excess contributions (as described 
in section 4973(e) of the Internal Revenue Code). Third, a 
$5,000 cap applies to funds deposited between 720 days and 365 
days before the filing date. Similar criteria apply with 
respect to funds used to purchase a tuition credit or 
certificate or to funds contributed to a qualified State 
tuition plan under section 529(b)(1)(A) of the Internal Revenue 
Code.
    Section 225(b) requires a debtor to file with the court a 
record of any interest that the debtor has in an education 
individual retirement account or qualified State tuition 
program.
Section 226. Definitions
    Section 226(a) amends section 101 of the Bankruptcy Code to 
add certain definitions with respect to debt relief agencies. 
Section 226(a)(1) defines an ``assisted person'' as a person 
whose debts consist primarily of consumer debts and whose 
nonexempt assets are less than $150,000. Section 226(a)(2) 
defines ``bankruptcy assistance'' as any goods or services sold 
or otherwise provided with the express or implied purpose of 
giving information, advice, or counsel; preparing documents for 
filing; or attending a meeting of creditors pursuant to section 
341; appearing in a proceeding on behalf of a person; or 
providing legal representation with respect to a case or 
proceeding under the Bankruptcy Code. Section 226(a)(3) defines 
a ``debt relief agency'' as any person (including a bankruptcy 
petition preparer) who provides bankruptcy assistance to an 
assisted person in return for the payment of money or other 
valuable consideration. The definition does not include a 
section 501(c)(3) nonprofit organization, depository 
institution, or Federal credit union which provides assistance 
with respect to restructuring debts. In addition, the 
definition does not apply to an author, publisher, distributor, 
or seller of works subject to copyright protection under title 
17 of the United States Code when acting in such capacity.
    Section 226(b) amends section 104(B)(1) of the Bankruptcy 
Code to permit the monetary amount set forth in the definition 
of an ``assisted person'' to be automatically adjusted to 
reflect the change in the Consumer Price Index.
Section 227. Restrictions on debt relief agencies
    Section 227 creates a new provision in the Bankruptcy Code 
to prohibit a debt relief agency from engaging in certain 
activities. First, section 227 bars the agency from failing to 
perform any service that it informed an assisted person would 
be provided. Second, this provision prohibits a debt relief 
agency from advising an assisted person to make an untrue or 
misleading statement. Third, it prohibits a debt relief agency 
from misrepresenting the services it provides and the benefits 
that an assisted person may receive as a result of bankruptcy. 
Fourth, section 227 bans a debt relief agency from advising an 
assisted person or prospective assisted person to incur 
additional debt in contemplation of filing for bankruptcy 
relief or for the purpose of paying fees for services rendered 
by an attorney or petition preparer in connection with the 
bankruptcy case. Any waiver by an assisted person of the 
protections under this provision are unenforceable, except 
against a debt relief agency.
    In addition, section 227 imposes penalties for the 
violation of section 526, 527 or 528 of the Bankruptcy Code (as 
enacted by this Act). First, any contract between a debt relief 
agency and an assisted person that does not comply with these 
provisions is void and may not be enforced by any State or 
Federal court or by any person, except an assisted person. 
Second, a debt relief agency is liable to an assisted person, 
under certain circumstances, for any fees or charges paid by 
such person to the agency, actual damages, and reasonable 
attorneys' fees and costs. A chief law enforcement officer of a 
State having reason to believe that a person has violated or is 
violating section 526 may seek to have such violation enjoined 
and recover actual damages arising from such violation. Third, 
section 227 provides that the United States district court has 
concurrent jurisdiction of certain actions under section 526. 
Fourth, section 227 provides that sections 526, 527 and 528 
preempt inconsistent State law. In addition, it provides that 
these provisions do not limit or curtail the authority of a 
Federal court, a State, or a subdivision or instrumentality of 
a State, to determine and enforce qualifications for the 
practice of law before the Federal court or under the laws of 
that State.
Section 228. Disclosures
    Section 228 mandates that a debt relief agency provide 
certain written notices to an assisted person. These include 
the notice required under section 342(b)(1), as amended by this 
Act, as well as a notice advising that: (1) all information the 
assisted person provides in connection with the case must be 
complete, accurate and truthful; (2) all assets and liabilities 
must be completely and accurately disclosed in the documents 
filed to commence the case, including the replacement value of 
each asset (if required) after reasonable inquiry to establish 
such value; (3) current monthly income, monthly expenses and, 
in a chapter 13 case, disposable income must be stated after 
reasonable inquiry; and (4) information an assisted person 
provides may be audited and that the failure to provide such 
information may result in dismissal of the case or other 
sanction including, in some instances, criminal sanctions. In 
addition, the agency must supply certain specified advisories 
and explanations regarding the bankruptcy process. Further, 
this provision requires the agency to advise an assisted person 
(to the extent permitted under nonbankruptcy law) concerning 
asset valuation, the calculation of disposable income, and the 
determination of exempt property.
Section 229. Requirements for debt relief agencies
    Section 229 requires a debt relief agency--not later than 
five business days after the first date on which it provides 
any bankruptcy assistance services to an assisted person (but 
prior to such assisted person's petition being filed)--to 
execute a written contract with the assisted person specifying 
clearly and conspicuously the services the agency will provide, 
the basis on which fees will be charged for such services, and 
the terms of payment. The assisted person must be given a copy 
of the fully executed and completed contract in a form the 
person can retain. The debt relief agency must include certain 
specified mandatory statements in any advertisement of 
bankruptcy assistance services or regarding the benefits of 
bankruptcy that is directed to the general public whether 
through the general media, seminars, specific mailings, 
telephonic or electronic messages, or otherwise.
Section 230. GAO study
    Section 230 directs the Comptroller General of the United 
States to conduct a study of and to report on the feasibility, 
efficacy and cost of requiring a trustee to supply certain 
specified information about a debtor's bankruptcy case to the 
Office of Child Support Enforcement for the purpose of 
determining whether a debtor has outstanding child support 
obligations.

                TITLE III--DISCOURAGING BANKRUPTCY ABUSE

Section 301. Reinforcement of the fresh start
    Section 301 makes a clarifying amendment to section 
523(a)(17) of the Bankruptcy Code concerning the 
dischargeability of court fees incurred by prisoners. Section 
523(a)(17) was added to the Bankruptcy Code by the Omnibus 
Consolidated Rescissions and Appropriations Act of 1996 \1\ to 
except from discharge the filing fees and related costs and 
expenses assessed by a court in a civil case or appeal. Because 
of a drafting error, however, this provision might be construed 
to apply to filing fees, costs or expenses incurred by any 
debtor, not solely by those who are prisoners. The amendment 
eliminates the ambiguity and makes other conforming changes to 
narrow its application in accordance with its original intent.
---------------------------------------------------------------------------
    \1\ Pub. L. No. 104-134, Section 804(b) (1996).
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Section 302. Discouraging bad faith repeat filings
    Section 302(a) amends section 362(c) of the Bankruptcy Code 
to terminate the automatic stay within 30 days in a chapter 7, 
11, or 13 case filed by or against an individual if such 
individual was a debtor in a previously dismissed case pending 
within the preceding 1-year period. The provision does not 
apply to a case refiled under a chapter other than chapter 7 
after dismissal of the prior chapter 7 case pursuant to section 
707(b) of the Bankruptcy Code. Upon motion of a party in 
interest, the court may continue the stay after notice and a 
hearing completed prior to the expiration of the 30-day period 
if such party demonstrates that the latter case was filed in 
good faith as to the creditors who are stayed by the filing. 
For purposes of this provision, a case is presumptively not 
filed in good faith as to all creditors if:

        (1) more than one bankruptcy case under chapter 7, 11 
        or 13 was previously filed by the debtor within the 
        preceding 1-year period;
        (2) the prior chapter 7, 11, or 13 case of the debtor 
        was dismissed within the preceding year for the 
        debtor's failure to (a) file or amend without 
        substantial excuse a document required under the 
        Bankruptcy Code or the court, (b) provide adequate 
        protection ordered by the court, or (c) perform the 
        terms of a confirmed plan; or
        (3) there has been no substantial change in the 
        debtor's financial or personal affairs since the 
        dismissal of the prior case, or there is no reason to 
        conclude that the pending case will conclude either 
        with a discharge (if a chapter 7 case) or confirmation 
        (if a chapter 11 or 13 case).

    In addition, a case is presumptively deemed filed not in 
good faith as to any creditor who obtained relief from the 
automatic stay in the prior case or sought such relief in the 
prior case and such action was pending at the time of the prior 
case's dismissal. The presumption may be rebutted by clear and 
convincing evidence. A similar presumption applies if two or 
more bankruptcy cases were pending in the 1-year preceding the 
filing of the pending case.
Section 303. Curbing abusive filings
    Section 303(a) amends section 362(d) of the Bankruptcy Code 
to add a new ground for relief from the automatic stay. It 
provides that cause for relief from the automatic stay may be 
established for a creditor whose claim is secured by an 
interest in real estate, if the court finds that the filing of 
the bankruptcy case was part of a scheme to delay, hinder and 
defraud creditors that involved either (a) a transfer of all or 
part of an ownership interest in real property without such 
creditor's consent or without court approval; or (b) multiple 
bankruptcy filings affecting the real property. If recorded in 
compliance with applicable State law governing notice of an 
interest in or a lien on real property, an order entered under 
this provision is binding in any other bankruptcy case for 2 
years from the date of entry of such order. A debtor in a 
subsequent case may move for relief based upon changed 
circumstances or for good cause shown after notice and a 
hearing. Section 303(a) further provides that any Federal, 
State or local governmental unit that accepts a notice of 
interest or a lien in real property, must accept a certified 
copy of an order entered under this provision.
    Section 303(b) amends section 362(b) of the Bankruptcy Code 
to except from the automatic stay an act to enforce any lien 
against or security interest in real property within 2 years 
following the entry of an order entered under section 
362(d)(4). A debtor, in a subsequent case, may move for relief 
from such order based upon changed circumstances or for other 
good cause shown after notice and a hearing. Section 303(b) 
also provides that the automatic stay does not apply in a case 
where the debtor (a) is ineligible to be a debtor in a 
bankruptcy case pursuant to section 109(g) of the Bankruptcy 
Code; or (b) filed the bankruptcy case in violation of an order 
issued in a prior bankruptcy case prohibiting the debtor from 
being a debtor in a subsequent bankruptcy case.
Section 304. Debtor retention of personal property security
    Section 304(1) amends section 521(a) of the Bankruptcy Code 
to provide that an individual who is a chapter 7 debtor may not 
retain possession of personal property securing, in whole or in 
part, a purchase money security interest unless the debtor, 
within 45 days after the first meeting of creditors, enters 
into a reaffirmation agreement with the creditor, or redeems 
the property. If the debtor fails to so act within the 
prescribed period, the property is not subject to the automatic 
stay and is no longer property of the estate. An exception 
applies if the court: (a) determines on motion of the trustee 
filed before the expiration of the 45-day period that the 
property has consequential value or would benefit the 
bankruptcy estate; (b) orders adequate protection of the 
creditor's interest; and (c) directs the debtor to deliver any 
collateral in the debtor's possession.
    Section 304(2) amends section 722 to clarify that a chapter 
7 debtor must pay the redemption value in a lump sum payment at 
the time of redemption.
Section 305. Relief from the automatic stay when the debtor does not 
        complete intended surrender of consumer debt collateral
    Section 305(1) amends section 362 of the Bankruptcy Code to 
terminate the automatic stay with respect to personal property 
of the estate or of the debtor in a chapter 7, 11, or 13 case 
that secures a claim (in whole or in part) or is subject to an 
unexpired lease if the debtor fails to:

        (1) file timely a statement of intention as required 
        by section 521(a)(2) of the Bankruptcy Code with 
        respect to such property;
        (2) indicate in such statement whether the property 
        will be surrendered or retained, and if retained, 
        whether the debtor will redeem the property or reaffirm 
        the debt, or assume an unexpired lease, if the trustee 
        does not; and
        (3) undertake timely the actions specified in such 
        statement of intention, unless the statement specifies 
        reaffirmation and the creditor refuses to enter into 
        the reaffirmation agreement on the original contract 
        terms.

In addition to terminating the automatic stay, this provision 
renders such property no longer property of the estate. An 
exception pertains where the court determines, on the motion of 
the trustee made prior to the expiration of the applicable time 
period under section 521(a)(2), and after notice and a hearing, 
that such property is of consequential value or benefit to the 
estate, orders adequate protection of the creditor's interest, 
and directs the debtor to deliver any collateral in the 
debtor's possession.
    Section 305(2) amends section 521 of the Bankruptcy Code to 
make the requirement to file a statement of intention 
applicable to all secured debts, not just secured consumer 
debts. In addition, it requires the debtor to effectuate his or 
her stated intention within 30 days from the first date set for 
the meeting of creditors. If the debtor fails to timely 
undertake certain specified actions with respect to property 
that a lessor or bailor owns and has leased, rented or bailed 
to the debtor, or in which a creditor has a security interest 
(not otherwise avoidable under section 522(f), 544, 545, 547, 
548 or 549 of the Bankruptcy Code), then nothing in the 
Bankruptcy Code shall prevent or limit the operation of a 
provision in a lease or agreement that places the debtor in 
default by reason of the debtor's bankruptcy or insolvency.
Section 306. Giving secured creditors fair treatment in chapter 13
    Section 306(a) amends section 1325(a)(5)(B)(i) of the 
Bankruptcy Code to require--as a condition of confirmation--
that a chapter 13 plan provide that a secured creditor retain 
its lien until the earlier of when the underlying debt is paid 
or the debtor receives a discharge. If the case is dismissed or 
converted prior to completion of the plan, the secured creditor 
is entitled to retain its lien to the extent recognized under 
applicable nonbankruptcy law.
    Section 306(b) amends section 1325(a) of the Bankruptcy 
Code to provide that section 506 of the Code does not apply to 
a debt incurred within the 5-year period preceding the filing 
of the bankruptcy case if the debt is secured by a purchase 
money security interest in a motor vehicle acquired for the 
personal use of the debtor. Where the collateral consists of 
any other type of property having value, section 306(b) 
provides that section 506 of the Bankruptcy Code does not apply 
if the debt was incurred during the 1-year period preceding the 
filing of the bankruptcy case.
    Section 306(c)(1) adds to section 101 of the Bankruptcy 
Code a definition of the term, ``debtor's principal 
residence,'' which it defines as a residential structure 
(including incidental property) whether or not such structure 
is attached to real property. The definition includes an 
individual condominium or cooperative unit as well as a mobile 
or manufactured home, and a trailer. Section 306(c)(2) defines 
``incidental property'' as property commonly conveyed with a 
principal residence in the area where the residence is located. 
The term includes all easements, rights, appurtenances, 
fixtures, rents, royalties, mineral rights, oil or gas rights 
or profits, water rights, escrow funds, and insurance proceeds. 
Further, the term includes all replacements and additions.
Section 307. Domiciliary requirements for exemptions
    Section 307 amends 522(b)(2)(A) of the Bankruptcy Code to 
extend the time that a debtor must be domiciled in a State 
before he or she may claim that State's exemptions. If the 
debtor's domicile was not located in a single State for the 
730-day period, then the State where the debtor was domiciled 
in the 180-day period preceding the 730-day period (or the 
longer portion of such 180-day period) controls.
Section 308. Residency requirements for homestead exemption
    Section 308 amends section 522 of the Bankruptcy Code to 
reduce the value of a debtor's interest in the following 
property that may be claimed as exempt under certain 
circumstances: (1) real or personal property that the debtor or 
a dependent of the debtor uses as a residence; (2) a 
cooperative that owns property that the debtor or a dependent 
of the debtor uses as a residence; or (3) a burial plot. Where 
nonexempt property is converted to the above-specified exempt 
property within the 7-year period preceding the filing of the 
bankruptcy case, the exemption must be reduced to the extent 
such value was acquired with the intent to hinder, delay or 
defraud a creditor.
Section 309. Protection secured creditors in chapter 13 cases
    Section 309(a) amends section 348(f)(1) of the Bankruptcy 
Code to specify that valuations of property and allowed secured 
claims in a chapter 13 case only apply if the case is 
subsequently converted to one under chapter 11 or 12. If the 
chapter 13 case is converted to one under chapter 7, then the 
creditor holding security as of the petition date shall 
continue to be secured unless its claim was paid in full as of 
the conversion date. In addition, unless a prebankruptcy 
default has been fully cured at the time of conversion, then 
the default in any bankruptcy proceeding shall have the effect 
given under applicable nonbankruptcy law.
    Section 309(b) amends section 365 of the Bankruptcy Code to 
provide that if a lease of personal property is rejected or not 
timely assumed by the trustee, the leased property is no longer 
property of the estate and the automatic stay under section 362 
is terminated. With regard to a chapter 7 case of an individual 
debtor, the debtor may notify the creditor in writing of his or 
her desire to assume the lease. Upon being so notified, the 
creditor may, at its option, inform the debtor that it is 
willing to have the lease assumed and condition such assumption 
on cure of any outstanding default on terms set by the 
contract. If within 30 days after such notice the debtor 
notifies the lessor in writing that the lease is assumed, the 
debtor (not the bankruptcy estate) assumes the liability under 
the lease. Section 309(b) provides that the automatic stay of 
section 362 and the discharge injunction of section 524 are not 
violated if the creditor notifies the debtor and negotiates a 
cure under section 365(p)(2) (as codified by this Act).
    In an individual chapter 11 or 13 case where the debtor is 
the lessee with respect to personal property and the lease is 
not assumed in the confirmed plan, the lease is deemed rejected 
as of the conclusion of the confirmation hearing. If the lease 
is rejected, the automatic stay under section 362 as well as 
the chapter 13 codebtor stay under section 1301 are 
automatically terminated with respect to such property.
    Section 309(c)(1) amends section 1325(a)(5)(B) of the 
Bankruptcy Code to require that periodic payments pursuant to a 
chapter 13 plan with respect to a secured claim be made in 
equal monthly installments and that the amount of such payments 
shall not be less than the amount sufficient to provide 
adequate protection to the holder of such claim.
    Section 309(c)(2) amends section 1326(a) of the Bankruptcy 
Code to require a chapter 13 debtor to commence making payments 
within 30 days after the filing of the plan or the order for 
relief, whichever is earlier. The amount of such payment must 
be the amount proposed in the plan, scheduled in a personal 
property lease for that portion of the obligation that becomes 
due postpetition (which amount shall reduce the payment 
required to be made to such lessor pursuant to the plan), and 
provides adequate protection directly to a creditor holding an 
allowed claim secured by personal property to the extent the 
claim is attributable to the purchase of such property (which 
amount shall reduce the payment required to be made to such 
secured creditor pursuant to the plan). Payments made pursuant 
to a plan must be retained by the chapter 13 trustee until 
confirmation or denial of confirmation. Section 309(c)(2) 
provides that if the plan is confirmed, the trustee must 
distribute payments received from the debtor as soon as 
practicable in accordance with the plan. If the plan is not 
confirmed, the trustee must return to the debtor payments not 
yet due and owing to creditors. Pending confirmation and 
subject to section 363, the court, after notice and a hearing, 
may modify the payments required under this provision. Section 
309(c)(2) requires the debtor, within 60 days following the 
filing of the bankruptcy case, to provide reasonable evidence 
of any required insurance coverage with respect to the use or 
ownership of leased personal property or property securing, in 
whole or in part, a purchase money security interest.
Section 310. Limitation on luxury goods
    Section 310 amends section 523(a)(2)(C) of the Bankruptcy 
Code to establish a presumption that consumer debts owed to a 
single creditor and aggregating more than $250 for luxury goods 
or services incurred by an individual debtor within 90 days 
before the order for relief are nondischargeable. With respect 
to cash advances aggregating more than $750 that are extensions 
of consumer credit under an open-end credit plan obtained by an 
individual debtor within 70 days prepetition, section 310 
establishes a presumption that these debts are 
nondischargeable. The term, ``luxury goods or services,'' does 
not include goods or services reasonably necessary for the 
support or maintenance of the debtor or a dependent of the 
debtor. In addition, ``an extension of consumer credit under an 
open-end credit plan'' has the same meaning as it has under the 
Consumer Credit Protection Act.
Section 311. Automatic stay
    Section 311 amends section 362(b) of the Bankruptcy Code to 
except the following proceedings from the automatic stay:

        (1) the continuation of any eviction, unlawful 
        detainer action, or similar proceeding by a lessor 
        against a debtor involving residential real property 
        where the debtor resides as a tenant under a rental 
        agreement;
        (2) the commencement of any eviction, unlawful 
        detainer action, or similar proceeding by a lessor 
        against a debtor involving residential real property 
        where the debtor resides as a tenant under a rental 
        agreement that has terminated pursuant to the lease 
        agreement or applicable State law; and
        (3) an eviction action based on endangerment to 
        property or person, or the use of illegal drugs.

    Section 311 also excepts from the automatic stay a transfer 
that is not avoidable under section 544 and that is not 
avoidable under section 549 of the Bankruptcy Code. This 
amendment responds to a 1997 Ninth Circuit case,\2\ in which 
two purchase money lenders (without knowledge that the debtor 
had recently filed an undisclosed chapter 11 case that was 
later converted to chapter 7), funded the debtor's acquisition 
of an apartment complex and recorded their purchase-money deed 
of trust immediately following recordation of the deed to the 
debtors. Specifically, it amends the definition of ``transfer'' 
to include the ``creation of a lien.'' This amendment gives 
expression to a widely held understanding that a transfer 
includes the creation of a lien.
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    \2\ Thompson v. Margen (In re McConville), 110 F.3d 47 (9th Cir. 
1997). The bankruptcy trustee sought to avoid the lien created by the 
lenders' deed of trust by asserting that the deed was an unauthorized, 
postpetition transfer under section 549(a) of the Bankruptcy Code. The 
lenders claimed that the voluntary transfer to them was a transfer of 
real property to good faith purchasers for value, which thereby 
excepted it, under section 549(c) of the Bankruptcy Code, from 
avoidance. The bankruptcy court held that: the postpetition recordation 
of the lenders' deed of trust was without authorization under the 
Bankruptcy Code or by the court and was therefore avoidable under 
section 549(a) and that the lenders did not qualify under the section 
549(c) exception as good faith purchasers of real property for value. 
The District Court subsequently affirmed the bankruptcy court's ruling 
granting the trustee the authority to avoid the lenders' lien. 
McConville v. David Margen and Lawton Associates (In re McConville), 
No. C 94-3308, 1994 U.S. Dist. LEXIS 18095 (N.D. Cal. Dec. 14, 1994). 
On appeal, the lower court's decision in McConville was initially 
affirmed. Thompson v. Margen (In re McConville), 84 F.3d 340 (9th Cir. 
1996). The Ninth Circuit, however, subsequently issued an amended 
opinion, also affirming the lower court, Thompson v. Margen (In re 
McConville), 97 F.3d 316 (9th Cir. 1996), and finally issued an opinion 
withdrawing its prior opinion and deciding the case on other grounds. 
It held that by obtaining secured credit from the lenders after filing 
but before the appointment of a trustee, the debtors violated their 
fiduciary responsibility to their creditors. Thompson v. Margen (In re 
McConville), 110 F.3d 47 (9th Cir. 1997).
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Section 312. Extension of period between bankruptcy discharges
    Section 312(1) amends section 727(a)(8) of the Bankruptcy 
Code to extend the period before which a chapter 7 debtor may 
receive a subsequent chapter 7 discharge from six to 8 years. 
Section 312(2) amends section 1328 to prohibit the issuance of 
a discharge in a subsequent chapter 13 case if the debtor 
received a discharge in a prior bankruptcy case within 5 years 
preceding the filing of the subsequent chapter 13 case.
Section 313. Definition of household goods and antiques
    Section 313(a) amends section 522(f) of the Bankruptcy Code 
to codify a modified version of the Federal Trade Commission's 
definition of ``household goods'' for purposes of the avoidance 
of a nonpossessory, nonpurchase money lien in such property. 
Section 313(b) requires the Director of the Executive Office 
for United States Trustees to prepare a report containing 
findings with respect to the use of this definition under 
section 522(f)(4). The report may include recommendations for 
amendments to section 522(f)(4).
Section 314. Debt incurred to pay nondischargeable debts
    Section 314(a) amends section 523(a) of the Bankruptcy Code 
to make a debt incurred to pay a nondischargeable tax owed to a 
governmental unit (other than a tax owed to the United States) 
nondischargeable as well.
    Section 314(b) amends section 1328(a) of the Bankruptcy 
Code to make the following additional debts nondischargeable in 
a chapter 13 case:

        (1) debts for money, property, services, or extensions 
        of credit obtained through fraud or by a false 
        statement in writing under section 523(a)(2)(A) and (B) 
        of the Bankruptcy Code;
        (2) consumer debts owed to a single creditor that 
        aggregate to more than $250 for luxury goods or 
        services incurred by an individual debtor within 90 
        days before the filing of the bankruptcy case, and cash 
        advances aggregating more than $750 that are extensions 
        of consumer credit obtained by a debtor under an open-
        end credit plan within 70 days before the order for 
        relief under section 523(a)(2)(C) (as amended by this 
        Act);
        (3) pursuant to section 523(a)(3) of the Bankruptcy 
        Code, debts that require timely request for a 
        dischargeability determination, if the creditor lacks 
        notice or does not have actual knowledge of the case in 
        time to make such request;
        (4) debts resulting from fraud or defalcation by the 
        debtor acting as a fiduciary under section 523(a)(4) of 
        the Bankruptcy Code;
        (5) debts for restitution or damages, awarded in a 
        civil action against the debtor as a result of willful 
        or malicious conduct by the debtor that caused personal 
        injury to an individual or the death of an individual.
Section 315. Giving creditors fair notice in chapters 7 and 13 cases
    Section 315(a) amends section 342 of the Bankruptcy Code in 
several respects. First, it deletes the provision specifying 
that the failure of a notice to include certain information 
required to be given by a debtor to a creditor does not 
invalidate the notice's legal effect. Second, it mandates that 
a debtor send any notice required under the Bankruptcy Code to 
the address specified by the creditor and to include on such 
notice the account number, if within 90 days prior to the date 
that the debtor filed for bankruptcy relief the creditor sent 
at least two communications to the debtor specifying such 
account number and address. If the creditor would be in 
violation of applicable nonbankruptcy law by sending any such 
communication during this time period, then the debtor must 
send the notice to the address provided by the creditor stated 
in the last two communications containing the creditor's 
address and such notice shall include the current account 
number. Third, it permits a creditor in a chapter 7 or 13 case 
of an individual debtor to file with the court and serve on the 
debtor the address to be used to notify such creditor in that 
case. Five days after receipt of such notice, the court or 
debtor must use the address so specified for noticing such 
creditor. Fourth, section 315(a) specifies that if an entity 
files a notice with the court stating an address to be used 
generally in chapter 7 and chapter 13 cases, this address must 
be used by the court for such cases within 30 days following 
the filing of such notice. Fifth, it provides that any notice 
shall not be effective until it has been brought to the 
creditor's attention. If the creditor has designated an entity 
to be responsible for receiving notices concerning bankruptcy 
cases and has established reasonable procedures so that these 
notices will be delivered to such entity, a notice will not be 
deemed to have been received by the creditor until it has been 
received by such entity. Sixth, it prohibits the imposition of 
any sanction for violation of the automatic stay or for the 
failure to comply with the Bankruptcy Code's turnover 
provisions in sections 542 and 543 if a creditor has not 
received proper notice.
    Section 315(b)(1) amends section 521 to require the debtor 
to file a certificate executed by the debtor's attorney or 
bankruptcy petition preparer stating that the attorney or 
preparer supplied the debtor with the notice required under 
section 342(b) (as amended by this Act). If the debtor is pro 
se and did not use the services of a bankruptcy petition 
preparer, then the debtor must sign a certificate stating that 
he or she obtained and read such notice. In addition, the 
debtor must file:
    (1) copies of all payment advices or other evidence of 
payment from any employer within 60 days preceding the 
bankruptcy filing;
    (2) a statement of the amount of monthly net income, 
itemized to show how such amount is calculated; and
    (3) a statement disclosing any reasonably anticipated 
increase in income or expenditures in the 12-month period 
following the date of filing.
    Upon request of a creditor, section 315(b)(2) requires the 
court to make the petition, schedules, and statement of 
financial affairs of an individual who is a chapter 7 or 
chapter 13 debtor available to such creditor. In addition, it 
requires the debtor to provide either a copy of his or her tax 
return or transcript (at the election of the debtor) for the 
latest taxable period prior to the filing of the bankruptcy 
case for which a tax return has been or should have been filed 
to the trustee not later than 7 days before the date first set 
for the first meeting of creditors. The debtor's failure to 
comply requires dismissal of the case unless the debtor 
demonstrates that such failure was due to circumstances beyond 
the debtor's control. If a creditor has requested a copy of the 
tax return or transcript, the debtor must provide such document 
to the creditor at the time the debtor supplies the return or 
transcript to the trustee. Should the debtor fail to comply 
with this requirement, the case must be dismissed, unless the 
debtor demonstrates that such failure is due to circumstances 
beyond the debtor's control. A creditor in a chapter 13 case 
may, at any time, file a notice with the court requesting a 
copy of the plan. The court must supply a copy of the chapter 
13 plan at a reasonable cost not later than 5 days after such 
request.
    At the time filed with the taxing authority, an individual 
debtor in a case under chapter 7, 11 or 13 must file copies of 
tax returns (including any schedules or attachments) with the 
court at the request of any party in interest during the 
pendency of the case. This requirement pertains to all tax 
returns (including any schedules or attachments) that were not 
filed for the 3-year period preceding the date on which the 
order for relief was entered. In addition, the debtor must file 
copies of any amendments to such tax returns.
    In a chapter 13 case, the debtor must file a statement, 
under penalty of perjury, of income and expenditures in the 
preceding tax year and monthly income showing how the amounts 
were calculated. The statement must be filed on the date that 
is the later of 90 days after the close of the debtor's tax 
year or 1 year after the order for relief, unless a plan has 
been confirmed. Thereafter, the statement must be filed on or 
before the date that is 45 days before the anniversary date of 
the plan's confirmation, until the case is closed. The 
statement must disclose the amount and sources of the debtor's 
income, the identity of any persons responsible with the debtor 
for the support of the debtor's dependents, the identity of any 
persons who contributed to the debtor's household expenses, and 
the amount of any such contributions.
    Section 315(b)(2) mandates that the tax returns, amendments 
thereto, and the statement of income and expenditures of an 
individual who is a chapter 7 or chapter 13 debtor be made 
available to the United States trustee or bankruptcy 
administrator, the trustee, and any party in interest for 
inspection and copying, subject to procedures established by 
the Director of the Administrative Office for United States 
Courts within 180 days from the Act's enactment date. The 
procedures must safeguard the confidentiality of any tax 
information required under this provision and include 
restrictions on creditor access to such information. In 
addition, the Director must, within 1 year and 180 days from 
the Act's enactment date, prepare and submit to the Congress a 
report that assesses the effectiveness of such procedures and, 
if appropriate, includes recommendations for legislation to 
further protect the confidentiality of such tax information and 
to impose penalties for its improper use.
    If requested by the United States trustee or trustee, the 
debtor must provide a document establishing the debtor's 
identity, which may include a driver's license, passport, or 
other document containing a photograph of the debtor, and such 
other personal identifying information relating to the debtor.
Section 316. Dismissal for failure to timely file schedules or provide 
        required information
    Section 316 amends section 521 of the Bankruptcy Code to 
provide that if an individual debtor in a voluntary chapter 7 
or chapter 13 case fails to file all of the information 
required under section 521(a)(1) within 45 days of the date on 
which the case is filed, the case must be automatically 
dismissed, effective on the 46th day. The 45-day period may be 
extended for an additional 45-day period providing the debtor 
requests such extension prior to the expiration of the original 
45-day period and the court finds justification for such 
extension. Upon request of a party in interest, the court must 
enter an order of dismissal within 5 days of such request.
Section 317. Adequate time to prepare for hearing on confirmation of 
        the plan
    Section 317 amends section 1324 of the Bankruptcy Code to 
require the chapter 13 confirmation hearing to be held not 
earlier than 20 days following the first date set for the 
meeting of creditors and not later than 45 days from this date.
Section 318. Chapter 13 plans to have a 5-year duration in certain 
        cases
    Section 318(1) amends section 1322(d) to specify that a 
chapter 13 plan may not provide for payments over a period that 
is longer than 5 years if the current monthly income of the 
debtor and the debtor's spouse (when multiplied by 12) is not 
less than the applicable State median family income last 
reported by the Census Bureau for a family of equal or lesser 
size. For a household of one person, the income threshold is 
the applicable State median family income for one earner. 
Section 318(1) adjusts the income threshold for households with 
more than four individuals. If the income of the debtor and the 
debtor's spouse fall below this threshold, then the duration of 
the plan may not be longer than 3 years, unless the court, for 
cause, approves a longer period up to 5 years. Section 318(2), 
(3), and (4) make conforming amendments to section 1325(b) and 
1329(c) of the Bankruptcy Code.
Section 319. Sense of Congress regarding expansion of rule 9011 of the 
        Federal Rules of Bankruptcy Procedure
    Section 319 expresses a sense of the Congress that rule 
9011 of the Federal Rules of Bankruptcy Procedure be modified 
to require that all signed and unsigned documents, including 
schedules, supplied to the court or the trustee by a debtor be 
submitted only after the debtor or the debtor's attorney has 
made reasonable inquiry to verify that the information 
contained in such documents is well grounded in fact and 
warranted by existing law or a good faith argument for the 
extension, modification, or reversal of existing law.
Section 320. Prompt relief from stay in individual cases
    Section 320 amends section 362(e) of the Bankruptcy Code to 
terminate the automatic stay in a chapter 7, 11 or 13 case of 
an individual debtor within 60 days following a request for 
relief from the stay, unless the bankruptcy court renders a 
final decision prior to the expiration of the 60-day time 
period, such period is extended pursuant to agreement of all 
parties in interest, or a specific extension of time is 
required for good cause as described in findings made by the 
court.
Section 321. Chapter 11 cases filed by individuals
    Section 321(a)(1) creates a new provision under chapter 11 
of the Bankruptcy Code specifying that property of the estate 
of an individual debtor includes, in addition to that 
identified in section 541 of the Bankruptcy Code, all property 
of the kind described in section 541 that the debtor acquires 
after commencement of the case, but before the case is closed, 
dismissed or converted to a case under chapter 7, 12 or 13 
(whichever occurs first). In addition, it includes earnings 
from services performed by the debtor after commencement of the 
case, but before the case is closed, dismissed or converted to 
a case under chapter 7, 12 or 13. Except as provided in section 
1104 of the Bankruptcy Code or the order confirming a chapter 
11 plan, section 321(a) provides that the debtor remains in 
possession of all property of the estate.
    Section 321(b) amends section 1123 to require the chapter 
11 plan of an individual debtor to provide for the payment to 
creditors of all or such portion of the debtor's earnings from 
personal services performed after commencement of the case or 
other future income that is necessary for the plan's execution.
    Section 321(c) amends section 1129(a) to include an 
additional requirement for confirmation in a chapter 11 case of 
an individual debtor upon objection to confirmation by a holder 
of an allowed unsecured claim. In such instance, the value of 
property to be distributed under the plan (1) on account of 
such claim, as of the plan's effective date, must not be less 
than the amount of such claim; or (2) is not less than the 
debtor's projected disposable income (as defined in section 
1325(b)(2)) to be received during the 5-year period beginning 
on the date that the first payment is due under the plan or 
during the plan's term, whichever is longer. Section 321(c) 
also amends section 1129(b)(2)(B)(ii) of the Bankruptcy Code to 
provide that an individual chapter 11 debtor may retain 
property included in the estate under section 1115 (as codified 
by the Act), subject to section 1129(a)(14).
    Section 321(d)(1) amends section 1141(d) to provide that 
debts under section 523 of the Bankruptcy Code are 
nondischargeable in a chapter 11 case. Section 321(d)(2) 
provides that in the chapter 11 case of an individual debtor, 
the debtor is not discharged until all plan payments have been 
made. The court may grant a hardship discharge if the value of 
property actually distributed under the plan--as of the plan's 
effective date--is not less than the amount that would have 
been available for distribution if the case was liquidated 
under chapter 7 on such date, and modification of the plan is 
not practicable.
    Section 321(e) amends section 1127 to permit a plan in a 
chapter 11 case of an individual debtor to be modified 
postconfirmation for the purpose of increasing or reducing the 
amount of payments, extending or reducing the time period for 
such payments, or altering the amount of distribution to a 
creditor whose claim is provided for by the plan. Such 
modification may be made at any time on request of the debtor, 
trustee, United States trustee, or holder of an allowed 
unsecured claim, if the plan has not been substantially 
consummated. The provision specifies that sections 1121 through 
1129 apply to such modification. In addition, it provides that 
the modified plan shall become the confirmed plan only if: (a) 
there has been disclosure pursuant to section 1125 (as the 
court directs); (b) notice and a hearing; and (c) such 
modification is approved.
Section 322. Limitation
    Section 322(a) amends section 522 of the Bankruptcy Code to 
impose an aggregate monetary limitation of $100,000, subject to 
sections 544 and 548, on the value of property that the debtor 
may claim as exempt under State or local law pursuant to 
section 522(b)(3)(A) under certain circumstances. The monetary 
cap applies if the debtor acquired such property within the 2-
year period preceding the filing of the petition and the 
property consists of any of the following: (a) real or personal 
property of the debtor or that a dependent of the debtor uses 
as a residence; (b) an interest in a cooperative that owns 
property, which the debtor or the debtor's dependent uses as a 
residence; or (c) a burial plot for the debtor or the debtor's 
dependent. This limitation does not apply to a principal 
residence claimed as exempt by a family farmer. In addition, 
the limitation does not apply to any interest transferred from 
a debtor's principal residence (which was acquired prior to the 
beginning of the 2-year period) to the debtor's current 
principal residence, if both the previous and current 
residences are located in the same State.
    Section 322(b) makes the monetary limitation set forth in 
section 322(a) subject to automatic adjustment pursuant to 
section 104 of the Bankruptcy Code.
    Section 323. Excluding employee benefit plan participant 
contributions and other property from the estate
    Section 323(a) amends section 541(b) of the Bankruptcy Code 
to exclude as property of the estate funds withheld or received 
by an employer from its employees' wages for payment as 
contributions to specified employee retirement plans, deferred 
compensation plans, and tax-deferred annuities. Such 
contributions do not constitute disposable income as defined in 
section 1325(b)(2) of the Bankruptcy Code. Section 323(a) also 
excludes as property of the estate funds withheld by an 
employer from the wages of its employees for payment as 
contributions to health insurance plans regulated by State law.
    Section 323(b) specifies that the amendments made by this 
provision do not apply to bankruptcy cases commenced prior to 
the expiration of the 180-day period beginning on the Act's 
enactment date.
Section 324. Exclusive jurisdiction in matters involving bankruptcy 
        professionals
    Section 324 amends section 1334 of title 28 of the United 
State Code to give a district court exclusive jurisdiction of 
all claims or causes of action involving the construction of 
section 327 of the Bankruptcy Code and rules relating to 
disclosure requirements under such provision.
Section 325. United States Trustee Program filing fee increase
    Section 325(a) amends section 1930(a) of title 28 of the 
United States Code to increase the filing fees for chapter 7 
and chapter 13 cases respectively to $160 and $150. Subsections 
325(b) and (c) amend section 589a of title 28 of the United 
States Code and section 406(b) of the Judiciary Appropriations 
Act of 1990 to increase the percentage of the fees collected 
under section 1930 of title 28 of the United States Code that 
are paid to the United States Trustee System Fund.
Section 326. Sharing of compensation
    Section 326 amends section 504 of the Bankruptcy Code to 
create a limited exception to the prohibition against fee 
sharing. The provision allows the sharing of compensation with 
bona fide public service attorney referral programs that 
operate in accordance with non-federal law regulating attorney 
referral services and with professional responsibility rules 
applicable to attorney acceptance of referrals.
Section 327. Fair valuation of collateral
    Section 327 amends section 506(a) to provide that the value 
of an allowed claim secured by personal property that is an 
asset in an individual debtor's chapter 7 or chapter 13 case is 
determined based on the replacement value of such property as 
of the filing date of the bankruptcy case without deduction for 
costs of sale or marketing. With respect to property acquired 
for personal, family, or household purposes, replacement value 
is the price a retail merchant would charge for property of 
that kind considering the age and condition of the property at 
the time its value is determined.
Section 328. Defaults based on nonmonetary obligations
    Section 328(a)(1) amends section 365(b) to provide that a 
trustee does not have to cure a default that is a breach of a 
provision (other than a penalty rate or penalty provision) 
relating to a default arising from any failure to perform a 
nonmonetary obligation under an unexpired lease of real 
property, if it is impossible for the trustee to cure the 
default by performing such nonmonetary act at and after the 
time of assumption. If the default arises from a failure to 
operate in accordance with a nonresidential real property 
lease, the default must be cured by performance at and after 
the time of assumption in accordance with the lease. Pecuniary 
losses resulting from such default must be compensated pursuant 
to section 365(b)(1). In addition, section 328(a)(1) amends 
section 365(b)(2)(D) to clarify that it applies to penalty 
provisions.
    Section 328(a)(2) through (4) make technical revisions to 
section 365(c), (d) and (f) by deleting language that is no 
longer effective pursuant to the Rail Safety Enforcement and 
Review Act.\3\
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    \3\ Pub. L. No. 102-365.
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    Section 328(b) amends section 1124(2)(A) of the Bankruptcy 
Code to clarify that a claim is not impaired if section 
365(b)(2) (as amended by this Act) expressly does not require a 
default with respect to such claim to be cured. In addition, it 
provides that any claim or interest that arises from the 
failure to perform a nonmonetary obligation (other than a 
default arising from the failure to operate a nonresidential 
real property lease subject to section 365(b)(1)(A)), is 
impaired unless the holder of such claim or interest (other 
than the debtor or an insider) is compensated for any actual 
pecuniary loss incurred by the holder as a result of such 
failure.

       TITLE IV. GENERAL AND SMALL BUSINESS BANKRUPTCY PROVISIONS

           SUBTITLE A. GENERAL BUSINESS BANKRUPTCY PROVISIONS

Section 401. Adequate protection for investors
    Section 401(a) amends section 101 of the Bankruptcy Code to 
define ``securities self regulatory organization'' as a 
securities association or national securities exchange 
registered with the Securities and Exchange Commission.
    Section 401(b) amends section 362 of the Bankruptcy Code to 
except from the automatic stay certain enforcement actions by a 
securities self regulatory organization.
Section 402. Meetings of creditors and equity security holders
    Section 402 amends section 341 of the Bankruptcy Code to 
permit a court, on request of a party in interest and after 
notice and a hearing, to order the United States trustee to not 
convene a meeting of creditors or equity security holders if a 
chapter 11 debtor has filed a plan for which the debtor 
solicited acceptances prior to the commencement of the case.
Section 403. Protection of refinance of security interest
    Section 403 amends section 547(e)(2) of the Bankruptcy Code 
to increase the perfection period from 10 to 30 days for the 
purpose of determining whether such transfer is an avoidable 
preferential transfer.
Section 404. Executory contracts and unexpired leases
    Section 404(a) amends section 365(d)(4) of the Bankruptcy 
Code to establish more finite deadlines by which an unexpired 
lease of nonresidential real property must be assumed or 
rejected. It provides that such lease shall be deemed rejected 
if the trustee fails to assume it by the earlier of 120 days 
after the date of the order for relief or the date on which an 
order of confirmation is entered. The court may extend this 
time period for an additional 90 days on motion of the trustee 
or lessor for cause. If such extension is granted, the court 
may permit a subsequent extension only upon the lessor's 
written consent.
    Section 404(b) amends section 365(f)(1) to make a trustee's 
authority to assign an executory contract or unexpired lease 
subject to section 365(b), amended by the Act.
Section 405. Creditors and equity security holders committees
    Section 405(a) amends section 1102(a)(2) to permit, after 
notice and a hearing, a bankruptcy court, on its own motion or 
on motion of a party in interest, to order a change in a 
committee's membership to ensure adequate representation of 
parties in a case. In addition, it specifies that the court may 
direct the United States trustee to increase the membership of 
a committee for the purpose of including a small business 
concern if the court determines that such creditor's claim is 
of the kind represented by the committee and that, in the 
aggregate, is disproportionately large when compared to the 
creditor's annual gross revenue.
    Section 405(b) requires the committee to allow creditors 
having claims of the kind represented by the committee access 
to information. In addition, the committee must solicit and 
receive comments from these creditors and, pursuant to court 
order, make additional reports or disclosures available to 
them.
Section 406. Amendment to section 546 of title 11, United States Code
    Section 406(1) corrects an erroneous subsection designation 
in section 546 of the Bankruptcy Code. Section 406(2) amends 
section 546 to provide that a trustee may not avoid a warehouse 
lien for storage, transportation, or other costs incidental to 
the storage and handling of goods. In addition, it specifies 
that this prohibition must be applied in a manner consistent 
with any applicable State statute that is similar to section 7-
209 of the Uniform Commercial Code.
Section 407. Amendments to section 330(a) of title 11, United States 
        Code
    Section 407 amends section 330(a)(3) of the Bankruptcy Code 
to clarify that this provision applies to examiners, chapter 11 
trustees, and professional persons. This section also amends 
section 330(a) to add a provision that requires a court, in 
determining the amount of reasonable compensation to award to a 
trustee, to treat such compensation as a commission pursuant to 
section 326 of the Bankruptcy Code.
Section 408. Postpetition disclosure and solicitation
    Section 408 amends section 1125 of the Bankruptcy Code to 
permit an acceptance or rejection of a chapter 11 plan to be 
solicited from the holder of a claim or interest if the holder 
was solicited before the commencement of the case in a manner 
that complied with applicable nonbankruptcy law.
Section 409. Preferences
    Section 409(1) amends section 547(c)(2) of the Bankruptcy 
Code to provide that a trustee may not avoid a transfer to the 
extent the transfer was in payment of a debt incurred by the 
debtor in the ordinary course of the business or financial 
affairs of the debtor and the transferee and such transfer was 
either made (1) in the ordinary course of the debtor's 
financial affairs or business, or (2) in accordance with 
ordinary business terms. Present law requires the recipient of 
a preferential transfer to establish both of these grounds in 
order to sustain a defense to a preferential transfer 
proceeding. In a case that does not have primarily consumer 
debts, section 409 provides that a transfer may not be avoided 
if the aggregate amount of all property constituting or 
affected by the transfer is less than $5,000.
Section 410. Venue of certain proceedings
    Section 410 amends section 1409(b) of title 28 of the 
United States Code to provide that a preferential transfer 
action in the amount of $10,000 or less must be filed in the 
district where the defendant resides. This amount is presently 
fixed at $1,000.
Section 411. Period for filing plan under chapter 11
    Section 411 amends section 1121(d) of the Bankruptcy Code 
to mandate that a chapter 11 debtor's exclusive period for 
filing a plan may not be extended beyond a date that is 18 
months after the order for relief. In addition, it provides 
that the debtor's exclusive period for obtaining acceptances of 
the plan may not be extended beyond 20 months after the order 
for relief.
Section 412. Fees arising from certain ownership interests
    Section 412 amends section 523(a)(16) of the Bankruptcy 
Code to broaden the protections accorded to community 
associations with respect to fees or assessments arising from 
the debtor's interest in a condominium, cooperative or 
homeowners' association. Irrespective of whether or not the 
debtor physically occupies such property, any fees or 
assessments that accrue during the period the debtor or the 
trustee has a legal, equitable, or possessory ownership 
interest in such property are nondischargeable.
Section 413. Creditor representation at first meeting of creditors
    Section 413 amends section 341(c) of the Bankruptcy Code to 
permit a creditor holding a consumer debt or any representative 
of such creditor to appear and participate at the meeting of 
creditors in chapter 7 and chapter 13 cases either alone or in 
conjunction with an attorney. In addition, the provision 
clarifies that it cannot be construed to require a creditor to 
be represented by counsel at any meeting of creditors.
Section 414. Definition of disinterested person
    Section 414 amends section 101(14) of the Bankruptcy Code 
to eliminate the requirement that an investment banker be a 
disinterested person.
Section 415. Factors for compensation of professional persons
    Section 415 amends section 330(a)(3) of the Bankruptcy Code 
to permit the court to consider, in awarding compensation, 
whether the person is board certified or otherwise has 
demonstrated skill and experience in the practice of bankruptcy 
law.
Section 416. Appointment of elected trustee
    Section 416 refines existing law by clarifying the 
procedure for the election of a private trustee in a chapter 11 
case. Section 1104(b) of the Bankruptcy Code permits creditors 
to elect an eligible, disinterested person to serve as the 
trustee in the case, provided certain conditions are met. 
Section 416 adds a provision to section 1104(b) requiring the 
United States trustee to file a report certifying the election 
of a chapter 11 trustee. Upon the filing of the report, the 
elected trustee is deemed to be selected and appointed for 
purposes of section 1104 and the service of any prior trustee 
appointed in the case is terminated. Section 416 also clarifies 
that the court shall resolve any dispute arising out of a 
chapter 11 trustee election.
Section 417. Utility service
    Section 417 amends section 366 of the Bankruptcy Code to 
provide that assurance of payment, for purposes of this 
provision, includes a cash deposit, letter of credit, 
certificate of deposit, surety bond, prepayment of utility 
consumption, or other form of security that is mutually agreed 
upon by the debtor or trustee and the utility. It also 
specifies that an administrative expense priority does not 
constitute an assurance of payment.
    With respect to chapter 11 cases, section 417 permits a 
utility to refuse or discontinue service if it does not receive 
adequate assurance of payment within 30 days of the filing of 
the petition that is satisfactory to the utility. The court, 
upon request of a party in interest, may modify the amount of 
this payment after notice and a hearing. In determining the 
adequacy of such payment, section 417 prevents a court from 
taking into consideration (1) the absence of security before 
the case was filed; (2) the debtor's timely payment of utility 
service charges before the case was filed; or (3) the 
availability of an administrative expense priority. 
Notwithstanding any other provision of law, section 417 permits 
a utility to recover or set off against a security deposit 
provided prepetition by the debtor to the utility without 
notice or court order.
Section 418. Bankruptcy fees
    Section 418 amends section 1930 of title 28 of the United 
States Code to permit a district court or a bankruptcy court, 
pursuant to procedures prescribed by the Judicial Conference of 
the United States, to waive the chapter 7 filing fee for an 
individual and certain other fees under subsections (b) and (c) 
of section 1930 if such individual's income is less than 150 
percent of the official poverty level (as defined by the Office 
of Management and Budget) and the individual is unable to pay 
such fee in installments. Section 418 also clarifies that 
section 1930, as amended, does not prevent a district or 
bankruptcy court from waiving other fees for creditors and 
debtors, if in accordance with Judicial Conference policy.
Section 419. More complete information regarding assets of the estate
    Section 419 requires the Advisory Committee on Bankruptcy 
Rules, after consideration of the views of the Director of the 
Executive Office for United States Trustees, to propose 
official rules and forms directing chapter 11 debtors to 
disclose information concerning the value, operations, and 
profitability of any closely held corporation, partnership, or 
other entity in which the debtor holds a substantial or 
controlling interest. This provision is intended to ensure that 
the debtor's interest in any of these entities is used for the 
payment of allowed claims against the debtor.

            SUBTITLE B. SMALL BUSINESS BANKRUPTCY PROVISIONS

Section 431. Flexible rules for disclosure statement and plan
    Section 431 is intended to streamline the disclosure 
statement process and to provide for more flexibility. Section 
431(1) amends section 1125(a)(1) of the Bankruptcy Code to 
require a bankruptcy court, in determining whether a disclosure 
statement supplies adequate information, to consider the 
complexity of the case, the benefit of additional information 
to creditors and other parties in interest, and the cost of 
providing such additional information.
    With regard to a small business case, section 431(2) amends 
section 1125(f) to provide that if the plan itself supplies 
adequate information, a separate disclosure statement may not 
be required. In addition, it provides that the court may 
approve a disclosure statement submitted on standard forms 
approved by the court or adopted under section 2075 of title 28 
of the United States Code. Further, section 431(2) provides 
that the court may conditionally approve a disclosure 
statement, subject to final approval after notice and a 
hearing, and allow the debtor to solicit acceptances of the 
plan based on such disclosure statement. The hearing on the 
disclosure statement may be combined with the confirmation 
hearing.
Section 432. Definitions
    Section 432 amends section 101 of the Bankruptcy Code to 
define a ``small business case'' as a chapter 11 case in which 
the debtor is a small business debtor. This provision, in turn, 
defines a ``small business debtor'' as a person (including 
affiliates that are also debtors, but excluding a person whose 
primary activity is the business of owning or operating real 
property or activities incidental thereto) having 
noncontingent, liquidated secured and unsecured debts of less 
than $3 million in the aggregate (excluding debts owed to 
affiliates or insiders of the debtor) as of the commencement of 
the case. This definition applies only in a case where the 
United States trustee has not appointed a creditors' committee 
or where the court has determined that the committee of 
unsecured creditors is not sufficiently active and 
representative to provide effective oversight of the debtor. 
The definition does not apply to any member of a group of 
affiliated debtors that has aggregate noncontingent, liquidated 
secured and unsecured debts in excess of $3 million (excluding 
debts owed to one or more affiliates or insiders).
Section 433. Standard form disclosure statement and plan
    Section 433 requires the Advisory Committee on Bankruptcy 
Rules of the Judicial Conference of the United States to 
propose for adoption standard form disclosure statements and 
plans for small business debtors. The provision directs that 
the forms be designed to achieve a practical balance between 
the needs of the court, case administrators, and other parties 
in interest to have reasonably complete information as well as 
the small business debtor's needs for economy and simplicity.
Section 434. Uniform national reporting requirements
    Section 434(a) adds a new provision to the Bankruptcy Code 
imposing additional reporting requirements for small business 
debtors. It requires a small business debtor to file periodic 
financial reports and other documents containing the following 
information with respect to the debtor's business operations: 
(a) profitability; (b) reasonable approximations of projected 
cash receipts and disbursements; (c) comparisons of actual cash 
receipts and disbursements with projections in prior reports; 
(d) whether the debtor is complying with postpetition 
requirements pursuant to the Bankruptcy Code and Federal Rules 
of Bankruptcy Procedure; and (5) whether the debtor is timely 
filing tax returns, paying taxes and other administrative 
expenses when due, and making other required government 
filings. In addition, the debtor must report on such other 
matters that are in the best interests of the debtor and the 
creditors and in the public interest.
    If the debtor is not in compliance with any postpetition 
requirements pursuant to the Bankruptcy Code and Federal Rules 
of Bankruptcy Procedure, or is not filing tax returns, paying 
taxes and other administrative expenses when due, or making 
other required government filings, the debtor must report: (a) 
what the failures are; (b) how they will be cured; (c) the cost 
of their cure; and (d) when they will be cured.
    Section 434(b) specifies that the effective date of this 
provision is 60 days after the date on which the rules required 
under this provision are promulgated.
Section 435. Uniform reporting rules and forms for small business cases
    Section 435(a) mandates that the Advisory Committee on 
Bankruptcy Rules of the Judicial Conference of the United 
States propose official rules and forms with respect to the 
periodic financial reports and other information that a small 
business debtor must file concerning its profitability, cash 
receipts and disbursements, filing of its tax returns, and 
payment of its taxes and other administrative expenses.
    Section 435(b) requires the rules and forms to achieve a 
practical balance between the need for reasonably complete 
information by the bankruptcy court, United States trustee, 
creditors and other parties in interest; and the small business 
debtor's interest in having such forms be easy and inexpensive 
to complete. The forms should also be designed to help the 
small business debtor to understand its financial condition and 
plan its future.
Section 436. Duties in small business cases
    Section 436 adds a provision to chapter 11 intended to 
implement greater administrative controls over such cases. The 
provision requires a chapter 11 trustee or debtor to:

        (1) file with a voluntary petition (or in an 
        involuntary case, within 7 days from the date of the 
        order for relief) the debtor's most recent financial 
        statements (including a balance sheet, statement of 
        operations, cash flow statement, and Federal income tax 
        return) or a statement explaining why such information 
        is not available;
        (2) attend, through its senior management personnel 
        and counsel, meetings scheduled by the bankruptcy court 
        or the United States trustee (including the initial 
        debtor interview and meeting of creditors pursuant to 
        section 341 of the Bankruptcy Code), unless the court 
        waives this requirement after notice and a hearing upon 
        a finding of extraordinary and compelling 
        circumstances;
        (3) timely file all requisite schedules and the 
        statement of financial affairs, unless the court, after 
        notice and a hearing, grants an extension of up to 30 
        days from the order of relief, absent extraordinary and 
        compelling circumstances;
        (4) file all postpetition financial and other reports 
        required by the Federal Rules of Bankruptcy Procedure 
        or by local rule of the district court;
        (5) maintain insurance that is customary and 
        appropriate for the industry, subject to section 
        363(c)(2);
        (6) timely file tax returns and make other required 
        government filings;
        (7) timely pay all administrative expense taxes 
        (except for certain contested claims), subject to 
        section 363(c)(2); and
        (8) permit the United States trustee to inspect the 
        debtor's business premises, books, and records at 
        reasonable hours after appropriate prior written 
        notice, unless notice is waived by the debtor.
Section 437. Plan filing and confirmation deadlines
    Section 437 amends section 1121(e) of the Bankruptcy Code 
with respect to the period of time within which a small 
business debtor must file and confirm a plan of reorganization. 
It provides that a small business debtor's exclusive period to 
file a plan is 180 days from the date of the order for relief, 
unless the period is extended after notice and a hearing, or 
the court, for cause, orders otherwise. It further provides 
that a small business debtor must file a plan and any 
disclosure statement not later than 300 days after the order 
for relief. These time periods may be extended only if (a) the 
debtor, after providing notice to parties in interest, 
demonstrates by a preponderance of the evidence that it is more 
likely than not that the court will confirm a plan within a 
reasonable period of time; (b) a new deadline is imposed at the 
time the extension is granted; and (c) the order granting such 
extension is signed before the expiration of the existing 
deadline.
Section 438. Plan confirmation deadline
    Section 438 amends section 1129 of the Bankruptcy Code to 
require that a plan in a small business case be confirmed not 
later than 175 days from the date of the order for relief, 
unless this period is extended pursuant to section 1121(e)(3) 
(as added by section 437 of the Act).
Section 439. Duties of the United States trustee
    Section 439 amends section 586(a) of title 28 of the United 
States Code to require the United States trustee to perform the 
following additional duties with respect to small business 
debtors:

        (1) conduct an initial debtor interview before the 
        meeting of creditors for the purpose of (a) 
        investigating the debtor's viability, (b) inquiring 
        about the debtor's business plan, (c) explaining the 
        debtor's obligation to file monthly operating reports, 
        (d) attempting to obtain an agreed scheduling order 
        setting various time frames (such as the date for 
        filing a plan and effecting confirmation), and (e) 
        informing the debtor of other obligations;
        (2) if determined to be appropriate and advisable, 
        inspect the debtor's business premises for the purpose 
        of reviewing the debtor's books and records and 
        verifying that the debtor has filed its tax returns;
        (3) review and monitor diligently the debtor's 
        activities to determine as promptly as possible whether 
        the debtor will be unable to confirm a plan; and
        (4) promptly apply to the court for relief in any case 
        in which the United States trustee finds material 
        grounds for dismissal or conversion of the case.
Section 440. Scheduling conferences
    Section 440 amends section 105(d) to mandate that a 
bankruptcy court hold status conferences as necessary to 
further the expeditious and economical resolution of a 
bankruptcy case.
Section 441. Serial filer provisions
    Section 441(1) amends section 362 of the Bankruptcy Code to 
provide that a court may award only actual damages for a 
violation of the automatic stay committed by an entity in the 
good faith belief that subsection (h) of section 362 (as added 
by this Act) applies to the debtor.
    Section 441(2) adds a new subsection to section 362 of the 
Bankruptcy Code specifying that the automatic stay does not 
apply where the chapter 11 debtor:

        (1)  is a debtor in a small business case pending at 
        the time the petition is filed;
        (2) was a debtor in a small business case dismissed 
        for any reason pursuant to an order that became final 
        in the 2-year period ending on the date of the order 
        for relief entered in the pending case;
        (3) was a debtor in small business case in which a 
        plan was confirmed in the 2-year period ending on the 
        date of the order for relief entered in the pending 
        case; or
        (4) is an entity that has succeeded to substantially 
        all of the assets or business of a small business 
        debtor as described above.
    An exception to this provision applies to a chapter 11 case 
that is commenced involuntarily and involves no collusion 
between the debtor and the petitioning creditors. Also, it does 
not apply if the debtor proves by a preponderance of the 
evidence that (a) the filing of the subsequent case resulted 
from circumstances beyond the debtor's control and which were 
not foreseeable at the time the prior case was filed; and (b) 
it is more likely than not that the court will confirm a 
feasible plan of reorganization (but not a liquidating plan) 
within a reasonable time.
Section 442. Expanded grounds for dismissal or conversion and 
        appointment of trustee
    Section 442(a) amends section 1112(b) of the Bankruptcy 
Code to mandate that the court convert or dismiss a chapter 11 
case or appoint a trustee (whichever is in the best interests 
of creditors and the estate) if the movant establishes cause. 
An exception applies if: (a) the debtor or a party in interest 
objects and establishes by a preponderance of the evidence that 
a plan having a reasonable possibility of being confirmed will 
be filed within a reasonable period of time; and (b) the 
grounds include an act or omission for which there exists a 
reasonable justification for such act or omission and that will 
be cured within a reasonable period of time. The court must 
commence the hearing on a section 1112(b) motion within 30 days 
of its filing and decide the motion not later than 15 days 
after commencement of the hearing unless the movant expressly 
consents to a continuance for a specified period of time or 
compelling circumstances prevent the court from meeting these 
time limits.
    The term ``cause'' under section 1112(b), as amended by 
this provision, includes the following:

         (1) substantial or continuing loss to or diminution 
        of the estate;
         (2) gross mismanagement of the estate;
         (3) failure to maintain appropriate insurance that 
        poses a material risk to the estate or the public;
         (4) unauthorized use of cash collateral that is 
        harmful to one or more creditors;
         (5) failure to comply with a court order;
         (6) repeated failure to timely satisfy any filing or 
        reporting requirement under the Bankruptcy Code or 
        applicable rule;
         (7) failure to attend the section 341 meeting of 
        creditors or an examination pursuant to rule 2004 of 
        the Federal Rules of Bankruptcy Procedure;
         (8) failure to timely provide information or to 
        attend meetings reasonably requested by the United 
        States trustee or bankruptcy administrator;
         (9) failure to timely pay postpetition taxes or file 
        tax returns due postpetition;
        (10) failure to file a disclosure statement or to 
        confirm a plan within the time fixed by the Bankruptcy 
        Code or pursuant to court order;
        (11) failure to pay any requisite fees or charges 
        under chapter 123 of title 28 of the United States 
        Code;
        (12) revocation of a confirmation order;
        (13) inability to effectuate substantial consummation 
        of a confirmed plan;
        (14) material default by the debtor with respect to a 
        confirmed plan;
        (15) termination of a plan by reason of the occurrence 
        of a condition specified in the plan; and
        (16) the debtor's failure to pay any domestic support 
        obligation that first becomes payable postpetition.

Section 442(a) requires the court to commence the hearing under 
section 1112(b) within 30 days of the filing of the motion and 
specifies that the court must decide the motion within 15 days 
after commencement of the hearing, unless the movant consents 
to a longer period or compelling circumstances prevent the 
court from meeting the specified time limits.
    Section 442(b) creates additional grounds for the 
appointment of a chapter 11 trustee under section 1104(a). It 
provides that should the bankruptcy court determine cause 
exists to convert or dismiss a chapter 11 case, it may appoint 
a trustee or examiner if in the best interests of creditors and 
the bankruptcy estate.
Section 443. Study of operation of title 11, United States Code, with 
        respect to small businesses
    Section 443 directs the Administrator of the Small Business 
Administration, in consultation with the Attorney General, the 
Director of the Executive Office for United States Trustees, 
and the Director of the Administrative Office of the United 
States Courts, to conduct a study to determine:

        (1) the internal and external factors that cause small 
        businesses (particularly sole proprietorships) to seek 
        bankruptcy relief and the factors that cause small 
        businesses to successfully complete their chapter 11 
        cases; and
        (2) how the bankruptcy laws may be made more effective 
        and efficient in assisting small business to remain 
        viable.
Section 444. Payment of interest
    Section 444(1) amends section 362(d)(3) of the Bankruptcy 
Code to require a court to grant relief from the automatic stay 
within 30 days after it determines that a single asset real 
estate debtor is subject to this provision. Section 444(2) 
amends section 362(d)(3)(B) to specify that relief from the 
automatic stay shall be granted unless the single asset real 
estate debtor has commenced making monthly payments to each 
creditor secured by the debtor's real property (other than a 
claim secured by a judgment lien or unmatured statutory lien) 
in an amount equal to the interest at the then applicable 
nondefault contract rate of interest on the value of the 
creditor's interest in the real estate. It allows a debtor in 
its sole discretion to make the requisite interest payments out 
of rents or other proceeds generated by the real property.
Section 445. Priority of administrative expenses
    Section 445 amends section 503(b) of the Bankruptcy Code to 
add a new administrative expense priority for a nonresidential 
real property lease that is assumed under section 365 and then 
subsequently rejected. The amount of the priority is the sum of 
all monetary obligations due under the lease (excluding 
penalties and obligations arising from or relating to a failure 
to operate) for the 2-year period following the rejection date 
or actual turnover of the premises (whichever is later), 
without reduction or setoff for any reason, except for sums 
actually received or to be received from a nondebtor. Any 
remaining sums due for the balance of the term of the lease is 
treated as a claim under section 502(b)(6) of the Bankruptcy 
Code.

                TITLE V. MUNICIPAL BANKRUPTCY PROVISIONS

Section 501. Petition and proceedings related to petition
    Section 501 amends sections 921(d) and 301 of the 
Bankruptcy Code to clarify that the court must enter the order 
for relief in a chapter 9 case.
Section 502. Applicability of other sections to chapter 9
    Section 502 amends section 901 of the Bankruptcy Code to 
make the following sections applicable to chapter 9 cases:

        (1) section 555 (contractual right to liquidate, 
        terminate or accelerate a securities contract);
        (2) section 556 (contractual right to liquidate, 
        terminate or accelerate a commodities or forward 
        contract);
        (3) section 559 (contractual right to liquidate, 
        terminate or accelerate a repurchase agreement);
        (4) section 560 (contractual right to liquidate, 
        terminate or accelerate a swap agreement);
        (5) section 561 (contractual right to liquidate, 
        terminate, accelerate, or offset under a master netting 
        agreement and across contracts); and
        (6) section 562 (damage measure in connection with 
        swap agreements, securities contracts, forward 
        contracts, commodity contracts, repurchase agreements, 
        or master netting agreement).

                       TITLE VI. BANKRUPTCY DATA

Section 601. Improved bankruptcy statistics
    Section 601 amends chapter 6 of title 28 of the United 
States Code to require the clerk for each district to collect 
certain statistics for chapter 7, 11, and 13 cases in a 
standardized form prescribed by the Director of the 
Administrative Office of the United States Courts and to make 
this information available to the public. In addition, section 
601 requires the Director to prepare an annual report and 
analysis for Congress concerning the information collected. The 
statistics must be itemized by chapter of the Bankruptcy Code 
and be presented in the aggregate for each district. The 
specific categories of information that must be gathered 
include the following:

        (1) scheduled total assets and liabilities by 
        category;
        (2) the debtors' current monthly income, average 
        income, and average expenses;
        (3) the aggregate amount of debts discharged during 
        the reporting period based on the difference between 
        the total amount of scheduled debts and by categories 
        that are predominantly nondischargeable;
        (4) the average time between the filing of the 
        bankruptcy case and the closing of the case;
        (5) the number of cases in which reaffirmation 
        agreements were filed, the total number of 
        reaffirmation agreements filed, the number of cases in 
        which the debtor was pro se and a reaffirmation 
        agreement was filed, and the number of cases in which 
        the reaffirmation agreement was approved by the court;
        (6) for chapter 13 cases, information on the number of 
        (a) orders determining the value of secured property in 
        an amount less than the amount of the secured claim, 
        (b) final orders that determined the value of property 
        securing a claim, (c) cases dismissed, (d) cases 
        dismissed for failure to make payments under the plan, 
        (e) cases refiled after dismissal, (f) cases in which 
        the plan was completed (separately itemized with 
        respect to the number of modifications made before 
        completion of the plan, and (g) cases in which the 
        debtor had previously sought bankruptcy relief within 
        the 6 years preceding the filing of the present case;
        (7) the number of cases in which creditors were fined 
        for misconduct and the amount of any punitive damages 
        awarded for creditor misconduct; and
        (8) the number of cases in which sanctions under rule 
        9011 of the Federal Rules of Bankruptcy Procedure were 
        imposed against a debtor's counsel and the damages 
        awarded under this rule.

Section 601 provides that the amendments in this provision take 
effect 18 months after the date of enactment of this Act.
Section 602. Uniform rules for the collection of bankruptcy data
    Section 602 amends chapter 39 of title 28 of the United 
States Code to add a provision requiring the Attorney General 
to promulgate rules mandating the establishment of uniform 
forms for final reports in chapter 7, 12 and 13 cases and 
periodic reports in chapter 11 cases. It also specifies that 
these reports be designed to facilitate compilation of data and 
to provide maximum public access by physical inspection at one 
or more central filing locations and by electronic access 
through the Internet or other appropriate media. The 
information should enable an evaluation of the efficiency and 
practicality of the Federal bankruptcy system. In issuing 
rules, the Attorney General must consider: (a) the reasonable 
needs of the public for information about the Federal 
bankruptcy system; (b) the economy, simplicity, and lack of 
undue burden on persons obligated to file the reports; and (c) 
appropriate privacy concerns and safeguards. Section 602 
provides that final reports by trustees in chapter 7, 12, and 
13 cases include the following information:

        (1) the length of time the case was pending;
        (2) assets abandoned;
        (3) assets exempted;
        (4) receipts and disbursements of the estate;
        (5) administrative expenses, including those 
        associated with section 707(b) of the Bankruptcy Code, 
        and the actual costs of administering chapter 13 cases;
        (6) claims asserted;
        (7) claims allowed; and
        (8) distributions to claimants and claims discharged 
        without payment.

    With regard to chapter 11 cases, section 602 provides that 
periodic reports include the following information regarding:

        (1) the standard industry classification for 
        businesses conducted by the debtor, as published by the 
        Department of Commerce;
        (2) the length of time that the case was pending;
        (3) the number of full-time employees as of the date 
        of the order for relief and at the end of each 
        reporting period;
        (4) cash receipts, cash disbursements, and 
        profitability of the debtor for the most recent period 
        and cumulatively from the date of the order for relief;
        (5) the debtor's compliance with the Bankruptcy Code, 
        including whether tax returns have been filed and taxes 
        have been paid;
        (6) professional fees approved by the court for the 
        most recent period and cumulatively from the date of 
        the order for relief; and
        (7) plans filed and confirmed, including the aggregate 
        recoveries of holders by class and as a percentage of 
        total claims of an allowed class.
Section 603. Audit procedures
    Section 603(a)(1) requires the Attorney General (for 
judicial districts served by United States trustees) and the 
Judicial Conference of the United States (for judicial 
districts served by bankruptcy administrators) to establish 
procedures to determine the accuracy, veracity, and 
completeness of petitions, schedules and other information 
filed by debtors pursuant to sections 111, 521 and 1322 of the 
Bankruptcy Code. Section 603(a)(1) requires the audits to be 
conducted in accordance with generally accepted auditing 
standards and performed by independent certified public 
accountants or independent licensed public accountants. It 
permits the Attorney General and the Judicial Conference to 
develop alternative auditing standards not later than 2 years 
after the date of enactment of this Act.
Section 603(a)(2) requires these procedures to:

        (1) establish a method of selecting appropriate 
        qualified contractors to perform these audits;
        (2) establish a method of randomly selecting cases for 
        audit, and that a minimum of at least one case out of 
        every 250 cases be selected for audit;
        (3) require audits in cases where the schedules of 
        income and expenses reflect greater than average 
        variances from the statistical norm for the district if 
        they occur by reason of higher income or higher 
        expenses than the statistical norm in which the 
        schedules were filed; and
        (4) require the aggregate results of such audits, 
        including the percentage of cases by district in which 
        a material misstatement of income or expenditures is 
        reported, to be made available to the public on an 
        annual basis.

    Section 603(b) amends section 586 of title 28 of the United 
States Code to require the United States trustee to submit 
reports as directed by the Attorney General, including the 
results of audits performed under section 603(a). In addition, 
it authorizes the United States trustee to contract with 
auditors to perform the audits specified in this provision. 
Further, it requires the report of each audit to be filed with 
the court and transmitted to the United States trustee. The 
report must specify material misstatements of income, 
expenditures or assets. In a case where a material misstatement 
has been reported, the clerk must provide notice of such 
misstatement to creditors and the United States trustee must 
report it to the United States Attorney, if appropriate, for 
possible criminal prosecution. If advisable, the United States 
trustee must also take appropriate action, such as revoking the 
debtor's discharge.
    Section 603(c) amends section 521 of the Bankruptcy Code to 
make it a duty of the debtor to cooperate with an auditor.
    Section 603(d) amends section 727 of the Bankruptcy Code to 
add, as a ground for revocation of a chapter 7 discharge the 
debtor's failure to: (a) satisfactorily explain a material 
misstatement discovered as the result of an audit pursuant to 
this provision; or (b) make available for inspection all 
necessary documents or property belonging to the debtor that 
are requested in connection with such audit.
    Section 603(e) provides that the amendments made by this 
provision take effect 18 months after the Act's enactment date.
Section 604. Sense of Congress regarding availability of bankruptcy 
        data
    Section 604 expresses a sense of Congress that it is a 
national policy of the United States that all data collected by 
bankruptcy clerks in electronic form (to the extent such data 
relates to public records pursuant to section 107 of the 
Bankruptcy Code) should be made available to the public in a 
useable electronic form in bulk, subject to appropriate privacy 
concerns and safeguards as determined by the Judicial 
Conference of the United States. It also states that a uniform 
bankruptcy data system should be established that uses a single 
set of data definitions and forms to collect such data and that 
data for any particular bankruptcy case should be aggregated in 
electronic format.

                  TITLE VII--BANKRUPTCY TAX PROVISIONS

Section 701. Treatment of certain tax liens
    Section 701(a) makes several amendments to section 724 of 
the Bankruptcy Code to provide greater protection for holders 
of ad valorem tax liens on real or personal property of the 
estate. Many school boards obtain liens on real property to 
ensure collection of unpaid ad valorem taxes. Under current 
law, local governments are sometimes unable to collect these 
taxes despite the presence of a lien because they may be 
subordinated to certain claims and expenses as a result of 
section 724. Section 701(a) is intended to protect the holders 
of these tax liens from, among other things, erosion of their 
claims' status by expenses incurred under chapter 11 of the 
Bankruptcy Code. Pursuant to section 701(a), subordination of 
ad valorem tax liens is still possible under section 724(b), 
but limited to the payment of: (a) claims incurred under 
chapter 7 for wages, salaries, or commissions (but not expenses 
incurred under chapter 11); (b) claims for wages, salaries, and 
commissions entitled to priority under section 507(a)(4); and 
(c)claims for contributions to employee benefit plans entitled 
to priority under section 507(a)(5). Before a tax lien on real 
or personal property may be subordinated pursuant to section 
724, the chapter 7 trustee must exhaust all other unencumbered 
estate assets and, consistent with section 506, recover 
reasonably necessary costs and expenses of preserving or 
disposing of such property.
    Section 701(b) amends section 505(a)(2) of the Bankruptcy 
Code to prevent a bankruptcy court from determining the amount 
or legality of an ad valorem tax on real or personal property 
if the applicable period for contesting or redetermining the 
amount of the claim under nonbankruptcy law has expired.
Section 702. Treatment of fuel tax claims
    Section 702 amends section 501 of the Bankruptcy Code to 
simplify the process for filing of claims by States for certain 
fuel taxes. Rather than requiring all States to file a claim 
for these taxes (as is the case under current law), section 702 
permits the designated ``base jurisdiction'' under the 
International Fuel Tax Agreement to file a claim on behalf of 
all States, which would then be allowed as a single claim.
Section 703. Notice of request for a determination of taxes
    Under current law, debtors may request that the 
governmental unit determine administrative tax liabilities in 
order to receive a discharge of those liabilities. There are no 
requirements as to the content or form of such notice to the 
government. Section 703 amends section 505(b) of the Bankruptcy 
Code to require bankruptcy court clerks to maintain a list of 
addresses designated by governmental units for service of 
section 505 requests. In addition, the list may also include 
additional information concerning filing requires so specified 
by such governmental units. If a governmental entity does not 
designate an address and provide that address to the bankruptcy 
court clerk, any request made under section 505(b) of the 
Bankruptcy Code may be served at the address of the appropriate 
taxing authority of that governmental unit.
Section 704. Rate of interest on tax claims
    Under current law, there is no uniform rate of interest 
applicable to tax claims. As a result, the bankruptcy courts 
have used varying standards to determine the applicable rate. 
Section 704 amends the Bankruptcy Code to add section 511 for 
the purpose of simplifying the interest rate calculation. It 
provides that for all tax claims (federal, State, and local), 
including administrative expense taxes, the interest rate shall 
be determined in accordance with applicable nonbankruptcy law. 
With respect to taxes paid under a confirmed plan, the rate of 
interest is determined as of the calendar month in which the 
plan is confirmed.
Section 705. Priority of tax claims
    Under current law, a tax claim is entitled to be treated as 
a priority claim if it arises within certain specified time 
periods. In the case of income taxes, a priority arises, among 
other time periods, if the tax return was due within 3 years of 
the filing of the bankruptcy petition or if the assessment of 
the tax was made within 240 days of the filing of the petition. 
The 240-day period is tolled during the time that an offer in 
compromise is pending (plus 30 days). Though the statute is 
silent, most courts have also held that the 3-year and 240-day 
time periods are tolled during the pendency of a previous 
bankruptcy case. Section 705 amends section 507(a)(8) of the 
Bankruptcy Code to codify the rule tolling priority periods 
during the pendency of a previous bankruptcy case during that 
240-day period together with an additional 90 days. It also 
includes tolling provisions to adjust for the collection due 
process rights provided by the Internal Revenue Service 
Restructuring and Reform Act of 1998. During any period in 
which the government is prohibited from collecting a tax as a 
result of a request by the debtor for a hearing and an appeal 
of any collection action taken against the debtor, the priority 
is tolled, plus 90 days. Also, during any time in which there 
was a stay of proceedings in a prior bankruptcy case or 
collection of an income tax was precluded by a confirmed 
bankruptcy plan, the priority is tolled, plus 90 days.
Section 706. Priority property taxes incurred
    Under current law, many provisions of the Bankruptcy Code 
are keyed to the word ``assessed.'' While this term has an 
accepted meaning in the Federal system, it is not used in many 
State and local statutes and has created some confusion. To 
eliminate this problem with respect to real property taxes, 
section 706 amends section 507(a)(8)(B) of the Bankruptcy Code 
by replacing the word ``assessed'' with ``incurred''.
Section 707. No discharge of fraudulent taxes in chapter 13
    Under current law, a debtor's ability to discharge tax 
debts varies depending on whether the debtor is in chapter 7 or 
chapter 13. Under chapter 7, taxes from a return due within 3 
years of the petition date, taxes assessed within 240 days, or 
taxes related to an unfiled return or false return are not 
dischargeable. Chapter 13, on the other hand, allows these 
obligations to be discharged. Section 707 amends section 
1328(a)(2) to prohibit the discharge of tax claims described in 
section 523(a)(1)(B) and (C) as well as claims for a tax 
required to be collected or withheld and for which the debtor 
is liable in whatever capacity pursuant to section 
507(a)(8)(C).
Section 708. No discharge of fraudulent taxes in chapter 11
    Under current law, the confirmation of a chapter 11 plan 
discharges the debtor from most debts. Section 708 amends 
section 1141(d) of the Bankruptcy Code to except from discharge 
in a corporate chapter 11 case a debt described in section 
523(a)(2) of the Bankruptcy Code (e.g., debts for money, 
property or services obtain by false pretenses, false 
representation or actual fraud, other than a statement 
respecting the debtor's or an insider's financial condition). 
In addition, a tax or customs duty with respect to which the 
debtor made a fraudulent tax return or willfully attempted in 
any manner to evade or defeat such tax is rendered 
nondischargeable in a chapter 11 case of a corporate debtor.
Section 709. Stay of tax proceedings limited to prepetition taxes
    Under current law, the filing of a petition for relief 
under the Bankruptcy Code activates an automatic stay that 
enjoins the commencement or continuation of a case in the 
Federal tax court. This rule was arguably extended in Halpern 
v. Commissioner, 96 T.C. 895 (1991), which held that the tax 
court did not have jurisdiction to hear a case involving a 
postpetition year. To address this issue, section 709 amends 
section 362(a)(8) of the Bankruptcy Code to specify that the 
automatic stay is limited to an individual debtor's prepetition 
taxes (taxes incurred before entering bankruptcy). The 
amendment clarifies that the automatic stay does not apply to 
an individual debtor's postpetition taxes. In addition, section 
709 allows the bankruptcy court to determine whether the 
automatic stay applies to the postpetition tax liabilities of a 
corporate debtor.
Section 710. Periodic payment of taxes in chapter 11 cases
    Section 710 amends section 1129(a)(9) of the Bankruptcy 
Code to provide that the allowed amount of priority tax claims 
(as of the plan's effective date) must be paid in regular cash 
installments within 5 years from the entry of the order for 
relief. The manner of payment may not be less favorable than 
that accorded the most favored nonpriority unsecured class of 
claims under section 1122(b).
Section 711. Avoidance of statutory liens prohibited
    The Internal Revenue Code gives special protections to 
certain purchasers of securities and motor vehicles 
notwithstanding the existence of a filed tax lien. Section 711 
amends section 545(2) of the Bankruptcy Code to prevent 
trustees from using these special protections to avoid an 
otherwise valid lien. Specifically, it prevents the avoidance 
of unperfected liens against a bona fide purchaser, if the 
purchaser qualifies as such under section 6323 of the Internal 
Revenue Code or a similar provision under State or local law.
Section 712. Payment of taxes in the conduct of business
    Although current law generally requires trustees and 
receivers to pay taxes in the ordinary course of the debtor's 
business, the payment of administrative expenses must first be 
authorized by the court. Section 712(a) amends section 960 of 
title 28 of the United States Code to clarify that postpetition 
taxes in the ordinary course of business must be paid on or 
before when such tax is due under applicable nonbankruptcy law, 
with certain exceptions. This requirement does not apply if the 
obligation is a property tax secured by a lien against property 
that is abandoned under section 554 within a reasonable time 
after the lien attaches. In addition, the requirement does not 
pertain where the payment is excused under the Bankruptcy Code. 
With respect to chapter 7 cases, section 712(a) provides that 
the payment of a tax may be deferred until final distribution 
pursuant to section 726 if the tax was not incurred by a 
chapter 7 trustee or the court, prior to the due date of the 
tax, finds that the estate has insufficient funds to pay all 
administrative expenses in full.
    Section 712(b) amends section 503(b)(1)(B)(i) of the 
Bankruptcy Code to clarify that this provision applies to 
secured as well as unsecured tax claims, including property 
taxes based on liability that is in rem, in personam or both.
    Section 712(c) amends section 503(b)(1) to exempt a 
governmental unit from the requirement to file a request for 
payment of an administrative expense.
    Section 712(d)(1) amends section 506(b) to provide that to 
the extent that an allowed claim is oversecured, the holder is 
entitled to interest and any reasonable fees, costs, or charges 
provided for under State law. Section 712(d)(2), in turn, 
amends section 506(c) to permit a trustee to recover from a 
secured creditor the payment of all ad valorem property taxes.
Section 713. Tardily filed priority tax claims
    Section 713 amends section 726(a)(1) of the Bankruptcy Code 
to require a tax claim to be filed either before the trustee 
commences distribution or 10 days following the mailing to 
creditors of the summary of the trustee's final report, 
whichever is earlier, in order for the claim to be entitled to 
distribution as an unsecured claim.
Section 714. Income tax returns prepared by tax authorities
    Section 714 amends section 523(a) of the Bankruptcy Code to 
provide that a return filed on behalf of a taxpayer who has 
provided information sufficient to complete a return 
constitutes filing a return (and the debt can be discharged), 
but that a return filed on behalf of a taxpayer based on 
information the Secretary obtains through testimony or 
otherwise does not constitute filing a return (and the debt 
cannot be discharged).
Section 715. Discharge of the estate's liability for unpaid taxes
    Under the Bankruptcy Code, a debtor may request a prompt 
audit to determine postpetition tax liabilities. If the 
government does not make a determination or request an 
extension of time to audit, then the debtor's determination of 
taxes will be final. Several court cases have held that while 
this protects the debtor and the trustee, it does not 
necessarily protect the estate. Section 715 amends section 
505(b) of the Bankruptcy Code to clarify that the estate is 
also protected if the government does not request an audit of 
the debtor's tax returns. Therefore, if the government does not 
make a determination of the debtor's postpetition tax 
liabilities or request extension of time to audit, then the 
estate's liability for unpaid taxes is discharged.
Section 716. Requirement to file tax returns to confirm chapter 13 
        plans
    Under current law, a debtor may enjoy the benefits of 
chapter 13 even if delinquent in the filing of tax returns. In 
response to this problem, section 716(a) amends section 1325(a) 
of the Bankruptcy Code to require a chapter 13 debtor file all 
applicable Federal, State, and local tax returns as a condition 
of confirmation pursuant to section 1308, as added by section 
716(b).
    Section 716(b) adds a new provision to chapter 13 requiring 
a chapter 13 debtor to be current on the filing of tax returns 
for the 4-year period preceding the filing of the case. If the 
returns are not filed by the date on which the meeting of 
creditors is first scheduled, the trustee may hold open that 
meeting for a reasonable period of time to allow the debtor to 
file any unfiled returns. The additional period of time may not 
extend beyond 120 days after the date of the meeting of the 
creditors or beyond the date on which the return is due under 
the last automatic extension of time for filing. The debtor, 
however, may obtain an extension of time from the court if the 
debtor demonstrates by a preponderance of the evidence that the 
failure to file was attributable to circumstances beyond the 
debtor's control.
    Section 716(c) amends section 1307 of the Bankruptcy Code 
to provide that if a chapter 13 debtor fails to file a tax 
return as required by section 1308, the court must dismiss the 
case or convert it to one under chapter 7 (whichever is in the 
best interests of creditors and the estate) on request of a 
party in interest or the United States trustee after notice and 
a hearing.
    Section 716(d) amends section 502(b)(9) of the Bankruptcy 
Code to provide that in a chapter 13 case, a governmental 
unit's tax claim based on a return filed under section 1308 
shall be deemed to be timely filed if the claim is filed within 
60 days from the date on which such return is filed.
    Section 716(e) states the sense of the Congress that the 
Advisory Committee on Bankruptcy Rules of the Judicial 
Conference of the United States should propose for adoption 
official rules with respect an objection by a governmental unit 
to confirmation of a chapter 13 plan when such claim pertains 
to a tax return filed pursuant section 1308.
Section 717. Standards for tax disclosure
    Before a chapter 11 plan may be submitted to creditors and 
stockholders for a vote, the plan proponent must file a 
disclosure statement that provides adequate information to 
holders of claims and interests so they can make a decision as 
to whether or not to vote in favor of the plan. As the tax 
consequences of a plan can have a significant impact on the 
debtor's reorganization prospects, section 717 amends section 
1125(a) of the Bankruptcy Code to require that a chapter 11 
disclosure statement discuss the plan's potential material 
Federal tax consequences to the debtor and to a hypothetical 
investor that is representative of the claimants and interest 
holders in the case.
Section 718. Setoff of tax refunds
    Under current law, the filing of a bankruptcy petition 
automatically stays the setoff of a prepetition tax refund 
against a prepetition tax obligation unless the bankruptcy 
court approves the setoff. Interest and penalties that may 
continue to accrue may also be nondischargeable pursuant to 
section 523(a)(1) of the Bankruptcy Code and cause individual 
debtors undue hardship. Section 718 amends section 362(b) of 
the Bankruptcy Code to create an exception to the automatic 
stay whereby such setoff could occur without court order unless 
it would not be permitted under applicable nonbankruptcy law 
because of a pending action to determine the amount or legality 
of the tax liability. In that circumstance, the governmental 
authority may hold the refund pending resolution of the action, 
unless the court, on motion of the trustee and after notice and 
a hearing, grants the taxing authority adequate protection 
pursuant to section 361.
Section 719. Special provisions related to the treatment of State and 
        local taxes
    Section 719 conforms State and local income tax 
administrative issues to the Internal Revenue Code. For 
example, under Federal law, a bankruptcy petitioner filing on 
March 5 has two tax years--January 1 to March 4, and March 5 to 
December 31. Under the Bankruptcy Code, however, State and 
local tax years are divided differently--January 1 to March 5, 
and March 6 to December 31. Section 719 requires the States to 
follow the Federal convention.
    It conforms State and local tax administration to the 
Internal Revenue Code in the following areas: division of tax 
liabilities and responsibilities between the estate and the 
debtor, tax consequences with respect to partnerships and 
transfers of property, and the taxable period of a debtor. 
Section 719 does not conform State and local tax rates to 
Federal tax rates.
Section 720. Dismissal for failure to timely file tax returns
    Under existing law, there is no definitive rule with 
respect to whether a bankruptcy court may dismiss a bankruptcy 
case if the debtor fails to file returns for taxes incurred 
postpetition. Section 720 amends section 521 of the Bankruptcy 
Code to allow a taxing authority to request that the court 
dismiss or convert a bankruptcy case if the debtor fails to 
file a postpetition tax return or obtain an extension. If the 
debtor does not file the required return or obtain the 
extension within 90 days from the time of the request by the 
taxing authority to file the return, the court must convert or 
dismiss the case, whichever is in the best interest of 
creditors and the estate.

           TITLE VIII--ANCILLARY AND OTHER CROSS-BORDER CASES

    Title VIII of H.R. 833 adds a new chapter to the Bankruptcy 
Code for transnational bankruptcy cases. This incorporates the 
Model Law on Cross-Border Insolvency to encourage cooperation 
between the United States and foreign countries with respect to 
transnational insolvency cases. Title VIII is intended to 
provide greater legal certainty for trade and investment as 
well as to provide for the fair and efficient administration of 
cross-border insolvencies, which protects the interests of 
creditors and other interested parties, including the debtor. 
In addition, it serves to protect and maximize the value of the 
debtor's assets.
Section 801. Amendment to add chapter 15 to title 11, United States 
        Code
    Section 801 introduces chapter 15 to the Bankruptcy Code, 
which is the Model Law on Cross-Border Insolvency (``Model 
Law'') promulgated by the United Nations Commission on 
International Trade Law (``UNCITRAL'') at its Thirtieth Session 
on May 12-30, 1997.\4\ Cases brought under chapter 15 are 
intended to be ancillary to cases brought in a debtor's home 
country, unless a full United States bankruptcy case is brought 
under another chapter. Even if a full case is brought, the 
court may decide under section 305 to stay or dismiss the 
United States case under the other chapter and limit the United 
States' role to an ancillary case under this chapter.\5\ If the 
full case is not dismissed, it will be subject to the 
provisions of this chapter governing cooperation, communication 
and coordination with the foreign courts and representatives. 
In any case, an order granting recognition is required as a 
prerequisite to the use of sections 301 and 303 by a foreign 
representative.
---------------------------------------------------------------------------
    \4\ The text of the Model Law and the Report of UNCITRAL on its 
adoption are found at U.N. G.A., 52d Sess., Supp. No. 17 (A/52/17) 
(``Report''). That Report and the Guide to Enactment of the UNCITRAL 
Model Law on Cross-Border Insolvency, U.N. Gen. Ass., UNCITRAL 30th 
Sess. U.N. Doc. A/CN.9/442 (1997) (``Guide''), which was discussed in 
the negotiations leading to the Model Law and published by UNCITRAL as 
an aid to enacting countries, should be consulted for guidance as to 
the meaning and purpose of its provisions. The development of the 
provisions in the negotiations at UNCITRAL, in which the United States 
was an active participant, is recounted in the interim reports of the 
Working Group that are cited in the Report.
    \5\ See section 1529 and commentary.
---------------------------------------------------------------------------
Section 1501. Purpose and scope of application
    Section 1501 combines the Preamble to the Model Law 
(subsection (1)) with its article 1 (subsections (2) and (3)) 
\6\. It largely follows the language of the Model Law and fills 
in blanks with appropriate United States references. However, 
it adds in subsection (3) an exclusion of certain natural 
persons who may be considered ordinary consumers. Although the 
consumer exclusion is not in the text of the Model Law, the 
discussions at UNCITRAL recognized that some such exclusion 
would be necessary in countries like the United States where 
there are special provisions for consumer debtors in the 
insolvency laws.\7\
---------------------------------------------------------------------------
    \6\ Guide at 16-19.
    \7\ See id. at 18, para. 60; 19 para. 66.
---------------------------------------------------------------------------
    The reference to section 109(e) essentially defines 
``consumer debtors'' for purposes of the exclusion by 
incorporating the debt limitations of that section, but not its 
requirement of regular income. The exclusion adds a requirement 
that the debtor or debtor couple be citizens or long-term legal 
residents of the United States. This ensures that residents of 
other countries will not be able to manipulate this exclusion 
to avoid recognition of foreign proceedings in their home 
countries or elsewhere.
    The first exclusion in subsection (c) constitutes, for the 
United States, the exclusion provided in article 1, subsection 
(2), of the Model Law.\8\ Foreign representatives of foreign 
proceedings which are excluded from the scope of chapter 15 may 
seek comity from courts other than the bankruptcy court since 
the limitations of section 1509(b)(2) and (3) would not apply 
to them.
---------------------------------------------------------------------------
    \8\ Id. at 17.
---------------------------------------------------------------------------
    The reference to section 109(b) interpolates into chapter 
15 the entities governed by specialized insolvency regimes 
under United States law which are currently excluded from 
liquidation proceedings under title 11. Section 1501 contains 
an exception to the section 109(b) exclusions so that foreign 
proceedings of foreign insurance companies are eligible for 
recognition and relief under chapter 15 as they had been under 
section 304. However, section 1501(d) has the effect of leaving 
to State regulation any deposit, escrow, trust fund or the like 
posted by a foreign insurer under State law.
Section 1502. Definitions
    ``Debtor'' is given a special definition for this chapter. 
That definition does not come from the Model Law but is 
necessary to eliminate the need to refer repeatedly to ``the 
same debtor as in the foreign proceeding.'' With certain 
exceptions, the term ``person'' used in the Model Law has been 
replaced with ``entity,'' which is defined broadly in section 
101(15) to include natural persons and various legal entities, 
thus matching the intended breadth of the term ``person'' in 
the Model Law. The exceptions include contexts in which a 
natural person is intended and those in which the Model Law 
language already refers to both persons and entities other than 
persons. The definition of ``trustee'' for this chapter ensures 
that debtors in possession and debtors, as well as trustees, 
are included in the term.\9\
---------------------------------------------------------------------------
    \9\ See section 1505.
---------------------------------------------------------------------------
    The definition of ``within the territorial jurisdiction of 
the United States'' in subsection (7) is not taken from the 
Model Law. It has been added because the United States, like 
some other countries, asserts insolvency jurisdiction over 
property outside its territorial limits under appropriate 
circumstances. Thus a limiting phrase is useful where the Model 
Law and this chapter intend to refer only to property within 
the territory of the enacting State. In addition, a definition 
of ``recognition'' supplements the Model Law definitions and 
merely simplifies drafting of various other sections of chapter 
15.
    Two key definitions of ``foreign proceeding'' and ``foreign 
representative,'' are found in sections 101(23) and (24), which 
have been amended consistent with Model Law article 2.\10\ The 
definitions of ``establishment,'' ``foreign court,'' ``foreign 
main proceeding,'' and ``foreign non-main proceeding'' have 
been taken from Model Law article 2, with only minor language 
variations necessary to comport with United States terminology. 
Additionally, defined terms have been placed in alphabetical 
order.\11\ In order to be recognized as a foreign non-main 
proceeding, the debtor must at least have an establishment in 
that foreign country.\12\
---------------------------------------------------------------------------
    \10\ Guide at 19-21, para.para. 67-68.
    \11\ See Guide at 19, (Model Law) 21 para. 75 (concerning 
establishment); 21 para. 74 (concerning foreign court); 21 para.para. 
72, 73 and 75 (concerning foreign main and non-main proceedings).
    \12\ See id. at 21, para. 75.
---------------------------------------------------------------------------
Section 1503. International obligations of the United States
    This section is taken exactly from the Model Law with only 
minor adaptations of terminology.\13\ Although this section 
makes an international obligation prevail over chapter 15, the 
courts will attempt to read the Model Law and the international 
obligation so as not to conflict, especially if the 
international obligation addresses a subject matter less 
directly related than the Model Law to a case before the court.
---------------------------------------------------------------------------
    \13\ See id. at 22, Art. 3.
---------------------------------------------------------------------------
Section 1504. Commencement of ancillary case
    Article 4 of the Model Law is designed for designation of 
the competent court which will exercise jurisdiction under the 
Model Law. In United States law, section 1334(a) of title 28 
gives exclusive jurisdiction to the district courts in a 
``case'' under this title.\14\ Therefore, since the competent 
court has been determined in title 28, this section instead 
provides that a petition for recognition commences a ``case,'' 
an approach that also invokes a number of other useful 
procedural provisions. In addition, a new subsection (P) to 
section 157 of title 28 makes cases under this chapter part of 
the core jurisdiction of bankruptcy courts when referred to 
them by the district courts, thus completing the designation of 
the competent court. Finally, the particular bankruptcy court 
that will rule on the petition is determined pursuant to a 
revised section 1410 of title 28 governing venue and 
transfer.\15\
---------------------------------------------------------------------------
    \14\ See id. at 23, Art. 4.
    \15\ New section 1410 of title 28 provides as follows:

      A case under chapter 15 of title 11 may be commenced in the 
---------------------------------------------------------------------------
      district court for the district----

      (1) in which the debtor has its principal place of 
      business or principal assets in the United States;
      (2) if the debtor does not have a place of business or 
      assets in the United States, in which there is pending 
      against the debtor an action or proceeding or enforcement 
      of judgment in a Federal or State court; or
      (3) in a case other than those specified in paragraph (1) 
      or (2), in which venue will be consistent with the 
      interests of justice and the convenience of the parties 
      having regard to the relief sought by the foreign 
      representative.
    The title ``ancillary'' in this section and in the title of 
this chapter emphasizes the United States policy in favor of a 
general rule that countries other than the home country of the 
debtor, where a main proceeding would be brought, should 
usually act through ancillary proceedings in aid of the main 
proceedings, in preference to a system of full bankruptcies 
(often called ``secondary'' proceedings) in each State where 
assets are found. Under the Model Law, notwithstanding the 
recognition of a foreign main proceeding, full bankruptcy cases 
are permitted in each country (see sections 1528 and 1529). In 
the United States, the court will have the power to suspend or 
dismiss such cases where appropriate under section 305.
Section 1505. Authorization to act in a foreign country
    The language in this section varies from the wording of 
article 5 of the Model Law as necessary to comport with United 
States law and terminology. The slight alteration to the 
language in the last sentence is meant to emphasize that the 
identification of the trustee or other entity entitled to act 
is under United States law, while the scope of actions that may 
be taken by the trustee or other entity under foreign law is 
limited by the foreign law.\16\
---------------------------------------------------------------------------
    \16\ See Guide at 24.
---------------------------------------------------------------------------
    The related amendment to section 586(a)(3) of title 28 
makes acting pursuant to authorization under this section an 
additional power of a trustee or debtor in possession. While 
the Model Law automatically authorizes an administrator to act 
abroad, this section requires all trustees and debtors to 
obtain court approval before acting abroad. That requirement is 
a change from the language of the Model Law, but one that is 
purely internal to United States law.\17\ Its main purpose is 
to ensure that the court has knowledge and control of possibly 
expensive activities, but it will have the collateral benefit 
of providing further assurance to foreign courts that the 
United States debtor or representative is under judicial 
authority and supervision. This requirement means that the 
first-day orders in reorganization cases should include 
authorization to act under this section where appropriate.
---------------------------------------------------------------------------
    \17\ See id. at 24, Art. 5.
---------------------------------------------------------------------------
    This section also contemplates the designation of an 
examiner or other natural person to act for the estate in one 
or more foreign countries where appropriate. One instance might 
be a case in which the designated person had a special 
expertise relevant to that assignment. Another might be where 
the foreign court would be more comfortable with a designated 
person than with an entity like a debtor in possession. Either 
are to be recognized under the Model Law.\18\
---------------------------------------------------------------------------
    \18\ See id. at 23-24, para. 82.
---------------------------------------------------------------------------
Section 1506. Public policy exception
    This provision follows the Model Law article 5 exactly, is 
standard in UNCITRAL texts, and has been narrowly interpreted 
on a consistent basis in courts around the world. The word 
``manifestly'' in international usage restricts the public 
policy exception to the most fundamental policies of the United 
States.\19\
---------------------------------------------------------------------------
    \19\ See id. at 25.
---------------------------------------------------------------------------
Section 1507. Additional assistance
    Subsection (1) follows the language of Model Law article 
7.\20\ Subsection (2) makes the authority for additional relief 
(beyond that permitted under sections 1519-1521, below) subject 
to the conditions for relief heretofore specified in United 
States law under section 304, which is repealed. This section 
is intended to permit the further development of international 
cooperation begun under section 304, but is not to be the basis 
for denying or limiting relief otherwise available under this 
chapter. The additional assistance is made conditional upon the 
court's consideration of the factors set forth in the current 
subsection 304(c) in a context of a reasonable balancing of 
interests following current case law. The references to 
``estate'' in section 304 have been changed to refer to the 
debtor's property, because many foreign systems do not create 
an estate in insolvency proceedings of the sort recognized 
under this chapter. Although the case law construing section 
304 makes it clear that comity is the central consideration, 
its physical placement as one of six factors in subsection (c) 
of section 304 is misleading, since those factors are 
essentially elements of the grounds for granting comity. 
Therefore, in subsection (2) of this section, comity is raised 
to the introductory language to make it clear that it is the 
central concept to be addressed.\21\
---------------------------------------------------------------------------
    \20\ Id. at 26.
    \21\ Id.
---------------------------------------------------------------------------
Section 1508. Interpretation
    This provision follows conceptually Model Law article 8 and 
is a standard one in recent UNCITRAL treaties and model laws. 
Language changes were made to express the concepts more clearly 
in United States vernacular.\22\ Interpretation of this chapter 
on a uniform basis will be aided by reference to the Guide and 
the Reports cited therein, which explain the reasons for the 
terms used and often cite their origins as well. Uniform 
interpretation will also be aided by reference to CLOUT, the 
UNCITRAL Case Law On Uniform Texts, which is a service of 
UNCITRAL. CLOUT receives reports from national reporters all 
over the world concerning court decisions interpreting 
treaties, model laws, and other text promulgated by UNCITRAL. 
Not only are these sources persuasive, but they are important 
to the crucial goal of uniformity of interpretation. To the 
extent that the United States courts rely on these sources, 
their decisions will more likely be regarded as persuasive 
elsewhere.
---------------------------------------------------------------------------
    \22\ Id. at 26, para. 91.
---------------------------------------------------------------------------
Section 1509. Right of direct access
    This section implements the purpose of article 9 of the 
Model Law, enabling a foreign representative to commence a case 
under this chapter by filing a petition directly with the court 
without preliminary formalities that may delay or prevent 
relief. It varies the language to fit United States procedural 
requirements and it imposes recognition of the foreign 
proceeding as a condition to further rights and duties of the 
foreign representative. If recognition is granted, the foreign 
representative will have full capacity under United States law 
(subsection (b)(1)), may request such relief in a State or 
Federal court other than the bankruptcy court (subsection 
(b)(2)), and may be granted comity or cooperation by such non-
bankruptcy court (subsection (b)(3) and (c)). Subsections 
(b)(2), (b)(3), and (c) make it clear that chapter 15 is 
intended to be the exclusive door to ancillary assistance to 
foreign proceedings. The goal is to concentrate control of 
these questions in one court. That goal is important in a 
Federal system like that of the United States with many 
different courts, State and Federal, that may have pending 
actions involving the debtor or the debtor's property. This 
section, therefore, completes for the United States the work of 
article 4 of the Model Law (``competent court'') as well as 
article 9.\23\
---------------------------------------------------------------------------
    \23\ See id. at 23, Art. 4, para.para. 79-83; 27 Art. 9, para. 93.
---------------------------------------------------------------------------
    Although a petition under current section 304 is the proper 
method for achieving deference by a United States court to a 
foreign insolvency under present law, some cases in State and 
Federal courts under current law have granted comity suspension 
or dismissal of cases involving foreign proceedings without 
requiring a section 304 petition or even referring to the 
requirements of that section. Even if the result is correct in 
a particular case, the procedure is undesirable, because there 
is room for abuse of comity. Parties would be free to avoid the 
requirements of this chapter and the expert scrutiny of the 
bankruptcy court by applying directly to a State or Federal 
court unfamiliar with the statutory requirements. Such an 
application could be made after denial of a petition under this 
chapter. This section concentrates the recognition and 
deference process in one United States court, ensures against 
abuse, and empowers a court that will be fully informed of the 
current status of all foreign proceedings involving the 
debtor.\24\
---------------------------------------------------------------------------
    \24\ See id. at 27, Art. 9; 34-35, Art. 15 and para.para. 116-119; 
39-40, Art. 18, para.para. 133-134; see also sections 1515(3), 1518.
---------------------------------------------------------------------------
    Subsection (d) has been added to ensure that a foreign 
representative cannot seek relief in courts in the United 
States after being denied recognition by the court under this 
chapter. Subsection (e) makes activities in the United States 
by a foreign representative subject to applicable United States 
law, just as 28 U.S.C. section 959 does for a domestic trustee 
in bankruptcy.\25\ Subsection (f) provides a limited exception 
to the prior recognition requirement so that collection of a 
claim which is property of the debtor, for example an account 
receivable, by a foreign representative may proceed without 
commencement of a case or recognition under this chapter.
---------------------------------------------------------------------------
    \25\ Id. at 27, para. 93.
---------------------------------------------------------------------------
Section 1510. Limited jurisdiction
    Section 1510, article 10 of the Model Law, is modeled on 
section 306 of the Bankruptcy Code. Although the language 
referring to conditional relief in section 306 is not included, 
the court has the power under section 1522 to attach 
appropriate conditions to any relief it may grant. 
Nevertheless, the authority in section 1522 is not intended to 
permit the imposition of jurisdiction over the foreign 
representative beyond the boundaries of the case under this 
chapter and any related actions the foreign representative may 
take, such as commencing a case under another chapter of this 
title.
Section 1511. Commencement of case under section 301 or 303
    This section follows the intent of article 11 of the Model 
Law, but adds language that conforms to United States law or 
that is otherwise necessary in the United States given its many 
bankruptcy court districts and the importance of full 
information and coordination among them.\26\ Article 11 does 
not distinguish between voluntary and involuntary proceedings, 
but seems to have implicitly assumed an involuntary 
proceeding.\27\ Subsection 1(a)(2) goes farther and permits a 
voluntary filing, with its much simpler requirements, if the 
foreign proceeding that has been recognized is a main 
proceeding.
---------------------------------------------------------------------------
    \26\ See id. at 28, Art. 11.
    \27\ Id. at 38, para.para. 97-99.
---------------------------------------------------------------------------
Section 1512. Participation of a foreign representative in a case under 
        this title
    This section follows article 12 of the Model Law with a 
slight alteration to tie into United States procedural 
terminology.\28\ The effect of this section is to make the 
recognized foreign representative a party in interest in any 
pending or later commenced United States bankruptcy case.\29\ 
Throughout this chapter, the word ``case'' has been substituted 
for the word ``proceeding'' in the Model Law when referring to 
cases under the United States Bankruptcy Code, to conform to 
United States usage.
---------------------------------------------------------------------------
    \28\ Id. at 29, Art. 12.
    \29\ Id. at 29, para.para. 10-102.
---------------------------------------------------------------------------
Section 1513. Access of foreign creditors to a case under this title
    This section mandates nondiscriminatory or ``national'' 
treatment for foreign creditors, except as provided in 
subsection (b) and section 1514. It follows the intent of Model 
Law article 13, but the language required alteration to fit 
into the Bankruptcy Code.\30\ The law as to priority for 
foreign claims that fit within a class given priority treatment 
under section 507 (for example, foreign employees or spouses) 
is unsettled. This section permits the continued development of 
case law on that subject and its general principle of national 
treatment should be an important factor to be considered. At a 
minimum, under this section, foreign claims must receive the 
treatment given to general unsecured claims without priority, 
unless they are in a class of claims in which domestic 
creditors would also be subordinated.\31\ The Model Law allows 
for an exception to the policy of nondiscrimination as to 
foreign revenue and other public law claims.\32\ Such claims 
(such as tax and Social Security claims) have been denied 
enforcement in the United States traditionally, inside and 
outside of bankruptcy. The Bankruptcy Code is silent on this 
point, so the rule is purely a matter of traditional case law. 
It is not clear if this policy should be maintained or 
modified, so this section leaves it to developing case law. It 
also allows the Department of the Treasury to negotiate 
reciprocal arrangements with our tax treaty partners in this 
regard, although it does not mandate any restriction of the 
evolution of case law pending such negotiations.
---------------------------------------------------------------------------
    \30\ Id. at 30, para. 103.
    \31\ See id. at 30, para. 104.
    \32\ See id. at 31, para. 105.
---------------------------------------------------------------------------
Section 1514. Notification of foreign creditors concerning a case under 
        title 11
    This section ensures that foreign creditors receive proper 
notice of cases in the United States.\33\ As a ``foreign 
creditor'' is not a defined term, foreign addresses are used as 
the distinguishing factor. The Federal Rules of Bankruptcy 
Procedure (``Rules'') should be amended to conform to the 
requirements of this section, including a special form for 
initial notice to such creditors. In particular, the Rules must 
provide for additional time for such creditors to file proofs 
of claim where appropriate and must provide for the court to 
make specific orders in that regard in proper circumstances. 
The notice must specify that secured claims must be asserted, 
because in many countries such claims are not affected by an 
insolvency proceeding and need not be filed.\34\ Of course, if 
a foreign creditor has made an appropriate request for notice, 
it will receive notices in every instance where notices would 
be sent to other creditors who have made such requests. 
Subsection (d) replaces the reference to ``a reasonable time 
period'' in Model Law article 14(3)(a).\35\ It makes clear that 
the Rules, local rules, and court orders must make appropriate 
adjustments in time periods and bar dates so that foreign 
creditors have a reasonable time within which to receive notice 
or take an action.
---------------------------------------------------------------------------
    \33\ See Model Law, Art. 14; Guide at 31-32, para.para. 106-109.
    \34\ Guide at 33, para. 111.
    \35\ Id. at 31, Art. 14(3)(a).
---------------------------------------------------------------------------
Section 1515. Application for recognition of a foreign proceeding
    This section follows article 15 of the Model Law with minor 
changes.\36\ The rules will require amendment to provide forms 
for some or all of the documents mentioned in this section, to 
make necessary additions to rules 1000 and 2002 to facilitate 
appropriate notices of the hearing on the petition for 
recognition, and to require filing of lists of creditors and 
other interested persons who should receive notices. Throughout 
the Model Law, the question of notice procedure is left to the 
law of the enacting State.\37\
---------------------------------------------------------------------------
    \36\ Id. at 33.
    \37\ See id. at 36, para. 121.
---------------------------------------------------------------------------
Section 1516. Presumptions concerning recognition
    This section follows article 16 of the Model Law with minor 
changes.\38\ Although sections 1515 and 1516 are designed to 
make recognition as simple and expedient as possible, the court 
may hear proof on any element stated. The ultimate burden as to 
each element is on the foreign representative, although the 
court is entitled to shift the burden to the extent indicated 
in section 1516. The word ``proof'' in subsection (3) has been 
changed to ``evidence'' to make it clearer using United States 
terminology that the ultimate burden is on the foreign 
representative.\39\ ``Registered office'' is the term used in 
the Model Law to refer to the place of incorporation or the 
equivalent for an entity that is not a natural person.\40\ The 
presumption that the place of the registered office is also the 
center of the debtor's main interest is included for speed and 
convenience of proof where there is no serious controversy.
---------------------------------------------------------------------------
    \38\ Id. at 36
    \39\ Id. at 36, Art. 16(3).
    \40\ Id.
---------------------------------------------------------------------------
Section 1517. Order granting recognition
    This section closely follows article 17 of the Model Law, 
with a few exceptions.\41\ The decision to grant recognition is 
not dependent upon any findings about the nature of the foreign 
proceedings of the sort previously mandated by section 304(c) 
of the Bankruptcy Code. The requirements of this section, which 
incorporates the definitions in section 1502 and sections 
101(23) and (24), are all that must be fulfilled to attain 
recognition. Reciprocity was specifically suggested as a 
requirement for recognition on more than one occasion in the 
negotiations that resulted in the Model Law. It was rejected by 
overwhelming consensus each time. The United States was one of 
the leading countries opposing the inclusion of a reciprocity 
requirement.\42\ In this regard, the Model Law conforms to 
section 304, which has no such requirement.
---------------------------------------------------------------------------
    \41\ Id. at 37.
    \42\ Report of the working group on Insolvency Law on the work of 
its Twentieth Session (Vienna, 7-18 October 1996), at 6, para.para. 16-
20.
---------------------------------------------------------------------------
    The drafters of the Model Law understood that only a main 
proceeding or a non-main proceeding meeting the standards of 
section 1502 (that is, one brought where the debtor has an 
establishment) were entitled to recognition under this section. 
The Model Law has been slightly modified to make this point 
clear by referring to the section 1502 definition of main and 
non-main proceedings, as well as to the general definition of a 
foreign proceeding in section 101(23). Naturally, a petition 
under section 1515 must show that proceeding is a main or a 
qualifying non-main proceeding in order to win recognition 
under this section.
    Consistent with the position of various civil law 
representatives in the drafting of the Model Law, recognition 
creates a status with the effects set forth in section 1520, so 
those effects are not viewed as orders to be modified, as are 
orders granting relief under sections 1519 and 1521. Subsection 
(4) states the grounds for modifying or terminating 
recognition. On the other hand, the effects of recognition 
(found in section 1520 and including an automatic stay) are 
subject to modification under section 362(d), made applicable 
by section 1520(2), which permits relief from the automatic 
stay of section 1520 for cause.
    Paragraph 1(d) of section 17 of the Model Law has been 
omitted as an unnecessary requirement for United States 
purposes, because a petition submitted to the wrong court will 
be dismissed or transferred under other provisions of United 
States law.\43\ The reference to section 350 refers to the 
routine closing of a case that has been completed and will 
invoke requirements including a final report from the foreign 
representative in such form as the rules may provide or a court 
may order.\44\
---------------------------------------------------------------------------
    \43\ Guide at 37, Art. 17(1)(d).
    \44\ Id.
---------------------------------------------------------------------------
Section 1518. Subsequent information
    This section follows the Model Law, except to eliminate the 
word ``same'' which is rendered unnecessary by the definition 
of ``debtor'' in section 1502 and to provide for a formal 
document to be filed with the court.\45\ Judges in several 
jurisdictions, including the United States, have reported a 
need for a requirement of complete and candid reports to the 
court of all proceedings, worldwide, involving the debtor. This 
section will ensure that such information is provided to the 
court on a timely basis. Any failure to comply with this 
section will be subject to the sanctions available to the court 
for violations of the statute. The section leaves to the rules 
the form of the required notice and related questions of notice 
to parties in interest, the time for filing, and the like.
---------------------------------------------------------------------------
    \45\ Id. at 39-40, para.para. 133, 134.
---------------------------------------------------------------------------
Section 1519. Relief may be granted upon petition for recognition of a 
        foreign proceeding
    This section generally follows article 19 of the Model 
Law.\46\ The bankruptcy court will have jurisdiction to grant 
emergency relief under rule 7065 pending a hearing on the 
petition for recognition. This section does not expand or 
reduce the scope of section 105 as determined by cases under 
section 105 nor does it modify the sweep of sections 555 to 
560. Subsection (d) precludes injunctive relief against police 
and regulatory action under section 1519, leaving section 105 
as the only avenue to such relief. Subsection (e) makes clear 
that this section contemplates injunctive relief and that such 
relief is subject to specific rules and a body of 
jurisprudence. Subsection (f) was added to complement 
amendments to the Bankruptcy Code provisions dealing with 
financial contracts.
---------------------------------------------------------------------------
    \46\ Id. at 40.
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Section 1520. Effects of recognition of a foreign main proceeding
    In general, this chapter sets forth all the relief that is 
available as a matter of right based upon recognition 
hereunder, although additional assistance may be provided under 
section 1507 and this chapter have no effect on any relief 
currently available under section 105. The stay created by 
article 20 of the Model Law is imported to chapter 15 from 
existing provisions of the Code. Subsection (a)(1) combines 
subsections 1(a) and (b) of article 20 of the Model Law, 
because section 362 imposes the restrictions required by those 
two subsections and additional restrictions as well.\47\
---------------------------------------------------------------------------
    \47\ Id. at 42, Art. 20 1(a), (b).
---------------------------------------------------------------------------
    Subsections (a)(2) and (4) apply the Bankruptcy Code 
sections that impose the restrictions called for by subsection 
1(c) of the Model Law. In both cases, the provisions are 
broader and more complete than those contemplated by the Model 
Law, but include all the restraints the Model Law provisions 
would impose.\48\ As the foreign proceeding may or may not 
create an ``estate'' similar to that created in cases under 
this title, the restraints are applicable to actions against 
the debtor under section 362(a) and with respect to the 
property of the debtor under the remaining sections. The only 
property covered by this section is property within the 
territorial jurisdiction of the United States as defined in 
section 1502. To achieve effects on property of the debtor 
which is not within the territorial jurisdiction of the United 
States, the foreign representative would have to commence a 
case under another chapter of this title.
---------------------------------------------------------------------------
    \48\ Id. at 42, 45.
---------------------------------------------------------------------------
    By applying sections 361 and 362, subsection (a) makes 
applicable the United States exceptions and limitations to the 
restraints imposed on creditors, debtors, and other in a case 
under this title, as stated in article 20(2) of the Model 
Law.\49\ It also introduces the concept of adequate protection 
provided in sections 362 and 363. These exceptions and 
limitations include those set forth in sections 362(b), (c) and 
(d). As one result, the court has the power to terminate the 
stay pursuant to section 362(d), for cause, including a failure 
of adequate protection.\50\
---------------------------------------------------------------------------
    \49\ Id. at 42, Art. 20(2); 44, para.para. 148, 150.
    \50\ Id. at 42, Art. 20(3); 44-45, para.para. 151 152.
---------------------------------------------------------------------------
    Subsection (a)(2), by its reference to sections 363 and 552 
adds to the powers of a foreign representative of a foreign 
main proceeding an automatic right to operate the debtor's 
business and exercise the power of a trustee under sections 363 
and 542, unless the court orders otherwise. A foreign 
representative of a foreign main proceeding may need to 
continue a business operation to maintain value and granting 
that authority automatically will eliminate the risk of delay. 
If the court is uncomfortable about this authority in a 
particular situation it can ``order otherwise'' as part of the 
order granting recognition.
    Two special exceptions to the automatic stay are embodied 
in subsections (b) and (c). To preserve a claim in certain 
foreign countries, it may be necessary to commence an action. 
Subsection (b) permits the commencement of such an action, but 
would not allow for its further prosecution. Subsection (c) 
provides that there is no stay of the commencement of a full 
United States bankruptcy case. This essentially provides an 
escape hatch through which any entity, including the foreign 
representative, can flee into a full case. The full case, 
however, will remain subject to subchapters IV and V on 
cooperation and coordination of proceedings and to section 305 
providing for stay or dismissal. Section 108 of the Bankruptcy 
Code provides the tolling protection intended by Model Law 
article 20(3), so no exception is necessary as to claims that 
might be extinguished under United States law.\51\
---------------------------------------------------------------------------
    \51\ Id.
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Section 1521. Relief that may be granted upon recognition of a foreign 
        proceeding
    This section follows article 21 of the Model Law, with 
detailed changes to fit United States law.\52\ The exceptions 
in subsection (a)(7) relate to avoiding powers. The foreign 
representative's status as to such powers is governed by 
section 1523 below. The avoiding power in section 549 and the 
exceptions to that power are covered by section 1520(a)(2). The 
word ``adequately'' in the Model Law, articles 21(2) and 22(1), 
has been changed to ``sufficiently'' in sections 1521(b) and 
1522(a) to avoid confusion with a very specialized legal term 
in United States bankruptcy, ``adequate protection.'' \53\ 
Subsection (c) is designed to limit relief to assets having 
some direct connection with a non-main proceeding, for example 
where they were part of an operating division in the 
jurisdiction of the non-main proceeding when they were 
fraudulently conveyed and then brought to the United 
States.\54\ Subsections (d), (e) and (f) are identical to those 
same subsections of section 1519. This section does not expand 
or reduce the scope of relief currently available in ancillary 
cases under sections 105 and 304 nor does it modify the sweep 
of sections 555 through 560.
---------------------------------------------------------------------------
    \52\ Id. at 45-46, Art. 21.
    \53\ Id. at 46, Art. 21(2); 47, Art. 22(1).
    \54\ See id. at 46-47, para.para. 158, 160.
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Section 1522. Protection of creditors and other interested persons
    This section follows article 22 of the Model Law with 
changes for United States usage and references to relevant 
Bankruptcy Code sections.\55\ It gives the bankruptcy court 
broad latitude to mold relief to circumstances, including 
appropriate responses if it is shown that the foreign 
proceeding is seriously and unjustifiably injuring United 
States creditors. For response to a showing that the conditions 
necessary to recognition did not actually exist or have ceased 
to exist, see section 1517. Concerning the change of 
``adequately'' in the Model Law to ``sufficiently'' in this 
section, see section 1521. Subsection (d) is new and simply 
makes clear that an examiner appointed in a case under chapter 
15 shall be subject to certain duties and bonding requirements 
based on those imposed on trustees and examiners under other 
chapters of this title.
---------------------------------------------------------------------------
    \55\ Id. at 47.
---------------------------------------------------------------------------
Section 1523. Actions to avoid acts detrimental to creditors
    This section follows article 23 of the Model Law, with 
wording to fit it within procedure under this title.\56\ It 
confers standing on a recognized foreign representative to 
assert an avoidance action but only in a pending case under 
another chapter of this title. The Model Law is not clear about 
whether it would grant standing in a recognized foreign 
proceeding if no full case were pending. This limitation 
reflects concerns raised by the United States delegation during 
the UNCITRAL debates that a simple grant of standing to bring 
avoidance actions neglects to address very difficult choice of 
law and forum issues. This limited grant of standing in section 
1523 does not create or establish any legal right of avoidance 
nor does it create or imply any legal rules with respect to the 
choice of applicable law as to the avoidance of any transfer of 
obligation.\57\ The courts will determine the nature and extent 
of any such action and what national law may be applicable to 
such action.
---------------------------------------------------------------------------
    \56\ Id. at 48-49.
    \57\ See id. at 49, para. 166.
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Section 1524. Intervention by a foreign representative
    The wording is the same as the Model Law, except for a few 
clarifying words.\58\ This section gives the foreign 
representative whose foreign proceeding has been recognized the 
right to intervene in United States cases, State or Federal, 
where the debtor is a party. Recognition being an act under 
Federal bankruptcy law, it must take effect in State as well as 
Federal courts. This section does not require substituting the 
foreign representative for the debtor, although that result may 
be appropriate in some circumstances.
---------------------------------------------------------------------------
    \58\ Id. at 49.
---------------------------------------------------------------------------
Section 1525. Cooperation and direct communication between the court 
        and foreign courts or foreign representatives
    The wording is almost exactly that of the Model Law.\59\ 
The right of courts to communicate with other courts in 
worldwide insolvency cases is of central importance. This 
section authorizes courts to do so. This right must be 
exercised, however, with due regard to the rights of the 
parties. Guidelines for such communications are left to the 
Federal rules of bankruptcy procedure.
---------------------------------------------------------------------------
    \59\ Id. at 50.
---------------------------------------------------------------------------
Section 1526. Cooperation and direct communication between the trustee 
        and foreign courts or foreign representatives
    This section follows the Model Law almost exactly.\60\ The 
language in Model Law article 26 concerning the trustee's 
function was eliminated as unnecessary because always implied 
under United States law. The section authorizes the trustee, 
including a debtor in possession, to cooperate with other 
proceedings. Subsection (3) is not taken from the Model Law but 
is added so that any examiner appointed under this chapter will 
be designated by the United States trustee and will be bonded.
---------------------------------------------------------------------------
    \60\ Id. at 51.
---------------------------------------------------------------------------
Section 1527. Forms of cooperation
    This section follows the Model Law exactly.\61\ United 
States bankruptcy courts have already engaged in most of the 
forms of cooperation mentioned here, but they now have explicit 
statutory authorization for acts like the approval of protocols 
of the sort used in cases.\62\
---------------------------------------------------------------------------
    \61\ Guide at 51, 53.
    \62\ See e.g., Gitlin v. Societe Generale, Barclays Bank (In re 
Maxwell Communication Corp.), 93 F.2d 1036 (2d Cir. 1996).
---------------------------------------------------------------------------
Section 1528. Commencement of a case under title 11 after recognition 
        of a foreign main proceeding
    This section follows the Model Law, with specifics of 
United States law replacing the general clause at the end to 
cover assets normally included within the jurisdiction of the 
United States courts in bankruptcy cases, except where assets 
are subject to the jurisdiction of another recognized 
proceeding.\63\ In a full bankruptcy case, the United States 
bankruptcy court generally has jurisdiction over assets outside 
the United States. Here that jurisdiction is limited where 
those assets are controlled by another recognized proceeding, 
if it is a main proceeding.
---------------------------------------------------------------------------
    \63\ Guide at 54-55.
---------------------------------------------------------------------------
    The court may use section 305 of this title to dismiss, 
stay, or limit a case as necessary to promote cooperation and 
coordination in a cross-border case. In addition, although the 
jurisdictional limitation applies only to United States 
bankruptcy cases commenced after recognition of a foreign 
proceeding, the court has ample authority under the next 
section and section 305 to exercise its discretion to dismiss, 
stay, or limit a United States case filed after a petition for 
recognition of a foreign main proceeding has been filed but 
before it has been approved, if recognition is ultimately 
granted.
Section 1529. Coordination of a case under title 11 and a foreign 
        proceeding
    This section follows the Model Law almost exactly, but 
subsection (4) adds a reference to section 305 to make it clear 
the bankruptcy court may continue to use that section, as under 
present law, to dismiss or suspend a United States case as part 
of coordination and cooperation with foreign proceedings.\64\ 
This provision is consistent with United States policy to act 
ancillary to a foreign main proceeding whenever possible.
---------------------------------------------------------------------------
    \64\ Id. at 55-56.
---------------------------------------------------------------------------
Section 1530. Coordination of more than one foreign proceeding
    This section follows exactly article 30 of the Model 
Law.\65\ It ensures that a foreign main proceeding will be 
given primacy in the United States, consistent with the overall 
approach of the United States favoring assistance to foreign 
main proceedings.
---------------------------------------------------------------------------
    \65\ Id. at 57.
---------------------------------------------------------------------------
Section 1531. Presumption of insolvency based on recognition of a 
        foreign main proceeding
    This section follows the Model Law exactly, inserting a 
reference to the standard for an involuntary case under this 
title.\66\ Where an insolvency proceeding has begun in the home 
country of the debtor, and in the absence of contrary evidence, 
the foreign representative should not have to make a new 
showing that the debtor is in the sort of financial distress 
requiring a collective judicial remedy. The word ``proof'' here 
means ``presumption.'' The presumption does not arise for any 
purpose outside this section.
---------------------------------------------------------------------------
    \66\ Id. at 58.
---------------------------------------------------------------------------
Section 1532. Rule of payment in concurrent proceeding
    This section follows the Model Law exactly and is very 
similar to prior section 508(a), which is repealed. The Model 
Law language is somewhat clearer and broader than the 
equivalent language of prior section 508(a).\67\
---------------------------------------------------------------------------
    \67\ Id. at 59.
---------------------------------------------------------------------------
Section 802. Other amendments to titles 11 and 28, United States Code
    Section 802(a) amends section 103 of the Bankruptcy Code to 
clarify the provisions of the Code that apply to chapter 15 and 
to specify which portions of chapter 15 apply in cases under 
other chapters of title 11. Section 802(b) amends the 
Bankruptcy Code's definitions of foreign proceeding and foreign 
representative in section 101. The new definitions are nearly 
identical to those contained in the Model Law but add to the 
phrase ``under a law relating to insolvency'' the words ``or 
debt adjustment.'' This addition emphasizes that the scope of 
the Model Law and chapter 15 is not limited to proceedings 
involving only debtors which are technically insolvent, but 
broadly includes all proceedings involving debtors in severe 
financial distress, so long as those proceedings also meet the 
other criteria of section 101(24).\68\
---------------------------------------------------------------------------
    \68\ Id. at 51-52, 71.
---------------------------------------------------------------------------
    Section 802(c) amends section 157(b)(2) of title 28 to 
provide that proceedings under chapter 15 will be core 
proceedings while other amendments to title 28 provide that the 
United States trustee's standing extends to cases under chapter 
15 and that the United States trustee's duties include acting 
in chapter 15 cases. Although the United States will continue 
to assert worldwide jurisdiction over property of a domestic or 
foreign debtor in a full bankruptcy case under chapters 7 and 
13 of this title, subject to deference to foreign proceedings 
under chapter 15 and section 305, the situation is different in 
a case commenced under chapter 15. There the United States is 
acting solely in an ancillary position, so jurisdiction over 
property is limited to that stated in chapter 15.
    Section 802(d) amends section 109 of the Bankruptcy Code to 
permit recognition of foreign proceedings involving foreign 
insurance companies and involving foreign banks which do not 
have a branch or agency in the United States (as defined in 12 
U.S.C. Sec. 3101). While a foreign bank not subject to United 
States regulation will be eligible for chapter 15 as a 
consequence of the amendment to section 109, section 303 
prohibits the commencement of a full involuntary case against 
such a foreign bank unless the bank is a debtor in a foreign 
proceeding.
    While section 304 is repealed and replaced by chapter 15, 
access to the jurisprudence which developed under section 304 
is preserved in the context of new section 1507. On deciding 
whether to grant the Additional Assistance contemplated by 
section 1507, the court must consider the same factors that had 
been imposed by former section 304. The venue provisions for 
cases ancillary to foreign proceedings have been amended to 
provide a hierarchy of choices beginning with principal place 
of business in the United States, if any. If there is no 
principal place of business in the United States, but there is 
litigation against a debtor, then the district in which the 
litigation is pending would be the appropriate venue. In any 
other case, venue must be determined with reference to the 
interests of justice and the convenience of the parties.

              TITLE IX--FINANCIAL CONTRACT PROVISIONS \69\
---------------------------------------------------------------------------

    \69\ Title IX is substantively very similar to H.R. 1161, the 
Financial Contract Netting Improvement Act of 1999, a bill that was 
introduced in the 106th Congress. Accordingly, the text explaining 
title IX is derived from the report accompanying this bill. See H.R. 
Rep. No. 106-834, Pt.1 (2000).
---------------------------------------------------------------------------
Section 901. Treatment of certain agreements by conservators or 
        receivers of insured depository institutions
    Subsections (a) through (f) amend the Federal Deposit 
Insurance Act's (FDIA) definitions of ``qualified financial 
contract'' (QFC), ``securities contract,'' ``commodity 
contract,'' ``forward contract,'' ``repurchase agreement'' and 
``swap agreement'' to make them consistent with the definitions 
in the Bankruptcy Code, as amended by this Act.
    Subsection (b) amends the definition of ``securities 
contract'' to encompass options on securities and margin loans. 
The inclusion of ``margin loans'' in the definition is intended 
to encompass only those loans commonly known in the securities 
industry as ``margin loans'' and does not include other loans 
utilizing securities as collateral, however documented. 
Subsection (b) also specifies that purchase, sale and 
repurchase obligations under a participation in a commercial 
mortgage loan do not constitute ``securities contracts.'' While 
a contract for the purchase or sale or a participation may 
constitute a ``securities contract,'' the purchase, sale or 
repurchase obligation embedded in a participation agreement 
does not make that agreement a ``securities contract.''
    Subsection (e) amends the definition of a ``repurchase 
agreement'' to codify the substance of the Federal Deposit 
Insurance Corporation's (FDIC) 1995 regulation defining 
repurchase agreement to include those on qualified foreign 
government securities.\70\ The term ``qualified foreign 
government securities'' is defined to include those that are 
direct obligations of, or fully guaranteed by, central 
governments of members of the Organization for Economic 
Cooperation and Development (OECD). Subsection (e) reflects 
developments in the repurchase agreement markets, which 
increasingly use foreign government securities as the 
underlying asset. Any risk presented by this modification is 
addressed by limiting it to those issued or guaranteed by OECD 
member States. Subsection (e), like subsection (b) for 
``securities contracts,'' specifies that repurchase obligations 
under a participation in a commercial mortgage loan do not make 
the participation agreement a ``repurchase agreement.'' Such 
repurchase obligations embedded in participations in commercial 
loans (such as recourse obligations) do not constitute a 
``repurchase agreement.'' However, a repurchase agreement 
involving the transfer of participations in commercial mortgage 
loans with a simultaneous agreement to repurchase the 
participation on demand or at a date certain 1 year or less 
after such transfer would constitute a ``repurchase 
agreement.''
---------------------------------------------------------------------------
    \70\ See 12 C.F.R. ' 360.5.
---------------------------------------------------------------------------
    Subsection (f) amends the definition of ``swap agreement'' 
to include an ``interest rate swap, option, future, or forward 
agreement, including a rate floor, rate cap, rate collar, 
cross-currency rate swap, and basis swap; a spot, same day-
tomorrow, tomorrow-next, forward or other foreign exchange or 
precious metals agreement; a currency swap, option, future, or 
forward agreement; an equity index or equity swap, option, 
spread, future, or forward agreement; a debt index or debt 
swap, option, future, or forward agreement; a credit swap, 
option, future, or forward agreement; a commodity index or 
commodity swap, option, future, or forward agreement; or a 
weather swap, weather derivative, or a weather option.'' This 
amendment would achieve contractual netting across economically 
similar over-the-counter products that can be terminated and 
closed out on a mark-to-market basis.
    Traditional commercial and lending arrangements, or other 
non-financial market transactions, such as commercial, 
residential or consumer loans, cannot be treated as ``swaps'' 
under either the FDIA or the Bankruptcy Code because the 
parties purport to document or label the transactions as ``swap 
agreements.'' In addition, these definitions apply only for 
purposes of the FDIA and the Bankruptcy Code. These 
definitions, and the characterization of a certain transaction 
as a ``swap agreement,'' are not intended to effect the 
characterization, definition, or treatment of any instruments 
under any other statute, regulation, or rule including, but not 
limited to, the statutes, regulations or rules enumerated in 
subsection (f).
    Subsection (g) amends the FDIA by adding a definition for 
``transfer,'' which is a key term used in the FDIA, to ensure 
that it is broadly construed to encompass dispositions of 
property or interests in property. The definition tracks that 
in section 101 of the Bankruptcy Code.
    Subsection (h) makes clarifying technical changes to 
conform the receivership and conservatorship provisions of the 
FDIA. This subsection (h) also clarifies that the FDIA 
expressly protects rights under security agreements, 
arrangements or other credit enhancement related to one or more 
qualified financial contracts (QFCs). An example of a security 
arrangement is a right of set off, and examples of other credit 
enhancements are letters of credit, guarantees, reimbursement 
obligations and other similar agreements.
    Subsection (i) clarifies that no provision of Federal or 
State law relating to the avoidance of preferential or 
fraudulent transfers (including the anti-preference provision 
of the National Bank Act) can be invoked to avoid a transfer 
made in connection with any QFC of an insured depository 
institution in conservatorship or receivership, absent actual 
fraudulent intent on the part of the transferee.
Section 902. Authority of the corporation with respect to failed and 
        failing institutions
    Section 203 provides that no provision of law, including 
the Federal Deposit Insurance Corporation Improvement Act 
(FDICIA), shall be construed to limit the power of the FDIC to 
transfer or to repudiate any QFC in accordance with its powers 
under the FDIA. As discussed below, there has been some 
uncertainty regarding whether or not FDICIA limits the 
authority of the FDIC to transfer or to repudiate QFCs of an 
insolvent financial institution. Section 902, as well as other 
provisions in the Act, clarify that FDICIA does not limit the 
transfer powers of the FDIC with respect to QFCs.
    In addition, section 902 denies enforcement to ``walkaway'' 
clauses in QFCs. A walkaway clause is defined as a provision 
that, after calculation of a value of a party's position or an 
amount due to or from one of the parties upon termination, 
liquidation or acceleration of the QFC, either does not create 
a payment obligation of a party or extinguishes a payment 
obligation of a party in whole or in part solely because of 
such party's status as a non-defaulting party.
Section 903. Amendments relating to transfers of qualified financial 
        contracts
    Subsection (a) amends the FDIA to expand the transfer 
authority of the FDIC to permit transfers of QFCs to 
``financial institutions'' as defined in FDICIA or in 
regulations. This provision allows the FDIC to transfer QFCs to 
a non-depository financial institution, provided the 
institution is not subject to bankruptcy or insolvency 
proceedings. The new FDIA provision specifies that when the 
FDIC transfers QFCs that are subject to the rules of a 
particular clearing organization, the transfer will not require 
the clearing organization to accept the transferee as a member 
of the organization. This provision gives the FDIC flexibility 
in resolving QFCs subject to the rules of a clearing 
organization, while preserving the ability of such 
organizations to enforce appropriate risk reducing membership 
requirements. The new FDIA provision also permits transfers to 
an eligible financial institution that is a non-U.S. person, or 
the branch or agency of a non-U.S. person if, following the 
transfer, the contractual rights of the parties would be 
enforceable substantially to the same extent as under the FDIA.
    Subsection (b) amends the notification requirements 
following a transfer of the QFCs of a failed depository 
institution to require the FDIC to notify any party to a 
transferred QFC of such transfer by 5:00 p.m. (Eastern Time) on 
the business day following the date of the appointment of the 
FDIC acting as receiver or following the date of such transfer 
by the FDIC acting as a conservator. This amendment is 
consistent with the policy statement on QFCs issued by the FDIC 
on December 12, 1989.
    Subsection (c) amends the FDIA to clarify the relationship 
between the FDIA and FDICIA. There has been some uncertainty 
whether FDICIA permits counterparties to terminate or liquidate 
a QFC before the expiration of the time period provided by the 
FDIA during which the FDIC may repudiate or transfer a QFC in a 
conservatorship or receivership. Subsection (c) provides that a 
party may not terminate a QFC based solely on the appointment 
of the FDIC as receiver until 5:00 p.m. (Eastern Time) on the 
business day following the appointment of the receiver or after 
the person has received notice of a transfer under FDIA section 
11(d)(9), or based solely on the appointment of the FDIC as 
conservator, notwithstanding the provisions of FDICIA. This 
provides the FDIC with an opportunity to undertake an orderly 
resolution of the insured depository institution. The amendment 
also prohibits the enforcement of rights of termination or 
liquidation that are based solely on the ``financial 
condition'' of the depository institution in receivership or 
conservatorship. For example, termination based on a cross-
default provision in a QFC that is triggered upon a default 
under another contract could be stayed if such other default 
was caused by an acceleration of amounts due under that other 
contract, and such acceleration was based solely on the 
appointment of a conservator or receiver for that depository 
institution. Similarly, a provision in a QFC permitting 
termination of the QFC based solely on a downgraded credit 
rating of a party will not be enforceable in an FDIC 
receivership or conservatorship because the provision is based 
solely on the financial condition of the depository institution 
in default. However, any payment, delivery or other 
performance-based default, or breach of a representation or 
covenant putting in question the enforceability of the 
agreement, will not be deemed to be based solely on financial 
condition for purposes of this provision. The amendment is not 
intended to prevent counterparties from taking all actions 
permitted and recovering all damages authorized upon 
repudiation of any QFC by a conservator or receiver. The 
amendment allows the FDIC to meet its obligation to provide 
notice to parties to transferred QFCs by taking steps 
reasonably calculated to provide notice to such parties by the 
required time. This is consistent with the existing policy 
statement on QFCs issued by the FDIC on December 12, 1989.
    Finally, the amendment permits the FDIC to transfer QFCs of 
a failed depository institution to a bridge bank or a 
depository institution organized by the FDIC for which a 
conservator is appointed either (i) immediately upon the 
organization of such institution or (ii) at the time of a 
purchase and assumption transaction between the FDIC and the 
institution. This provision clarifies that such institutions 
are not to be considered financial institutions that are 
ineligible to receive such transfers under FDIA section 
11(e)(9). This is consistent with the existing policy statement 
on QFCs issued by the FDIC on December 12, 1989.
Section 904. Amendments relating to disaffirmance or repudiation of 
        qualified financial contracts
    Section 904 limits the disaffirmance and repudiation 
authority of the FDIC with respect to QFCs so that such 
authority is consistent with the FDIC's transfer authority 
under FDIA section 11(e)(9). This ensures that no 
disaffirmance, repudiation or transfer authority of the FDIC 
may be exercised to ``cherry-pick'' or otherwise treat 
independently all the QFCs between a depository institution in 
default and a person or any affiliate of such person. The FDIC 
has announced that its policy is not to repudiate or disaffirm 
QFCs selectively. This unified treatment is fundamental to the 
reduction of systemic risk.
Section 905. Clarifying amendment relating to master agreements
    Section 905 states that a master agreement for one or more 
securities contracts, commodity contracts, forward contracts, 
repurchase agreements or swap agreements will be treated as a 
single QFC under the FDIA. This provision ensures that cross-
product netting pursuant to a master agreement will be 
enforceable under the FDIA. Cross-product netting permits a 
wide variety of financial transactions between two parties to 
be netted, thereby maximizing the present and potential future 
risk-reducing benefits of the netting arrangement between the 
parties. Express recognition of the enforceability of such 
cross-product master agreements furthers the policy of 
increasing legal certainty and reducing systemic risks in the 
case of an insolvency of a large financial participant. Similar 
Bankruptcy Code clarifications to recognize cross-product 
netting both under a master agreement and in the absence of a 
master agreement are described below.
Section 906. Federal Deposit Insurance Corporation Improvement Act of 
        1991.
    Subsection (a)(1) amends the definition of ``clearing 
organization'' to include clearinghouses that are subject to 
exemptions pursuant to orders of the SEC or the CFTC.
    The FDICIA provides that a netting arrangement will be 
enforced pursuant to its terms, notwithstanding the failure of 
a party to the agreement. However, the current netting 
provisions of FDICIA limit this protection to ``financial 
institutions,'' which include depository institutions. 
Subsection (a)(2) amends the FDICIA definition of covered 
institutions to include (i) uninsured national and State member 
banks, irrespective of their eligibility for deposit insurance 
and (ii) foreign banks (including the foreign bank and its 
branches or agencies as a combined group, or only the foreign 
bank parent of a branch or agency). The Federal Reserve Board 
already has by regulation included certain foreign banks in the 
definition of a ``financial institution'' for purposes of 
FDICIA and the latter change will statutorily extend the 
protections of FDICIA to ensure that U.S. financial 
organizations participating in netting agreements with foreign 
banks are covered by the Act, thereby enhancing the safety and 
soundness of these arrangements.
    Subsection (a)(3) amends FDICIA to provide that, for 
purposes of FDICIA, two or more clearing organizations that 
enter into a netting contract are considered ``members'' of 
each other. This assures the enforceability of netting 
arrangements involving two or more clearing organizations and a 
member common to all such organizations, thus reducing systemic 
risk in the event of the failure of such a member. Under the 
current FDICIA provisions, the enforceability of such 
arrangements depends on a case-by-case determination that 
clearing organizations could be regarded as members of each 
other for purposes of FDICIA.
    Subsection (a)(4) amends the FDICIA definition of netting 
contract and the general rules applicable to netting contracts. 
The current FDICIA provisions require that the netting 
agreement must be governed by the law of the United States or a 
State to receive the protections of FDICIA. However, many of 
these agreements, particularly netting arrangements covering 
positions taken in foreign exchange dealings, are governed by 
the laws of a foreign country. This subsection broadens the 
definition of ``netting contract'' to include those agreements 
governed by foreign law, and preserves the FDICIA requirement 
that a netting contract is not invalid under or precluded by 
Federal law.
    Subsections (b) and (c) establish two exceptions to 
FDICIA's protection of the enforceability of the provisions of 
netting contracts between financial institutions and among 
clearing organization members. First, the termination 
provisions of netting contracts will not be enforceable based 
solely on (i) the appointment of a conservator for an insolvent 
depository institution under the FDIA or (ii) the appointment 
of a receiver for such institution under the FDIA, if such 
receiver transfers or repudiates QFCs in accordance with the 
FDIA and gives notice of a transfer by 5:00 p.m. on the 
business day following the appointment of a receiver. This 
change is made to confirm the FDIC's flexibility to transfer or 
repudiate the QFCs of an insolvent depository institution in 
accordance with the terms of the FDIA. This modification also 
provides important legal certainty regarding the treatment of 
QFCs under the FDIA, because the current relationship between 
the FDIA and FDICIA is unclear. The second exception provides 
that FDICIA does not override a stay order under the Securities 
Investor Protection Act (SIPA) with respect to foreclosure on 
securities (but not cash) collateral of a debtor (section 911 
makes a conforming change to SIPA). There is also an exception 
relating to insolvent commodity brokers. Subsection (a)(5) adds 
a new definition of ``payment'' to FDICIA.
    Subsections (b) and (c) also clarify that a security 
agreement or other credit enhancement related to a netting 
contract is enforceable to the same extent as the underlying 
netting contract.
    Subsection (d) adds a new section 407 to FDICIA. This new 
section provides that, notwithstanding any other law, QFCs with 
uninsured national banks or uninsured Federal branches or 
agencies that are placed in receivership or conservatorship 
will be treated in the same manner as if the contract were with 
an insured national bank or insured Federal branch for which a 
receiver or conservator was appointed. This provision will 
ensure that parties to QFCs with uninsured national banks or 
uninsured Federal branches or agencies will have the same 
rights and obligations as parties entering into the same 
agreements with insured depository institutions. The new 
section also specifically limits the powers of a receiver or 
conservator for an uninsured national bank or uninsured Federal 
branch or agency to those provisions that address QFCs in 
section 1821(e)(8), (9), (10), and (11) of title 12 of the 
United States Code.
    While the amendment would apply the same rules to uninsured 
national banks and Federal branches and agencies that apply to 
insured institutions, the provision would not change the rules 
that apply to insured institutions. Nothing in this section 
would amend the International Banking Act, the Federal Deposit 
Insurance Act, the National Bank Act, or other statutory 
provisions with respect to receiverships of insured national 
banks or Federal branches.
Section 907. Bankruptcy Code amendments
    Subsection (a)(1) amends the Bankruptcy Code definitions of 
``repurchase agreement'' and ``swap agreement'' to conform them 
with the amendments to the FDIA contained in subsections (e) 
and (f) of section 901. In connection with the definition of 
``repurchase agreement,'' the term ``qualified foreign 
government securities'' is defined to include securities that 
are direct obligations of, or fully guaranteed by, central 
governments of members of the Organization for Economic 
Cooperation and Development (OECD). This language reflects 
developments in the repurchase agreement markets, which 
increasingly use foreign government securities as the 
underlying asset. Any risk presented by this modification is 
addressed by limiting it to those obligating or guaranteed by 
OECD member States. Subsection (a)(1) specifies that repurchase 
obligations under a participation in an commercial mortgage 
loan do not make the participation agreement a ``repurchase 
agreement.'' Such repurchase obligations embedded in 
participations in commercial loans (such as recourse 
obligations) do not constitute a ``repurchase agreement.'' 
However, a repurchase agreement involving the transfer of 
participations in commercial mortgage loans with a simultaneous 
agreement to repurchase the participation on demand or at a 
date certain 1 year or less after such transfer would 
constitute a ``repurchase agreement.'' The amendments to the 
definition of ``repurchase agreement'' are not intended to 
affect the interpretation of the definition of ``securities 
contract.''
    The definition of ``swap agreement,'' in conjunction with 
the addition of ``spot foreign exchange transactions'' that was 
added to the definition in 1994, will achieve contractual 
netting across economically similar over-the-counter products 
that can be terminated and closed out on a mark-to-market 
basis. The definition of ``swap agreement'' originally was 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and uses of swap 
transactions matured. For that reason, the phrase ``or any 
other similar agreement'' was included in the definition. To 
clarify this, subsection (a)(1) expands the definition of 
``swap agreement'' to include any agreement or transaction 
similar to any other agreement or transaction referred to in 
subsection (a)(1) that is presently, or in the future becomes, 
regularly entered into in the swap market and is a forward, 
swap, future, or option on one or more rates, currencies, 
commodities, equity securities or other equity instruments, 
debt securities or other debt instruments, or economic indices 
or measures of economic risk or value. However, traditional 
commercial and lending arrangements, or other non-financial 
market transactions, such as commercial, residential or 
consumer loans, cannot be treated as ``swaps'' under either the 
FDIA or the Bankruptcy Code because the parties purport to 
document or label the transactions as ``swap agreements.'' 
Subsection (a)(1) specifies that this definition of swap 
agreement applies only for purposes of the Bankruptcy Code and 
is inapplicable to the other statutes, rules and regulations 
enumerated in that section. The definition also includes any 
security agreement or arrangement, or other credit enhancement, 
related to a swap agreement. This ensures that any such 
agreement, arrangement or enhancement is itself deemed to be a 
swap agreement, and therefore eligible for treatment as such 
for purposes of termination, liquidation, acceleration, offset 
and netting under the Bankruptcy Code and the FDIA. Similar 
changes are made in the definitions of ``forward contract,'' 
``commodity contract'' and ``repurchase agreement.'' An example 
of a security arrangement is a right of setoff; examples of 
other credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
    Subsections (a)(2) and (a)(3) amend the Bankruptcy Code 
definitions of ``securities contract'' and ``commodity 
contract,'' respectively, to conform them to the definitions in 
the FDIA, and also to include any security agreements or 
arrangements or other credit enhancements related to one or 
more such contracts. Subsection (a)(2), like the amendments to 
the FDIA, amends the definition of ``securities contract'' to 
encompass options on securities and margin loans. The inclusion 
of ``margin loans'' in the definition is intended to encompass 
only those loans commonly known in the securities industry as 
``margin loans'' and does not include other loans utilizing 
securities as collateral, however documented. Subsection (a)(2) 
also specifies that purchase, sale and repurchase obligations 
under a participation in a commercial mortgage loan do not 
constitute ``securities contracts.'' While a contract for the 
purchase or sale or a participation may constitute a 
``securities contract,'' the purchase, sale or repurchase 
obligation embedded in a participation agreement does not make 
that agreement a ``securities contract.''
    Subsection (b) amends the Bankruptcy Code definition of 
``forward contract merchant'' and also adds a new definition of 
``financial participant'' to limit the potential impact of 
insolvencies upon other major market participants. These 
definitions will allow such market participants to close-out 
and net agreements with insolvent entities under sections 
362(b)(6), 546, 548, 555, and 556 even if the creditor could 
not qualify as, for example, a commodity broker. The new 
subsection preserves the limitations of the right to close-out 
and net such contracts, in most cases, to entities who qualify 
under the Bankruptcy Code's counter party limitations. However, 
where the counter party has transactions with a total gross 
dollar value of at least $1 billion in notional principal 
amount outstanding on any day during the previous 15-month 
period, or has gross mark-to-market positions of at least $100 
million (aggregated across counter parties) in one or more 
agreements or transactions on any day during the previous 15-
month period, the new subsection and corresponding amendments 
would permit it to exercise netting rights irrespective of its 
inability otherwise to satisfy those counter party limitations. 
This change will help prevent systemic impacts upon the markets 
from a single failure.
    Subsection (c) adds to the Bankruptcy Code new definitions 
for the terms ``master netting agreement'' and ``master netting 
agreement participant.'' The definition of ``master netting 
agreement'' is designed to protect the termination and close-
out netting provisions of cross-product master agreements 
between parties. Such an agreement may be used (i) to document 
a wide variety of securities contracts, commodity contracts, 
forward contracts, repurchase agreements and swap agreements or 
(ii) as an umbrella agreement for separate master agreements 
between the same parties, each of which is used to document a 
discrete type of transaction. The definition includes security 
agreements or arrangements or other credit enhancements related 
to one or more such agreements and clarifies that a master 
netting agreement will be treated as such even if it documents 
transactions that are not within the enumerated categories of 
qualifying transactions (but the provisions of the Bankruptcy 
Code relating to master netting agreements and the other 
categories of transactions will not apply to such other 
transactions). A ``master netting agreement participant'' is 
any entity that is a party to an outstanding master netting 
agreement with a debtor before the filing of a bankruptcy 
petition.
    Subsection (d) amends section 362(b) of the Bankruptcy Code 
to protect enforcement, free from the automatic stay, of setoff 
or netting provisions in swap agreements and in master netting 
agreements and security agreements or arrangements related to 
one or more swap agreements or master netting agreements. This 
provision parallels the other provisions of the Bankruptcy Code 
that protect netting provisions of securities contracts, 
commodity contracts, forward contracts, and repurchase 
agreements. Because the relevant definitions include related 
security agreements, the reference to ``setoff'' in this 
provisions, as well as in section 362(b)(6) and (7) of the 
Bankruptcy Code, are intended to refer also to rights to 
foreclose on, and to set off against, obligations to return 
collateral securing swap agreements, master netting 
arrangements, repurchase agreements, securities contracts, 
commodity contracts, or forward contracts. Collateral may be 
pledged to cover the cost of replacing the defaulted 
transactions in the relevant market, as well as other costs and 
expenses incurred or estimated to be incurred for the purpose 
of hedging or reducing the risks arising out of such 
termination. Enforcement of these agreements and arrangements 
is consistent with the policy goal of minimizing systemic risk.
    Subsection (d) also clarifies that the provisions 
protecting setoff and foreclosure in relation to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, and master netting agreements free 
from the automatic stay apply to collateral pledged by the 
debtor that is under the control of the creditor but that 
cannot technically be ``held by'' the creditor, such as 
receivables and book-entry securities, and to collateral that 
has been repledged by the creditor.
    Subsection (e) amends section 546 of the Bankruptcy Code to 
provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This section of the Act also clarifies the 
limitations on a trustee's power to avoid transfers made under 
swap agreements.
    Subsection (f) amends section 548(d) of the Bankruptcy Code 
to provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This amendment provides the same protections for 
transfers made under, or in connection with, master netting 
agreements as currently is provided for margin payments and 
settlement payments received by commodity brokers, forward 
contract merchants, stockbrokers, financial institutions, 
securities clearing agencies, repo participants, and swap 
participants under sections 546 and 548(d).
    Subsections (g), (h), (i), and (j) clarify that the 
provisions of the Bankruptcy Code that protect (i) rights of 
liquidation under securities contracts, commodity contracts, 
forward contracts and repurchase agreements also protect rights 
of termination or acceleration under such contracts, and (ii) 
rights to terminate under swap agreements also protect rights 
of liquidation and acceleration.
    Subsection (k) adds a new section 561 to the Bankruptcy 
Code to protect the contractual right of a master netting 
agreement participant to enforce any rights of termination, 
liquidation, acceleration, offset or netting under a master 
netting agreement. Such rights include rights arising (i) from 
the rules of a securities exchange or clearing organization, 
(ii) under common law, law merchant or (iii) by reason of 
normal business practice. This is consistent with the current 
treatment of rights under swap agreements pursuant to section 
560 of the Bankruptcy Code. With respect to sections 555, 556, 
559, 560 and 561 of the Bankruptcy Code, it is intended that 
the normal business practice in the event of a default of a 
party based on bankruptcy or insolvency is to terminate, 
liquidate or accelerate securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements and master netting agreements with the bankrupt or 
insolvent party. The protection of netting and offset rights in 
sections 560 and 561 is in addition to the protections afforded 
in subsections 362(b)(6), (b)(7), (b)(17) and (b)(32). For 
example, cross-product netting will be protected from the 
automatic stay under section 561 even in the absence of a 
master netting agreement. Sections 561(b)(2) and (3) limit the 
exercise of contractual rights to net or to offset obligations 
where one leg of the obligations sought to be netted relates to 
commodity contracts. Under subsection (b)(2), netting or offset 
is not permitted if the obligations are not mutual. This means, 
for example, that proprietary obligations cannot be netted or 
offset against obligations held for, or on behalf of, some 
other party. Even if the obligations are mutual, under 
subsection (b)(3) netting or offset is not permitted in a 
commodity broker bankruptcy if the party seeking to net or to 
offset has no positive net equity in the commodity account at 
the debtor. Subsections (b)(2) and (b)(3) limit the depletion 
of assets available for distribution to customers of commodity 
brokers. This is consistent with the principle of subchapter IV 
of chapter 7 of the Bankruptcy Code, which gives priority to 
customer claims in the bankruptcy of a commodity broker.
    Under this provision, the termination, liquidation or 
acceleration rights of a master netting agreement participant 
are subject to limitations contained in other provisions of the 
Bankruptcy Code relating to securities contracts and repurchase 
agreements. In particular, if a securities contract or 
repurchase agreement is documented under a master netting 
agreement, a party's termination, liquidation and acceleration 
rights would be subject to the provisions of the Bankruptcy 
Code relating to orders authorized under the provisions of SIPA 
or any statute administered by the Section In addition, the 
netting rights of a party to a master netting agreement would 
be subject to any contractual terms between the parties 
limiting or waiving netting or set off rights. Similarly, a 
waiver by a bank or a counter party of netting or set off 
rights in connection with QFCs would be enforceable under the 
FDIA.
    Subsection (l) clarifies that, with respect to municipal 
bankruptcies, all the provisions of the Bankruptcy Code 
relating to securities contracts, commodity contracts, forward 
contracts, repurchase agreements, swap agreements and master 
netting agreements (which by their terms are intended to apply 
in all cases and proceedings under the Bankruptcy Code) will 
apply in a chapter 9 case. Although sections 555, 556, 559, and 
560 provide that they apply in any case or proceeding under the 
Bankruptcy Code, this subsection makes a technical amendment in 
chapter 9 to clarify the applicability of these provisions.
    Subsection (m) clarifies that the provisions of the 
Bankruptcy Code related to securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements and master netting agreements apply in a section 304 
proceeding ancillary to a foreign insolvency proceeding.
    Subsections (n) and (o) amend those provisions in the 
Bankruptcy Code concerning the liquidation of commodity brokers 
and stockbrokers. Subchapter III of chapter 7 of the Bankruptcy 
Code details specific rules for the liquidation of 
stockbrokers. Subchapter IV of chapter 7 of the Bankruptcy Code 
and regulations of the CFTC detail specific rules for the 
liquidation of commodity brokers. These authorities are 
designed to protect customers and customer property of an 
insolvent stockbroker or commodity broker.
    Subsections (n) and (o) clarify the rights of parties to 
commodity contracts, securities contracts, forward contracts, 
swap agreements, repurchase agreements and master netting 
agreements with an insolvent commodity broker or stockbroker. 
They ensure that non-customers will not defeat the priority 
scheme of subchapter III or IV priority by gaining access to 
assets held in segregated customer accounts. The subsections 
also clarify that the exercise of termination and netting 
rights will not otherwise affect customer property or 
distributions by the trustee of the insolvent commodity broker 
or stockbroker after the exercise of such rights.
    Subsection (p) amends section 553 of the Bankruptcy Code to 
clarify that the acquisition by a creditor of setoff rights in 
connection with swap agreements, repurchase agreements, 
securities contracts, forward contracts, commodity contracts 
and master netting agreements cannot be avoided as a 
preference. This subsection also adds setoff of the kinds 
described in sections 555, 556, 559, 560, and 561 of the 
Bankruptcy Code to the types of set off excepted from section 
553(b).
Section 908. Recordkeeping requirements
    Section 908 amends section 11(e)(8) of the FDIA to 
explicitly authorize the FDIC, in consultation with appropriate 
Federal banking agencies, to prescribe regulations on 
recordkeeping with respect to QFCs. Adequate recordkeeping for 
such transactions is essential to effective risk management and 
to the reduction of systemic risk permitted by the orderly 
resolution of depository institutions utilizing QFCs.
Section 909. Exemptions from contemporaneous execution requirement
    Section 909 amends section 13(e)(2) of the FDIA to provide 
that an agreement for the collateralization of governmental 
deposits, bankruptcy estate funds, Federal Reserve Bank or 
Federal Home Loan Bank extensions of credit or one or more QFCs 
shall not be deemed invalid solely because such agreement was 
not entered into contemporaneously with the acquisition of the 
collateral or because of pledges, delivery or substitution of 
the collateral made in accordance with such agreement. The 
amendment codifies portions of policy statements issued by the 
FDIC regarding the application of section 13(e), which codifies 
the ``Oench Duhme'' doctrine. With respect to QFCs, this 
codification recognizes that QFCs often are subject to 
collateral and other security arrangements that may require 
posting and return of collateral on an ongoing basis based on 
the mark-to-market values of the collateralized transactions. 
The codification of only portions of the existing FDIC policy 
statements on these and related issues should not give rise to 
any negative implication regarding the continued validity of 
these policy statements.
Section 910. Damage measure
    Section 910 adds a new section 562 to the Bankruptcy Code 
providing that damages under any swap agreement, securities 
contract, forward contract, commodity contract, repurchase 
agreement or master netting agreement be calculated as of the 
earlier of (i) the date of rejection of such agreement by a 
trustee or (ii) the date of liquidation, termination or 
acceleration of such contract or agreement. New section 562 
provides important legal certainty and makes the Bankruptcy 
Code consistent with the current provisions related to the 
timing of the calculation of damages under QFCs in the FDIA.
Section 911. SIPC stay
    Section 911 amends SIPA to provide that an order or decree 
issued pursuant to SIPA shall not operate as a stay of any 
right of liquidation, termination, acceleration, offset or 
netting under one or more securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements or master netting agreements (as defined in the 
Bankruptcy Code and including rights of foreclosure on 
collateral), except that such order or decree may stay any 
right to foreclose on securities (but not cash) collateral 
pledged by the debtor or sold by the debtor under a repurchase 
agreement (a corresponding amendment to FDICIA is made by the 
Act). A creditor that was stayed in exercising rights against 
securities collateral would be entitled to post-insolvency 
interest to the extent of the collateral.
Section 912. Asset-backed securitizations
    Section 912 amends section 541 of the Bankruptcy Code to 
provide that certain assets transferred to an eligible entity 
in connection with an asset-backed securitization generally 
will not be included within the bankruptcy estate of the 
debtor. This provision recognizes that a valid transfer of such 
assets to an ``eligible entity,'' generally eliminates the 
debtor's legal or equitable interests in those assets. 
Accordingly, subject to the avoidance powers in section 548(a), 
the transfer will be treated as a sale of those assets not 
subject to avoidance.
Section 913. Effective date; application of amendments
    Section 913(a) provides that title IX become effective on 
the Act's date of enactment. Section 913(b) provides that the 
amendments made by the Act shall not apply with respect to 
cases commenced, or to conservator and receiver appointments 
made before the date of enactment.

                 TITLE X--PROTECTION OF FAMILY FARMERS

Section 1001. Permanent reenactment of chapter 12
    Section 1001(a) reenacts chapter 12 of the Bankruptcy Code 
and provides that such reenactment takes effect on July 1, 
2000. Section 1001(b) makes a conforming amendment to section 
302 of the Bankruptcy, Judges, United States Trustees, and 
Family Farmer Bankruptcy Act of 1986.
Section 1002. Debt limit increase
    Section 1002 amends section 104(b) of the Bankruptcy Code 
to provide for annual or biannual adjustments of the debt limit 
for family farmers beginning on April 1, 2004.
Section 1003. Certain claims owed to governmental units
    Section 1003(a) amends section 1222(a) of the Bankruptcy 
Code to require a chapter 12 plan provide for payment in full 
of all claims entitled to priority under section 507, unless 
the claim is owed to a governmental unit arising from the sale 
or exchange of any farm asset. If the claim falls within this 
exception, it is treated as an unsecured claim and the 
underlying debt is treated the same if the debtor receives a 
discharge or the holder of a claim agrees to a different 
treatment of that claim. Section 1003(b) amends section 1231(b) 
of the Bankruptcy Code to have it apply to any governmental 
unit.

               TITLE XI--HEATH CARE AND EMPLOYEE BENEFITS

Section 1101. Definitions
    Section 1101(a) amends section 101 of the Bankruptcy Code 
to add a definition of the term ``health care business.'' A 
health care business is defined as any public or private entity 
(without regard as to whether the entity is organized for 
profit or not for profit) that is primarily engaged in offering 
to the general public facilities and services for certain 
specified purposes. Section 1101(b) amends section 101 of the 
Bankruptcy Code to define ``patient'' and ``patient records.'' 
Section 1101(c) clarifies that the amendments implemented by 
section 1101(a) are not intended to affect the interpretation 
of section 109(b) of the Bankruptcy Code concerning an entity's 
eligibility to be a chapter 7 debtor.
Section 1102. Disposal of patient records
    Section 1102 adds a provision to chapter 3 of the 
Bankruptcy Code specifying requirements for the disposal of 
patient records in a chapter 7, 9, or 11 case of a health care 
business where the trustee lacks sufficient funds to pay for 
the storage of such records in accordance with applicable 
Federal or State law. The requirements chiefly consist of 
providing notice to the affected patients and specifying the 
method of disposal for unclaimed records. These requirements 
are intended to protect the privacy and confidentiality of a 
patient's medical records when they are in the custody of a 
health care business in bankruptcy.
Section 1103. Administrative expense claim for costs of closing a 
        health care business and other administrative expenses
    Section 1103 amends section 503(b) of the Bankruptcy Code 
to provide that the actual, necessary costs and expenses of 
closing a health care business (including the disposal of 
patient records or transferral of patients) incurred by a 
trustee, Federal agency, or a department or agency of a State 
are allowed administrative expenses.
    With respect to a nonresidential real property lease 
previously assumed under section 365 and then subsequently 
rejected, section 1103 amends section 503(b) to provide that 
the sum of all monetary obligations due (excluding those 
arising from or related to a failure to operate or penalty 
provisions) for the 2-year period following the later of the 
rejection date or date of actual turnover of the premises 
(without reduction or setoff for any reason, except for sums 
actually received or to be received from a nondebtor) are 
allowed administrative expenses under section 503(b) of the 
Bankruptcy Code. The claim for remaining sums due for the 
balance of the lease's term shall be treated as a claim under 
section 502(b)(6).
Section 1104. Appointment of ombudsman to act as patient advocate
    Section 1104(a) adds a provision to chapter 3 of the 
Bankruptcy Code requiring the court to order the appointment of 
an ombudsman within 30 days after the commencement of a chapter 
7, 9 or 11 case by a health care provider, unless the court 
finds that such appointment is not necessary for the protection 
of patients under the specific facts of the case. Section 
1104(a) requires the ombudsman to be a disinterested person. 
Pursuant to this provision, the ombudsman is responsible for 
monitoring the quality of patient care and to represent the 
interests of the patients. Within 60 days after his or her 
appointment, the ombudsman must report to the court at a 
hearing or in writing on the quality of patient care at the 
health care business. Subsequent reports are due not less 
frequently than every 60 days thereafter. If the ombudsman 
determines that the quality of patient care is declining 
significantly or is otherwise being materially compromised, the 
ombudsman must immediately notify the court by motion or 
written report (on notice to appropriate parties in interest). 
Section 1104(a) specifies that the ombudsman must maintain any 
information he or she obtains relating to patients as 
confidential. The ombudsman may not review confidential patient 
records unless the court provides prior approval, with 
restrictions to protect the confidentiality of such records.
    Section 1104(b) amends section 330(a)(1) of the Bankruptcy 
Code to authorize the payment of reasonable compensation to an 
ombudsman.
Section 1105. Debtor in possession; duty of trustee to transfer 
        patients
    Section 1105 amends section 704 of the Bankruptcy Code to 
require a chapter 7 trustee, chapter 11 trustee, or a chapter 
11 debtor in possession to use all reasonable and best efforts 
to transfer patients from a health care business that is being 
closed to an appropriate health care business. The transferee 
health care business should be in the vicinity of the 
transferor health care business, provide the patient with 
services that are substantially similar to those provided by 
the transferor health care business, and maintain a reasonable 
quality of care.
Section 1106. Exclusion from program participation not subject to 
        automatic stay
    Section 1106 amends section 362(b) of the Bankruptcy Code 
to except from the automatic stay the exclusion by the 
Secretary of Health and Human Services of a debtor from 
participation in the Medicare program or other specified 
Federal health care programs.

                    TITLE XII--TECHNICAL AMENDMENTS

Section 1201. Definitions
    Section 1201 amends the definitions contained in section 
101 of the Bankruptcy Code. Paragraphs (1), (2), (4), and (7) 
of section 1201 make technical changes to section 101 to 
convert each definition into a sentence (thereby facilitating 
future amendments to the separate paragraphs) and to 
redesignate the definitions in correct and completely numerical 
sequence. Paragraph (3) of section 1101 makes necessary and 
conforming amendments to cross references to the newly 
redesignated definitions.
    Paragraph (5) of section 1201 concerns single asset real 
estate debtors. A single asset real estate chapter 11 case 
presents special concerns. As the name implies, the principal 
asset in this type of case consists of some form of real 
estate, such as undeveloped land. Typically, the form of 
ownership of a single asset real estate debtor is a corporation 
or limited partnership. The largest creditor in a single asset 
real estate case is typically the secured lender who advanced 
the funds to the debtor to acquire the real property. Often, a 
single asset real estate debtor resorts to filing for 
bankruptcy relief for the sole purpose of staying an impending 
foreclosure proceeding or sale commenced by the secured lender. 
Foreclosure actions are filed when the debtor lacks sufficient 
cash flow to service the debt and maintain the property. Taxing 
authorities may also have liens against the property. Based on 
the nature of its principal asset, a single asset real estate 
debtor often has few, if any, unsecured creditors. If unsecured 
creditors exist, they may have only nominal claims against the 
single asset real estate debtor. Depending on the nature and 
ownership of any business operating on the debtor's real 
property, the debtor may have few, if any, employees. 
Accordingly, there may be little interest on behalf of 
unsecured creditors in a single asset real estate case to serve 
on a creditors' committee.
    In 1994, the Bankruptcy Code was amended to accord special 
treatment for a single asset real estate debtor. It defined 
this type of debtor as a bankruptcy estate comprised of a 
single piece of real property or project, other than 
residential real property with fewer than four residential 
units. The property or project must generate substantially all 
of the debtor's gross income. A debtor that conducts 
substantial business on the property beyond that relating to 
its operation is excluded from this definition. In addition, 
the definition fixed a monetary cap. To qualify as a single 
asset real estate debtor, the debtor could not have 
noncontingent, liquidated secured debts in excess of $4 
million.\71\ Subparagraph (5)(A) amends the definition of 
``single asset real estate'' to exclude family farmers from 
this definition. Paragraph (5)(B) amends section 101(51B) of 
the Bankruptcy Code to eliminate the $4 million debt limitation 
on single asset real estate. The present $4 million cap 
prevents the use of the expedited relief procedure in many 
commercial property reorganizations, and effectively provides 
an opportunity for a number of debtors to abusively file for 
bankruptcy in order to obtain the protection of the automatic 
stay against their creditors. As a result of this amendment, 
creditors in more cases will be able to obtain the expedited 
relief from the automatic stay which is made available under 
section 362(d)(3) of the Bankruptcy Code.
---------------------------------------------------------------------------
    \71\ See 11 U.S.C. Sec. 101(51B).
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    Paragraph (6) of section 1201, together with section 1214, 
respond to a 1997 Ninth Circuit case,\72\ in which two purchase 
money lenders (without knowledge that the debtor had recently 
filed an undisclosed chapter 11 case that was subsequently 
converted to chapter 7), funded the debtor's acquisition of an 
apartment complex and recorded their purchase-money deed of 
trust immediately following recordation of the deed to the 
debtors. Specifically, it amends the definition of ``transfer'' 
in section 101(54) of the Bankruptcy Code to include the 
``creation of a lien.'' This amendment gives expression to a 
widely held understanding since the enactment of the Bankruptcy 
Reform Act of 1978,\73\ that is, a transfer includes the 
creation of a lien.
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    \72\ Thompson v. Margen (In re McConville), 110 F.3d 47 (9th Cir.), 
cert. denied 522 U.S. 966 (1997). The bankruptcy trustee sought to 
avoid the lien created by the lenders' deed of trust by asserting that 
the deed was an unauthorized, postpetition transfer under section 
549(a) of the Bankruptcy Code. The lenders claimed that the voluntary 
transfer to them was a transfer of real property to good faith 
purchasers for value, which was thereby excepted it, under section 
549(c) of the Bankruptcy Code, from avoidance. The bankruptcy court 
held that the postpetition recordation of the lenders' deed of trust 
was without authorization under the Bankruptcy Code or by the court and 
was therefore avoidable under section 549(a), and that the lenders did 
not qualify under the section 549(c) exception as good faith purchasers 
of real property for value. The District Court subsequently affirmed 
the bankruptcy court's ruling granting the trustee the authority to 
avoid the lenders' lien. In re McConville, D.C. No. CV 94 03308 FMS 
(N.D. Cal.1994). On appeal, the lower court's decision in McConville 
was initially affirmed. The Ninth Circuit, however, subsequently issued 
an amended opinion, also affirming the lower court, and finally issued 
an opinion withdrawing its prior opinion and deciding the case on other 
grounds. It held that by obtaining secured credit from the lenders, 
after filing but before the appointment of a trustee, the debtors 
violated their fiduciary responsibility to their creditors.
    \73\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).
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Section 1202. Adjustment of dollar amounts
    Section 1202 corrects an omission in section 104(b) of the 
Bankruptcy Code to include a reference to section 522(f)(3).
Section 1203. Extension of time
    Section 1203 makes a technical amendment to correct a 
reference error described in amendment notes contained in the 
United States Code. As specified in the amendment note relating 
to subsection (c)(2) of section 108 of the Bankruptcy Code, the 
amendment made by section 257(b)(2)(B) of Public Law 99-554 
could not be executed as stated.
Section 1204. Technical amendments
    Section 1204 makes technical amendments to sections 
109(b)(2) (to strike an statutory cross reference), 541(b)(2) 
(to add ``or'' to the end of this provision), and 522(b)(1) (to 
replace ``product'' with ``products'').
Section 1205. Penalty for persons who negligently or fraudulently 
        prepare bankruptcy petitions
    Section 1205 amends section 110(j)(4) of the Bankruptcy 
Code to change the reference to attorneys from the singular 
possessive to the plural possessive.
Section 1206. Limitation on compensation of professional persons
    Section 328(a) of the Bankruptcy Code provides that a 
trustee or a creditors' and equity security holders' committee 
may, with court approval, obtain the services of a professional 
person on any reasonable terms and conditions of employment, 
including on a retainer, on an hourly basis, or on a contingent 
fee basis. Section 1206 amends section 328(a) to include 
compensation ``on a fixed or percentage fee basis'' in addition 
to the other specified forms of reimbursement.
Section 1207. Effect of conversion
    Section 1207 makes a technical correction in section 
348(f)(2) of the Bankruptcy Code to clarify that the first 
reference to property, like the subsequent reference to 
property, is a reference to property of the estate.
Section 1208. Allowance of administrative expenses
    Section 1208 amends section 503(b)(4) of the Bankruptcy 
Code to limit the types of compensable professional services 
rendered by an attorney or accountant that can qualify as 
administrative expenses in a bankruptcy case. Expenses for 
attorneys or accountants incurred by individual members of 
creditors' or equity security holders' committees are not 
recoverable, but expenses incurred for such professional 
services incurred by such committees themselves would be.
Section 1209. Exceptions to discharge
    Section 1209 of the bill amends section 523(a) of the 
Bankruptcy Code to correct a technical error in the placement 
of paragraph (15), which was added to section 523 by section 
304(e)(1) of the Bankruptcy Reform Act of 1994. This provision 
also amends section 523(a)(9), which makes nondischargeable any 
debt resulting from death or personal injury arising from the 
debtor's unlawful operation of a motor vehicle while 
intoxicated, to add ``watercraft, or aircraft'' after ``motor 
vehicle.'' Neither additional term should be defined or 
included as a ``motor vehicle'' in section 523(a)(9) and each 
is intended to comprise unpowered as well as motor-powered 
craft. Congress previously made the policy judgment that the 
equities of persons injured by drunk drivers outweigh the 
responsible debtor's interest in a fresh start, and here 
clarifies that the policy applies not only on land but also on 
the water and in the air. Viewed from a practical standpoint, 
this provision closes a loophole that gives intoxicated 
watercraft and aircraft operators preferred treatment over 
intoxicated motor vehicle drivers and denies victims of alcohol 
and drug related boat and plane accidents the same rights 
accorded to automobile accident victims under current law. 
Finally, this section amends corrects a grammatical error in 
section 523(e).
Section 1210. Effect of discharge
    Section 1210 makes technical amendments to correct errors 
in section 524(a)(3) of the Bankruptcy Code caused by section 
257(o)(2) of Public Law 99-554 and section 501(d)(14)(A) of 
Public Law 103-394.\74\
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    \74\ For a description of these errors, see the appropriate 
footnote and amendment notes in the United States Code.
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Section 1211. Protection against discriminatory treatment
    Section 1211 conforms a reference to its antecedent 
reference in section 525(c) of the Bankruptcy Code. The 
omission of ``student'' before ``grant'' in the second place it 
appears in section 525(c) made possible the interpretation that 
a broader limitation on lender discretion was intended, so that 
no loan could be denied because of a prior bankruptcy if the 
lending institution was in the business of making student 
loans. Section 1211 is intended to make clear that lenders 
involved in making government guaranteed or insured student 
loans are not barred by this Bankruptcy Code provision from 
denying other types of loans based on an applicant's bankruptcy 
history; only student loans and grants, therefore, cannot be 
denied under section 525(c) because of a prior bankruptcy.
Section 1212. Property of the estate
    Production payments are royalties tied to the production of 
a certain volume or value of oil or gas, determined without 
regard to production costs. They typically would be paid by an 
oil or gas operator to the owner of the underlying property on 
which the oil or gas is found. Under section 541(b)(4)(B)(ii) 
of the Bankruptcy Code, added by the Bankruptcy Reform Act of 
1994, production payments are generally excluded from the 
debtor's estate, provided they could be included only by virtue 
of section 542 of the Bankruptcy Code, which relates generally 
to the obligation of those holding property which belongs in 
the estate to turn it over to the trustee. Section 1212 adds to 
this proviso a reference to section 365 of the Bankruptcy Code, 
which authorizes the trustee to assume or reject an executory 
contract or unexpired lease. It thereby clarifies the original 
Congressional intent to generally exclude production payments 
from the debtor's estate.
Section 1213. Preferences
    Section 547 of the Bankruptcy Code authorizes a trustee to 
avoid a preferential payment made to a creditor by a debtor 
within 90 days of filing, whether the creditor is an insider or 
an outsider. Because of the concern that a corporate insider 
(such as an officer or directors who is a creditor of his or 
her own corporation has an unfair advantage over outside 
creditors, section 547 also authorizes a trustee to avoid a 
preferential payment made to an insider creditor between 90 
days and 1 year before filing. Several recent cases, including 
DePrizio,\75\ allowed the trustee to ``reach-back'' and avoid a 
transfer to a noninsider creditor which fell within the 90-day 
to 1-year time frame if an insider benefitted from the transfer 
in some way. This had the effect of discouraging lenders from 
obtaining loan guarantees, lest transfers to the lender be 
vulnerable to recapture by reason of the debtor's insider 
relationship with the loan guarantor. Section 202 of the 
Bankruptcy Reform Act of 1994 addressed the DePrizio problem by 
inserting a new section 550(c) into the Bankruptcy Code to 
prevent avoidance or recovery from a noninsider creditor during 
the 90-day to 1-year period even though the transfer to the 
noninsider benefitted an insider creditor. The 1994 amendments, 
however, failed to make a corresponding amendment to section 
547, which deals with the avoidance of preferential transfers. 
As a result, a trustee could still utilize section 547 to avoid 
a preferential lien given to a noninsider bank, more than 90 
days but less than 1 year before bankruptcy, if the transfer 
benefitted an insider guarantor of the debtor's debt. 
Accordingly, section 1213 makes a perfecting amendment to 
section 547 to provide that if the trustee avoids a transfer 
given by the debtor to a noninsider for the benefit of an 
insider creditor between 90 days and 1 year before filing, that 
avoidance is valid only with respect to the insider creditor. 
Thus both the previous amendment to section 550 and the 
perfecting amendment to section 547 protect the noninsider from 
the avoiding powers of the trustee exercised with respect to 
transfers made during the 90-day to 1 year pre-filing period.
---------------------------------------------------------------------------
    \75\ Levit v. Ingersoll Rand Fin. Corp., 874 F.2d 1186 (7th Cir. 
1989); see, e.g., Ray v. City Bank and Trust Co. (In re C-L Cartage 
Co.), 899 F.2d 1490 (6th Cir. 1990); Manufacturers Hanover Leasing 
Corp. v. Lowrey (In re Robinson Bros. Drilling, Inc.), 892 F.2d 850 
(10th Cir. 1989).
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Section 1214. Postpetition transactions
    Section 1214 amends section 549(c) of the Bankruptcy Code 
to clarify its application to an interest in real property. 
This amendment should be construed in conjunction with section 
1201 of the Act.
Section 1215. Disposition of property of the estate
    Section 1215 of the bill amends section 726(b) of the 
Bankruptcy Code to strike an erroneous reference to a 
nonexistent section.\76\
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    \76\ For a description of the error, see the appropriate footnote 
and amendment notes in the United States Code.
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Section 1216. General provisions
    Section 1216 amends section 901(a) of the Bankruptcy Code 
to correct an omission in a list of sections applicable to 
cases under chapter 9 of title 11 of the United States Code.
Section 1217. Abandonment of railroad line
    Section 1217 amends section 1170(e)(1) of the Bankruptcy 
Code to reflect the fact that section 11347 of title 49 of the 
United States Code was repealed by section 102(a) of Public Law 
104-88 and that provisions comparable to section 11347 appear 
in section 11326(a) of title 49 of the United States Code.
Section 1218. Contents of plan
    Section 1218 amends section 1172(c)(1) of the Bankruptcy 
Code to reflect the fact that section 11347 of title 49 of the 
United States Code was repealed by section 102(a) of Public Law 
104-88 and that provisions comparable to section 11347 appear 
in section 11326(a) of title 49 of the United States Code.
Section 1219. Discharge under chapter 12
    Section 1219 amends section 1228 of the Bankruptcy Code, 
dealing with discharge under chapter 12, to correct erroneous 
references.
Section 1220. Bankruptcy cases and proceedings
    Section 1220 amends section 1334(d) of title 28 of the 
United States Code to correct erroneous references.\77\
---------------------------------------------------------------------------
    \77\ For a description of the errors, see the appropriate footnote 
and amendment notes in the United States Code.
---------------------------------------------------------------------------
Section 1221. Knowing disregard of bankruptcy law or rule
    This section amends section 156(a) of title 18 of the 
United States Code to make stylistic changes and correct a 
reference to the Bankruptcy Code.
Section 1222. Transfers made by nonprofit charitable corporations
    Section 1222 amends section 363(d) of the Bankruptcy Code 
to restrict the authority of a trustee to use, sell, or lease 
property by a nonprofit corporation or trust. First, the use, 
sell or lease must be in accordance with applicable 
nonbankruptcy law and to the extent it is not inconsistent with 
any relief granted under certain specified provisions of 
section 362 of the Bankruptcy Code concerning the applicability 
of the automatic stay. Second, section 1222 imposes similar 
restrictions with regard to plan confirmation requirements for 
chapter 11 cases. Third, it amends section 541 of the 
Bankruptcy Code to provide that any property of a bankruptcy 
estate in which the debtor is a nonprofit corporation (as 
described in certain provisions of the Internal Revenue Code) 
may not be transferred to an entity that is not a corporation, 
but only under the same conditions that would apply if the 
debtor was not in bankruptcy. The amendments made by this 
section apply to cases pending on the date of enactment or to 
cases filed after such date. Section 1222 provides that a court 
may not confirm a plan without considering whether this 
provision would substantially affect the rights of a party in 
interest who first acquired rights with respect to the debtor 
postpetition. Nothing in this provision may be construed to 
require the court to remand or refer any proceeding, issue, or 
controversy to any other court or to require the approval of 
any other court for the transfer of property.
Section 1223. Protection of valid purchase money security interests
    Section 1223 extends the applicable perfection period for a 
security interest in property of the debtor in section 
547(c)(3)(B) of the Bankruptcy Code from 20 to 30 days.
Section 1224. Bankruptcy judgeships
    The substantial increase in bankruptcy case filings clearly 
creates a need for additional bankruptcy judgeships. In the 
105th Congress, the House responded to this need by passing 
H.R. 1596, which would have created additional permanent and 
temporary bankruptcy judgeships and extended an existing 
temporary position. Section 1224 generally incorporates H.R. 
1596 as it passed the House with provisions extending five 
existing temporary judgeships.
Section 1225. Compensating trustees
    Section 1225 amends section 1326 of the Bankruptcy Code to 
provide that if a chapter 7 trustee has been allowed 
compensation as a result of the conversion or dismissal of the 
debtor's prior case pursuant to section 707(b) and some portion 
of that compensation remains unpaid, the amount of any such 
unpaid compensation must be repaid in the debtor's subsequent 
chapter 13 case. This payment must be prorated over the term of 
the plan and paid on a monthly basis. The amount of the monthly 
payment may not to exceed the greater of $25 or the amount 
payable to unsecured nonpriority creditors as provided by the 
plan, multiplied by 5 percent and the result divided by the 
number of months of the plan.
Section 1226. Amendment to section 362 of title 11, United States Code
    Section 1226 amends section 362(b) of the Bankruptcy Code 
to except from the automatic stay the creation or perfection of 
a statutory lien for an ad valorem property tax or for a 
special tax or special assessment on real property (whether or 
not ad valorem) that is imposed by a governmental unit, if such 
tax or assessment becomes due after the filing of the petition.
Section 1227. Judicial education
    Section 1227 requires the Director of the Federal Judicial 
Center, in consultation with the Director of the Executive 
Office for United States Trustees, to develop materials and 
conduct training as may be useful to the courts in implementing 
this Act, including the needs-based reforms under section 
707(b) (as amended by this Act) and amendments pertaining to 
reaffirmation agreements.
Section 1228. Reclamation
    Section 1228(a) amends section 546 of the Bankruptcy Code 
to provide that the rights of a trustee under sections 544(a), 
545, 547, and 549 are subject to the right of a seller of goods 
to reclaim goods sold in the ordinary course of business to the 
debtor if (1) the debtor received these goods while insolvent, 
and (2) written demand for reclamation of the goods is made not 
later than 45 days after their receipt by the debtor or within 
20 days after the commencement of the bankruptcy case. This 
provision specifies, however, that it is subject to sections 
546(d) and 507(c) as well as the prior rights of holders of 
security interests in such goods or the proceeds thereof. If 
the seller fails to provide the notice described in this 
provision, such seller may still assert the rights specified in 
section 503(b)(7).
    Section 1228(b) amends section 503(b) to provide that the 
value of any goods received by a debtor not later than 20 days 
after the commencement of a bankruptcy case in which the goods 
have been sold to the debtor in the ordinary course of the 
debtor's business is an allowed administrative expense.
Section 1229. Providing requested tax documents to the court
    Section 1229(a) provides that the court may not grant a 
discharge to an individual in a case under chapter 7 unless 
requested tax documents have been provided to the court. 
Section 1229(b) similarly provides that the court may not 
confirm a chapter 11 or 13 plan unless requested tax documents 
have been filed with the court. Section 1229(c) directs the 
court to destroy documents submitted in support of a bankruptcy 
claim not sooner than 3 years after the date of the conclusion 
of a bankruptcy case filed by an individual debtor under 
chapter 7, 11 or 13. In the event of a pending audit or 
enforcement action, the court may extend the time for 
destruction of such requested tax documents.
Section 1230. Encouraging creditworthiness
    Section 1230(a) expresses the sense of the Congress that 
lenders may sometimes offer credit to consumers 
indiscriminately and that resulting consumer debt may be a 
major contributing factor leading to consumer insolvency.
    Section 1230(b) directs the Board of Governors of the 
Federal Reserve System (Board) to study certain consumer credit 
industry solicitation and credit granting practices as well as 
the effect of such practices on consumer debt and insolvency. 
The specified practices involve the solicitation and extension 
of credit on an indiscriminate basis that encourages consumers 
to accumulate additional debt and where the lender fails to 
ensure that the consumer borrower is capable of repaying the 
debt.
    Section 1230(c) requires the study described in subsection 
(b) to be prepared within 12 months from the date of the Act's 
enactment. This provision authorizes the Board to issue 
regulations requiring additional disclosures to consumers and 
permits it to undertake any other actions consistent with its 
statutory authority, which are necessary to ensure responsible 
industry practices and to prevent resulting consumer debt and 
insolvency.
Section 1231. Property no longer subject to redemption
    Section 1231 amends section 541(b) of the Bankruptcy Code 
to provide that, under certain circumstances, an interest of 
the debtor in tangible personal property (other than 
securities, or written or printed evidences of indebtedness or 
title) that the debtor pledged or sold as collateral for a loan 
or advance of money given by a person licensed under law to 
make such loan or advance is not property of the estate. 
Subject to subchapter III of chapter 5 of the Bankruptcy Code, 
the provision applies where (a) the property is in the 
possession of the pledgee or transferee; (b) the debtor has no 
obligation to repay the money, redeem the collateral, or buy 
back the property at a stipulated price; and (c) neither the 
debtor nor the trustee have exercised any right to redeem 
provided under the contract or State law in a timely manner as 
provided under State law and section 108(b) of the Bankruptcy 
Code.
Section 1232. Trustees
    Section 1232 establishes a series of procedural protections 
for chapter 7 and chapter 13 trustees concerning final agency 
decisions relating to trustee appointments and future case 
assignments. Section 1232(a) amends section 586(d) of title 28 
of the United States Code to allow a chapter 7 or chapter 13 
trustee to obtain judicial review of such decisions by 
commencing an action in the United States district court after 
the trustee exhausts all available administrative remedies. 
Unless the trustee elects an administrative hearing on the 
record, the trustee is deemed to have exhausted all 
administrative remedies under this provision if the agency 
fails to make a final agency decision within 90 days after the 
trustee requests an administrative remedy. Section 1232(a) 
requires the Attorney General to promulgate procedures to 
implement this provision. It further provides that the agency's 
decision must be affirmed by the district court unless it is 
unreasonable and without cause based on the administrative 
record before the agency.
    Section 1232(b) amends section 586(e) of title 28 of the 
United States Code to permit a chapter 13 trustee to obtain 
judicial review of certain final agency actions relating to 
claims for actual, necessary expenses under section 586(e). The 
trustee may commence an action in the United States district 
court where the trustee resides. The agency's decision must be 
affirmed by the district court unless it is unreasonable and 
without cause based on the administrative record before the 
agency. It directs the Attorney General to prescribe procedures 
to implement this provision.
Section 1233. Bankruptcy forms
    Section 1233 amends section 2075 of title 28 of the United 
States Code to require the bankruptcy rules promulgated under 
this provision to prescribe a form for the statement specified 
under section 707(b)(2)(C) of the Bankruptcy Code and to 
provide general rules on the content of such statement.
Section 1234. Expedited appeals of bankruptcy cases to courts of 
        appeals
    Currently, appeals from decisions rendered by the 
bankruptcy court are either heard by the district court or a 
bankruptcy appellate panel. In addition to the time and cost 
factors attendant to the present appellate system, decisions 
rendered by a district court as an appellate court are not 
binding and lack stare decisis value.
    To address these problems, section 1234(a) amends section 
158(d) of title 28 of the United States Code to deem a 
judgment, decision, order, or decree of a bankruptcy judge to 
be a judgment, decision, order, or decree of the district court 
entered 31 days after an appeal of such judgment, decision, 
order or decree is filed with the district court, unless 
certain factors apply. These factors are (a) the district court 
issues a decision on the appeal within 30 days after such 
appeal is filed or enters an order extending the 30-day period 
for cause upon motion of a party or by the court sua sponte; or 
(b) all parties to the appeal file written consent that the 
district court may retain such appeal until it enters a 
decision. For purposes of this provision, section 1234(a) 
provides that an appeal is considered filed with the district 
court on the date on which the notice of appeal is filed, 
except in a case where a party has made an election that the 
appeal be heard by the district court. If the appellant so 
elects, then the appeal is considered filed with the district 
court on the date such election is made.
    Section 1234(a) provides that the courts of appeals shall 
have jurisdiction of appeals from (1) all final judgments, 
decisions, orders, and decrees of district courts entered under 
section 158(a); (2) all final judgments, decisions, orders, and 
decrees of bankruptcy appellate panels entered under section 
158(b); (3) all judgments, decisions, orders, and decrees of 
district courts entered under section 158(d) (as amended by 
this Act) to the extent they are reviewable by a district court 
pursuant to section 158(a). Section 1234(a) further provides 
that the court of appeals may use its discretion, in accordance 
with rules prescribed by the Supreme Court, to exercise 
jurisdiction over an appeal from an interlocutory judgment, 
decision, order, or decree under section 158(e)(3) (as added by 
this Act).
    Section 1234(b) makes technical and conforming amendments 
to implement this provision.
Section 1235. Exemptions
    Section 1235 makes a conforming amendment to section 
522(g)(2) of the Bankruptcy Code.

                 TITLE XIII--CONSUMER CREDIT DISCLOSURE

Section 1301. Enhanced disclosures under an open end credit plan
    Section 1301(a) amends section 127(b) of the Truth in 
Lending Act to mandate the inclusion of certain specified 
disclosures in billing statements with respect to various open 
end credit plans. In general, these statements must contain an 
example of the time it would take to repay a stated balance at 
a specified interest rate. In addition, they must warn the 
borrower that making only the minimum payment will increase the 
amount of interest that must be paid and the time it takes to 
repay the balance. Further, a toll-free telephone number must 
be provided where the borrower can obtain an estimate of the 
time it would take to repay the balance if only minimum 
payments are made. With respect to a creditor whose compliance 
with title 15 of the United States Code is enforced by the 
Federal Trade Commission (FTC), the billing statement must 
advise the borrower to contact the FTC at a toll-free telephone 
number to obtain an estimate of the time it would take to repay 
the borrower's balance. Section 1401(a) permits the creditor to 
substitute an example based on a higher interest rate. As 
necessary, the provision requires the Board of Governors of the 
Federal Reserve System (``Board''), to periodically recalculate 
by rule the interest rate and repayment periods specified in 
Section 1401(a). With respect to the toll-free telephone 
number, section 1401(a) permits a third party to establish and 
maintain it. Under certain circumstances, the toll-free number 
may connect callers to an automated device.
    For a period not to exceed 24 months from the effective 
date of the Act, the Board is required to establish and 
maintain a toll-free telephone number (or provide a toll-free 
telephone number established and maintained by a third party) 
for use by creditors that are depository institutions (as 
defined in section 3 of the Federal Deposit Insurance Act), 
including a Federal or State credit union (as defined in 
section 101 of the Federal Credit Union Act), with total assets 
not exceeding $250 million. Not later than 6 months prior to 
the expiration of the 24-month period, the Board must submit a 
report on this program to the Committee on Banking, Housing, 
and Urban Affairs of the Senate, and the Committee on Banking 
and Financial Services of the House of Representatives.
    In addition, section 1301(a) requires the Board to 
establish a detailed table illustrating the approximate number 
of months that it would take to repay an outstanding balance if 
a consumer pays only the required minimum month payments and if 
no other advances are made. The table should reflect a 
significant number of different annual percentage rates, and 
account balances, minimum payment amounts. The Board must also 
promulgate regulations providing instructional guidance 
regarding the manner in which the information contained in the 
tables should be used to respond to a request by an obligor 
under this provision. Section 1401(a) provides that the 
disclosure requirements of this provision are inapplicable to 
any charge card account where the primary purpose of which is 
to require payment of charges in full each month.
    Section 1301(b)(1) requires the Board to promulgate 
regulations implementing section 1301(a)'s amendments to 
section127. Section 1301(b)(2) specifies that the effective 
date of the amendments under subsection (a) and the regulations 
required under this provision shall not take effect until the 
later of 18 months after the date of enactment of this Act or 
12 months after the publication of final regulations by the 
Board.
    Section 1301(c) authorizes the Board to conduct a study to 
determine the types of information available to potential 
borrowers from consumer credit lending institutions regarding 
factors qualifying potential borrowers for credit, repayment 
requirements, and the consequences of default. The provision 
specifies the factors that should be considered. The findings 
of such study must be submitted to Congress and include 
recommendations for legislative initiatives, based on the 
Board's findings.
Section 1302. Enhanced disclosure for credit extensions secured by a 
        dwelling
    Section 1302(a)(1) amends section 127A(a)(13) of the Truth 
in Lending Act to require a statement in any case in which the 
extension of credit exceeds the fair market value of a dwelling 
specifying that the interest on the portion of the credit 
extension that is greater than the fair market value of the 
dwelling is not tax deductible for Federal income tax purposes.
    Section 1302(a)(2) amends section 147(b) of the Truth in 
Lending Act to require an advertisement relating to an 
extension of credit that may exceed the fair market value of a 
dwelling and such advertisement is disseminated in paper form 
to the public or through the Internet (as opposed to 
dissemination by radio or television) to include a specified 
statement. The statement must disclose that the interest on the 
portion of the credit extension that is greater than the fair 
market value of the dwelling is not tax deductible for Federal 
income tax purposes and that the consumer should consult a tax 
advisor for further information regarding the deductibility of 
interest and charges.
    With respect to non-open end credit extensions, section 
1302(b)(1) amends section 128 of the Truth in Lending Act to 
require that a consumer receive a specified statement at the 
time he or she applies for credit with respect to a consumer 
credit transaction secured by the consumer's principal dwelling 
and where the credit extension may exceed the fair market value 
of the dwelling must contain a specified statement. The 
statement must disclose that the interest on the portion of the 
credit extension that exceeds the dwelling's fair market value 
is not tax deductible for Federal income tax purposes and that 
the consumer should consult a tax advisor for further 
information regarding the deductibility of interest and 
charges.
    Section 1302(b)(2) requires certain advertisements 
disseminated in paper form to the public or through the 
Internet that relate to a consumer credit transaction secured 
by a consumer's principal dwelling where the extension of 
credit may exceed the dwelling's fair market value to contain 
specified statements. These statements advise that the interest 
on the portion of the credit extension that is greater than the 
fair market value of the dwelling is not tax deductible for 
Federal income tax purposes and that the consumer should 
consult a tax advisor for further information regarding the 
deductibility of interest and charges.
    Section 1302(c)(1) requires the Board to promulgate 
regulations implementing the amendments effectuated by section 
1402. Section 1302(c)(2) provides that the these regulations 
shall not take effect until the later of 12 months following 
the Act's enactment date or 12 months after the date of 
publication of such final regulations by the Board.
Section 1303. Disclosures related to ``introductory rates''
    Section 1303(a) amends section 127(c) of the Truth in 
Lending Act by adding a provision add further requirements for 
applications, solicitations and related materials that are 
subject to section 127(c)(1). With respect to an application or 
solicitation to open a credit card account and all promotional 
materials accompanying such application or solicitation 
involving an ``introductory rate'' offer, such materials must 
do the following if they offer a temporary annual percentage 
rate of interest:

        (1) use the term ``introductory'' in immediate 
        proximity to each listing of the temporary annual 
        percentage interest rate applicable to such account;
        (2) if the annual percentage interest rate that will 
        apply after the end of the temporary rate period will 
        be a fixed rate, the time period in which the 
        introductory period will end and the annual percentage 
        rate that will apply after the end of the introductory 
        period must be clearly and conspicuously stated in a 
        prominent location closely proximate to the first 
        listing of the temporary annual percentage rate;
        (3) if the annual percentage rate that will apply 
        after the end of the temporary rate period will vary in 
        accordance with an index, the time period in which the 
        introductory period will end and the rate that will 
        apply after that, based on an annual percentage rate 
        that was in effect 60 days before the date of mailing 
        of the application or solicitation must be clearly and 
        conspicuously stated in a prominent location closely 
        proximate to the first listing of the temporary annual 
        percentage rate.

    The second and third provisions described above do not 
apply with respect to any listing of a temporary annual 
percentage rate on an envelope or other enclosure in which an 
application or solicitation to open a credit card account is 
mailed.
    With respect to an application or solicitation to open a 
credit card account for which disclosure is required pursuant 
to section 127(c)(1), section 1303(a) specifies that certain 
statements be made if the rate of interest is revocable under 
any circumstance or upon any event. The statements must be 
clearly and conspicuously appear in a prominent manner on or 
with the application or solicitation. The disclosures include a 
general description of the circumstances that may result in the 
revocation of the temporary annual percentage rate and an 
explanation of the type of interest rate that will apply upon 
revocation of the temporary rate.
    To implement this provision, section 1303(b) amends section 
127(c) to define various relevant terms and requires the Board 
to promulgate regulations. The provision does not become 
effective until the earlier of 12 months after the Act's 
enactment date or 12 months after the date of public of such 
final regulations.
Section 1304. Internet-based credit card solicitations
    Section 1304(a) amends section 127(c) of the Truth in 
Lending Act to require any solicitation to open a credit card 
account for an open end consumer credit plan through the 
Internet or other interactive computer service to clearly and 
conspicuously include the disclosures required under section 
127(c)(1)(A) and (B). It also specifies that the disclosure 
required pursuant to section 127(c)(1)(A) be readily accessible 
to consumers in close proximity to the solicitation and be 
updated regularly to reflect current policies, terms, and fee 
amounts applicable to the credit card account. Section 1304(a) 
defines terms relevant to the Internet.
    Section 1304(b) requires the Board to promulgate 
regulations implementing this provision. It also provides that 
the amendments effectuated by section 1404 do not take effect 
until the later of 12 months after the Act's enactment date or 
12 months after the date of publication of such regulations.
Section 1305. Disclosures related to late payment deadlines and 
        penalties
    Section 1305(a) amends section 127(b) of the Truth in 
Lending Act to provide that if a late payment fee is to be 
imposed due to the obligor's failure to make payment on or 
before a required payment due date, the billing statement must 
specify the date on which that payment is due (or if different 
the earliest date on which a late payment fee may be charged) 
and the amount of the late payment fee to be imposed if payment 
is made after such date.
    Section 1305(b) requires the Board to promulgate 
regulations implementing this provision. The amendments 
effectuated by this provision and the regulations promulgated 
thereunder shall not take effect until the later of 12 months 
after the Act's enactment date or 12 months after the date of 
publication of the regulations.
Section 1306. Prohibition on certain actions for failure to incur 
        finance charges
    Section 1306(a) amends section 127 to add a provision 
prohibiting a creditor of an open end consumer credit plan from 
terminating an account prior to its expiration date solely 
because the consumer has not incurred finance charges on the 
account. The provision does not prevent the creditor from 
terminating such account for inactivity for three or more 
consecutive months.
    Section 1306(b) requires the Board to promulgate 
regulations implementing the amendments effectuated by section 
1306(a) and provides that they do not become effective until 
the later of 12 months after the Act's enactment date or 12 
months after the date of publication of such final regulations.
Section 1307. Dual use credit card
    Section 1307(a) provides that the Board may conduct a study 
and submit a report to Congress containing its analysis of 
consumer protections under existing law to limit the liability 
of consumers for unauthorized use of a debit card or similar 
access device. The report must include recommendations for 
legislative initiatives, if any, based on its findings.
    Section 1307(b) provides that the Board, in preparing its 
report, may include analysis of section 909 of the Electronic 
Fund Transfer Act to the extent this provision is in effect at 
the time of the report and the implementing regulations. In 
addition, the analysis may pertain to whether any voluntary 
industry rules have enhanced or may enhance the level of 
protection afforded consumers in connection with such 
unauthorized use liability and whether amendments to the 
Electronic Fund Transfer Act or implementing regulations are 
necessary to further address adequate protection for consumers 
concerning unauthorized use liability.
Section 1308. Study of bankruptcy impact of credit extended to 
        dependent students
    Section 1308 directs the Board of Governors of the Federal 
Reserve to study the impact that the extension of credit to 
dependents (defined under the Internal Revenue Code of 1986) 
who are enrolled in postsecondary educational institutions has 
on the rate of bankruptcy cases filed. The report must be 
submitted to the Senate and House of Representatives no later 
than 1 year from the Act's enactment date.
Section 1309. Clarification of clear and conspicuous
    Section 1309(a) requires the Board (in consultation with 
other Federal banking agencies, the National Credit Union 
Administration Board, and the Federal Trade Commission) to 
promulgate regulations not later than 6 months after the Act's 
enactment date to provide guidance on the meaning of the term 
``clear and conspicuous'' as it is used in section 
127(b)(11)(A), (B) and (C) and section 127(c)(6)(A)(ii) and 
(iii) of the Truth in Lending Act.
    Section 1309(b) provides that regulations promulgated under 
section 1309(a) shall include examples of clear and conspicuous 
model disclosures for the purposes of disclosures required 
under the Truth in Lending Act provisions set forth therein.
    Section 1309(c) requires the Board, in promulgating 
regulations under this provision, to ensure that the clear and 
conspicuous standard required for disclosures made under the 
Truth in Lending Act provisions set forth in section 1309(a) 
can be implemented in a manner that results in disclosures 
which are reasonably understandable and designed to call 
attention to the nature and significance of the information in 
the notice.
Section 1310. Enforcement of certain foreign judgements barred
    Section 1310(a) provides that notwithstanding any other 
provision of law or contract, a court within the United States 
shall not recognize or enforce any judgment rendered in a 
foreign court if, by clear and convincing evidence, the court 
in which recognition or enforcement of the judgment is sought 
determines that the judgment gives effect to any purported 
right or interest derived, directly or indirectly, from any 
fraudulent misrepresentation and fraudulent omission that 
occurred in the United States during the period beginning on 
January 1, 1975, and ending on December 31, 1993.
    Section 1310(b) provides that section 1310(a) shall not 
prevent recognition or enforcement of a judgment rendered in a 
foreign court if the foreign tribunal rendering judgment giving 
effect to the right or interest concerned determines that no 
fraudulent misrepresentation or fraudulent omission described 
in section 1310(a) occurred.

      TITLE XIV. GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

Section 1401. Effective date; application of amendments
    Section 1401(a) states that the Act shall take effect 180 
days after the date of enactment, unless otherwise specified in 
this Act.
    Section 1401(b) provides that the amendments made by this 
Act shall not apply with respect to cases commenced under the 
Bankruptcy Code before the Act's effective date, unless other 
specified in this Act.

         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 italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 11, UNITED STATES CODE

                          TITLE 11--BANKRUPTCY

Chap.                                                               Sec.

      General Provisions.............................................101
     * * * * * * *
      Ancillary and Other Cross-Border Cases........................1501

                     CHAPTER 1--GENERAL PROVISIONS

Sec.
101.  Definitions.
     * * * * * * *
111.  Credit counseling services; financial management instructional 
          courses.

Sec. 101. Definitions

    [In this title--] In this title the following definitions 
shall apply:
            (1) The term ``accountant'' means accountant 
        authorized under applicable law to practice public 
        accounting, and includes professional accounting 
        association, corporation, or partnership, if so 
        authorized[;].
            (2) The term ``affiliate'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (D) entity that operates the business or 
                substantially all of the property of the debtor 
                under a lease or operating agreement[;].
            (3) The term ``assisted person'' means any person 
        whose debts consist primarily of consumer debts and 
        whose non-exempt assets are less than $150,000.
            (4) The term ``attorney'' means attorney, 
        professional law association, corporation, or 
        partnership, authorized under applicable law to 
        practice law[;].
            (4A) The term ``bankruptcy assistance'' means any 
        goods or services sold or otherwise provided to an 
        assisted person with the express or implied purpose of 
        providing information, advice, counsel, document 
        preparation, or filing, or attendance at a creditors' 
        meeting or appearing in a proceeding on behalf of 
        another or providing legal representation with respect 
        to a case or proceeding under this title.
            (5) The term ``claim'' means--
                    (A) * * *
                    (B) right to an equitable remedy for breach 
                of performance if such breach gives rise to a 
                right to payment, whether or not such right to 
                an equitable remedy is reduced to judgment, 
                fixed, contingent, matured, unmatured, 
                disputed, undisputed, secured, or unsecured[;].
            (6) The term ``commodity broker'' means futures 
        commission merchant, foreign futures commission 
        merchant, clearing organization, leverage transaction 
        merchant, or commodity options dealer, as defined in 
        section 761 of this title, with respect to which there 
        is a customer, as defined in section 761 of this 
        title[;].
            (7) The term ``community claim'' means claim that 
        arose before the commencement of the case concerning 
        the debtor for which property of the kind specified in 
        section 541(a)(2) of this title is liable, whether or 
        not there is any such property at the time of the 
        commencement of the case[;].
            (8) The term ``consumer debt'' means debt incurred 
        by an individual primarily for a personal, family, or 
        household purpose[;].
            (9) The term ``corporation''--
                    (A) * * *
                    (B) does not include limited 
                partnership[;].
            (10) The term ``creditor'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) entity that has a community claim[;].
            (10A) The term ``current monthly income''--
                    (A) means the average monthly income from 
                all sources which the debtor, or in a joint 
                case, the debtor and the debtor's spouse, 
                receive without regard to whether the income is 
                taxable income, derived during the 6-month 
                period preceding the date of determination; and
                    (B) includes any amount paid by any entity 
                other than the debtor (or, in a joint case, the 
                debtor and the debtor's spouse), on a regular 
                basis to the household expenses of the debtor 
                or the debtor's dependents (and, in a joint 
                case, the debtor's spouse if not otherwise a 
                dependent), but excludes benefits received 
                under the Social Security Act and payments to 
                victims of war crimes or crimes against 
                humanity on account of their status as victims 
                of such crimes.
            (11) The term ``custodian'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) trustee, receiver, or agent under 
                applicable law, or under a contract, that is 
                appointed or authorized to take charge of 
                property of the debtor for the purpose of 
                enforcing a lien against such property, or for 
                the purpose of general administration of such 
                property for the benefit of the debtor's 
                creditors[;].
            (12) The term ``debt'' means liability on a 
        claim[;].
            [(12A) ``debt for child support'' means a debt of a 
        kind specified in section 523(a)(5) of this title for 
        maintenance or support of a child of the debtor;]
            (12A) The term ``debt relief agency'' means any 
        person who provides any bankruptcy assistance to an 
        assisted person in return for the payment of money or 
        other valuable consideration, or who is a bankruptcy 
        petition preparer under section 110, but does not 
        include--
                    (A) any person that is an officer, 
                director, employee or agent of that person;
                    (B) a nonprofit organization which is 
                exempt from taxation under section 501(c)(3) of 
                the Internal Revenue Code of 1986;
                    (C) a creditor of the person, to the extent 
                that the creditor is assisting the person to 
                restructure any debt owed by the person to the 
                creditor;
                    (D) a depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act) 
                or any Federal credit union or State credit 
                union (as those terms are defined in section 
                101 of the Federal Credit Union Act), or any 
                affiliate or subsidiary of such a depository 
                institution or credit union; or
                    (E) an author, publisher, distributor, or 
                seller of works subject to copyright protection 
                under title 17, when acting in such capacity.
            (13) The term ``debtor'' means person or 
        municipality concerning which a case under this title 
        has been commenced[;].
            (13A) The term ``debtor's principal residence''--
                    (A) means a residential structure, 
                including incidental property, without regard 
                to whether that structure is attached to real 
                property; and
                    (B) includes an individual condominium or 
                cooperative unit, a mobile or manufactured 
                home, or trailer.
            [(14) ``disinterested person'' means person that--
                    [(A) is not a creditor, an equity security 
                holder, or an insider;
                    [(B) is not and was not an investment 
                banker for any outstanding security of the 
                debtor;
                    [(C) has not been, within three years 
                before the date of the filing of the petition, 
                an investment banker for a security of the 
                debtor, or an attorney for such an investment 
                banker in connection with the offer, sale, or 
                issuance of a security of the debtor;
                    [(D) is not and was not, within two years 
                before the date of the filing of the petition, 
                a director, officer, or employee of the debtor 
                or of an investment banker specified in 
                subparagraph (B) or (C) of this paragraph; and
                    [(E) does not have an interest materially 
                adverse to the interest of the estate or of any 
                class of creditors or equity security holders, 
                by reason of any direct or indirect 
                relationship to, connection with, or interest 
                in, the debtor or an investment banker 
                specified in subparagraph (B) or (C) of this 
                paragraph, or for any other reason;]
            (14) The term ``disinterested person'' means a 
        person that--
                    (A) is not a creditor, an equity security 
                holder, or an insider;
                    (B) is not and was not, within 2 years 
                before the date of the filing of the petition, 
                a director, officer, or employee of the debtor; 
                and
                    (C) does not have an interest materially 
                adverse to the interest of the estate or of any 
                class of creditors or equity security holders, 
                by reason of any direct or indirect 
                relationship to, connection with, or interest 
                in, the debtor, or for any other reason.
            (14A) The term ``domestic support obligation'' 
        means a debt that accrues before or after the entry of 
        an order for relief under this title, including 
        interest that accrues on that debt as provided under 
        applicable nonbankruptcy law notwithstanding any other 
        provision of this title, that is--
                    (A) owed to or recoverable by--
                            (i) a spouse, former spouse, or 
                        child of the debtor or such child's 
                        parent, legal guardian, or responsible 
                        relative; or
                            (ii) a governmental unit;
                    (B) in the nature of alimony, maintenance, 
                or support (including assistance provided by a 
                governmental unit) of such spouse, former 
                spouse, or child of the debtor or such child's 
                parent, without regard to whether such debt is 
                expressly so designated;
                    (C) established or subject to establishment 
                before or after entry of an order for relief 
                under this title, by reason of applicable 
                provisions of--
                            (i) a separation agreement, divorce 
                        decree, or property settlement 
                        agreement;
                            (ii) an order of a court of record; 
                        or
                            (iii) a determination made in 
                        accordance with applicable 
                        nonbankruptcy law by a governmental 
                        unit; and
                    (D) not assigned to a nongovernmental 
                entity, unless that obligation is assigned 
                voluntarily by the spouse, former spouse, 
                child, or parent, legal guardian, or 
                responsible relative of the child for the 
                purpose of collecting the debt.
            (15) The term ``entity'' includes person, estate, 
        trust, governmental unit, and United States trustee[;].
            (16) The term ``equity security'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) warrant or right, other than a right to 
                convert, to purchase, sell, or subscribe to a 
                share, security, or interest of a kind 
                specified in subparagraph (A) or (B) of this 
                paragraph[;].
            (17) The term ``equity security holder'' means 
        holder of an equity security of the debtor[;].
            (18) The term ``family farmer'' means--
                    (A) * * *
                    (B) corporation or partnership in which 
                more than 50 percent of the outstanding stock 
                or equity is held by one family, or by one 
                family and the relatives of the members of such 
                family, and such family or such relatives 
                conduct the farming operation, and
                            (i) * * *

           *       *       *       *       *       *       *

                            (iii) if such corporation issues 
                        stock, such stock is not publicly 
                        traded[;].
            (19) The term ``family farmer with regular annual 
        income'' means family farmer whose annual income is 
        sufficiently stable and regular to enable such family 
        farmer to make payments under a plan under chapter 12 
        of this title[;].
            (20) The term ``farmer'' means (except when such 
        term appears in the term ``family farmer'') person that 
        received more than 80 percent of such person's gross 
        income during the taxable year of such person 
        immediately preceding the taxable year of such person 
        during which the case under this title concerning such 
        person was commenced from a farming operation owned or 
        operated by such person[;].
            (21) The term ``farming operation'' includes 
        farming, tillage of the soil, dairy farming, ranching, 
        production or raising of crops, poultry, or livestock, 
        and production of poultry or livestock products in an 
        unmanufactured state[;].
            (21A) The term ``farmout agreement'' means a 
        written agreement in which--
                    (A) * * *
                    (B) such other entity (either directly or 
                through its agents or its assigns), as 
                consideration, agrees to perform drilling, 
                reworking, recompleting, testing, or similar or 
                related operations, to develop or produce 
                liquid or gaseous hydrocarbons on the 
                property[;].
            (21B) The term ``Federal depository institutions 
        regulatory agency'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (D) with respect to any insured depository 
                institution for which the Federal Deposit 
                Insurance Corporation has been appointed 
                conservator or receiver, the Federal Deposit 
                Insurance Corporation[;].
            (22) The term the term ``financial institution''--
                    (A) * * *
                    (B) includes any person described in 
                subparagraph (A) which operates, or operates 
                as, a multilateral clearing organization 
                pursuant to section 409 of the Federal Deposit 
                Insurance Corporation Improvement Act of 
                1991[;].
            (22A) The term ``financial participant'' means an 
        entity that, at the time it enters into a securities 
        contract, commodity contract, or forward contract, or 
        at the time of the filing of the petition, has one or 
        more agreements or transactions described in paragraph 
        (1), (2), (3), (4), (5), or (6) of section 561(a) with 
        the debtor or any other entity (other than an 
        affiliate) of a total gross dollar value of not less 
        than $1,000,000,000 in notional or actual principal 
        amount outstanding on any day during the previous 15-
        month period, or has gross mark-to-market positions of 
        not less than $100,000,000 (aggregated across 
        counterparties) in one or more such agreements or 
        transactions with the debtor or any other entity (other 
        than an affiliate) on any day during the previous 15-
        month period.
            [(23) ``foreign proceeding'' means proceeding, 
        whether judicial or administrative and whether or not 
        under bankruptcy law, in a foreign country in which the 
        debtor's domicile, residence, principal place of 
        business, or principal assets were located at the 
        commencement of such proceeding, for the purpose of 
        liquidating an estate, adjusting debts by composition, 
        extension, or discharge, or effecting a reorganization;
            [(24) ``foreign representative'' means duly 
        selected trustee, administrator, or other 
        representative of an estate in a foreign proceeding;]
            (23) The term ``foreign proceeding'' means a 
        collective judicial or administrative proceeding in a 
        foreign country, including an interim proceeding, under 
        a law relating to insolvency or adjustment of debt in 
        which proceeding the assets and affairs of the debtor 
        are subject to control or supervision by a foreign 
        court, for the purpose of reorganization or 
        liquidation.
            (24) The term ``foreign representative'' means a 
        person or body, including a person or body appointed on 
        an interim basis, authorized in a foreign proceeding to 
        administer the reorganization or the liquidation of the 
        debtor's assets or affairs or to act as a 
        representative of the foreign proceeding.
            (25) The term ``forward contract'' [means a 
        contract] means--
                    (A) a contract (other than a commodity 
                contract) for the purchase, sale, or transfer 
                of a commodity, as defined in section 761(8) of 
                this title, or any similar good, article, 
                service, right, or interest which is presently 
                or in the future becomes the subject of dealing 
                in the forward contract trade, or product or 
                byproduct thereof, with a maturity date more 
                than two days after the date the contract is 
                entered into, including, but not limited to, a 
                repurchase transaction, reverse repurchase 
                transaction, consignment, lease, swap, hedge 
                transaction, deposit, loan, option, allocated 
                transaction, unallocated transaction[, or any 
                combination thereof or option thereon;], or any 
                other similar agreement;
                    (B) any combination of agreements or 
                transactions referred to in subparagraphs (A) 
                and (C);
                    (C) any option to enter into an agreement 
                or transaction referred to in subparagraph (A) 
                or (B);
                    (D) a master agreement that provides for an 
                agreement or transaction referred to in 
                subparagraph (A), (B), or (C), together with 
                all supplements to any such master agreement, 
                without regard to whether such master agreement 
                provides for an agreement or transaction that 
                is not a forward contract under this paragraph, 
                except that such master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement 
                or transaction under such master agreement that 
                is referred to in subparagraph (A), (B), or 
                (C); or
                    (E) any security agreement or arrangement, 
                or other credit enhancement related to any 
                agreement or transaction referred to in 
                subparagraph (A), (B), (C), or (D), but not to 
                exceed the actual value of such contract on the 
                date of the filing of the petition.
            [(26) ``forward contract merchant'' means a person 
        whose business consists in whole or in part of entering 
        into forward contracts as or with merchants in a 
        commodity, as defined in section 761(8) of this title, 
        or any similar good, article, service, right, or 
        interest which is presently or in the future becomes 
        the subject of dealing in the forward contract trade;]
            (26) The term ``forward contract merchant'' means a 
        Federal reserve bank, or an entity, the business of 
        which consists in whole or in part of entering into 
        forward contracts as or with merchants or in a 
        commodity, as defined or in section 761 or any similar 
        good, article, service, right, or interest which is 
        presently or in the future becomes the subject of 
        dealing in the forward contract trade.
            (27) The term ``governmental unit'' means United 
        States; State; Commonwealth; District; Territory; 
        municipality; foreign state; department, agency, or 
        instrumentality of the United States (but not a United 
        States trustee while serving as a trustee in a case 
        under this title), a State, a Commonwealth, a District, 
        a Territory, a municipality, or a foreign state; or 
        other foreign or domestic government[;].
            (27A) The term ``health care business''--
                    (A) means any public or private entity 
                (without regard to whether that entity is 
                organized for profit or not for profit) that is 
                primarily engaged in offering to the general 
                public facilities and services for--
                            (i) the diagnosis or treatment of 
                        injury, deformity, or disease; and
                            (ii) surgical, drug treatment, 
                        psychiatric, or obstetric care; and
                    (B) includes--
                            (i) any--
                                    (I) general or specialized 
                                hospital;
                                    (II) ancillary ambulatory, 
                                emergency, or surgical 
                                treatment facility;
                                    (III) hospice;
                                    (IV) home health agency; 
                                and
                                    (V) other health care 
                                institution that is similar to 
                                an entity referred to in 
                                subclause (I), (II), (III), or 
                                (IV); and
                            (ii) any long-term care facility, 
                        including any--
                                    (I) skilled nursing 
                                facility;
                                    (II) intermediate care 
                                facility;
                                    (III) assisted living 
                                facility;
                                    (IV) home for the aged;
                                    (V) domiciliary care 
                                facility; and
                                    (VI) health care 
                                institution that is related to 
                                a facility referred to in 
                                subclause (I), (II), (III), 
                                (IV), or (V), if that 
                                institution is primarily 
                                engaged in offering room, 
                                board, laundry, or personal 
                                assistance with activities of 
                                daily living and incidentals to 
                                activities of daily living.
            (27B) The term ``incidental property'' means, with 
        respect to a debtor's principal residence--
                    (A) property commonly conveyed with a 
                principal residence in the area where the real 
                estate is located;
                    (B) all easements, rights, appurtenances, 
                fixtures, rents, royalties, mineral rights, oil 
                or gas rights or profits, water rights, escrow 
                funds, or insurance proceeds; and
                    (C) all replacements or additions.
            (28) The term ``indenture'' means mortgage, deed of 
        trust, or indenture, under which there is outstanding a 
        security, other than a voting-trust certificate, 
        constituting a claim against the debtor, a claim 
        secured by a lien on any of the debtor's property, or 
        an equity security of the debtor[;].
            (29) The term ``indenture trustee'' means trustee 
        under an indenture[;].
            (30) The term ``individual with regular income'' 
        means individual whose income is sufficiently stable 
        and regular to enable such individual to make payments 
        under a plan under chapter 13 of this title, other than 
        a stockbroker or a commodity broker[;].
            (31) The term ``insider'' includes--
                    (A) * * *

           *       *       *       *       *       *       *

                    (F) managing agent of the debtor[;].
            (32) The term ``insolvent'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) with reference to a municipality, 
                financial condition such that the municipality 
                is--
                            (i) generally not paying its debts 
                        as they become due unless such debts 
                        are the subject of a bona fide dispute; 
                        or
                            (ii) unable to pay its debts as 
                        they become due[;].
            (33) The term ``institution-affiliated party''--
                    (A) * * *
                    (B) with respect to an insured credit 
                union, has the meaning given it in section 
                206(r) of the Federal Credit Union Act[;].
            (34) The term ``insured credit union'' has the 
        meaning given it in section 101(7) of the Federal 
        Credit Union Act[;].
            (35) The term ``insured depository institution''--
                    (A) has the meaning given it in section 
                3(c)(2) of the Federal Deposit Insurance Act; 
                and
                    (B) includes an insured credit union 
                (except in the case of [paragraphs (21B) and 
                (33)(A)] paragraphs (23) and (35) of this 
                subsection)[;].
            (35A) The term ``intellectual property'' means--
                    (A) * * *

           *       *       *       *       *       *       *

                    (F) mask work protected under chapter 9 of 
                title 17;
        to the extent protected by applicable nonbankruptcy 
        law[; and].
            (36) The term ``judicial lien'' means lien obtained 
        by judgment, levy, sequestration, or other legal or 
        equitable process or proceeding[;].
            (37) The term ``lien'' means charge against or 
        interest in property to secure payment of a debt or 
        performance of an obligation[;].
            (38) The term ``margin payment'' means, for 
        purposes of the forward contract provisions of this 
        title, payment or deposit of cash, a security or other 
        property, that is commonly known in the forward 
        contract trade as original margin, initial margin, 
        maintenance margin, or variation margin, including 
        mark-to-market payments, or variation payments[; and].
            (38A) The term ``master netting agreement''--
                    (A) means an agreement providing for the 
                exercise of rights, including rights of 
                netting, setoff, liquidation, termination, 
                acceleration, or closeout, under or in 
                connection with one or more contracts that are 
                described in any one or more of paragraphs (1) 
                through (5) of section 561(a), or any security 
                agreement or arrangement or other credit 
                enhancement related to one or more of the 
                foregoing; and
                    (B) if the agreement contains provisions 
                relating to agreements or transactions that are 
                not contracts described in paragraphs (1) 
                through (5) of section 561(a), shall be deemed 
                to be a master netting agreement only with 
                respect to those agreements or transactions 
                that are described in any one or more of 
                paragraphs (1) through (5) of section 561(a);
            (38B) The term ``master netting agreement 
        participant'' means an entity that, at any time before 
        the filing of the petition, is a party to an 
        outstanding master netting agreement with the debtor;
            (39) The term ``mask work'' has the meaning given 
        it in section 901(a)(2) of title 17.
            (40) The term ``municipality'' means political 
        subdivision or public agency or instrumentality of a 
        State[;].
            (40A) The term ``patient'' means any person who 
        obtains or receives services from a health care 
        business.
            (40B) The term ``patient records'' means any 
        written document relating to a patient or a record 
        recorded in a magnetic, optical, or other form of 
        electronic medium.
            (41) The term ``person'' includes individual, 
        partnership, and corporation, but does not include 
        governmental unit, except that a governmental unit 
        that--
                    (A) * * *

           *       *       *       *       *       *       *

                    (C) is the legal or beneficial owner of an 
                asset of--
                            (i) an employee pension benefit 
                        plan that is a governmental plan, as 
                        defined in section 414(d) of the 
                        Internal Revenue Code of 1986; or
                            (ii) an eligible deferred 
                        compensation plan, as defined in 
                        section 457(b) of the Internal Revenue 
                        Code of 1986;
        shall be considered, for purposes of section 1102 of 
        this title, to be a person with respect to such asset 
        or such benefit[;].
            (42) The term ``petition'' means petition filed 
        under section 301, 302, 303, or 304 of this title, as 
        the case may be, commencing a case under this title[;].
            (42A) The term ``production payment'' means a term 
        overriding royalty satisfiable in cash or in kind--
                    (A) contingent on the production of a 
                liquid or gaseous hydrocarbon from particular 
                real property; and
                    (B) from a specified volume, or a specified 
                value, from the liquid or gaseous hydrocarbon 
                produced from such property, and determined 
                without regard to production costs[;].
            (43) The term ``purchaser'' means transferee of a 
        voluntary transfer, and includes immediate or mediate 
        transferee of such a transferee[;].
            (44) The term ``railroad'' means common carrier by 
        railroad engaged in the transportation of individuals 
        or property or owner of trackage facilities leased by 
        such a common carrier[;].
            (45) The term ``relative'' means individual related 
        by affinity or consanguinity within the third degree as 
        determined by the common law, or individual in a step 
        or adoptive relationship within such third degree[;].
            (46) The term ``repo participant'' means an entity 
        that, [on any day during the period beginning 90 days 
        before the date of] at any time before the filing of 
        the petition, has an outstanding repurchase agreement 
        with the debtor[;].
            [(47) ``repurchase agreement'' (which definition 
        also applies to a reverse repurchase agreement) means 
        an agreement, including related terms, which provides 
        for the transfer of certificates of deposit, eligible 
        bankers' acceptances, or securities that are direct 
        obligations of, or that are fully guaranteed as to 
        principal and interest by, the United States or any 
        agency of the United States against the transfer of 
        funds by the transferee of such certificates of 
        deposit, eligible bankers' acceptances, or securities 
        with a simultaneous agreement by such transferee to 
        transfer to the transferor thereof certificates of 
        deposit, eligible bankers' acceptances, or securities 
        as described above, at a date certain not later than 
        one year after such transfers or on demand, against the 
        transfer of funds;]
            (47) The term ``repurchase agreement'' (which 
        definition also applies to a reverse repurchase 
        agreement)--
                    (A) means--
                            (i) an agreement, including related 
                        terms, which provides for the transfer 
                        of one or more certificates of deposit, 
                        mortgage related securities (as defined 
                        in section 3 of the Securities Exchange 
                        Act of 1934), mortgage loans, interests 
                        in mortgage related securities or 
                        mortgage loans, eligible bankers' 
                        acceptances, qualified foreign 
                        government securities (defined as a 
                        security that is a direct obligation 
                        of, or that is fully guaranteed by, the 
                        central government of a member of the 
                        Organization for Economic Cooperation 
                        and Development), or securities that 
                        are direct obligations of, or that are 
                        fully guaranteed by, the United States 
                        or any agency of the United States 
                        against the transfer of funds by the 
                        transferee of such certificates of 
                        deposit, eligible bankers' acceptances, 
                        securities, loans, or interests, with a 
                        simultaneous agreement by such 
                        transferee to transfer to the 
                        transferor thereof certificates of 
                        deposit, eligible bankers' acceptance, 
                        securities, loans, or interests of the 
                        kind described in this clause, at a 
                        date certain not later than 1 year 
                        after such transfer or on demand, 
                        against the transfer of funds;
                            (ii) any combination of agreements 
                        or transactions referred to in clauses 
                        (i) and (iii);
                            (iii) an option to enter into an 
                        agreement or transaction referred to in 
                        clause (i) or (ii);
                            (iv) a master agreement that 
                        provides for an agreement or 
                        transaction referred to in clause (i), 
                        (ii), or (iii), together with all 
                        supplements to any such master 
                        agreement, without regard to whether 
                        such master agreement provides for an 
                        agreement or transaction that is not a 
                        repurchase agreement under this 
                        paragraph, except that such master 
                        agreement shall be considered to be a 
                        repurchase agreement under this 
                        paragraph only with respect to each 
                        agreement or transaction under the 
                        master agreement that is referred to in 
                        clause (i), (ii), or (iii); or
                            (v) any security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreement or transaction 
                        referred to in clause (i), (ii), (iii), 
                        or (iv), but not to exceed the actual 
                        value of such contract on the date of 
                        the filing of the petition; and
                    (B) does not include a repurchase 
                obligation under a participation in a 
                commercial mortgage loan.
            (48) The term ``securities clearing agency'' means 
        person that is registered as a clearing agency under 
        section 17A of the Securities Exchange Act of 1934 or 
        exempt from such registration under such section 
        pursuant to an order of the Securities and Exchange 
        Commission, or whose business is confined to the 
        performance of functions of a clearing agency with 
        respect to exempted securities, as defined in section 
        3(a)(12) of such Act for the purposes of such section 
        17A[;].
            (48A) The term ``securities self regulatory 
        organization'' means either a securities association 
        registered with the Securities and Exchange Commission 
        under section 15A of the Securities Exchange Act of 
        1934 (15 U.S.C. 78o-3) or a national securities 
        exchange registered with the Securities and Exchange 
        Commission under section 6 of the Securities Exchange 
        Act of 1934 (15 U.S.C. 78f).
            (49) The term ``security''--
                    (A) * * *

           *       *       *       *       *       *       *

                    (B) does not include--
                            (i) * * *

           *       *       *       *       *       *       *

                            (vii) debt or evidence of 
                        indebtedness for goods sold and 
                        delivered or services rendered[;].
            (50) The term ``security agreement'' means 
        agreement that creates or provides for a security 
        interest[;].
            (51) The term ``security interest'' means lien 
        created by an agreement[;].
            (51A) The term ``settlement payment'' means, for 
        purposes of the forward contract provisions of this 
        title, a preliminary settlement payment, a partial 
        settlement payment, an interim settlement payment, a 
        settlement payment on account, a final settlement 
        payment, a net settlement payment, or any other similar 
        payment commonly used in the forward contract trade[;].
            (51B) The term ``single asset real estate'' means 
        real property constituting a single property or 
        project, other than residential real property with 
        fewer than 4 residential units, which generates 
        substantially all of the gross income of a debtor who 
        is not a family farmer and on which no substantial 
        business is being conducted by a debtor other than the 
        business of operating the real property and activities 
        incidental [thereto having aggregate noncontingent, 
        liquidated secured debts in an amount no more than 
        $4,000,000;]
            [(51C) ``small business'' means a person engaged in 
        commercial or business activities (but does not include 
        a person whose primary activity is the business of 
        owning or operating real property and activities 
        incidental thereto) whose aggregate noncontingent 
        liquidated secured and unsecured debts as of the date 
        of the petition do not exceed $2,000,000;]
            (51C) The term ``small business case'' means a case 
        filed under chapter 11 of this title in which the 
        debtor is a small business debtor.
            (51D) The term ``small business debtor''--
                    (A) subject to subparagraph (B), means a 
                person engaged in commercial or business 
                activities (including any affiliate of such 
                person that is also a debtor under this title 
                and excluding a person whose primary activity 
                is the business of owning or operating real 
                property or activities incidental thereto) that 
                has aggregate noncontingent, liquidated secured 
                and unsecured debts as of the date of the 
                petition or the order for relief in an amount 
                not more than $3,000,000 (excluding debts owed 
                to 1 or more affiliates or insiders) for a case 
                in which the United States trustee has not 
                appointed under section 1102(a)(1) a committee 
                of unsecured creditors or where the court has 
                determined that the committee of unsecured 
                creditors is not sufficiently active and 
                representative to provide effective oversight 
                of the debtor; and
                    (B) does not include any member of a group 
                of affiliated debtors that has aggregate 
                noncontingent liquidated secured and unsecured 
                debts in an amount greater than $3,000,000 
                (excluding debt owed to 1 or more affiliates or 
                insiders).
            (52) The term ``State'' includes the District of 
        Columbia and Puerto Rico, except for the purpose of 
        defining who may be a debtor under chapter 9 of this 
        title[;].
            (53) The term ``statutory lien'' means lien arising 
        solely by force of a statute on specified circumstances 
        or conditions, or lien of distress for rent, whether or 
        not statutory, but does not include security interest 
        or judicial lien, whether or not such interest or lien 
        is provided by or is dependent on a statute and whether 
        or not such interest or lien is made fully effective by 
        statute[;].
            (53A) The term ``stockbroker'' means person--
                    (A) * * *
                    (B) that is engaged in the business of 
                effecting transactions in securities--
                            (i) * * *
                            (ii) with members of the general 
                        public, from or for such person's own 
                        account[;].
            [(53B) ``swap agreement'' means--
                    [(A) an agreement (including terms and 
                conditions incorporated by reference therein) 
                which is a rate swap agreement, basis swap, 
                forward rate agreement, commodity swap, 
                interest rate option, forward foreign exchange 
                agreement, spot foreign exchange agreement, 
                rate cap agreement, rate floor agreement, rate 
                collar agreement, currency swap agreement, 
                cross-currency rate swap agreement, currency 
                option, any other similar agreement (including 
                any option to enter into any of the foregoing);
                    [(B) any combination of the foregoing; or
                    [(C) a master agreement for any of the 
                foregoing together with all supplements;]
            (53B) The term ``swap agreement''--
                    (A) means--
                            (i) any agreement, including the 
                        terms and conditions incorporated by 
                        reference in such agreement, which is 
                        an interest rate swap, option, future, 
                        or forward agreement, including--
                                    (I) a rate floor, rate cap, 
                                rate collar, cross-currency 
                                rate swap, and basis swap;
                                    (II) a spot, same day-
                                tomorrow, tomorrow-next, 
                                forward, or other foreign 
                                exchange or precious metals 
                                agreement;
                                    (III) a currency swap, 
                                option, future, or forward 
                                agreement;
                                    (IV) an equity index or an 
                                equity swap, option, future, or 
                                forward agreement;
                                    (V) a debt index or a debt 
                                swap, option, future, or 
                                forward agreement;
                                    (VI) a credit spread or a 
                                credit swap, option, future, or 
                                forward agreement;
                                    (VII) a commodity index or 
                                a commodity swap, option, 
                                future, or forward agreement; 
                                or
                                    (VIII) a weather swap, 
                                weather derivative, or weather 
                                option;
                            (ii) any agreement or transaction 
                        similar to any other agreement or 
                        transaction referred to in this 
                        paragraph that--
                                    (I) is presently, or in the 
                                future becomes, regularly 
                                entered into in the swap market 
                                (including terms and conditions 
                                incorporated by reference 
                                therein); and
                                    (II) is a forward, swap, 
                                future, or option on one or 
                                more rates, currencies, 
                                commodities, equity securities, 
                                or other equity instruments, 
                                debt securities or other debt 
                                instruments, or economic 
                                indices or measures of economic 
                                risk or value;
                            (iii) any combination of agreements 
                        or transactions referred to in this 
                        subparagraph;
                            (iv) any option to enter into an 
                        agreement or transaction referred to in 
                        this subparagraph;
                            (v) a master agreement that 
                        provides for an agreement or 
                        transaction referred to in clause (i), 
                        (ii), (iii), or (iv), together with all 
                        supplements to any such master 
                        agreement, and without regard to 
                        whether the master agreement contains 
                        an agreement or transaction that is not 
                        a swap agreement under this paragraph, 
                        except that the master agreement shall 
                        be considered to be a swap agreement 
                        under this paragraph only with respect 
                        to each agreement or transaction under 
                        the master agreement that is referred 
                        to in clause (i), (ii), (iii), or (iv); 
                        or
                            (vi) any security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreements or 
                        transactions referred to in clause (i) 
                        through (v), but not to exceed the 
                        actual value of such contract on the 
                        date of the filing of the petition; and
                    (B) is applicable for purposes of this 
                title only, and shall not be construed or 
                applied so as to challenge or affect the 
                characterization, definition, or treatment of 
                any swap agreement under any other statute, 
                regulation, or rule, including the Securities 
                Act of 1933, the Securities Exchange Act of 
                1934, the Public Utility Holding Company Act of 
                1935, the Trust Indenture Act of 1939, the 
                Investment Company Act of 1940, the Investment 
                Advisers Act of 1940, the Securities Investor 
                Protection Act of 1970, the Commodity Exchange 
                Act, and the regulations prescribed by the 
                Securities and Exchange Commission or the 
                Commodity Futures Trading Commission.
            (53C) The term ``swap participant'' means an entity 
        that, at any time before the filing of the petition, 
        has an outstanding swap a greement with the debtor[;].
            (56A) The term ``term overriding royalty'' means an 
        interest in liquid or gaseous hydrocarbons in place or 
        to be produced from particular real property that 
        entitles the owner thereof to a share of production, or 
        the value thereof, for a term limited by time, 
        quantity, or value realized[;].
            (53D) The term ``timeshare plan'' means and shall 
        include that interest purchased in any arrangement, 
        plan, scheme, or similar device, but not including 
        exchange programs, whether by membership, agreement, 
        tenancy in common, sale, lease, deed, rental agreement, 
        license, right to use agreement, or by any other means, 
        whereby a purchaser, in exchange for consideration, 
        receives a right to use accommodations, facilities, or 
        recreational sites, whether improved or unimproved, for 
        a specific period of time less than a full year during 
        any given year, but not necessarily for consecutive 
        years, and which extends for a period of more than 
        three years. A ``timeshare interest'' is that interest 
        purchased in a timeshare plan which grants the 
        purchaser the right to use and occupy accommodations, 
        facilities, or recreational sites, whether improved or 
        unimproved, pursuant to a timeshare plan[;].
            [(54) ``transfer'' means every mode, direct or 
        indirect, absolute or conditional, voluntary or 
        involuntary, of disposing of or parting with property 
        or with an interest in property, including retention of 
        title as a security interest and foreclosure of the 
        debtor's equity of redemption;]
            (54) The term ``transfer'' means--
                    (A) the creation of a lien;
                    (B) the retention of title as a security 
                interest;
                    (C) the foreclosure of a debtor's equity of 
                redemption; or
                    (D) each mode, direct or indirect, absolute 
                or conditional, voluntary or involuntary, of 
                disposing of or parting with--
                            (i) property; or
                            (ii) an interest in property.
    (54A) The term the term ``uninsured State member bank'' 
means a State member bank (as defined in section 3 of the 
Federal Deposit Insurance Act) the deposits of which are not 
insured by the Federal Deposit Insurance Corporation[; and].
            (55) The term ``United States'', when used in a 
        geographical sense, includes all locations where the 
        judicial jurisdiction of the United States extends, 
        including territories and possessions of the United 
        States[;].

           *       *       *       *       *       *       *


Sec. 103. Applicability of chapters

    (a) Except as provided in section 1161 of this title, 
chapters 1, 3, and 5 of this title apply in a case under 
chapter 7, 11, 12, or 13 of this title, and this chapter, 
sections 307, 362(l), 555 through 557, and 559 through 562 
apply in a case under chapter 15.

           *       *       *       *       *       *       *

    (j) Chapter 15 applies only in a case under such chapter, 
except that--
            (1) sections 1505, 1513, and 1514 apply in all 
        cases under this title; and
            (2) section 1509 applies whether or not a case 
        under this title is pending.

Sec. 104. Adjustment of dollar amounts

    (a)  * * *
    (b)(1) On April 1, 1998, and at each 3-year interval ending 
on April 1 thereafter, each dollar amount in effect under 
sections 101(3), 109(e), 303(b), 507(a), 522(d), 522(f)(3), 
522(n), 522(p), and 523(a)(2)(C) immediately before such April 
1 shall be adjusted--
            (A)  * * *

           *       *       *       *       *       *       *

    (2) Not later than March 1, 1998, and at each 3-year 
interval ending on March 1 thereafter, the Judicial Conference 
of the United States shall publish in the Federal Register the 
dollar amounts that will become effective on such April 1 under 
sections 109(e), 303(b), 507(a), 522(d), 522(f)(3), and 
523(a)(2)(C) of this title.

           *       *       *       *       *       *       *

    (4) The dollar amount in section 101(18) shall be adjusted 
at the same times and in the same manner as the dollar amounts 
in paragraph (1) of this subsection, beginning with the 
adjustment to be made on April 1, 2004.

Sec. 105. Power of court

    (a)  * * *

           *       *       *       *       *       *       *

    (d) The court, on its own motion or on the request of a 
party in interest[, may]--
            [(1) hold a status conference regarding any case or 
        proceeding under this title after notice to the parties 
        in interest; and]
            (1) shall hold such status conferences as are 
        necessary to further the expeditious and economical 
        resolution of the case; and

           *       *       *       *       *       *       *


Sec. 108. Extension of time

    (a) * * *

           *       *       *       *       *       *       *

    (c) Except as provided in section 524 of this title, if 
applicable nonbankruptcy law, an order entered in a 
nonbankruptcy proceeding, or an agreement fixes a period for 
commencing or continuing a civil action in a court other than a 
bankruptcy court on a claim against the debtor, or against an 
individual with respect to which such individual is protected 
under section 1201 or 1301 of this title, and such period has 
not expired before the date of the filing of the petition, then 
such period does not expire until the later of--
            (1) * * *
            (2) 30 days after notice of the termination or 
        expiration of the stay under section 362, [922, or] 
        922, 1201, or 1301 of this title, as the case may be, 
        with respect to such claim.

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 
        small business investment company licensed by the Small 
        Business Administration under [subsection (c) or (d) 
        of] 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; or
            [(3) a foreign insurance company, bank, savings 
        bank, cooperative bank, savings and loan association, 
        building and loan association, homestead association, 
        or credit union, engaged in such business in the United 
        States.]
            (3)(A) a foreign insurance company, engaged in such 
        business in the United States; or
            (B) a foreign bank, savings bank, cooperative bank, 
        savings and loan association, building and loan 
        association, or credit union, that has a branch or 
        agency (as defined in section 1(b) of the International 
        Banking Act of 1978 (12 U.S.C. 3101) in the United 
        States.

           *       *       *       *       *       *       *

    (h)(1) Subject to paragraphs (2) and (3), and 
notwithstanding any other provision of this section, an 
individual may not be a debtor under this title unless that 
individual has, during the 180-day period preceding the date of 
filing of the petition of that individual, received from an 
approved nonprofit budget and credit counseling agency 
described in section 111(a) an individual or group briefing 
(including a briefing conducted by telephone or on the 
Internet) that outlined the opportunities for available credit 
counseling and assisted that individual in performing a related 
budget analysis.
    (2)(A) Paragraph (1) shall not apply with respect to a 
debtor who resides in a district for which the United States 
trustee or bankruptcy administrator of the bankruptcy court of 
that district determines that the approved nonprofit budget and 
credit counseling agencies for that district are not reasonably 
able to provide adequate services to the additional individuals 
who would otherwise seek credit counseling from that agency by 
reason of the requirements of paragraph (1).
    (B) Each United States trustee or bankruptcy administrator 
that makes a determination described in subparagraph (A) shall 
review that determination not later than 1 year after the date 
of that determination, and not less frequently than every year 
thereafter. Notwithstanding the preceding sentence, a nonprofit 
budget and credit counseling service may be disapproved by the 
United States trustee or bankruptcy administrator at any time.
    (3)(A) Subject to subparagraph (B), the requirements of 
paragraph (1) shall not apply with respect to a debtor who 
submits to the court a certification that--
            (i) describes exigent circumstances that merit a 
        waiver of the requirements of paragraph (1);
            (ii) states that the debtor requested credit 
        counseling services from an approved nonprofit budget 
        and credit counseling agency, but was unable to obtain 
        the services referred to in paragraph (1) during the 5-
        day period beginning on the date on which the debtor 
        made that request; and
            (iii) is satisfactory to the court.
    (B) With respect to a debtor, an exemption under 
subparagraph (A) shall cease to apply to that debtor on the 
date on which the debtor meets the requirements of paragraph 
(1), but in no case may the exemption apply to that debtor 
after the date that is 30 days after the debtor files a 
petition, except that the court, for cause, may order an 
additional 15 days.

Sec. 110. Penalty for persons who negligently or fraudulently prepare 
                    bankruptcy petitions

    (a) In this section--
            (1) ``bankruptcy petition preparer'' means [a 
        person, other than an attorney or an employee of an 
        attorney] the attorney for the debtor or an employee of 
        such attorney under the direct supervision of such 
        attorney, who prepares for compensation a document for 
        filing; and

           *       *       *       *       *       *       *

    (b)(1) A bankruptcy petition preparer who prepares a 
document for filing shall sign the document and print on the 
document the preparer's name and address. If a bankruptcy 
petition preparer is not an individual, then an officer, 
principal, responsible person, or partner of the preparer shall 
be required to--
            (A) sign the document for filing; and
            (B) print on the document the name and address of 
        that officer, principal, responsible person or partner.
    [(2) A bankruptcy petition preparer who fails to comply 
with paragraph (1) may be fined not more than $500 for each 
such failure unless the failure is due to reasonable cause.]
    (2)(A) Before preparing any document for filing or 
accepting any fees from a debtor, the bankruptcy petition 
preparer shall provide to the debtor a written notice to 
debtors concerning bankruptcy petition preparers, which shall 
be on an official form issued by the Judicial Conference of the 
United States.
    (B) The notice under subparagraph (A)--
            (i) shall inform the debtor in simple language that 
        a bankruptcy petition preparer is not an attorney and 
        may not practice law or give legal advice;
            (ii) may contain a description of examples of legal 
        advice that a bankruptcy petition preparer is not 
        authorized to give, in addition to any advice that the 
        preparer may not give by reason of subsection (e)(2); 
        and
            (iii) shall--
                    (I) be signed by--
                            (aa) the debtor; and
                            (bb) the bankruptcy petition 
                        preparer, under penalty of perjury; and
                    (II) be filed with any document for filing.
    (c)(1) * * *
    [(2) For purposes] (2)(A) Subject to subparagraph (B), for 
purposes of this section, the identifying number of a 
bankruptcy petition preparer shall be the Social Security 
account number of each individual who prepared the document or 
assisted in its preparation.
    (B) If a bankruptcy petition preparer is not an individual, 
the identifying number of the bankruptcy petition preparer 
shall be the Social Security account number of the officer, 
principal, responsible person, or partner of the preparer.
    [(3) A bankruptcy petition preparer who fails to comply 
with paragraph (1) may be fined not more than $500 for each 
such failure unless the failure is due to reasonable cause.]
    [(d)(1)] (d) A bankruptcy petition preparer shall, not 
later than the time at which a document for filing is presented 
for the debtor's signature, furnish to the debtor a copy of the 
document.
    [(2) A bankruptcy petition preparer who fails to comply 
with paragraph (1) may be fined not more than $500 for each 
such failure unless the failure is due to reasonable cause.]
    (e)(1) A bankruptcy petition preparer shall not execute any 
document on behalf of a debtor.
    [(2) A bankruptcy petition preparer may be fined not more 
than $500 for each document executed in violation of paragraph 
(1).]
    (2)(A) A bankruptcy petition preparer may not offer a 
potential bankruptcy debtor any legal advice, including any 
legal advice described in subparagraph (B).
    (B) The legal advice referred to in subparagraph (A) 
includes advising the debtor--
            (i) whether--
                    (I) to file a petition under this title; or
                    (II) commencing a case under chapter 7, 11, 
                12, or 13 is appropriate;
            (ii) whether the debtor's debts will be eliminated 
        or discharged in a case under this title;
            (iii) whether the debtor will be able to retain the 
        debtor's home, car, or other property after commencing 
        a case under this title;
            (iv) concerning--
                    (I) the tax consequences of a case brought 
                under this title; or
                    (II) the dischargeability of tax claims;
            (v) whether the debtor may or should promise to 
        repay debts to a creditor or enter into a reaffirmation 
        agreement with a creditor to reaffirm a debt;
            (vi) concerning how to characterize the nature of 
        the debtor's interests in property or the debtor's 
        debts; or
            (vii) concerning bankruptcy procedures and rights.
    [(f)(1)] (f) A bankruptcy petition preparer shall not use 
the word ``legal'' or any similar term in any advertisements, 
or advertise under any category that includes the word 
``legal'' or any similar term.
    [(2) A bankruptcy petition preparer shall be fined not more 
than $500 for each violation of paragraph (1).]
    [(g)(1)] (g) A bankruptcy petition preparer shall not 
collect or receive any payment from the debtor or on behalf of 
the debtor for the court fees in connection with filing the 
petition.
    [(2) A bankruptcy petition preparer shall be fined not more 
than $500 for each violation of paragraph (1).]
    (h)(1) The Supreme Court may promulgate rules under section 
2075 of title 28, or the Judicial Conference of the United 
States may prescribe guidelines, for setting a maximum 
allowable fee chargeable by a bankruptcy petition preparer. A 
bankruptcy petition preparer shall notify the debtor of any 
such maximum amount before preparing any document for filing 
for a debtor or accepting any fee from the debtor.
    [(1)] (2) Within 10 days after the date of the filing of a 
petition, a bankruptcy petition preparer shall file a 
declaration under penalty of perjury by the bankruptcy petition 
preparer shall be filed together with the petition, disclosing 
any fee received from or on behalf of the debtor within 12 
months immediately prior to the filing of the case, and any 
unpaid fee charged to the debtor. If rules or guidelines 
setting a maximum fee for services have been promulgated or 
prescribed under paragraph (1), the declaration under this 
paragraph shall include a certification that the bankruptcy 
petition preparer complied with the notification requirement 
under paragraph (1).
    [(2) The court shall disallow and order the immediate 
turnover to the bankruptcy trustee of any fee referred to in 
paragraph (1) found to be in excess of the value of services 
rendered for the documents prepared. An individual debtor may 
exempt any funds so recovered under section 522(b).]
            (3)(A) The court shall disallow and order the 
        immediate turnover to the bankruptcy trustee any fee 
        referred to in paragraph (2) found to be in excess of 
        the value of any services--
                    (i) rendered by the preparer during the 12-
                month period immediately preceding the date of 
                filing of the petition; or
                    (ii) found to be in violation of any rule 
                or guideline promulgated or prescribed under 
                paragraph (1).
            (B) All fees charged by a bankruptcy petition 
        preparer may be forfeited in any case in which the 
        bankruptcy petition preparer fails to comply with this 
        subsection or subsection (b), (c), (d), (e), (f), or 
        (g).
            (C) An individual may exempt any funds recovered 
        under this paragraph under section 522(b).
    [(3)] (4) The debtor, the trustee, a creditor, [or the 
United States trustee] the United States trustee, the 
bankruptcy administrator, or the court, on the initiative of 
the court, may file a motion for an order under paragraph (2).
    [(4)] (5) A bankruptcy petition preparer shall be fined not 
more than $500 for each failure to comply with a court order to 
turn over funds within 30 days of service of such order.
    [(i)(1) If a bankruptcy case or related proceeding is 
dismissed because of the failure to file bankruptcy papers, 
including papers specified in section 521(1) of this title, the 
negligence or intentional disregard of this title or the 
Federal Rules of Bankruptcy Procedure by a bankruptcy petition 
preparer, or if a bankruptcy petition preparer violates this 
section or commits any fraudulent, unfair, or deceptive act, 
the bankruptcy court shall certify that fact to the district 
court, and the district court, on motion of the debtor, the 
trustee, or a creditor and after a hearing, shall order the 
bankruptcy petition preparer to pay to the debtor--]
    (i)(1) If a bankruptcy petition preparer violates this 
section or commits any act that the court finds to be 
fraudulent, unfair, or deceptive, on motion of the debtor, 
trustee, United States trustee, or bankruptcy administrator, 
and after the court holds a hearing with respect to that 
violation or act, the court shall order the bankruptcy petition 
preparer to pay to the debtor--
            (A) * * *

           *       *       *       *       *       *       *

    (j)(1)  * * *
    (2)(A) In an action under paragraph (1), if the court finds 
that--
            (i) a bankruptcy petition preparer has--
                    (I) engaged in conduct in violation of this 
                section or of any provision of this title [a 
                violation of which subjects a person to 
                criminal penalty];

           *       *       *       *       *       *       *

    (B) If the court finds that a bankruptcy petition preparer 
has continually engaged in conduct described in subclause (I), 
(II), or (III) of clause (i) and that an injunction prohibiting 
such conduct would not be sufficient to prevent such person's 
interference with the proper administration of this title, [or] 
has not paid a penalty imposed under this section, or failed to 
disgorge all fees ordered by the court the court may enjoin the 
person from acting as a bankruptcy petition preparer.
    (3) The court, as part of its contempt power, may enjoin a 
bankruptcy petition preparer that has failed to comply with a 
previous order issued under this section. The injunction under 
this paragraph may be issued upon motion of the court, the 
trustee, the United States trustee, or the bankruptcy 
administrator.
    [(3)] (4) The court shall award to a debtor, trustee, or 
creditor that brings a successful action under this subsection 
reasonable [attorney's] attorneys' fees and costs of the 
action, to be paid by the bankruptcy petition preparer.

           *       *       *       *       *       *       *

    (l)(1) A bankruptcy petition preparer who fails to comply 
with any provision of subsection (b), (c), (d), (e), (f), (g), 
or (h) may be fined not more than $500 for each such failure.
    (2) The court shall triple the amount of a fine assessed 
under paragraph (1) in any case in which the court finds that a 
bankruptcy petition preparer--
            (A) advised the debtor to exclude assets or income 
        that should have been included on applicable schedules;
            (B) advised the debtor to use a false Social 
        Security account number;
            (C) failed to inform the debtor that the debtor was 
        filing for relief under this title; or
            (D) prepared a document for filing in a manner that 
        failed to disclose the identity of the preparer.
    (3) The debtor, the trustee, a creditor, the United States 
trustee, or the bankruptcy administrator may file a motion for 
an order imposing a fine on the bankruptcy petition preparer 
for each violation of this section.
    (4)(A) Fines imposed under this subsection in judicial 
districts served by United States trustees shall be paid to the 
United States trustee, who shall deposit an amount equal to 
such fines in a special account of the United States Trustee 
System Fund referred to in section 586(e)(2) of title 28. 
Amounts deposited under this subparagraph shall be available to 
fund the enforcement of this section on a national basis.
    (B) Fines imposed under this subsection in judicial 
districts served by bankruptcy administrators shall be 
deposited as offsetting receipts to the fund established under 
section 1931 of title 28, and shall remain available until 
expended to reimburse any appropriation for the amount paid out 
of such appropriation for expenses of the operation and 
maintenance of the courts of the United States.

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

    (a) The clerk of each district shall maintain a publicly 
available list of--
            (1) credit counseling agencies that provide 1 or 
        more programs described in section 109(h) currently 
        approved by the United States trustee or the bankruptcy 
        administrator for the district, as applicable; and
            (2) instructional courses concerning personal 
        financial management currently approved by the United 
        States trustee or the bankruptcy administrator for the 
        district, as applicable.
    (b) The United States trustee or bankruptcy administrator 
shall only approve a credit counseling agency or instructional 
course concerning personal financial management as follows:
            (1) The United States trustee or bankruptcy 
        administrator shall have thoroughly reviewed the 
        qualifications of the credit counseling agency or of 
        the provider of the instructional course under the 
        standards set forth in this section, and the programs 
        or instructional courses which will be offered by such 
        agency or provider, and may require an agency or 
        provider of an instructional course which has sought 
        approval to provide information with respect to such 
        review.
            (2) The United States trustee or bankruptcy 
        administrator shall have determined that the credit 
        counseling agency or course of instruction fully 
        satisfies the applicable standards set forth in this 
        section.
            (3) When an agency or course of instruction is 
        initially approved, such approval shall be for a 
        probationary period not to exceed 6 months. An agency 
        or course of instruction is initially approved if it 
        did not appear on the approved list for the district 
        under subsection (a) immediately prior to approval.
            (4) At the conclusion of the probationary period 
        under paragraph (3), the United States trustee or 
        bankruptcy administrator may only approve for an 
        additional 1-year period, and for successive 1-year 
        periods thereafter, any agency or course of instruction 
        which has demonstrated during the probationary or 
        subsequent period that such agency or course of 
        instruction--
                    (A) has met the standards set forth under 
                this section during such period; and
                    (B) can satisfy such standards in the 
                future.
            (5) Not later than 30 days after any final decision 
        under paragraph (4), that occurs either after the 
        expiration of the initial probationary period, or after 
        any 2-year period thereafter, an interested person may 
        seek judicial review of such decision in the 
        appropriate United States District Court.
    (c)(1) The United States trustee or bankruptcy 
administrator shall only approve a credit counseling agency 
that demonstrates that it will provide qualified counselors, 
maintain adequate provision for safekeeping and payment of 
client funds, provide adequate counseling with respect to 
client credit problems, and deal responsibly and effectively 
with other matters as relate to the quality, effectiveness, and 
financial security of such programs.
    (2) To be approved by the United States trustee or 
bankruptcy administrator, a credit counseling agency shall, at 
a minimum--
            (A) be a nonprofit budget and credit counseling 
        agency, the majority of the board of directors of 
        which--
                    (i) are not employed by the agency; and
                    (ii) will not directly or indirectly 
                benefit financially from the outcome of a 
                credit counseling session;
            (B) if a fee is charged for counseling services, 
        charge a reasonable fee, and provide services without 
        regard to ability to pay the fee;
            (C) provide for safekeeping and payment of client 
        funds, including an annual audit of the trust accounts 
        and appropriate employee bonding;
            (D) provide full disclosures to clients, including 
        funding sources, counselor qualifications, possible 
        impact on credit reports, and any costs of such program 
        that will be paid by the debtor and how such costs will 
        be paid;
            (E) provide adequate counseling with respect to 
        client credit problems that includes an analysis of 
        their current situation, what brought them to that 
        financial status, and how they can develop a plan to 
        handle the problem without incurring negative 
        amortization of their debts;
            (F) provide trained counselors who receive no 
        commissions or bonuses based on the counseling session 
        outcome, and who have adequate experience, and have 
        been adequately trained to provide counseling services 
        to individuals in financial difficulty, including the 
        matters described in subparagraph (E);
            (G) demonstrate adequate experience and background 
        in providing credit counseling; and
            (H) have adequate financial resources to provide 
        continuing support services for budgeting plans over 
        the life of any repayment plan.
    (d) The United States trustee or bankruptcy administrator 
shall only approve an instructional course concerning personal 
financial management--
            (1) for an initial probationary period under 
        subsection (b)(3) if the course will provide at a 
        minimum--
                    (A) trained personnel with adequate 
                experience and training in providing effective 
                instruction and services;
                    (B) learning materials and teaching 
                methodologies designed to assist debtors in 
                understanding personal financial management and 
                that are consistent with stated objectives 
                directly related to the goals of such course of 
                instruction;
                    (C) adequate facilities situated in 
                reasonably convenient locations at which such 
                course of instruction is offered, except that 
                such facilities may include the provision of 
                such course of instruction or program by 
                telephone or through the Internet, if the 
                course of instruction or program is effective; 
                and
                    (D) the preparation and retention of 
                reasonable records (which shall include the 
                debtor's bankruptcy case number) to permit 
                evaluation of the effectiveness of such course 
                of instruction or program, including any 
                evaluation of satisfaction of course of 
                instruction or program requirements for each 
                debtor attending such course of instruction or 
                program, which shall be available for 
                inspection and evaluation by the Executive 
                Office for United States Trustees, the United 
                States trustee, bankruptcy administrator, or 
                chief bankruptcy judge for the district in 
                which such course of instruction or program is 
                offered; and
            (2) for any 1-year period if the provider thereof 
        has demonstrated that the course meets the standards of 
        paragraph (1) and, in addition--
                    (A) has been effective in assisting a 
                substantial number of debtors to understand 
                personal financial management; and
                    (B) is otherwise likely to increase 
                substantially debtor understanding of personal 
                financial management.
    (e) The District Court may, at any time, investigate the 
qualifications of a credit counseling agency referred to in 
subsection (a), and request production of documents to ensure 
the integrity and effectiveness of such credit counseling 
agencies. The District Court may, at any time, remove from the 
approved list under subsection (a) a credit counseling agency 
upon finding such agency does not meet the qualifications of 
subsection (b).
    (f) The United States trustee or bankruptcy administrator 
shall notify the clerk that a credit counseling agency or an 
instructional course is no longer approved, in which case the 
clerk shall remove it from the list maintained under subsection 
(a).
    (g)(1) No credit counseling service may provide to a credit 
reporting agency information concerning whether an individual 
debtor has received or sought instruction concerning personal 
financial management from the credit counseling service.
    (2) A credit counseling service that willfully or 
negligently fails to comply with any requirement under this 
title with respect to a debtor shall be liable for damages in 
an amount equal to the sum of--
            (A) any actual damages sustained by the debtor as a 
        result of the violation; and
            (B) any court costs or reasonable attorneys' fees 
        (as determined by the court) incurred in an action to 
        recover those damages.

           *       *       *       *       *       *       *


                     CHAPTER 3--CASE ADMINISTRATION

                  SUBCHAPTER I--COMMENCEMENT OF A CASE

Sec.
301.  Voluntary cases.
     * * * * * * *
[304.  Cases ancillary to foreign proceedings.]
     * * * * * * *
308.  Debtor reporting requirements.
     * * * * * * *

                         SUBCHAPTER II--OFFICERS

321.  Eligibility to serve as trustee.
     * * * * * * *
332.  Appointment of ombudsman.
     * * * * * * *

                     SUBCHAPTER III--ADMINISTRATION

341.  Meetings of creditors and equity security holders.
     * * * * * * *
351.  Disposal of patient records.

           *       *       *       *       *       *       *


                  SUBCHAPTER I--COMMENCEMENT OF A CASE

Sec. 301. Voluntary cases

    (a) A voluntary case under a chapter of this title is 
commenced by the filing with the bankruptcy court of a petition 
under such chapter by an entity that may be a debtor under such 
chapter. [The commencement of a voluntary case under a chapter 
of this title constitutes an order for relief under such 
chapter.]
    (b) The commencement of a voluntary case under a chapter of 
this title constitutes an order for relief under such chapter.

           *       *       *       *       *       *       *


Sec. 303. Involuntary cases

    (a) * * *

           *       *       *       *       *       *       *

    [(k) Notwithstanding subsection (a) of this section, an 
involuntary case may be commenced against a foreign bank that 
is not engaged in such business in the United States only under 
chapter 7 of this title and only if a foreign proceeding 
concerning such bank is pending.]

[Sec. 304. Cases ancillary to foreign proceedings

    [(a) A case ancillary to a foreign proceeding is commenced 
by the filing with the bankruptcy court of a petition under 
this section by a foreign representative.
    [(b) Subject to the provisions of subsection (c) of this 
section, if a party in interest does not timely controvert the 
petition, or after trial, the court may--
            [(1) enjoin the commencement or continuation of--
                    [(A) any action against--
                            [(i) a debtor with respect to 
                        property involved in such foreign 
                        proceeding; or
                            [(ii) such property; or
                    [(B) the enforcement of any judgment 
                against the debtor with respect to such 
                property, or any act or the commencement or 
                continuation of any judicial proceeding to 
                create or enforce a lien against the property 
                of such estate;
            [(2) order turnover of the property of such estate, 
        or the proceeds of such property, to such foreign 
        representative; or
            [(3) order other appropriate relief.
    [(c) In determining whether to grant relief under 
subsection (b) of this section, the court shall be guided by 
what will best assure an economical and expeditious 
administration of such estate, consistent with--
            [(1) just treatment of all holders of claims 
        against or interests in such estate;
            [(2) protection of claim holders in the United 
        States against prejudice and inconvenience in the 
        processing of claims in such foreign proceeding;
            [(3) prevention of preferential or fraudulent 
        dispositions of property of such estate;
            [(4) distribution of proceeds of such estate 
        substantially in accordance with the order prescribed 
        by this title;
            [(5) comity; and
            [(6) if appropriate, the provision of an 
        opportunity for a fresh start for the individual that 
        such foreign proceeding concerns.]

Sec. 305. Abstention

    (a) The court, after notice and a hearing, may dismiss a 
case under this title, or may suspend all proceedings in a case 
under this title, at any time if--
            [(2)(A) there is pending a foreign proceeding; and
            [(B) the factors specified in section 304(c) of 
        this title warrant such dismissal or suspension.]
            (2)(A) a petition under section 1515 of this title 
        for recognition of a foreign proceeding has been 
        granted; and
            (B) the purposes of chapter 15 of this title would 
        be best served by such dismissal or suspension.

           *       *       *       *       *       *       *

    (c) An order under subsection (a) of this section 
dismissing a case or suspending all proceedings in a case, or a 
decision not so to dismiss or suspend, is not reviewable by 
appeal or otherwise by the court of appeals under [section 
158(d)] subsection (e) or (f) of section 158, 1291, or 1292 of 
title 28 or by the Supreme Court of the United States under 
section 1254 of title 28.

Sec. 306. Limited appearance

    An appearance in a bankruptcy court by a foreign 
representative in connection with a petition or request under 
section 303[, 304,] or 305 of this title does not submit such 
foreign representative to the jurisdiction of any court in the 
United States for any other purpose, but the bankruptcy court 
may condition any order under section 303[, 304,] or 305 of 
this title on compliance by such foreign representative with 
the orders of such bankruptcy court.

           *       *       *       *       *       *       *


Sec. 308. Debtor reporting requirements

    (a) For purposes of this section, the term 
``profitability'' means, with respect to a debtor, the amount 
of money that the debtor has earned or lost during current and 
recent fiscal periods.
    (b) A small business debtor shall file periodic financial 
and other reports containing information including--
            (1) the debtor's profitability;
            (2) reasonable approximations of the debtor's 
        projected cash receipts and cash disbursements over a 
        reasonable period;
            (3) comparisons of actual cash receipts and 
        disbursements with projections in prior reports;
            (4)(A) whether the debtor is--
                    (i) in compliance in all material respects 
                with postpetition requirements imposed by this 
                title and the Federal Rules of Bankruptcy 
                Procedure; and
                    (ii) timely filing tax returns and other 
                required government filings and paying taxes 
                and other administrative claims when due;
            (B) if the debtor is not in compliance with the 
        requirements referred to in subparagraph (A)(i) or 
        filing tax returns and other required government 
        filings and making the payments referred to in 
        subparagraph (A)(ii), what the failures are and how, at 
        what cost, and when the debtor intends to remedy such 
        failures; and
            (C) such other matters as are in the best interests 
        of the debtor and creditors, and in the public interest 
        in fair and efficient procedures under chapter 11 of 
        this title.

           *       *       *       *       *       *       *


                        SUBCHAPTER II--OFFICERS

           *       *       *       *       *       *       *


Sec. 328. Limitation on compensation of professional persons

    (a) The trustee, or a committee appointed under section 
1102 of this title, with the court's approval, may employ or 
authorize the employment of a professional person under section 
327 or 1103 of this title, as the case may be, on any 
reasonable terms and conditions of employment, including on a 
retainer, on an hourly basis, on a fixed or percentage fee 
basis, or on a contingent fee basis. Notwithstanding such terms 
and conditions, the court may allow compensation different from 
the compensation provided under such terms and conditions after 
the conclusion of such employment, if such terms and conditions 
prove to have been improvident in light of developments not 
capable of being anticipated at the time of the fixing of such 
terms and conditions.

           *       *       *       *       *       *       *


Sec. 330. Compensation of officers

    (a)(1) After notice to the parties in interest and the 
United States Trustee and a hearing, and subject to sections 
326, 328, and 329, the court may award to a trustee, an 
examiner, an ombudsman appointed under section 331, or a 
professional person employed under section 327 or 1103--
            (A) reasonable compensation for actual, necessary 
        services rendered by the trustee, examiner, ombudsman, 
        professional person, or attorney and by any 
        paraprofessional person employed by any such person; 
        and

           *       *       *       *       *       *       *

    (3)[(A) In] In determining the amount of reasonable 
compensation to be awarded to an examiner, trustee under 
chapter 11, or professional person, the court shall consider 
the nature, the extent, and the value of such services, taking 
into account all relevant factors, including--
            (A) * * *

           *       *       *       *       *       *       *

            (D) whether the services were performed within a 
        reasonable amount of time commensurate with the 
        complexity, importance, and nature of the problem, 
        issue, or task addressed; [and]
                    (E) with respect to a professional person, 
                whether the person is board certified or 
                otherwise has demonstrated skill and experience 
                in the bankruptcy field; and
            [(E)] (F) whether the compensation is reasonable 
        based on the customary compensation charged by 
        comparably skilled practitioners in cases other than 
        cases under this title.

           *       *       *       *       *       *       *

            (7) In determining the amount of reasonable 
        compensation to be awarded to a trustee, the court 
        shall treat such compensation as a commission, based on 
        section 326 of this title.

           *       *       *       *       *       *       *


Sec. 332. Appointment of ombudsman

    (a) In General.--
            (1) Authority to appoint.--Not later than 30 days 
        after a case is commenced by a health care business 
        under chapter 7, 9, or 11, the court shall order the 
        appointment of an ombudsman to monitor the quality of 
        patient care to represent the interests of the patients 
        of the health care business, unless the court finds 
        that the appointment of the ombudsman is not necessary 
        for the protection of patients under the specific facts 
        of the case.
            (2) Qualifications.--If the court orders the 
        appointment of an ombudsman, the United States trustee 
        shall appoint 1 disinterested person, other than the 
        United States trustee, to serve as an ombudsman, 
        including a person who is serving as a State Long-Term 
        Care Ombudsman appointed under title III or VII of the 
        Older Americans Act of 1965 (42 U.S.C. 3021 et seq., 
        3058 et seq.).
    (b) Duties.--An ombudsman appointed under subsection (a) 
shall--
            (1) monitor the quality of patient care, to the 
        extent necessary under the circumstances, including 
        interviewing patients and physicians;
            (2) not later than 60 days after the date of 
        appointment, and not less frequently than every 60 days 
        thereafter, report to the court, at a hearing or in 
        writing, regarding the quality of patient care at the 
        health care business involved; and
            (3) if the ombudsman determines that the quality of 
        patient care is declining significantly or is otherwise 
        being materially compromised, notify the court by 
        motion or written report, with notice to appropriate 
        parties in interest, immediately upon making that 
        determination.
    (c) Confidentiality.--An ombudsman shall maintain any 
information obtained by the ombudsman under this section that 
relates to patients (including information relating to patient 
records) as confidential information. The ombudsman may not 
review confidential patient records, unless the court provides 
prior approval, with restrictions on the ombudsman to protect 
the confidentiality of patient records.

           *       *       *       *       *       *       *


                     SUBCHAPTER III--ADMINISTRATION

Sec. 341. Meetings of creditors and equity security holders

    (a)  * * *

           *       *       *       *       *       *       *

    (c) The court may not preside at, and may not attend, any 
meeting under this section including any final meeting of 
creditors. Notwithstanding any local court rule, provision of a 
State constitution, any other Federal or State law that is not 
a bankruptcy law, or other requirement that representation at 
the meeting of creditors under subsection (a) be by an 
attorney, a creditor holding a consumer debt or any 
representative of the creditor (which may include an entity or 
an employee of an entity and may be a representative for more 
than 1 creditor) shall be permitted to appear at and 
participate in the meeting of creditors in a case under chapter 
7 or 13, either alone or in conjunction with an attorney for 
the creditor. Nothing in this subsection shall be construed to 
require any creditor to be represented by an attorney at any 
meeting of creditors.

           *       *       *       *       *       *       *

    (e) Notwithstanding subsections (a) and (b), the court, on 
the request of a party in interest and after notice and a 
hearing, for cause may order that the United States trustee not 
convene a meeting of creditors or equity security holders if 
the debtor has filed a plan as to which the debtor solicited 
acceptances prior to the commencement of the case.

           *       *       *       *       *       *       *


Sec. 342. Notice

    (a)  * * *
    [(b) Prior to the commencement of a case under this title 
by an individual whose debts are primarily consumer debts, the 
clerk shall give written notice to such individual that 
indicates each chapter of this title under which such 
individual may proceed.]
    (b) Before the commencement of a case under this title by 
an individual whose debts are primarily consumer debts, the 
clerk shall give to such individual written notice containing--
            (1) a brief description of--
                    (A) chapters 7, 11, 12, and 13 and the 
                general purpose, benefits, and costs of 
                proceeding under each of those chapters; and
                    (B) the types of services available from 
                credit counseling agencies; and
            (2) statements specifying that--
                    (A) a person who knowingly and fraudulently 
                conceals assets or makes a false oath or 
                statement under penalty of perjury in 
                connection with a bankruptcy case shall be 
                subject to fine, imprisonment, or both; and
                    (B) all information supplied by a debtor in 
                connection with a bankruptcy case is subject to 
                examination by the Attorney General.
    (c)(1) If notice is required to be given by the debtor to a 
creditor under this title, any rule, any applicable law, or any 
order of the court, such notice shall contain the name, 
address, and taxpayer identification number of the debtor[, but 
the failure of such notice to contain such information shall 
not invalidate the legal effect of such notice].
            (2) If, within the 90 days prior to the date of the 
        filing of a petition in a voluntary case, the creditor 
        supplied the debtor in at least 2 communications sent 
        to the debtor with the current account number of the 
        debtor and the address at which the creditor wishes to 
        receive correspondence, then the debtor shall send any 
        notice required under this title to the address 
        provided by the creditor and such notice shall include 
        the account number. In the event the creditor would be 
        in violation of applicable nonbankruptcy law by sending 
        any such communication within such 90-day period and if 
        the creditor supplied the debtor in the last 2 
        communications with the current account number of the 
        debtor and the address at which the creditor wishes to 
        receive correspondence, then the debtor shall send any 
        notice required under this title to the address 
        provided by the creditor and such notice shall include 
        the account number.
    (d) In an individual case under chapter 7 in which the 
presumption of abuse is triggered under section 707(b), the 
clerk shall give written notice to all creditors not later than 
10 days after the date of the filing of the petition that the 
presumption of abuse has been triggered.
    (e) At any time, a creditor, in a case of an individual 
debtor under chapter 7 or 13, may file with the court and serve 
on the debtor a notice of the address to be used to notify the 
creditor in that case. Five days after receipt of such notice, 
if the court or the debtor is required to give the creditor 
notice, such notice shall be given at that address.
    (f) An entity may file with the court a notice stating its 
address for notice in cases under chapters 7 and 13. After 30 
days following the filing of such notice, any notice in any 
case filed under chapter 7 or 13 given by the court shall be to 
that address unless specific notice is given under subsection 
(e) with respect to a particular case.
    (g)(1) Notice given to a creditor other than as provided in 
this section shall not be effective notice until that notice 
has been brought to the attention of the creditor. If the 
creditor designates a person or department to be responsible 
for receiving notices concerning bankruptcy cases and 
establishes reasonable procedures so that bankruptcy notices 
received by the creditor are to be delivered to such department 
or person, notice shall not be considered to have been brought 
to the attention of the creditor until received by such person 
or department.
    (2) No sanction under section 362(k) or any other sanction 
that a court may impose on account of violations of the stay 
under section 362(a) or failure to comply with section 542 or 
543 may be imposed on any action of the creditor unless the 
action takes place after the creditor has received notice of 
the commencement of the case effective under this section.

           *       *       *       *       *       *       *


[Sec. 346. Special tax provisions

    [(a) Except to the extent otherwise provided in this 
section, subsections (b), (c), (d), (e), (g), (h), (i), and (j) 
of this section apply notwithstanding any State or local law 
imposing a tax, but subject to the Internal Revenue Code of 
1986.
    [(b)(1) In a case under chapter 7, 12, or 11 of this title 
concerning an individual, any income of the estate may be taxed 
under a State or local law imposing a tax on or measured by 
income only to the estate, and may not be taxed to such 
individual. Except as provided in section 728 of this title, if 
such individual is a partner in a partnership, any gain or loss 
resulting from a distribution of property from such 
partnership, or any distributive share of income, gain, loss, 
deduction, or credit of such individual that is distributed, or 
considered distributed, from such partnership, after the 
commencement of the case is gain, loss, income, deduction, or 
credit, as the case may be, of the estate.
    [(2) Except as otherwise provided in this section and in 
section 728 of this title, any income of the estate in such a 
case, and any State or local tax on or measured by such income, 
shall be computed in the same manner as the income and the tax 
of an estate.
    [(3) The estate in such a case shall use the same 
accounting method as the debtor used immediately before the 
commencement of the case.
    [(c)(1) The commencement of a case under this title 
concerning a corporation or a partnership does not effect a 
change in the status of such corporation or partnership for the 
purposes of any State or local law imposing a tax on or 
measured by income. Except as otherwise provided in this 
section and in section 728 of this title, any income of the 
estate in such case may be taxed only as though such case had 
not been commenced.
    [(2) In such a case, except as provided in section 728 of 
this title, the trustee shall make any tax return otherwise 
required by State or local law to be filed by or on behalf of 
such corporation or partnership in the same manner and form as 
such corporation or partnership, as the case may be, is 
required to make such return.
    [(d) In a case under chapter 13 of this title, any income 
of the estate or the debtor may be taxed under a State or local 
law imposing a tax on or measured by income only to the debtor, 
and may not be taxed to the estate.
    [(e) A claim allowed under section 502(f) or 503 of this 
title, other than a claim for a tax that is not otherwise 
deductible or a capital expenditure that is not otherwise 
deductible, is deductible by the entity to which income of the 
estate is taxed unless such claim was deducted by another 
entity, and a deduction for such a claim is deemed to be a 
deduction attributable to a business.
    [(f) The trustee shall withhold from any payment of claims 
for wages, salaries, commissions, dividends, interest, or other 
payments, or collect, any amount required to be withheld or 
collected under applicable State or local tax law, and shall 
pay such withheld or collected amount to the appropriate 
governmental unit at the time and in the manner required by 
such tax law, and with the same priority as the claim from 
which such amount was withheld was paid.
    [(g)(1) Neither gain nor loss shall be recognized on a 
transfer--
            [(A) by operation of law, of property to the 
        estate;
            [(B) other than a sale, of property from the estate 
        to the debtor; or
            [(C) in a case under chapter 11 or 12 of this title 
        concerning a corporation, of property from the estate 
        to a corporation that is an affiliate participating in 
        a joint plan with the debtor, or that is a successor to 
        the debtor under the plan, except that gain or loss may 
        be recognized to the same extent that such transfer 
        results in the recognition of gain or loss under 
        section 371 of the Internal Revenue Code of 1986.
    [(2) The transferee of a transfer of a kind specified in 
this subsection shall take the property transferred with the 
same character, and with the transferor's basis, as adjusted 
under subsection (j)(5) of this section, and holding period.
    [(h) Notwithstanding sections 728(a) and 1146(a) of this 
title, for the purpose of determining the number of taxable 
periods during which the debtor or the estate may use a loss 
carryover or a loss carryback, the taxable period of the debtor 
during which the case is commenced is deemed not to have been 
terminated by such commencement.
    [(i)(1) In a case under chapter 7, 12, or 11 of this title 
concerning an individual, the estate shall succeed to the 
debtor's tax attributes, including--
            [(A) any investment credit carryover;
            [(B) any recovery exclusion;
            [(C) any loss carryover;
            [(D) any foreign tax credit carryover;
            [(E) any capital loss carryover; and
            [(F) any claim of right.
    [(2) After such a case is closed or dismissed, the debtor 
shall succeed to any tax attribute to which the estate 
succeeded under paragraph (1) of this subsection but that was 
not utilized by the estate. The debtor may utilize such tax 
attributes as though any applicable time limitations on such 
utilization by the debtor were suspended during the time during 
which the case was pending.
    [(3) In such a case, the estate may carry back any loss of 
the estate to a taxable period of the debtor that ended before 
the order for relief under such chapter the same as the debtor 
could have carried back such loss had the debtor incurred such 
loss and the case under this title had not been commenced, but 
the debtor may not carry back any loss of the debtor from a 
taxable period that ends after such order to any taxable period 
of the debtor that ended before such order until after the case 
is closed.
    [(j)(1) Except as otherwise provided in this subsection, 
income is not realized by the estate, the debtor, or a 
successor to the debtor by reason of forgiveness or discharge 
of indebtedness in a case under this title.
    [(2) For the purposes of any State or local law imposing a 
tax on or measured by income, a deduction with respect to a 
liability may not be allowed for any taxable period during or 
after which such liability is forgiven or discharged under this 
title. In this paragraph, ``a deduction with respect to a 
liability'' includes a capital loss incurred on the disposition 
of a capital asset with respect to a liability that was 
incurred in connection with the acquisition of such asset.
    [(3) Except as provided in paragraph (4) of this 
subsection, for the purpose of any State or local law imposing 
a tax on or measured by income, any net operating loss of an 
individual or corporate debtor, including a net operating loss 
carryover to such debtor, shall be reduced by the amount of 
indebtedness forgiven or discharged in a case under this title, 
except to the extent that such forgiveness or discharge 
resulted in a disallowance under paragraph (2) of this 
subsection.
    [(4) A reduction of a net operating loss or a net operating 
loss carryover under paragraph (3) of this subsection or of 
basis under paragraph (5) of this subsection is not required to 
the extent that the indebtedness of an individual or corporate 
debtor forgiven or discharged--
            [(A) consisted of items of a deductible nature that 
        were not deducted by such debtor; or
            [(B) resulted in an expired net operating loss 
        carryover or other deduction that--
                    [(i) did not offset income for any taxable 
                period; and
                    [(ii) did not contribute to a net operating 
                loss in or a net operating loss carryover to 
                the taxable period during or after which such 
                indebtedness was discharged.
    [(5) For the purposes of a State or local law imposing a 
tax on or measured by income, the basis of the debtor's 
property or of property transferred to an entity required to 
use the debtor's basis in whole or in part shall be reduced by 
the lesser of--
            [(A)(i) the amount by which the indebtedness of the 
        debtor has been forgiven or discharged in a case under 
        this title; minus
            [(ii) the total amount of adjustments made under 
        paragraphs (2) and (3) of this subsection; and
            [(B) the amount by which the total basis of the 
        debtor's assets that were property of the estate before 
        such forgiveness or discharge exceeds the debtor's 
        total liabilities that were liabilities both before and 
        after such forgiveness or discharge.
    [(6) Notwithstanding paragraph (5) of this subsection, 
basis is not required to be reduced to the extent that the 
debtor elects to treat as taxable income, of the taxable period 
in which indebtedness is forgiven or discharged, the amount of 
indebtedness forgiven or discharged that otherwise would be 
applied in reduction of basis under paragraph (5) of this 
subsection.
    [(7) For the purposes of this subsection, indebtedness with 
respect to which an equity security, other than an interest of 
a limited partner in a limited partnership, is issued to the 
creditor to whom such indebtedness was owed, or that is 
forgiven as a contribution to capital by an equity security 
holder other than a limited partner in the debtor, is not 
forgiven or discharged in a case under this title--
            [(A) to any extent that such indebtedness did not 
        consist of items of a deductible nature; or
            [(B) if the issuance of such equity security has 
        the same consequences under a law imposing a tax on or 
        measured by income to such creditor as a payment in 
        cash to such creditor in an amount equal to the fair 
        market value of such equity security, then to the 
        lesser of--
                    [(i) the extent that such issuance has the 
                same such consequences; and
                    [(ii) the extent of such fair market 
                value.]

Sec. 346. Special provisions related to the treatment of state and 
                    local taxes

    (a) Whenever the Internal Revenue Code of 1986 provides 
that a separate taxable estate or entity is created in a case 
concerning a debtor under this title, and the income, gain, 
loss, deductions, and credits of such estate shall be taxed to 
or claimed by the estate, a separate taxable estate is also 
created for purposes of any State and local law imposing a tax 
on or measured by income and such income, gain, loss, 
deductions, and credits shall be taxed to or claimed by the 
estate and may not be taxed to or claimed by the debtor. The 
preceding sentence shall not apply if the case is dismissed. 
The trustee shall make tax returns of income required under any 
such State or local law.
    (b) Whenever the Internal Revenue Code of 1986 provides 
that no separate taxable estate shall be created in a case 
concerning a debtor under this title, and the income, gain, 
loss, deductions, and credits of an estate shall be taxed to or 
claimed by the debtor, such income, gain, loss, deductions, and 
credits shall be taxed to or claimed by the debtor under a 
State or local law imposing a tax on or measured by income and 
may not be taxed to or claimed by the estate. The trustee shall 
make such tax returns of income of corporations and of 
partnerships as are required under any State or local law, but 
with respect to partnerships, shall make said returns only to 
the extent such returns are also required to be made under such 
Code. The estate shall be liable for any tax imposed on such 
corporation or partnership, but not for any tax imposed on 
partners or members.
    (c) With respect to a partnership or any entity treated as 
a partnership under a State or local law imposing a tax on or 
measured by income that is a debtor in a case under this title, 
any gain or loss resulting from a distribution of property from 
such partnership, or any distributive share of any income, 
gain, loss, deduction, or credit of a partner or member that is 
distributed, or considered distributed, from such partnership, 
after the commencement of the case, is gain, loss, income, 
deduction, or credit, as the case may be, of the partner or 
member, and if such partner or member is a debtor in a case 
under this title, shall be subject to tax in accordance with 
subsection (a) or (b).
    (d) For purposes of any State or local law imposing a tax 
on or measured by income, the taxable period of a debtor in a 
case under this title shall terminate only if and to the extent 
that the taxable period of such debtor terminates under the 
Internal Revenue Code of 1986.
    (e) The estate in any case described in subsection (a) 
shall use the same accounting method as the debtor used 
immediately before the commencement of the case, if such method 
of accounting complies with applicable nonbankruptcy tax law.
    (f) For purposes of any State or local law imposing a tax 
on or measured by income, a transfer of property from the 
debtor to the estate or from the estate to the debtor shall not 
be treated as a disposition for purposes of any provision 
assigning tax consequences to a disposition, except to the 
extent that such transfer is treated as a disposition under the 
Internal Revenue Code of 1986.
    (g) Whenever a tax is imposed pursuant to a State or local 
law imposing a tax on or measured by income pursuant to 
subsection (a) or (b), such tax shall be imposed at rates 
generally applicable to the same types of entities under such 
State or local law.
    (h) The trustee shall withhold from any payment of claims 
for wages, salaries, commissions, dividends, interest, or other 
payments, or collect, any amount required to be withheld or 
collected under applicable State or local tax law, and shall 
pay such withheld or collected amount to the appropriate 
governmental unit at the time and in the manner required by 
such tax law, and with the same priority as the claim from 
which such amount was withheld or collected was paid.
    (i)(1) To the extent that any State or local law imposing a 
tax on or measured by income provides for the carryover of any 
tax attribute from one taxable period to a subsequent taxable 
period, the estate shall succeed to such tax attribute in any 
case in which such estate is subject to tax under subsection 
(a).
    (2) After such a case is closed or dismissed, the debtor 
shall succeed to any tax attribute to which the estate 
succeeded under paragraph (1) to the extent consistent with the 
Internal Revenue Code of 1986.
    (3) The estate may carry back any loss or tax attribute to 
a taxable period of the debtor that ended before the order for 
relief under this title to the extent that--
            (A) applicable State or local tax law provides for 
        a carryback in the case of the debtor; and
            (B) the same or a similar tax attribute may be 
        carried back by the estate to such a taxable period of 
        the debtor under the Internal Revenue Code of 1986.
    (j)(1) For purposes of any State or local law imposing a 
tax on or measured by income, income is not realized by the 
estate, the debtor, or a successor to the debtor by reason of 
discharge of indebtedness in a case under this title, except to 
the extent, if any, that such income is subject to tax under 
the Internal Revenue Code of 1986.
    (2) Whenever the Internal Revenue Code of 1986 provides 
that the amount excluded from gross income in respect of the 
discharge of indebtedness in a case under this title shall be 
applied to reduce the tax attributes of the debtor or the 
estate, a similar reduction shall be made under any State or 
local law imposing a tax on or measured by income to the extent 
such State or local law recognizes such attributes. Such State 
or local law may also provide for the reduction of other 
attributes to the extent that the full amount of income from 
the discharge of indebtedness has not been applied.
    (k)(1) Except as provided in this section and section 505, 
the time and manner of filing tax returns and the items of 
income, gain, loss, deduction, and credit of any taxpayer shall 
be determined under applicable nonbankruptcy law.
    (2) For Federal tax purposes, the provisions of this 
section are subject to the Internal Revenue Code of 1986 and 
other applicable Federal nonbankruptcy law.

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Sec. 348. Effect of conversion

    (a)  * * *

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    (f)(1) Except as provided in paragraph (2), when a case 
under chapter 13 of this title is converted to a case under 
another chapter under this title--
            (A) property of the estate in the converted case 
        shall consist of property of the estate, as of the date 
        of filing of the petition, that remains in the 
        possession of or is under the control of the debtor on 
        the date of conversion; [and]
            (B) valuations of property and of allowed secured 
        claims in the chapter 13 case shall apply [in the 
        converted case, with allowed secured claims] only in a 
        case converted to a case under chapter 11 or 12, but 
        not in a case converted to a case under chapter 7, with 
        allowed secured claims in cases under chapters 11 and 
        12 reduced to the extent that they have been paid in 
        accordance with the chapter 13 plan[.]; and
            (C) with respect to cases converted from chapter 
        13--
                    (i) the claim of any creditor holding 
                security as of the date of the petition shall 
                continue to be secured by that security unless 
                the full amount of such claim determined under 
                applicable nonbankruptcy law has been paid in 
                full as of the date of conversion, 
                notwithstanding any valuation or determination 
                of the amount of an allowed secured claim made 
                for the purposes of the chapter 13 proceeding; 
                and
                    (ii) unless a prebankruptcy default has 
                been fully cured under the plan at the time of 
                conversion, in any proceeding under this title 
                or otherwise, the default shall have the effect 
                given under applicable nonbankruptcy law.
    (2) If the debtor converts a case under chapter 13 of this 
title to a case under another chapter under this title in bad 
faith, the property of the estate in the converted case shall 
consist of the property of the estate as of the date of 
conversion.

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Sec. 351. Disposal of patient records

    If a health care business commences a case under chapter 7, 
9, or 11, and the trustee does not have a sufficient amount of 
funds to pay for the storage of patient records in the manner 
required under applicable Federal or State law, the following 
requirements shall apply:
            (1) The trustee shall--
                    (A) promptly publish notice, in 1 or more 
                appropriate newspapers, that if patient records 
                are not claimed by the patient or an insurance 
                provider (if applicable law permits the 
                insurance provider to make that claim) by the 
                date that is 365 days after the date of that 
                notification, the trustee will destroy the 
                patient records; and
                    (B) during the first 180 days of the 365-
                day period described in subparagraph (A), 
                promptly attempt to notify directly each 
                patient that is the subject of the patient 
                records and appropriate insurance carrier 
                concerning the patient records by mailing to 
                the last known address of that patient, or a 
                family member or contact person for that 
                patient, and to the appropriate insurance 
                carrier an appropriate notice regarding the 
                claiming or disposing of patient records.
            (2) If, after providing the notification under 
        paragraph (1), patient records are not claimed during 
        the 365-day period described under that paragraph, the 
        trustee shall mail, by certified mail, at the end of 
        such 365-day period a written request to each 
        appropriate Federal agency to request permission from 
        that agency to deposit the patient records with that 
        agency, except that no Federal agency is required to 
        accept patient records under this paragraph.
            (3) If, following the 365-day period described in 
        paragraph (2) and after providing the notification 
        under paragraph (1), patient records are not claimed by 
        a patient or insurance provider, or request is not 
        granted by a Federal agency to deposit such records 
        with that agency, the trustee shall destroy those 
        records by--
                    (A) if the records are written, shredding 
                or burning the records; or
                    (B) if the records are magnetic, optical, 
                or other electronic records, by otherwise 
                destroying those records so that those records 
                cannot be retrieved.

                 SUBCHAPTER IV--ADMINISTRATIVE POWERS

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Sec. 362. Automatic stay

    (a) Except as provided in subsection (b) of this section, a 
petition filed under section 301, 302, or 303 of this title, or 
an application filed under section 5(a)(3) of the Securities 
Investor Protection Act of 1970, operates as a stay, applicable 
to all entities, of--
            (1)  * * *

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