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Title 11 United States Bankruptcy Proceedings
Chapter 1 ( General Provisions
101 Definitions
102 Rules of construction
103 Applicability of chapters
104 Adjustment of dollar amounts
105 Power of court
106 Waiver of sovereign immunity
107 Public access to papers
108 Extension of time
109 Who may be a debtor
110 Penalty for persons who negligently or fr...
Chapter 3 ( Case Administration
Subchapter I ( Commencement of a Case
301 Voluntary cases
302 Joint cases
303 Involuntary cases
304 Cases ancillary to foreign proceedings
305 Abstention
306 Limited Appearance
307 United States trustee
Subchapter II ( Officers
321 Eligibility to serve as trustee
322 Qualification of trustee
323 Role and capacity of trustee
324 Removal of trustee or examiner
325 Effect of vacancy
326 Limitation on compensation of trustee
327 Employment of professional persons
328 Limitation on compensation of professiona...
329 Debtor's transactions with attorneys
330 Compensation of officers
331 Interim compensation
Subchapter III ( Administration
341 Meetings of creditors and equity security
342 Notice
343 Examination of the debtor
344 Self-incrimination, immunity
345 Money of estates
346 Special tax provisions
347 Unclaimed property
348 Effect of conversion
349 Effect of dismissal
350 Closing and reopening cases
Subchapter IV ( Administrative Powers
361 Adequate protection
362 Automatic stay
363 Use, sale, or lease of property
364 Obtaining credit
365 Executory contracts and unexpired leases
366 Utility service
Chapter 5 ( Creditors, the Debtor, and the Estate
Subchapter 1 ( Creditors & Claims
501 Filing of proofs of claims or interests
502 Allowance of claims or interests
503 Allowance of administrative expenses
504 Sharing of compensation
505 Determination of tax liability
506 Determination of secured status
507 Priorities
508 Effect of distribution other than under t...
509 Claims of codebtors
510 Subordination
Subchapter II ( Debtor's Duties and Benefits
521 Debtor's duties
522 Exemptions
523 Exceptions to discharge
524 Effect of discharge
525 Protection against discriminatory treatme...
Subchapter III ( The Estate
541 Property of the estate
542 Turnover of property to the estate
543 Turnover of property by a custodian
544 Trustee as hen creditor and as successor
545 Statutory liens
546 Limitations on avoiding powers
547 Preferences
548 Fraudulent transfers and obligations
549 Postpetition transactions
550 Liability of transferee of avoided transf...
551 Automatic preservation of avoided transfe...
552 Postpetition effect of security interest
553 Setoff
554 Abandonment of property of the estate
555 Contractual right to liquidate a secunti...
556 Contractual right to liquidate a commodit...
557 Expedited determination of interests in, ...
558 Defenses of the estate
559 Contractual right to liquidate a repurcha...
560 Contractual right to terminate a swap agr...<
Chapter 7 ( Liquidation
Subchapter 1 ( Officers and Administration
701 Interim trustee
702 Election of trustee
703 Successor trustee
704 Duties of trustee
705 Creditors' committee
706 Conversion
707 Dismissal
Subchapter II ( Collection, Liquidation and Distribution of t...
721 Authorization to operate business
722 Redemption
723 Rights of partnership trustee against gen...
724 Treatment of certain hens
725 Disposition of certain property
726 Distribution of property of the estate
727 Discharge
728 Special tax provisions
Subchapter III ( Stockbroker Liquidation
741 Definitions for this subchapter
742 Effect of section 362 of this title in th...
743 Notice
744 Executory contracts
745 Treatment of accounts
746 Extent of customer claims
747 Subordination of certain customer claims
748 Reduction of securities to money
749 Voidable transfers
750 Distribution of securities
751 Customer name securities
752 Customer property
Subchapter IV ( Commodity Broker Liquidation
761 Definitions for this subchapter
762 Notice to the Commission and right to be
763 Treatment of accounts
764 Voidable transfers
765 Customer instructions
766 Treatment of customer property
Subchapter V ( Clearing Bank Liquidation
781 Definitions
782 Selection of trustee
783 Additional powers of trustee
784 Right to be heard
Chapter 9 ( Adjustments of Debts of a Municipality
Subchapter I ( General Provisions
901 Applicability of other sections of this t...
902 Definitions for this chapter
903 Reservation of State power to control mun...
904 Limitation on jurisdiction and powers of...
Subchapter II ( Administration
921 Petition and proceedings relating to peti...
922 Automatic stay of enforcement of claims a...
923 Notice
924 List of creditors
925 Effect of list of claims
926 Avoiding powers
927 Limitation on recourse
928 Post petition effect of security interest
929 Municipal leases
930 Dismissal
Subchapter III ( The Plan
941 Filing of plan
942 Modification of plan
943 Confirmation
944 Effect of confirmation
945 Continuing jurisdiction and closing of th...
946 Effect of exchange of securities before t...
Chapter 11 ( Reorganization
Subchapter I ( Officers and Administration
1101 Definitions for this chapter
1102 Creditors' and equity security holders'...
1103 Powers and duties of committees
1104 Appointment of trustee or examiner
1105 Termination of trustee's appointment
1106 Duties of trustee and examiner
1107 Rights, powers, and duties of debtor in...
1108 Authorization to operate business
1109 Right to be heard
1110 Aircraft equipment and vessels
1111 Claims and interests
1112 Conversion or dismissal
1113 Rejection of collective bargaining agree
1114 Payment of insurance benefits to retired
Subchapter II ( The Plan
1121 Who may file a plan
1122 Classification of claims or interests
1123 Contents of plan
1124 Impairment of claims or interests
1125 Postpetition disclosure and solicitation
1126 Acceptance of plan
1127 Modification of plan
1128 Confirmation hearing
1129 Confirmation of plan
Subchapter III ( Postconfirmation Matters
1141 Effect of confirmation
1142 Implementation of plan
1143 Distribution
1144 Revocation of an order of confirmation
1145 Exemption from securities laws
1146 Special tax provisions
Subchapter IV ( Railroad Reorganization
1161 Inapplicability of other sections
1162 Definition
1163 Appointment of trustee
1164 Right to be heard
1165 Protection of the public interest
1166 Effect of subtitle IV of title 49 and of
1167 Collective bargaining agreements
1168 Rolling stock equipment
1169 Effect of rejection of lease of railroad
1170 Abandonment of railroad line
1171 Priority claims
1172 Contents of plan
1173 Confirmation of plan
1174 Liquidation
Chapter 12 ( Adjustments of Debts of a Family Farmer with Regular Annual Income
Subchapter I ( Officers, Administration, and the Estate
1201 Stay of action against codebtor
1202 Trustee
1203 Rights and powers of debtor
1204 Removal of debtor as debtor in possession
1205 Adequate protection
1206 Sales free of interests
1207 Property of the estate
1208 Conversion or dismissal
Subchapter II ( The Plan
1221 Filing of plan
1222 Contents of plan
1223 Modification of plan before confirmation
1224 Confirmation hearing
1225 Confirmation of plan
1226 Payments
1227 Effect of confirmation
1228 Discharge
1229 Modification of plan after confirmation
1230 Revocation of an order of confirmation
1231 Special tax provisions
Chapter 13 ( Adjustment of Debts of an Individual with Regular Income
Subchapter I ( Officers Administration and the Estate
1301 Stay of action against codebtor
1302 Trustee
1303 Rights and powers of debtor
1304 Debtor engaged in business
1305 Filing and allowance of postpetition cla...
1306 Property of the estate
1307 Conversion or dismissal
Subchapter II (The Plan
1321 Filing of plan
1322 Contents of plan
1323 Modification of plan before confirmation
1324 Confirmation hearing
1325 Confirmation of plan
1326 Payments
1327 Effect of confirmation
1328 Discharge
1329 Modification of plan after confirmation
1330 Revocation of an order of confirmation
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Chapter 1 - General Provisions
101. Definitions
In this title-
(1) "accountant" means accountant authorized under applicable law to practice
public accounting, and includes professional accounting association,
corporation, or partnership, if so authorized;
(2) "affiliate" means-
(A) entity that directly or indirectly owns, controls, or holds with power to
vote, 20 percent or more of the outstanding voting securities of the debtor,
other than an entity that holds such securities-
(i) in a fiduciary or agency capacity without sole discretionary power to vote
such securities; or
(ii) solely to secure a debt, if such entity has not in fact exercised such
power to vote;
(B) corporation 20 percent or more of whose outstanding voting securities are
directly or indirectly owned, controlled, or held with power to vote, by the
debtor, or by an entity that directly or indirectly owns, controls, or holds
with power to vote, 20 percent or more of the outstanding voting securities of
the debtor, other than an entity that holds such securities-
(i) in a fiduciary or agency capacity without sole discretionary power to vote
such securities; or
(ii) solely to secure a debt, if such entity has not in fact exercised such
power to vote;
(C) person whose business is operated under a lease or operating agreement by a
debtor, or person substantially all of whose property is operated under an
operating agreement with the debtor; or
(D) entity that operates the business or substantially all of the property of
the debtor under a lease or operating agreement;
[(3)Redesignated(21B)]
(4) "attorney" means attorney, professional law association, corporation, or
partnership, authorized under applicable law to practice law;
(5) "claim" means-
(A) right to payment, whether or not such right is reduced to judgment,
liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed,
undisputed, legal, equitable, secured, or unsecured; or
(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) "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) "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) "consumer debt" means debt incurred by an individual primarily for a
personal, family, or household purpose;
(9) "corporation"-
(A) includes-
(i) association having a power or privilege that a private corporation, but not
an
individual or a partnership, possesses;
(ii) partnership association organized under a law that makes only the capital
subscribed responsible for the debts of such association;
(iii) joint-stock company;
(iv) unincorporated company or association; or
(v) business trust; but
(B) does not include limited partnership;
(10) "creditor" means-
(A) entity that has a claim against the debtor that arose at the time of or
before the order for relief concerning the debtor;
(B) entity that has a claim against the estate of a kind specified in section
348(d), 502(f), 502(g), 502(h) or 502(i) of this title; or
(C) entity that has a community claim;
(11) "custodian" means-
(A) receiver or trustee of any of the property of the debtor, appointed in a
case or proceeding not under this title;
(B) assignee under a general assignment for the benefit of the debtor's
creditors; or
(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) "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;
(13) "debtor" means person or municipality concerning which a case under this
title has been commenced;
(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;
(15) "entity" includes person, estate, trust, governmental unit, and United
States trustee;
(16) "equity security" means-
(A) share in a corporation, whether or not transferable or denominated "stock",
or similar security;
(B) interest of a limited partner in a limited partnership; or
(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) "equity security holder" means holder of an equity security of the debtor;
(18) "family farmer" means-
(A) individual or individual and spouse engaged in a farming operation whose
aggregate debts do not exceed $1,500,000 and not less than 80 percent of whose
aggregate noncontingent, liquidated debts (excluding a debt for the principal
residence of such individual or such individual and spouse unless such debt
arises out of a farming operation), on the date the case is filed, arise out of
a farming operation owned or operated by such individual or such individual and
spouse, and such individual or such individual and spouse receive from such
farming operation more than 50 percent of such individual's or such individual
and spouse's gross income for the taxable year preceding the taxable year in
which the case concerning such individual or such individual and spouse was
filed; or
(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) more than 80 percent of the value of its assets consists of assets related
to the farming operation;
(ii) its aggregate debts do not exceed $1,500,000 and not less than 80 percent
of its aggregate noncontingent, liquidated debts (excluding a debt for one
dwelling which is owned by such corporation or partnership and which a
shareholder or partner maintains as a principal residence, unless such debt
arises out of a farming operation), on the date the case is filed, arise out of
the farming operation owned or operated by such corporation or such partnership;
and (iii) if such corporation issues stock, such stock is not publicly traded;
(19) "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) "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) "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;
(21 A) "farmout agreement" means a written agreement in which-
(A) the owner of a right to drill, produce, or operate liquid or gaseous
hydrocarbons on property agrees or has agreed to transfer or assign all or a
part of such right to another entity; and
(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) "Federal depository institutions regulatory
agency" means-
(A) with respect to an insured depository institution (as defined in section
3(c)(2) of the Federal Deposit Insurance Act) for which no conservator or
receiver has been appointed, the appropriate Federal banking agency (as defined
in section 3(q) of such Act);
(B) with respect to an insured credit union (including an insured credit union
for which the National Credit Union Administration has been appointed
conservator or liquidating agent), the National Credit Union Administration;
(C) with respect to any insured depository institution for which the Resolution
Trust Corporation has been appointed conservator or receiver, the Resolution
Trust Corporation; and
(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 "financial institution'-
(A) means-
(i) a Federal reserve bank or an entity (domestic or foreign) that is a
commercial or savings bank, industrial savings bank, savings and loan
association, trust company, or receiver or conservator for such entity and, when
any such Federal reserve bank, receiver, conservator, or entity is acting as
agent or custodian for a customer in connection with a securities contract, as
defined in section 741 of this title, the customer; or
(ii) in connection with a securities contract, as defined in section 741 of this
title, an investment company registered under the Investment Company Act of
1940; and
(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;
(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;
(25) "forward contract" means 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;
(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;
(27) "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;
(28) "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) "indenture trustee" means trustee under an indenture;
(30) "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) "insider" includes-
(A) if the debtor is an individual-
(i) relative of the debtor or of a general partner of the debtor;
(ii) partnership in which the debtor is a general partner;
(iii) general partner of the debtor; or
(iv) corporation of which the debtor is a director, officer, or person in
control;
(B) if the debtor is a corporation- (i) director of the debtor;
(ii) officer of the debtor;
(iii) person in control of the debtor;
(iv) partnership in which the debtor is a general partner;
(v) general partner of the debtor; or
(vi) relative of a general partner, director, officer, or person in control of
the
debtor;
(C) if the debtor is a partnership- (i) general partner in the debtor;
(ii) relative of a general partner in, general partner of, or person in control
of the
debtor;
(iii) partnership in which the debtor is a general partner;
(iv) general partner of the debtor; or
(v) person in control of the debtor;
(D) if the debtor is a municipality, elected official of the debtor or relative
of an elected official of the debtor;
(E) affiliate, or insider of an affiliate as if such affiliate were the debtor;
and
(F) managing agent of the debtor;
(32) "insolvent" means-
(A) with reference to an entity other than a partnership and a municipality,
financial condition such that the sum of such entity's debts is greater than all
of such entity's property, at a fair valuation, exclusive of-
(i) property transferred, concealed, or removed with intent to hinder, delay, or
defraud such entity's creditors; and
(ii) property that may be exempted from property of the estate under section 522
of this title;
(B) with reference to a partnership, financial condition such that the sum of
such partnership's debts is greater than the aggregate of, at a fair valuation-
(i) all of such partnership's property, exclusive of property of the kind
specified in subparagraph (A)(i) of this paragraph; and
(ii) the sum of the excess of the value of each general partner's nonpartnership
property, exclusive of property of the kind specified in subparagraph (A) of
this paragraph, over such partner's nonpartnership debts; and
(C) with reference to a municipality, financial condition such that the
municipality
(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) "institution-affiliated party"-
(A) with respect to an insured depository institution (as defined in section
3(c)(2) of the Federal Deposit Insurance Act), has the meaning given it in
section 3(u) of the Federal Deposit Insurance Act; and
(B) with respect to an insured credit union, has the meaning given it in section
206(r) of the Federal Credit Union Act;
(34) "insured credit union" has the meaning given it in section 101(7) of the
Federal Credit Union Act;
(35) "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) of this subsection);
(35A) "intellectual property" means-
(A) trade secret;
(B) invention, process, design, or plant protected under title 35;
(C) patent application;
(D) plant variety;
(E) work of authorship protected under title 17; or
(F) mask work protected under chapter 9 of title 17;to the extent protected by
applicable nonbankruptcy law; and [sic]
(36) "judicial lien" means lien obtained by judgment, levy, sequestration, or
other legal or equitable process or proceeding;
(37) "lien" means charge against or interest in property to secure payment of a
debt or performance of an obligation;
(38) "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 [sic]
(39) "mask work" has the meaning given it in section 901(a)(2) of title 17.
[sic] [;]
(40) "municipality" means political subdivision or public agency or
instrumentality of a State;
(41) "person" includes individual, partnership, and corporation, but does not
include governmental unit, except that a governmental unit that-
(A) acquires an asset from a person-
(i) as a result of the operation of a loan guarantee agreement; or (ii) as
receiver or liquidating agent of a person;
(B) is a guarantor of a pension benefit payable by or on behalf of the debtor or
an affiliate of the debtor; or
(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) "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) "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) "purchaser" means transferee of a voluntary transfer, and includes
immediate or mediate transferee of such a transferee;
(44) "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) "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) "repo participant" means an entity that, on any day during the period
beginning 90 days before the date of 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;
(48) "securities clearing agency" means person that is registered as a clearing
agency under section 17A of the Securities Exchange Act of 1934 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;
(49) "security"-
(A) includes- (i) note; (ii) stock;
(iii) treasury stock; (iv) bond; (v) debenture;
(vi) collateral trust certificate; (vii) pre-organization certificate or
subscription; (viii) transferable share; (ix) voting-trust certificate; (x)
certificate of deposit; (xi) certificate of deposit for security;
(xii) investment contract or certificate of interest or participation in a
profit-sharing agreement or in an oil, gas, or mineral royalty or lease, if such
contract or interest is required to be the subject of a registration statement
filed with the Securities and Exchange Commission under the provisions of the
Securities Act of 1933, or is exempt under section 3(b) of such Act from the
requirement to file such a statement;
(xiii) interest of a limited partner in a limited partnership; (xiv) other claim
or interest commonly known as "security"; and (xv) certificate of interest or
participation in, temporary or interim certificate for, receipt for, or warrant
or right to subscribe to or purchase or sell, a security; but
(B) does not include-
(i) currency, check, draft, bill of exchange, or bank letter of credit; (ii)
leverage transaction, as defined in section 761 of this title; (iii) commodity
futures contract or forward contract;
(iv) option, warrant, or right to subscribe to or purchase or sell a commodity
futures contract;
(v) option to purchase or sell a commodity;
(vi) contract or certificate of a kind specified in subparagraph (A)(xii) of
this
paragraph that is not required to be the subject of a registration statement
filed
with the Securities and Exchange Commission and is not exempt under section
3(b) of the Securities Act of 1933 from the requirement to file such a
statement;
or
(vii) debt or evidence of indebtedness for goods sold and delivered or services
rendered;
(50) "security agreement" means agreement that creates or provides for a
security interest;
(51) "security interest" means lien created by an agreement;
(51 A) "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) "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 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;
(52) "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) "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) "stockbroker" means person-
(A) with respect to which there is a customer, as defined in section 741 of this
title; and
(B) that is engaged in the business of effecting transactions in securities- (i)
for the account of others; or
(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;
(53C) "swap participant" means an entity that, at any time before the filing of
the petition, has an outstanding swap agreement with the debtor;
(53D) "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;
(54A) 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) "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; [sic] [and]
[(56)Redesignated(35A)]
(56A) "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; [sic] [.]
[(57) Redesignated (39)]
102. Rules of construction
In this title-
(1) "after notice and a hearing", or a similar phrase-
(A) means after such notice as is appropriate in the particular circumstances,
and such opportunity for a hearing as is appropriate in the particular
circumstances; but
(B) authorizes an act without an actual hearing if such notice is given properly
and if-
(i) such a hearing is not requested timely by a party in interest; or (ii) there
is insufficient time for a hearing to be commenced before such act must be done,
and the court authorizes such act;
(2) "claim against the debtor" includes claim against property of the debtor;
(3) "includes" and "including" are not limiting;
(4) "may not" is prohibitive, and not permissive;
(5) "or" is not exclusive;
(6) "order for relief" means entry of an order for relief;
(7) the singular includes the plural;
(8) a definition, contained in a section of this title that refers to another
section of this title, does not, for the purpose of such reference, affect the
meaning of a term used in such other section; and
(9) "United States trustee" includes a designee of the United States trustee.
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.
(b) Subchapters I and II of chapter 7 of this title apply only in a case under
such chapter.
(c) Subchapter III of chapter 7 of this title applies only in a case under such
chapter concerning a stockbroker.
(d) Subchapter IV of chapter 7 of this title applies only in a case under such
chapter concerning a commodity broker.
(e) Scope of application.- Subchapter V of chapter 7 of this title shall apply
only in a case under such chapter concerning the liquidation of an uninsured
State member bank, or a corporation organized under section 25 A of the Federal
Reserve Act, which operates, or operates as, a multilateral clearing
organization pursuant to section 409 of the Federal Deposit Insurance
Corporation Improvement Act of 1991.
(f) Except as provided in section 901 of this title, only chapters 1 and 9 of
this title apply in a case under such chapter 9.
(g) Except as provided in section 901 of this title, subchapters I, II, and III
of chapter 11 of this title apply only in a case under such chapter.
(h) Subchapter IV of chapter 11 of this title applies only in a case under such
chapter concerning a railroad.
(i) Chapter 13 of this title applies only in a case under such chapter.
(j) Chapter 12 of this title applies only in a case under such chapter.
104. Adjustment of dollar amounts
(a) The Judicial Conference of the United States shall transmit to the Congress
and to the President before May 1, 1985, and before May 1 of every sixth year
after May 1, 1985, a recommendation for the uniform percentage adjustment of
each dollar amount in this title and in section 1930 of title 28.
(b) (1) On April 1, 1998, and at each 3-year interval ending on April 1
thereafter, each dollar amount in effect under sections 109(e), 303(b), 507(a),
522(d), and 523(a)(2)(C) immediately before such April 1 shall be adjusted-
(A) to reflect the change in the Consumer Price Index for All Urban Consumers,
published by the Department of Labor, for the most recent 3-year period ending
immediately before January 1 preceding such April 1, and
(B) to round to the nearest $25 the dollar amount that represents such change.
(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), and 523(a)(2)(C) of this title.
(3) Adjustments made in accordance with paragraph (1) shall not apply with
respect to cases commenced before the date of such adjustments.
105. Power of court
(a) The court may issue any order, process, or judgment that is necessary or
appropriate to carry out the provisions of this title. No provision of this
title providing for the raising of an issue by a party in interest shall be
construed to preclude the court from, sua sponte, taking any action or making
any determination necessary or appropriate to enforce or implement court orders
or rules, or to prevent an abuse of process.
(b) Notwithstanding subsection (a) of this section, a court may not appoint a
receiver in a case under this title.
(c) The ability of any district judge or other officer or employee of a district
court to exercise any of the authority or responsibilities conferred upon the
court under this title shall be determined by reference to the provisions
relating to such judge, officer, or employee set forth in title 28. This
subsection shall not be interpreted to exclude bankruptcy judges and other
officers or employees appointed pursuant to chapter 6 of title 28 from its
operation.
(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
(2) unless inconsistent with another provision of this title or with applicable
Federal Rules of Bankruptcy Procedure, issue an order at any such conference
prescribing such limitations and conditions as the court deems appropriate to
ensure that the case is handled expeditiously and economically, including an
order that-
(A) sets the date by which the trustee must assume or reject an executory
contract or unexpired lease; or
(B) in a case under chapter 11 of this title-
(i) sets a date by which the debtor, or trustee if one has been appointed, shall
file a disclosure statement and plan;
(ii) sets a date by which the debtor, or trustee if one has been appointed,
shall solicit acceptances of a plan;
(iii) sets the date by which a party in interest other than a debtor may file a
plan;
(iv) sets a date by which a proponent of a plan, other than the debtor, shall
solicit acceptances of such plan;
(v) fixes the scope and format of the notice to be provided regarding the
hearing on approval of the disclosure statement; or
(vi) provides that the hearing on approval of the disclosure statement may be
combined with the hearing on confirmation of the plan.
106. Waiver of sovereign immunity
(a) Notwithstanding an assertion of sovereign immunity, sovereign immunity is
abrogated as to a governmental unit to the extent set forth in this section with
respect to the following:
(1) Sections 105, 106, 107, 108, 303, 346, 362, 363, 364, 365, 366, 502, 503,
505, 506, 510, 522, 523, 524, 525, 542, 543, 544, 545, 546, 547, 548, 549, 550,
551, 552, 553, 722, 724, 726, 728, 744, 749, 764, 901, 922, 926, 928, 929, 944,
1107, 1141, 1142, 1143, 1146, 1201, 1203, 1205, 1206, 1227, 1231, 1301, 1303,
1305, and 1327 of this title.
(2) The court may hear and determine any issue arising with respect to the
application of such sections to governmental units.
(3) The court may issue against a governmental unit an order, process, or
judgment under such sections or the Federal Rules of Bankruptcy Procedure,
including an order or judgment awarding a money recovery, but not including an
award of punitive damages. Such order or judgment for costs or fees under this
title or the Federal Rules of Bankruptcy Procedure against any governmental unit
shall be consistent with the provisions and limitations of section 2412(d)(2)(A)
of title 28.
(4) The enforcement of any such order, process, or judgment against any
governmental unit shall be consistent with appropriate nonbankruptcy law
applicable to such governmental unit and, in the case of a money judgment
against the United States, shall be paid as if it is a judgment rendered by a
district court of the United States.
(5) Nothing in this section shall create any substantive claim for relief or
cause of action not otherwise existing under this title, the Federal Rules of
Bankruptcy Procedure, or nonbankruptcy law.
(b) A governmental unit that has filed a proof of claim in the case is deemed to
have waived sovereign immunity with respect to a claim against such governmental
unit that is property of the estate and that arose out of the same transaction
or occurrence out of which the claim of such governmental unit arose.
(c) Notwithstanding any assertion of sovereign immunity by a governmental unit,
there shall be offset against a claim or interest of a governmental unit any
claim against such governmental unit that is property of the estate.
107. Public access to papers
(a) Except as provided in subsection (b) of this section, a paper filed in a
case under this title and the dockets of a bankruptcy court are public records
and open to examination by an entity at reasonable times without charge.
(b) On request of a party in interest, the bankruptcy court shall, and on the
bankruptcy court's own motion, the bankruptcy court may-
(1) protect an entity with respect to a trade secret or confidential research,
development, or commercial information; or
(2) protect a person with respect to scandalous or defamatory matter contained
in a paper filed in a case under this title.
108. Extension of time
(a) If applicable nonbankruptcy law, an order entered in a nonbankruptcy
proceeding, or an agreement fixes a period within which the debtor may commence
an action, and such period has not expired before the date of the filing of the
petition, the trustee may commence such action only before the later of-
(1) the end of such period, including any suspension of such period occurring on
or after the commencement of the case; or
(2) two years after the order for relief.
(b) Except as provided in subsection (a) of this section, if applicable
nonbankruptcy law, an order entered in a nonbankruptcy proceeding, or an
agreement fixes a period within which the debtor or an individual protected
under section 1201 or 1301 of this title may file any pleading, demand, notice,
or proof of claim or loss, cure a default, or perform any other similar act, and
such period has not expired before the date of the filing of the petition, the
trustee may only file, cure, or perform, as the case may be, before the later
of-
(1) the end of such period, including any suspension of such period occurring on
or after the commencement of the case; or
(2) 60 days after the order for relief.
(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) the end of such period, including any suspension of such period occurring on
or after the commencement of the case; or
(2) 30 days after notice of the termination or expiration of the stay under
section 362, 922, 1201, or 1301 of this title, as the case may be, with respect
to such claim.
109. Who may be a debtor
(a) Notwithstanding any other provision of this section, only a person that
resides or has a domicile, a place of business, or property in the United
States, or a municipality, may be a debtor under this title.
(b) A person may be a debtor under chapter 7 of this title only if such person
is not-
(1) a railroad;
(2) a domestic insurance company, bank, savings bank, cooperative bank, savings
and loan association, building and loan association, homestead association, a
New Markets Venture Capital company as defined in section 351 of the Small
Business Investment Act of 1958, a small business investment company licensed by
the Small Business Administration under 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, except that an uninsured State member bank, or a
corporation organized under section 25A of the
Federal Reserve Act, which operates, or operates as, a multilateral clearing
organization pursuant to section 409 of the Federal Deposit Insurance
Corporation Improvement Act of 1991 may be a debtor if a petition is filed at
the direction of the Board of Governors of the Federal Reserve System ; or
(3) a 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.
(c) An entity may be a debtor under chapter 9 of this title if and only if such
entity-
(1) is a municipality;
(2) is specifically authorized, in its capacity as a municipality or by name, to
be a debtor under such chapter by State law, or by a governmental officer or
organization empowered by State law to authorize such entity to be a debtor
under such chapter;
(3) is insolvent;
(4) desires to effect a plan to adjust such debts; and
(5) (A) has obtained the agreement of creditors holding at least a majority in
amount of the claims of each class that such entity intends to impair under a
plan in a case under such chapter;
(B) has negotiated in good faith with creditors and has failed to obtain the
agreement of creditors holding at least a majority in amount of the claims of
each class that such entity intends to impair under a plan in a case under such
chapter;
(C) is unable to negotiate with creditors because such negotiation is
impracticable; or
(D) reasonably believes that a creditor may attempt to obtain a transfer that is
avoidable under section 547 of this title.
(d) Only a railroad, a person that may be a debtor under chapter 7 of this title
(except a stockbroker or a commodity broker), and an uninsured State member
bank, or a corporation organized under section 25 A of the Federal Reserve Act,
which operates, or operates as, a multilateral clearing organization pursuant to
section 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991
may be a debtor under chapter 11 of this title.
(e) Only an individual with regular income that owes, on the date of the filing
of the petition, noncontingent, liquidated, unsecured debts of less than
$250,000 [$290,525] and noncontingent, liquidated, secured debts of less than
$750,000 [$871,550], or an individual with regular income and such individual's
spouse, except a stockbroker or a commodity broker, that owe, on the date of the
filing of the petition, noncontingent, liquidated, unsecured debts that
aggregate less than $250,000 [$290,525] and noncontingent, liquidated, secured
debts of less than $750,000 [$871,550] may be a debtor under chapter 13 of this
title.
(f) Only a family farmer with regular annual income may be a debtor under
chapter 12 of this title.
(g) Notwithstanding any other provision of this section, no individual or family
farmer may be a debtor under this title who has been a debtor in a case pending
under this title at any time in the preceding 180 days if-
(1) the case was dismissed by the court for willful failure of the debtor to
abide by orders of the court, or to appear before the court in proper
prosecution of the case; or
(2) the debtor requested and obtained the voluntary dismissal of the case
following the filing of a request for relief from the automatic stay provided by
section 362 of this title.
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, who prepares for compensation a document for filing;
and
(2) "document for filing" means a petition or any other document prepared for
filing by a debtor in a United States bankruptcy court or a United States
district court in connection with a case under this title.
(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.
(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.
(c) (1) A bankruptcy petition preparer who prepares a document for filing shall
place on the document, after the preparer's signature, an identifying number
that identifies individuals who prepared the document.
(2) 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.
(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) 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).
(f) (1) 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) 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) Within 10 days after the date of the filing of a petition, a bankruptcy
petition preparer shall file a declaration under penalty of perjury 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.
(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) The debtor, the trustee, a creditor, or the United States trustee may file a
motion for an order under paragraph (2).
(4) 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-
(A) the debtor's actual damages;
(B) the greater of- (i) $2,000; or
(ii) twice the amount paid by the debtor to the bankruptcy petition preparer for
the preparer's services; and
(C) reasonable attorneys' fees and costs in moving for damages under this
subsection.
(2) If the trustee or creditor moves for damages on behalf of the debtor under
this subsection, the bankruptcy petition preparer shall be ordered to pay the
movant the additional amount of $1,000 plus reasonable attorneys' fees and costs
incurred, (j) (1) A debtor for whom a bankruptcy petition preparer has prepared
a document for filing, the trustee, a creditor, or the United States trustee in
the district in which the bankruptcy petition preparer resides, has conducted
business, or the United States trustee in any other district in which the debtor
resides may bring a civil action to enjoin a
bankruptcy petition preparer from engaging in any conduct in violation of this
section or from further acting as a bankruptcy petition preparer.
(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;
(II) misrepresented the preparer's experience or education as a bankruptcy
petition preparer; or
(III) engaged in any other fraudulent, unfair, or deceptive conduct; and (ii)
injunctive relief is appropriate to prevent the recurrence of such conduct,
the court may enjoin the bankruptcy petition preparer from engaging in such
conduct.
(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, the court may enjoin the person
from acting as a bankruptcy petition preparer.
(3) The court shall award to a debtor, trustee, or creditor that brings a
successful action under this subsection reasonable attorney's fees and costs of
the action, to be paid by the bankruptcy petition preparer.
(k) Nothing in this section shall be construed to permit activities that are
otherwise prohibited by law, including rules and laws that prohibit the
unauthorized practice of law.
Chapter 3 - Case Administration
subchapter i - commencement of a case
301. Voluntary cases
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.
302. Joint cases
(a) A joint case under a chapter of this title is commenced by the filing with
the bankruptcy court of a single petition under such chapter by an individual
that may be a debtor under such chapter and such individual's spouse. The
commencement of a joint case under a chapter of this title constitutes an order
for relief under such chapter.
(b) After the commencement of a joint case, the court shall determine the
extent, if any, to which the debtors' estates shall be consolidated.
303. Involuntary cases
(a) An involuntary case may be commenced only under chapter 7 or 11 of this
title, and only against a person, except a farmer, family farmer, or a
corporation that is not a moneyed, business, or commercial corporation, that may
be a debtor under the chapter under which such case is commenced.
(b) An involuntary case against a person is commenced by the filing with the
bankruptcy court of a petition under chapter 7 or 11 of this title-
(1) by three or more entities, each of which is either a holder of a claim
against such person that is not contingent as to liability or the subject of a
bona fide dispute, or an indenture trustee representing such a holder, if such
claims aggregate at least $10,000 [$11,625] more than the value of any lien on
property of the debtor securing such claims held by the holders of such claims;
(2) if there are fewer than 12 such holders, excluding any employee or insider
of such person and any transferee of a transfer that is voidable under section
544, 545, 547, 548, 549, or 724(a) of this title, by one or more of such holders
that hold in the aggregate at least $10,000 [$11,625] of such claims;
(3) if such person is a partnership-
(A) by fewer than all of the general partners in such partnership; or
(B) if relief has been ordered under this title with respect to all of the
general partners in such partnership, by a general partner in such partnership,
the trustee of such a general partner, or a holder of a claim against such
partnership; or
(4) by a foreign representative of the estate in a foreign proceeding concerning
such person.
(c) After the filing of a petition under this section but before the case is
dismissed or relief is ordered, a creditor holding an unsecured claim that is
not contingent, other than a creditor filing under subsection (b) of this
section, may join in the petition with the same effect as if such joining
creditor were a petitioning creditor under subsection (b) of this section.
(d) The debtor, or a general partner in a partnership debtor that did not join
in the petition, may file an answer to a petition under this section.
(e) After notice and a hearing, and for cause, the court may require the
petitioners under this section to file a bond to indemnify the debtor for such
amounts as the court may later allow under subsection (i) of this section.
(f) Notwithstanding section 363 of this title, except to the extent that the
court orders otherwise, and until an order for relief in the case, any business
of the debtor may continue to operate, and the debtor may continue to use,
acquire, or dispose of property as if an involuntary case concerning the debtor
had not been commenced.
(g) At any time after the commencement of an involuntary case under chapter 7 of
this title but before an order for relief in the case, the court, on request of
a party in interest, after notice to the debtor and a hearing, and if necessary
to preserve the property of the
estate or to prevent loss to the estate, may order the United States trustee to
appoint an interim trustee under section 701 of this title to take possession of
the property of the estate and to operate any business of the debtor. Before an
order for relief, the debtor may regain possession of property in the possession
of a trustee ordered appointed under this subsection if the debtor files such
bond as the court requires, conditioned on the debtor's accounting for and
delivering to the trustee, if there is an order for relief in the case, such
property, or the value, as of the date the debtor regains possession, of such
property.
(h) If the petition is not timely controverted, the court shall order relief
against the debtor in an involuntary case under the chapter under which the
petition was filed. Otherwise, after trial, the court shall order relief against
the debtor in an involuntary case under the chapter under which the petition was
filed, only if-
(1) the debtor is generally not paying such debtor's debts as such debts become
due unless such debts are the subject of a bona fide dispute; or
(2) within 120 days before the date of the filing of the petition, a custodian,
other than a trustee, receiver, or agent appointed or authorized to take charge
of less than substantially all of the property of the debtor for the purpose of
enforcing a lien against such property, was appointed or took possession.
(i) If the court dismisses a petition under this section other than on consent
of all petitioners and the debtor, and if the debtor does not waive the right to
judgment under this subsection, the court may grant judgment-
(1) against the petitioners and in favor of the debtor for-
(A) costs; or
(B) a reasonable attorney's fee; or
(2) against any petitioner that filed the petition in bad faith, for-
(A) any damages proximately caused by such filing; or
(B) punitive damages.
(j) Only after notice to all creditors and a hearing may the court dismiss a
petition filed under this section-
(1) on the motion of a petitioner;
(2) on consent of all petitioners and the debtor; or
(3) for want of prosecution.
(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.
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.
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-
(1) the interests of creditors and the debtor would be better served by such
dismissal or suspension; or
(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.
(b) A foreign representative may seek dismissal or suspension under subsection
(a)(2) of this section.
(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), 1291, or 1292 of title 28 or by the Supreme Court of the United
States under section 1254 of title 28.
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.
307. United States trustee
The United States trustee may raise and may appear and be heard on any issue in
any case or proceeding under this title but may not file a plan pursuant to
section 1121(c) of this title.
SUBCHAPTER II - OFFICERS
321. Eligibility to serve as trustee
(a) A person may serve as trustee in a case under this title only if such person
is-
(1) an individual that is competent to perform the duties of trustee and, in a
case under chapter 7, 12, or 13 of this title, resides or has an office in the
judicial district within which the case is pending, or in any judicial district
adjacent to such district; or
(2) a corporation authorized by such corporation's charter or bylaws to act as
trustee, and, in a case under chapter 7, 12, or 13 of this title, having an
office in at least one of such districts.
(b) A person that has served as an examiner in the case may not serve as trustee
in the case.
(c) The United States trustee for the judicial district in which the case is
pending is eligible to serve as trustee in the case if necessary.
322. Qualification of trustee
(a) Except as provided in subsection (b)(1), a person selected under section
701, 702, 703, 1104, 1163, 1202, or 1302 of this title to serve as trustee in a
case under this title qualifies if before five days after such selection, and
before beginning official duties, such person has filed with the court a bond in
favor of the United States conditioned on the faithful performance of such
official duties.
(b) (1) The United States trustee qualifies wherever such trustee serves as
trustee in a case under this title.
(2) The United States trustee shall determine-
(A) the amount of a bond required to be filed under subsection (a) of this
section; and
(B) the sufficiency of the surety on such bond.
(c) A trustee is not liable personally or on such trustee's bond in favor of the
United States for any penalty or forfeiture incurred by the debtor.
(d) A proceeding on a trustee's bond may not be commenced after two years after
the date on which such trustee was discharged.
323. Role and capacity of trustee
(a) The trustee in a case under this title is the representative of the estate.
(b) The trustee in a case under this title has capacity to sue and be sued.
324. Removal of trustee or examiner
(a) The court, after notice and a hearing, may remove a trustee, other than the
United States trustee, or an examiner, for cause.
(b) Whenever the court removes a trustee or examiner under subsection (a) in a
case under this title, such trustee or examiner shall thereby be removed in all
other cases under this title in which such trustee or examiner is then serving
unless the court orders otherwise.
325. Effect of vacancy
A vacancy in the office of trustee during a case does not abate any pending
action or proceeding, and the successor trustee shall be substituted as a party
in such action or proceeding.
326. Limitation on compensation of trustee
(a) In a case under chapter 7 or 11, the court may allow reasonable compensation
under section 330 of this title of the trustee for the trustee's services,
payable after the trustee renders such services, not to exceed 25 percent on the
first $5,000 or less, 10 percent on any amount in excess of $5,000 but not in
excess of $50,000, 5 percent on any amount in excess of $50,000 but not in
excess of $1,000,000, and reasonable compensation not to exceed 3 percent of
such moneys in excess of $1,000,000, upon all moneys disbursed or turned over in
the case by the trustee to parties in interest, excluding the debtor, but
including holders of secured claims.
(b) In a case under chapter 12 or 13 of this title, the court may not allow
compensation for services or reimbursement of expenses of the United States
trustee or of a standing trustee appointed under section 586(b) of title 28, but
may allow reasonable compensation under section 330 of this title of a trustee
appointed under section 1202(a) or 1302(a) of this title for the trustee's
services, payable after the trustee renders such services, not to exceed five
percent upon all payments under the plan.
(c) If more than one person serves as trustee in the case, the aggregate
compensation of such persons for such service may not exceed the maximum
compensation prescribed for a single trustee by subsection (a) or (b) of this
section, as the case may be.
(d) The court may deny allowance of compensation for services or reimbursement
of expenses of the trustee if the trustee failed to make diligent inquiry into
facts that would permit denial of allowance under section 328(c) of this title
or, with knowledge of such facts, employed a professional person under section
327 of this title.
327. Employment of professional persons
(a) Except as otherwise provided in this section, the trustee, with the court's
approval, may employ one or more attorneys, accountants, appraisers,
auctioneers, or other professional persons, that do not hold or represent an
interest adverse to the estate, and that are disinterested persons, to represent
or assist the trustee in carrying out the trustee's duties under this title.
(b) If the trustee is authorized to operate the business of the debtor under
section 721, 1202, or 1108 of this title, and if the debtor has regularly
employed attorneys, accountants, or other professional persons on salary, the
trustee may retain or replace such professional persons if necessary in the
operation of such business.
(c) In a case under chapter 7, 12, or 11 of this title, a person is not
disqualified for employment under this section solely because of such person's
employment by or representation of a creditor, unless there is objection by
another creditor or the United States trustee, in which case the court shall
disapprove such employment if there is an actual conflict of interest.
(d) The court may authorize the trustee to act as attorney or accountant for the
estate if such authorization is in the best interest of the estate.
(e) The trustee, with the court's approval, may employ, for a specified special
purpose, other than to represent the trustee in conducting the case, an attorney
that has represented the debtor, if in the best interest of the estate, and if
such attorney does not represent or hold any interest adverse to the debtor or
to the estate with respect to the matter on which such attorney is to be
employed.
(f) The trustee may not employ a person that has served as an examiner in the
case.
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, 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.
(b) If the court has authorized a trustee to serve as an attorney or accountant
for the estate under section 327(d) of this title, the court may allow
compensation for the trustee's services as such attorney or accountant only to
the extent that the trustee performed services as attorney or accountant for the
estate and not for performance of any of the trustee's duties that are generally
performed by a trustee without the assistance of an attorney or accountant for
the estate.
(c) Except as provided in section 327(c), 327(e), or 1107(b) of this title, the
court may deny allowance of compensation for services and reimbursement of
expenses of a professional person employed under section 327 or 1103 of this
title if, at any time during such professional person's employment under section
327 or 1103 of this title, such professional person is not a disinterested
person, or represents or holds an interest adverse to the interest of the estate
with respect to the matter on which such professional person is employed.
329. Debtor's transactions with attorneys
(a) Any attorney representing a debtor in a case under this title, or in
connection with such a case, whether or not such attorney applies for
compensation under this title, shall file with the court a statement of the
compensation paid or agreed to be paid, if such payment or agreement was made
after one year before the date of the filing of the petition, for services
rendered or to be rendered in contemplation of or in connection with the case by
such attorney, and the source of such compensation.
(b) If such compensation exceeds the reasonable value of any such services, the
court may cancel any such agreement, or order the return of any such payment, to
the extent excessive, to-
(1) the estate, if the property transferred-
(A) would have been property of the estate; or
(B) was to be paid by or on behalf of the debtor under a plan under chapter 11,
12, or 13 of this title; or
(2) the entity that made such payment.
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, a professional person employed under section 327 or
1103-
(A) reasonable compensation for actual, necessary services rendered by the
trustee, examiner, professional person, or attorney and by any paraprofessional
person employed by any such person; and
(B) reimbursement for actual, necessary expenses.
(2) The court may, on its own motion or on the motion of the United States
Trustee, the United States Trustee for the District or Region, the trustee for
the estate, or any other party in interest, award compensation that is less than
the amount of compensation that is requested.
(3) (A) In determining the amount of reasonable compensation to be awarded, the
court shall consider the nature, the extent, and the value of such services,
taking into account all relevant factors, including-
(A) [sic] the time spent on such services;
(B) the rates charged for such services;
(C) whether the services were necessary to the administration of, or beneficial
at the time at which the service was rendered toward the completion of, a case
under this title;
(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) whether the compensation is reasonable based on the customary compensation
charged by comparably skilled practitioners in cases other than cases under this
title.
(4) (A) Except as provided in subparagraph (B), the court shall not allow
compensation for-
(i) unnecessary duplication of services; or (ii) services that were not-
(I) reasonably likely to benefit the debtor's estate; or
(II) necessary to the administration of the case.
(B) In a chapter 12 or chapter 13 case in which the debtor is an individual, the
court may allow reasonable compensation to the debtor's attorney for
representing the interests of the debtor in connection with the bankruptcy case
based on a consideration of the benefit and necessity of such services to the
debtor and the other factors set forth in this section.
(5) The court shall reduce the amount of compensation awarded under this section
by the amount of any interim compensation awarded under section 331, and, if the
amount of such interim compensation exceeds the amount of compensation awarded
under this section, may order the return of the excess to the estate.
(6) Any compensation awarded for the preparation of a fee application shall be
based on the level and skill reasonably required to prepare the application.
(b) (1) There shall be paid from the filing fee in a case under chapter 7 of
this title $45 to the trustee serving in such case, after such trustee's
services are rendered.
(2) The Judicial Conference of the United States-
(A) shall prescribe additional fees of the same kind as prescribed under section
1914(b)oftitle28;and
(B) may prescribe notice of appearance fees and fees charged against
distributions in cases under this title;
to pay $15 to trustees serving in cases after such trustees' services are
rendered. Beginning 1 year after the date of the enactment of the Bankruptcy
Reform Act of 1994, such $15 shall be paid in addition to the amount paid under
paragraph (1).
(c) Unless the court orders otherwise, in a case under chapter 12 or 13 of this
title the compensation paid to the trustee serving in the case shall not be less
than $5 per month from any distribution under the plan during the administration
of the plan.
(d) In a case in which the United States trustee serves as trustee, the
compensation of the trustee under this section shall be paid to the clerk of the
bankruptcy court and deposited by the clerk into the United States Trustee
System Fund established by section 589a of title 28.
331. Interim compensation
A trustee, an examiner, a debtor's attorney, or any professional person employed
under section 327 or 1103 of this title may apply to the court not more than
once every 120 days after an order for relief in a case under this title, or
more often if the court permits, for such compensation for services rendered
before the date of such an application or reimbursement for expenses incurred
before such date as is provided under section 330 of this title. After notice
and a hearing, the court may allow and disburse to such applicant such
compensation or reimbursement.
SUBCHAPTER III - ADMINISTRATION
341. Meetings of creditors and equity security holders
(a) Within a reasonable time after the order for relief in a case under this
title, the United States trustee shall convene and preside at a meeting of
creditors.
(b) The United States trustee may convene a meeting of any equity security
holders.
(c) The court may not preside at, and may not attend, any meeting under this
section including any final meeting of creditors.
(d) Prior to the conclusion of the meeting of creditors or equity security
holders, the trustee shall orally examine the debtor to ensure that the debtor
in a case under chapter 7 of this title is aware of-
(1) the potential consequences of seeking a discharge in bankruptcy, including
the effects on credit history;
(2) the debtor's ability to file a petition under a different chapter of this
title;
(3) the effect of receiving a discharge of debts under this title; and
(4) the effect of reaffirming a debt, including the debtor's knowledge of the
provisions of section 524(d) of this title.
342. Notice
(a) There shall be given such notice as is appropriate, including notice to any
holder of a community claim, of an order for relief in a case under this title.
(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.
(c) 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.
343. Examination of the debtor
The debtor shall appear and submit to examination under oath at the meeting of
creditors under section 341 (a) of this title. Creditors, any indenture trustee,
any trustee or examiner
in the case, or the United States trustee may examine the debtor. The United
States trustee may administer the oath required under this section.
344. Self-incrimination; immunity
Immunity for persons required to submit to examination, to testify, or to
provide information in a case under this title may be granted under part V of
title 18.
345. Money of estates
(a) A trustee in a case under this title may make such deposit or investment of
the money of the estate for which such trustee serves as will yield the maximum
reasonable net return on such money, taking into account the safety of such
deposit or investment.
(b) Except with respect to a deposit or investment that is insured or guaranteed
by the United States or by a department, agency, or instrumentality of the
United States or backed by the full faith and credit of the United States, the
trustee shall require from an entity with which such money is deposited or
invested-
(1) a bond-
(A) in favor of the United States;
(B) secured by the undertaking of a corporate surety approved by the United
States trustee for the district in which the case is pending; and
(C) conditioned on-
(i) a proper accounting for all money so deposited or invested and for any
return on such money;
(ii) prompt repayment of such money and return; and (iii) faithful performance
of duties as a depository; or
(2) the deposit of securities of the kind specified in section 9303 of title 31;
unless the court for cause orders otherwise.
(c) An entity with which such moneys are deposited or invested is authorized to
deposit or invest such moneys as may be required under this section.
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.
347. Unclaimed property
(a) Ninety days after the final distribution under section 726, 1226, or 1326 of
this title in a case under chapter 7, 12, or 13 of this title, as the case may
be, the trustee shall stop payment on any check remaining unpaid, and any
remaining property of the estate shall be paid into the court and disposed of
under chapter 129 of title 28.
(b) Any security, money, or other property remaining unclaimed at the expiration
of the time allowed in a case under chapter 9, 11, or 12 of this title for the
presentation of a security or the performance of any other act as a condition to
participation in the distribution under any plan confirmed under section 943(b),
1129, 1173, or 1225 of this title, as the case may be, becomes the property of
the debtor or of the entity acquiring the assets of the debtor under the plan,
as the case may be.
348. Effect of conversion
(a) Conversion of a case from a case under one chapter of this title to a case
under another chapter of this title constitutes an order for relief under the
chapter to which the case is converted, but, except as provided in subsections
(b) and (c) of this section, does not effect a change in the date of the filing
of the petition, the commencement of the case, or the order for relief.
(b) Unless the court for cause orders otherwise, in sections 701 (a),
727(a)(10), 727(b), 728(a), 728(b), 1102(a), 1110(a)(1), 1121(b), 1121(c),
1141(d)(4), 1146(a), 1146(b), 1201(a), 1221, 1228(a), 1301(a), and 1305(a) of
this title, "the order for relief under this chapter" in a chapter to which a
case has been converted under section 706, 1112, 1208, or 1307 of this title
means the conversion of such case to such chapter.
(c) Sections 342 and 365(d) of this title apply in a case that has been
converted under section 706, 1112, 1208, or 1307 of this title, as if the
conversion order were the order for relief.
(d) A claim against the estate or the debtor that arises after the order for
relief but before conversion in a case that is converted under section 1112,
1208, or 1307 of this title, other than a claim specified in section 503(b) of
this title, shall be treated for all purposes as if such claim had arisen
immediately before the date of the filing of the petition.
(e) Conversion of a case under section 706, 1112, 1208, or 1307 of this title
terminates the service of any trustee or examiner that is serving in the case
before such conversion.
(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 reduced to
the extent that they have been paid in accordance with the chapter 13 plan.
(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 in the converted
case shall consist of the property of the estate as of the date of conversion.
349. Effect of dismissal
(a) Unless the court, for cause, orders otherwise, the dismissal of a case under
this title does not bar the discharge, in a later case under this title, of
debts that were dischargeable in the case dismissed; nor does the dismissal of a
case under this title prejudice the debtor with regard to the filing of a
subsequent petition under this title, except as provided in section 109(g) of
this title.
(b) Unless the court, for cause, orders otherwise, a dismissal of a case other
than under section 742 of this title-
(1) reinstates-
(A) any proceeding or custodianship superseded under section 543 of this title;
(B) any transfer avoided under section 522, 544, 545, 547, 548, 549, or 724(a)
of this title, or preserved under section 510(c)(2), 522(i)(2), or 551 of this
title; and
(C) any lien voided under section 506(d) of this title;
(2) vacates any order, judgment, or transfer ordered, under section 522(i)(1),
542, 550, or 553 of this title; and
(3) revests the property of the estate in the entity in which such property was
vested immediately before the commencement of the case under this title.
350. Closing and reopening cases
(a) After an estate is fully administered and the court has discharged the
trustee, the court shall close the case.
(b) A case may be reopened in the court in which such case was closed to
administer assets, to accord relief to the debtor, or for other cause.
SUBCHAPTER IV - ADMINISTRATIVE POWERS
361. Adequate protection
When adequate protection is required under section 362, 363, or 364 of this
title of an interest of an entity in property, such adequate protection may be
provided by-
(1) requiring the trustee to make a cash payment or periodic cash payments to
such entity, to the extent that the stay under section 362 of this title, use,
sale, or lease under section 363 of this title, or any grant of a lien under
section 364 of this title results in a decrease in the value of such entity's
interest in such property;
(2) providing to such entity an additional or replacement lien to the extent
that such stay, use, sale, lease, or grant results in a decrease in the value of
such entity's interest in such property; or
(3) granting such other relief, other than entitling such entity to compensation
allowable under section 503(b)(1) of this title as an administrative expense, as
will result in the realization by such entity of the indubitable equivalent of
such entity's interest in such property.
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) the commencement or continuation, including the issuance or employment of
process, of a judicial, administrative, or other action or proceeding against
the debtor that was or could have been commenced before the commencement of the
case under this title, or to recover a claim against the debtor that arose
before the commencement of the case under this title;
(2) the enforcement, against the debtor or against property of the estate, of a
judgment obtained before the commencement of the case under this title;
(3) any act to obtain possession of property of the estate or of property from
the estate or to exercise control over property of the estate;
(4) any act to create, perfect, or enforce any lien against property of the
estate;
(5) any act to create, perfect, or enforce against property of the debtor any
lien to the extent that such lien secures a claim that arose before the
commencement of the case under this title;
(6) any act to collect, assess, or recover a claim against the debtor that arose
before the commencement of the case under this title;
(7) the setoff of any debt owing to the debtor that arose before the
commencement of the case under this title against any claim against the debtor;
and
(8) the commencement or continuation of a proceeding before the United States
Tax Court concerning the debtor.
(b) The filing of a petition under section 301, 302, or 303 of this title, or of
an application under section 5(a)(3) of the Securities Investor Protection Act
of 1970, does not operate as a stay-
(1) under subsection (a) of this section, of the commencement or continuation of
a criminal action or proceeding against the debtor;
(2) under subsection (a) of this section-
(A) of the commencement or continuation of an action or proceeding for- (i) the
establishment of paternity; or
(ii) the establishment or modification of an order for alimony, maintenance, or
support; or
(B) of the collection of alimony, maintenance, or support from property that is
not property of the estate;
(3) under subsection (a) of this section, of any act to perfect, or to maintain
or continue the perfection of, an interest in property to the extent that the
trustee's rights and powers are subject to such perfection under section 546(b)
of this title or to the extent that such act is accomplished within the period
provided under section 547(e)(2)(A) of this title;
(4) under paragraph (1), (2), (3), or (6) of subsection (a) of this section, of
the commencement or continuation of an action or proceeding by a governmental
unit or any organization exercising authority under the Convention on the
Prohibition of the Development, Production, Stockpiling and Use of Chemical
Weapons and on Their Destruction, opened for signature on January 13, 1993, to
enforce such governmental unit's or organization's police and regulatory power,
including the enforcement of a judgment other than a money judgment, obtained in
an action or proceeding by the governmental unit to enforce such governmental
unit's or organization's police or regulatory power;
[(5) Repealed. Pub.L. 105-277, Div. I, Title VI, 603(1), Oct. 21, 1998, 112
Stat. 2681-886]
(6) under subsection (a) of this section, of the setoff by a commodity broker,
forward contract merchant, stockbroker, financial institutions, or securities
clearing agency of any mutual debt and claim under or in connection with
commodity contracts, as defined in
section 761 of this title, forward contracts, or securities contracts, as
defined in section 741 of this title, that constitutes the setoff of a claim
against the debtor for a margin payment, as defined in section 101, 741, or 761
of this title, or settlement payment, as defined in section 101 or 741 of this
title, arising out of commodity contracts, forward contracts, or securities
contracts against cash, securities, or other property held by or due from such
commodity broker, forward contract merchant, stockbroker, financial
institutions, or securities clearing agency to margin, guarantee, secure, or
settle commodity contracts, forward contracts, or securities contracts;
(7) under subsection (a) of this section, of the setoff by a repo participant,
of any mutual debt and claim under or in connection with repurchase agreements
that constitutes the setoff of a claim against the debtor for a margin payment,
as defined in section 741 or 761 of this title, or settlement payment, as
defined in section 741 of this title, arising out of repurchase agreements
against cash, securities, or other property held by or due from such repo
participant to margin, guarantee, secure or settle repurchase agreements;
(8) under subsection (a) of this section, of the commencement of any action by
the Secretary of Housing and Urban Development to foreclose a mortgage or deed
of trust in any case in which the mortgage or deed of trust held by the
Secretary is insured or was formerly insured under the National Housing Act and
covers property, or combinations of property, consisting of five or more living
units;
(9) under subsection (a), of-
(A) an audit by a governmental unit to determine tax liability;
(B) the issuance to the debtor by a governmental unit of a notice of tax
deficiency;
(C) a demand for tax returns; or
(D) the making of an assessment for any tax and issuance of a notice and demand
for payment of such an assessment (but any tax lien that would otherwise attach
to property of the estate by reason of such an assessment shall not take effect
unless such tax is a debt of the debtor that will not be discharged in the case
and such property or its proceeds are transferred out of the estate to, or
otherwise revested in, the debtor).
(10) under subsection (a) of this section, of any act by a lessor to the debtor
under a lease of nonresidential real property that has terminated by the
expiration of the stated term of the lease before the commencement of or during
a case under this title to obtain possession of such property;
(11) under subsection (a) of this section, of the presentment of a negotiable
instrument and the giving of notice of and protesting dishonor of such an
instrument;
(12) under subsection (a) of this section, after the date which is 90 days after
the filing of such petition, of the commencement or continuation, and conclusion
to the entry of final judgment, of an action which involves a debtor subject to
reorganization pursuant to chapter 11 of this title and which was brought by the
Secretary of Transportation under section 31325 of title 46 (including
distribution of any proceeds of sale) to foreclose a preferred ship or fleet
mortgage, or a security interest in or relating to a vessel or vessel under
construction, held by the Secretary of Transportation under section 207 or title
XI of the Merchant Marine Act, 1936, or under applicable State law;
(13) under subsection (a) of this section, after the date which is 90 days after
the filing of such petition, of the commencement or continuation, and conclusion
to the entry of final judgment, of an action which involves a debtor subject to
reorganization pursuant
to chapter 11 of this title and which was brought by the Secretary of Commerce
under section 31325 of title 46 (including distribution of any proceeds of sale)
to foreclose a preferred ship or fleet mortgage in a vessel or a mortgage, deed
of trust, or other security interest in a fishing facility held by the Secretary
of Commerce under section 207 or title XI of the Merchant Marine Act, 1936;
(14) under subsection (a) of this section, of any action by an accrediting
agency regarding the accreditation status of the debtor as an educational
institution;
(15) under subsection (a) of this section, of any action by a State licensing
body regarding the licensure of the debtor as an educational institution;
(16) under subsection (a) of this section, of any action by a guaranty agency,
as defined in section 435(j) of the Higher Education Act of 1965 or the
Secretary of Education regarding the eligibility of the debtor to participate in
programs authorized under such Act;
(17) under subsection (a) of this section, of the setoff by a swap participant,
of any mutual debt and claim under or in connection with any swap agreement that
constitutes the setoff of a claim against the debtor for any payment due from
the debtor under or in connection with any swap agreement against any payment
due to the debtor from the swap participant under or in connection with any swap
agreement or against cash, securities, or other property of the debtor held by
or due from such swap participant to guarantee, secure or settle any swap
agreement; or
(18) under subsection (a) of the creation or perfection of a statutory lien for
an ad valorem property tax imposed by the District of Columbia, or a political
subdivision of a State, if such tax comes due after the filing of the petition.
The provisions of paragraphs (12) and (13) of this subsection shall apply with
respect to any such petition filed on or before December 31, 1989.
(c) Except as provided in subsections (d), (e), and (f) of this section-
(1) the stay of an act against property of the estate under subsection (a) of
this section continues until such property is no longer property of the estate;
and
(2) the stay of any other act under subsection (a) of this section continues
until the earliest of-
(A) the time the case is closed;
(B) the time the case is dismissed; or
(C) if the case is a case under chapter 7 of this title concerning an individual
or a case under chapter 9, 11, 12, or 13 of this title, the time a discharge is
granted or denied.
(d) On request of a party in interest and after notice and a hearing, the court
shall grant relief from the stay provided under subsection (a) of this section,
such as by terminating, annulling, modifying, or conditioning such stay-
(1) for cause, including the lack of adequate protection of an interest in
property of such party in interest;
(2) with respect to a stay of an act against property under subsection (a) of
this section, if-
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization; or
(3) with respect to a stay of an act against single asset real estate under
subsection (a), by a creditor whose claim is secured by an interest in such real
estate, unless, not later than the date that is 90 days after the entry of the
order for relief (or such later date as the court may determine for cause by
order entered within that 90-day period)-
(A) the debtor has filed a plan of reorganization that has a reasonable
possibility of being confirmed within a reasonable time; or
(B) the debtor has commenced monthly payments to each creditor whose claim is
secured by such real estate (other than a claim secured by a judgment lien or by
an unmatured statutory lien), which payments are in an amount equal to interest
at a current fair market rate on the value of the creditor's interest in the
real estate.
(e) Thirty days after a request under subsection (d) of this section for relief
from the stay of any act against property of the estate under subsection (a) of
this section, such stay is terminated with respect to the party in interest
making such request, unless the court, after notice and a hearing, orders such
stay continued in effect pending the conclusion of, or as a result of, a final
hearing and determination under subsection (d) of this section. A hearing under
this subsection may be a preliminary hearing, or may be consolidated with the
final hearing under subsection (d) of this section. The court shall order such
stay continued in effect pending the conclusion of the final hearing under
subsection (d) of this section if there is a reasonable likelihood that the
party opposing relief from such stay will prevail at the conclusion of such
final hearing. If the hearing under this subsection is a preliminary hearing,
then such final hearing shall be concluded not later than thirty days after the
conclusion of such preliminary hearing, unless the 30-day period is extended
with the consent of the parties in interest or for a specific time which the
court finds is required by compelling circumstances.
(f) Upon request of a party in interest, the court, with or without a hearing,
shall grant such relief from the stay provided under subsection (a) of this
section as is necessary to prevent irreparable damage to the interest of an
entity in property, if such interest will suffer such damage before there is an
opportunity for notice and a hearing under subsection (d) or (e) of this
section.
(g) In any hearing under subsection (d) or (e) of this section concerning relief
from the stay of any act under subsection (a) of this section-
(1) the party requesting such relief has the burden of proof on the issue of the
debtor's equity in property; and
(2) the party opposing such relief has the burden of proof on all other issues.
(h) An individual injured by any willful violation of a stay provided by this
section shall recover actual damages, including costs and attorneys' fees, and,
in appropriate circumstances, may recover punitive damages.
363. Use, sale, or lease of property
(a) In this section, "cash collateral" means cash, negotiable instruments,
documents of title, securities, deposit accounts, or other cash equivalents
whenever acquired in which the estate and an entity other than the estate have
an interest and includes the proceeds,
products, offspring, rents, or profits of property and the fees, charges,
accounts or other payments for the use or occupancy of rooms and other public
facilities in hotels, motels, or other lodging properties subject to a security
interest as provided in section 552(b) of this title, whether existing before or
after the commencement of a case under this title.
(b) (1) The trustee, after notice and a hearing, may use, sell, or lease, other
than in the ordinary course of business, property of the estate.
(2) If notification is required under subsection (a) of section 7A of the
Clayton Act in the case of a transaction under this subsection, then-
(A) notwithstanding subsection (a) of such section, the notification required by
such subsection to be given by the debtor shall be given by the trustee; and
(B) notwithstanding subsection (b) of such section, the required waiting period
shall end on the 15th day after the date of the receipt, by the Federal Trade
Commission and the Assistant Attorney General in charge of the Antitrust
Division of the Department of Justice, of the notification required under such
subsection (a), unless such waiting period is extended-
(i) pursuant to subsection (e)(2) of such section, in the same manner as such
subsection (e)(2) applies to a cash tender offer;
(ii) pursuant to subsection (g)(2) of such section; or (iii) by the court after
notice and a hearing.
(c) (1) If the business of the debtor is authorized to be operated under section
721, 1108, 1203, 1204, or 1304 of this title and unless the court orders
otherwise, the trustee may enter into transactions, including the sale or lease
of property of the estate, in the ordinary course of business, without notice or
a hearing, and may use property of the estate in the ordinary course of business
without notice or a hearing.
(2) The trustee may not use, sell, or lease cash collateral under paragraph (1)
of this subsection unless-
(A) each entity that has an interest in such cash collateral consents; or
(B) the court, after notice and a hearing, authorizes such use, sale, or lease
in accordance with the provisions of this section.
(3) Any hearing under paragraph (2)(B) of this subsection may be a preliminary
hearing or may be consolidated with a hearing under subsection (e) of this
section, but shall be scheduled in accordance with the needs of the debtor. If
the hearing under paragraph (2)(B) of this subsection is a preliminary hearing,
the court may authorize such use, sale, or lease only if there is a reasonable
likelihood that the trustee will prevail at the final hearing under subsection
(e) of this section. The court shall act promptly on any request for
authorization under paragraph (2)(B) of this subsection.
(4) Except as provided in paragraph (2) of this subsection, the trustee shall
segregate and account for any cash collateral in the trustee's possession,
custody, or control.
(d) The trustee may use, sell, or lease property under subsection (b) or (c) of
this section only to the extent not inconsistent with any relief granted under
section 362(c), 362(d), 362(e), or 362(f) of this title.
(e) Notwithstanding any other provision of this section, at any time, on request
of an entity that has an interest in property used, sold, or leased, or proposed
to be used, sold, or leased, by the trustee, the court, with or without a
hearing, shall prohibit or condition such use, sale, or lease as is necessary to
provide adequate protection of such interest. This subsection also applies to
property that is subject to any unexpired lease of personal property (to the
exclusion of such property being subject to an order to grant relief from the
stay under section 362).
(f) The trustee may sell property under subsection (b) or (c) of this section
free and clear of any interest in such property of an entity other than the
estate, only if-
(1) applicable nonbankruptcy law permits sale of such property free and clear of
such interest;
(2) such entity consents;
(3) such interest is a lien and the price at which such property is to be sold
is greater than the aggregate value of all liens on such property;
(4) such interest is in bona fide dispute; or
(5) such entity could be compelled, in a legal or equitable proceeding, to
accept a money satisfaction of such interest.
(g) Notwithstanding subsection (f) of this section, the trustee may sell
property under subsection (b) or (c) of this section free and clear of any
vested or contingent right in the nature of dower or courtesy.
(h) Notwithstanding subsection (f) of this section, the trustee may sell both
the estate's interest, under subsection (b) or (c) of this section, and the
interest of any co-owner in property in which the debtor had, at the time of the
commencement of the case, an undivided interest as a tenant in common, joint
tenant, or tenant by the entirety, only if-
(1) partition in kind of such property among the estate and such co-owners is
impracticable;
(2) sale of the estate's undivided interest in such property would realize
significantly less for the estate than sale of such property free of the
interests of such co-owners;
(3) the benefit to the estate of a sale of such property free of the interests
of co-owners outweighs the detriment, if any, to such co-owners; and
(4) such property is not used in the production, transmission, or distribution,
for sale, of electric energy or of natural or synthetic gas for heat, light, or
power.
(i) Before the consummation of a sale of property to which subsection (g) or (h)
of this section applies, or of property of the estate that was community
property of the debtor and the debtor's spouse immediately before the
commencement of the case, the debtor's spouse, or a co-owner of such property,
as the case may be, may purchase such property at the price at which such sale
is to be consummated.
(j) After a sale of property to which subsection (g) or (h) of this section
applies, the trustee shall distribute to the debtor's spouse or the co-owners of
such property, as the case may be, and to the estate, the proceeds of such sale,
less the costs and expenses, not
including any compensation of the trustee, of such sale, according to the
interests of such spouse or co-owners, and of the estate.
(k) At a sale under subsection (b) of this section of property that is subject
to a lien that secures an allowed claim, unless the court for cause orders
otherwise the holder of such claim may bid at such sale, and, if the holder of
such claim purchases such property, such holder may offset such claim against
the purchase price of such property.
(l) Subject to the provisions of section 365, the trustee may use, sell, or
lease property under subsection (b) or (c) of this section, or a plan under
chapter 11, 12, or 13 of this title may provide for the use, sale, or lease of
property, notwithstanding any provision in a contract, a lease, or applicable
law that is conditioned on the insolvency or financial condition of the debtor,
on the commencement of a case under this title concerning the debtor, or on the
appointment of or the taking possession by a trustee in a case under this title
or a custodian, and that effects, or gives an option to effect, a forfeiture,
modification, or termination of the debtor's interest in such property.
(m) The reversal or modification on appeal of an authorization under subsection
(b) or (c) of this section of a sale or lease of property does not affect the
validity of a sale or lease under such authorization to an entity that purchased
or leased such property in good faith, whether or not such entity knew of the
pendency of the appeal, unless such authorization and such sale or lease were
stayed pending appeal.
(n) The trustee may avoid a sale under this section if the sale price was
controlled by an agreement among potential bidders at such sale, or may recover
from a party to such agreement any amount by which the value of the property
sold exceeds the price at which such sale was consummated, and may recover any
costs, attorneys' fees, or expenses incurred in avoiding such sale or recovering
such amount. In addition to any recovery under the preceding sentence, the court
may grant judgment for punitive damages in favor of the estate and against any
such party that entered into such an agreement in willful disregard of this
subsection.
(o) In any hearing under this section-
(1) the trustee has the burden of proof on the issue of adequate protection; and
(2) the entity asserting an interest in property has the burden of proof on the
issue of the validity, priority, or extent of such interest.
364. Obtaining credit
(a) If the trustee is authorized to operate the business of the debtor under
section 721, 1108, 1203, 1204, or 1304 of this title, unless the court orders
otherwise, the trustee may obtain unsecured credit and incur unsecured debt in
the ordinary course of business allowable under section 503(b)(1) of this title
as an administrative expense.
(b) The court, after notice and a hearing, may authorize the trustee to obtain
unsecured credit or to incur unsecured debt other than under subsection (a) of
this section, allowable under section 503(b)(1) of this title as an
administrative expense.
(c) If the trustee is unable to obtain unsecured credit allowable under section
503(b)(1) of this title as an administrative expense, the court, after notice
and a hearing, may authorize the obtaining of credit or the incurring of debt-
(1) with priority over any or all administrative expenses of the kind specified
in section 503(b) or 507(b) of this title;
(2) secured by a lien on property of the estate that is not otherwise subject to
a lien; or
(3) secured by a junior lien on property of the estate that is subject to a
lien.
(d) (1) The court, after notice and a hearing, may authorize the obtaining of
credit or the incurring of debt secured by a senior or equal lien on property of
the estate that is subject to a lien only if-
(A) the trustee is unable to obtain such credit otherwise; and
(B) there is adequate protection of the interest of the holder of the lien on
the property of the estate on which such senior or equal lien is proposed to be
granted. (2) In any hearing under this subsection, the trustee has the burden of
proof on the
issue of adequate protection.
(e) The reversal or modification on appeal of an authorization under this
section to obtain credit or incur debt, or of a grant under this section of a
priority or a lien, does not affect the validity of any debt so incurred, or any
priority or lien so granted, to an entity that extended such credit in good
faith, whether or not such entity knew of the pendency of the appeal, unless
such authorization and the incurring of such debt, or the granting of such
priority or lien, were stayed pending appeal.
(f) Except with respect to an entity that is an underwriter as defined in
section 1145(b) of this title, section 5 of the Securities Act of 1933, the
Trust Indenture Act of 1939, and any State or local law requiring registration
for offer or sale of a security or registration or licensing of an issuer of,
underwriter of, or broker or dealer in, a security does not apply to the offer
or sale under this section of a security that is not an equity security.
365. Executory contracts and unexpired leases
(a) Except as provided in sections 765 and 766 of this title and in subsections
(b), (c), and (d) of this section, the trustee, subject to the court's approval,
may assume or reject any executory contract or unexpired lease of the debtor.
(b) (1) If there has been a default in an executory contract or unexpired lease
of the debtor, the trustee may not assume such contract or lease unless, at the
time of assumption of such contract or lease, the trustee-
(A) cures, or provides adequate assurance that the trustee will promptly cure,
such default;
(B) compensates, or provides adequate assurance that the trustee will promptly
compensate, a party other than the debtor to such contract or lease, for any
actual pecuniary loss to such party resulting from such default; and
(C) provides adequate assurance of future performance under such contract or
lease.
(2) Paragraph (1) of this subsection does not apply to a default that is a
breach of a provision relating to-
(A) the insolvency or financial condition of the debtor at any time before the
closing of the case;
(B) the commencement of a case under this title;
(C) the appointment of or taking possession by a trustee in a case under this
title or a custodian before such commencement; or
(D) the satisfaction of any penalty rate or provision relating to a default
arising from any failure by the debtor to perform non-monetary obligations under
the executory contract or unexpired lease.
(3) For the purposes of paragraph (1) of this subsection and paragraph (2)(B) of
subsection (f), adequate assurance of future performance of a lease of real
property in a shopping center includes adequate assurance-
(A) of the source of rent and other consideration due under such lease, and in
the case of an assignment, that the financial condition and operating
performance of the proposed assignee and its guarantors, if any, shall be
similar to the financial condition and operating performance of the debtor and
its guarantors, if any, as of the time the debtor became the lessee under the
lease;
(B) that any percentage rent due under such lease will not decline
substantially;
(C) that assumption or assignment of such lease is subject to all the provisions
thereof, including (but not limited to) provisions such as a radius, location,
use, or exclusivity provision, and will not breach any such provision contained
in any other lease, financing agreement, or master agreement relating to such
shopping center; and
(D) that assumption or assignment of such lease will not disrupt any tenant mix
or balance in such shopping center.
(4) Notwithstanding any other provision of this section, if there has been a
default in an unexpired lease of the debtor, other than a default of a kind
specified in paragraph (2) of this subsection, the trustee may not require a
lessor to provide services or supplies incidental to such lease before
assumption of such lease unless the lessor is compensated under the terms of
such lease for any services and supplies provided under such lease before
assumption of such lease.
(c) The trustee may not assume or assign any executory contract or unexpired
lease of the debtor, whether or not such contract or lease prohibits or
restricts assignment of rights or delegation of duties, if-
(1) (A) applicable law excuses a party, other than the debtor, to such contract
or lease from accepting performance from or rendering performance to an entity
other than the debtor or the debtor in possession, whether or not such contract
or lease prohibits or restricts assignment of rights or delegation of duties;
and
(B) such party does not consent to such assumption or assignment; or
(2) such contract is a contract to make a loan, or extend other debt financing
or financial accommodations, to or for the benefit of the debtor, or to issue a
security of the debtor;
(3) such lease is of nonresidential real property and has been terminated under
applicable nonbankruptcy law prior to the order for relief; or
(4) such lease is of nonresidential real property under which the debtor is the
lessee of an aircraft terminal or aircraft gate at an airport at which the
debtor is the lessee under one or more additional nonresidential leases of an
aircraft terminal or aircraft gate and the trustee, in connection with such
assumption or assignment, does not assume all such leases or does not assume and
assign all of such leases to the same person, except that the trustee may assume
or assign less than all of such leases with the airport operator's written
consent.
(d) (1) In a case under chapter 7 of this title, if the trustee does not assume
or reject an executory contract or unexpired lease of residential real property
or of personal property of the debtor within 60 days after the order for relief,
or within such additional time as the court, for cause, within such 60- day
period, fixes, then such contract or lease is deemed rejected.
(2) In a case under chapter 9, 11, 12, or 13 of this title, the trustee may
assume or reject an executory contract or unexpired lease of residential real
property or of personal property of the debtor at any time before the
confirmation of a plan but the court, on the request of any party to such
contract or lease, may order the trustee to determine within a specified period
of time whether to assume or reject such contract or lease.
(3) The trustee shall timely perform all the obligations of the debtor, except
those specified in section 365(b)(2), arising from and after the order for
relief under any unexpired lease of nonresidential real property, until such
lease is assumed or rejected, notwithstanding section 503(b)(1) of this title.
The court may extend, for cause, the time for performance of any such obligation
that arises within 60 days after the date of the order for relief, but the time
for performance shall not be extended beyond such 60-day period.
This subsection shall not be deemed to affect the trustee's obligations under
the provisions of subsection (b) or (f) of this section. Acceptance of any such
performance does not constitute waiver or relinquishment of the lessor's rights
under such lease or under this title.
(4) Notwithstanding paragraphs (1) and (2), in a case under any chapter of this
title, if the trustee does not assume or reject an unexpired lease of
nonresidential real property under which the debtor is the lessee within 60 days
after the date of the order for relief, or within such additional time as the
court, for cause, within such 60-day period, fixes, then such lease is deemed
rejected, and the trustee shall immediately surrender such nonresidential real
property to the lessor.
(5) Notwithstanding paragraphs (1) and (4) of this subsection, in a case under
any chapter of this title, if the trustee does not assume or reject an unexpired
lease of nonresidential real property under which the debtor is an affected air
carrier that is the lessee of an aircraft terminal or aircraft gate before the
occurrence of a termination event, then (unless the court orders the trustee to
assume such unexpired leases within 5 days after the termination event), at the
option of the airport operator, such lease is deemed rejected 5 days after the
occurrence of a termination event and the trustee shall immediately surrender
possession of the premises to the airport operator; except that the lease shall
not be deemed to be rejected unless the airport operator first waives the right
to damages related to the rejection. In the event that the lease is deemed to be
rejected under this paragraph, the airport operator shall provide the affected
air carrier adequate
opportunity after the surrender of the premises to remove the fixtures and
equipment installed by the affected air carrier.
(6) For the purpose of paragraph (5) of this subsection and paragraph (f)(1) of
this section, the occurrence of a termination event means, with respect to a
debtor which is an affected air carrier that is the lessee of an aircraft
terminal or aircraft gate-
(A) the entry under section 301 or 302 of this title of an order for relief
under chapter 7 of this title;
(B) the conversion of a case under any chapter of this title to a case under
chapter 7 of this title; or
(C) the granting of relief from the stay provided under section 362(a) of this
title with respect to aircraft, aircraft engines, propellers, appliances, or
spare parts, as defined in section 40102(a) of title 49, except for property of
the debtor found by the court not to be necessary to an effective
reorganization.
(7) Any order entered by the court pursuant to paragraph (4) extending the
period within which the trustee of an affected air carrier must assume or reject
an unexpired lease of nonresidential real property shall be without prejudice
to-
(A) the right of the trustee to seek further extensions within such additional
time period granted by the court pursuant to paragraph (4); and
(B) the right of any lessor or any other party in interest to request, at any
time, a shortening or termination of the period within which the trustee must
assume or reject an unexpired lease of nonresidential real property.
(8) The burden of proof for establishing cause for an extension by an affected
air carrier under paragraph (4) or the maintenance of a previously granted
extension under paragraph (7)(A) and (B) shall at all times remain with the
trustee.
(9) For purposes of determining cause under paragraph (7) with respect to an
unexpired lease of nonresidential real property between the debtor that is an
affected air carrier and an airport operator under which such debtor is the
lessee of an airport terminal or an airport gate, the court shall consider,
among other relevant factors, whether substantial harm will result to the
airport operator or airline passengers as a result of the extension or the
maintenance of a previously granted extension. In making the determination of
substantial harm, the court shall consider, among other relevant factors, the
level of actual use of the terminals or gates which are the subject of the
lease, the public interest in actual use of such terminals or gates, the
existence of competing demands for the use of such terminals or gates, the
effect of the court's extension or termination of the period of time to assume
or reject the lease on such debtor's ability to successfully reorganize under
chapter 11 of this title, and whether the trustee of the affected air carrier is
capable of continuing to comply with its obligations under section 365(d)(3) of
this title.
(10) The trustee shall timely perform all of the obligations of the debtor,
except those specified in section 365(b)(2), first arising from or after 60 days
after the order for relief in a case under chapter 11 of this title under an
unexpired lease of personal property (other than personal property leased to an
individual primarily for personal, family, or household purposes), until such
lease is assumed or rejected notwithstanding section 503(b)(1) of this title,
unless the court, after notice and a hearing and based on the equities of the
case, orders otherwise with respect to the obligations or timely performance
thereof. This subsection shall not be deemed to affect the trustee's
obligations under the provisions of subsection (b) or (f). Acceptance of any
such performance does not constitute waiver or relinquishment of the lessor's
rights under such lease or under this title.
(e) (1) Notwithstanding a provision in an executory contract or unexpired lease,
or in applicable law, an executory contract or unexpired lease of the debtor may
not be terminated or modified, and any right or obligation under such contract
or lease may not be terminated or modified, at any time after the commencement
of the case solely because of a provision in such contract or lease that is
conditioned on-
(A) the insolvency or financial condition of the debtor at any time before the
closing of the case;
(B) the commencement of a case under this title; or
(C) the appointment of or taking possession by a trustee in a case under this
title or a custodian before such commencement.
(2) Paragraph (1) of this subsection does not apply to an executory contract or
unexpired lease of the debtor, whether or not such contract or lease prohibits
or restricts assignment of rights or delegation of duties, if-
(A)(i) applicable law excuses a party, other than the debtor, to such contract
or lease from accepting performance from or rendering performance to the trustee
or to an assignee of such contract or lease, whether or not such contract or
lease prohibits or restricts assignment of rights or delegation of duties; and
(ii) such party does not consent to such assumption or assignment; or (B) such
contract is a contract to make a loan, or extend other debt financing or
financial accommodations, to or for the benefit of the debtor, or to issue a
security of the debtor.
(f) (1) Except as provided in subsection (c) of this section, notwithstanding a
provision in an executory contract or unexpired lease of the debtor, or in
applicable law, that prohibits, restricts, or conditions the assignment of such
contract or lease, the trustee may assign such contract or lease under paragraph
(2) of this subsection; except that the trustee may not assign an unexpired
lease of nonresidential real property under which the debtor is an affected air
carrier that is the lessee of an aircraft terminal or aircraft gate if there has
occurred a termination event.
(2) The trustee may assign an executory contract or unexpired lease of the
debtor only if-
(A) the trustee assumes such contract or lease in accordance with the provisions
of this section; and
(B) adequate assurance of future performance by the assignee of such contract or
lease is provided, whether or not there has been a default in such contract or
lease.
(3) Notwithstanding a provision in an executory contract or unexpired lease of
the debtor, or in applicable law that terminates or modifies, or permits a party
other than the debtor to terminate or modify, such contract or lease or a right
or obligation under such contract or lease on account of an assignment of such
contract or lease, such contract, lease, right, or obligation may not be
terminated or modified under such provision because of the assumption or
assignment of such contract or lease by the trustee.
(g) Except as provided in subsections (h)(2) and (i)(2) of this section, the
rejection of an executory contract or unexpired lease of the debtor constitutes
a breach of such contract or lease-
(1) if such contract or lease has not been assumed under this section or under a
plan confirmed under chapter 9, 11, 12, or 13 of this title, immediately before
the date of the filing of the petition; or
(2) if such contract or lease has been assumed under this section or under a
plan confirmed under chapter 9, 11, 12, or 13 of this title-
(A) if before such rejection the case has not been converted under section 1112,
1208, or 1307 of this title, at the time of such rejection; or
(B) if before such rejection the case has been converted under section 1112,
1208, or 1307 of this title-
(i) immediately before the date of such conversion, if such contract or lease
was assumed before such conversion; or
(ii) at the time of such rejection, if such contract or lease was assumed after
such conversion.
(h) (1) (A) If the trustee rejects an unexpired lease of real property under
which the
debtor is the lessor and-
(i) if the rejection by the trustee amounts to such a breach as would entitle
the lessee to treat such lease as terminated by virtue of its terms, applicable
nonbankruptcy law, or any agreement made by the lessee, then the lessee under
such lease may treat such lease as terminated by the rejection; or
(ii) if the term of such lease has commenced, the lessee may retain its rights
under such lease (including rights such as those relating to the amount and
timing of payment of rent and other amounts payable by the lessee and any right
of use, possession, quiet enjoyment, subletting, assignment, or hypothecation)
that are in or appurtenant to the real property for the balance of the term of
such lease and for any renewal or extension of such rights to the extent that
such rights are enforceable under applicable nonbankruptcy law.
(B) If the lessee retains its rights under subparagraph (A)(ii), the lessee may
offset against the rent reserved under such lease for the balance of the term
after the date of the rejection of such lease and for the term of any renewal or
extension of such lease, the value of any damage caused by the nonperformance
after the date of such rejection, of any obligation of the debtor under such
lease, but the lessee shall not have any other right against the estate or the
debtor on account of any damage occurring after such date caused by such
nonperformance.
(C) The rejection of a lease of real property in a shopping center with respect
to which the lessee elects to retain its rights under subparagraph (A)(ii) does
not affect the enforceability under applicable nonbankruptcy law of any
provision in the lease pertaining to radius, location, use, exclusivity, or
tenant mix or balance.
(D) In this paragraph, "lessee" includes any successor, assign, or mortgagee
permitted under the terms of such lease.
(2) (A) If the trustee rejects a timeshare interest under a timeshare plan under
which the debtor is the timeshare interest seller and-
(i) if the rejection amounts to such a breach as would entitle the timeshare
interest purchaser to treat the timeshare plan as terminated under its terms,
applicable nonbankruptcy law, or any agreement made by timeshare interest
purchaser, the timeshare interest purchaser under the timeshare plan may treat
the timeshare plan as terminated by such rejection; or
(ii) if the term of such timeshare interest has commenced, then the timeshare
interest purchaser may retain its rights in such timeshare interest for the
balance
of such term and for any term of renewal or extension of such timeshare interest
to the extent that such rights are enforceable under applicable nonbankruptcy
law.
(B) If the timeshare interest purchaser retains its rights under subparagraph
(A),
such timeshare interest purchaser may offset against the moneys due for such
timeshare interest for the balance of the term after the date of the rejection
of such
timeshare interest, and the term of any renewal or extension of such timeshare
interest, the value of any damage caused by the nonperformance after the date of
such
rejection, of any obligation of the debtor under such timeshare plan, but the
timeshare
interest purchaser shall not have any right against the estate or the debtor on
account
of any damage occurring after such date caused by such nonperformance.
(i) (1) If the trustee rejects an executory contract of the debtor for the sale
of real property or for the sale of a timeshare interest under a timeshare plan,
under which the purchaser is in possession, such purchaser may treat such
contract as terminated, or, in the alternative, may remain in possession of such
real property or timeshare interest. (2) If such purchaser remains in
possession-
(A) such purchaser shall continue to make all payments due under such contract,
but may, [sic] offset against such payments any damages occurring after the date
of the rejection of such contract caused by the nonperformance of any obligation
of the debtor after such date, but such purchaser does not have any rights
against the estate on account of any damages arising after such date from such
rejection, other than such offset; and
(B) the trustee shall deliver title to such purchaser in accordance with the
provisions of such contract, but is relieved of all other obligations to perform
under such contract.
(j) A purchaser that treats an executory contract as terminated under subsection
(i) of this section, or a party whose executory contract to purchase real
property from the debtor is rejected and under which such party is not in
possession, has a lien on the interest of the debtor in such property for the
recovery of any portion of the purchase price that such purchaser or party has
paid.
(k) Assignment by the trustee to an entity of a contract or lease assumed under
this section relieves the trustee and the estate from any liability for any
breach of such contract or lease occurring after such assignment.
(l) If an unexpired lease under which the debtor is the lessee is assigned
pursuant to this section, the lessor of the property may require a deposit or
other security for the
performance of the debtor's obligations under the lease substantially the same
as would have been required by the landlord upon the initial leasing to a
similar tenant.
(m) For purposes of this section 365 and sections 541(b)(2) and 362(b)(10),
leases of real property shall include any rental agreement to use real property.
(n) (1) If the trustee rejects an executory contract under which the debtor is a
licensor of a right to intellectual property, the licensee under such contract
may elect-
(A) to treat such contract as terminated by such rejection if such rejection by
the trustee amounts to such a breach as would entitle the licensee to treat such
contract as terminated by virtue of its own terms, applicable nonbankruptcy law,
or an agreement made by the licensee with another entity; or
(B) to retain its rights (including a right to enforce any exclusivity provision
of such contract, but excluding any other right under applicable nonbankruptcy
law to specific performance of such contract) under such contract and under any
agreement supplementary to such contract, to such intellectual property
(including any embodiment of such intellectual property to the extent protected
by applicable nonbankruptcy law), as such rights existed immediately before the
case commenced, for-
(i) the duration of such contract; and
(ii) any period for which such contract may be extended by the licensee as of
right under applicable nonbankruptcy law.
(2) If the licensee elects to retain its rights, as described in paragraph
(1)(B) of this subsection, under such contract-
(A) the trustee shall allow the licensee to exercise such rights;
(B) the licensee shall make all royalty payments due under such contract for the
duration of such contract and for any period described in paragraph (1)(B) of
this subsection for which the licensee extends such contract; and
(C) the licensee shall be deemed to waive-
(i) any right of setoff it may have with respect to such contract under this
title or applicable nonbankruptcy law; and
(ii) any claim allowable under section 503(b) of this title arising from the
performance of such contract.
(3) If the licensee elects to retain its rights, as described in paragraph
(1)(B) of this subsection, then on the written request of the licensee the
trustee shall-
(A) to the extent provided in such contract, or any agreement supplementary to
such contract, provide to the licensee any intellectual property (including such
embodiment) held by the trustee; and
(B) not interfere with the rights of the licensee as provided in such contract,
or any agreement supplementary to such contract, to such intellectual property
(including such embodiment) including any right to obtain such intellectual
property (or such embodiment) from another entity.
(4) Unless and until the trustee rejects such contract, on the written request
of the licensee the trustee shall-
(A) to the extent provided in such contract or any agreement supplementary to
such contract-
(i) perform such contract; or
(ii) provide to the licensee such intellectual property (including any
embodiment of such intellectual property to the extent protected by applicable
nonbankruptcy law) held by the trustee; and
(B) not interfere with the rights of the licensee as provided in such contract,
or any agreement supplementary to such contract, to such intellectual property
(including such embodiment), including any right to obtain such intellectual
property (or such embodiment) from another entity.
(o) In a case under chapter 11 of this title, the trustee shall be deemed to
have assumed (consistent with the debtor's other obligations under section 507),
and shall immediately cure any deficit under, any commitment by the debtor to a
Federal depository institutions regulatory agency (or predecessor to such
agency) to maintain the capital of an insured depository institution, and any
claim for a subsequent breach of the obligations thereunder shall be entitled to
priority under section 507. This subsection shall not extend any commitment that
would otherwise be terminated by any act of such an agency.
[(p) Repealed. Pub.L. 103-394, Title V, 501(d)(10)(E), Oct. 22, 1994, 108 Stat.
4145]
366. Utility service
(a) Except as provided in subsection (b) of this section, a utility may not
alter, refuse, or discontinue service to, or discriminate against, the trustee
or the debtor solely on the basis of the commencement of a case under this title
or that a debt owed by the debtor to such utility for service rendered before
the order for relief was not paid when due.
(b) Such utility may alter, refuse, or discontinue service if neither the
trustee nor the debtor, within 20 days after the date of the order for relief,
furnishes adequate assurance of payment, in the form of a deposit or other
security, for service after such date. On request of a party in interest and
after notice and a hearing, the court may order reasonable modification of the
amount of the deposit or other security necessary to provide adequate assurance
of payment.
Chapter 5- Creditors, the Debtor, and the Estate
SUBCHAPTER I, CREDITORS & CLAIMS
501. Filing of proofs of claims or interests
(a) A creditor or an indenture trustee may file a proof of claim. An equity
security holder may file a proof of interest.
(b) If a creditor does not timely file a proof of such creditor's claim, an
entity that is liable to such creditor with the debtor, or that has secured such
creditor, may file a proof of such claim.
(c) If a creditor does not timely file a proof of such creditor's claim, the
debtor or the trustee may file a proof of such claim.
(d) A claim of a kind specified in section 502(e)(2), 502(f), 502(g), 502(h) or
502(i) of this title may be filed under subsection (a), (b), or (c) of this
section the same as if such claim were a claim against the debtor and had arisen
before the date of the filing of the petition.
502. Allowance of claims or interests
(a) A claim or interest, proof of which is filed under section 501 of this
title, is deemed allowed, unless a party in interest, including a creditor of a
general partner in a partnership that is a debtor in a case under chapter 7 of
this title, objects.
(b) Except as provided in subsections (e)(2), (f), (g), (h) and (i) of this
section, if such objection to a claim is made, the court, after notice and a
hearing, shall determine the amount of such claim in lawful currency of the
United States as of the date of the filing of the petition, and shall allow such
claim in such amount, except to the extent that-
(1) such claim is unenforceable against the debtor and property of the debtor,
under any agreement or applicable law for a reason other than because such claim
is contingent or unmatured;
(2) such claim is for unmatured interest;
(3) if such claim is for a tax assessed against property of the estate, such
claim exceeds the value of the interest of the estate in such property;
(4) if such claim is for services of an insider or attorney of the debtor, such
claim exceeds the reasonable value of such services;
(5) such claim is for a debt that is unmatured on the date of the filing of the
petition and that is excepted from discharge under section 523(a)(5) of this
title;
(6) if such claim is the claim of a lessor for damages resulting from the
termination of a lease of real property, such claim exceeds-
(A) the rent reserved by such lease, without acceleration, for the greater of
one year, or 15 percent, not to exceed three years, of the remaining term of
such lease, following the earlier of-
(i) the date of the filing of the petition; and
(ii) the date on which such lessor repossessed, or the lessee surrendered, the
leased property; plus
(B) any unpaid rent due under such lease, without acceleration, on the earlier
of such dates;
(7) if such claim is the claim of an employee for damages resulting from the
termination of an employment contract, such claim exceeds-
(A) the compensation provided by such contract, without acceleration, for one
year following the earlier of-
(i) the date of the filing of the petition; or
(ii) the date on which the employer directed the employee to terminate, or such
employee terminated, performance under such contract; plus
(B) any unpaid compensation due under such contract, without acceleration, on
the earlier of such dates;
(8) such claim results from a reduction, due to late payment, in the amount of
an otherwise applicable credit available to the debtor in connection with an
employment tax on wages, salaries, or commissions earned from the debtor; or
(9) proof of such claim is not timely filed, except to the extent tardily filed
as permitted under paragraph (1), (2), or (3) of section 726(a) of this title or
under the Federal Rules of Bankruptcy Procedure, except that a claim of a
governmental unit shall be timely filed if it is filed before 180 days after the
date of the order for relief or such later time as the Federal Rules of
Bankruptcy Procedure may provide.
(c) There shall be estimated for purpose of allowance under this section-
(1) any contingent or unliquidated claim, the fixing or liquidation of which, as
the case may be, would unduly delay the administration of the case; or
(2) any right to payment arising from a right to an equitable remedy for breach
of performance.
(d) Notwithstanding subsections (a) and (b) of this section, the court shall
disallow any claim of any entity from which property is recoverable under
section 542, 543, 550, or 553 of this title or that is a transferee of a
transfer avoidable under section 522(f), 522(h), 544, 545, 547, 548, 549, or
724(a) of this title, unless such entity or transferee has paid the amount, or
turned over any such property, for which such entity or transferee is liable
under section 522(i), 542, 543, 550, or 553 of this title.
(e) (1) Notwithstanding subsections (a), (b), and (c) of this section and
paragraph (2) of this subsection, the court shall disallow any claim for
reimbursement or contribution of an entity that is liable with the debtor on or
has secured, the claim of a creditor, to the extent that-
(A) such creditor's claim against the estate is disallowed;
(B) such claim for reimbursement or contribution is contingent as of the time of
allowance or disallowance of such claim for reimbursement or contribution; or
(C) such entity asserts a right of subrogation to the rights of such creditor
under section 509 of this title.
(2) A claim for reimbursement or contribution of such an entity that becomes
fixed after the commencement of the case shall be determined, and shall be
allowed under subsection (a), (b), or (c) of this section, or disallowed under
subsection (d) of this section, the same as if such claim had become fixed
before the date of the filing of the petition.
(f) In an involuntary case, a claim arising in the ordinary course of the
debtor's business or financial affairs after the commencement of the case but
before the earlier of the appointment of a trustee and the order for relief
shall be determined as of the date such claim arises, and shall be allowed under
subsection (a), (b), or (c) of this section or disallowed under subsection (d)
or (e) of this section, the same as if such claim had arisen before the date of
the filing of the petition.
(g) A claim arising from the rejection, under section 365 of this title or under
a plan under chapter 9, 11, 12, or 13 of this title, of an executory contract or
unexpired lease of the
debtor that has not been assumed shall be determined, and shall be allowed under
subsection (a), (b), or (c) of this section or disallowed under subsection (d)
or (e) of this section, the same as if such claim had arisen before the date of
the filing of the petition.
(h) A claim arising from the recovery of property under section 522, 550, or 553
of this title shall be determined, and shall be allowed under subsection (a),
(b), or (c) of this section, or disallowed under subsection (d) or (e) of this
section, the same as if such claim had arisen before the date of the filing of
the petition.
(i) A claim that does not arise until after the commencement of the case for a
tax entitled to priority under section 507(a)(8) of this title shall be
determined, and shall be allowed under subsection (a), (b), or (c) of this
section, or disallowed under subsection (d) or (e) of this section, the same as
if such claim had arisen before the date of the filing of the petition.
(j) A claim that has been allowed or disallowed may be reconsidered for cause. A
reconsidered claim may be allowed or disallowed according to the equities of the
case. Reconsideration of a claim under this subsection does not affect the
validity of any payment or transfer from the estate made to a holder of an
allowed claim on account of such allowed claim that is not reconsidered, but if
a reconsidered claim is allowed and is of the same class as such holder's claim,
such holder may not receive any additional payment or transfer from the estate
on account of such holder's allowed claim until the holder of such reconsidered
and allowed claim receives payment on account of such claim proportionate in
value to that already received by such other holder. This subsection does not
alter or modify the trustee's right to recover from a creditor any excess
payment or transfer made to such creditor.
503. Allowance of administrative expenses
(a) An entity may timely file a request for payment of an administrative
expense, or may tardily file such request if permitted by the court for cause.
(b) After notice and a hearing, there shall be allowed, administrative expenses,
other than claims allowed under section 502(f) of this title, including-
(1) (A) the actual, necessary costs and expenses of preserving the estate,
including wages, salaries, or commissions for services rendered after the
commencement of the case;
(B) any tax-
(i) incurred by the estate, except a tax of a kind specified in section
507(a)(8) of this title; or
(ii) attributable to an excessive allowance of a tentative carryback adjustment
that the estate received, whether the taxable year to which such adjustment
relates ended before or after the commencement of the case; and
(C) any fine, penalty, or reduction in credit relating to a tax of a kind
specified in subparagraph (B) of this paragraph;
(2) compensation and reimbursement awarded under section 330(a) of this title;
(3) the actual, necessary expenses, other than compensation and reimbursement
specified in paragraph (4) of this subsection, incurred by-
(A) a creditor that files a petition under section 303 of this title;
(B) a creditor that recovers, after the court's approval, for the benefit of the
estate any property transferred or concealed by the debtor;
(C) a creditor in connection with the prosecution of a criminal offense relating
to the case or to the business or property of the debtor;
(D) a creditor, an indenture trustee, an equity security holder, or a committee
representing creditors or equity security holders other than a committee
appointed under section 1102 of this title, in making a substantial contribution
in a case under chapter 9 or 11 of this title;
(E) a custodian superseded under section 543 of this title, and compensation for
the services of such custodian; or
(F) a member of a committee appointed under section 1102 of this title, if such
expenses are incurred in the performance of the duties of such committee;
(4) reasonable compensation for professional services rendered by an attorney or
an accountant of an entity whose expense is allowable under paragraph (3) of
this subsection, based on the time, the nature, the extent, and the value of
such services, and the cost of comparable services other than in a case under
this title, and reimbursement for actual, necessary expenses incurred by such
attorney or accountant;
(5) reasonable compensation for services rendered by an indenture trustee in
making a substantial contribution in a case under chapter 9 or 11 of this title,
based on the time, the nature, the extent, and the value of such services, and
the cost of comparable services other than in a case under this title; and
(6) the fees and mileage payable under chapter 119 of title 28.
504. Sharing of compensation
(a) Except as provided in subsection (b) of this section, a person receiving
compensation or reimbursement under section 503(b)(2) or 503(b)(4) of this title
may not share or agree to share-
(1) any such compensation or reimbursement with another person; or
(2) any compensation or reimbursement received by another person under such
sections.
(b) (1) A member, partner, or regular associate in a professional association,
corporation, or partnership may share compensation or reimbursement received
under section 503(b)(2) or 503(b)(4) of this title with another member, partner,
or regular associate in such association, corporation, or partnership, and may
share in any compensation or reimbursement received under such sections by
another member, partner, or regular associate in such association, corporation,
or partnership.
(2) An attorney for a creditor that files a petition under section 303 of this
title may share compensation and reimbursement received under section 503(b)(4)
of this title with any other attorney contributing to the services rendered or
expenses incurred by such creditor's attorney.
505. Determination of tax liability
(a) (1) Except as provided in paragraph (2) of this subsection, the court may
determine the amount or legality of any tax, any fine or penalty relating to a
tax, or any addition to tax, whether or not previously assessed, whether or not
paid, and whether or not contested before and adjudicated by a judicial or
administrative tribunal of competent jurisdiction.
(2) The court may not so determine-
(A) the amount or legality of a tax, fine, penalty, or addition to tax if such
amount or legality was contested before and adjudicated by a judicial or
administrative tribunal of competent jurisdiction before the commencement of the
case under this title; or
(B) any right of the estate to a tax refund, before the earlier of-
(i) 120 days after the trustee properly requests such refund from the
governmental unit from which such refund is claimed; or
(ii) a determination by such governmental unit of such request.
(b) A trustee may request a determination of any unpaid liability of the estate
for any tax incurred during the administration of the case by submitting a tax
return for such tax and a request for such a determination to the governmental
unit charged with responsibility for collection or determination of such tax.
Unless such return is fraudulent, or contains a material misrepresentation, the
trustee, the debtor, and any successor to the debtor are discharged from any
liability for such tax-
(1) upon payment of the tax shown on such return, if-
(A) such governmental unit does not notify the trustee, within 60 days after
such request, that such return has been selected for examination; or
(B) such governmental unit does not complete such an examination and notify the
trustee of any tax due, within 180 days after such request or within such
additional time as the court, for cause, permits;
(2) upon payment of the tax determined by the court, after notice and a hearing,
after completion by such governmental unit of such examination; or
(3) upon payment of the tax determined by such governmental unit to be due.
(c) Notwithstanding section 362 of this title, after determination by the court
of a tax under this section, the governmental unit charged with responsibility
for collection of such tax may assess such tax against the estate, the debtor,
or a successor to the debtor, as the case may be, subject to any otherwise
applicable law.
506. Determination of secured status
(a) An allowed claim of a creditor secured by a lien on property in which the
estate has an interest, or that is subject to setoff under section 553 of this
title, is a secured claim to the extent of the value of such creditor's interest
in the estate's interest in such property, or to the extent of the amount
subject to setoff, as the case may be, and is an unsecured claim to the extent
that the value of such creditor's interest or the amount so subject to setoff is
less than the amount of such allowed claim. Such value shall be determined in
light of the purpose of the valuation and of the proposed disposition or use of
such property, and in
conjunction with any hearing on such disposition or use or on a plan affecting
such creditor's interest.
(b) To the extent that an allowed secured claim is secured by property the value
of which, after any recovery under subsection (c) of this section, is greater
than the amount of such claim, there shall be allowed to the holder of such
claim, interest on such claim, and any reasonable fees, costs, or charges
provided for under the agreement under which such claim arose.
(c) The trustee may recover from property securing an allowed secured claim the
reasonable, necessary costs and expenses of preserving, or disposing of, such
property to the extent of any benefit to the holder of such claim.
(d) To the extent that a lien secures a claim against the debtor that is not an
allowed secured claim, such lien is void, unless-
(1) such claim was disallowed only under section 502(b)(5) or 502(e) of this
title; or
(2) such claim is not an allowed secured claim due only to the failure of any
entity to file a proof of such claim under section 501 of this title.
507. Priorities
(a) The following expenses and claims have priority in the following order:
(1) First, administrative expenses allowed under section 503(b) of this title,
and any fees and charges assessed against the estate under chapter 123 of title
28.
(2) Second, unsecured claims allowed under section 502(f) of this title.
(3) Third, allowed unsecured claims, but only to the extent of $4,000 [$4,650]
for each individual or corporation, as the case may be, earned within 90 days
before the date of the filing of the petition or the date of the cessation of
the debtor's business, whichever occurs first, for-
(A) wages, salaries, or commissions, including vacation, severance, and sick
leave pay earned by an individual; or
(B) sales commissions earned by an individual or by a corporation with only 1
employee, acting as an independent contractor in the sale of goods or services
for the debtor in the ordinary course of the debtor's business if, and only if,
during the 12 months preceding that date, at least 75 percent of the amount that
the individual or corporation earned by acting as an independent contractor in
the sale of goods or services was earned from the debtor;
(4) Fourth, allowed unsecured claims for contributions to an employee benefit
plan-
(A) arising from services rendered within 180 days before the date of the filing
of the petition or the date of the cessation of the debtor's business, whichever
occurs first; but only
(B) for each such plan, to the extent of-
(i) the number of employees covered by each such plan multiplied by $4,000
[$4,650]; less
(ii) the aggregate amount paid to such employees under paragraph (3) of this
subsection, plus the aggregate amount paid by the estate on behalf of such
employees to any other employee benefit plan.
(5) Fifth, allowed unsecured claims of persons-
(A) engaged in the production or raising of grain, as defined in section 557(b)
of this title, against a debtor who owns or operates a grain storage facility,
as defined in section 557(b) of this title, for grain or the proceeds of grain,
or
(B) engaged as a United States fisherman against a debtor who has acquired fish
or fish produce from a fisherman through a sale or conversion, and who is
engaged in operating a fish produce storage or processing facility-
but only to the extent of $4,000 [$4,650] for each such individual.
(6) Sixth, allowed unsecured claims of individuals, to the extent of $1,800
[$2,100] for each such individual, arising from the deposit, before the
commencement of the case, of money in connection with the purchase, lease, or
rental of property, or the purchase of services, for the personal, family, or
household use of such individuals, that were not delivered or provided.
(7) Seventh, allowed claims for debts to a spouse, former spouse, or child of
the debtor, for alimony to, maintenance for, or support of such spouse or child,
in connection with a separation agreement, divorce decree or other order of a
court of record, determination made in accordance with State or territorial law
by a governmental unit, or property settlement agreement, but not to the extent
that such debt-
(A) is assigned to another entity, voluntarily, by operation of law, or
otherwise; or
(B) includes a liability designated as alimony, maintenance, or support, unless
such liability is actually in the nature of alimony, maintenance or support.
(8) Eighth, allowed unsecured claims of governmental units, only to the extent
that such claims are for-
(A) a tax on or measured by income or gross receipts-
(i) for a taxable year ending on or before the date of the filing of the
petition for which a return, if required, is last due, including extensions,
after three years before the date of the filing of the petition;
(ii) assessed within 240 days, plus any time plus 30 days during which an offer
in compromise with respect to such tax that was made within 240 days after such
assessment was pending, before the date of the filing of the petition; or
(iii) other than a tax of a kind specified in section 523(a)(1)(B) or
523(a)(1)(C) of this title, not assessed before, but assessable, under
applicable law or by agreement, after, the commencement of the case;
(B) a property tax assessed before the commencement of the case and last payable
without penalty after one year before the date of the filing of the petition;
(C) a tax required to be collected or withheld and for which the debtor is
liable in whatever capacity;
(D) an employment tax on a wage, salary, or commission of a kind specified in
paragraph (3) of this subsection earned from the debtor before the date of the
filing of the petition, whether or not actually paid before such date, for which
a return is last due, under applicable law or under any extension, after three
years before the date of the filing of the petition;
(E) an excise tax on-
(i) a transaction occurring before the date of the filing of the petition for
which a return, if required, is last due, under applicable law or under any
extension, after three years before the date of the filing of the petition; or
(ii) if a return is not required, a transaction occurring during the three years
immediately preceding the date of the filing of the petition;
(F) a customs duty arising out of the importation of merchandise-
(i) entered for consumption within one year before the date of the filing of the
petition;
(ii) covered by an entry liquidated or reliquidated within one year before the
date of the filing of the petition; or
(iii) entered for consumption within four years before the date of the filing of
the petition but unliquidated on such date, if the Secretary of the Treasury
certifies that failure to liquidate such entry was due to an investigation
pending on such date into assessment of antidumping or countervailing duties or
fraud, or if information needed for the proper appraisement or classification of
such merchandise was not available to the appropriate customs officer before
such date; or
(G) a penalty related to a claim of a kind specified in this paragraph and in
compensation for actual pecuniary loss.
(9) Ninth, allowed unsecured claims based upon any commitment by the debtor to a
Federal depository institutions regulatory agency (or predecessor to such
agency), to maintain the capital of an insured depository institution.
(b) If the trustee, under section 362, 363, or 364 of this title, provides
adequate protection of the interest of a holder of a claim secured by a lien on
property of the debtor and if, notwithstanding such protection, such creditor
has a claim allowable under subsection (a)(1) of this section arising from the
stay of action against such property under section 362 of this title, from the
use, sale, or lease of such property under section 363 of this title, or from
the granting of a lien under section 364(d) of this title, then such creditor's
claim under such subsection shall have priority over every other claim allowable
under such subsection.
(c) For the purpose of subsection (a) of this section, a claim of a governmental
unit arising from an erroneous refund or credit of a tax has the same priority
as a claim for the tax to which such refund or credit relates.
(d) An entity that is subrogated to the rights of a holder of a claim of a kind
specified in subsection (a)(3), (a)(4), (a)(5), (a)(6), (a)(7), (a)(8), or
(a)(9) of this section is not subrogated to the right of the holder of such
claim to priority under such subsection.
508. Effect of distribution other than under this title
(a) If a creditor receives, in a foreign proceeding, payment of, or a transfer
of property on account of, a claim that is allowed under this title, such
creditor may not receive any payment under this title on account of such claim
until each of the other holders of claims on account of which such holders are
entitled to share equally with such creditor under this title has received
payment under this title equal in value to the consideration received by such
creditor in such foreign proceeding.
(b) If a creditor of a partnership debtor receives, from a general partner that
is not a debtor in a case under chapter 7 of this title, payment of, or a
transfer of property on account of, a claim that is allowed under this title and
that is not secured by a lien on property of such partner, such creditor may not
receive any payment under this title on account of such claim until each of the
other holders of claims on account of which such holders are entitled to share
equally with such creditor under this title has received payment under this
title equal in value to the consideration received by such creditor from such
general partner.
509. Claims of codebtors
(a) Except as provided in subsection (b) or (c) of this section, an entity that
is liable with the debtor on, or that has secured, a claim of a creditor against
the debtor, and that pays such claim, is subrogated to the rights of such
creditor to the extent of such payment.
(b) Such entity is not subrogated to the rights of such creditor to the extent
that-
(1) a claim of such entity for reimbursement or contribution on account of such
payment of such creditor's claim is-
(A) allowed under section 502 of this title;
(B) disallowed other than under section 502(e) of this title; or
(C) subordinated under section 510 of this title; or
(2) as between the debtor and such entity, such entity received the
consideration for the claim held by such creditor.
(c) The court shall subordinate to the claim of a creditor and for the benefit
of such creditor an allowed claim, by way of subrogation under this section, or
for reimbursement or contribution, of an entity that is liable with the debtor
on, or that has secured, such creditor's claim, until such creditor's claim is
paid in full, either through payments under this title or otherwise.
510. Subordination
(a) A subordination agreement is enforceable in a case under this title to the
same extent that such agreement is enforceable under applicable nonbankruptcy
law.
(b) For the purpose of distribution under this title, a claim arising from
rescission of a purchase or sale of a security of the debtor or of an affiliate
of the debtor, for damages arising from the purchase or sale of such a security,
or for reimbursement or contribution allowed under section 502 on account of
such a claim, shall be subordinated to all claims or interests that are senior
to or equal the claim or interest represented by such security, except that if
such security is common stock, such claim has the same priority as common stock.
(c) Notwithstanding subsections (a) and (b) of this section, after notice and a
hearing, the court may-
(1) under principles of equitable subordination, subordinate for purposes of
distribution all or part of an allowed claim to all or part of another allowed
claim or all or part of an allowed interest to all or part of another allowed
interest; or
(2) order that any lien securing such a subordinated claim be transferred to the
estate.
SUBCHAPTER II - DEBTOR'S DUTIES AND BENEFITS
521. Debtor's duties
The debtor shall-
(1) file a list of creditors, and unless the court orders otherwise, a schedule
of assets and liabilities, a schedule of current income and current
expenditures, and a statement of the debtor's financial affairs;
(2) if an individual debtor's schedule of assets and liabilities includes
consumer debts which are secured by property of the estate-
(A) within thirty days after the date of the filing of a petition under chapter
7 of this title or on or before the date of the meeting of creditors, whichever
is earlier, or within such additional time as the court, for cause, within such
period fixes, the debtor shall file with the clerk a statement of his intention
with respect to the retention or surrender of such property and, if applicable,
specifying that such property is claimed as exempt, that the debtor intends to
redeem such property, or that the debtor intends to reaffirm debts secured by
such property;
(B) within forty-five days after the filing of a notice of intent under this
section, or within such additional time as the court, for cause, within such
forty-five day period fixes, the debtor shall perform his intention with respect
to such property, as specified by subparagraph (A) of this paragraph; and
(C) nothing in subparagraphs (A) and (B) of this paragraph shall alter the
debtor's or the trustee's rights with regard to such property under this title;
(3) if a trustee is serving in the case, cooperate with the trustee as necessary
to enable the trustee to perform the trustee's duties under this title;
(4) if a trustee is serving in the case, surrender to the trustee all property
of the estate and any recorded information, including books, documents, records,
and papers, relating to property of the estate, whether or not immunity is
granted under section 344 of this title; and
(5) appear at the hearing required under section 524(d) of this title.
522. Exemptions
(a) In this section-
(1) "dependent" includes spouse, whether or not actually dependent; and
(2) "value" means fair market value as of the date of the filing of the petition
or, with respect to property that becomes property of the estate after such
date, as of the date such property becomes property of the estate.
(b) Notwithstanding section 541 of this title, an individual debtor may exempt
from property of the estate the property listed in either paragraph (1) or, in
the alternative, paragraph (2) of this subsection. In joint cases filed under
section 302 of this title and individual cases filed under section 301 or 303 of
this title by or against debtors who are husband and wife, and whose estates are
ordered to be jointly administered under Rule 1015(b) of the Federal Rules of
Bankruptcy Procedure, one debtor may not elect to exempt property listed in
paragraph (1) and the other debtor elect to exempt property
listed in paragraph (2) of this subsection. If the parties cannot agree on the
alternative to be elected, they shall be deemed to elect paragraph (1), where
such election is permitted under the law of the jurisdiction where the case is
filed. Such property is-
(1) property that is specified under subsection (d) of this section, unless the
State law that is applicable to the debtor under paragraph (2)(A) of this
subsection specifically does not so authorize; or, in the alternative,
(2) (A) any property that is exempt under Federal law, other than subsection (d)
of this section, or State or local law that is applicable on the date of the
filing of the petition at the place in which the debtor's domicile has been
located for the 180 days immediately preceding the date of the filing of the
petition, or for a longer portion of such 180-day period than in any other
place; and
(B) any interest in property in which the debtor had, immediately before the
commencement of the case, an interest as a tenant by the entirety or joint
tenant to the extent that such interest as a tenant by the entirety or joint
tenant is exempt from process under applicable nonbankruptcy law.
(c) Unless the case is dismissed, property exempted under this section is not
liable during or after the case for any debt of the debtor that arose, or that
is determined under section 502 of this title as if such debt had arisen, before
the commencement of the case, except-
(1) a debt of a kind specified in section 523(a)(1) or 523(a)(5) of this title;
(2) a debt secured by a lien that is-
(A)(i) not avoided under subsection (f) or (g) of this section or under section
544, 545, 547, 548, 549, or 724(a) of this title; and
(ii) not void under section 506(d) of this title; (B) a tax lien, notice of
which is properly filed; or
(3) a debt of a kind specified in section 523(a)(4) or 523(a)(6) of this title
owed by an institution-affiliated party of an insured depository institution to
a Federal depository institutions regulatory agency acting in its capacity as
conservator, receiver, or liquidating agent for such institution; or
(4) a debt in connection with fraud in the obtaining or providing of any
scholarship, grant, loan, tuition, discount, award, or other financial
assistance for purposes of financing an education at an institution of higher
education (as that term is defined in section 101 of the Higher Education Act of
1965 (20 U.S.C. 1001)).
(d) The following property may be exempted under subsection (b)(1) of this
section:
(1) The debtor's aggregate interest, not to exceed $15,000 [$17,425] in value,
in real property or personal property that the debtor or a dependent of the
debtor uses as a residence, in a cooperative that owns property that the debtor
or a dependent of the debtor uses as a residence, or in a burial plot for the
debtor or a dependent of the debtor.
(2) The debtor's interest, not to exceed $2,400 [$2,775] in value, in one motor
vehicle.
(3) The debtor's interest, not to exceed $400 [$450] in value in any particular
item or $8,000 [$9,300] in aggregate value, in household furnishings, household
goods, wearing apparel, appliances, books, animals, crops, or musical
instruments, that are held primarily for the personal, family, or household use
of the debtor or a dependent of the debtor.
(4) The debtor's aggregate interest, not to exceed $1,000 [$1,150] in value, in
jewelry held primarily for the personal, family, or household use of the debtor
or a dependent of the debtor.
(5) The debtor's aggregate interest in any property, not to exceed in value $800
[$925] plus up to $7,500 [$8,725] of any unused amount of the exemption provided
under paragraph (1) of this subsection.
(6) The debtor's aggregate interest, not to exceed $1,500 [$1,750] in value, in
any implements, professional books, or tools, of the trade of the debtor or the
trade of a dependent of the debtor.
(7) Any unmatured life insurance contract owned by the debtor, other than a
credit life insurance contract.
(8) The debtor's aggregate interest, not to exceed in value $8,000 [$9,300] less
any amount of property of the estate transferred in the manner specified in
section 542(d) of this title, in any accrued dividend or interest under, or loan
value of, any unmatured life insurance contract owned by the debtor under which
the insured is the debtor or an individual of whom the debtor is a dependent.
(9) Professionally prescribed health aids for the debtor or a dependent of the
debtor.
(10) The debtor's right to receive-
(A) a social security benefit, unemployment compensation, or a local public
assistance benefit;
(B) a veterans' benefit;
(C) a disability, illness, or unemployment benefit;
(D) alimony, support, or separate maintenance, to the extent reasonably
necessary for the support of the debtor and any dependent of the debtor;
(E) a payment under a stock bonus, pension, profitsharing, annuity, or similar
plan or contract on account of illness, disability, death, age, or length of
service, to the extent reasonably necessary for the support of the debtor and
any dependent of the debtor, unless-
(i) such plan or contract was established by or under the auspices of an insider
that employed the debtor at the time the debtor's rights under such plan or
contract arose;
(ii) such payment is on account of age or length of service; and (iii) such plan
or contract does not qualify under section 401 (a), 403(a), 403(b), or 408 of
the Internal Revenue Code of 1986.
(11) The debtor's right to receive, or property that is traceable to-
(A) an award under a crime victim's reparation law;
(B) a payment on account of the wrongful death of an individual of whom the
debtor was a dependent, to the extent reasonably necessary for the support of
the debtor and any dependent of the debtor;
(C) a payment under a life insurance contract that insured the life of an
individual of whom the debtor was a dependent on the date of such individual's
death, to the extent reasonably necessary for the support of the debtor and any
dependent of the debtor;
(D) a payment, not to exceed $15,000, [$17,425] on account of personal bodily
injury, not including pain and suffering or compensation for actual pecuniary
loss, of the debtor or an individual of whom the debtor is a dependent; or
(E) a payment in compensation of loss of future earnings of the debtor or an
individual of whom the debtor is or was a dependent, to the extent reasonably
necessary for the support of the debtor and any dependent of the debtor.
(e) A waiver of an exemption executed in favor of a creditor that holds an
unsecured claim against the debtor is unenforceable in a case under this title
with respect to such claim against property that the debtor may exempt under
subsection (b) of this section. A waiver by the debtor of a power under
subsection (f) or (h) of this section to avoid a transfer, under subsection (g)
or (i) of this section to exempt property, or under subsection (i) of this
section to recover property or to preserve a transfer, is unenforceable in a
case under this title.
(f) (1) Notwithstanding any waiver of exemptions but subject to paragraph (3),
the debtor may avoid the fixing of a lien on an interest of the debtor in
property to the extent that such lien impairs an exemption to which the debtor
would have been entitled under subsection (b) of this section, if such lien is-
(A) a judicial lien, other than a judicial lien that secures a debt-
(i) to a spouse, former spouse, or child of the debtor, for alimony to,
maintenance for, or support of such spouse or child, in connection with a
separation agreement, divorce decree or other order of a court of record,
determination made in accordance with State or territorial law by a governmental
unit, or property settlement agreement; and
(ii) to the extent that such debt-
(I) is not assigned to another entity, voluntarily, by operation of law, or
otherwise; and
(II) includes a liability designated as alimony, maintenance, or support, unless
such liability is actually in the nature of alimony, maintenance or support.
[sic]; or
(B) a nonpossessory, nonpurchase-money security interest in any-
(i) household furnishings, household goods, wearing apparel, appliances, books,
animals, crops, musical instruments, or jewelry that are held primarily for the
personal, family, or household use of the debtor or a dependent of the debtor;
(ii) implements, professional books, or tools, of the trade of the debtor or the
trade of a dependent of the debtor; or
(iii) professionally prescribed health aids for the debtor or a dependent of the
debtor.
(2) (A) For the purposes of this subsection, a lien shall be considered to
impair an exemption to the extent that the sum of- (i) the lien;
(ii) all other liens on the property; and
(iii) the amount of the exemption that the debtor could claim if there were no
liens on the property; exceeds the value that the debtor's interest in the
property would have in the absence of any liens.
(B) In the case of a property subject to more than 1 lien, a lien that has been
avoided shall not be considered in making the calculation under subparagraph (A)
with respect to other liens.
(C) This paragraph shall not apply with respect to a judgment arising out of a
mortgage foreclosure. (3) In a case in which State law that is applicable to the
debtor-
(A) permits a person to voluntarily waive a right to claim exemptions under
subsection (d) or prohibits a debtor from claiming exemptions under subsection
(d); and
(B) either permits the debtor to claim exemptions under State law without
limitation in amount, except to the extent that the debtor has permitted the
fixing of a consensual lien on any property or prohibits avoidance of a
consensual lien on property otherwise eligible to be claimed as exempt property;
the debtor may not avoid the fixing of a lien on an interest of the debtor or a
dependent of the debtor in property if the lien is a nonpossessory,
nonpurchase-money security interest in implements, professional books, or tools
of the trade of the debtor or a dependent of the debtor or farm animals or crops
of the debtor or a dependent of the debtor to the extent the value of such
implements, professional books, tools of the trade, animals, and crops exceeds
$5,000.
(g) Notwithstanding sections 550 and 551 of this title, the debtor may exempt
under subsection (b) of this section property that the trustee recovers under
section 510(c)(2), 542, 543, 550, 551, or 553 of this title, to the extent that
the debtor could have exempted such property under subsection (b) of this
section if such property had not been transferred, if-
(1) (A) such transfer was not a voluntary transfer of such property by the
debtor; and (B) the debtor did not conceal such property; or
(2) the debtor could have avoided such transfer under subsection (f)(2) of this
section.
(h) The debtor may avoid a transfer of property of the debtor or recover a
setoff to the extent that the debtor could have exempted such property under
subsection (g)(1) of this section if the trustee had avoided such transfer, if-
(1) such transfer is avoidable by the trustee under section 544, 545, 547, 548,
549, or 724(a) of this title or recoverable by the trustee under section 553 of
this title; and
(2) the trustee does not attempt to avoid such transfer.
(i) (1) If the debtor avoids a transfer or recovers a setoff under subsection
(f) or (h) of this section, the debtor may recover in the manner prescribed by,
and subject to the limitations of, section 550 of this title, the same as if the
trustee had avoided such transfer, and may exempt any property so recovered
under subsection (b) of this section.
(2) Notwithstanding section 551 of this title, a transfer avoided under section
544, 545, 547, 548, 549, or 724(a) of this title, under subsection (f) or (h) of
this section, or property recovered under section 553 of this title, may be
preserved for the benefit of the debtor to the extent that the debtor may exempt
such property under subsection (g) of this section or paragraph (1) of this
subsection.
(j) Notwithstanding subsections (g) and (i) of this section, the debtor may
exempt a particular kind of property under subsections (g) and (i) of this
section only to the extent
that the debtor has exempted less property in value of such kind than that to
which the debtor is entitled under subsection (b) of this section.
(k) Property that the debtor exempts under this section is not liable for
payment of any administrative expense except-
(1) the aliquot share of the costs and expenses of avoiding a transfer of
property that the debtor exempts under subsection (g) of this section, or of
recovery of such property, that is attributable to the value of the portion of
such property exempted in relation to the value of the property recovered; and
(2) any costs and expenses of avoiding a transfer under subsection (f) or (h) of
this section, or of recovery of property under subsection (i)(1) of this
section, that the debtor has not paid.
(l) The debtor shall file a list of property that the debtor claims as exempt
under subsection (b) of this section. If the debtor does not file such a list, a
dependent of the debtor may file such a list, or may claim property as exempt
from property of the estate on behalf of the debtor. Unless a party in interest
objects, the property claimed as exempt on such list is exempt.
(m) Subject to the limitation in subsection (b), this section shall apply
separately with respect to each debtor in a joint case.
523. Exceptions to discharge
(a) A discharge under section 727, 1141, 1228(a), 1228(b), or 1328(b) of this
title does not discharge an individual debtor from any debt-
(1) for a tax or a customs duty-
(A) of the kind and for the periods specified in section 507(a)(2) or 507(a)(8)
of this title, whether or not a claim for such tax was filed or allowed;
(B) with respect to which a return, if required- (i) was not filed; or
(ii) was filed after the date on which such return was last due, under
applicable law or under any extension, and after two years before the date of
the filing of the petition; or
(C) with respect to which the debtor made a fraudulent return or willfully
attempted in any manner to evade or defeat such tax;
(2) for money, property, services, or an extension, renewal, or refinancing of
credit, to the extent obtained by-
(A) false pretenses, a false representation, or actual fraud, other than a
statement respecting the debtor's or an insider's financial condition;
(B) use of a statement in writing- (i) that is materially false;
(ii) respecting the debtor's or an insider's financial condition; (iii) on which
the creditor to whom the debtor is liable for such money, property, services, or
credit reasonably relied; and
(iv) that the debtor caused to be made or published with intent to deceive; or
(C) for purposes of subparagraph (A) of this paragraph, consumer debts owed to a
single creditor and aggregating more than $1,000 [$1,150] for "luxury goods or
services" incurred by an individual debtor on or within 60 days before the order
for relief under this title, or cash advances aggregating more than $1,000
[$1,150] that are extensions of consumer credit under an open end credit plan
obtained by an individual debtor on or within 60 days before the order for
relief under this title, are presumed to be nondischargeable; "luxury goods or
services" do not include goods or services reasonably acquired for the support
or maintenance of the debtor or a dependent of the debtor; an extension of
consumer credit under an open end credit plan is to be defined for purposes of
this subparagraph as it is defined in the Consumer Credit Protection Act;
(3) neither listed nor scheduled under section 521(1) of this title, with the
name, if known to the debtor, of the creditor to whom such debt is owed, in time
to permit-
(A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of
this subsection, timely filing of a proof of claim, unless such creditor had
notice or actual knowledge of the case in time for such timely filing; or
(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this
subsection, timely filing of a proof of claim and timely request for a
determination of dischargeability of such debt under one of such paragraphs,
unless such creditor had notice or actual knowledge of the case in time for such
timely filing and request;
(4) for fraud or defalcation while acting in a fiduciary capacity, embezzlement,
or larceny;
(5) to a spouse, former spouse, or child of the debtor, for alimony to,
maintenance for, or support of such spouse or child, in connection with a
separation agreement, divorce decree or other order of a court of record,
determination made in accordance with State or territorial law by a governmental
unit, or property settlement agreement, but not to the extent that-
(A) such debt is assigned to another entity, voluntarily, by operation of law,
or otherwise (other than debts assigned pursuant to section 408(a)(3) of the
Social Security Act, or any such debt which has been assigned to the Federal
Government or to a State or any political subdivision of such State); or
(B) such debt includes a liability designated as alimony, maintenance, or
support, unless such liability is actually in the nature of alimony,
maintenance, or support;
(6) for willful and malicious injury by the debtor to another entity or to the
property of another entity;
(7) to the extent such debt is for a fine, penalty, or forfeiture payable to and
for the benefit of a governmental unit, and is not compensation for actual
pecuniary loss, other than a tax penalty-
(A) relating to a tax of a kind not specified in paragraph (1) of this
subsection; or
(B) imposed with respect to a transaction or event that occurred before three
years before the date of the filing of the petition;
(8) for an educational benefit overpayment or loan made, insured or guaranteed
by a governmental unit, or made under any program funded in whole or in part by
a governmental unit or nonprofit institution, or for an obligation to repay
funds received as an educational benefit, scholarship or stipend, unless
excepting such debt from discharge
under this paragraph will impose an undue hardship on the debtor and the
debtor's dependents;
(9) for death or personal injury caused by the debtor's operation of a motor
vehicle if such operation was unlawful because the debtor was intoxicated from
using alcohol, a drug, or another substance;
(10) that was or could have been listed or scheduled by the debtor in a prior
case concerning the debtor under this title or under the Bankruptcy Act in which
the debtor waived discharge, or was denied a discharge under section 727(a)(2),
(3), (4), (5), (6), or (7) of this title, or under section 14c(1), (2), (3),
(4), (6), or (7) of such Act;
(11) provided in any final judgment, unreviewable order, or consent order or
decree entered in any court of the United States or of any State, issued by a
Federal depository institutions regulatory agency, or contained in any
settlement agreement entered into by the debtor, arising from any act of fraud
or defalcation while acting in a fiduciary capacity committed with respect to
any depository institution or insured credit union;
(12) for malicious or reckless failure to fulfill any commitment by the debtor
to a Federal depository institutions regulatory agency to maintain the capital
of an insured depository institution, except that this paragraph shall not
extend any such commitment which would otherwise be terminated due to any act of
such agency;; [sic] or
(13) for any payment of an order of restitution issued under title 18, United
States Code;
(14) incurred to pay a tax to the United States that would be nondischargeable
pursuant to paragraph (1);
(15) not of the kind described in paragraph (5) that is incurred by the debtor
in the course of a divorce or separation or in connection with a separation
agreement, divorce decree or other order of a court of record, a determination
made in accordance with State or territorial law by a governmental unit unless-
(A) the debtor does not have the ability to pay such debt from income or
property of the debtor not reasonably necessary to be expended for the
maintenance or support of the debtor or a dependent of the debtor and, if the
debtor is engaged in a business, for the payment of expenditures necessary for
the continuation, preservation, and operation of such business; or
(B) discharging such debt would result in a benefit to the debtor that outweighs
the detrimental consequences to a spouse, former spouse, or child of the debtor;
(16) for a fee or assessment that becomes due and payable after the order for
relief to a membership association with respect to the debtor's interest in a
dwelling unit that has condominium ownership or in a share of a cooperative
housing corporation, but only if such fee or assessment is payable for a period
during which-
(A) the debtor physically occupied a dwelling unit in the condominium or
cooperative project; or
(B) the debtor rented the dwelling unit to a tenant and received payments from
the tenant for such period,
but nothing in this paragraph shall except from discharge the debt of a debtor
for a membership association fee or assessment for a period arising before entry
of the order for relief in a pending or subsequent bankruptcy case;
(17) for a fee imposed by a court for the filing of a case, motion, complaint,
or appeal, or for other costs and expenses assessed with respect to such filing,
regardless of an
assertion of poverty by the debtor under section 1915(b) or (f) of title 28, or
the debtor's status as a prisoner, as defined in section 1915(h) of title 28; or
(18) owed under State law to a State or municipality that is-
(A) in the nature of support, and
(B) enforceable under part D of title IV of the Social Security Act (42 U.S.C.
601 et seq.).
(b) Notwithstanding subsection (a) of this section, a debt that was excepted
from discharge under subsection (a)(1), (a)(3), or (a)(8) of this section, under
section 17a(1), 17a(3), or 17a(5) of the Bankruptcy Act, under section 439A of
the Higher Education Act of 1965, or under section 733(g) of the Public Health
Service Act in a prior case concerning the debtor under this title, or under the
Bankruptcy Act, is dischargeable in a case under this title unless, by the terms
of subsection (a) of this section, such debt is not dischargeable in the case
under this title.
(c) (1) Except as provided in subsection (a)(3)(B) of this section, the debtor
shall be discharged from a debt of a kind specified in paragraph (2), (4), (6),
or (15) of subsection (a) of this section, unless, on request of the creditor to
whom such debt is owed, and after notice and a hearing, the court determines
such debt to be excepted from discharge under paragraph (2), (4), (6), or (15),
as the case may be, of subsection (a) of this section.
(2) Paragraph (1) shall not apply in the case of a Federal depository
institutions regulatory agency seeking, in its capacity as conservator,
receiver, or liquidating agent for an insured depository institution, to recover
a debt described in subsection (a)(2), (a)(4), (a)(6), or (a)(11) owed to such
institution by an institution-affiliated party unless the receiver, conservator,
or liquidating agent was appointed in time to reasonably comply, or for a
Federal depository institutions regulatory agency acting in its corporate
capacity as a successor to such receiver, conservator, or liquidating agent to
reasonably comply, with subsection (a)(3)(B) as a creditor of such
institution-affiliated party with respect to such debt.
(d) If a creditor requests a determination of dischargeability of a consumer
debt under subsection (a)(2) of this section, and such debt is discharged, the
court shall grant judgment in favor of the debtor for the costs of, and a
reasonable attorney's fee for, the proceeding if the court finds that the
position of the creditor was not substantially justified, except that the court
shall not award such costs and fees if special circumstances would make the
award unjust.
(e) Any institution-affiliated party of a insured depository institution shall
be considered to be acting in a fiduciary capacity with respect to the purposes
of subsection (a)(4) or (11).
524. Effect of discharge
(a) A discharge in a case under this title-
(1) voids any judgment at any time obtained, to the extent that such judgment is
a determination of the personal liability of the debtor with respect to any debt
discharged
under section 727, 944, 1141, 1228, or 1328 of this title, whether or not
discharge of such debt is waived;
(2) operates as an injunction against the commencement or continuation of an
action, the employment of process, or an act, to collect, recover or offset any
such debt as a personal liability of the debtor, whether or not discharge of
such debt is waived; and
(3) operates as an injunction against the commencement or continuation of an
action, the employment of process, or an act, to collect or recover from, or
offset against, property of the debtor of the kind specified in section
541(a)(2) of this title that is acquired after the commencement of the case, on
account of any allowable community claim, except a community claim that is
excepted from discharge under section 523, 1228(a)(1), or 1328(a)(1) of this
title, or that would be so excepted, determined in accordance with the
provisions of sections 523(c) and 523(d) of this title, in a case concerning the
debtor's spouse commenced on the date of the filing of the petition in the case
concerning the debtor, whether or not discharge of the debt based on such
community claim is waived.
(b) Subsection (a)(3) of this section does not apply if-
(1) (A) the debtor's spouse is a debtor in a case under this title, or a
bankrupt or a debtor in a case under the Bankruptcy Act, commenced within six
years of the date of the filing of the petition in the case concerning the
debtor; and
(B) the court does not grant the debtor's spouse a discharge in such case
concerning the debtor's spouse; or
(2) (A) the court would not grant the debtor's spouse a discharge in a case
under chapter 7 of this title concerning such spouse commenced on the date of
the filing of the petition in the case concerning the debtor; and
(B) a determination that the court would not so grant such discharge is made by
the bankruptcy court within the time and in the manner provided for a
determination under section 727 of this title of whether a debtor is granted a
discharge.
(c) An agreement between a holder of a claim and the debtor, the consideration
for which, in whole or in part, is based on a debt that is dischargeable in a
case under this title is enforceable only to any extent enforceable under
applicable nonbankruptcy law, whether or not discharge of such debt is waived,
only if-
(1) such agreement was made before the granting of the discharge under section
727, 1141, 1228, or 1328 of this title;
(2) (A) such agreement contains a clear and conspicuous statement which advises
the debtor that the agreement may be rescinded at any time prior to discharge or
within sixty days after such agreement is filed with the court, whichever occurs
later, by giving notice of rescission to the holder of such claim; and
(B) such agreement contains a clear and conspicuous statement which advises the
debtor that such agreement is not required under this title, under nonbankruptcy
law, or under any agreement not in accordance with the provisions of this
subsection;
(3) such agreement has been filed with the court and, if applicable, accompanied
by a declaration or an affidavit of the attorney that represented the debtor
during the course of negotiating an agreement under this subsection, which
states that-
(A) such agreement represents a fully informed and voluntary agreement by the
debtor;
(B) such agreement does not impose an undue hardship on the debtor or a
dependent of the debtor; and
(C) the attorney fully advised the debtor of the legal effect and consequences
of- (i) an agreement of the kind specified in this subsection; and
(ii) any default under such an agreement;
(4) the debtor has not rescinded such agreement at any time prior to discharge
or within sixty days after such agreement is filed with the court, whichever
occurs later, by giving notice of rescission to the holder of such claim;
(5) the provisions of subsection (d) of this section have been complied with;
and
(6) (A) in a case concerning an individual who was not represented by an
attorney during the course of negotiating an agreement under this subsection,
the court approves such agreement as-
(i) not imposing an undue hardship on the debtor or a dependent of the debtor;
and
(ii) in the best interest of the debtor.
(B) Subparagraph (A) shall not apply to the extent that such debt is a consumer
debt secured by real property.
(d) In a case concerning an individual, when the court has determined whether to
grant or not to grant a discharge under section 727, 1141, 1228, or 1328 of this
title, the court may hold a hearing at which the debtor shall appear in person.
At any such hearing, the court shall inform the debtor that a discharge has been
granted or the reason why a discharge has not been granted. If a discharge has
been granted and if the debtor desires to make an agreement of the kind
specified in subsection (c) of this section and was not represented by an
attorney during the course of negotiating such agreement, then the court shall
hold a hearing at which the debtor shall appear in person and at such hearing
the court shall-
(1) inform the debtor-
(A) that such an agreement is not required under this title, under nonbankruptcy
law, or under any agreement not made in accordance with the provisions of
subsection (c) of this section; and
(B) of the legal effect and consequences of-
(i) an agreement of the kind specified in subsection (c) of this section; and
(ii) a default under such an agreement; and
(2) determine whether the agreement that the debtor desires to make complies
with the requirements of subsection (c)(6) of this section, if the consideration
for such agreement is based in whole or in part on a consumer debt that is not
secured by real property of the debtor.
(e) Except as provided in subsection (a)(3) of this section, discharge of a debt
of the debtor does not affect the liability of any other entity on, or the
property of any other entity for, such debt.
(f) Nothing contained in subsection (c) or (d) of this section prevents a debtor
from voluntarily repaying any debt.
(g) (1) (A) After notice and hearing, a court that enters an order confirming a
plan of reorganization under chapter 11 may issue, in connection with such
order, an injunction in accordance with this subsection to supplement the
injunctive effect of a discharge under this section.
(B) An injunction may be issued under subparagraph (A) to enjoin entities from
taking legal action for the purpose of directly or indirectly collecting,
recovering, or receiving payment or recovery with respect to any claim or demand
that, under a plan of reorganization, is to be paid in whole or in part by a
trust described in paragraph (2)(B)(i), except such legal actions as are
expressly allowed by the injunction, the confirmation order, or the plan of
reorganization.
(2) (A) Subject to subsection (h), if the requirements of subparagraph (B) are
met at the time an injunction described in paragraph (1) is entered, then after
entry of such injunction, any proceeding that involves the validity,
application, construction, or modification of such injunction, or of this
subsection with respect to such injunction, may be commenced only in the
district court in which such injunction was entered, and such court shall have
exclusive jurisdiction over any such proceeding without regard to the amount in
controversy.
(B) The requirements of this subparagraph are that-
(i) the injunction is to be implemented in connection with a trust that,
pursuant to the plan of reorganization-
(I) is to assume the liabilities of a debtor which at the time of entry of the
order for relief has been named as a defendant in personal injury, wrongful
death, or property-damage actions seeking recovery for damages allegedly caused
by the presence of, or exposure to, asbestos or asbestos- containing products;
(II) is to be funded in whole or in part by the securities of 1 or more debtors
involved in such plan and by the obligation of such debtor or debtors to make
future payments, including dividends;
(III) is to own, or by the exercise of rights granted under such plan would be
entitled to own if specified contingencies occur, a majority of the voting
shares of-
(aa) each such debtor;
(bb) the parent corporation of each such debtor; or
(cc) a subsidiary of each such debtor that is also a debtor; and
(IV) is to use its assets or income to pay claims and demands; and (ii) subject
to subsection (h), the court determines that-
(I) the debtor is likely to be subject to substantial future demands for payment
arising out of the same or similar conduct or events that gave rise to the
claims that are addressed by the injunction;
(II) the actual amounts, numbers, and timing of such future demands cannot be
determined;
(III) pursuit of such demands outside the procedures prescribed by such plan is
likely to threaten the plan's purpose to deal equitably with claims and future
demands;
(IV) as part of the process of seeking confirmation of such plan-
(aa) the terms of the injunction proposed to be issued under paragraph (1)(A),
including any provisions barring actions against third parties pursuant to
paragraph (4)(A), are set out in such plan and in any disclosure statement
supporting the plan; and
(bb) a separate class or classes of the claimants whose claims are to be
addressed by a trust described in clause (i) is established and votes, by at
least 75 percent of those voting, in favor of the plan; and
(V) subject to subsection (h), pursuant to court orders or otherwise, the
trust will operate through mechanisms such as structured, periodic, or
supplemental payments, pro rata distributions, matrices, or periodic review of
estimates of the numbers and values of present claims and future demands, or
other comparable mechanisms, that provide reasonable assurance that the trust
will value, and be in a financial position to pay, present claims and future
demands that involve similar claims in substantially the same manner.
(3) (A) If the requirements of paragraph (2)(B) are met and the order confirming
the plan of reorganization was issued or affirmed by the district court that has
jurisdiction over the reorganization case, then after the time for appeal of the
order that issues or affirms the plan-
(i) the injunction shall be valid and enforceable and may not be revoked or
modified by any court except through appeal in accordance with paragraph (6);
(ii) no entity that pursuant to such plan or thereafter becomes a direct or
indirect transferee of, or successor to any assets of, a debtor or trust that is
the subject of the injunction shall be liable with respect to any claim or
demand made against such entity by reason of its becoming such a transferee or
successor; and
(iii) no entity that pursuant to such plan or thereafter makes a loan to such a
debtor or trust or to such a successor or transferee shall, by reason of making
the loan, be liable with respect to any claim or demand made against such
entity, nor shall any pledge of assets made in connection with such a loan be
upset or impaired for that reason; (B) Subparagraph (A) shall not be construed
to-
(i) imply that an entity described in subparagraph (A)(ii) or (iii) would, if
this paragraph were not applicable, necessarily be liable to any entity by
reason of any of the acts described in subparagraph (A);
(ii) relieve any such entity of the duty to comply with, or of liability under,
any Federal or State law regarding the making of a fraudulent conveyance in a
transaction described in subparagraph (A)(ii) or (iii); or
(iii) relieve a debtor of the debtor's obligation to comply with the terms of
the plan of reorganization, or affect the power of the court to exercise its
authority under sections 1141 and 1142 to compel the debtor to do so.
(4) (A)(i) Subject to subparagraph (B), an injunction described in paragraph (1)
shall be valid and enforceable against all entities that it addresses.
(ii) Notwithstanding the provisions of section 524(e), such an injunction may
bar any action directed against a third party who is identifiable from the terms
of such injunction (by name or as part of an identifiable group) and is alleged
to be directly or indirectly liable for the conduct of, claims against, or
demands on the debtor to the extent such alleged liability of such third party
arises by reason of-
(I) the third party's ownership of a financial interest in the debtor, a past or
present affiliate of the debtor, or a predecessor in interest of the debtor;
(II) the third party's involvement in the management of the debtor or a
predecessor in interest of the debtor, or service as an officer, director or
employee of the debtor or a related party;
(III) the third party's provision of insurance to the debtor or a related party;
or
(IV) the third party's involvement in a transaction changing the corporate
structure, or in a loan or other financial transaction affecting the financial
condition, of the debtor or a related party, including but not limited to-
(aa) involvement in providing financing (debt or equity), or advice to an entity
involved in such a transaction; or
(bb) acquiring or selling a financial interest in an entity as part of such a
transaction, (iii) As used in this subparagraph, the term "related party" means-
(I) a past or present affiliate of the debtor;
(II) a predecessor in interest of the debtor; or
(III) any entity that owned a financial interest in- (aa) the debtor;
(bb) a past or present affiliate of the debtor; or (cc) a predecessor in
interest of the debtor.
(B) Subject to subsection (h), if, under a plan of reorganization, a kind of
demand described in such plan is to be paid in whole or in part by a trust
described in paragraph (2)(B)(i) in connection with which an injunction
described in paragraph (1) is to be implemented, then such injunction shall be
valid and enforceable with respect to a demand of such kind made, after such
plan is confirmed, against the debtor or debtors involved, or against a third
party described in subparagraph (A)(ii), if-
(i) as part of the proceedings leading to issuance of such injunction, the court
appoints a legal representative for the purpose of protecting the rights of
persons that might subsequently assert demands of such kind, and
(ii) the court determines, before entering the order confirming such plan, that
identifying such debtor or debtors, or such third party (by name or as part of
an identifiable group), in such injunction with respect to such demands for
purposes of this subparagraph is fair and equitable with respect to the persons
that might subsequently assert such demands, in light of the benefits provided,
or to be provided, to such trust on behalf of such debtor or debtors or such
third party.
(5) In this subsection, the term "demand" means a demand for payment, present or
future, that-
(A) was not a claim during the proceedings leading to the confirmation of a plan
of reorganization;
(B) arises out of the same or similar conduct or events that gave rise to the
claims addressed by the injunction issued under paragraph (1); and
(C) pursuant to the plan, is to be paid by a trust described in paragraph
(2)(B)(i).
(6) Paragraph (3)(A)(i) does not bar an action taken by or at the direction of
an appellate court on appeal of an injunction issued under paragraph (1) or of
the order of confirmation that relates to the injunction.
(7) This subsection does not affect the operation of section 1144 or the power
of the district court to refer a proceeding under section 157 of title 28 or any
reference of a proceeding made prior to the date of the enactment of this
subsection.
(h) Application to existing injunctions.-For purposes of subsection (g)
(1) subject to paragraph (2), if an injunction of the kind described in
subsection (g)(1)(B) was issued before the date of the enactment of this Act, as
part of a plan of reorganization confirmed by an order entered before such date,
then the injunction shall be considered to meet the requirements of subsection
(g)(2)(B) for purposes of subsection (g)(2)(A), and to satisfy subsection
(g)(4)(A)(ii), if-
(A) the court determined at the time the plan was confirmed that the plan was
fair and equitable in accordance with the requirements of section 1129(b);
(B) as part of the proceedings leading to issuance of such injunction and
confirmation of such plan, the court had appointed a legal representative for
the purpose of protecting the rights of persons that might subsequently assert
demands described in subsection (g)(4)(B) with respect to such plan; and
(C) such legal representative did not object to confirmation of such plan or
issuance of such injunction; and
(2) for purposes of paragraph (1), if a trust described in subsection
(g)(2)(B)(i) is subject to a court order on the date of the enactment of this
Act staying such trust from settling or paying further claims-
(A) the requirements of subsection (g)(2)(B)(ii)(V) shall not apply with respect
to such trust until such stay is lifted or dissolved; and
(B) if such trust meets such requirements on the date such stay is lifted or
dissolved, such trust shall be considered to have met such requirements
continuously from the date of the enactment of this Act.
525. Protection against discriminatory treatment
(a) Except as provided in the Perishable Agricultural Commodities Act, 1930, the
Packers and Stockyards Act, 1921, and section 1 of the Act entitled "An Act
making appropriations for the Department of Agriculture for the fiscal year
ending June 30, 1944, and for other purposes," approved July 12, 1943, a
governmental unit may not deny, revoke, suspend, or refuse to renew a license,
permit, charter, franchise, or other similar grant to, condition such a grant
to, discriminate with respect to such a grant against, deny employment to,
terminate the employment of, or discriminate with respect to employment against,
a person that is or has been a debtor under this title or a bankrupt or a debtor
under the Bankruptcy Act, or another person with whom such bankrupt or debtor
has been associated, solely because such bankrupt or debtor is or has been a
debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has
been insolvent before the commencement of the case under this title, or during
the case but before the debtor is granted or denied a discharge, or has not paid
a debt that is dischargeable in the case under this title or that was discharged
under the Bankruptcy Act.
(b) No private employer may terminate the employment of, or discriminate with
respect to employment against, an individual who is or has been a debtor under
this title, a debtor
or bankrupt under the Bankruptcy Act, or an individual associated with such
debtor or bankrupt, solely because such debtor or bankrupt-
(1) is or has been a debtor under this title or a debtor or bankrupt under the
Bankruptcy Act;
(2) has been insolvent before the commencement of a case under this title or
during the case but before the grant or denial of a discharge; or
(3) has not paid a debt that is dischargeable in a case under this title or that
was discharged under the Bankruptcy Act.
(c) (1) A governmental unit that operates a student grant or loan program and a
person engaged in a business that includes the making of loans guaranteed or
insured under a student loan program may not deny a grant, loan, loan guarantee,
or loan insurance to a person that is or has been a debtor under this title or a
bankrupt or debtor under the Bankruptcy Act, or another person with whom the
debtor or bankrupt has been associated, because the debtor or bankrupt is or has
been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act,
has been insolvent before the commencement of a case under this title or during
the pendency of the case but before the debtor is granted or denied a discharge,
or has not paid a debt that is dischargeable in the case under this title or
that was discharged under the Bankruptcy Act.
(2) In this section, "student loan program" means the program operated under
part B, D, or E of title IV of the Higher Education Act of 1965 or a similar
program operated under State or local law.
SUBCHAPTER III - THE ESTATE
541. Property of the estate
(a) The commencement of a case under section 301, 302, or 303 of this title
creates an estate. Such estate is comprised of all the following property,
wherever located and by whomever held:
(1) Except as provided in subsections (b) and (c)(2) of this section, all legal
or equitable interests of the debtor in property as of the commencement of the
case.
(2) All interests of the debtor and the debtor's spouse in community property as
of the commencement of the case that is-
(A) under the sole, equal, or joint management and control of the debtor; or
(B) liable for an allowable claim against the debtor, or for both an allowable
claim against the debtor and an allowable claim against the debtor's spouse, to
the extent that such interest is so liable.
(3) Any interest in property that the trustee recovers under section 329(b),
363(n), 543, 550, 553, or 723 of this title.
(4) Any interest in property preserved for the benefit of or ordered transferred
to the estate under section 510(c) or 551 of this title.
(5) Any interest in property that would have been property of the estate if such
interest had been an interest of the debtor on the date of the filing of the
petition, and that the debtor acquires or becomes entitled to acquire within 180
days after such date-
(A) by bequest, devise, or inheritance;
(B) as a result of a property settlement agreement with the debtor's spouse, or
of an interlocutory or final divorce decree; or
(C) as a beneficiary of a life insurance policy or of a death benefit plan.
(6) Proceeds, product, offspring, rents, or profits of or from property of the
estate, except such as are earnings from services performed by an individual
debtor after the commencement of the case.
(7) Any interest in property that the estate acquires after the commencement of
the case.
(b) Property of the estate does not include-
(1) any power that the debtor may exercise solely for the benefit of an entity
other than the debtor;
(2) any interest of the debtor as a lessee under a lease of nonresidential real
property that has terminated at the expiration of the stated term of such lease
before the commencement of the case under this title, and ceases to include any
interest of the debtor as a lessee under a lease of nonresidential real property
that has terminated at the expiration of the stated term of such lease during
the case;
(3) any eligibility of the debtor to participate in programs authorized under
the Higher Education Act of 1965 (20 U.S.C. 1001 et seq.; 42 U.S.C. 2751 et
seq.), or any accreditation status or State licensure of the debtor as an
educational institution;
(4) any interest of the debtor in liquid or gaseous hydrocarbons to the extent
that-
(A) (i) the debtor has transferred or has agreed to transfer such interest
pursuant to a farmout agreement or any written agreement directly related to a
farmout agreement; and
(ii) but for the operation of this paragraph, the estate could include the
interest referred to in clause (i) only by virtue of section 365 or 544(a)(3) of
this title; or
(B) (i) the debtor has transferred such interest pursuant to a written
conveyance of a production payment to an entity that does not participate in the
operation of the property from which such production payment is transferred; and
(ii) but for the operation of this paragraph, the estate could include the
interest referred to in clause (i) only by virtue of section 542 of this title;
or
(5) any interest in cash or cash equivalents that constitute proceeds of a sale
by the debtor of a money order that is made-
(A) on or after the date that is 14 days prior to the date on which the petition
is filed; and
(B) under an agreement with a money order issuer that prohibits the commingling
of such proceeds with property of the debtor (notwithstanding that, contrary to
the agreement, the proceeds may have been commingled with property of the
debtor), unless the money order issuer had not taken action, prior to the filing
of the petition, to require compliance with the prohibition.
Paragraph (4) shall not be construed to exclude from the estate any
consideration the debtor retains, receives, or is entitled to receive for
transferring an interest in liquid or gaseous hydrocarbons pursuant to a farmout
agreement.
(c) (1) Except as provided in paragraph (2) of this subsection, an interest of
the debtor in property becomes property of the estate under subsection (a)(1),
(a)(2), or (a)(5) of this
section notwithstanding any provision in an agreement, transfer instrument, or
applicable nonbankruptcy law-
(A) that restricts or conditions transfer of such interest by the debtor; or
(B) that is conditioned on the insolvency or financial condition of the debtor,
on the commencement of a case under this title, or on the appointment of or
taking possession by a trustee in a case under this title or a custodian before
such commencement, and that effects or gives an option to effect a forfeiture,
modification, or termination of the debtor's interest in property.
(2) A restriction on the transfer of a beneficial interest of the debtor in a
trust that is enforceable under applicable nonbankruptcy law is enforceable in a
case under this title.
(d) Property in which the debtor holds, as of the commencement of the case, only
legal title and not an equitable interest, such as a mortgage secured by real
property, or an interest in such a mortgage, sold by the debtor but as to which
the debtor retains legal title to service or supervise the servicing of such
mortgage or interest, becomes property of the estate under subsection (a)(1) or
(2) of this section only to the extent of the debtor's legal title to such
property, but not to the extent of any equitable interest in such property that
the debtor does not hold.
542. Turnover of property to the estate
(a) Except as provided in subsection (c) or (d) of this section, an entity,
other than a custodian, in possession, custody, or control, during the case, of
property that the trustee may use, sell, or lease under section 363 of this
title, or that the debtor may exempt under section 522 of this title, shall
deliver to the trustee, and account for, such property or the value of such
property, unless such property is of inconsequential value or benefit to the
estate.
(b) Except as provided in subsection (c) or (d) of this section, an entity that
owes a debt that is property of the estate and that is matured, payable on
demand, or payable on order, shall pay such debt to, or on the order of, the
trustee, except to the extent that such debt may be offset under section 553 of
this title against a claim against the debtor.
(c) Except as provided in section 362(a)(7) of this title, an entity that has
neither actual notice nor actual knowledge of the commencement of the case
concerning the debtor may transfer property of the estate, or pay a debt owing
to the debtor, in good faith and other than in the manner specified in
subsection (d) of this section, to an entity other than the trustee, with the
same effect as to the entity making such transfer or payment as if the case
under this title concerning the debtor had not been commenced.
(d) A life insurance company may transfer property of the estate or property of
the debtor to such company in good faith, with the same effect with respect to
such company as if the case under this title concerning the debtor had not been
commenced, if such transfer is to pay a premium or to carry out a nonforfeiture
insurance option, and is required to be made automatically, under a life
insurance contract with such company that was entered into before the date of
the filing of the petition and that is property of the estate.
(e) Subject to any applicable privilege, after notice and a hearing, the court
may order an attorney, accountant, or other person that holds recorded
information, including books, documents, records, and papers, relating to the
debtor's property or financial affairs, to turn over or disclose such recorded
information to the trustee.
543. Turnover of property by a custodian
(a) A custodian with knowledge of the commencement of a case under this title
concerning the debtor may not make any disbursement from, or take any action in
the administration of, property of the debtor, proceeds, product, offspring,
rents, or profits of such property, or property of the estate, in the
possession, custody, or control of such custodian, except such action as is
necessary to preserve such property.
(b) A custodian shall-
(1) deliver to the trustee any property of the debtor held by or transferred to
such custodian, or proceeds, product, offspring, rents, or profits of such
property, that is in such custodian's possession, custody, or control on the
date that such custodian acquires knowledge of the commencement of the case; and
(2) file an accounting of any property of the debtor, or proceeds, product,
offspring, rents, or profits of such property, that, at any time, came into the
possession, custody, or control of such custodian.
(c) The court, after notice and a hearing, shall-
(1) protect all entities to which a custodian has become obligated with respect
to such property or proceeds, product, offspring, rents, or profits of such
property;
(2) provide for the payment of reasonable compensation for services rendered and
costs and expenses incurred by such custodian; and
(3) surcharge such custodian, other than an assignee for the benefit of the
debtor's creditors that was appointed or took possession more than 120 days
before the date of the filing of the petition, for any improper or excessive
disbursement, other than a disbursement that has been made in accordance with
applicable law or that has been approved, after notice and a hearing, by a court
of competent jurisdiction before the commencement of the case under this title.
(d) After notice and hearing, the bankruptcy court-
(1) may excuse compliance with subsection (a), (b), or (c) of this section if
the interests of creditors and, if the debtor is not insolvent, of equity
security holders would be better served by permitting a custodian to continue in
possession, custody, or control of such property, and
(2) shall excuse compliance with subsections (a) and (b)(1) of this section if
the custodian is an assignee for the benefit of the debtor's creditors that was
appointed or took possession more than 120 days before the date of the filing of
the petition, unless compliance with such subsections is necessary to prevent
fraud or injustice.
544. Trustee as lien creditor and as successor to certain creditors and
purchasers
(a) The trustee shall have, as of the commencement of the case, and without
regard to any knowledge of the trustee or of any creditor, the rights and powers
of, or may avoid any transfer of property of the debtor or any obligation
incurred by the debtor that is voidable by-
(1) a creditor that extends credit to the debtor at the time of the commencement
of the case, and that obtains, at such time and with respect to such credit, a
judicial lien on all property on which a creditor on a simple contract could
have obtained such a judicial lien, whether or not such a creditor exists;
(2) a creditor that extends credit to the debtor at the time of the commencement
of the case, and obtains, at such time and with respect to such credit, an
execution against the debtor that is returned unsatisfied at such time, whether
or not such a creditor exists; or
(3) a bona fide purchaser of real property, other than fixtures, from the
debtor, against whom applicable law permits such transfer to be perfected, that
obtains the status of a bona fide purchaser and has perfected such transfer at
the time of the commencement of the case, whether or not such a purchaser
exists.
(b) (1) Except as provided in paragraph (2), the trustee may avoid any transfer
of an interest of the debtor in property or any obligation incurred by the
debtor that is voidable under applicable law by a creditor holding an unsecured
claim that is allowable under section 502 of this title or that is not allowable
only under section 502(e) of this title.
(2) Paragraph (1) shall not apply to a transfer of a charitable contribution (as
that term is defined in section 548(d)(3)) that is not covered under section
548(a)(1)(B), by reason of section 548(a)(2). Any claim by any person to recover
a transferred contribution described in the preceding sentence under Federal or
State law in a Federal or State court shall be preempted by the commencement of
the case.
545. Statutory liens
The trustee may avoid the fixing of a statutory lien on property of the debtor
to the extent that such lien-
(1) first becomes effective against the debtor-
(A) when a case under this title concerning the debtor is commenced;
(B) when an insolvency proceeding other than under this title concerning the
debtor is commenced;
(C) when a custodian is appointed or authorized to take or takes possession;
(D) when the debtor becomes insolvent;
(E) when the debtor's financial condition fails to meet a specified standard; or
(F) at the time of an execution against property of the debtor levied at the
instance of an entity other than the holder of such statutory lien;
(2) is not perfected or enforceable at the time of the commencement of the case
against a bona fide purchaser that purchases such property at the time of the
commencement of the case, whether or not such a purchaser exists;
(3) is for rent; or
(4) is a lien of distress for rent.
546. Limitations on avoiding powers
(a) An action or proceeding under section 544, 545, 547, 548, or 553 of this
title may not be commenced after the earlier of-
(1) the later of-
(A) 2 years after the entry of the order for relief; or
(B) 1 year after the appointment or election of the first trustee under section
702, 1104, 1163, 1202, or 1302 of this title if such appointment or such
election occurs before the expiration of the period specified in subparagraph
(A); or
(2) the time the case is closed or dismissed.
(b) (1) The rights and powers of a trustee under sections 544, 545, and 549 of
this title are subject to any generally applicable law that-
(A) permits perfection of an interest in property to be effective against an
entity that acquires rights in such property before the date of perfection; or
(B) provides for the maintenance or continuation of perfection of an interest in
property to be effective against an entity that acquires rights in such property
before the date on which action is taken to effect such maintenance or
continuation.
(2) If-
(A) a law described in paragraph (1) requires seizure of such property or
commencement of an action to accomplish such perfection, or maintenance or
continuation of perfection of an interest in property; and
(B) such property has not been seized or such an action has not been commenced
before the date of the filing of the petition; such interest in such property
shall be perfected, or perfection of such interest shall be maintained or
continued, by giving notice within the time fixed by such law for such seizure
or such commencement.
(c) Except as provided in subsection (d) of this section, the rights and powers
of a trustee under sections 544(a), 545, 547, and 549 of this title are subject
to any statutory or common-law right of a seller of goods that has sold goods to
the debtor, in the ordinary course of such seller's business, to reclaim such
goods if the debtor has received such goods while insolvent, but-
(1) such a seller may not reclaim any such goods unless such seller demands in
writing -reclamation of such goods-
(A) before 10 days after receipt of such goods by the debtor; or
(B) if such 10-day period expires after the commencement of the case, before 20
days after receipt of such goods by the debtor; and
(2) the court may deny reclamation to a seller with such a right of reclamation
that has made such a demand only if the court-
(A) grants the claim of such a seller priority as a claim of a kind specified in
section 503(b) of this title; or
(B) secures such claim by a lien.
(d) In the case of a seller who is a producer of grain sold to a grain storage
facility, owned or operated by the debtor, in the ordinary course of such
seller's business (as such terms are defined in section 557 of this title) or in
the case of a United States fisherman who has caught fish sold to a fish
processing facility owned or operated by the debtor in the
ordinary course of such fisherman's business, the rights and powers of the
trustee under sections 544(a), 545, 547, and 549 of this title are subject to
any statutory or common law right of such producer or fisherman to reclaim such
grain or fish if the debtor has received such grain or fish while insolvent,
but-
(1) such producer or fisherman may not reclaim any grain or fish unless such
producer or fisherman demands, in writing, reclamation of such grain or fish
before ten days after receipt thereof by the debtor; and
(2) the court may deny reclamation to such a producer or fisherman with a right
of reclamation that has made such a demand only if the court secures such claim
by a lien.
(e) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 548(b) of this
title, the trustee may not avoid a transfer that is a margin payment, as defined
in section 101, 741, or 761 of this title, or settlement payment, as defined in
section 101 or 741 of this title, made by or to a commodity broker, forward
contract merchant, stockbroker, financial institution, or securities clearing
agency, that is made before the commencement of the case, except under section
548(a)(1)(A) of this title.
(f) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 548(b) of this
title, the trustee may not avoid a transfer that is a margin payment, as defined
in section 741 or 761 of this title, or settlement payment, as defined in
section 741 of this title, made by or to a repo participant, in connection with
a repurchase agreement and that is made before the commencement of the case,
except under section 548(a)(1)(A) of this title.
(g) [sic] Notwithstanding sections 544, 545, 547, 548(a)(1)(B) and 548(b) of
this title, the trustee may not avoid a transfer under a swap agreement, made by
or to a swap participant, in connection with a swap agreement and that is made
before the commencement of the case, except under section 548(a)(1)(A) of this
title.
(g) [sic] Notwithstanding the rights and powers of a trustee under sections
544(a), 545, 547, 549, and 553, if the court determines on a motion by the
trustee made not later than 120 days after the date of the order for relief in a
case under chapter 11 of this title and after notice and a hearing, that a
return is in the best interests of the estate, the debtor, with the consent of a
creditor, may return goods shipped to the debtor by the creditor before the
commencement of the case, and the creditor may offset the purchase price of such
goods against any claim of the creditor against the debtor that arose before the
commencement of the case.
547. Preferences
(a) In this section-
(1) "inventory" means personal property leased or furnished, held for sale or
lease, or to be furnished under a contract for service, raw materials, work in
process, or materials used or consumed in a business, including farm products
such as crops or livestock, held for sale or lease;
(2) "new value" means money or money's worth in goods, services, or new credit,
or release by a transferee of property previously transferred to such transferee
in a transaction that is neither void nor voidable by the debtor or the trustee
under any
applicable law, including proceeds of such property, but does not include an
obligation substituted for an existing obligation;
(3) "receivable" means right to payment, whether or not such right has been
earned by performance; and
(4) a debt for a tax is incurred on the day when such tax is last payable
without penalty, including any extension.
(b) Except as provided in subsection (c) of this section, the trustee may avoid
any transfer of an interest of the debtor in property-
(1) to or for the benefit of a creditor;
(2) for or on account of an antecedent debt owed by the debtor before such
transfer was made;
(3) made while the debtor was insolvent;
(4) made-
(A) on or within 90 days before the date of the filing of the petition; or
(B) between ninety days and one year before the date of the filing of the
petition, if such creditor at the time of such transfer was an insider; and
(5) that enables such creditor to receive more than such creditor would receive
if-
(A) the case were a case under chapter 7 of this title;
(B) the transfer had not been made; and
(C) such creditor received payment of such debt to the extent provided by the
provisions of this title.
(c) The trustee may not avoid under this section a transfer-
(1) to the extent that such transfer was-
(A) intended by the debtor and the creditor to or for whose benefit such
transfer was made to be a contemporaneous exchange for new value given to the
debtor; and
(B) in fact a substantially contemporaneous exchange;
(2) to the extent that such transfer was-
(A) in payment of a debt incurred by the debtor in the ordinary course of
business or financial affairs of the debtor and the transferee;
(B) made in the ordinary course of business or financial affairs of the debtor
and the transferee; and
(C) made according to ordinary business terms;
(3) that creates a security interest in property acquired by the debtor-
(A) to the extent such security interest secures new value that was-
(i) given at or after the signing of a security agreement that contains a
description of such property as collateral;
(ii) given by or on behalf of the secured party under such agreement; (iii)
given to enable the debtor to acquire such property; and (iv) in fact used by
the debtor to acquire such property; and
(B) that is perfected on or before 20 days after the debtor receives possession
of such property;
(4) to or for the benefit of a creditor, to the extent that, after such
transfer, such creditor gave new value to or for the benefit of the debtor-
(A) not secured by an otherwise unavoidable security interest; and
(B) on account of which new value the debtor did not make an otherwise
unavoidable transfer to or for the benefit of such creditor;
(5) that creates a perfected security interest in inventory or a receivable or
the proceeds of either, except to the extent that the aggregate of all such
transfers to the transferee caused a reduction, as of the date of the filing of
the petition and to the prejudice of other creditors holding unsecured claims,
of any amount by which the debt secured by such security interest exceeded the
value of all security interests for such debt on the later of-
(A)(i) with respect to a transfer to which subsection (b)(4)(A) of this section
applies, 90 days before the date of the filing of the petition; or
(ii) with respect to a transfer to which subsection (b)(4)(B) of this section
applies, one year before the date of the filing of the petition; or
(B) the date on which new value was first given under the security agreement
creating such security interest;
(6) that is the fixing of a statutory lien that is not avoidable under section
545 of this title;
(7) to the extent such transfer was a bona fide payment of a debt to a spouse,
former spouse, or child of the debtor, for alimony to, maintenance for, or
support of such spouse or child, in connection with a separation agreement,
divorce decree or other order of a court of record, determination made in
accordance with State or territorial law by a governmental unit, or property
settlement agreement, but not to the extent that such debt-
(A) is assigned to another entity, voluntarily, by operation of law, or
otherwise; or
(B) includes a liability designated as alimony, maintenance, or support, unless
such liability is actually in the nature of alimony, maintenance or support; or
(8) if, in a case filed by an individual debtor whose debts are primarily
consumer debts, the aggregate value of all property that constitutes or is
affected by such transfer is less than $600.
(d) The trustee may avoid a transfer of an interest in property of the debtor
transferred to or for the benefit of a surety to secure reimbursement of such a
surety that furnished a bond or other obligation to dissolve a judicial lien
that would have been avoidable by the trustee under subsection (b) of this
section. The liability of such surety under such bond or obligation shall be
discharged to the extent of the value of such property recovered by the trustee
or the amount paid to the trustee.
(e) (1) For the purposes of this section-
(A) a transfer of real property other than fixtures, but including the interest
of a seller or purchaser under a contract for the sale of real property, is
perfected when a bona fide purchaser of such property from the debtor against
whom applicable law permits such transfer to be perfected cannot acquire an
interest that is superior to the interest of the transferee; and
(B) a transfer of a fixture or property other than real property is perfected
when a creditor on a simple contract cannot acquire a judicial lien that is
superior to the interest of the transferee.
(2) For the purposes of this section, except as provided in paragraph (3) of
this subsection, a transfer is made-
(A) at the time such transfer takes effect between the transferor and the
transferee, if such transfer is perfected at, or within 10 days after, such
time, except as provided in subsection (c)(3)(B);
(B) at the time such transfer is perfected, if such transfer is perfected after
such 10 days; or
(C) immediately before the date of the filing of the petition, if such transfer
is not perfected at the later of-
(i) the commencement of the case; or
(ii) 10 days after such transfer takes effect between the transferor and the
transferee.
(3) For the purposes of this section, a transfer is not made until the debtor
has acquired rights in the property transferred.
(f) For the purposes of this section, the debtor is presumed to have been
insolvent on and during the 90 days immediately preceding the date of the filing
of the petition.
(g) For the purposes of this section, the trustee has the burden of proving the
avoidability of a transfer under subsection (b) of this section, and the
creditor or party in interest against whom recovery or avoidance is sought has
the burden of proving the nonavoidability of a transfer under subsection (c) of
this section.
548. Fraudulent transfers and obligations
(a) (1) The trustee may avoid any transfer of an interest of the debtor in
property, or any obligation incurred by the debtor, that was made or incurred on
or within one year before the date of the filing of the petition, if the debtor
voluntarily or involuntarily-
(A) made such transfer or incurred such obligation with actual intent to hinder,
delay, or defraud any entity to which the debtor was or became, on or after the
date that such transfer was made or such obligation was incurred, indebted; or
(B)(i) received less than a reasonably equivalent value in exchange for such
transfer or obligation; and
(ii) (I) was insolvent on the date that such transfer was made or such
obligation was incurred, or became insolvent as a result of such transfer or
obligation;
(II) was engaged in business or a transaction, or was about to engage in
business or a transaction, for which any property remaining with the debtor was
an unreasonably small capital; or
(III) intended to incur, or believed that the debtor would incur, debts that
would be beyond the debtor's ability to pay as such debts matured.
(2) A transfer of a charitable contribution to a qualified religious or
charitable entity or organization shall not be considered to be a transfer
covered under paragraph (1)(B) in any case in which.-
(A) the amount of that contribution does not exceed 15 percent of the gross
annual
income of the debtor for the year in which the transfer of the contribution is
made; or
(B) the contribution made by a debtor exceeded the percentage amount of gross
annual income specified in subparagraph (A), if the transfer was consistent with
the practices of the debtor in making charitable contributions.
(b) The trustee of a partnership debtor may avoid any transfer of an interest of
the debtor in property, or any obligation incurred by the debtor, that was made
or incurred on or within one year before the date of the filing of the petition,
to a general partner in the debtor, if the debtor was insolvent on the date such
transfer was made or such obligation was incurred, or became insolvent as a
result of such transfer or obligation.
(c) Except to the extent that a transfer or obligation voidable under this
section is voidable under section 544, 545, or 547 of this title, a transferee
or obligee of such a transfer or obligation that takes for value and in good
faith has a lien on or may retain any interest transferred or may enforce any
obligation incurred, as the case may be, to the extent that such transferee or
obligee gave value to the debtor in exchange for such transfer or obligation.
(d) (1) For the purposes of this section, a transfer is made when such transfer
is so perfected that a bona fide purchaser from the debtor against whom
applicable law permits such transfer to be perfected cannot acquire an interest
in the property transferred that is superior to the interest in such property of
the transferee, but if such transfer is not so perfected before the commencement
of the case, such transfer is made immediately before the date of the filing of
the petition.
(2) In this section-
(A) "value" means property, or satisfaction or securing of a present or
antecedent debt of the debtor, but does not include an unperformed promise to
furnish support to the debtor or to a relative of the debtor;
(B) a commodity broker, forward contract merchant, stockbroker, financial
institution, or securities clearing agency that receives a margin payment, as
defined in section 101, 741, or 761 of this title, or settlement payment, as
defined in section 101 or 741 of this title, takes for value to the extent of
such payment;
(C) a repo participant that receives a margin payment, as defined in section 741
or 761 of this title, or settlement payment, as defined in section 741 of this
title, in connection with a repurchase agreement, takes for value to the extent
of such payment; and
(D) a swap participant that receives a transfer in connection with a swap
agreement takes for value to the extent of such transfer.
(3) In this section, the term "charitable contribution" means a charitable
contribution, as that term is defined in section 170(c) of the Internal Revenue
Code of 1986, if that contribution-
(A) is made by a natural person; and
(B) consists of.-
(i) a financial instrument (as that term is defined in section 731(c)(2)(C) of
the Internal Revenue Code of 1986); or (ii) cash.
(4) In this section, the term "qualified religious or charitable entity or
organization" means-
(A) an entity described in section 170(c)(1) of the Internal Revenue Code of
1986; or
(B) an entity or organization described in section 170(c)(2) of the Internal
Revenue Code of 1986.
549. Postpetition transactions
(a) Except as provided in subsection (b) or (c) of this section, the trustee may
avoid a transfer of property of the estate-
(1) that occurs after the commencement of the case; and
(2) (A) that is authorized only under section 303(f) or 542(c) of this title; or
(B) that is not authorized under this title or by the court.
(b) In an involuntary case, the trustee may not avoid under subsection (a) of
this section a transfer made after the commencement of such case but before the
order for relief to the extent any value, including services, but not including
satisfaction or securing of a debt that arose before the commencement of the
case, is given after the commencement of the case in exchange for such transfer,
notwithstanding any notice or knowledge of the case that the transferee has.
(c) The trustee may not avoid under subsection (a) of this section a transfer of
real property to a good faith purchaser without knowledge of the commencement of
the case and for present fair equivalent value unless a copy or notice of the
petition was filed, where a transfer of such real property may be recorded to
perfect such transfer, before such transfer is so perfected that a bona fide
purchaser of such property, against whom applicable law permits such transfer to
be perfected, could not acquire an interest that is superior to the interest of
such good faith purchaser. A good faith purchaser without knowledge of the
commencement of the case and for less than present fair equivalent value has a
lien on the property transferred to the extent of any present value given,
unless a copy or notice of the petition was so filed before such transfer was so
perfected.
(d) An action or proceeding under this section may not be commenced after the
earlier of-
(1) two years after the date of the transfer sought to be avoided; or
(2) the time the case is closed or dismissed.
550. Liability of transferee of avoided transfer
(a) Except as otherwise provided in this section, to the extent that a transfer
is avoided under section 544, 545, 547, 548, 549, 553(b), or 724(a) of this
title, the trustee may recover, for the benefit of the estate, the property
transferred, or, if the court so orders, the value of such property, from-
(1) the initial transferee of such transfer or the entity for whose benefit such
transfer was made; or
(2) any immediate or mediate transferee of such initial transferee.
(b) The trustee may not recover under section [sic] (a)(2) of this section from-
(1) a transferee that takes for value, including satisfaction or securing of a
present or antecedent debt, in good faith, and without knowledge of the
voidability of the transfer avoided; or
(2) any immediate or mediate good faith transferee of such transferee.
(c) If a transfer made between 90 days and one year before the filing of the
petition-
(1) is avoided under section 547(b) of this title; and
(2) was made for the benefit of a creditor that at the time of such transfer was
an insider; the trustee may not recover under subsection (a) from a transferee
that is not an insider.
(d) The trustee is entitled to only a single satisfaction under subsection (a)
of this section.
(e) (1) A good faith transferee from whom the trustee may recover under
subsection (a) of this section has a lien on the property recovered to secure
the lesser of-
(A) the cost, to such transferee, of any improvement made after the transfer,
less the amount of any profit realized by or accruing to such transferee from
such property; and
(B) any increase in the value of such property as a result of such improvement,
of the property transferred.
(2) In this subsection, "improvement" includes-
(A) physical additions or changes to the property transferred;
(B) repairs to such property;
(C) payment of any tax on such property;
(D) payment of any debt secured by a lien on such property that is superior or
equal to the rights of the trustee; and
(E) preservation of such property.
(f) An action or proceeding under this section may not be commenced after the
earlier of-
(1) one year after the avoidance of the transfer on account of which recovery
under this section is sought; or
(2) the time the case is closed or dismissed.
551. Automatic preservation of avoided transfer
Any transfer avoided under section 522, 544, 545, 547, 548, 549, or 724(a) of
this title, or any lien void under section 506(d) of this title, is preserved
for the benefit of the estate but only with respect to property of the estate.
552. Postpetition effect of security interest
(a) Except as provided in subsection (b) of this section, property acquired by
the estate or by the debtor after the commencement of the case is not subject to
any lien resulting from any security agreement entered into by the debtor before
the commencement of the case.
(b) (1) Except as provided in sections 363, 506(c), 522, 544, 545, 547, and 548
of this title, if the debtor and an entity entered into a security agreement
before the commencement of the case and if the security interest created by such
security agreement extends to property of the debtor acquired before the
commencement of the case and to proceeds, product, offspring, or profits of such
property, then such security interest extends to such proceeds, product,
offspring, or profits acquired by the estate after the commencement of the case
to the extent provided by such security agreement and by applicable
nonbankruptcy law, except to any extent that the court, after notice and a
hearing and based on the equities of the case, orders otherwise.
(2) Except as provided in sections 363, 506(c), 522, 544, 545, 547, and 548 of
this title, and notwithstanding section 546(b) of this title, if the debtor and
an entity entered into a security agreement before the commencement of the case
and if the security interest created by such security agreement extends to
property of the debtor acquired before the commencement of the case and to
amounts paid as rents of such property or the fees, charges, accounts, or other
payments for the use or occupancy of rooms and other public facilities in
hotels, motels, or other lodging properties, then such security interest extends
to such rents and such fees, charges, accounts, or other payments acquired by
the estate after the commencement of the case to the extent provided in such
security agreement, except to any extent that the court, after notice and a
hearing and based on the equities of the case, orders otherwise.
553. Setoff
(a) Except as otherwise provided in this section and in sections 362 and 363 of
this title, this title does not affect any right of a creditor to offset a
mutual debt owing by such creditor to the debtor that arose before the
commencement of the case under this title against a claim of such creditor
against the debtor that arose before the commencement of the case, except to the
extent that-
(1) the claim of such creditor against the debtor is disallowed;
(2) such claim was transferred, by an entity other than the debtor, to such
creditor-
(A) after the commencement of the case; or
(B) (i) after 90 days before the date of the filing of the petition; and (ii)
while the debtor was insolvent; or
(3) the debt owed to the debtor by such creditor was incurred by such creditor-
(A) after 90 days before the date of the filing of the petition;
(B) while the debtor was insolvent; and
(C) for the purpose of obtaining a right of setoff against the debtor.
(b) (1) Except with respect to a setoff of a kind described in section
362(b)(6), 362(b)(7), 362(b)(14), 365(h), 546(h), or 365(i)(2) of this title, if
a creditor offsets a mutual debt owing to the debtor against a claim against the
debtor on or within 90 days before the date of the filing of the petition, then
the trustee may recover from such creditor the amount so offset to the extent
that any insufficiency on the date of such setoff is less than the insufficiency
on the later of-
(A) 90 days before the date of the filing of the petition; and
(B) the first date during the 90 days immediately preceding the date of the
filing of the petition on which there is an insufficiency.
(2) In this subsection, "insufficiency" means amount, if any, by which a claim
against the debtor exceeds a mutual debt owing to the debtor by the holder of
such claim.
(c) For the purposes of this section, the debtor is presumed to have been
insolvent on and during the 90 days immediately preceding the date of the filing
of the petition.
554. Abandonment of property of the estate
(a) After notice and a hearing, the trustee may abandon any property of the
estate that is burdensome to the estate or that is of inconsequential value and
benefit to the estate.
(b) On request of a party in interest and after notice and a hearing, the court
may order the trustee to abandon any property of the estate that is burdensome
to the estate or that is of inconsequential value and benefit to the estate.
(c) Unless the court orders otherwise, any property scheduled under section
521(1) of this title not otherwise administered at the time of the closing of a
case is abandoned to the debtor and administered for purposes of section 350 of
this title.
(d) Unless the court orders otherwise, property of the estate that is not
abandoned under this section and that is not administered in the case remains
property of the estate.
555. Contractual right to liquidate a securities contract
The exercise of a contractual right of a stockbroker, financial institution, or
securities clearing agency to cause the liquidation of a securities contract, as
defined in section 741 of this title, because of a condition of the kind
specified in section 365(e)(1) of this title shall not be stayed, avoided, or
otherwise limited by operation of any provision of this title or by order of a
court or administrative agency in any proceeding under this title unless such
order is authorized under the provisions of the Securities Investor Protection
Act of 1970 or any statute administered by the Securities and Exchange
Commission. As used in this section, the term "contractual right" includes a
right set forth in a rule or bylaw of a national securities exchange, a national
securities association, or a securities clearing agency.
556. Contractual right to liquidate a commodities contract or forward contract
The contractual right of a commodity broker or forward contract merchant to
cause the liquidation of a commodity contract, as defined in section 761 of this
title, or forward contract because of a condition of the kind specified in
section 365(e)(1) of this title, and the right to a variation or maintenance
margin payment received from a trustee with respect to open commodity contracts
or forward contracts, shall not be stayed, avoided, or otherwise limited by
operation of any provision of this title or by the order of a court in any
proceeding under this title. As used in this section, the term "contractual
right" includes a right set forth in a rule or bylaw of a clearing organization
or contract market or in a resolution of the governing board thereof and a
right, whether or not evidenced in writing, arising under common law, under law
merchant or by reason of normal business practice.
557. Expedited determination of interests in, and abandonment or other
disposition of grain assets
(a) This section applies only in a case concerning a debtor that owns or
operates a grain storage facility and only with respect to grain and the
proceeds of grain. This section does not affect the application of any other
section of this title to property other than grain and proceeds of grain.
(b) In this section-
(1) "grain" means wheat, corn, flaxseed, grain sorghum, barley, oats, rye,
soybeans, other dry edible beans, or rice;
(2) "grain storage facility" means a site or physical structure regularly used
to store grain for producers, or to store grain acquired from producers for
resale; and
(3) "producer" means an entity which engages in the growing of grain.
(c) (1) Notwithstanding sections 362, 363, 365, and 554 of this title, on the
court's own motion the court may, and on the request of the trustee or an entity
that claims an interest in grain or the proceeds of grain the court shall,
expedite the procedures for the determination of interests in and the
disposition of grain and the proceeds of grain, by shortening to the greatest
extent feasible such time periods as are otherwise applicable for such
procedures and by establishing, by order, a timetable having a duration of not
to exceed 120 days for the completion of the applicable procedure specified in
subsection
(d) of this section. Such time periods and such timetable may be modified by the
court, for cause, in accordance with subsection (f) of this section.
(2) The court shall determine the extent to which such time periods shall be
shortened, based upon-
(A) any need of an entity claiming an interest in such grain or the proceeds of
grain for a prompt determination of such interest;
(B) any need of such entity for a prompt disposition of such grain;
(C) the market for such grain;
(D) the conditions under which such grain is stored;
(E) the costs of continued storage or disposition of such grain;
(F) the orderly administration of the estate;
(G) the appropriate opportunity for an entity to assert an interest in such
grain; and
(H) such other considerations as are relevant to the need to expedite such
procedures in the case.
(d) The procedures that may be expedited under subsection (c) of this section
include- (1) the filing of and response to-
(A) a claim of ownership;
(B) a proof of claim;
(C) a request for abandonment;
(D) a request for relief from the stay of action against property under section
362(a) of this title;
(E) a request for determination of secured status;
(F) a request for determination of whether such grain or the proceeds of grain-
(i) is property of the estate;
(ii) must be turned over to the estate; or (iii) may be used, sold, or leased;
and
(G) any other request for determination of an interest in such grain or the
proceeds of grain;
(2) the disposition of such grain or the proceeds of grain, before or after
determination of interests in such grain or the proceeds of grain, by way of-
(A) sale of such grain;
(B) abandonment;
(C) distribution; or
(D) such other method as is equitable in the case;
(3) subject to sections 701, 702, 703, 1104, 1202, and 1302 of this title, the
appointment of a trustee or examiner and the retention and compensation of any
professional person required to assist with respect to matters relevant to the
determination of interests in or disposition of such grain or the proceeds of
grain; and
(4) the determination of any dispute concerning a matter specified in paragraph
(1), (2), or (3) of this subsection.
(e) (1) Any governmental unit that has regulatory jurisdiction over the
operation or liquidation of the debtor or the debtor's business shall be given
notice of any request made or order entered under subsection (c) of this
section.
(2) Any such governmental unit may raise, and may appear and be heard on, any
issue relating to grain or the proceeds of grain in a case in which a request is
made, or an order is entered, under subsection (c) of this section.
(3) The trustee shall consult with such governmental unit before taking any
action relating to the disposition of grain in the possession, custody, or
control of the debtor or the estate.
(f) The court may extend the period for final disposition of grain or the
proceeds of grain under this section beyond 120 days if the court finds that-
(1) the interests of justice so require in light of the complexity of the case;
and
(2) the interests of those claimants entitled to distribution of grain or the
proceeds of grain will not be materially injured by such additional delay.
(g) Unless an order establishing an expedited procedure under subsection (c) of
this section, or determining any interest in or approving any disposition of
grain or the proceeds of grain, is stayed pending appeal-
(1) the reversal or modification of such order on appeal does not affect the
validity of any procedure, determination, or disposition that occurs before such
reversal or modification, whether or not any entity knew of the pendency of the
appeal; and
(2) neither the court nor the trustee may delay, due to the appeal of such
order, any proceeding in the case in which such order is issued.
(h) (1) The trustee may recover from grain and the proceeds of grain the
reasonable and necessary costs and expenses allowable under section 503(b) of
this title attributable to preserving or disposing of grain or the proceeds of
grain, but may not recover from such grain or the proceeds of grain any other
costs or expenses.
(2) Notwithstanding section 326(a) of this title, the dollar amounts of money
specified in such section include the value, as of the date of disposition, of
any grain that the trustee distributes in kind.
(i) In all cases where the quantity of a specific type of grain held by a debtor
operating a grain storage facility exceeds ten thousand bushels, such grain
shall be sold by the trustee and the assets thereof distributed in accordance
with the provisions of this section.
558. Defenses of the estate
The estate shall have the benefit of any defense available to the debtor as
against any entity other than the estate, including statutes of limitation,
statutes of frauds, usury, and other personal defenses. A waiver of any such
defense by the debtor after the commencement of the case does not bind the
estate.
559. Contractual right to liquidate a repurchase agreement
The exercise of a contractual right of a repo participant to cause the
liquidation of a repurchase agreement because of a condition of the kind
specified in section 365(e)(1) of this title shall not be stayed, avoided, or
otherwise limited by operation of any provision of this title or by order of a
court or administrative agency in any proceeding under this title, unless, where
the debtor is a stockbroker or securities clearing agency, such order is
authorized under the provisions of the Securities Investor Protection Act of
1970 or any statute administered by the Securities and Exchange Commission. In
the event that a repo participant liquidates one or more repurchase agreements
with a debtor and under the terms of one or more such agreements has agreed to
deliver assets subject to repurchase agreements to the debtor, any excess of the
market prices received on liquidation of such assets (or if any such assets are
not disposed of on the date of liquidation of such repurchase agreements, at the
prices available at the time of liquidation of such repurchase agreements from a
generally recognized source or the most recent closing bid quotation from such a
source) over the sum of the stated repurchase prices and all expenses in
connection with the liquidation of such repurchase agreements shall be deemed
property of the estate, subject to the available rights of setoff. As used in
this section, the term "contractual right" includes a right set forth in a rule
or bylaw, applicable to each party to the repurchase agreement, of a national
securities exchange, a national securities association, or a securities clearing
agency, and a right, whether or not evidenced in writing, arising under common
law, under law merchant or by reason of normal business practice.
560. Contractual right to terminate a swap agreement
The exercise of any contractual right of any swap participant to cause the
termination of a swap agreement because of a condition of the kind specified in
section 365(e)(1) of this title or to offset or net out any termination values
or payment amounts arising under or in connection with any swap agreement shall
not be stayed, avoided, or otherwise limited by operation of any provision of
this title or by order of a court or administrative agency in any proceeding
under this title. As used in this section, the term "contractual right" includes
a right, whether or not evidenced in writing, arising under common law, under
law merchant, or by reason of normal business practice.
Chapter 7 - Liquidation
Subchapter i - Officers and Administration
701. Interim trustee
(a) (1) Promptly after the order for relief under this chapter, the United
States trustee shall appoint one disinterested person that is a member of the
panel of private trustees established under section 586(a)(1) of title 28 or
that is serving as trustee in the case immediately before the order for relief
under this chapter to serve as interim trustee in the case.
(2) If none of the members of such panel is willing to serve as interim trustee
in the case, then the United States trustee may serve as interim trustee in the
case.
(b) The service of an interim trustee under this section terminates when a
trustee elected or designated under section 702 of this title to serve as
trustee in the case qualifies under section 322 of this title.
(c) An interim trustee serving under this section is a trustee in a case under
this title.
702. Election of trustee
(a) A creditor may vote for a candidate for trustee only if such creditor-
(1) holds an allowable, undisputed, fixed, liquidated, unsecured claim of a kind
entitled to distribution under section 726(a)(2), 726(a)(3), 726(a)(4), 752(a),
766(h), or 766(i) of this title;
(2) does not have an interest materially adverse, other than an equity interest
that is not substantial in relation to such creditor's interest as a creditor,
to the interest of creditors entitled to such distribution; and
(3) is not an insider.
(b) At the meeting of creditors held under section 341 of this title, creditors
may elect one person to serve as trustee in the case if election of a trustee is
requested by creditors that may vote under subsection (a) of this section, and
that hold at least 20 percent in amount of the claims specified in subsection
(a)(1) of this section that are held by creditors that may vote under subsection
(a) of this section.
(c) A candidate for trustee is elected trustee if-
(1) creditors holding at least 20 percent in amount of the claims of a kind
specified in subsection (a)(1) of this section that are held by creditors that
may vote under subsection (a) of this section vote; and
(2) such candidate receives the votes of creditors holding a majority in amount
of claims specified in subsection (a)(1) of this section that are held by
creditors that vote for a trustee.
(d) If a trustee is not elected under this section, then the interim trustee
shall serve as trustee in the case.
703. Successor trustee
(a) If a trustee dies or resigns during a case, fails to qualify under section
322 of this title, or is removed under section 324 of this title, creditors may
elect, in the manner specified in section 702 of this title, a person to fill
the vacancy in the office of trustee.
(b) Pending election of a trustee under subsection (a) of this section, if
necessary to preserve or prevent loss to the estate, the United States trustee
may appoint an interim trustee in the manner specified in section 701 (a).
(c) If creditors do not elect a successor trustee under subsection (a) of this
section or if a trustee is needed in a case reopened under section 350 of this
title, then the United States trustee-
(1) shall appoint one disinterested person that is a member of the panel of
private trustees established under section 586(a)(1) of title 28 to serve as
trustee in the case; or
(2) may, if none of the disinterested members of such panel is willing to serve
as trustee, serve as trustee in the case.
704. Duties of trustee
The trustee shall-
(1) collect and reduce to money the property of the estate for which such
trustee serves, and close such estate as expeditiously as is compatible with the
best interests of parties in interest;
(2) be accountable for all property received;
(3) ensure that the debtor shall perform his intention as specified in section
521(2)(B) of this title;
(4) investigate the financial affairs of the debtor;
(5) if a purpose would be served, examine proofs of claims and object to the
allowance of any claim that is improper;
(6) if advisable, oppose the discharge of the debtor;
(7) unless the court orders otherwise, furnish such information concerning the
estate and the estate's administration as is requested by a party in interest;
(8) if the business of the debtor is authorized to be operated, file with the
court, with the United States trustee, and with any governmental unit charged
with responsibility for collection or determination of any tax arising out of
such operation, periodic reports and summaries of the operation of such
business, including a statement of receipts and disbursements, and such other
information as the United States trustee or the court requires; and
(9) make a final report and file a final account of the administration of the
estate with the court and with the United States trustee.
705. Creditors' committee
(a) At the meeting under section 341 (a) of this title, creditors that may vote
for a trustee under section 702(a) of this title may elect a committee of not
fewer than three, and not more than eleven, creditors, each of whom holds an
allowable unsecured claim of a kind entitled to distribution under section
726(a)(2) of this title.
(b) A committee elected under subsection (a) of this section may consult with
the trustee or the United States trustee in connection with the administration
of the estate, make recommendations to the trustee or the United States trustee
respecting the performance of the trustee's duties, and submit to the court or
the United States trustee any question affecting the administration of the
estate.
706. Conversion
(a) The debtor may convert a case under this chapter to a case under chapter 11,
12, or 13 of this title at any time, if the case has not been converted under
section 1112, 1208, or 1307 of this title. Any waiver of the right to convert a
case under this subsection is unenforceable.
(b) On request of a party in interest and after notice and a hearing, the court
may convert a case under this chapter to a case under chapter 11 of this title
at any time.
(c) The court may not convert a case under this chapter to a case under chapter
12 or 13 of this title unless the debtor requests such conversion.
(d) Notwithstanding any other provision of this section, a case may not be
converted to a case under another chapter of this title unless the debtor may be
a debtor under such chapter.
707. Dismissal
(a) The court may dismiss a case under this chapter only after notice and a
hearing and only for cause, including-
(1) unreasonable delay by the debtor that is prejudicial to creditors;
(2) nonpayment of any fees or charges required under chapter 123 of title 28;
and
(3) failure of the debtor in a voluntary case to file, within fifteen days or
such additional time as the court may allow after the filing of the petition
commencing such case, the information required by paragraph (1) of section 521,
but only on a motion by the United States trustee.
(b) After notice and a hearing, the court, on its own motion or on a motion by
the United States trustee, but not at the request or suggestion of any party in
interest, may dismiss a case filed by an individual debtor under this chapter
whose debts are primarily consumer debts if it finds that the granting of relief
would be a substantial abuse of the provisions of this chapter. There shall be a
presumption in favor of granting the relief requested by the debtor. In making a
determination whether to dismiss a case under this section, the court may not
take into consideration whether a debtor has made, or continues to make,
charitable contributions (that meet the definition of "charitable contribution"
under section 548(d)(3)) to any qualified religious or charitable entity or
organization (as that term is defined in section 548(d)(4)).
subchapter ii - collection, liquidation and distribution of
the Estate
721. Authorization to operate business
The court may authorize the trustee to operate the business of the debtor for a
limited period, if such operation is in the best interest of the estate and
consistent with the orderly liquidation of the estate.
722. Redemption
An individual debtor may, whether or not the debtor has waived the right to
redeem under this section, redeem tangible personal property intended primarily
for personal, family, or household use, from a lien securing a dischargeable
consumer debt, if such property is exempted under section 522 of this title or
has been abandoned under section 554 of this title, by paying the holder of such
lien the amount of the allowed secured claim of such holder that is secured by
such lien.
723. Rights of partnership trustee against general partners
(a) If there is a deficiency of property of the estate to pay in full all claims
which are allowed in a case under this chapter concerning a partnership and with
respect to which a general partner of the partnership is personally liable, the
trustee shall have a claim against such general partner to the extent that under
applicable nonbankruptcy law such general partner is personally liable for such
deficiency.
(b) To the extent practicable, the trustee shall first seek recovery of such
deficiency from any general partner in such partnership that is not a debtor in
a case under this title. Pending determination of such deficiency, the court may
order any such partner to provide the estate with indemnity for, or assurance of
payment of, any deficiency recoverable from such partner, or not to dispose of
property.
(c) Notwithstanding section 728(c) of this title, the trustee has a claim
against the estate of each general partner in such partnership that is a debtor
in a case under this title for the full amount of all claims of creditors
allowed in the case concerning such partnership. Notwithstanding section 502 of
this title, there shall not be allowed in such partner's case a claim against
such partner on which both such partner and such partnership are liable, except
to any extent that such claim is secured only by property of such partner and
not by property of such partnership. The claim of the trustee under this
subsection is entitled to distribution in such partner's case under section
726(a) of this title the same as any other claim of a kind specified in such
section.
(d) If the aggregate that the trustee recovers from the estates of general
partners under subsection (c) of this section is greater than any deficiency not
recovered under subsection (b) of this section, the court, after notice and a
hearing, shall determine an equitable distribution of the surplus so recovered,
and the trustee shall distribute such surplus to the estates of the general
partners in such partnership according to such determination.
724. Treatment of certain liens
(a) The trustee may avoid a lien that secures a claim of a kind specified in
section 726(a)(4) of this title.
(b) Property in which the estate has an interest and that is subject to a lien
that is not avoidable under this title and that secures an allowed claim for a
tax, or proceeds of such property, shall be distributed-
(1) first, to any holder of an allowed claim secured by a lien on such property
that is not avoidable under this title and that is senior to such tax lien;
(2) second, to any holder of a claim of a kind specified in section 507(a)(1),
507(a)(2), 507(a)(3), 507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of this
title, to the extent of the amount of such allowed tax claim that is secured by
such tax lien;
(3) third, to the holder of such tax lien, to any extent that such holder's
allowed tax claim that is secured by such tax lien exceeds any amount
distributed under paragraph (2) of this subsection;
(4) fourth, to any holder of an allowed claim secured by a lien on such property
that is not avoidable under this title and that is junior to such tax lien;
(5) fifth, to the holder of such tax lien, to the extent that such holder's
allowed claim secured by such tax lien is not paid under paragraph (3) of this
subsection; and
(6) sixth, to the estate.
(c) If more than one holder of a claim is entitled to distribution under a
particular paragraph of subsection (b) of this section, distribution to such
holders under such paragraph shall be in the same order as distribution to such
holders would have been other than under this section.
(d) A statutory lien the priority of which is determined in the same manner as
the priority of a tax lien under section 6323 of the Internal Revenue Code of
1986 shall be treated under subsection (b) of this section the same as if such
lien were a tax lien.
725. Disposition of certain property
After the commencement of a case under this chapter, but before final
distribution of property of the estate under section 726 of this title, the
trustee, after notice and a hearing, shall dispose of any property in which an
entity other than the estate has an interest, such as a lien, and that has not
been disposed of under another section of this title.
726. Distribution of property of the estate
(a) Except as provided in section 510 of this title, property of the estate
shall be distributed-
(1) first, in payment of claims of the kind specified in, and in the order
specified in, section 507 of this title, proof of which is timely filed under
section 501 of this title or tardily filed before the date on which the trustee
commences distribution under this section;
(2) second, in payment of any allowed unsecured claim, other than a claim of a
kind specified in paragraph (1), (3), or (4) of this subsection, proof of which
is-
(A) timely filed under section 501 (a) of this title;
(B) timely filed under section 501(b) or 501(c) of this title; or
(C) tardily filed under section 501 (a) of this title, if-
(i) the creditor that holds such claim did not have notice or actual knowledge
of the case in time for timely filing of a proof of such claim under section 501
(a) of this title; and
(ii) proof of such claim is filed in time to permit payment of such claim;
(3) third, in payment of any allowed unsecured claim proof of which is tardily
filed under section 501 (a) of this title, other than a claim of the kind
specified in paragraph (2)(C) of this subsection;
(4) fourth, in payment of any allowed claim, whether secured or unsecured, for
any fine, penalty, or forfeiture, or for multiple, exemplary, or punitive
damages, arising before the earlier of the order for relief or the appointment
of a trustee, to the extent that such fine, penalty, forfeiture, or damages are
not compensation for actual pecuniary loss suffered by the holder of such claim;
(5) fifth, in payment of interest at the legal rate from the date of the filing
of the petition, on any claim paid under paragraph (1), (2), (3), or (4) of this
subsection; and
(6) sixth, to the debtor.
(b) Payment on claims of a kind specified in paragraph (1), (2), (3), (4), (5),
(6), (7), or (8) of section 507(a) of this title, or in paragraph (2), (3), (4),
or (5) of subsection (a) of this section, shall be made pro rata among claims of
the kind specified in each such particular paragraph, except that in a case that
has been converted to this chapter under section 1009, 1112, 1208, or 1307 of
this title, a claim allowed under section 503(b) of this title incurred under
this chapter after such conversion has priority over a claim allowed under
section 503(b) of this title incurred under any other chapter of this title or
under this chapter before such conversion and over any expenses of a custodian
superseded under section 543 of this title.
(c) Notwithstanding subsections (a) and (b) of this section, if there is
property of the kind specified in section 541(a)(2) of this title, or proceeds
of such property, in the estate, such property or proceeds shall be segregated
from other property of the estate, and such property or proceeds and other
property of the estate shall be distributed as follows:
(1) Claims allowed under section 503 of this title shall be paid either from
property of the kind specified in section 541(a)(2) of this title, or from other
property of the estate, as the interest of justice requires.
(2) Allowed claims, other than claims allowed under section 503 of this title,
shall be paid in the order specified in subsection (a) of this section, and,
with respect to claims of a kind specified in a particular paragraph of section
507 of this title or subsection (a) of this section, in the following order and
manner:
(A) First, community claims against the debtor or the debtor's spouse shall be
paid from property of the kind specified in section 541(a)(2) of this title,
except to the extent that such property is solely liable for debts of the
debtor.
(B) Second, to the extent that community claims against the debtor are not paid
under subparagraph (A) of this paragraph, such community claims shall be paid
from property of the kind specified in section 541(a)(2) of this title that is
solely liable for debts of the debtor.
(C) Third, to the extent that all claims against the debtor including community
claims against the debtor are not paid under subparagraph (A) or (B) of this
paragraph such claims shall be paid from property of the estate other than
property of the kind specified in section 541(a)(2) of this title.
(D) Fourth, to the extent that community claims against the debtor or the
debtor's spouse are not paid under subparagraph (A), (B), or (C) of this
paragraph, such claims shall be paid from all remaining property of the estate.
727. Discharge
(a) The court shall grant the debtor a discharge, unless-
(1) the debtor is not an individual;
(2) the debtor, with intent to hinder, delay, or defraud a creditor or an
officer of the estate charged with custody of property under this title, has
transferred, removed, destroyed, mutilated, or concealed, or has permitted to be
transferred, removed, destroyed, mutilated, or concealed-
(A) property of the debtor, within one year before the date of the filing of the
petition; or
(B) property of the estate, after the date of the filing of the petition;
(3) the debtor has concealed, destroyed, mutilated, falsified, or failed to keep
or preserve any recorded information, including books, documents, records, and
papers, from which the debtor's financial condition or business transactions
might be ascertained, unless such act or failure to act was justified under all
of the circumstances of the case;
(4) the debtor knowingly and fraudulently, in or in connection with the case-
(A) made a false oath or account;
(B) presented or used a false claim;
(C) gave, offered, received, or attempted to obtain money, property, or
advantage, or a promise of money, property, or advantage, for acting or
forbearing to act; or
(D) withheld from an officer of the estate entitled to possession under this
title, any recorded information, including books, documents, records, and
papers, relating to the debtor's property or financial affairs;
(5) the debtor has failed to explain satisfactorily, before determination of
denial of discharge under this paragraph, any loss of assets or deficiency of
assets to meet the debtor's liabilities;
(6) the debtor has refused, in the case-
(A) to obey any lawful order of the court, other than an order to respond to a
material question or to testify;
(B) on the ground of privilege against self-incrimination, to respond to a
material question approved by the court or to testify, after the debtor has been
granted immunity with respect to the matter concerning which such privilege was
invoked; or
(C) on a ground other than the properly invoked privilege against
self-incrimination, to respond to a material question approved by the court or
to testify;
(7) the debtor has committed any act specified in paragraph (2), (3), (4), (5),
or (6) of this subsection, on or within one year before the date of the filing
of the petition, or during the case, in connection with another case, under this
title or under the Bankruptcy Act, concerning an insider;
(8) the debtor has been granted a discharge under this section, under section
1141 of this title, or under section 14, 371, or 476 of the Bankruptcy Act, in a
case commenced within six years before the date of the filing of the petition;
(9) the debtor has been granted a discharge under section 1228 or 1328 of this
title, or under section 660 or 661 of the Bankruptcy Act, in a case commenced
within six years before the date of the filing of the petition, unless payments
under the plan in such case totaled at least-
(A) 100 percent of the allowed unsecured claims in such case; or
(B) (i) 70 percent of such claims; and
(ii) the plan was proposed by the debtor in good faith, and was the debtor's
best effort; or
(10) the court approves a written waiver of discharge executed by the debtor
after the order for relief under this chapter.
(b) Except as provided in section 523 of this title, a discharge under
subsection (a) of this section discharges the debtor from all debts that arose
before the date of the order for relief under this chapter, and any liability on
a claim that is determined under section 502 of this title as if such claim had
arisen before the commencement of the case, whether or not a proof of claim
based on any such debt or liability is filed under section 501 of this title,
and whether or not a claim based on any such debt or liability is allowed under
section 502 of this title.
(c) (1) The trustee, a creditor, or the United States trustee may object to the
granting of a discharge under subsection (a) of this section.
(2) On request of a party in interest, the court may order the trustee to
examine the acts and conduct of the debtor to determine whether a ground exists
for denial of discharge.
(d) On request of the trustee, a creditor, or the United States trustee, and
after notice and a hearing, the court shall revoke a discharge granted under
subsection (a) of this section if-
(1) such discharge was obtained through the fraud of the debtor, and the
requesting party did not know of such fraud until after the granting of such
discharge;
(2) the debtor acquired property that is property of the estate, or became
entitled to acquire property that would be property of the estate, and knowingly
and fraudulently failed to report the acquisition of or entitlement to such
property, or to deliver or surrender such property to the trustee; or
(3) the debtor committed an act specified in subsection (a)(6) of this section.
(e) The trustee, a creditor, or the United States trustee may request a
revocation of a discharge-
(1) under subsection (d)(1) of this section within one year after such discharge
is granted; or
(2) under subsection (d)(2) or (d)(3) of this section before the later of-
(A) one year after the granting of such discharge; and
(B) the date the case is closed.
728. Special tax provisions
(a) For the purposes of any State or local law imposing a tax on or measured by
income, the taxable period of a debtor that is an individual shall terminate on
the date of the order for relief under this chapter, unless the case was
converted under section 1112 or 1208 of this title.
(b) Notwithstanding any State or local law imposing a tax on or measured by
income, the trustee shall make tax returns of income for the estate of an
individual debtor in a case under this chapter or for a debtor that is a
corporation in a case under this chapter only if such estate or corporation has
net taxable income for the entire period after the order for relief under this
chapter during which the case is pending. If such entity has such income, or if
the debtor is a partnership, then the trustee shall make and file a return of
income for each taxable period during which the case was pending after the order
for relief under this chapter.
(c) If there are pending a case under this chapter concerning a partnership and
a case under this chapter concerning a partner in such partnership, a
governmental unit's claim for any unpaid liability of such partner for a State
or local tax on or measured by income, to the extent that such liability arose
from the inclusion in such partner's taxable income of earnings of such
partnership that were not withdrawn by such partner, is a claim only against
such partnership.
(d) Notwithstanding section 541 of this title, if there are pending a case under
this chapter concerning a partnership and a case under this chapter concerning a
partner in such partnership, then any State or local tax refund or reduction of
tax of such partner that would have otherwise been property of the estate of
such partner under section 541 of this title-
(1) is property of the estate of such partnership to the extent that such tax
refund or reduction of tax is fairly apportionable to losses sustained by such
partnership and not reimbursed by such partner; and
(2) is otherwise property of the estate of such partner.
SUBCHAPTER III-STOCKBROKER LIQUIDATION
741. Definitions for this subchapter
In this subchapter-
(1) "Commission" means Securities and Exchange Commission;
(2) "customer" includes-
(A) entity with whom a person deals as principal or agent and that has a claim
against such person on account of a security received, acquired, or held by such
person in the ordinary course of such person's business as a stockbroker, from
or for the securities account or accounts of such entity-
(i) for safekeeping;
(ii) with a view to sale;
(iii) to cover a consummated sale;
(iv) pursuant to a purchase;
(v) as collateral under a security agreement; or
(vi) for the purpose of effecting registration of transfer; and (B) entity that
has a claim against a person arising out of-
(i) a sale or conversion of a security received, acquired, or held as specified
in subparagraph (A) of this paragraph; or
(ii) a deposit of cash, a security, or other property with such person for the
purpose of purchasing or selling a security;
(3) "customer name security" means security-
(A) held for the account of a customer on the date of the filing of the petition
by or on behalf of the debtor;
(B) registered in such customer's name on such date or in the process of being
so registered under instructions from the debtor; and
(C) not in a form transferable by delivery on such date;
(4) "customer property" means cash, security, or other property, and proceeds of
such cash, security, or property, received, acquired, or held by or for the
account of the debtor, from or for the securities account of a customer-
(A) including-
(i) property that was unlawfully converted from and that is the lawful property
of the estate;
(ii) a security held as property of the debtor to the extent such security is
necessary to meet a net equity claim of a customer based on a security of the
same class and series of an issuer;
(iii) resources provided through the use or realization of a customer's debit
cash balance or a debit item includible in the Formula for Determination of
Reserve Requirement for Brokers and Dealers as promulgated by the Commission
under the Securities Exchange Act of 1934; and
(iv) other property of the debtor that any applicable law, rule, or regulation
requires to be set aside or held for the benefit of a customer, unless including
such property as customer property would not significantly increase customer
property; but
(B) not including-
(i) a customer name security delivered to or reclaimed by a customer under
section 751 of this title; or
(ii) property to the extent that a customer does not have a claim against the
debtor based on such property;
(5) "margin payment" means payment or deposit of cash, a security, or other
property, that is commonly known to the securities trade as original margin,
initial margin, maintenance margin, or variation margin, or as a mark-to-market
payment, or that secures an obligation of a participant in a securities clearing
agency;
(6) "net equity" means, with respect to all accounts of a customer that such
customer has in the same capacity-
(A)(i) aggregate dollar balance that would remain in such accounts after the
liquidation, by sale or purchase, at the time of the filing of the petition, of
all securities positions in all such accounts, except any customer name
securities of such customer; minus
(ii) any claim of the debtor against such customer in such capacity that would
have been owing immediately after such liquidation; plus
(B) any payment by such customer to the trustee, within 60 days after notice
under section 342 of this title, of any business related claim of the debtor
against such customer in such capacity;
(7) "securities contract" means contract for the purchase, sale, or loan of a
security, including an option for the purchase or sale of a security,
certificate of deposit, or group or index of securities (including any interest
therein or based on the value thereof), or any option entered into on a national
securities exchange relating to foreign currencies, or the guarantee of any
settlement of cash or securities by or to a securities clearing agency;
(8) "settlement payment" means a preliminary settlement payment, a partial
settlement payment, an interim settlement payment, a settlement payment on
account, a final settlement payment, or any other similar payment commonly used
in the securities trade; and
(9) "SIPC" means Securities Investor Protection Corporation.
742. Effect of section 362 of this title in this subchapter
Notwithstanding section 362 of this title, SIPC may file an application for a
protective decree under the Securities Investor Protection Act of 1970. The
filing of such application stays all proceedings in the case under this title
unless and until such application is dismissed. If SIPC completes the
liquidation of the debtor, then the court shall dismiss the case.
743. Notice
The clerk shall give the notice required by section 342 of this title to SIPC
and to the Commission.
744. Executory contracts
Notwithstanding section 365(d) (1) of this title, the trustee shall assume or
reject, under section 365 of this title, any executory contract of the debtor
for the purchase or sale of a security in the ordinary course of the debtor's
business, within a reasonable time after the date of the order for relief, but
not to exceed 30 days. If the trustee does not assume such a contract within
such time, such contract is rejected.
745. Treatment of accounts
(a) Accounts held by the debtor for a particular customer in separate capacities
shall be treated as accounts of separate customers.
(b) If a stockbroker or a bank holds a customer net equity claim against the
debtor that arose out of a transaction for a customer of such stockbroker or
bank, each such customer of such stockbroker or bank shall be treated as a
separate customer of the debtor.
(c) Each trustee's account specified as such on the debtor's books, and
supported by a trust deed filed with, and qualified as such by, the Internal
Revenue Service, and under the Internal Revenue Code of 1986, shall be treated
as a separate customer account for each beneficiary under such trustee account.
746. Extent of customer claims
(a) If, after the date of the filing of the petition, an entity enters into a
transaction with the debtor, in a manner that would have made such entity a
customer had such transaction occurred before the date of the filing of the
petition, and such transaction was entered into by such entity in good faith and
before the qualification under section 322 of this title of a trustee, such
entity shall be deemed a customer, and the date of such transaction shall be
deemed to be the date of the filing of the petition for the purpose of
determining such entity's net equity.
(b) An entity does not have a claim as a customer to the extent that such entity
transferred to the debtor cash or a security that, by contract, agreement,
understanding, or operation of law, is-
(1) part of the capital of the debtor; or
(2) subordinated to the claims of any or all creditors.
747. Subordination of certain customer claims
Except as provided in section 510 of this title, unless all other customer net
equity claims have been paid in full, the trustee may not pay in full or pay in
part, directly or indirectly, any net equity claim of a customer that was, on
the date the transaction giving rise to such claim occurred-
(1) an insider;
(2) a beneficial owner of at least five percent of any class of equity
securities of the debtor, other than-
(A) nonconvertible stock having fixed preferential dividend and liquidation
rights; or
(B) interests of limited partners in a limited partnership;
(3) a limited partner with a participation of at least five percent in the net
assets or net profits of the debtor; or
(4) an entity that, directly or indirectly, through agreement or otherwise,
exercised or had the power to exercise control over the management or policies
of the debtor.
748. Reduction of securities to money
As soon as practicable after the date of the order for relief, the trustee shall
reduce to money, consistent with good market practice, all securities held as
property of the estate, except for customer name securities delivered or
reclaimed under section 751 of this title.
749. Voidable transfers
(a) Except as otherwise provided in this section, any transfer of property that,
but for such transfer, would have been customer property, may be avoided by the
trustee, and such property shall be treated as customer property, if and to the
extent that the trustee avoids such transfer under section 544, 545, 547, 548,
or 549 of this title. For the purpose of such sections, the property so
transferred shall be deemed to have been property of the debtor and, if such
transfer was made to a customer or for a customer's benefit, such customer shall
be deemed, for the purposes of this section, to have been a creditor.
(b) Notwithstanding sections 544, 545, 547, 548, and 549 of this title, the
trustee may not avoid a transfer made before five days after the order for
relief if such transfer is approved by the Commission by rule or order, either
before or after such transfer, and if such transfer is-
(1) a transfer of a securities contract entered into or carried by or through
the debtor on behalf of a customer, and of any cash, security, or other property
margining or securing such securities contract; or
(2) the liquidation of a securities contract entered into or carried by or
through the debtor on behalf of a customer.
750. Distribution of securities
The trustee may not distribute a security except under section 751 of this
title.
751. Customer name securities
The trustee shall deliver any customer name security to or on behalf of the
customer entitled to such security, unless such customer has a negative net
equity. With the approval of the trustee, a customer may reclaim a customer name
security after payment to the trustee, within such period as the trustee allows,
of any claim of the debtor against such customer to the extent that such
customer will not have a negative net equity after such payment.
752. Customer property
(a) The trustee shall distribute customer property ratably to customers on the
basis and to the extent of such customers' allowed net equity claims and in
priority to all other claims, except claims of the kind specified in section
507(a)(1) of this title that are attributable to the administration of such
customer property.
(b) (1) The trustee shall distribute customer property in excess of that
distributed under subsection (a) of this section in accordance with section 726
of this title.
(2) Except as provided in section 510 of this title, if a customer is not paid
the full amount of such customer's allowed net equity claim from customer
property, the unpaid portion of such claim is a claim entitled to distribution
under section 726 of this title.
(c) Any cash or security remaining after the liquidation of a security interest
created under a security agreement made by the debtor, excluding property
excluded under section 741(4)(B) of this title, shall be apportioned between the
general estate and customer property in the same proportion as the general
estate of the debtor and customer property were subject to such security
interest.
SUBCHAPTER IV - COMMODITY BROKER LIQUIDATION
761. Definitions for this subchapter
In this subchapter-
(1) "Act" means Commodity Exchange Act;
(2) 'clearing organization" means a derivatives clearing organization registered
under the Act;
(3) "Commission" means Commodity Futures Trading Commission;
(4) "commodity contract" means-
(A) with respect to a futures commission merchant, contract for the purchase or
sale of a commodity for future delivery on, or subject to the rules of, a
contract market or board of trade;
(B) with respect to a foreign futures commission merchant, foreign future;
(C) with respect to a leverage transaction merchant, leverage transaction;
(D) with respect to a clearing organization, contract for the purchase or sale
of a commodity for future delivery on, or subject to the rules of, a contract
market or board of trade that is cleared by such clearing organization, or
commodity option traded on, or subject to the rules of, a contract market or
board of trade that is cleared by such clearing organization; or
(E) with respect to a commodity options dealer, commodity option;
(5) "commodity option" means agreement or transaction subject to regulation
under section 4c(b) of the Act;
(6) "commodity options dealer" means person that extends credit to, or that
accepts cash, a security, or other property from, a customer of such person for
the purchase or sale of an interest in a commodity option;
(7) "contract market" means a registered entity;
(8) "contract of sale", "commodity", "derivatives clearing organization" ,
"future delivery", "board of trade", "registered entity", and "futures
commission merchant" have the meanings assigned to those terms in the Act;
(9) "customer" means-
(A) with respect to a futures commission merchant-
(i) entity for or with whom such futures commission merchant deals and that
holds a claim against such futures commission merchant on account of a commodity
contract made, received, acquired, or held by or through such futures commission
merchant in the ordinary course of such futures commission merchant's business
as a futures commission merchant from or for the commodity futures account of
such entity; or
(ii) entity that holds a claim against such futures commission merchant arising
out of-
(I) the making, liquidation, or change in the value of a commodity contract of a
kind specified in clause (i) of this subparagraph;
(II) a deposit or payment of cash, a security, or other property with such
futures commission merchant for the purpose of making or margining such a
commodity contract; or
(III) the making or taking of delivery on such a commodity contract;
(B) with respect to a foreign futures commission merchant-
(i) entity for or with whom such foreign futures commission merchant deals and
that holds a claim against such foreign futures commission merchant on account
of a commodity contract made, received, acquired, or held by or through such
foreign futures commission merchant in the ordinary course of such foreign
futures commission merchant's business as a foreign futures commission merchant
from or for the foreign futures account of such entity; or
(ii) entity that holds a claim against such foreign futures commission merchant
arising out of-
(I) the making, liquidation, or change in value of a commodity contract of a
kind specified in clause (i) of this subparagraph;
(II) a deposit or payment of cash, a security, or other property with such
foreign futures commission merchant for the purpose of making or margining such
a commodity contract; or
(III) the making or taking of delivery on such a commodity contract;
(C) with respect to a leverage transaction merchant-
(i) entity for or with whom such leverage transaction merchant deals and that
holds a claim against such leverage transaction merchant on account of a
commodity contract engaged in by or with such leverage transaction merchant in
the ordinary course of such leverage transaction merchant's business as a
leverage
transaction merchant from or for the leverage account of such entity; or
(ii) entity that holds a claim against such leverage transaction merchant
arising out
of-
(I) the making, liquidation, or change in value of a commodity contract of a
kind specified in clause (i) of this subparagraph;
(II) a deposit or payment of cash, a security, or other property with such
leverage transaction merchant for the purpose of entering into or margining such
a commodity contract; or
(III) the making or taking of delivery on such a commodity contract;
(D) with respect to a clearing organization, clearing member of such clearing
organization with whom such clearing organization deals and that holds a claim
against such clearing organization on account of cash, a security, or other
property received by such clearing organization to margin, guarantee, or secure
a commodity contract in such clearing member's proprietary account or customers'
account; or
(E) with respect to a commodity options dealer-
(i) entity for or with whom such commodity options dealer deals and that holds a
claim on account of a commodity contract made, received, acquired, or held by or
through such commodity options dealer in the ordinary course of such commodity
options dealer's business as a commodity options dealer from or for the
commodity options account of such entity; or
(ii) entity that holds a claim against such commodity options dealer arising out
of-
(I) the making of, liquidation of, exercise of, or a change in value of, a
commodity contract of a kind specified in clause (i) of this subparagraph; or
(II) a deposit or payment of cash, a security, or other property with such
commodity options dealer for the purpose of making, exercising, or margining
such a commodity contract;
(10) "customer property" means cash, a security, or other property, or proceeds
of such cash, security, or property, received, acquired, or held by or for the
account of the debtor, from or for the account of a customer-
(A) including-
(i) property received, acquired, or held to margin, guarantee, secure, purchase,
or
sell a commodity contract;
(ii) profits or contractual or other rights accruing to a customer as a result
of a commodity contract;
(iii) an open commodity contract;
(iv) specifically identifiable customer property;
(v) warehouse receipt or other document held by the debtor evidencing ownership
of or title to property to be delivered to fulfill a commodity contract from or
for the account of a customer;
(vi) cash, a security, or other property received by the debtor as payment for a
commodity to be delivered to fulfill a commodity contract from or for the
account of a customer;
(vii) a security held as property of the debtor to the extent such security is
necessary to meet a net equity claim based on a security of the same class and
series of an issuer;
(viii) property that was unlawfully converted from and that is the lawful
property of the estate; and
(ix) other property of the debtor that any applicable law, rule, or regulation
requires to be set aside or held for the benefit of a customer, unless including
such
property as customer property would not significantly increase customer
property; but
(B) not including property to the extent that a customer does not have a claim
against
the debtor based on such property;
(11) "foreign future" means contract for the purchase or sale of a commodity for
future delivery on, or subject to the rules of, a board of trade outside the
United States;
(12) "foreign futures commission merchant" means entity engaged in soliciting or
accepting orders for the purchase or sale of a foreign future or that, in
connection with such a solicitation or acceptance, accepts cash, a security, or
other property, or extends credit to margin, guarantee, or secure any trade or
contract that results from such a solicitation or acceptance;
(13) "leverage transaction" means agreement that is subject to regulation under
section 19 of the Commodity Exchange Act, and that is commonly known to the
commodities trade as a margin account, margin contract, leverage account, or
leverage contract;
(14) "leverage transaction merchant" means person in the business of engaging in
leverage transactions;
(15) "margin payment" means payment or deposit of cash, a security, or other
property, that is commonly known to the commodities trade as original margin,
initial margin, maintenance margin, or variation margin, including mark-to-
market payments, settlement payments, variation payments, daily settlement
payments, and final settlement payments made as adjustments to settlement
prices;
(16) "member property" means customer property received, acquired, or held by or
for the account of a debtor that is a clearing organization, from or for the
proprietary account of a customer that is a clearing member of the debtor; and
(17) "net equity" means, subject to such rules and regulations as the Commission
promulgates under the Act, with respect to the aggregate of all of a customer's
accounts that such customer has in the same capacity-
(A) the balance remaining in such customer's accounts immediately after-
(i) all commodity contracts of such customer have been transferred, liquidated,
or become identified for delivery; and
(ii) all obligations of such customer in such capacity to the debtor have been
offset; plus
(B) the value, as of the date of return under section 766 of this title, of any
specifically identifiable customer property actually returned to such customer
before the date specified in subparagraph (A) of this paragraph; plus
(C) the value, as of the date of transfer, of-
(i) any commodity contract to which such customer is entitled that is
transferred to another person under section 766 of this title; and
(ii) any cash, security, or other property of such customer transferred to such
other person under section 766 of this title to margin or secure such
transferred commodity contract.
762. Notice to the Commission and right to be heard
(a) The clerk shall give the notice required by section 342 of this title to the
Commission.
(b) The Commission may raise and may appear and be heard on any issue in a case
under this chapter.
763. Treatment of accounts
(a) Accounts held by the debtor for a particular customer in separate capacities
shall be treated as accounts of separate customers.
(b) A member of a clearing organization shall be deemed to hold such member's
proprietary account in a separate capacity from such member's customers'
account.
(c) The net equity in a customer's account may not be offset against the net
equity in the account of any other customer.
764. Voidable transfers
(a) Except as otherwise provided in this section, any transfer by the debtor of
property that, but for such transfer, would have been customer property, may be
avoided by the trustee, and such property shall be treated as customer property,
if and to the extent that the trustee avoids such transfer under section 544,
545, 547, 548, 549, or 724(a) of this title. For the purpose of such sections,
the property so transferred shall be deemed to have been property of the debtor,
and, if such transfer was made to a customer or for a customer's benefit, such
customer shall be deemed, for the purposes of this section, to have been a
creditor.
(b) Notwithstanding sections 544, 545, 547, 548, 549, and 724(a) of this title,
the trustee may not avoid a transfer made before five days after the order for
relief, if such transfer is approved by the Commission by rule or order, either
before or after such transfer, and if such transfer is-
(1) a transfer of a commodity contract entered into or carried by or through the
debtor on behalf of a customer, and of any cash, securities, or other property
margining or securing such commodity contract; or
(2) the liquidation of a commodity contract entered into or carried by or
through the debtor on behalf of a customer.
765. Customer instructions
(a) The notice required by section 342 of this title to customers shall instruct
each customer-
(1) to file a proof of such customer's claim promptly, and to specify in such
claim any specifically identifiable security, property, or commodity contract;
and
(2) to instruct the trustee of such customer's desired disposition, including
transfer under section 766 of this title or liquidation, of any commodity
contract specifically identified to such customer.
(b) The trustee shall comply, to the extent practicable, with any instruction
received from a customer regarding such customer's desired disposition of any
commodity contract specifically identified to such customer. If the trustee has
transferred, under section 766 of this title, such a commodity contract, the
trustee shall transmit any such instruction to the commodity broker to whom such
commodity contract was so transferred.
766. Treatment of customer property
(a) The trustee shall answer all margin calls with respect to a specifically
identifiable commodity contract of a customer until such time as the trustee
returns or transfers such commodity contract, but the trustee may not make a
margin payment that has the effect of a distribution to such customer of more
than that to which such customer is entitled under subsection (h) or (i) of this
section.
(b) The trustee shall prevent any open commodity contract from remaining open
after the last day of trading in such commodity contract, or into the first day
on which notice of intent to deliver on such commodity contract may be tendered,
whichever occurs first. With respect to any commodity contract that has remained
open after the last day of trading in such commodity contract or with respect to
which delivery must be made or accepted under the rules of the contract market
on which such commodity contract was made, the trustee may operate the business
of the debtor for the purpose of-
(1) accepting or making tender of notice of intent to deliver the physical
commodity underlying such commodity contract;
(2) facilitating delivery of such commodity; or
(3) disposing of such commodity if a party to such commodity contract defaults.
(c) The trustee shall return promptly to a customer any specifically
identifiable security, property, or commodity contract to which such customer is
entitled, or shall transfer, on such customer's behalf, such security, property,
or commodity contract to a commodity broker that is not a debtor under this
title, subject to such rules or regulations as the Commission may prescribe, to
the extent that the value of such security, property, or commodity contract does
not exceed the amount to which such customer would be entitled under subsection
(h) or (i) of this section if such security, property, or commodity contract
were not returned or transferred under this subsection.
(d) If the value of a specifically identifiable security, property, or commodity
contract exceeds the amount to which the customer of the debtor is entitled
under subsection (h) or (i) of this section, then such customer to whom such
security, property, or commodity contract is specifically identified may deposit
cash with the trustee equal to the difference between the value of such
security, property, or commodity contract and such amount, and the trustee then
shall-
(1) return promptly such security, property, or commodity contract to such
customer; or
(2) transfer, on such customer's behalf, such security, property, or commodity
contract to a commodity broker that is not a debtor under this title, subject to
such rules or regulations as the Commission may prescribe.
(e) Subject to subsection (b) of this section, the trustee shall liquidate any
commodity contract that-
(1) is identified to a particular customer and with respect to which such
customer has not timely instructed the trustee as to the desired disposition of
such commodity contract;
(2) cannot be transferred under subsection (c) of this section; or
(3) cannot be identified to a particular customer.
(f) As soon as practicable after the commencement of the case, the trustee shall
reduce to money, consistent with good market practice, all securities and other
property, other than commodity contracts, held as property of the estate, except
for specifically identifiable securities or property distributable under
subsection (h) or (i) of this section.
(g) The trustee may not distribute a security or other property except under
subsection (h) or (i) of this section.
(h) Except as provided in subsection (b) of this section, the trustee shall
distribute customer property ratably to customers on the basis and to the extent
of such customers' allowed net equity claims, and in priority to all other
claims, except claims of a kind specified in section 507(a)(1) of this title
that are attributable to the administration of customer property. Such
distribution shall be in the form of-
(1) cash;
(2) the return or transfer, under subsection (c) or (d) of this section, of
specifically identifiable customer securities, property, or commodity contracts;
or
(3) payment of margin calls under subsection (a) of this section.
Notwithstanding any other provision of this subsection, a customer net equity
claim based on a proprietary account, as defined by Commission rule, regulation,
or order, may not be paid either in whole or in part, directly or indirectly,
out of customer property unless all other customer net equity claims have been
paid in full.
(i) If the debtor is a clearing organization, the trustee shall distribute-
(1) customer property, other than member property, ratably to customers on the
basis and to the extent of such customers' allowed net equity claims based on
such customers' accounts other than proprietary accounts, and in priority to all
other claims, except claims
of a kind specified in section 507(a)(1) of this title that are attributable to
the administration of such customer property; and
(2) member property ratably to customers on the basis and to the extent of such
customers' allowed net equity claims based on such customers' proprietary
accounts, and in priority to all other claims, except claims of a kind specified
in section 507(a)(1) of this title that are attributable to the administration
of member property or customer property.
(j) (1) The trustee shall distribute customer property in excess of that
distributed under subsection (h) or (i) of this section in accordance with
section 726 of this title.
(2) Except as provided in section 510 of this title, if a customer is not paid
the full amount of such customer's allowed net equity claim from customer
property, the unpaid portion of such claim is a claim entitled to distribution
under section 726 of this title.
SUBCHAPTER V - CLEARING BANK LIQUIDATION
781. Definitions
For purposes of this subchapter, the following definitions shall apply:
(1) Board.-The term "Board" means the Board of Governors of the Federal Reserve
System.
(2) Depository institution.-The term "depository institution" has the same
meaning as in section 3 of the Federal Deposit Insurance Act.
(3) Clearing bank.--The term "clearing bank" means an uninsured State member
bank, or a corporation organized under section 25 A of the Federal Reserve Act,
which operates, or operates as, a multilateral clearing organization pursuant to
section 409 of the Federal Deposit Insurance Corporation Improvement Act of
1991.
782. Selection of trustee
(a) In general.-
(1) Appointment.-Notwithstanding any other provision of this title, the
conservator or receiver who files the petition shall be the trustee under this
chapter, unless the Board designates an alternative trustee.
(2) Successor.-The Board may designate a successor trustee if required.
(b) Authority of trustee.-Whenever the Board appoints or designates a trustee,
chapter 3 and sections 704 and 705 of this title shall apply to the Board in the
same way and to the same extent that they apply to a United States trustee.
783. Additional powers of trustee
(a) Distribution of property not of the estate.-The trustee under this
subchapter has power to distribute property not of the estate, including
distributions to customers that are mandated by subchapters III and IV of this
chapter.
(b) Disposition of institution.-The trustee under this subchapter may, after
notice and a hearing-
(1) sell the clearing bank to a depository institution or consortium of
depository institutions (which consortium may agree on the allocation of the
clearing bank among the consortium);
(2) merge the clearing bank with a depository institution;
(3) transfer contracts to the same extent as could a receiver for a depository
institution under paragraphs (9) and (10) of section 1 1(e) of the Federal
Deposit Insurance Act;
(4) transfer assets or liabilities to a depository institution; and
(5) transfer assets and liabilities to a bridge bank as provided in paragraphs
(1), (3)(A), (5), and (6) of section 11(n) of the Federal Deposit Insurance Act,
paragraphs (9) through (13) of such section, and subparagraphs (A) through (H)
and subparagraph (K) of paragraph (4) of such section 1 1(n), except that-
(A) the bridge bank to which such assets or liabilities are transferred shall be
treated as a clearing bank for the purpose of this subsection; and
(B) any references in any such provision of law to the Federal Deposit Insurance
Corporation shall be construed to be references to the appointing agency and
that references to deposit insurance shall be omitted.
(c) Certain transfers included.-Any reference in this section to transfers of
liabilities includes a ratable transfer of liabilities within a priority class.
784. Right to be heard
The Board or a Federal reserve bank (in the case of a clearing bank that is a
member of that bank) may raise and may appear and be heard on any issue in a
case under this subchapter.
Chapter 9 - Adjustments of Debts of a Municipality
Subchapter I - General Provisions
901. Applicability of other sections of this title
(a) Sections 301, 344, 347(b), 349, 350(b), 361, 362, 364(c), 364(d), 364(e),
364(f), 365, 366, 501, 502, 503, 504, 506, 507(a)(1), 509, 510, 524(a)(1),
524(a)(2), 544, 545, 546, 547, 548, 549(a), 549(c), 549(d), 550, 551, 552, 553,
557, 1102, 1103, 1109, 1111(b), 1122, 1123(a)(1), 1123(a)(2), 1123(a)(3),
1123(a)(4), 1123(a)(5), 1123(b), 1124, 1125, 1126(a), 1126(b), 1126(c), 1126(e),
1126(f), 1126(g), 1127(d), 1128, 1129(a)(2), 1129(a)(3), 1129(a)(6), 1129(a)(8),
1129(a)(10), 1129(b)(1), 1129(b)(2)(A), 1129(b)(2)(B), 1142(b), 1143, 1144, and
1145 of this title apply in a case under this chapter.
(b) A term used in a section of this title made applicable in a case under this
chapter by subsection (a) of this section or section 103(e) of this title has
the meaning defined for such term for the purpose of such applicable section,
unless such term is otherwise defined in section 902 of this title.
(c) A section made applicable in a case under this chapter by subsection (a) of
this section that is operative if the business of the debtor is authorized to be
operated is operative in a case under this chapter.
902. Definitions for this chapter
In this chapter-
(1) "property of the estate", when used in a section that is made applicable in
a case under this chapter by section 103(e) or 901 of this title, means property
of the debtor;
(2) "special revenues" means-
(A) receipts derived from the ownership, operation, or disposition of projects
or systems of the debtor that are primarily used or intended to be used
primarily to provide transportation, utility, or other services, including the
proceeds of borrowings to finance the projects or systems;
(B) special excise taxes imposed on particular activities or transactions;
(C) incremental tax receipts from the benefited area in the case of tax-
increment financing;
(D) other revenues or receipts derived from particular functions of the debtor,
whether or not the debtor has other functions; or
(E) taxes specifically levied to finance one or more projects or systems,
excluding receipts from general property, sales, or income taxes (other than
tax-increment financing) levied to finance the general purposes of the debtor;
(3) "special tax payer" means record owner or holder of legal or equitable title
to real property against which a special assessment or special tax has been
levied the proceeds of which are the sole source of payment of an obligation
issued by the debtor to defray the cost of an improvement relating to such real
property;
(4) "special tax payer affected by the plan" means special tax payer with
respect to whose real property the plan proposes to increase the proportion of
special assessments or special taxes referred to in paragraph (2) of this
section assessed against such real property; and
(5) "trustee", when used in a section that is made applicable in a case under
this chapter by section 103(e) or 901 of this title, means debtor, except as
provided in section 926 of this title.
903. Reservation of State power to control municipalities
This chapter does not limit or impair the power of a State to control, by
legislation or otherwise, a municipality of or in such State in the exercise of
the political or governmental powers of such municipality, including
expenditures for such exercise, but-
(1) a State law prescribing a method of composition of indebtedness of such
municipality may not bind any creditor that does not consent to such
composition; and
(2) a judgment entered under such a law may not bind a creditor that does not
consent to such composition.
904. Limitation on jurisdiction and powers of court
Notwithstanding any power of the court, unless the debtor consents or the plan
so provides, the court may not, by any stay, order, or decree, in the case or
otherwise, interfere with-
(1) any of the political or governmental powers of the debtor;
(2) any of the property or revenues of the debtor; or
(3) the debtor's use or enjoyment of any income-producing property.
SUBCHAPTER II - ADMINISTRATION
921. Petition and proceedings relating to petition
(a) Notwithstanding sections 109(d) and 301 of this title, a case under this
chapter concerning an unincorporated tax or special assessment district that
does not have such district's own officials is commenced by the filing under
section 301 of this title of a petition under this chapter by such district's
governing authority or the board or body having authority to levy taxes or
assessments to meet the obligations of such district.
(b) The chief judge of the court of appeals for the circuit embracing the
district in which the case is commenced shall designate the bankruptcy judge to
conduct the case.
(c) After any objection to the petition, the court, after notice and a hearing,
may dismiss the petition if the debtor did not file the petition in good faith
or if the petition does not meet the requirements of this title.
(d) If the petition is not dismissed under subsection (c) of this section, the
court shall order relief under this chapter.
(e) The court may not, on account of an appeal from an order for relief, delay
any proceeding under this chapter in the case in which the appeal is being
taken; nor shall any court order a stay of such proceeding pending such appeal.
The reversal on appeal of a finding of jurisdiction does not affect the validity
of any debt incurred that is authorized by the court under section 364(c) or
364(d) of this title.
922. Automatic stay of enforcement of claims against the debtor
(a) A petition filed under this chapter operates as a stay, in addition to the
stay provided by section 362 of this title, applicable to all entities, of-
(1) the commencement or continuation, including the issuance or employment of
process, of a judicial, administrative, or other action or proceeding against an
officer or inhabitant of the debtor that seeks to enforce a claim against the
debtor; and
(2) the enforcement of a lien on or arising out of taxes or assessments owed to
the debtor.
(b) Subsections (c), (d), (e), (f), and (g) of section 362 of this title apply
to a stay under subsection (a) of this section the same as such subsections
apply to a stay under section 362(a) of this title.
(c) If the debtor provides, under section 362, 364, or 922 of this title,
adequate protection of the interest of the holder of a claim secured by a lien
on property of the debtor and if, notwithstanding such protection such creditor
has a claim arising from the stay of action against such property under section
362 or 922 of this title or from the granting of a lien under section 364(d) of
this title, then such claim shall be allowable as an administrative expense
under section 503(b) of this title.
(d) Notwithstanding section 362 of this title and subsection (a) of this
section, a petition filed under this chapter does not operate as a stay of
application of pledged special revenues in a manner consistent with section 927
of this title to payment of indebtedness secured by such revenues.
923. Notice
There shall be given notice of the commencement of a case under this chapter,
notice of an order for relief under this chapter, and notice of the dismissal of
a case under this chapter. Such notice shall also be published at least once a
week for three successive weeks in at least one newspaper of general circulation
published within the district in which the case is commenced, and in such other
newspaper having a general circulation among bond dealers and bondholders as the
court designates.
924. List of creditors
The debtor shall file a list of creditors.
925. Effect of list of claims
A proof of claim is deemed filed under section 501 of this title for any claim
that appears in the list filed under section 924 of this title, except a claim
that is listed as disputed, contingent, or unliquidated.
926. Avoiding powers
(a) If the debtor refuses to pursue a cause of action under section 544, 545,
547, 548, 549(a), or 550 of this title, then on request of a creditor, the court
may appoint a trustee to pursue such cause of action.
(b) A transfer of property of the debtor to or for the benefit of any holder of
a bond or note, on account of such bond or note, may not be avoided under
section 547 of this title.
927. Limitation on recourse
The holder of a claim payable solely from special revenues of the debtor under
applicable nonbankruptcy law shall not be treated as having recourse against the
debtor on account of such claim pursuant to section 1111 (b) of this title.
928. Post petition effect of security interest
(a) Notwithstanding section 552(a) of this title and subject to subsection (b)
of this section, special revenues acquired by the debtor after the commencement
of the case shall remain subject to any lien resulting from any security
agreement entered into by the debtor before the commencement of the case.
(b) Any such lien on special revenues, other than municipal betterment
assessments, derived from a project or system shall be subject to the necessary
operating expenses of such project or system, as the case may be.
929. Municipal leases
A lease to a municipality shall not be treated as an executory contract or
unexpired lease for the purposes of section 365 or 502(b)(6) of this title
solely by reason of its being subject to termination in the event the debtor
fails to appropriate rent.
930. Dismissal
(a) After notice and a hearing, the court may dismiss a case under this chapter
for cause, including-
(1) want of prosecution;
(2) unreasonable delay by the debtor that is prejudicial to creditors;
(3) failure to propose a plan within the time fixed under section 941 of this
title;
(4) if a plan is not accepted within any time fixed by the court;
(5) denial of confirmation of a plan under section 943(b) of this title and
denial of additional time for filing another plan or a modification of a plan;
or
(6) if the court has retained jurisdiction after confirmation of a plan-
(A) material default by the debtor with respect to a term of such plan; or
(B) termination of such plan by reason of the occurrence of a condition
specified in such plan.
(b) The court shall dismiss a case under this chapter if confirmation of a plan
under this chapter is refused.
SUBCHAPTER III -THE PLAN
941. Filing of plan
The debtor shall file a plan for the adjustment of the debtor's debts. If such a
plan is not filed with the petition, the debtor shall file such a plan at such
later time as the court fixes.
942. Modification of plan
The debtor may modify the plan at any time before confirmation, but may not
modify the plan so that the plan as modified fails to meet the requirements of
this chapter. After the debtor files a modification, the plan as modified
becomes the plan.
943. Confirmation
(a) A special tax payer may object to confirmation of a plan.
(b) The court shall confirm the plan if-
(1) the plan complies with the provisions of this title made applicable by
sections 103(e)and901 of this title;
(2) the plan complies with the provisions of this chapter;
(3) all amounts to be paid by the debtor or by any person for services or
expenses in the case or incident to the plan have been fully disclosed and are
reasonable;
(4) the debtor is not prohibited by law from taking any action necessary to
carry out the plan;
(5) except to the extent that the holder of a particular claim has agreed to a
different treatment of such claim, the plan provides that on the effective date
of the plan each holder of a claim of a kind specified in section 507(a)(1) of
this title will receive on account of such claim cash equal to the allowed
amount of such claim;
(6) any regulatory or electoral approval necessary under applicable
nonbankruptcy law in order to carry out any provision of the plan has been
obtained, or such provision is expressly conditioned on such approval; and
(7) the plan is in the best interests of creditors and is feasible.
944. Effect of confirmation
(a) The provisions of a confirmed plan bind the debtor and any creditor, whether
or not-
(1) a proof of such creditor's claim is filed or deemed filed under section 501
of this title;
(2) such claim is allowed under section 502 of this title; or
(3) such creditor has accepted the plan.
(b) Except as provided in subsection (c) of this section, the debtor is
discharged from all debts as of the time when-
(1) the plan is confirmed;
(2) the debtor deposits any consideration to be distributed under the plan with
a disbursing agent appointed by the court; and
(3) the court has determined-
(A) that any security so deposited will constitute, after distribution, a valid
legal obligation of the debtor; and
(B) that any provision made to pay or secure payment of such obligation is
valid.
(c) The debtor is not discharged under subsection (b) of this section from any
debt-
(1) excepted from discharge by the plan or order confirming the plan; or
(2) owed to an entity that, before confirmation of the plan, had neither notice
nor actual knowledge of the case.
945. Continuing jurisdiction and closing of the case
(a) The court may retain jurisdiction over the case for such period of time as
is necessary for the successful implementation of the plan.
(b) Except as provided in subsection (a) of this section, the court shall close
the case when administration of the case has been completed.
946. Effect of exchange of securities before the date of the filing of the
petition
The exchange of a new security under the plan for a claim covered by the plan,
whether such exchange occurred before or after the date of the filing of the
petition, does not limit
or impair the effectiveness of the plan or of any provision of this chapter. The
amount and number specified in section 1126(c) of this title include the amount
and number of claims formerly held by a creditor that has participated in any
such exchange.
Chapter 11 - Reorganization
subchapter i - officers and administration
1101. Definitions for this chapter
In this chapter-
(1) "debtor in possession" means debtor except when a person that has qualified
under section 322 of this title is serving as trustee in the case;
(2) "substantial consummation" means-
(A) transfer of all or substantially all of the property proposed by the plan to
be transferred;
(B) assumption by the debtor or by the successor to the debtor under the plan of
the business or of the management of all or substantially all of the property
dealt with by the plan; and
(C) commencement of distribution under the plan.
1102. Creditors' and equity security holders' committees
(a) (1) Except as provided in paragraph (3), as soon as practicable after the
order for relief under chapter 11 of this title, the United States trustee shall
appoint a committee of creditors holding unsecured claims and may appoint
additional committees of creditors or of equity security holders as the United
States trustee deems appropriate.
(2) On request of a party in interest, the court may order the appointment of
additional committees of creditors or of equity security holders if necessary to
assure adequate representation of creditors or of equity security holders. The
United States trustee shall appoint any such committee.
(3) On request of a party in interest in a case in which the debtor is a small
business and for cause, the court may order that a committee of creditors not be
appointed.
(b) (1) A committee of creditors appointed under subsection (a) of this section
shall ordinarily consist of the persons, willing to serve, that hold the seven
largest claims against the debtor of the kinds represented on such committee, or
of the members of a committee organized by creditors before the commencement of
the case under this chapter, if such committee was fairly chosen and is
representative of the different kinds of claims to be represented.
(2) A committee of equity security holders appointed under subsection (a)(2) of
this section shall ordinarily consist of the persons, willing to serve, that
hold the seven largest amounts of equity securities of the debtor of the kinds
represented on such committee.
1103. Powers and duties of committees
(a) At a scheduled meeting of a committee appointed under section 1102 of this
title, at which a majority of the members of such committee are present, and
with the court's approval, such committee may select and authorize the
employment by such committee
of one or more attorneys, accountants, or other agents, to represent or perform
services for such committee.
(b) An attorney or accountant employed to represent a committee appointed under
section 1102 of this title may not, while employed by such committee, represent
any other entity having an adverse interest in connection with the case.
Representation of one or more creditors of the same class as represented by the
committee shall not per se constitute the representation of an adverse interest.
(c) A committee appointed under section 1102 of this title may-
(1) consult with the trustee or debtor in possession concerning the
administration of the case;
(2) investigate the acts, conduct, assets, liabilities, and financial condition
of the debtor, the operation of the debtor's business and the desirability of
the continuance of such business, and any other matter relevant to the case or
to the formulation of a plan;
(3) participate in the formulation of a plan, advise those represented by such
committee of such committee's determinations as to any plan formulated, and
collect and file with the court acceptances or rejections of a plan;
(4) request the appointment of a trustee or examiner under section 1104 of this
title; and
(5) perform such other services as are in the interest of those represented.
(d) As soon as practicable after the appointment of a committee under section
1102 of this title, the trustee shall meet with such committee to transact such
business as may be necessary and proper.
1104. Appointment of trustee or examiner
(a) At any time after the commencement of the case but before confirmation of a
plan, on request of a party in interest or the United States trustee, and after
notice and a hearing, the court shall order the appointment of a trustee-
(1) for cause, including fraud, dishonesty, incompetence, or gross mismanagement
of the affairs of the debtor by current management, either before or after the
commencement of the case, or similar cause, but not including the number of
holders of securities of the debtor or the amount of assets or liabilities of
the debtor; or
(2) if such appointment is in the interests of creditors, any equity security
holders, and other interests of the estate, without regard to the number of
holders of securities of the debtor or the amount of assets or liabilities of
the debtor.
(b) Except as provided in section 1163 of this title, on the request of a party
in interest made not later than 30 days after the court orders the appointment
of a trustee under subsection (a), the United States trustee shall convene a
meeting of creditors for the purpose of electing one disinterested person to
serve as trustee in the case. The election of a trustee shall be conducted in
the manner provided in subsections (a), (b), and (c) of section 702 of this
title.
(c) If the court does not order the appointment of a trustee under this section,
then at any time before the confirmation of a plan, on request of a party in
interest or the United
States trustee, and after notice and a hearing, the court shall order the
appointment of an examiner to conduct such an investigation of the debtor as is
appropriate, including an investigation of any allegations of fraud, dishonesty,
incompetence, misconduct, mismanagement, or irregularity in the management of
the affairs of the debtor of or by current or former management of the debtor,
if-
(1) such appointment is in the interests of creditors, any equity security
holders, and other interests of the estate; or
(2) the debtor's fixed, liquidated, unsecured debts, other than debts for goods,
services, or taxes, or owing to an insider, exceed $5,000,000.
(d) If the court orders the appointment of a trustee or an examiner, if a
trustee or an examiner dies or resigns during the case or is removed under
section 324 of this title, or if a trustee fails to qualify under section 322 of
this title, then the United States trustee, after consultation with parties in
interest, shall appoint, subject to the court's approval, one disinterested
person other than the United States trustee to serve as trustee or examiner, as
the case may be, in the case.
1105. Termination of trustee's appointment
At any time before confirmation of a plan, on request of a party in interest or
the United States trustee, and after notice and a hearing, the court may
terminate the trustee's appointment and restore the debtor to possession and
management of the property of the estate and of the operation of the debtor's
business.
1106. Duties of trustee and examiner
(a) A trustee shall-
(1) perform the duties of a trustee specified in sections 704(2), 704(5),
704(7), 704(8), and 704(9) of this title;
(2) if the debtor has not done so, file the list, schedule, and statement
required under section 521(1) of this title;
(3) except to the extent that the court orders otherwise, investigate the acts,
conduct, assets, liabilities, and financial condition of the debtor, the
operation of the debtor's business and the desirability of the continuance of
such business, and any other matter relevant to the case or to the formulation
of a plan;
(4) as soon as practicable-
(A) file a statement of any investigation conducted under paragraph (3) of this
subsection, including any fact ascertained pertaining to fraud, dishonesty,
incompetence, misconduct, mismanagement, or irregularity in the management of
the affairs of the debtor, or to a cause of action available to the estate; and
(B) transmit a copy or a summary of any such statement to any creditors'
committee or equity security holders' committee, to any indenture trustee, and
to such other entity as the court designates;
(5) as soon as practicable, file a plan under section 1121 of this title, file a
report of why the trustee will not file a plan, or recommend conversion of the
case to a case under chapter 7, 12, or 13 of this title or dismissal of the
case;
(6) for any year for which the debtor has not filed a tax return required by
law, furnish, without personal liability, such information as may be required by
the
governmental unit with which such tax return was to be filed, in light of the
condition of the debtor's books and records and the availability of such
information; and
(7) after confirmation of a plan, file such reports as are necessary or as the
court orders.
(b) An examiner appointed under section 1104(d) of this title shall perform the
duties specified in paragraphs (3) and (4) of subsection (a) of this section,
and, except to the extent that the court orders otherwise, any other duties of
the trustee that the court orders the debtor in possession not to perform.
1107. Rights, powers, and duties of debtor in possession
(a) Subject to any limitations on a trustee serving in a case under this
chapter, and to such limitations or conditions as the court prescribes, a debtor
in possession shall have all the rights, other than the right to compensation
under section 330 of this title, and powers, and shall perform all the functions
and duties, except the duties specified in sections 1106(a)(2), (3), and (4) of
this title, of a trustee serving in a case under this chapter.
(b) Notwithstanding section 327(a) of this title, a person is not disqualified
for employment under section 327 of this title by a debtor in possession solely
because of such person's employment by or representation of the debtor before
the commencement of the case.
1108. Authorization to operate business
Unless the court, on request of a party in interest and after notice and a
hearing, orders otherwise, the trustee may operate the debtor's business.
1109. Right to be heard
(a) The Securities and Exchange Commission may raise and may appear and be heard
on any issue in a case under this chapter, but the Securities and Exchange
Commission may not appeal from any judgment, order, or decree entered in the
case.
(b) A party in interest, including the debtor, the trustee, a creditors'
committee, an equity security holders' committee, a creditor, an equity security
holder, or any indenture trustee, may raise and may appear and be heard on any
issue in a case under this chapter.
1110. Aircraft equipment and vessels
(a) (1) Except as provided in paragraph (2) and subject to subsection (b), the
right of a secured party with a security interest in equipment described in
paragraph (3), or of a lessor or conditional vendor of such equipment, to take
possession of such equipment in compliance with a security agreement, lease, or
conditional sale contract, and to enforce any of its other rights or remedies,
under such security agreement, lease, or conditional sale contract, to sell,
lease, or otherwise retain or dispose of such equipment, is not limited or
otherwise affected by any other provision of this title or by any power of the
court.
(2) The right to take possession and to enforce the other rights and remedies
described in paragraph (1) shall be subject to section 362 if-
(A) before the date that is 60 days after the date of the order for relief under
this chapter, the trustee, subject to the approval of the court, agrees to
perform all obligations of the debtor under such security agreement, lease, or
conditional sale contract; and
(B) any default, other than a default of a kind specified in section 365(b)(2),
under such security agreement, lease, or conditional sale contract-
(i) that occurs before the date of the order is cured before the expiration of
such 60-day period;
(ii) that occurs after the date of the order and before the expiration of such
60-day period is cured before the later of-
(I) the date that is 30 days after the date of the default; or
(II) the expiration of such 60-day period; and
(iii) that occurs on or after the expiration of such 60-day period is cured in
compliance with the terms of such security agreement, lease, or conditional sale
contract, if a cure is permitted under that agreement, lease, or contract.
(3) The equipment described in this paragraph-
(A) is-
(i) an aircraft, aircraft engine, propeller, appliance, or spare part (as
defined in section 40102 of title 49) that is subject to a security interest
granted by, leased to, or conditionally sold to a debtor that, at the time such
transaction is entered into, holds an air carrier operating certificate issued
pursuant to chapter 447 of title 49 for aircraft capable of carrying 10 or more
individuals or 6,000 pounds or more of cargo; or
(ii) a documented vessel (as defined in section 30101(1) of title 46) that is
subject to a security interest granted by, leased to, or conditionally sold to a
debtor that is a water carrier that, at the time such transaction is entered
into, holds a certificate of public convenience and necessity or permit issued
by the Department of Transportation; and
(B) includes all records and documents relating to such equipment that are
required, under the terms of the security agreement, lease, or conditional sale
contract, to be surrendered or returned by the debtor in connection with the
surrender or return of such equipment.
(4) Paragraph (1) applies to a secured party, lessor, or conditional vendor
acting in its own behalf or acting as trustee or otherwise in behalf of another
party.
(b) The trustee and the secured party, lessor, or conditional vendor whose right
to take possession is protected under subsection (a) may agree, subject to the
approval of the court, to extend the 60-day period specified in subsection
(a)(1).
(c) (1) In any case under this chapter, the trustee shall immediately surrender
and return to a secured party, lessor, or conditional vendor, described in
subsection (a)(1), equipment described in subsection (a)(3), if at any time
after the date of the order for relief under this chapter such secured party,
lessor, or conditional vendor is entitled pursuant to subsection (a)(1) to take
possession of such equipment and makes a written demand for such possession to
the trustee.
(2) At such time as the trustee is required under paragraph (1) to surrender and
return equipment described in subsection (a)(3), any lease of such equipment,
and any security agreement or conditional sale contract relating to such
equipment, if such security agreement or conditional sale contract is an
executory contract, shall be deemed rejected.
(d) With respect to equipment first placed in service on or before October 22,
1994, for purposes of this section-
(1) the term 'lease' includes any written agreement with respect to which the
lessor and the debtor, as lessee, have expressed in the agreement or in a
substantially contemporaneous writing that the agreement is to be treated as a
lease for Federal income tax purposes; and
(2) the term "security interest" means a purchase-money equipment security
interest.
1111. Claims and interests
(a) A proof of claim or interest is deemed filed under section 501 of this title
for any claim or interest that appears in the schedules filed under section
521(1) or 1106(a)(2) of this title, except a claim or interest that is scheduled
as disputed, contingent, or unliquidated.
(b) (1) (A) A claim secured by a lien on property of the estate shall be allowed
or disallowed under section 502 of this title the same as if the holder of such
claim had recourse against the debtor on account of such claim, whether or not
such holder has such recourse, unless-
(i) the class of which such claim is a part elects, by at least two-thirds in
amount and more than half in number of allowed claims of such class, application
of paragraph (2) of this subsection; or
(ii) such holder does not have such recourse and such property is sold under
section 363 of this title or is to be sold under the plan.
(B) A class of claims may not elect application of paragraph (2) of this
subsection if-
(i) the interest on account of such claims of the holders of such claims in such
property is of inconsequential value; or
(ii) the holder of a claim of such class has recourse against the debtor on
account of such claim and such property is sold under section 363 of this title
or is to be sold under the plan.
(2) If such an election is made, then notwithstanding section 506(a) of this
title, such claim is a secured claim to the extent that such claim is allowed.
1112. Conversion or dismissal
(a) The debtor may convert a case under this chapter to a case under chapter 7
of this title unless-
(1) the debtor is not a debtor in possession;
(2) the case originally was commenced as an involuntary case under this chapter;
or
(3) the case was converted to a case under this chapter other than on the
debtor's request.
(b) Except as provided in subsection (c) of this section, on request of a party
in interest or the United States trustee or bankruptcy administrator, and after
notice and a hearing, the court may convert a case under this chapter to a case
under chapter 7 of this title or may dismiss a case under this chapter,
whichever is in the best interest of creditors and the estate, for cause,
including-
(1) continuing loss to or diminution of the estate and absence of a reasonable
likelihood of rehabilitation;
(2) inability to effectuate a plan;
(3) unreasonable delay by the debtor that is prejudicial to creditors;
(4) failure to propose a plan under section 1121 of this title within any time
fixed by the court;
(5) denial of confirmation of every proposed plan and denial of a request made
for additional time for filing another plan or a modification of a plan;
(6) revocation of an order of confirmation under section 1144 of this title, and
denial of confirmation of another plan or a modified plan under section 1129 of
this title;
(7) inability to effectuate substantial consummation of a confirmed plan;
(8) material default by the debtor with respect to a confirmed plan;
(9) termination of a plan by reason of the occurrence of a condition specified
in the plan; or
(10) nonpayment of any fees or charges required under chapter 123 of title 28.
(c) The court may not convert a case under this chapter to a case under chapter
7 of this title if the debtor is a farmer or a corporation that is not a
moneyed, business, or commercial corporation, unless the debtor requests such
conversion.
(d) The court may convert a case under this chapter to a case under chapter 12
or 13 of this title only if-
(1) the debtor requests such conversion;
(2) the debtor has not been discharged under section 1141 (d) of this title; and
(3) if the debtor requests conversion to chapter 12 of this title, such
conversion is equitable.
(e) Except as provided in subsections (c) and (f), the court, on request of the
United States trustee, may convert a case under this chapter to a case under
chapter 7 of this title or may dismiss a case under this chapter, whichever is
in the best interest of creditors and the estate if the debtor in a voluntary
case fails to file, within fifteen days after the filing of the petition
commencing such case or such additional time as the court may allow, the
information required by paragraph (1) of section 521, including a list
containing the names and addresses of the holders of the twenty largest
unsecured claims (or of all unsecured claims if there are fewer than twenty
unsecured claims) and the approximate dollar amounts of each of such claims.
(f) Notwithstanding any other provision of this section, a case may not be
converted to a case under another chapter of this title unless the debtor may be
a debtor under such chapter.
1113. Rejection of collective bargaining agreements
(a) The debtor in possession, or the trustee if one has been appointed under the
provisions of this chapter, other than a trustee in a case covered by subchapter
IV of this chapter and by title I of the Railway Labor Act, may assume or reject
a collective bargaining agreement only in accordance with the provisions of this
section.
(b) (1) Subsequent to filing a petition and prior to filing an application
seeking rejection of a collective bargaining agreement, the debtor in possession
or trustee (hereinafter in this section "trustee" shall include a debtor in
possession), shall-
(A) make a proposal to the authorized representative of the employees covered by
such agreement, based on the most complete and reliable information available at
the time of such proposal, which provides for those necessary modifications in
the employees benefits and protections that are necessary to permit the
reorganization of the debtor and assures that all creditors, the debtor and all
of the affected parties are treated fairly and equitably; and
(B) provide, subject to subsection (d)(3), the representative of the employees
with such relevant information as is necessary to evaluate the proposal.
(2) During the period beginning on the date of the making of a proposal provided
for in paragraph (1) and ending on the date of the hearing provided for in
subsection (d)(1), the trustee shall meet, at reasonable times, with the
authorized representative to confer in good faith in attempting to reach
mutually satisfactory modifications of such agreement.
(c) The court shall approve an application for rejection of a collective
bargaining agreement only if the court finds that-
(1) the trustee has, prior to the hearing, made a proposal that fulfills the
requirements of subsection (b)(1);
(2) the authorized representative of the employees has refused to accept such
proposal without good cause; and
(3) the balance of the equities clearly favors rejection of such agreement.
(d) (1) Upon the filing of an application for rejection the court shall schedule
a hearing to be held not later than fourteen days after the date of the filing
of such application. All interested parties may appear and be heard at such
hearing. Adequate notice shall be provided to such parties at least ten days
before the date of such hearing. The court may extend the time for the
commencement of such hearing for a period not exceeding seven days where the
circumstances of the case, and the interests of justice require such extension,
or for additional periods of time to which the trustee and representative agree.
(2) The court shall rule on such application for rejection within thirty days
after the date of the commencement of the hearing. In the interests of justice,
the court may extend such time for ruling for such additional period as the
trustee and the employees' representative may agree to. If the court does not
rule on such application within thirty days after the date of the commencement
of the hearing, or within such additional time as the trustee and the employees'
representative may agree to, the trustee may terminate or alter any provisions
of the collective bargaining agreement pending the ruling of the court on such
application.
(3) The court may enter such protective orders, consistent with the need of the
authorized representative of the employee to evaluate the trustee's proposal and
the application for rejection, as may be necessary to prevent disclosure of
information provided to such representative where such disclosure could
compromise the position of the debtor with respect to its competitors in the
industry in which it is engaged.
(e) If during a period when the collective bargaining agreement continues in
effect, and if essential to the continuation of the debtor's business, or in
order to avoid irreparable damage to the estate, the court, after notice and a
hearing, may authorize the trustee to implement interim changes in the terms,
conditions, wages, benefits, or work rules provided by a collective bargaining
agreement. Any hearing under this paragraph shall be scheduled in accordance
with the needs of the trustee. The implementation of such interim changes shall
not render the application for rejection moot.
(f) No provision of this title shall be construed to permit a trustee to
unilaterally terminate or alter any provisions of a collective bargaining
agreement prior to compliance with the provisions of this section.
1114. Payment of insurance benefits to retired employees
(a) For purposes of this section, the term "retiree benefits" means payments to
any entity or person for the purpose of providing or reimbursing payments for
retired employees and their spouses and dependents, for medical, surgical, or
hospital care benefits, or benefits in the event of sickness, accident,
disability, or death under any plan, fund, or program (through the purchase of
insurance or otherwise) maintained or established in whole or in part by the
debtor prior to filing a petition commencing a case under this title.
(b) (1) For purposes of this section, the term "authorized representative" means
the authorized representative designated pursuant to subsection (c) for persons
receiving any retiree benefits covered by a collective bargaining agreement or
subsection (d) in the case of persons receiving retiree benefits not covered by
such an agreement.
(2) Committees of retired employees appointed by the court pursuant to this
section shall have the same rights, powers, and duties as committees appointed
under sections 1102 and 1103 of this title for the purpose of carrying out the
purposes of sections 1114 and 1129(a)(13) and, as permitted by the court, shall
have the power to enforce the rights of persons under this title as they relate
to retiree benefits.
(c) (1) A labor organization shall be, for purposes of this section, the
authorized representative of those persons receiving any retiree benefits
covered by any collective bargaining agreement to which that labor organization
is signatory, unless (A) such labor organization elects not to serve as the
authorized representative of such persons, or (B) the court, upon a motion by
any party in interest, after notice and hearing, determines that different
representation of such persons is appropriate.
(2) In cases where the labor organization referred to in paragraph (1) elects
not to serve as the authorized representative of those persons receiving any
retiree benefits covered by any collective bargaining agreement to which that
labor organization is signatory, or in cases where the court, pursuant to
paragraph (1) finds different
representation of such persons appropriate, the court, upon a motion by any
party in interest, and after notice and a hearing, shall appoint a committee of
retired employees if the debtor seeks to modify or not pay the retiree benefits
or if the court otherwise determines that it is appropriate, from among such
persons, to serve as the authorized representative of such persons under this
section.
(d) The court, upon a motion by any party in interest, and after notice and a
hearing, shall appoint a committee of retired employees if the debtor seeks to
modify or not pay the retiree benefits or if the court otherwise determines that
it is appropriate, to serve as the authorized representative, under this
section, of those persons receiving any retiree benefits not covered by a
collective bargaining agreement.
(e) (1) Notwithstanding any other provision of this title, the debtor in
possession, or the trustee if one has been appointed under the provisions of
this chapter (hereinafter in this section "trustee" shall include a debtor in
possession), shall timely pay and shall not modify any retiree benefits, except
that-
(A) the court, on motion of the trustee or authorized representative, and after
notice and a hearing, may order modification of such payments, pursuant to the
provisions of subsections (g) and (h) of this section, or
(B) the trustee and the authorized representative of the recipients of those
benefits may agree to modification of such payments, after which such benefits
as modified shall continue to be paid by the trustee.
(2) Any payment for retiree benefits required to be made before a plan confirmed
under section 1129 of this title is effective has the status of an allowed
administrative expense as provided in section 503 of this title.
(f) (1) Subsequent to filing a petition and prior to filing an application
seeking modification of the retiree benefits, the trustee shall-
(A) make a proposal to the authorized representative of the retirees, based on
the most complete and reliable information available at the time of such
proposal, which provides for those necessary modifications in the retiree
benefits that are necessary to permit the reorganization of the debtor and
assures that all creditors, the debtor and all of the affected parties are
treated fairly and equitably; and
(B) provide, subject to subsection (k)(3), the representative of the retirees
with such relevant information as is necessary to evaluate the proposal.
(2) During the period beginning on the date of the making of a proposal provided
for in paragraph (1), and ending on the date of the hearing provided for in
subsection (k)(1), the trustee shall meet, at reasonable times, with the
authorized representative to confer in good faith in attempting to reach
mutually satisfactory modifications of such retiree benefits.
(g) The court shall enter an order providing for modification in the payment of
retiree benefits if the court finds that-
(1) the trustee has, prior to the hearing, made a proposal that fulfills the
requirements of subsection (f);
(2) the authorized representative of the retirees has refused to accept such
proposal without good cause; and
(3) such modification is necessary to permit the reorganization of the debtor
and assures that all creditors, the debtor, and all of the affected parties are
treated fairly and equitably, and is clearly favored by the balance of the
equities; except that in no case shall the court enter an order providing for
such modification which provides for a modification to a level lower than that
proposed by the trustee in the proposal found by the court to have complied with
the requirements of this subsection and subsection (f): Provided, however, That
at any time after an order is entered providing for modification in the payment
of retiree benefits, or at any time after an agreement modifying such benefits
is made between the trustee and the authorized representative of the recipients
of such benefits, the authorized representative may apply to the court for an
order increasing those benefits which order shall be granted if the increase in
retiree benefits sought is consistent with the standard set forth in paragraph
(3): Provided further, That neither the trustee nor the authorized
representative is precluded from making more than one motion for a modification
order governed by this subsection.
(h) (1) Prior to a court issuing a final order under subsection (g) of this
section, if essential to the continuation of the debtor's business, or in order
to avoid irreparable damage to the estate, the court, after notice and a
hearing, may authorize the trustee to implement interim modifications in retiree
benefits.
(2) Any hearing under this subsection shall be scheduled in accordance with the
needs of the trustee.
(3) The implementation of such interim changes does not render the motion for
modification moot.
(i) No retiree benefits paid between the filing of the petition and the time a
plan confirmed under section 1129 of this title becomes effective shall be
deducted or offset from the amounts allowed as claims for any benefits which
remain unpaid, or from the amounts to be paid under the plan with respect to
such claims for unpaid benefits, whether such claims for unpaid benefits are
based upon or arise from a right to future unpaid benefits or from any benefits
not paid as a result of modifications allowed pursuant to this section.
(j) No claim for retiree benefits shall be limited by section 502(b)(7) of this
title.
(k) (1) Upon the filing of an application for modifying retiree benefits, the
court shall schedule a hearing to be held not later than fourteen days after the
date of the filing of such application. All interested parties may appear and be
heard at such hearing. Adequate notice shall be provided to such parties at
least ten days before the date of such hearing. The court may extend the time
for the commencement of such hearing for a period not exceeding seven days where
the circumstances of the case, and the interests of justice require such
extension, or for additional periods of time to which the trustee and the
authorized representative agree.
(2) The court shall rule on such application for modification within ninety days
after the date of the commencement of the hearing. In the interests of justice,
the court may
extend such time for ruling for such additional period as the trustee and the
authorized representative may agree to. If the court does not rule on such
application within ninety days after the date of the commencement of the
hearing, or within such additional time as the trustee and the authorized
representative may agree to, the trustee may implement the proposed
modifications pending the ruling of the court on such application.
(3) The court may enter such protective orders, consistent with the need of the
authorized representative of the retirees to evaluate the trustee's proposal and
the application for modification, as may be necessary to prevent disclosure of
information provided to such representative where such disclosure could
compromise the position of the debtor with respect to its competitors in the
industry in which it is engaged.
(l ) This section shall not apply to any retiree, or the spouse or dependents of
such retiree, if such retiree's gross income for the twelve months preceding the
filing of the bankruptcy petition equals or exceeds $250,000, unless such
retiree can demonstrate to the satisfaction of the court that he is unable to
obtain health, medical, life, and disability coverage for himself, his spouse,
and his dependents who would otherwise be covered by the employer's insurance
plan, comparable to the coverage provided by the employer on the day before the
filing of a petition under this title.
SUBCHAPTER II -THE PLAN
1121. Who may file a plan
(a) The debtor may file a plan with a petition commencing a voluntary case, or
at any time in a voluntary case or an involuntary case.
(b) Except as otherwise provided in this section, only the debtor may file a
plan until after 120 days after the date of the order for relief under this
chapter.
(c) Any party in interest, including the debtor, the trustee, a creditors'
committee, an equity security holders' committee, a creditor, an equity security
holder, or any indenture trustee, may file a plan if and only if-
(1) a trustee has been appointed under this chapter;
(2) the debtor has not filed a plan before 120 days after the date of the order
for relief under this chapter; or
(3) the debtor has not filed a plan that has been accepted, before 180 days
after the date of the order for relief under this chapter, by each class of
claims or interests that is impaired under the plan.
(d) On request of a party in interest made within the respective periods
specified in subsections (b) and (c) of this section and after notice and a
hearing, the court may for cause reduce or increase the 120-day period or the
180-day period referred to in this section.
(e) In a case in which the debtor is a small business and elects to be
considered a small business-
(1) only the debtor may file a plan until after 100 days after the date of the
order for relief under this chapter;
(2) all plans shall be filed within 160 days after the date of the order for
relief; and
(3) on request of a party in interest made within the respective periods
specified in paragraphs (1) and (2) and after notice and a hearing, the court
may-
(A) reduce the 100-day period or the 160-day period specified in paragraph (1)
or (2) for cause; and
(B) increase the 100-day period specified in paragraph (1) if the debtor shows
that the need for an increase is caused by circumstances for which the debtor
should not be held accountable.
1122. Classification of claims or interests
(a) Except as provided in subsection (b) of this section, a plan may place a
claim or an interest in a particular class only if such claim or interest is
substantially similar to the other claims or interests of such class.
(b) A plan may designate a separate class of claims consisting only of every
unsecured claim that is less than or reduced to an amount that the court
approves as reasonable and necessary for administrative convenience.
1123. Contents of plan
(a) Notwithstanding any otherwise applicable nonbankruptcy law, a plan shall-
(1) designate, subject to section 1122 of this title, classes of claims, other
than claims of a kind specified in section 507(a)(1), 507(a)(2), or 507(a)(8) of
this title, and classes of interests;
(2) specify any class of claims or interests that is not impaired under the
plan;
(3) specify the treatment of any class of claims or interests that is impaired
under the plan;
(4) provide the same treatment for each claim or interest of a particular class,
unless the holder of a particular claim or interest agrees to a less favorable
treatment of such particular claim or interest;
(5) provide adequate means for the plan's implementation, such as-
(A) retention by the debtor of all or any part of the property of the estate;
(B) transfer of all or any part of the property of the estate to one or more
entities, whether organized before or after the confirmation of such plan;
(C) merger or consolidation of the debtor with one or more persons;
(D) sale of all or any part of the property of the estate, either subject to or
free of any lien, or the distribution of all or any part of the property of the
estate among those having an interest in such property of the estate;
(E) satisfaction or modification of any lien;
(F) cancellation or modification of any indenture or similar instrument;
(G) curing or waiving of any default;
(H) extension of a maturity date or a change in an interest rate or other term
of outstanding securities;
(I) amendment of the debtor's charter; or
(J) issuance of securities of the debtor, or of any entity referred to in
subparagraph (B) or (C) of this paragraph, for cash, for property, for existing
securities, or in exchange for claims or interests, or for any other appropriate
purpose;
(6) provide for the inclusion in the charter of the debtor, if the debtor is a
corporation, or of any corporation referred to in paragraph (5)(B) or (5)(C) of
this subsection, of a provision prohibiting the issuance of nonvoting equity
securities, and providing, as to the several classes of securities possessing
voting power, an appropriate distribution of such power among such classes,
including, in the case of any class of equity securities having a preference
over another class of equity securities with respect to dividends, adequate
provisions for the election of directors representing such preferred class in
the event of default in the payment of such dividends; and
(7) contain only provisions that are consistent with the interests of creditors
and equity security holders and with public policy with respect to the manner of
selection of any officer, director, or trustee under the plan and any successor
to such officer, director, or trustee.
(b) Subject to subsection (a) of this section, a plan may-
(1) impair or leave unimpaired any class of claims, secured or unsecured, or of
interests;
(2) subject to section 365 of this title, provide for the assumption, rejection,
or assignment of any executory contract or unexpired lease of the debtor not
previously rejected under such section;
(3) provide for-
(A) the settlement or adjustment of any claim or interest belonging to the
debtor or to the estate; or
(B) the retention and enforcement by the debtor, by the trustee, or by a
representative of the estate appointed for such purpose, of any such claim or
interest;
(4) provide for the sale of all or substantially all of the property of the
estate, and the distribution of the proceeds of such sale among holders of
claims or interests;
(5) modify the rights of holders of secured claims, other than a claim secured
only by a security interest in real property that is the debtor's principal
residence, or of holders of unsecured claims, or leave unaffected the rights of
holders of any class of claims; and
(6) include any other appropriate provision not inconsistent with the applicable
provisions of this title.
(c) In a case concerning an individual, a plan proposed by an entity other than
the debtor may not provide for the use, sale, or lease of property exempted
under section 522 of this title, unless the debtor consents to such use, sale,
or lease.
(d) Notwithstanding subsection (a) of this section and sections 506(b),
1129(a)(7), and 1129(b) of this title, if it is proposed in a plan to cure a
default the amount necessary to cure the default shall be determined in
accordance with the underlying agreement and applicable nonbankruptcy law.
1124. Impairment of claims or interests
Except as provided in section 1123(a)(4) of this title, a class of claims or
interests is impaired under a plan unless, with respect to each claim or
interest of such class, the plan-
(1) leaves unaltered the legal, equitable, and contractual rights to which such
claim or interest entitles the holder of such claim or interest; or
(2) notwithstanding any contractual provision or applicable law that entitles
the holder of such claim or interest to demand or receive accelerated payment of
such claim or interest after the occurrence of a default-
(A) cures any such default that occurred before or after the commencement of the
case under this title, other than a default of a kind specified in section
365(b)(2) of this title;
(B) reinstates the maturity of such claim or interest as such maturity existed
before such default;
(C) compensates the holder of such claim or interest for any damages incurred as
a result of any reasonable reliance by such holder on such contractual provision
or such applicable law; and
(D) does not otherwise alter the legal, equitable, or contractual rights to
which such claim or interest entitles the holder of such claim or interest.
[(3) Repealed. Pub.L. 103-394, Title II, 213(d)(3), Oct. 22, 1994, 108 Stat.
4126]
1125. Postpetition disclosure and solicitation
(a) In this section-
(1) "adequate information" means information of a kind, and in sufficient
detail, as far as is reasonably practicable in light of the nature and history
of the debtor and the condition of the debtor's books and records, that would
enable a hypothetical reasonable investor typical of holders of claims or
interests of the relevant class to make an informed judgment about the plan, but
adequate information need not include such information about any other possible
or proposed plan; and
(2) "investor typical of holders of claims or interests of the relevant class"
means investor having-
(A) a claim or interest of the relevant class;
(B) such a relationship with the debtor as the holders of other claims or
interests of such class generally have; and
(C) such ability to obtain such information from sources other than the
disclosure required by this section as holders of claims or interests in such
class generally have.
(b) An acceptance or rejection of a plan may not be solicited after the
commencement of the case under this title from a holder of a claim or interest
with respect to such claim or interest, unless, at the time of or before such
solicitation, there is transmitted to such holder the plan or a summary of the
plan, and a written disclosure statement approved, after notice and a hearing,
by the court as containing adequate information. The court may approve a
disclosure statement without a valuation of the debtor or an appraisal of the
debtor's assets.
(c) The same disclosure statement shall be transmitted to each holder of a claim
or interest of a particular class, but there may be transmitted different
disclosure statements, differing in amount, detail, or kind of information, as
between classes.
(d) Whether a disclosure statement required under subsection (b) of this section
contains adequate information is not governed by any otherwise applicable
nonbankruptcy law, rule, or regulation, but an agency or official whose duty is
to administer or enforce such a law, rule, or regulation may be heard on the
issue of whether a disclosure statement contains adequate information. Such an
agency or official may not appeal from, or otherwise seek review of, an order
approving a disclosure statement.
(e) A person that solicits acceptance or rejection of a plan, in good faith and
in compliance with the applicable provisions of this title, or that
participates, in good faith and in compliance with the applicable provisions of
this title, in the offer, issuance, sale, or purchase of a security, offered or
sold under the plan, of the debtor, of an affiliate participating in a joint
plan with the debtor, or of a newly organized successor to the debtor under the
plan, is not liable, on account of such solicitation or participation, for
violation of any applicable law, rule, or regulation governing solicitation of
acceptance or rejection of a plan or the offer, issuance, sale, or purchase of
securities.
(f) Notwithstanding subsection (b), in a case in which the debtor has elected
under section 1121 (e) to be considered a small business-
(1) the court may conditionally approve a disclosure statement subject to final
approval after notice and a hearing;
(2) acceptances and rejections of a plan may be solicited based on a
conditionally approved disclosure statement as long as the debtor provides
adequate information to each holder of a claim or interest that is solicited,
but a conditionally approved disclosure statement shall be mailed at least 10
days prior to the date of the hearing on confirmation of the plan; and
(3) a hearing on the disclosure statement may be combined with a hearing on
confirmation of a plan.
1126. Acceptance of plan
(a) The holder of a claim or interest allowed under section 502 of this title
may accept or reject a plan. If the United States is a creditor or equity
security holder, the Secretary of the Treasury may accept or reject the plan on
behalf of the United States.
(b) For the purposes of subsections (c) and (d) of this section, a holder of a
claim or interest that has accepted or rejected the plan before the commencement
of the case under this title is deemed to have accepted or rejected such plan,
as the case may be, if-
(1) the solicitation of such acceptance or rejection was in compliance with any
applicable nonbankruptcy law, rule, or regulation governing the adequacy of
disclosure in connection with such solicitation; or
(2) if there is not any such law, rule, or regulation, such acceptance or
rejection was solicited after disclosure to such holder of adequate information,
as defined in section 1125(a) of this title.
(c) A class of claims has accepted a plan if such plan has been accepted by
creditors, other than any entity designated under subsection (e) of this
section, that hold at least two-thirds in amount and more than one-half in
number of the allowed claims of such class held by creditors, other than any
entity designated under subsection (e) of this section, that have accepted or
rejected such plan.
(d) A class of interests has accepted a plan if such plan has been accepted by
holders of such interests, other than any entity designated under subsection (e)
of this section, that hold at least two-thirds in amount of the allowed
interests of such class held by holders of such interests, other than any entity
designated under subsection (e) of this section, that have accepted or rejected
such plan.
(e) On request of a party in interest, and after notice and a hearing, the court
may designate any entity whose acceptance or rejection of such plan was not in
good faith, or was not solicited or procured in good faith or in accordance with
the provisions of this title.
(f) Notwithstanding any other provision of this section, a class that is not
impaired under a plan, and each holder of a claim or interest of such class, are
conclusively presumed to have accepted the plan, and solicitation of acceptances
with respect to such class from the holders of claims or interests of such class
is not required.
(g) Notwithstanding any other provision of this section, a class is deemed not
to have accepted a plan if such plan provides that the claims or interests of
such class do not entitle the holders of such claims or interests to receive or
retain any property under the plan on account of such claims or interests.
1127. Modification of plan
(a) The proponent of a plan may modify such plan at any time before
confirmation, but may not modify such plan so that such plan as modified fails
to meet the requirements of sections 1122 and 1123 of this title. After the
proponent of a plan files a modification of such plan with the court, the plan
as modified becomes the plan.
(b) The proponent of a plan or the reorganized debtor may modify such plan at
any time after confirmation of such plan and before substantial consummation of
such plan, but may not modify such plan so that such plan as modified fails to
meet the requirements of sections 1122 and 1123 of this title. Such plan as
modified under this subsection becomes the plan only if circumstances warrant
such modification and the court, after notice and a hearing, confirms such plan
as modified, under section 1129 of this title.
(c) The proponent of a modification shall comply with section 1125 of this title
with respect to the plan as modified.
(d) Any holder of a claim or interest that has accepted or rejected a plan is
deemed to have accepted or rejected, as the case may be, such plan as modified,
unless, within the
time fixed by the court, such holder changes such holder's previous acceptance
or rejection.
1128. Confirmation hearing
(a) After notice, the court shall hold a hearing on confirmation of a plan.
(b) A party in interest may object to confirmation of a plan.
1129. Confirmation of plan
(a) The court shall confirm a plan only if all of the following requirements are
met:
(1) The plan complies with the applicable provisions of this title.
(2) The proponent of the plan complies with the applicable provisions of this
title.
(3) The plan has been proposed in good faith and not by any means forbidden by
law.
(4) Any payment made or to be made by the proponent, by the debtor, or by a
person issuing securities or acquiring property under the plan, for services or
for costs and expenses in or in connection with the case, or in connection with
the plan and incident to the case, has been approved by, or is subject to the
approval of, the court as reasonable.
(5) (A)(i) The proponent of the plan has disclosed the identity and affiliations
of any individual proposed to serve, after confirmation of the plan, as a
director, officer, or voting trustee of the debtor, an affiliate of the debtor
participating in a joint plan with the debtor, or a successor to the debtor
under the plan; and
(ii) the appointment to, or continuance in, such office of such individual, is
consistent with the interests of creditors and equity security holders and with
public policy; and (B) the proponent of the plan has disclosed the identity of
any insider that will be
employed or retained by the reorganized debtor, and the nature of any
compensation
for such insider.
(6) Any governmental regulatory commission with jurisdiction, after confirmation
of the plan, over the rates of the debtor has approved any rate change provided
for in the plan, or such rate change is expressly conditioned on such approval.
(7) With respect to each impaired class of claims or interests-
(A) each holder of a claim or interest of such class- (i) has accepted the plan;
or
(ii) will receive or retain under the plan on account of such claim or interest
property of a value, as of the effective date of the plan, that is not less than
the amount that such holder would so receive or retain if the debtor were
liquidated under chapter 7 of this title on such date; or
(B) if section 1111(b)(2) of this title applies to the claims of such class,
each holder of a claim of such class will receive or retain under the plan on
account of such claim property of a value, as of the effective date of the plan,
that is not less than the value of such holder's interest in the estate's
interest in the property that secures such claims.
(8) With respect to each class of claims or interests-
(A) such class has accepted the plan; or
(B) such class is not impaired under the plan.
(9) Except to the extent that the holder of a particular claim has agreed to a
different treatment of such claim, the plan provides that-
(A) with respect to a claim of a kind specified in section 507(a)(1) or
507(a)(2) of this title, on the effective date of the plan, the holder of such
claim will receive on account of such claim cash equal to the allowed amount of
such claim;
(B) with respect to a class of claims of a kind specified in section 507(a)(3),
507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of this title, each holder of a
claim of such class will receive-
(i) if such class has accepted the plan, deferred cash payments of a value, as
of the effective date of the plan, equal to the allowed amount of such claim; or
(ii) if such class has not accepted the plan, cash on the effective date of the
plan equal to the allowed amount of such claim; and
(C) with respect to a claim of a kind specified in section 507(a)(8) of this
title, the holder of such claim will receive on account of such claim deferred
cash payments, over a period not exceeding six years after the date of
assessment of such claim, of a value, as of the effective date of the plan,
equal to the allowed amount of such claim.
(10) If a class of claims is impaired under the plan, at least one class of
claims that is impaired under the plan has accepted the plan, determined without
including any acceptance of the plan by any insider.
(11) Confirmation of the plan is not likely to be followed by the liquidation,
or the need for further financial reorganization, of the debtor or any successor
to the debtor under the plan, unless such liquidation or reorganization is
proposed in the plan.
(12) All fees payable under section 1930 of title 28, as determined by the court
at the hearing on confirmation of the plan, have been paid or the plan provides
for the payment of all such fees on the effective date of the plan.
(13) The plan provides for the continuation after its effective date of payment
of all retiree benefits, as that term is defined in section 1114 of this title,
at the level established pursuant to subsection (e)(1)(B) or (g) of section 1114
of this title, at any time prior to confirmation of the plan, for the duration
of the period the debtor has obligated itself to provide such benefits.
(b) (1) Notwithstanding section 510(a) of this title, if all of the applicable
requirements of subsection (a) of this section other than paragraph (8) are met
with respect to a plan, the court, on request of the proponent of the plan,
shall confirm the plan notwithstanding the requirements of such paragraph if the
plan does not discriminate unfairly, and is fair and equitable, with respect to
each class of claims or interests that is impaired under, and has not accepted,
the plan.
(2) For the purpose of this subsection, the condition that a plan be fair and
equitable with respect to a class includes the following requirements:
(A) With respect to a class of secured claims, the plan provides-
(i) (I) that the holders of such claims retain the liens securing such claims,
whether the property subject to such liens is retained by the debtor or
transferred to another entity, to the extent of the allowed amount of such
claims; and
(II) that each holder of a claim of such class receive on account of such claim
deferred cash payments totaling at least the allowed amount of such
claim, of a value, as of the effective date of the plan, of at least the value
of
such holder's interest in the estate's interest in such property;
(ii) for the sale, subject to section 363(k) of this title, of any property that
is subject to the liens securing such claims, free and clear of such liens, with
such liens to attach to the proceeds of such sale, and the treatment of such
liens on proceeds under clause (i) or (iii) of this subparagraph; or
(iii) for the realization by such holders of the indubitable equivalent of such
claims.
(B) With respect to a class of unsecured claims-
(i) the plan provides that each holder of a claim of such class receive or
retain on account of such claim property of a value, as of the effective date of
the plan, equal to the allowed amount of such claim; or
(ii) the holder of any claim or interest that is junior to the claims of such
class will not receive or retain under the plan on account of such junior claim
or interest any property.
(C) With respect to a class of interests-
(i) the plan provides that each holder of an interest of such class receive or
retain on account of such interest property of a value, as of the effective date
of the plan, equal to the greatest of the allowed amount of any fixed
liquidation preference to which such holder is entitled, any fixed redemption
price to which such holder is entitled, or the value of such interest; or
(ii) the holder of any interest that is junior to the interests of such class
will not receive or retain under the plan on account of such junior interest any
property.
(c) Notwithstanding subsections (a) and (b) of this section and except as
provided in section 1127(b) of this title, the court may confirm only one plan,
unless the order of confirmation in the case has been revoked under section 1144
of this title. If the requirements of subsections (a) and (b) of this section
are met with respect to more than one plan, the court shall consider the
preferences of creditors and equity security holders in determining which plan
to confirm.
(d) Notwithstanding any other provision of this section, on request of a party
in interest that is a governmental unit, the court may not confirm a plan if the
principal purpose of the plan is the avoidance of taxes or the avoidance of the
application of section 5 of the Securities Act of 1933. In any hearing under
this subsection, the governmental unit has the burden of proof on the issue of
avoidance.
SUBCHAPTER III - POSTCONFIRMATION MATTERS
1141. Effect of confirmation
(a) Except as provided in subsections (d)(2) and (d)(3) of this section, the
provisions of a confirmed plan bind the debtor, any entity issuing securities
under the plan, any entity acquiring property under the plan, and any creditor,
equity security holder, or general partner in the debtor, whether or not the
claim or interest of such creditor, equity security
holder, or general partner is impaired under the plan and whether or not such
creditor, equity security holder, or general partner has accepted the plan.
(b) Except as otherwise provided in the plan or the order confirming the plan,
the confirmation of a plan vests all of the property of the estate in the
debtor.
(c) Except as provided in subsections (d)(2) and (d)(3) of this section and
except as otherwise provided in the plan or in the order confirming the plan,
after confirmation of a plan, the property dealt with by the plan is free and
clear of all claims and interests of creditors, equity security holders, and of
general partners in the debtor.
(d) (1) Except as otherwise provided in this subsection, in the plan, or in the
order confirming the plan, the confirmation of a plan-
(A) discharges the debtor from any debt that arose before the date of such
confirmation, and any debt of a kind specified in section 502(g), 502(h), or
502(i) of this title, whether or not-
(i) a proof of the claim based on such debt is filed or deemed filed under
section 501 of this title;
(ii) such claim is allowed under section 502 of this title; or (iii) the holder
of such claim has accepted the plan; and
(B) terminates all rights and interests of equity security holders and general
partners provided for by the plan.
(2) The confirmation of a plan does not discharge an individual debtor from any
debt excepted from discharge under section 523 of this title.
(3) The confirmation of a plan does not discharge a debtor if-
(A) the plan provides for the liquidation of all or substantially all of the
property of the estate;
(B) the debtor does not engage in business after consummation of the plan; and
(C) the debtor would be denied a discharge under section 727(a) of this title if
the case were a case under chapter 7 of this title.
(4) The court may approve a written waiver of discharge executed by the debtor
after the order for relief under this chapter.
1142. Implementation of plan
(a) Notwithstanding any otherwise applicable nonbankruptcy law, rule, or
regulation relating to financial condition, the debtor and any entity organized
or to be organized for the purpose of carrying out the plan shall carry out the
plan and shall comply with any orders of the court.
(b) The court may direct the debtor and any other necessary party to execute or
deliver or to join in the execution or delivery of any instrument required to
effect a transfer of property dealt with by a confirmed plan, and to perform any
other act, including the satisfaction of any lien, that is necessary for the
consummation of the plan.
1143. Distribution
If a plan requires presentment or surrender of a security or the performance of
any other act as a condition to participation in distribution under the plan,
such action shall be taken not later than five years after the date of the entry
of the order of confirmation. Any entity that has not within such time presented
or surrendered such entity's security or taken any such other action that the
plan requires may not participate in distribution under the plan.
1144. Revocation of an order of confirmation
On request of a party in interest at any time before 180 days after the date of
the entry of the order of confirmation, and after notice and a hearing, the
court may revoke such order if and only if such order was procured by fraud. An
order under this section revoking an order of confirmation shall-
(1) contain such provisions as are necessary to protect any entity acquiring
rights in good faith reliance on the order of confirmation; and
(2) revoke the discharge of the debtor.
1145. Exemption from securities laws
(a) Except with respect to an entity that is an underwriter as defined in
subsection (b) of this section, section 5 of the Securities Act of 1933 and any
State or local law requiring registration for offer or sale of a security or
registration or licensing of an issuer of, underwriter of, or broker or dealer
in, a security do not apply to-
(1) the offer or sale under a plan of a security of the debtor, of an affiliate
participating in a joint plan with the debtor, or of a successor to the debtor
under the plan-
(A) in exchange for a claim against, an interest in, or a claim for an
administrative expense in the case concerning, the debtor or such affiliate; or
(B) principally in such exchange and partly for cash or property;
(2) the offer of a security through any warrant, option, right to subscribe, or
conversion privilege that was sold in the manner specified in paragraph (1) of
this subsection, or the sale of a security upon the exercise of such a warrant,
option, right, or privilege;
(3) the offer or sale, other than under a plan, of a security of an issuer other
than the debtor or an affiliate, if-
(A) such security was owned by the debtor on the date of the filing of the
petition;
(B) the issuer of such security is-
(i) required to file reports under section 13 or 15(d) of the Securities
Exchange Act of 1934; and
(ii) in compliance with the disclosure and reporting provision of such
applicable section; and
(C) such offer or sale is of securities that do not exceed-
(i) during the two-year period immediately following the date of the filing of
the petition, four percent of the securities of such class outstanding on such
date; and
(ii) during any 180-day period following such two-year period, one percent of
the securities outstanding at the beginning of such 180-day period; or
(4) a transaction by a stockbroker in a security that is executed after a
transaction of a kind specified in paragraph (1) or (2) of this subsection in
such security and before the expiration of 40 days after the first date on which
such security was bona fide offered to the public by the issuer or by or through
an underwriter, if such stockbroker provides, at the time of or before such
transaction by such stockbroker, a disclosure statement approved under section
1125 of this title, and, if the court orders, information supplementing such
disclosure statement.
(b) (1) Except as provided in paragraph (2) of this subsection and except with
respect to ordinary trading transactions of an entity that is not an issuer, an
entity is an underwriter under section 2(11) of the Securities Act of 1933, if
such entity-
(A) purchases a claim against, interest in, or claim for an administrative
expense in the case concerning, the debtor, if such purchase is with a view to
distribution of any security received or to be received in exchange for such a
claim or interest;
(B) offers to sell securities offered or sold under the plan for the holders of
such securities;
(C) offers to buy securities offered or sold under the plan from the holders of
such securities, if such offer to buy is-
(i) with a view to distribution of such securities; and
(ii) under an agreement made in connection with the plan, with the consummation
of the plan, or with the offer or sale of securities under the plan; or
(D) is an issuer, as used in such section 2(11), with respect to such
securities.
(2) An entity is not an underwriter under section 2(11) of the Securities Act of
1933 or under paragraph (1) of this subsection with respect to an agreement that
provides only for-
(A)(i) the matching or combining of fractional interests in securities offered
or sold under the plan into whole interests; or
(ii) the purchase or sale of such fractional interests from or to entities
receiving such fractional interests under the plan; or
(B) the purchase or sale for such entities of such fractional or whole interests
as are necessary to adjust for any remaining fractional interests after such
matching.
(3) An entity other than an entity of the kind specified in paragraph (1) of
this subsection is not an underwriter under section 2(11) of the Securities Act
of 1933 with respect to any securities offered or sold to such entity in the
manner specified in subsection (a)(1) of this section.
(c) An offer or sale of securities of the kind and in the manner specified under
subsection (a)(1) of this section is deemed to be a public offering.
(d) The Trust Indenture Act of 1939 does not apply to a note issued under the
plan that matures not later than one year after the effective date of the plan.
1146. Special tax provisions
(a) For the purposes of any State or local law imposing a tax on or measured by
income, the taxable period of a debtor that is an individual shall terminate on
the date of the order for relief under this chapter, unless the case was
converted under section 706 of this title.
(b) The trustee shall make a State or local tax return of income for the estate
of an individual debtor in a case under this chapter for each taxable period
after the order for relief under this chapter during which the case is pending.
(c) The issuance, transfer, or exchange of a security, or the making or delivery
of an instrument of transfer under a plan confirmed under section 1129 of this
title, may not be taxed under any law imposing a stamp tax or similar tax.
(d) The court may authorize the proponent of a plan to request a determination,
limited to questions of law, by a State or local governmental unit charged with
responsibility for collection or determination of a tax on or measured by
income, of the tax effects, under section 346 of this title and under the law
imposing such tax, of the plan. In the event of an actual controversy, the court
may declare such effects after the earlier of-
(1) the date on which such governmental unit responds to the request under this
subsection; or
(2) 270 days after such request.
SUBCHAPTER IV - RAILROAD REORGANIZATION
1161. Inapplicability of other sections
Sections 341, 343, 1102(a)(1), 1104, 1105, 1107, 1129(a)(7), and 1129(c) of this
title do not apply in a case concerning a railroad.
1162. Definition
In this subchapter, "Board" means the "Surface Transportation Board".
1163. Appointment of trustee
As soon as practicable after the order for relief the Secretary of
Transportation shall submit a list of five disinterested persons that are
qualified and willing to serve as trustees in the case. The United States
trustee shall appoint one of such persons to serve as trustee in the case.
1164. Right to be heard
The Board, the Department of Transportation, and any State or local commission
having regulatory jurisdiction over the debtor may raise and may appear and be
heard on any issue in a case under this chapter, but may not appeal from any
judgment, order, or decree entered in the case.
1165. Protection of the public interest
In applying sections 1166, 1167, 1169, 1170, 1171, 1172, 1173, and 1174 of this
title, the court and the trustee shall consider the public interest in addition
to the interests of the debtor, creditors, and equity security holders.
1166. Effect of subtitle IV of title 49 and of Federal, State, or local
regulations
Except with respect to abandonment under section 1170 of this title, or merger,
modification of the financial structure of the debtor, or issuance or sale of
securities under a plan, the trustee and the debtor are subject to the
provisions of subtitle IV of title 49 that are applicable to railroads, and the
trustee is subject to orders of any Federal, State, or local regulatory body to
the same extent as the debtor would be if a petition commencing the case under
this chapter had not been filed, but-
(1) any such order that would require the expenditure, or the incurring of an
obligation for the expenditure, of money from the estate is not effective unless
approved by the court; and
(2) the provisions of this chapter are subject to section 601(b) of the Regional
Rail Reorganization Act of 1973.
1167. Collective bargaining agreements
Notwithstanding section 365 of this title, neither the court nor the trustee may
change the wages or working conditions of employees of the debtor established by
a collective bargaining agreement that is subject to the Railway Labor Act
except in accordance with section 6 of such Act.
1168. Rolling stock equipment
(a) (1) The right of a secured party with a security interest in or of a lessor
or conditional vendor of equipment described in paragraph ( 2) to take
possession of such equipment in compliance with an equipment security agreement,
lease, or conditional sale contract, and to enforce any of its other rights or
remedies under such security agreement, lease, or conditional sale contract, to
sell, lease, or otherwise retain or dispose of such equipment, is not limited or
otherwise affected by any other provision of this title or by any power of the
court, except that right to take possession and enforce those other rights and
remedies shall be subject to section 362, if-
(A) before the date that is 60 days after the date of commencement of a case
under this chapter, the trustee, subject to the court's approval, agrees to
perform all obligations of the debtor under such security agreement, lease, or
conditional sale contract; and
(B) any default, other than a default of a kind described in section 365(b)(2),
under such security agreement, lease, or conditional sale contract-
(i) that occurs before the date of commencement of the case and is an event of
default therewith is cured before the expiration of such 60-day period;
(ii) that occurs or becomes an event of default after the date of commencement
of the case and before the expiration of such 60-day period is cured before the
later of-
(I) the date that is 30 days after the date of the default or event of the
default; or
(II) the expiration of such 60-day period; and
(iii) that occurs on or after the expiration of such 60-day period is cured in
accordance with the terms of such security agreement, lease, or conditional sale
contract, if cure is permitted under that agreement, lease, or conditional sale
contract.
(2) The equipment described in this paragraph-
(A) is rolling stock equipment or accessories used on rolling stock equipment,
including superstructures or racks, that is subject to a security interest
granted by, leased to, or conditionally sold to a debtor; and
(B) includes all records and documents relating to such equipment that are
required, under the terms of the security agreement, lease, or conditional sale
contract, that is to be surrendered or returned by the debtor in connection with
the surrender or return of such equipment.
(3) Paragraph (1) applies to a secured party, lessor, or conditional vendor
acting in its own behalf or acting as trustee or otherwise in behalf of another
party.
(b) The trustee and the secured party, lessor, or conditional vendor whose right
to take possession is protected under subsection (a) may agree, subject to the
court's approval, to extend the 60-day period specified in subsection (a)(1).
(c) (1) In any case under this chapter, the trustee shall immediately surrender
and return to a secured party, lessor, or conditional vendor, described in
subsection (a)(1), equipment described in subsection (a)(2), if at any time
after the date of commencement of the case under this chapter such secured
party, lessor, or conditional vendor is entitled pursuant to subsection (a)(1)
to take possession of such equipment and makes a written demand for such
possession of the trustee.
(2) At such time as the trustee is required under paragraph (1) to surrender and
return equipment described in subsection (a)( 2), any lease of such equipment,
and any security agreement or conditional sale contract relating to such
equipment, if such security agreement or conditional sale contract is an
executory contract, shall be deemed rejected.
(d) With respect to equipment first placed in service on or prior to October 22,
1994, for purposes of this section-
(1) the term 'lease' includes any written agreement with respect to which the
lessor and the debtor, as lessee, have expressed in the agreement or in a
substantially contemporaneous writing that the agreement is to be treated as a
lease for Federal income tax purposes; and
(2) the term "security interest" means a purchase- money equipment security
interest.
(e) With respect to equipment first placed in service after October 22, 1994,
for purposes of this section, the term 'rolling stock equipment' includes
rolling stock equipment that is substantially rebuilt and accessories used on
such equipment.
1169. Effect of rejection of lease of railroad line
(a) Except as provided in subsection (b) of this section, if a lease of a line
of railroad under which the debtor is the lessee is rejected under section 365
of this title, and if the trustee, within such time as the court fixes, and with
the court's approval, elects not to operate the leased line, the lessor under
such lease, after such approval, shall operate the line.
(b) If operation of such line by such lessor is impracticable or contrary to the
public interest, the court, on request of such lessor, and after notice and a
hearing, shall order the trustee to continue operation of such line for the
account of such lessor until abandonment is ordered under section 1170 of this
title, or until such operation is otherwise lawfully terminated, whichever
occurs first.
(c) During any such operation, such lessor is deemed a carrier subject to the
provisions of subtitle IV of title 49 that are applicable to railroads.
1170. Abandonment of railroad line
(a) The court, after notice and a hearing, may authorize the abandonment of all
or a portion of a railroad line if such abandonment is-
(1) (A) in the best interest of the estate; or
(B) essential to the formulation of a plan; and
(2) consistent with the public interest.
(b) If, except for the pendency of the case under this chapter, such abandonment
would require approval by the Board under a law of the United States, the
trustee shall initiate an appropriate application for such abandonment with the
Board. The court may fix a time within which the Board shall report to the court
on such application.
(c) After the court receives the report of the Board, or the expiration of the
time fixed under subsection (b) of this section, whichever occurs first, the
court may authorize such abandonment, after notice to the Board, the Secretary
of Transportation, the trustee, any party in interest that has requested notice,
any affected shipper or community, and any other entity prescribed by the court,
and a hearing.
(d) (1) Enforcement of an order authorizing such abandonment shall be stayed
until the time for taking an appeal has expired, or, if an appeal is timely
taken, until such order has become final.
(2) If an order authorizing such abandonment is appealed, the court, on request
of a party in interest, may authorize suspension of service on a line or a
portion of a line pending the determination of such appeal, after notice to the
Board, the Secretary of Transportation, the trustee, any party in interest that
has requested notice, any affected shipper or community, and any other entity
prescribed by the court, and a hearing. An appellant may not obtain a stay of
the enforcement of an order authorizing such suspension by the giving of a
supersedeas bond or otherwise, during the pendency of such appeal.
(e) (1) In authorizing any abandonment of a railroad line under this section,
the court shall require the rail carrier to provide a fair arrangement at least
as protective of the interests of employees as that established under section
11347 of title 49.
(2) Nothing in this subsection shall be deemed to affect the priorities or
timing of payment of employee protection which might have existed in the absence
of this subsection.
1171. Priority claims
(a) There shall be paid as an administrative expense any claim of an individual
or of the personal representative of a deceased individual against the debtor or
the estate, for personal injury to or death of such individual arising out of
the operation of the debtor or the estate, whether such claim arose before or
after the commencement of the case.
(b) Any unsecured claim against the debtor that would have been entitled to
priority if a receiver in equity of the property of the debtor had been
appointed by a Federal court on the date of the order for relief under this
title shall be entitled to the same priority in the case under this chapter.
1172. Contents of plan
(a) In addition to the provisions required or permitted under section 1123 of
this title, a plan-
(1) shall specify the extent to and the means by which the debtor's rail service
is proposed to be continued, and the extent to which any of the debtor's rail
service is proposed to be terminated; and
(2) may include a provision for-
(A) the transfer of any or all of the operating railroad lines of the debtor to
another operating railroad; or
(B) abandonment of any railroad line in accordance with section 1170 of this
title.
(b) If, except for the pendency of the case under this chapter, transfer of, or
operation of or over, any of the debtor's rail lines by an entity other than the
debtor or a successor to the debtor under the plan would require approval by the
Board under a law of the United States, then a plan may not propose such a
transfer or such operation unless the proponent of the plan initiates an
appropriate application for such a transfer or such operation with the Board
and, within such time as the court may fix, not exceeding 180 days, the Board,
with or without a hearing, as the Board may determine, and with or without
modification or condition, approves such application, or does not act on such
application. Any action or order of the Board approving, modifying,
conditioning, or disapproving such application is subject to review by the court
only under sections 706(2)(A), 706(2)(B), 706(2)(C), and 706(2)(D) of title 5.
(c) (1) In approving an application under subsection (b) of this section, the
Board shall require the rail carrier to provide a fair arrangement at least as
protective of the interests of employees as that established under section 11347
of title 49.
(2) Nothing in this subsection shall be deemed to affect the priorities or
timing of payment of employee protection which might have existed in the absence
of this subsection.
1173. Confirmation of plan
(a) The court shall confirm a plan if-
(1) the applicable requirements of section 1129 of this title have been met;
(2) each creditor or equity security holder will receive or retain under the
plan property of a value, as of the effective date of the plan, that is not less
than the value of
property that each such creditor or equity security holder would so receive or
retain if all of the operating railroad lines of the debtor were sold, and the
proceeds of such sale, and the other property of the estate, were distributed
under chapter 7 of this title on such date;
(3) in light of the debtor's past earnings and the probable prospective earnings
of the reorganized debtor, there will be adequate coverage by such prospective
earnings of any fixed charges, such as interest on debt, amortization of funded
debt, and rent for leased railroads, provided for by the plan; and
(4) the plan is consistent with the public interest.
(b) If the requirements of subsection (a) of this section are met with respect
to more than one plan, the court shall confirm the plan that is most likely to
maintain adequate rail service in the public interest.
1174. Liquidation
On request of a party in interest and after notice and a hearing, the court may,
or, if a plan has not been confirmed under section 1173 of this title before
five years after the date of the order for relief, the court shall, order the
trustee to cease the debtor's operation and to collect and reduce to money all
of the property of the estate in the same manner as if the case were a case
under chapter 7 of this title.
Chapter 12 - Adjustments of Debts of a Family Farmer with Regular Annual Income
subchapter i - officers, administration, and the estate
1201. Stay of action against codebtor
(a) Except as provided in subsections (b) and (c) of this section, after the
order for relief under this chapter, a creditor may not act, or commence or
continue any civil action, to collect all or any part of a consumer debt of the
debtor from any individual that is liable on such debt with the debtor, or that
secured such debt, unless-
(1) such individual became liable on or secured such debt in the ordinary course
of such individual's business; or
(2) the case is closed, dismissed, or converted to a case under chapter 7 of
this title.
(b) A creditor may present a negotiable instrument, and may give notice of
dishonor of such an instrument.
(c) On request of a party in interest and after notice and a hearing, the court
shall grant relief from the stay provided by subsection (a) of this section with
respect to a creditor, to the extent that-
(1) as between the debtor and the individual protected under subsection (a) of
this section, such individual received the consideration for the claim held by
such creditor;
(2) the plan filed by the debtor proposes not to pay such claim; or
(3) such creditor's interest would be irreparably harmed by continuation of such
stay.
(d) Twenty days after the filing of a request under subsection (c)(2) of this
section for relief from the stay provided by subsection (a) of this section,
such stay is terminated with respect to the party in interest making such
request, unless the debtor or any individual that is liable on such debt with
the debtor files and serves upon such party in interest a written objection to
the taking of the proposed action.
1202. Trustee
(a) If the United States trustee has appointed an individual under section
586(b) of title 28 to serve as standing trustee in cases under this chapter and
if such individual qualifies as a trustee under section 322 of this title, then
such individual shall serve as trustee in any case filed under this chapter.
Otherwise, the United States trustee shall appoint one disinterested person to
serve as trustee in the case or the United States trustee may serve as trustee
in the case if necessary.
(b) The trustee shall-
(1) perform the duties specified in sections 704(2), 704(3), 704(5), 704(6),
704(7), and 704(9) of this title;
(2) perform the duties specified in section 1106(a)(3) and 1106(a)(4) of this
title if the court, for cause and on request of a party in interest, the
trustee, or the United States trustee, so orders;
(3) appear and be heard at any hearing that concerns-
(A) the value of property subject to a lien;
(B) confirmation of a plan;
(C) modification of the plan after confirmation; or
(D) the sale of property of the estate;
(4) ensure that the debtor commences making timely payments required by a
confirmed plan; and
(5) if the debtor ceases to be a debtor in possession, perform the duties
specified in sections 704(8), 1106(a)(1), 1106(a)(2), 1106(a)(6), 1106(a)(7),
and 1203.
1203. Rights and powers of debtor
Subject to such limitations as the court may prescribe, a debtor in possession
shall have all the rights, other than the right to compensation under section
330, and powers, and shall perform all the functions and duties, except the
duties specified in paragraphs (3) and (4) of section 1106(a), of a trustee
serving in a case under chapter 11, including operating the debtor's farm.
1204. Removal of debtor as debtor in possession
(a) On request of a party in interest, and after notice and a hearing, the court
shall order that the debtor shall not be a debtor in possession for cause,
including fraud, dishonesty, incompetence, or gross mismanagement of the affairs
of the debtor, either before or after the commencement of the case.
(b) On request of a party in interest, and after notice and a hearing, the court
may reinstate the debtor in possession.
1205. Adequate protection
(a) Section 361 does not apply in a case under this chapter.
(b) In a case under this chapter, when adequate protection is required under
section 362, 363, or 364 of this title of an interest of an entity in property,
such adequate protection may be provided by-
(1) requiring the trustee to make a cash payment or periodic cash payments to
such entity, to the extent that the stay under section 362 of this title, use,
sale, or lease under section 363 of this title, or any grant of a lien under
section 364 of this title results in a decrease in the value of property
securing a claim or of an entity's ownership interest in property;
(2) providing to such entity an additional or replacement lien to the extent
that such stay, use, sale, lease, or grant results in a decrease in the value of
property securing a claim or of an entity's ownership interest in property;
(3) paying to such entity for the use of farmland the reasonable rent customary
in the community where the property is located, based upon the rental value, net
income, and earning capacity of the property; or
(4) granting such other relief, other than entitling such entity to compensation
allowable under section 503(b)(1) of this title as an administrative expense, as
will adequately protect the value of property securing a claim or of such
entity's ownership interest in property.
1206. Sales free of interests
After notice and a hearing, in addition to the authorization contained in
section 363(f), the trustee in a case under this chapter may sell property under
section 363(b) and (c) free and clear of any interest in such property of an
entity other than the estate if the property is farmland or farm equipment,
except that the proceeds of such sale shall be subject to such interest.
1207. Property of the estate
(a) Property of estate includes, in addition to the property specified in
section 541 of this title-
(1) all property of the kind specified in such section that the debtor acquires
after the commencement of the case but before the case is closed, dismissed, or
converted to a case under chapter 7 of this title, whichever occurs first; and
(2) earnings from services performed by the debtor after the commencement of the
case but before the case is closed, dismissed, or converted to a case under
chapter 7 of this title, whichever occurs first.
(b) Except as provided in section 1204, a confirmed plan, or an order confirming
a plan, the debtor shall remain in possession of all property of the estate.
1208. Conversion or dismissal
(a) The debtor may convert a case under this chapter to a case under chapter 7
of this title at any time. Any waiver of the right to convert under this
subsection is unenforceable.
(b) On request of the debtor at any time, if the case has not been converted
under section 706 or 1112 of this title, the court shall dismiss a case under
this chapter. Any waiver of the right to dismiss under this subsection is
unenforceable.
(c) On request of a party in interest, and after notice and a hearing, the court
may dismiss a case under this chapter for cause, including-
(1) unreasonable delay, or gross mismanagement, by the debtor that is
prejudicial to creditors;
(2) nonpayment of any fees and charges required under chapter 123 of title 28;
(3) failure to file a plan timely under section 1221 of this title;
(4) failure to commence making timely payments required by a confirmed plan;
(5) denial of confirmation of a plan under section 1225 of this title and denial
of a request made for additional time for filing another plan or a modification
of a plan;
(6) material default by the debtor with respect to a term of a confirmed plan;
(7) revocation of the order of confirmation under section 1230 of this title,
and denial of confirmation of a modified plan under section 1229 of this title;
(8) termination of a confirmed plan by reason of the occurrence of a condition
specified in the plan; or
(9) continuing loss to or diminution of the estate and absence of a reasonable
likelihood of rehabilitation.
(d) On request of a party in interest, and after notice and a hearing, the court
may dismiss a case under this chapter or convert a case under this chapter to a
case under chapter 7 of this title upon a showing that the debtor has committed
fraud in connection with the case.
(e) Notwithstanding any other provision of this section, a case may not be
converted to a case under another chapter of this title unless the debtor may be
a debtor under such chapter.
SUBCHAPTER II -THE PLAN
1221. Filing of plan
The debtor shall file a plan not later than 90 days after the order for relief
under this chapter, except that the court may extend such period if the need for
an extension is attributable to circumstances for which the debtor should not
justly be held accountable.
1222. Contents of plan
(a) The plan shall-
(1) provide for the submission of all or such portion of future earnings or
other future income of the debtor to the supervision and control of the trustee
as is necessary for the execution of the plan;
(2) provide for the full payment, in deferred cash payments, of all claims
entitled to priority under section 507 of this title, unless the holder of a
particular claim agrees to a different treatment of such claim; and
(3) if the plan classifies claims and interests, provide the same treatment for
each claim or interest within a particular class unless the holder of a
particular claim or interest agrees to less favorable treatment.
(b) Subject to subsections (a) and (c) of this section, the plan may-
(1) designate a class or classes of unsecured claims, as provided in section
1122 of this title, but may not discriminate unfairly against any class so
designated; however, such plan may treat claims for a consumer debt of the
debtor if an individual is liable on such consumer debt with the debtor
differently than other unsecured claims;
(2) modify the rights of holders of secured claims, or of holders of unsecured
claims, or leave unaffected the rights of holders of any class of claims;
(3) provide for the curing or waiving of any default;
(4) provide for payments on any unsecured claim to be made concurrently with
payments on any secured claim or any other unsecured claim;
(5) provide for the curing of any default within a reasonable time and
maintenance of payments while the case is pending on any unsecured claim or
secured claim on which the last payment is due after the date on which the final
payment under the plan is due;
(6) subject to section 365 of this title, provide for the assumption, rejection,
or assignment of any executory contract or unexpired lease of the debtor not
previously rejected under such section;
(7) provide for the payment of all or part of a claim against the debtor from
property of the estate or property of the debtor;
(8) provide for the sale of all or any part of the property of the estate or the
distribution of all or any part of the property of the estate among those having
an interest in such property;
(9) provide for payment of allowed secured claims consistent with section
1225(a)(5) of this title, over a period exceeding the period permitted under
section 1222(c);
(10) provide for the vesting of property of the estate, on confirmation of the
plan or at a later time, in the debtor or in any other entity; and
(11) include any other appropriate provision not inconsistent with this title.
(c) Except as provided in subsections (b)(5) and (b)(9), the plan may not
provide for payments over a period that is longer than three years unless the
court for cause approves a longer period, but the court may not approve a period
that is longer than five years.
(d) Notwithstanding subsection (b)(2) of this section and sections 506(b) and
1225(a)(5) of this title, if it is proposed in a plan to cure a default, the
amount necessary to cure the default, shall be determined in accordance with the
underlying agreement and applicable nonbankruptcy law.
1223. Modification of plan before confirmation
(a) The debtor may modify the plan at any time before confirmation, but may not
modify the plan so that the plan as modified fails to meet the requirements of
section 1222 of this title.
(b) After the debtor files a modification under this section, the plan as
modified becomes the plan.
(c) Any holder of a secured claim that has accepted or rejected the plan is
deemed to have accepted or rejected, as the case may be, the plan as modified,
unless the modification provides for a change in the rights of such holder from
what such rights were under the plan before modification, and such holder
changes such holder's previous acceptance or rejection.
1224. Confirmation hearing
After expedited notice, the court shall hold a hearing on confirmation of the
plan. A party in interest, the trustee, or the United States trustee may object
to the confirmation of the plan. Except for cause, the hearing shall be
concluded not later than 45 days after the filing of the plan.
1225. Confirmation of plan
(a) Except as provided in subsection (b), the court shall confirm a plan if-
(1) the plan complies with the provisions of this chapter and with the other
applicable provisions of this title;
(2) any fee, charge, or amount required under chapter 123 of title 28, or by the
plan, to be paid before confirmation, has been paid;
(3) the plan has been proposed in good faith and not by any means forbidden by
law;
(4) the value, as of the effective date of the plan, of property to be
distributed under the plan on account of each allowed unsecured claim is not
less than the amount that would be paid on such claim if the estate of the
debtor were liquidated under chapter 7 of this title on such date;
(5) with respect to each allowed secured claim provided for by the plan-
(A) the holder of such claim has accepted the plan;
(B) (i) the plan provides that the holder of such claim retain the lien securing
such claim; and
(ii) the value, as of the effective date of the plan, of property to be
distributed by the trustee or the debtor under the plan on account of such claim
is not less than the allowed amount of such claim; or
(C) the debtor surrenders the property securing such claim to such holder; and
(6) the debtor will be able to make all payments under the plan and to comply
with the plan.
(b) (1) If the trustee or the holder of an allowed unsecured claim objects to
the confirmation of the plan, then the court may not approve the plan unless, as
of the effective date of the plan-
(A) the value of the property to be distributed under the plan on account of
such claim is not less than the amount of such claim; or
(B) the plan provides that all of the debtor's projected disposable income to be
received in the three-year period, or such longer period as the court may
approve under section 1222(c), beginning on the date that the first payment is
due under the plan will be applied to make payments under the plan.
(2) For purposes of this subsection, "disposable income" means income which is
received by the debtor and which is not reasonably necessary to be expended-
(A) for the maintenance or support of the debtor or a dependent of the debtor;
or
(B) for the payment of expenditures necessary for the continuation,
preservation, and operation of the debtor's business.
(c) After confirmation of a plan, the court may order any entity from whom the
debtor receives income to pay all or any part of such income to the trustee.
1226. Payments
(a) Payments and funds received by the trustee shall be retained by the trustee
until confirmation or denial of confirmation of a plan. If a plan is confirmed,
the trustee shall distribute any such payment in accordance with the plan. If a
plan is not confirmed, the trustee shall return any such payments to the debtor,
after deducting-
(1) any unpaid claim allowed under section 503(b) of this title; and
(2) if a standing trustee is serving in the case, the percentage fee fixed for
such standing trustee.
(b) Before or at the time of each payment to creditors under the plan, there
shall be paid-
(1) any unpaid claim of the kind specified in section 507(a)(1) of this title;
and
(2) if a standing trustee appointed under section 1202(c) of this title is
serving in the case, the percentage fee fixed for such standing trustee under
section 1202(d) of this title.
(c) Except as otherwise provided in the plan or in the order confirming the
plan, the trustee shall make payments to creditors under the plan.
1227. Effect of confirmation
(a) Except as provided in section 1228(a) of this title, the provisions of a
confirmed plan bind the debtor, each creditor, each equity security holder, and
each general partner in the debtor, whether or not the claim of such creditor,
such equity security holder, or such general partner in the debtor is provided
for by the plan, and whether or not such creditor, such equity security holder,
or such general partner in the debtor has objected to, has accepted, or has
rejected the plan.
(b) Except as otherwise provided in the plan or the order confirming the plan,
the confirmation of a plan vests all of the property of the estate in the
debtor.
(c) Except as provided in section 1228(a) of this title and except as otherwise
provided in the plan or in the order confirming the plan, the property vesting
in the debtor under subsection (b) of this section is free and clear of any
claim or interest of any creditor provided for by the plan.
1228. Discharge
(a) As soon as practicable after completion by the debtor of all payments under
the plan, other than payments to holders of allowed claims provided for under
section 1222(b)(5)
or 1222(b)(9) of this title, unless the court approves a written waiver of
discharge executed by the debtor after the order for relief under this chapter,
the court shall grant the debtor a discharge of all debts provided for by the
plan allowed under section 503 of this title or disallowed under section 502 of
this title, except any debt-
(1) provided for under section 1222(b)(5) or 1222(b)(9) of this title; or
(2) of the kind specified in section 523(a) of this title.
(b) At any time after the confirmation of the plan and after notice and a
hearing, the court may grant a discharge to a debtor that has not completed
payments under the plan only if-
(1) the debtor's failure to complete such payments is due to circumstances for
which the debtor should not justly be held accountable;
(2) the value, as of the effective date of the plan, of property actually
distributed under the plan on account of each allowed unsecured claim is not
less than the amount that would have been paid on such claim if the estate of
the debtor had been liquidated under chapter 7 of this title on such date; and
(3) modification of the plan under section 1229 of this title is not
practicable.
(c) A discharge granted under subsection (b) of this section discharges the
debtor from all unsecured debts provided for by the plan or disallowed under
section 502 of this title, except any debt-
(1) provided for under section 1222(b)(5) or 1222(b)(9) of this title; or
(2) of a kind specified in section 523(a) of this title.
(d) On request of a party in interest before one year after a discharge under
this section is granted, and after notice and a hearing, the court may revoke
such discharge only if-
(1) such discharge was obtained by the debtor through fraud; and
(2) the requesting party did not know of such fraud until after such discharge
was granted.
(e) After the debtor is granted a discharge, the court shall terminate the
services of any trustee serving in the case.
1229. Modification of plan after confirmation
(a) At any time after confirmation of the plan but before the completion of
payments under such plan, the plan may be modified, on request of the debtor,
the trustee, or the holder of an allowed unsecured claim, to-
(1) increase or reduce the amount of payments on claims of a particular class
provided for by the plan;
(2) extend or reduce the time for such payments; or
(3) alter the amount of the distribution to a creditor whose claim is provided
for by the plan to the extent necessary to take account of any payment of such
claim other than under the plan.
(b) (1) Sections 1222(a), 1222(b), and 1223(c) of this title and the
requirements of section 1225(a) of this title apply to any modification under
subsection (a) of this section.
(2) The plan as modified becomes the plan unless, after notice and a hearing,
such modification is disapproved.
(c) A plan modified under this section may not provide for payments over a
period that expires after three years after the time that the first payment
under the original confirmed plan was due, unless the court, for cause, approves
a longer period, but the court may not approve a period that expires after five
years after such time.
1230. Revocation of an order of confirmation
(a) On request of a party in interest at any time within 180 days after the date
of the entry of an order of confirmation under section 1225 of this title, and
after notice and a hearing, the court may revoke such order if such order was
procured by fraud.
(b) If the court revokes an order of confirmation under subsection (a) of this
section, the court shall dispose of the case under section 1207 of this title,
unless, within the time fixed by the court, the debtor proposes and the court
confirms a modification of the plan under section 1229 of this title.
1231. Special tax provisions
(a) For the purpose of any State or local law imposing a tax on or measured by
income, the taxable period of a debtor that is an individual shall terminate on
the date of the order for relief under this chapter, unless the case was
converted under section 706 of this title.
(b) The trustee shall make a State or local tax return of income for the estate
of an individual debtor in a case under this chapter for each taxable period
after the order for relief under this chapter during which the case is pending.
(c) The issuance, transfer, or exchange of a security, or the making or delivery
of an instrument of transfer under a plan confirmed under section 1225 of this
title, may not be taxed under any law imposing a stamp tax or similar tax.
(d) The court may authorize the proponent of a plan to request a determination,
limited to questions of law, by a State or local governmental unit charged with
responsibility for collection or determination of a tax on or measured by
income, of the tax effects, under section 346 of this title and under the law
imposing such tax, of the plan. In the event of an actual controversy, the court
may declare such effects after the earlier of-
(1) the date on which such governmental unit responds to the request under this
subsection; or
(2) 270 days after such request.
Chapter 13 - Adjustment of Debts of an Individual with Regular Income
subchapter i - officers administration and the estate
1301. Stay of action against codebtor
(a) Except as provided in subsections (b) and (c) of this section, after the
order for relief under this chapter, a creditor may not act, or commence or
continue any civil action, to collect all or any part of a consumer debt of the
debtor from any individual that is liable on such debt with the debtor, or that
secured such debt, unless-
(1) such individual became liable on or secured such debt in the ordinary course
of such individual's business; or
(2) the case is closed, dismissed, or converted to a case under chapter 7 or 11
of this title.
(b) A creditor may present a negotiable instrument, and may give notice of
dishonor of such an instrument.
(c) On request of a party in interest and after notice and a hearing, the court
shall grant relief from the stay provided by subsection (a) of this section with
respect to a creditor, to the extent that-
(1) as between the debtor and the individual protected under subsection (a) of
this section, such individual received the consideration for the claim held by
such creditor;
(2) the plan filed by the debtor proposes not to pay such claim; or
(3) such creditor's interest would be irreparably harmed by continuation of such
stay.
(d) Twenty days after the filing of a request under subsection (c)(2) of this
section for relief from the stay provided by subsection (a) of this section,
such stay is terminated with respect to the party in interest making such
request, unless the debtor or any individual that is liable on such debt with
the debtor files and serves upon such party in interest a written objection to
the taking of the proposed action.
1302. Trustee
(a) If the United States trustee appoints an individual under section 586(b) of
title 28 to serve as standing trustee in cases under this chapter and if such
individual qualifies under section 322 of this title, then such individual shall
serve as trustee in the case. Otherwise, the United States trustee shall appoint
one disinterested person to serve as trustee in the case or the United States
trustee may serve as a trustee in the case.
(b) The trustee shall-
(1) perform the duties specified in sections 704(2), 704(3), 704(4), 704(5),
704(6), 704(7), and 704(9) of this title;
(2) appear and be heard at any hearing that concerns-
(A) the value of property subject to a lien;
(B) confirmation of a plan; or
(C) modification of the plan after confirmation;
(3) dispose of, under regulations issued by the Director of the Administrative
Office of the United States Courts, moneys received or to be received in a case
under chapter XIII of the Bankruptcy Act;
(4) advise, other than on legal matters, and assist the debtor in performance
under the plan; and
(5) ensure that the debtor commences making timely payments under section 1326
of this title.
(c) If the debtor is engaged in business, then in addition to the duties
specified in subsection (b) of this section, the trustee shall perform the
duties specified in sections 1106(a)(3) and 1106(a)(4) of this title.
1303. Rights and powers of debtor
Subject to any limitations on a trustee under this chapter, the debtor shall
have, exclusive of the trustee, the rights and powers of a trustee under
sections 363(b), 363(d), 363(e), 363(f), and 363(l), of this title.
1304. Debtor engaged in business
(a) A debtor that is self-employed and incurs trade credit in the production of
income from such employment is engaged in business.
(b) Unless the court orders otherwise, a debtor engaged in business may operate
the business of the debtor and, subject to any limitations on a trustee under
sections 363(c) and 364 of this title and to such limitations or conditions as
the court prescribes, shall have, exclusive of the trustee, the rights and
powers of the trustee under such sections.
(c) A debtor engaged in business shall perform the duties of the trustee
specified in section 704(8) of this title.
1305. Filing and allowance of postpetition claims
(a) A proof of claim may be filed by any entity that holds a claim against the
debtor-
(1) for taxes that become payable to a governmental unit while the case is
pending; or
(2) that is a consumer debt, that arises after the date of the order for relief
under this chapter, and that is for property or services necessary for the
debtor's performance under the plan.
(b) Except as provided in subsection (c) of this section, a claim filed under
subsection (a) of this section shall be allowed or disallowed under section 502
of this title, but shall be determined as of the date such claim arises, and
shall be allowed under section 502(a), 502(b), or 502(c) of this title, or
disallowed under section 502(d) or 502(e) of this title, the same as if such
claim had arisen before the date of the filing of the petition.
(c) A claim filed under subsection (a)(2) of this section shall be disallowed if
the holder of such claim knew or should have known that prior approval by the
trustee of the debtor's incurring the obligation was practicable and was not
obtained.
1306. Property of the estate
(a) Property of the estate includes, in addition to the property specified in
section 541 of this title-
(1) all property of the kind specified in such section that the debtor acquires
after the commencement of the case but before the case is closed, dismissed, or
converted to a case under chapter 7, 11, or 12 of this title, whichever occurs
first; and
(2) earnings from services performed by the debtor after the commencement of the
case but before the case is closed, dismissed, or converted to a case under
chapter 7, 11, or 12 of this title, whichever occurs first.
(b) Except as provided in a confirmed plan or order confirming a plan, the
debtor shall remain in possession of all property of the estate.
1307. Conversion or dismissal
(a) The debtor may convert a case under this chapter to a case under chapter 7
of this title at any time. Any waiver of the right to convert under this
subsection is unenforceable.
(b) On request of the debtor at any time, if the case has not been converted
under section 706, 1112, or 1208 of this title, the court shall dismiss a case
under this chapter. Any waiver of the right to dismiss under this subsection is
unenforceable.
(c) Except as provided in subsection (e) of this section, on request of a party
in interest or the United States trustee and after notice and a hearing, the
court may convert a case under this chapter to a case under chapter 7 of this
title, or may dismiss a case under this chapter, whichever is in the best
interests of creditors and the estate, for cause, including-
(1) unreasonable delay by the debtor that is prejudicial to creditors;
(2) nonpayment of any fees and charges required under chapter 123 of title 28;
(3) failure to file a plan timely under section 1321 of this title;
(4) failure to commence making timely payments under section 1326 of this title;
(5) denial of confirmation of a plan under section 1325 of this title and denial
of a request made for additional time for filing another plan or a modification
of a plan;
(6) material default by the debtor with respect to a term of a confirmed plan;
(7) revocation of the order of confirmation under section 1330 of this title,
and denial of confirmation of a modified plan under section 1329 of this title;
[sic]
(8) termination of a confirmed plan by reason of the occurrence of a condition
specified in the plan other than completion of payments under the plan;
(9) only on request of the United States trustee, failure of the debtor to file,
within fifteen days, or such additional time as the court may allow, after the
filing of the petition commencing such case, the information required by
paragraph (1) of section 521; or
(10) only on request of the United States trustee, failure to timely file the
information required by paragraph (2) of section 521.
(d) Except as provided in subsection (e) of this section, at any time before the
confirmation of a plan under section 1325 of this title, on request of a party
in interest or
the United States trustee and after notice and a hearing, the court may convert
a case under this chapter to a case under chapter 11 or 12 of this title.
(e) The court may not convert a case under this chapter to a case under chapter
7, 11, or 12 of this title if the debtor is a farmer, unless the debtor requests
such conversion.
(f) Notwithstanding any other provision of this section, a case may not be
converted to a case under another chapter of this title unless the debtor may be
a debtor under such chapter.
SUBCHAPTER II -THE PLAN
1321. Filing of plan
The debtor shall file a plan.
1322. Contents of plan
(a) The plan shall-
(1) provide for the submission of all or such portion of future earnings or
other future income of the debtor to the supervision and control of the trustee
as is necessary for the execution of the plan;
(2) provide for the full payment, in deferred cash payments, of all claims
entitled to priority under section 507 of this title, unless the holder of a
particular claim agrees to a different treatment of such claim; and
(3) if the plan classifies claims, provide the same treatment for each claim
within a particular class.
(b) Subject to subsections (a) and (c) of this section, the plan may-
(1) designate a class or classes of unsecured claims, as provided in section
1122 of this title, but may not discriminate unfairly against any class so
designated; however, such plan may treat claims for a consumer debt of the
debtor if an individual is liable on such consumer debt with the debtor
differently than other unsecured claims;
(2) modify the rights of holders of secured claims, other than a claim secured
only by a security interest in real property that is the debtor's principal
residence, or of holders of unsecured claims, or leave unaffected the rights of
holders of any class of claims;
(3) provide for the curing or waiving of any default;
(4) provide for payments on any unsecured claim to be made concurrently with
payments on any secured claim or any other unsecured claim;
(5) notwithstanding paragraph (2) of this subsection, provide for the curing of
any default within a reasonable time and maintenance of payments while the case
is pending on any unsecured claim or secured claim on which the last payment is
due after the date on which the final payment under the plan is due;
(6) provide for the payment of all or any part of any claim allowed under
section 1305 of this title;
(7) subject to section 365 of this title, provide for the assumption, rejection,
or assignment of any executory contract or unexpired lease of the debtor not
previously rejected under such section;
(8) provide for the payment of all or part of a claim against the debtor from
property of the estate or property of the debtor;
(9) provide for the vesting of property of the estate, on confirmation of the
plan or at a later time, in the debtor or in any other entity; and
(10) include any other appropriate provision not inconsistent with this title.
(c) Notwithstanding subsection (b)(2) and applicable nonbankruptcy law-
(1) a default with respect to, or that gave rise to, a lien on the debtor's
principal residence may be cured under paragraph (3) or (5) of subsection (b)
until such residence is sold at a foreclosure sale that is conducted in
accordance with applicable nonbankruptcy law; and
(2) in a case in which the last payment on the original payment schedule for a
claim secured only by a security interest in real property that is the debtor's
principal residence is due before the date on which the final payment under the
plan is due, the plan may provide for the payment of the claim as modified
pursuant to section 1325(a)(5) of this title.
(d) The plan may not provide for payments over a period that is longer than
three years, unless the court, for cause, approves a longer period, but the
court may not approve a period that is longer than five years.
(e) Notwithstanding subsection (b)(2) of this section and sections 506(b) and
1325(a)(5) of this title, if it is proposed in a plan to cure a default, the
amount necessary to cure the default, shall be determined in accordance with the
underlying agreement and applicable nonbankruptcy law.
1323. Modification of plan before confirmation
(a) The debtor may modify the plan at any time before confirmation, but may not
modify the plan so that the plan as modified fails to meet the requirements of
section 1322 of this title.
(b) After the debtor files a modification under this section, the plan as
modified becomes the plan.
(c) Any holder of a secured claim that has accepted or rejected the plan is
deemed to have accepted or rejected, as the case may be, the plan as modified,
unless the modification provides for a change in the rights of such holder from
what such rights were under the plan before modification, and such holder
changes such holder's previous acceptance or rejection.
1324. Confirmation hearing
After notice, the court shall hold a hearing on confirmation of the plan. A
party in interest may object to confirmation of the plan.
1325. Confirmation of plan
(a) Except as provided in subsection (b), the court shall confirm a plan if-
(1) the plan complies with the provisions of this chapter and with the other
applicable provisions of this title;
(2) any fee, charge, or amount required under chapter 123 of title 28, or by the
plan, to be paid before confirmation, has been paid;
(3) the plan has been proposed in good faith and not by any means forbidden by
law;
(4) the value, as of the effective date of the plan, of property to be
distributed under the plan on account of each allowed unsecured claim is not
less than the amount that would be paid on such claim if the estate of the
debtor were liquidated under chapter 7 of this title on such date;
(5) with respect to each allowed secured claim provided for by the plan-
(A) the holder of such claim has accepted the plan;
(B) (i) the plan provides that the holder of such claim retain the lien securing
such claim; and
(ii) the value, as of the effective date of the plan, of property to be
distributed under the plan on account of such claim is not less than the allowed
amount of such claim; or
(C) the debtor surrenders the property securing such claim to such holder; and
(6) the debtor will be able to make all payments under the plan and to comply
with the plan.
(b) (1) If the trustee or the holder of an allowed unsecured claim objects to
the confirmation of the plan, then the court may not approve the plan unless, as
of the effective date of the plan-
(A) the value of the property to be distributed under the plan on account of
such claim is not less than the amount of such claim; or
(B) the plan provides that all of the debtor's projected disposable income to be
received in the three-year period beginning on the date that the first payment
is due under the plan will be applied to make payments under the plan.
(2) For purposes of this subsection, "disposable income" means income which is
received by the debtor and which is not reasonably necessary to be expended-
(A) for the maintenance or support of the debtor or a dependent of the debtor,
including charitable contributions (that meet the definition of "charitable
contribution" under section 548(d)(3)) to a qualified religious or charitable
entity or organization (as that term is defined in section 548(d)(4)) in an
amount not to exceed 15 percent of the gross income of the debtor for the year
in which the contributions are made; and
(B) if the debtor is engaged in business, for the payment of expenditures
necessary for the continuation, preservation, and operation of such business.
(c) After confirmation of a plan, the court may order any entity from whom the
debtor receives income to pay all or any part of such income to the trustee.
1326. Payments
(a) (1) Unless the court orders otherwise, the debtor shall commence making the
payments proposed by a plan within 30 days after the plan is filed.
(2) A payment made under this subsection shall be retained by the trustee until
confirmation or denial of confirmation of a plan. If a plan is confirmed, the
trustee shall distribute any such payment in accordance with the plan as soon as
practicable. If a plan is not confirmed, the trustee shall return any such
payment to the debtor, after deducting any unpaid claim allowed under section
503(b) of this title.
(b) Before or at the time of each payment to creditors under the plan, there
shall be paid-
(1) any unpaid claim of the kind specified in section 507(a)(1) of this title;
and
(2) if a standing trustee appointed under section 586(b) of title 28 is serving
in the case, the percentage fee fixed for such standing trustee under section
586(e)(1)(B) of title 28.
(c) Except as otherwise provided in the plan or in the order confirming the
plan, the trustee shall make payments to creditors under the plan.
1327. Effect of confirmation
(a) The provisions of a confirmed plan bind the debtor and each creditor,
whether or not the claim of such creditor is provid