BANKRUPTCY CODE - CHAPTER 1

Section 101(2) defines "affiliate.". The House amendment contains a provision that is a compromise between the definition in the House-passed version of H.R. 8200 and the Senate amendment in the nature of a substitute to H.R. 8200. Subparagraphs (A) and (B) are derived from the Senate amendment and subparagraph (D) is taken from the House bill, while subparagraph (C) represents a compromise, taking the House position with respect to a person whose business is operated under a lease or an operating agreement by the debtor and with respect to a person substantially all of whose property is operated under an operating agreement by the debtor and with respect to a person substantially all of whose property is operated under an operating agreement by the debtor and the Senate position on leased property. Thus, the definition of "affiliate" excludes persons substantially all of whose property is operated under a lease agreement by a debtor, such as a small company which owns equipment all of which is leased to a larger nonrelated company.

Section 101(4)(B) represents a modification of the House-passed bill to include the definition of "claim" a right to an equitable remedy for breach of performance if such breach gives rise to a right to payment. This is intended to cause the liquidation or estimation of contingent rights of payment for which there may be an alternative equitable remedy with the result that the equitable remedy will be susceptible to being discharged in bankruptcy. For example, in some States, a judgment for specific performance may be satisfied by an alternative right to payment, in the event performance is refused; in that event, the creditor entitled to specific performance would have a "claim" for purposes of a proceeding under title 11.

On the other hand, rights to an equitable remedy for a breach of performance with respect to which such breach does not give rise to a right to payment are not "claims" and would therefore not be susceptible to discharge in bankruptcy.

In a case under chapter 9 to title 11, "claim" does not include a right to payment under an industrial development bond issued by a municipality as a matter of convenience for a third party.

Municipalities are authorized, under section 103(c) of the Internal Revenue Code of 1954, as amended [section 103(c) of Title 26, Internal Revenue Code], to issue tax-exempt industrial development revenue bonds to provide for the financing of certain projects for privately owned companies. The bonds are sold on the basis of the credit of the company on whose behalf they are issued, and the principal, interest, and premium, if any, are payable solely from payments made by the company to the trustee under the bond indenture and do not constitute claims on the tax revenues or other funds of the issuing municipalities. The municipality merely acts as the vehicle to enable the bonds to be issued on a tax-exempt basis. claims that arise by virtue of these bonds are not among the claims defined by this paragraph and amounts owed by private companies to the holders of industrial development revenue bonds are not to be included among the assets of the municipality that would be affected by the plan.

Section 101(6) defines "commodity broker" as provided by the Senate amendment in order to indicate that a commodity broker exists whether or not there is community property in the estate as of the commencement of the case.

Section 101(7) of the House amendment contains a definition of consumer debt identical to the definition in the House bill and Senate amendment. A consumer debt does not include a debt to any extent the debt is secured by real property.

Section 101(9) of the Senate amendment contained a definition of "court." The House amendment deletes the provision as unnecessary in light of the pervasive jurisdiction of a bankruptcy court under all chapters of title 11 as indicated in title II of the House amendment to H.R. 8200.

Section 101(11) defines "debt" to mean liability on a claim, as was contained in the House-passed version of H.R. 8200. The Senate amendment contained language indicating that "debt" does not include a policy loan made by a life insurance company to the debtor. That language is deleted in the House amendment as unnecessary since a life insurance company clearly has no right to have a policy loan repaid by the debtor, although such company does have a right of offset with respect to such policy loan. Clearly, then, a "debt" does not include a policy loan made by a life insurance company. Inclusion of the language contained in the Senate amendment would have required elaboration of other legal relationships not arising by a liability on a claim. Further the language would have required clarification that interest on a policy loan made by a life insurance company is a debt, and that the insurance company does have right to payment to that interest.

Section 101(14) adopts the definition of "entity" contained in the Senate- passed version of H.R. 8200. Since the Senate amendment to H.R. 8200 deleted the U.S. trustee, a corresponding definitional change is made in chapter 15 of the House amendment for U.S. trustees under the pilot program. Adoption by the House amendment of a pilot program for U.S. trustees under chapter 15 requires insertion of "United States trustee" in many sections. Several provisions in chapter 15 of the House amendment that relate to the U.S. trustee were not contained in the Senate amendment in the nature of a substitute.

Section 101(17) defines "farmer" as in the Senate amendment with an income limitation percentage of 80 percent instead of 75 percent.

Section 101(18) contains a new definition of "farming operation" derived from present law and the definition of "farmer" in the Senate amendment. This definition gives a broad construction to the term "farming operation".

Section 101(20) contains a definition of foreign representative. It clarifies the House bill and Senate amendment by indicating that a foreign representative must be duly selected in a foreign proceeding.

Section 101(35) defines "security" as contained in the Senate amendment. H.R. 8200 as adopted by the House excluded certain commercial notes from the definition of "security", and that exclusion is deleted.

Section 101(40) defines "transfer" as in the Senate amendment. The definition contained in H.R. 8200 as passed by the House included "setoff" in the definition of "transfer". Inclusion of "setoff" is deleted. The effect is that a "setoff" is not subject to being set aside as a preferential "transfer" but will be subject to special rules.

1986 Acts (Pub. L. 99-554). House Report No. 99-764 and House Conference Report No. 99-958.

Paragraph (1) defines "accountant" as an accountant authorized under applicable law to practice accounting. The term includes a professional accounting association, corporation, or partnership if applicable law authorizes such a unit to practice accounting.

Paragraph (2) defines "affiliate." An affiliate is an entity with a close relationship to the debtor. It includes a 20 percent parent or subsidiary of the debtor, whether a corporate, partnership, individual, or estate parent.

The use of "directly or indirectly" in subparagraphs (A) and (B) is intended to cover situations in which there is an opportunity to control, and where the existence of that opportunity operates as indirect control.

"Affiliate" is defined primarily for use in the definition of insider, infra, and for use in the chapter 11 reorganization cases. The definition of "affiliate" does not include an entity acting in a fiduciary or agency capacity if the entity does not have the sole discretionary power to vote 20 percent of the voting securities but hold them solely as security and have not exercised the power to vote. This restriction applies to a corporate affiliate under subparagraph (B) of paragraph (2).

Subsections (C) and (D) of paragraph (2) define affiliate also as those persons and entities whose business or substantially all of whose property is operated under a lease or operating agreement by a debtor and whose business or property is more than 50 percent under the control of the debtor.

The definition of "attorney" in paragraph (3) is similar to the definition of accountant.

Paragraph (4) defines "claim." The effect of the definition is a significant departure from present law. Under present law, "claim"; is not defined in straight bankruptcy. Instead it is simply used, along with the concept of provability in section 63 of the Bankruptcy Act [section 103 of former Title 11], to limit the kinds of obligations that are payable in a bankruptcy case. The term is defined in the debtor rehabilitation chapters of present law far more broadly. The definition in paragraph (4) adopts an even broader definition of claim than is found in the present debtor rehabilitation chapters. The definition is any right to payment, whether or not reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured. The definition also includes as a claim an equitable right to performance that does not give rise to a right to payment. By this broadest possible definition and by the use of the term throughout the title 11, especially in subchapter I of chapter 5, the bill contemplates that all legal obligations of the debtor, no matter how remote or contingent, will be able to be dealt with in the bankruptcy case. It permits the broadest possible relief in the bankruptcy court.

Paragraph (5) defines "commodity broker" by reference to various terms used and defined in subchapter IV of chapter 7, Commodity Broker Liquidation. The terms are described in connection with section 761, infra.

Paragraph (6) defines "community claim" for those eight States that have community property laws. The definition is keyed to the liability of the debtor's property for a claim against either the debtor or the debtor's spouse. If the debtor's property is liable for a claim against either, that claim is a commodity broker.

Paragraph (7) defines "consumer debt". The definition is adapted from the definition used in various consumer protection laws. It encompasses only a debt incurred by an individual primarily for a personal, family, or household purpose.

The definition of "corporation" in paragraph (8) is similar to the definition in current law, section 1(8) [section 1(8) of former Title 11]. The term encompasses any association having the power or privilege that a private corporation, but not an individual or partnership, has; partnership associations organized under a law that makes only the capital subscribed responsible for the debts of the partnership; joint-stock company; unincorporated company or association; and business trust. "Unincorporated association" is intended specifically to include a labor union, as well as other bodies that come under that phrase as used under current law. The exclusion of limited partnerships is explicit, and not left to the case law.

Paragraph (9) defines "court" as the bankruptcy judge in the district in which the case is pending except in municipal adjustment and railroad reorganization cases, where "court" means the Federal district judge.

Paragraph (10) defines "creditor" to include holders of prepetition claims against the debtor. However, it also encompasses certain holders of claims that are deemed to arise before the date of the filing of the petition, such as those injured by the rejection of an executory contract or unexpired lease, certain investment tax credit recapture claim holders, "involuntary gap" creditors, and certain holders of the right of setoff. The term also includes the holder of a prepetition commodity broker. A guarantor of or surety for a claim against the debtor is also a creditor, because he holds a contingent claim against the debtor that becomes fixed when he pays the creditor whose claim he has guaranteed or insured.

Paragraph (11) defines "custodian." There is no similar definition in current law. It is defined to facilitate drafting, and means a prepetition liquidator of the debtor's property, such as an assignee for the benefit of creditors, a receiver of the debtor's property, or administrator of the debtor's property. The definition of custodian to include a receiver or trustee is descriptive, and not meant to be limited to court officers with those titles. The definition is intended to include other officers of the court if their functions are substantially similar to those of a receiver or trustee.

"Debt" is defined in paragraph (12) as a liability on a claim. The terms "debt" and "claim" are coextensive: a creditor has a "claim" against the debtor; the debtor owes a "debt" to the creditor. This definition of "debt" and the definition of "claim" on which it is based, proposed 11 U.S.C. 101(4), does not include a transaction such as a policy loan on an insurance policy. Under that kind of transaction, the debtor is not liable to the insurance company for repayment; the amount owed is merely available to the company for setoff against any benefits that become payable under the policy. As such, the loan is not a claim (it is not a right to payment) that the company can assert against the estate; nor is the debtor's obligation a debt (a liability on a claim) that will be discharged under proposed 11 U.S.C. 523 or 524.

Paragraph (13) defines "debtor." Debtor means person or municipality concerning which a case under title II [probably means 11] has been commenced. This is a change in terminology from present law, which identifies the person by or against whom a petition is filed in a straight bankruptcy liquidation case as the "bankrupt", and a person or municipality that is proceeding under a debtor rehabilitation chapter (chapters VIII through XIII of the Bankruptcy Act) [chapters 8 through 13 of former Title 11] as a "debtor." The term "debtor" is used for both kinds of cases in this bill, for ease of reference in chapters 1, 3, and 5 (which apply to straight bankruptcy and reorganization cases).

Paragraph (14) defines "disinterested person." The definition is adapted from section 158 of chapter X of current law [section 558 of former Title 11], though it is expanded and modified in some respects. A person is a disinterested person if the person is not a creditor, equity security holder, or insider; is not and was not an investment banker of the debtor for any outstanding security of the debtor (the change from underwriter in current law to investment banker is to make the term more descriptive and to avoid conflict with the definition of underwriter in section 2(11) of the Securities Act of 1933 (15 U.S.C. 77b(11) ) [15 U.S.C. § 77(b)(11)]; has not been an investment banker for a security of the debtor within 3 years before the date of the filing of the petition (the change from five years to three years here conforms the definition with the statute of limitations in the Securities Act of 1933) [15 U.S.C. § 77n], or an attorney for such an investment banker; is not an insider of the debtor or of such an investment banker; and does not have an interest materially adverse to the estate.

"Entity" is defined, for convenience, in paragraph (15), to include person, estate, trust, and governmental unit. It is the most inclusive of the various defined terms relating to bodies or units.

Paragraph (16) defines "equity security." The term includes a share or stock in a corporation, a limited partner's interest in a limited partnership, and a warrant or right to subscribe to an equity security. The term does not include a security, such as a convertible debenture, that is convertible into equity security, but has not been converted.

Paragraph (17) defines "equity security holder" for convenience as the holder of an equity securing of the debtor.

Paragraph (18) defines "farmer". It encompasses only those persons for whom farming operations contribute 75 percent or more of their total income.

Paragraphs (19) and (20) define "foreign proceeding" and "foreign representative". A foreign proceeding is a proceeding in another country in which the debtor has some substantial connection for the purpose of liquidating the estate of the debtor or the purpose of financial rehabilitation of the debtor. A foreign representative is the representative of the estate in a foreign proceeding, such as a trustee or administrator.

Paragraph (21) defines "governmental unit" in the broadest sense. The definition encompasses the United States, a State, Commonwealth, District, Territory, municipality, or foreign state, and a department, agency, or instrumentality of any of those entities. "Department, agency, or instrumentality" does not include an entity that owes its existence to State action, such as the granting of a charter or a license but that has no other connection with a State or local government or the Federal Government. The relationship must be an active one in which the department, agency, or instrumentality is actually carrying out some governmental function.

Paragraph (22) defines "indenture." It is similar to the definition of indenture in the Trust Indenture Act of 1939 [15 U.S.C. § 77ccc(7)]. An indenture is the instrument under which securities, either debt or equity, of the debtor are outstanding.

Paragraph (24) defines "individual with regular income." The effect of this definition, and of its use in section 109(e), is to expand substantially the kinds of individuals that are eligible for relief under chapter 13, Adjustment of Debts of an Individual with Regular Income. Chapter XIII [chapter 13 of former Title 11] is now available only for wage earners. The definition encompasses all individuals with incomes that are sufficiently stable and regular to enable them to make payments under a chapter 13 plan. Thus, individuals on welfare, social security, fixed pension incomes, or who live on investment incomes, will be able to work out repayment plans with their creditors rather than being forced into straight bankruptcy. Also, self- employed individuals will be eligible to use chapter 13 if they have regular incomes.

However, the definition excludes certain stockbrokers and commodity brokers, in order to prohibit them from proceeding under chapter 13 and avoiding the customer protection provisions of chapter 7.

"Insider", defined in paragraph (25), is a new term. An insider is one who has a sufficiently close relationship with the debtor that his conduct is made subject to closer scrutiny than those dealing at arms length with the debtor. If the debtor is an individual, then a relative of the debtor, a partnership in which the debtor is a general partner, a general partner of the debtor, and a corporation controlled by the debtor are all insiders. If the debtor is a corporation, then a controlling person, a relative of a controlling person, a partnership in which the debtor is a general partner, and a general partner of the debtor are all insiders. If the debtor is a partnership, then a general partner of or in the debtor, a relative of a general partner in the debtor, and a person in control are all insiders. If the debtor is a municipality, then an elected official of the debtor is an insider. In addition, affiliates of the debtor and managing agents are insiders.

The definition of "insolvent" in paragraph (26) is adopted from section 1(19) of current law [section 1(19) of former Title 11]. An entity is insolvent if its debts are greater than its assets, at a fair valuation, exclusive of property exempted or fraudulently transferred. It is the traditional bankruptcy balance sheet test of insolvency. For a partnership, the definition is modified to account for the liability of a gener"tner for the partnership's debts. The difference in this definition from that in current law is in the exclusion of exempt property for all purposes in the definition of insolvent.

Paragraph (27) defines "judicial lien." It is one of three kinds of liens defined in this section. A judicial lien is a lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding.

Paragraph (28) defines "lien." The definition is new and is very broad. A lien is defined as a charge against or interest in property to secure payment of a debt or performance of an obligation. It includes inchoate liens. In general, the concept of lien is divided into three kinds of liens: judicial liens, security interests, and statutory liens. Those three categories are mutually exclusive and are exhaustive except for certain common law liens.

Paragraph (29) defines "municipality." The definition is adapted from the terms used in the chapter IX (municipal bankruptcy) [chapter 9 of former Title 11] amendment to the Bankruptcy Act enacted in 1976 (Pub. L. 94-260). That amendment spoke in terms of "political subdivision or public agency or instrumentality of a State". Bankruptcy Act sec. 84 [section 404 of former Title 11]. The term municipality is defined by those three terms for convenience. It does not include the District of Columbia or any territories of the United States.

"Person" is defined in paragraph (30). The definition is a change in wording, but not in substance, from the definition in section 1(23) of the Bankruptcy Act [section 1(23) of former Title 11]. The definition is also similar to the one contained in 1 U.S.C. sec. 1, but is repeated here for convenience and ease of reference. Person includes individual partnership, and corporation. The exclusion of governmental units is made explicit in order to avoid any confusion that may arise if, for example, a municipality is incorporated and thus is legally a corporation as well as governmental unit. The definition does not include an estate or a trust, which are included only in the definition of "entity" in proposed 11 U.S.C. 101(14).

"Petition" is defined for convenience in paragraph (31). Petition is a petition under section 301, 302, 303, or 304 of the bankruptcy code—that is, a petition that commences a case under title 11.

Paragraph (32) defines purchaser as a transferee of a voluntary transfer, such as a sale or gift, and includes an immediate or mediate transferee of a purchaser.

The definition of "railroad" in paragraph (33) is derived from section 77 of the Bankruptcy Act [section 205 of former Title 11]. A railroad is a common carrier by railroad engaged in the transportation of individuals or property, or an owner of trackage facilities leased by such a common carrier. The effect of the definition and the use of the term in section 109(d) is to eliminate the limitation now found in section 77 of the Bankruptcy Act that only railroads engaged in interstate commerce may proceed under the railroad reorganization provisions. The limitation may have been inserted because of a doubt that the commerce power could not reach intrastate railroads. Be that as it may, this bill is enacted under the bankruptcy power.

Paragraph (34) defines "relative" as an individual related by affinity or consanguinity within the third degree as determined by the common law, and includes individuals in a step or adoptive relationship. The definition is similar to current law, but adds the latter phrase. This definition should be applied as of the time when the transaction that it concerns took place. Thus, a former spouse is not a relative, but if, for example, for purposes of the preference section, proposed 11 U.S.C. 547(b)(4)(B), the transferee was a spouse of the debtor at the time of the transfer sought to be avoided, then the transferee would be relative and subject to the insider rules, even if the transferee was no longer married to the debtor at the time of the commencement of the case or at the time of the commencement of the preference recovery proceeding.

Paragraph (35) defines "security." The definition is new and is modeled on the most recent draft of the American Law Institute's proposed securities code, with some exceptions. The interest of a limited partner in a limited partnership is included in order to make sure that everything that is defined as an equity security is also a "security." The definition, as with the definition of "entity", "insider", and "person", is open-ended because the term is not susceptible of precise specification. Thus the courts will be able to use the characterization provided in this definition to treat with new kinds of documents on a flexible basis.

Paragraphs (36) and (37) defined "security agreement" and "security interest." A security interest is one of the kinds of liens. It is a lien created by an agreement. Security agreement is defined as the agreement creating the security interest. Though these terms are similar to the same terms in the Uniform Commercial Code, article IX, they are broader. For example, the U.C.C. does not cover real property mortgages. Under this definition, such a mortgage is included, as are all other liens created by agreement, even though not covered by the U.C.C. All U.C.C. security interests and security agreements are, however, security interests and security agreements under this definition. Whether a consignment or a lease constitutes a security interest under the bankruptcy code will depend on whether it constitutes a security interest under applicable State or local law.

Paragraph (38) defines another kind of lien, "statutory lien." The definition, derived from current law, states that a statutory lien is a lien arising solely by force of statute on specified circumstances or conditions and includes a lien of distress for rent (whether statutory, common law, or otherwise). The definition excludes judicial liens and security interests, whether or not they are provided for or are dependent on a statute, and whether or not they are made fully effective by statute. A statutory lien is only one that arises automatically, and is not based on an agreement to give a lien or on judicial action. Mechanics', materialmen's, and warehousemen's liens are examples. Tax liens are also included in the definition of statutory lien.

"Stockbroker" is defined in paragraph (39) as a person engaged in the business of effecting transactions in securities for the account of others or with members of the general public from or for such person's own account, if the person has a customer, as defined. Thus, the definition, derived from a combination of the definitions of "broker" and "dealer" in the Securities Exchange Act of 1934 [15 U.S.C. § 78c], encompasses both brokers and dealers. The definition is used in section 109 and in subchapter III of chapter 7, Stockholder Liquidation. The term does not encompass an employee who acts for a principal that "effects" transaction or deals with the public, because such an employee will not have a "customer".

Paragraph (40) defines "transfer." It is derived and adapted, with stylistic changes, from section 1(30) of the Bankruptcy Act [section 1(30) of former Title 11]. A transfer is a disposition of an interest in property. The definition of transfer is as broad as possible. Many of the potentially limiting words in current law are deleted, and the language is simplified. Under this definition, any transfer of an interest in property is a transfer, including a transfer of possession, custody, or control even if there is no transfer of title, because possession, custody, and control are interests in property. A deposit in a bank account or similar account is a transfer.

Par. (22). Pub. L. 106-554, § 1(a)(5) [title I, § 112(c)(3)], rewrote par. (22), which formerly read: " 'financial institution' means a person that is a commercial or savings bank, industrial savings bank, savings and loan association, or trust company and, when any such person is acting as agent or custodian for a customer in connection with a securities contract, as defined in section 741 of this title, such customer;".

Par. (54A). Pub. L. 106-554, § 1(a)(5) [title I, § 112(c)(4)], added par. (54A).

Par. (3). Pub. L. 103–394, § 501(a)(1), redesignated par. (3) as (21B) and inserted it after par. (21A).

Par. (6). Pub. L. 103–394, § 501(b)(1)(A), substituted "section 761" for “section 761 (9)” after “customer, as defined in”.

Par. (21B). Pub. L. 103-394, § 501(a)(1), redesignated former par. (3) as (21B).

Par. (22). Pub. L. 103-394, § 501(b)(1)(B), substituted "741" for "741(7)".

Par. (33)(A). Pub. L. 103-394, § 501(d)(1)(A)(i), struck out "(12 U.S.C. 1813(u))" following "section 3(u) of the Federal Deposit Insurance Act".

Par. (33)(B). Pub. L. 103-394, § 501(d)(1)(A)(ii), struck out "(12 U.S.C. 1786(r))" following "Federal Credit Union Act".

Par. (34). Pub. L. 103-394, § 501(d)(1)(B), struck out "(12 U.S.C. 1752(7))" following "Federal Credit Union Act".

Par. (35). Pub. L. 103–394, § 501(b)(1)(C), (d)(1)(C), struck out “(12 U.S.C. 1813 (c)(2))” after “Act” in subpar. (A) and substituted “paragraphs (21B)” for “paragraphs (3)” in subpar. (B). Par. (35). Pub. L. 103–394, § 501(b)(1)(C), (d)(1)(C), struck out “(12 U.S.C. 1813 (c)(2))” after “Act” in subpar. (A) and substituted “paragraphs (21B)” for “paragraphs (3)” in subpar. (B).

Par. (39). Pub. L. 103-394, § 501(a)(2), redesignated former par. (39) as (51A).

Par. (41). Pub. L. 103-394, § 106, added par. (41) and struck out former par. (41) which read as follows: " 'person' includes individual, partnership, and corporation, but does not include governmental unit, Provided, however, That any governmental unit that acquires an asset from a person as a result of operation of a loan guarantee agreement, or as receiver or liquidating agent of a person, will be considered a person for purposes of section 1102 of this title."

Par. (48). Pub. L. 103-394, § 501(d)(1)(D), struck out "(15 U.S.C. 78q- 1)" following "Securities Exchange Act of 1934", and "(15 U.S.C. 78c(12))" following "section 3(a)(12) of such Act".

Par. (49)(A)(xii). Pub. L. 103-394, § 501(d)(1)(E)(i), struck out "(15 U.S.C. 77a et seq.)" following "Securities Act of 1933", and "(15 U.S.C. 77c(b))" following "section 3(b) of such Act".

Par. (49)(B). Pub. L. 103–394, § 501(b)(1)(D), (d)(1)(E)(ii), substituted “section 761” for “section 761 (13)” in cl. (ii) and struck out “(15 U.S.C. 77c (b))” after “Act of 1933” in cl. (vi).

Par. (51A). Pub. L. 103-394, § 501(a)(2), redesignated former par. (39) as (51A)

Par. (53A). Pub. L. 103-394, § 501(a)(3), redesignated former par. (54), defining "stockbroker", as (53A) and substituted “section 741” for “section 741 (2)” in subpar. (A).

Par. (53B). Pub. L. 103–394, § 501(a)(3), redesignated par. (55) defining "swap agreement", as (53B).

Par. (53C). Pub. L. 103–394, § 501(a)(3), redesignated par. (56) defining ""swap participant"", as (53C).

Par. (53D). Pub. L. 103–394, § 501(a)(3), (d)(1)(F), redesignated par. (57) defining ""timeshare plan", as (53D) and substituted semicolon for period at end.

Par. (54). Pub. L. 103–394, § 501(a)(3), redesignated par. (54) defining "stockbroker", as (53A).

Par. (55). Pub. L. 103–394, § 501(a)(3), redesignated par. (55) defining "swap agreement", as (53B).

Pub. L. 103–394, § 215, inserted “spot foreign exchange agreement,” after “forward foreign exchange agreement,”.

Par. (56). Pub. L. 103–394, § 501(a)(3), redesignated par. (56) defining "swap participant", as (53C).

Pub. L. 103–394, § 501(a)(4), redesignated par. (56) defining “intellectual property” as (35A) and inserted it after par. (35).

Par. (56A). Pub. L. 103–394, § 208(a)(2), added par. (56A) and inserted it after par. defining "swap participant".

Par. (57). Pub. L. 103–394, § 501(a)(3), redesignated par. (57) defining ""timeshare plan", as (53D).

Pub. L. 103–394, § 501(a)(5), redesignated par. (57) defining "mask work" as (39) and inserted it after par. (38).

Par. (3). Pub. L. 101-647, § 2522(e)(4), added par. (3). Former par. (3) redesignated (4).

Pars. (4) to (23). Pub. L. 101-647, § 2522(e)(3), redesignated pars. (3) to (22) as (4) to (23). Former par. (23) redesignated (24).

Par. (24). Pub. L. 101-647, § 2522(e)(3), redesignated par. (23) as (24). Former par. (24) redesignated (25).

Pub. L. 101–311, § 201(1), inserted “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,” after “transfer of commodity,” and “, 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” after “entered into”.

Par. (25). Pub. L. 101-647, § 2522(e)(3), redesignated par. (24) as (25). Former par. (25) redesignated (26).

Pub. L. 101–311, § 201(2), substituted “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” for “commodities”.

Par. (26) to (32). Pub. L. 101–647, § 2522(e)(3), redesignated pars. (25) to (31) as (26) to (32), respectively. Former par. (32) redesignated (36).

Par. (33). Pub. L. 101-647, § 2522(e)(2), added par. (33). Former par. (33) redesignated (37).

Par. (34). Pub. L. 101-647, § 2522(e)(2), added par. (34). Former par. (34) redesignated (38).

Pub. L. 101-311, § 201(4), added par. (34). Former par. (34) redesignated (36).

Par. (35). Pub. L. 101-647, § 2522(e)(2), added par. (35). Former par. (35) redesignated (39).

Pub. L. 101-311, § 201(4), added par. (35). Former par. (35) redesignated (37).

Par. (36). Pub. L. 101-647, § 2522(e)(1), redesignated par. (32) as (36). Former par. (36) redesignated (40).

Pub. L. 101-311, § 201(3), redesignated par. (34) as (36). Former par. (36) redesignated (38).

Pars. (37) to (48). Pub. L. 101-647, § 2522(e)(1), redesignated pars. (33) to (44) as (37) to (48), respectively. Former pars. (37) to (48) redesignated (41) to (52), respectively.

Pub. L. 101-311, § 201(3), redesignated former pars. (35) through (48) as (37) through (50), respectively. Former pars. (37) to (48) redesignated (39) to (50), respectively.

Pars. (49), (50). Pub. L. 101-647, § 2522(e)(1), redesignated former pars. (45) and (46) as (49) and (50), respectively. Former pars. (49) and (50) redesignated (53) and (54), both respectively defining "stockbroker".

Pub. L. 101-311, § 201(3), redesignated pars. (47) and (48) as (49) and (50), respectively. Former pars. (49) and (50) redesignated as (51) and (52), respectively.

Pub. L. 101-311, § 101, added pars. (49) and (50). Former pars. (49) and (50) redesignated as (51) and (52), respectively.

Par. (51). Pub. L. 101-647, § 2522(e)(1), redesignated par. (47) as (51). Former par. (51) redesignated as (55) defining "swap agreement".

Pub. L. 101-311, § 201(3), redesignated par. (49) as (51). Former par. (51) redesignated as (53).

Pub. L. 101-311, § 101(1), redesignated par. (49) as (51). Former par. (51) redesignated as (53).

Par. (52). Pub. L. 101-647, § 2522(e)(1), redesignated par. (48) as (52). Former par. (52) redesignated as (56) defining "swap participant".

Pub. L. 101-311, § 201(3), redesignated par. (50) as (52). Former par. (52) redesignated as (54) defining "transfer".

Pub. L. 101-311, § 101(1), redesignated par. (50) as (52). Former par. (52) redesignated as (54).

Par. (53). Pub. L. 101-647, § 2522(e)(1), redesignated par. (49) as (53). Former par. (53) redesignated as (57) defining "timeshare plan".

Pub. L. 101-311, § 201(3), redesignated par. (51) as (53). Former par. (53) redesignated as (55) defining "United States".

Pub. L. 101-311, § 101(1), redesignated par. (51) as (53). Former par. (53) redesignated as (55).

Par. (54). Pub. L. 101-647, § 2522(e)(1), redesignated par. (50) as (54) defining "stockbroker".

Pub. L. 101-311, § 201(3), redesignated par. (52) as (54) defining "transfer". Former par. (54) redesignated as (56) defining "intellectual property").

Par. (55). Pub. L. 101-647, § 2522(e)(1), redesignated par. (51) as (55) defining "swap agreement".

Pub. L. 101-311, § 201(3), redesignated par. (53) as (55). Former par. (55) redesignated as (57) defining "mask work".

Par. (56). Pub. L. 101-647, § 2522(e)(1), redesignated par. (52) as (56) defining "swap participant".

Pub. L. 101-311, § 201(3), redesignated par. (54) as (56) defining "intellectual property".

Par. (57). Pub. L. 101-647, § 2522(e)(1), redesignated par. (53) as (57) defining "timeshare plan".

Pub. L. 101-311, § 201(3), redesignated par. (55) as (57) defining "mask work".

Par. (31). Pub. L. 100-597, § 1, inserted in subpar. (A) "and a municipality" after "partnership" and added subpar. (C).

Par. (17), (18). Pub. L. 99-554, § 251(2), (3), and added pars. (17) and (18) redesignated former pars. (17) and (18) as (19) and (20), respectively.

Par. (19). Pub. L. 99-554, § 251(1), (2), redesignated former par. (17) as (19) and inserted "(except when such term appears in the term 'family farmer')" following "means". Former par. (19) was redesignated (21).

Pars. (20) to (25). Pub. L. 99-554, § 251(2), redesignated former pars. (18) to (23) as (20) to (25), respectively. Former pars. (20) to (25) were redesignated as (22) to (27), respectively.

Par. (26). Pub. L. 99-554, § 201(2), substituted "of the United States (but not a United States trustee while serving as a trustee in a case under this title), a State" for "of the United States, a State".

Pub. L. 99-554, § 251(2), redesignated former par. (24) as (26). Former par. (26) was redesignated (28).

Pars. (27) to (42). Pub. L. 99-554, § 251(2), redesignated former pars. (25) to (40) as (27) to (42), respectively. Former pars. (27) to (42) were redesignated (29) to (44), respectively.

Par. (43). Pub. L. 99-554, § 251(2), redesignated former par. (41) as (43). Former par. (43) was redesignated (45).

Par. (43)(A)(xv). Pub. L. 99-554, § 283(a)(1), substituted "security" for "secuity".

Pars. (44) to (50). Pub. L. 99-554, § 251(2), redesignated former pars. (42) to (48) as (44) to (50), respectively. Former pars. (44) to (49) were redesignated (46) to (51), respectively.

Par. (51). Pub. L. 99-554, § 283(a)(2), substituted "States." for "States;".

Par. (2)(D). Pub. L. 98-353, § 421(a), struck out "or all" after "business".

Par. (8)(B). Pub. L. 98-353, § 421(b), substituted a semicolon for the colon at the end of subpar. (B).

Par. (19). Pub. L. 98-353, § 421(j)(4), added par. (19). Former par. (19) was redesignated as (20).

Pars. (19) to (21). Pub. L. 98–353, § 421(j)(3), (4), added par. (19) and redesignated former pars. (19), (20), and (21) as (20), (21), and (24), respectively

Pars. (22), (23). Pub. L. 98–353, § 421(j)(2), (5), added pars. (22) and (23) and redesignated former pars. (22) and (23) as (25) and (26), respectively.

Pars. (24) to (26). Pub. L. 98–353, § 421(j)(2), redesignated former pars. (21) to (23) as (24) to (26), respectively. Former pars. (24) to (26) redesignated (27) to (29), respectively.

Par. (27). Pub. L. 98–353, § 421(e), (j)(2), redesignated former par. (24) as (27) and substituted "stockbroker"for “stock broker”. Former par. (27) redesignated (30).

Par. (28). Pub. L. 98-353, § 421(j)(2), redesignated former par. (25) as (28). Former par. (28) redesignated (31).

Par. (29). Pub. L. 98-353, § 421(f), (j)(2), redesignated former par. (26) as (29) and, in subpar. (B)(ii), substituted "nonpartnership" and "(A)" for "separate" and "(A)(ii)", respectively, wherever appearing. Former par. (29) was redesignated as (32).

Pars. (30) to (32). Pub. L. 98–353, § 421(j)(2), redesignated former pars. (27) to (29) as (30) to (32), respectively. Former pars. (30) to (32) redesignated (33) to (35), respectively.

Par. (33). Pub. L. 98-353, § 421(g), (j)(2), redesignated former par. (30) as (33) and added proviso relating to consideration of certain governmental units as persons for purposes of section 1102 of this title. Former par. (33) was redesignated as (36).

Par. (34). Pub. L. 98-353, § 421(j)(2), redesignated former par. (31) as (34). Former par. (34) redesignated (37).

Pars. (35), (36). Pub. L. 98-353, § 421(j)(2), redesignated former pars. (32) and (33) as (35) and (36), respectively. Former pars. (35) and (36), as added by Pub. L. 98-353, § 391(2), redesignated (38) and (39), respectively.

Pub. L. 98-353, § 391, added pars. (35) and (36), and redesignated former pars. (35) and (36) as (37) and (38) which were again redesignated as (40) and (41), respectively.

Par. (37). Pub. L. 98-353, § 421(j)(2), redesignated former par. (34) as (37). Former par. (37) redesignated successively as (39) and again as (42).

Par. (38). Pub. L. 98-353, §§ 391(2), 421(j)(2), added par. (35) and redesignated such par. (35) as (38). Former par. (38) redesignated successively as (40) and again as (43).

Par. (39). Pub. L. 98-353, §§ 391(2), 421(j)(2), added par. (36) and redesignated such par. (36) as (39). Former par. (39) redesignated successively as (41) and again as (45).

Par. (40). Pub. L. 98-353, §§ 391(1), 421(j)(2), redesignated successively former par. (35) as (37) and again as (40). Former par. (40) redesignated successively as (42) and again as (46).

Par. (41). Pub. L. 98-353, §§ 391(1), 401(1), 421(h), (j)(2), redesignated successively former par. (36) as (38) and again as (41), and, in subpar. (B)(vi), substituted "certificate of a kind specified in subparagraph (A)(xii)" for "certificate specified in clause (xii) of subparagraph (A)" and substituted "required to be the subject of a registration statement" for "the subject of such registration statement". Former par. (41) redesignated successively as (43), again as (44), and again as (48).

Par. (42). Pub. L. 98-353, §§ 391(1), 421(j)(2), redesignated successively former par. (37) as (39) and again as (42).

Par. (43). Pub. L. 98-353, §§ 391(1), 421(j)(2), redesignated successively former par. (38) as (40) and again as (43).

Pub. L. 98-353, § 401, redesignated former par. (43), originally par. (41), as (44), and added another par. (43) which was redesignated (47).

Par. (44). Pub. L. 98-353, § 421(j)(6), added par. (44). Former par. (44) originally was par. (41) and was redesignated successively as (43), again as (44), and again as (48).

Pars. (45), (46). Pub. L. 98-353, §§ 391(1), 421(j)(1), redesignated successively former pars. (39) and (40) as (41) and (42), and again as (45) and (46), respectively.

Par. (47). Pub. L. 98-353, §§ 401(2), 421(j)(1), added par. (43) and redesignated such par. (43) as (47).

Par. (48). Pub. L. 98-353, §§ 391(1), 401(1), 421(i), (j)(1), redesignated successively former par. (41) as (43), again as (44), and again as (48), and substituted "and foreclosure of the debtor's equity of redemption; and" for the period at the end.

Par. (35). Pub. L. 97-222, § 1(a) (2), added par. (35). Former par. (35) was redesignated (36).

Par. (36). Pub. L. 97-222, § 1(a) (1), (b), (c), redesignated par. (35) as (36) and in par. (36) as so redesignated, substituted "is required to be the subject of a registration statement" for "is the subject of a registration statement" in subpar. (A) (xii) and substituted "forward contract" for "forward commodity contract" in subpar. (B) (iii). Former par. (36) was redesignated (37).

Pars. (37) to (39). Pub. L. 97-222, § 1(a)(1), redesignated pars. (36) to (38) as (37) to (39), respectively. Former pars. (37) to (39) were redesignated (38) to (40), respectively.

Pars. (40), (41). Pub. L. 97–222, § 1(a)(1), (d), redesignated former par. (39) as (40) and restructured its provisions by dividing the former introductory provisions into subpars. (A) and (B) and by redesignating former subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar. (B). Former par. (40) redesignated (41).

2005 Acts. Pub. L. 109-8, Title XV, § 1501, Apr. 20, 2005, provided that, except as otherwise specifically provided, all amendments, except for amendments provided in Pub. L. 109-8, Title III, §§ 308, 322, and 330, are effective 180 days after enactment of the Act on April 20, 2005 (which occurs on October 17, 2005), and are inapplicable with respect to cases commenced under Title 11 before the effective date.

"(a) Effective date.—Except as provided in subsection (b), this Act [see Short Title of 1994 Amendments set out under this section] shall take effect on the date of the enactment of this Act [Oct. 22, 1994].

(1) Except as provided in paragraph (2), the amendments made by this Act shall not apply with respect to cases commenced under title 11 of the United States Code before the date of the enactment of this Act [Oct. 22, 1994].

"(2)(A) Paragraph (1) shall not apply with respect to the amendment made by section 111 [enacting subsecs. (g) and (h) of section 524 of this title and a provision set out as a note under 11 U.S.C. § 524].

"(B) The amendments made by sections 113 and 117 [amending 11 U.S.C. §§ 106 and 330, respectively] shall apply with respect to cases commenced under title 11 of the United States Code before, on, and after the date of the enactment of this Act [Oct. 22, 1994].

"(C) Section 1110 of title 11, United States Code, as amended by section 201 of this Act [11 U.S.C. § 1110], shall apply with respect to any lease, as defined in such section 1110(c) as so amended, entered into in connection with a settlement of any proceeding in any case pending under title 11 of the United States Code on the date of the enactment of this Act [Oct. 22, 1994].

"(D) The amendments made by section 305 [amending 11 U.S.C. §§ 1123, 1222, 1322] shall apply only to agreements entered into after the date of enactment of this Act [Oct. 22, 1994]."

"(1) Except as provided in paragraph (2), the amendments made by this section [amending this section and 11 U.S.C. § 541] shall take effect on the date of the enactment of this Act [Oct. 24, 1992].

"(2) The amendments made by this section [amending this section and 11 U.S.C. § 541] shall not apply with respect to cases commenced under title 11 of the United States Code [this title] before the date of the enactment of this Act [Oct. 24, 1992]."

"(a) Effective date.—Except as provided in subsection (b), this Act and the amendments made by this Act [enacting 11 U.S.C. §§ 927 to 929, amending 11 U.S.C. §§ 101, 109, 901, 902, 922, 926, 943, and renumbering former section 927 as 930 of this title] shall take effect on the date of the enactment of this Act [Nov. 3, 1988].

"(b) Application of amendments.—The amendments made by this Act shall not apply with respect to cases commenced under title 11 of the United States Code before the date of the enactment of this Act [Nov. 3, 1988]."

"(a) Effective date.—Except as provided in subsection (b), this Act and the amendments made by this Act [amending 11 U.S.C. §§ 101 and 365] shall take effect on the date of the enactment of this Act [Oct. 18, 1988].

"(b) Application of amendments.—The amendments made by this Act shall not apply with respect to any case commenced under title 11 of the United States Code before the date of the enactment of this Act [Oct. 18, 1988]."

1986 Acts. Effective date and applicability of amendment by section 201 of Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure.

Amendment by section 251 of Pub. L. 99-554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99-554.

Amendment by section 283 of Pub. L. 99-554 effective 30 days after Oct. 27, 1986, see section 302(a) of Pub. L. 99-554.

1984 Acts. Section 552, formerly section 553 of Title III (§§ 301 to 553) of Pub. L. 98-353, as redesignated by Pub. L. 98-531, §§ 1(2), Oct. 19, 1984, 98 Stat. 2704, eff. July 10, 1984, provided that:

"(a) Except as otherwise provided in this section the amendments made by this title [see Tables for classification] shall become effective to [sic] cases filed 90 days after the date of enactment of this Act [July 10, 1984].

"(b) The amendments made by section 426(b) [amending 11 U.S.C. § 303] shall become effective upon the date of enactment of this Act [July 10, 1984].

"(c) The amendments made by subtitle J [enacting 11 U.S.C. § 1113], shall become effective as provided in section 541(c) [set out as a note under 11 U.S.C. § 1113]."

2005. Amendments. P.L. 109-8, § 1(a), April 20, 2005, 119 Stat. 145, provided that: "This Act may be cited as the 'Bankruptcy Abuse Prevention and Consumer Protection Act of 2005'."

2003 Amendments. Pub. L. 108-73, § 1, Aug. 15, 2003, 117 Stat. 891, provided that: "This Act [enacting provisions set out as a note under 11 U.S.C. § 1201 and amending 11 U.S.C. §§ 1201 to 1208, 1221 to 1231, and provisions set out as a note under 11 U.S.C. § 1201] may be cited as the 'Family Farmer Bankruptcy Relief Act of 2003'."

2002 Amendments. Pub. L. 107-377, § 1, Dec. 19, 2002, 116 Stat. 3115, provided that: "This Act [amending 11 U.S.C. §§ 1201 to 1208, 1221 to 1231 and enacting provisions set out as notes under 11 U.S.C. § 1201] may be cited as the 'Protection of Family Farmers Act of 2002'."

1998 Amendments. Pub. L. 105-183, § 1, June 19, 1998, 112 Stat. 517, provided that: "This Act [amending 11 U.S.C. §§ 544, 546, 548, 707, and 1325 and enacting provisions set out as a note under 11 U.S.C. § 544] may be cited as the 'Religious Liberty and Charitable Donation Protection Act of 1998'."

1990 Amendments. Pub. L. 101-647, Title XXXI, § 3101, Nov. 29, 1990, 104 Stat. 4916, provided that: "This title [amending 11 U.S.C. §§ 523, 1328 and enacting provisions set out as a note under 11 U.S.C. § 523] may be cited as the 'Criminal Victims Protection Act of 1990'."

Pub. L. 101-581, § 1, Nov. 15, 1990, 104 Stat. 2865, provided that: "This Act [amending 11 U.S.C. §§ 523, 1328 and enacting provisions set out as notes under 11 U.S.C. § 523] may be cited as the 'Criminal Victims Protection Act of 1990'."

1988 Amendments. Pub. L. 100-334, § 1, June 16, 1988, 102 Stat. 610, provided that: "This Act [enacting 11 U.S.C. § 1114, amending 11 U.S.C. § 1129, enacting provisions set out as a note under 11 U.S.C. § 1114, and amending and repealing provisions set out as notes under 11 U.S.C. § 1106] may be cited as the 'Retiree Benefits Bankruptcy Protection Act of 1988'."

1986 Amendments. Pub. L. 99-554, § 1, Oct. 27, 1986, 100 Stat. 3088, provided that said Act [enacting 11 U.S.C. §§ 307, 1201 to 1231 and 28 U.S.C. § 589a, amending 11 U.S.C. §§ 101 to 103, 105, 108, 109, 303, 321, 322, 324, 326, 327, 329, 330, 341, 343, 345 to 348, 362 to 365, 502, 503, 521 to 524, 546 to 549, 554, 557, 701, 703 to 707, 724, 726 to 728, 743, 1102, 1104 to 1106, 1112, 1121, 1129, 1163, 1202, 1302, 1306, 1307, 1324 to 1326, Bankruptcy Form No. 1, set out in the Appendix to Title 11, 28 U.S.C. §§ 49, 96, 152, 156, 157, 526, 581, 582, 584 to 587, 604, 1334, 1930, repealing 11 U.S.C. §§ 1201 to 1231, 1501 to 151326, enacting provisions set out as notes under 28 U.S.C. §§ 581, 589, amending provisions set out as a note under 28 U.S.C. § 152, and repealing provisions set out as a note preceding 28 U.S.C. § 581] may be cited as the "Bankruptcy Judges, United States Trustees, and Family Farmer Bankruptcy Act of 1986". See note set out under 28 U.S.C. § 581.

Section 361 of subtitle C (Sec. 361-363) of title III of Pub. L. 98-353 provided that: "This subtitle (amending sections 362, 365, and 541 of this title) may be cited as the 'Leasehold Management Bankruptcy Amendments Act of 1983'."

Section 701 of Pub. L. 103-394 provided that: "If any provision of this Act or amendment made by this Act [see Short Title of 1994 Amendments note set out under this section] or the application of such provision or amendment to any person or circumstance is held to be unconstitutional, the remaining provisions of and amendments made by this Act and the application of such other provisions and amendments to any person or circumstance shall not be affected thereby."

Section 551 of Title III (§§ 301-553) of Pub. L. 98-353 provided that: "If any provision of this title or any amendment made by this title [see Tables for classification], or the application thereof to any person or circumstance is held invalid, the provisions of every other part, and their application shall not be affected thereby."

Section 3 of the Federal Deposit Insurance Act, referred to in pars. (21B)(A), (33)(A), (35)(A), and (54A) is Act Sept. 21, 1950, c. 967, § 2 [3], 64 Stat. 873, which is classified to 12 U.S.C. § 1813.

The Investment Company Act of 1940, referred to in par. (22)(A)(ii), is Act Aug. 22, 1940, c. 686, Title I, 54 Stat. 789, as amended, which is principally classified to subchapter I of chapter 2D of this title, 15 U.S.C. § 80a-1 et seq. For complete classification, see Tables.

Section 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991, referred to in par. (22)(B), is Pub. L. 102-242, Title IV, § 409, as added by Pub. L. 106-554, § 1(a)(5) [Title I, § 112(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763a-391, which is classified as 12 U.S.C. § 4422.

Sections 101(7) and 206(r) of the Federal Credit Union Act, referred to in pars. (33)(B) and (34), are classified to sections 1752(7) and 1786(r), respectively, of Title 12.

Sections 414(d) and 457(b) of the Internal Revenue Code of 1986, referred to in par. (41)(C), are sections 414(d) and 457(b), respectively, of Title 26, Internal Revenue Code.

Sections 3(a)(12) and 17A of the Securities Exchange Act of 1934, referred to in par. (48), are classified to sections 78c (a)(12) and 78q–1, respectively, of Title 15, Commerce and Trade.

The Securities Act of 1933, referred to in par. (49)(A)(xii), is act May 27, 1933, ch. 38, title I, 48 Stat. 74, as amended, which is classified generally to subchapter I (§ 77a et seq.) of chapter 2A of Title 15. Section 3(b) of the Act is classified to section 77c (b) of Title 15. For complete classification of this Act to the Code, see section 77a of Title 15 and Tables.

This section is referred to in sections 362, 546 of this title; title 7 section 6; title 12 sections 1787, 1821; title 15 sections 78eee, 78fff-1; title 28 section 1930; title 33 section 2716; title 42 section 656.

[SIC] So in the original. Should be punctuated with a period at the end. Pub. L. 103–394, § 208(a)(2), Oct. 22, 1994, added par. (56A) and inserted it "after the first paragraph (56)" (the definition of “swap participant,” redesignated as par. (53C) by § 501(a)(3) of the same Act). Therefore, per Pub. L. 103–394, although BC § 101(56A) is out of sequence alphabetically, it is properly located and numerically sequenced after BC § 101(55). •

BAPCPA § 102(k) ([SIC] The original text of the Act contains two paragraphs designated as § 102(k)) • House Report 109-31 •

(c) Rule of Construction.—The amendments made by subsection (a) of this section shall not affect the interpretation of section 109(b) of title 11, United States Code. -

Section 102 specifies various rules of construction but is not exclusive. Other rules of construction that are not set out in title 11 are nevertheless intended to be followed in construing the bankruptcy code. For example, the phrase "on request of a party in interest" or a similar phrase, is used in connection with an action that the court may take in various sections of the Code. The phrase is intended to restrict the court from acting sua sponte. Rules of bankruptcy procedure or court decisions will determine who is a party in interest for the particular purposes of the provision in question, but the court will not be permitted to act on its own.

Although "property" is not construed in this section, it is used consistently throughout the code in its broadest sense, including cash, all interests in property, such as liens, and every kind of consideration including promises to act or forbear to act as in section 548(d).

Section 102(1) expands on a rule of construction contained in H.R. 8200 as passed by the House and in the Senate amendment. The phrase "after notice and a hearing", or a similar phrase, is intended to be construed according to the particular proceeding to mean after such notice as is appropriate in the particular circumstances, and such opportunity, if any, for a hearing as is appropriate in the particular circumstances. If a provision of title 11 authorizes an act to be taken "after notice and a hearing" this means that if appropriate notice is given and no party to whom such notice is sent timely requests a hearing, then the act sought to be taken may be taken without an actual hearing.

In very limited emergency circumstances, there will be insufficient time for a hearing to be commenced before an action must be taken. The action sought to be taken may be taken if authorized by the court at an ex parte hearing of which a record is made in open court. A full hearing after the fact will be available in such an instance.

In some circumstances, such as under section 1128, the bill requires a hearing and the court may act only after a hearing is held. In those circumstances the judge will receive evidence before ruling. In other circumstances, the court may take action "after notice and a hearing," if no party in interest requests a hearing. In that event a court order authorizing the action to be taken is not necessary as the ultimate action taken by the court implies such an authorization.

Section 102(8) is new. It contains a rule of construction indicating that a definition contained in a section in title 11 that refers to another section of title 11 does not, for the purposes of such reference, take the meaning of a term used in the other section. For example, section 522(a)(2) defines "value" for the purposes of section 522. Section 548(d)(2) defines "value" for purposes of section 548. When section 548 is incorporated by reference in section 522, this rule of construction makes clear that the definition of "value" in section 548 governs its meaning in section 522 notwithstanding a different definition of "value" in section 522(a)(2).

1986 Acts (Pub. L. 99-554). House Report No. 99-764 and House Conference Report No. 99-958.

Senate Report No. 95-989. Section 102 provides seven rules of construction. Some are derived from current law; others are derived from 1 U.S.C. 1; a few are new. They apply generally throughout proposed title 11. These are terms that are not appropriate for definition, but that require an explanation.

Paragraph (1) defines the concept of "after notice and a hearing." The concept is central to the bill and to the separation of the administrative and judicial functions of bankruptcy judges. The phrase means after such notice as is appropriate in the particular circumstances (to be prescribed by either the Rules of Bankruptcy Procedure or by the court in individual circumstances that the Rules do not cover. In many cases, the Rules will provide for combined notice of several proceedings), and such opportunity for a hearing as is appropriate in the particular circumstances. Thus, a hearing will not be necessary in every instance. If there is no objection to the proposed action, the action may go ahead without court action. This is a significant change from present law, which requires the affirmative approval of the bankruptcy judge for almost every action. The change will permit the bankruptcy judge to stay removed from the administration of the bankruptcy or reorganization case, and to become involved only when there is a dispute about a proposed action, that is, only when there is an objection. The phrase "such opportunity for a hearing as is appropriate in the particular circumstances" is designed to permit the Rules and the courts to expedite or dispense with hearings when speed is essential. The language "or similar phrase" is intended to cover the few instances in the bill where "after notice and a hearing" is interrupted by another phrase, such as "after notice to the debtor and a hearing."

Paragraph (2) specifies that "claim against the debtor" includes claim against property of the debtor. This paragraph is intended to cover nonrecourse loan agreements where the creditor's only rights are against property of the debtor, and not against the debtor personally. Thus, such an agreement would give rise to a claim that would be treated as a claim against the debtor personally, for the purposes of the bankruptcy code.

Paragraph (3) is a codification of American Surety Co. v. Marotta, 287 U.S. 513 (1933) [53 S.Ct. 260, 77 L.Ed. 466]. It specifies that "includes" and "including" are not limiting.

Paragraph (4) specifies that "may not" is prohibitive and not permissive (such as in "might not").

Paragraph (5) specifies that "or" is not exclusive. Thus, if a party "may do (a) or (b)", then the party may do either or both. The party is not limited to a mutually exclusive choice between the two alternatives.

Paragraph (6) makes clear that "order for relief" means entry of an order for relief. If the court orally orders relief, but the order is not entered until a later time, then any time measurements in the bill are from entry, not from the oral order. In a voluntary case, the entry of the order for relief is the filing of the petition commencing the voluntary case.

Paragraph (7) specifies that the singular includes the plural. The plural, however, generally does not include the singular. The bill uses only the singular, even when the item in question most often is found in plural quantities, in order to avoid the confusion possible if both rules of construction applied. When an item is specified in the plural, the plural is intended.

1986 Acts. Effective date and applicability of amendment by Pub. L. 99-554 dependent upon the judicial district involved, see section 302(d), (e) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure.

1984 Acts. Amendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a), formerly 553(a) of Pub. L. 98-353, set out as a note under section 101 of this title.

1986 Acts (Pub. L. 99-554). House Report No. 99-764 and House Conference Report No. 99-958.

Senate Report No. 95-989. Section 103 prescribes which chapters of the proposed bankruptcy code apply in various cases. All cases, other than cases ancillary to foreign proceedings, are filed under chapter 7, 9, 11, or 13, the operative chapters of the proposed bankruptcy code. The general provisions that apply no matter which chapter a case is filed under are found in chapters 1, 3, and 5. Subsection (a) makes this explicit, with an exception for chapter 9. The other provisions, which are self-explanatory, provide the special rules for Stockbroker Liquidations, Commodity Broker Liquidations, Municipal Debt Adjustments, and Railroad Reorganizations.

2000 — Subsecs. (e) to (j). Pub. L. 106-554, § 1(a)(5) [Title I, § 112(c)(5)(A)], added subsec. (e), and redesignated former subsecs. (e) through (i) as (f) through (j), respectively.

1984 — Subsec. (c). Pub. L. 98-353 substituted "stockbroker" for "stockholder".

1986 Acts. Amendment by Pub. L. 99-554 effective 30 days after Oct. 27, 1986, but not applicable to cases commenced under this title before that date, see section 302(a), (c)(1) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure.

1984 Acts. Amendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a), formerly 553(a), of Pub. L. 98-353, set out as a note under section 101 of this title.

Subchapter V of chapter 7 of this title, referred to in subsec. (e), is 11 U.S.C. § 781 et seq.

Section 25A of the Federal Reserve Act, referred to in subsec. (e), is Dec. 23, 1913, c. 6, § 25A, formerly § 25(a), as added Dec. 24, 1919, c. 18, 41 Stat. 378, as amended, which is classified to subchapter II of chapter 6 of Title 12, 12 U.S.C. § 611 et seq.

Section 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991, referred to in subsec. (e), is Pub. L. 102-242, Title IV, § 409, as added by Pub. L. 106-554, § 1(a)(5) [Title I, § 112(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A-394, which is classified as 12 U.S.C. § 4422.

Section 104 represents a compromise between the House bill and the Senate amendment with respect to the adjustment of dollar amounts in title 11. The House amendment authorizes the Judicial Conference of the United States to transmit a recommendation for the uniform percentage of adjustment for each dollar amount in title 11 and in 28 U.S.C. 1930 to the Congress and to the President before May 1, 1985, and before May 1 of every sixth year thereafter. The requirement in the House bill that each such recommendation be based only on any change in the cost-of-living increase during the period immediately preceding the recommendation is deleted.

Senate Report No. 95-989. This section requires that the Director of the Administrative Office of the U. S. Courts report to Congress and the President before Oct. 1, 1985, and before May 1 every 6 years thereafter a recommendation for adjustment in dollar amounts found in this title. The Committee feels that regular adjustment of the dollar amounts by the Director will conserve congressional time and yet assure that the relative dollar amounts used in the bill are maintained. Changes in the cost of living should be a significant, but not necessarily the only, factor considered by the Director. The fact that there has been an increase in the cost of living does not necessarily mean that an adjustment of dollar amounts would be needed or warranted.

House Report No. 95-595. This section requires the Judicial Conference to report to the Congress every four years after the effective date of the bankruptcy code any changes that have occurred in the cost of living during the preceding four years, and the appropriate adjustments to the dollar amounts in the bill. The dollar amounts are found primarily in the exemption section (11 U.S.C. 522), the wage priority (11 U.S.C. 507), and the eligibility for chapter 13 (11 U.S.C. 109). This section requires that the Conference recommend uniform percentage changes in these amounts based solely on cost of living changes. The dollar amounts in the bill would not change on that recommendation, absent Congressional veto. Instead, Congress is required to take affirmative action, by passing a law amending the appropriate section, if it wishes to accomplish the change.

If the Judicial Conference has policy recommendations concerning the appropriate dollar amounts in the bankruptcy code based other than on cost of living considerations there are adequate channels through which it may communicate its views. This section is solely for the housekeeping function of maintaining the dollar amounts in the code at fairly constant real dollar levels.

Subsec. (a). Pub. L. 103-394, § 108(e)(1), designated existing provisions as subsec. (a).

The references to "522(p), 522(q)," contained in § 104(b)(1) & (2) were added by Pub. L. 109-8, Title III, § 322(b), and are effective as to all cases filed after enactment on April 20, 2005.

1994 Acts. Amendment by Pub. L. 103-394 effective on Oct. 22, 1994, and not to apply with respect to cases commenced under Title 11 of the United States Code before Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a note under section 101 of this title.

If any provision of or amendment made by Pub. L. 103-394 or the application of such provision or amendment to any person or circumstance is held to be unconstitutional, the remaining provisions of and amendments made by Pub. L. 103-394 and the application of such provisions and amendments to any person or circumstance shall not be affected thereby, see section 701 of Pub. L. 103- 394, set out as a note under section 101 of this title.

By notice dated Feb. 18, 2004, 69 F.R. 8482, the Judicial Conference of the United States adjusted the dollar amounts in provisions specified in subsec. (b) of this section, effective Apr. 1, 2004, and provided also that these increases do not apply to cases commenced before the effective date of the adjustments, i.e., April 1, 2004. The dollar amounts are adjusted as set out in the following chart.

11 U.S.C.	Dollar amount to be adjusted	New (adjusted) dollar amount
Section 109(e)—allowable debt limits for filing bankruptcy under Chapter 13	$290,525 (each time it appears)	$307,675 (each time it appears)
	$871,550	$922,975
Section 303(b)—minimum aggregate claims needed for the commencement of an involuntary bankruptcy:	$11,625	$12,300
Section 507(a)—priority claims:
(1)—in paragraph (3)	$ 4,650	$ 4,925
(2)—in paragraph (4)(B)(i)
(3)—in paragraph (5)
(4)—in paragraph (6)	$ 2,100	$ 2,225
Section 522(d)—value of property exemptions allowed to the debtor:
(1)—in paragraph (1)	$17,425	$18,450
(2)—in paragraph (2)	$2,775	$2,950
(3)—in paragraph (3)	$450	$475
(3)—in paragraph (3)	$9,300	$9,850
(4)—in paragraph (4)	$1,150	$1,225
(5)—in paragraph (5)	$925	$975
(5)—in paragraph (5)	$8,725	$9,250
(6)—in paragraph (6)	$1,750	$1,850
(7)—in paragraph (8)	$9,300	$9,850
(8)—in paragraph (11)(D)	$17,425	$18,450
Section 523(a)(2)(C)—"luxury goods and services" or cash advances obtained by the consumer debtor within 60 days before the filing of a bankruptcy petition, which are considered nondischargeable	$1,150	$1,225

Previous adjustments of the dollar amounts in provisions specified in subsec. (b) of this section were contained in the following:

BAPCPA § 1202(4) (struck "and 1325(b)(3)" and inserted "1322(d), 1325(b), and 1326(b)(3) of this title and section 1409(b) of title 28") • House Report 109-31 •

BAPCPA § 1202(5) (struck "and 1325(b)(3) of this title" and inserted "1322(d), 1325(b), and 1326(b)(3) of this title and section 1409(b) of title 28") • House Report 109-31 •

1986 Acts (Pub. L. 99-554). House Report No. 99-764 and House Conference Report No. 99-958.

Senate Report No. 95-989. Section 105 is derived from section 2a(15) of present law [section 11(a)(15) of former Title 11], with two changes. First, the limitation on the power of a bankruptcy judge (the power to enjoin a court being reserved to the district judge) is removed as inconsistent with the increased powers and jurisdiction of the new bankruptcy court. Second, the bankruptcy judge is prohibited from appointing a receiver in a case under title 11 under any circumstances. The bankruptcy code has ample provision for the appointment of a trustee when needed. Appointment of a receiver would simply circumvent the established procedures.

This section is also an authorization, as required under 28 U.S.C. 2283, for a court of the United States to stay the action of a State court. As such, Toucey v. New York Life Insurance Company, 314 U.S. 118 (1941) [62 S.Ct. 139, 86 L.Ed. 100, 137 A.L.R. 967], is overruled.

The Federal Rules of Bankruptcy Procedure, referred to in subsec. (d)(2), are set out in this title.

1986 — Subsec. (a). Pub. L. 99-554, § 203, added "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" following "of this title".

Subsec. (a). Pub. L. 98-353, § 118(1), struck out "bankruptcy" preceding "court".

Subsec. (b). Pub. L. 98-353, § 118(1), struck out "bankruptcy" preceding "court".

1984 Acts. Amendment by Pub. L. 98-353 effective July 10, 1984, see section 122(a) of Pub. L. 98-353, set out as a note under section 151 of Title 28, Judiciary and Judicial Procedure.

This section is referred to in section 106 of this title; title 26 section 7433.

Section 106(c) relating to sovereign immunity is new. The provision indicates that the use of the term "creditor," "entity," or "governmental unit" in title 11 applies to governmental units notwithstanding any assertion of sovereign immunity and that an order of the court binds governmental units. The provision is included to comply with the requirement in case law that an express waiver of sovereign immunity is required in order to be effective. Section 106(c) codifies In re Gwilliam, 519 F.2d 407 (9th Cir., 1975), and In re Dolard, 519 F.2d 282 (9th Cir., 1975), permitting the bankruptcy court to determine the amount and dischargeability of tax liabilities owing by the debtor or the estate prior to or during a bankruptcy case whether or not the governmental unit to which such taxes are owed files a proof of claim. Except as provided in sections 106(a) and (b) subsection (c) is not limited to those issues, but permits the bankruptcy court to bind governmental units on other matters as well. For example, section 106(c) permits a trustee or debtor in possession to assert avoiding powers under title 11 against a governmental unit; contrary language in the House report to H.R. 8200 is thereby overruled.

Senate Report No. 95-989. Section 106 provides for a limited waiver of sovereign immunity in bankruptcy cases. Though Congress has the power to waive sovereign immunity for the Federal government completely in bankruptcy cases, the policy followed here is designed to achieve approximately the same result that would prevail outside of bankruptcy. Congress does not, however, have the power to waive sovereign immunity completely with respect to claims of a bankrupt estate against a State, though it may exercise its bankruptcy power through the supremacy clause to prevent or prohibit State action that is contrary to bankruptcy policy.

There is, however, a limited change from the result that would prevail in the absence of bankruptcy; the change is two-fold and is within Congress' power vis-a-vis both the Federal Government and the States. First, the filing of a proof of claim against the estate by a governmental unit is a waiver by that governmental unit of sovereign immunity with respect to compulsory counterclaims, as defined in the Federal Rules of Civil Procedure [set out in Title 28, Judiciary and Judicial Procedure], that is, counterclaims arising out of the same transaction or occurrence. The governmental unit cannot receive a distribution from the estate without subjecting itself to any liability it has to the estate within the confines of a compulsory counterclaim rule. Any other result would be one-sided. The counterclaim by the estate against the governmental unit is without limit.

Second, the estate may offset against the allowed claim of a governmental unit, up to the amount of the governmental unit's claim, any claim that the debtor, and thus the estate, has against the governmental unit, without regard to whether the estate's claim arose out of the same transaction or occurrence as the government's claim. Under this provision, the setoff permitted is only to the extent of the governmental unit's claim. No affirmative recovery is permitted. Subsection (a) governs affirmative recovery.

Though this subsection creates a partial waiver of immunity when the governmental unit files a proof of claim, it does not waive immunity if the debtor or trustee, and not the governmental unit, files proof of a governmental unit's claim under proposed 11 U.S.C. 501(c).

This section does not confer sovereign immunity on any governmental unit that does not already have immunity. It simply recognizes any immunity that exists and prescribes the proper treatment of claims by and against that sovereign.

1994 Subsecs. (a) to (c). Pub. L. 103-394, § 113, amended subsecs. (a) to (c) generally. Prior to amendment, subsecs. (a) to (c) read as follows:

"(a) A governmental unit is deemed to have waived sovereign immunity with respect to any claim against such governmental unit that is property of the estate and that arose out of the same transaction or occurrence out of which such governmental unit's claim arose.

"(b) There shall be offset against an allowed claim or interest of a governmental unit any claim against such governmental unit that is property of the estate.

"(c) Except as provided in subsections (a) and (b) of this section and notwithstanding any assertion of sovereign immunity—

"(2) a determination by the court of an issue arising under such a provision binds governmental units."

1994 Acts. Amendment by section 113 of Pub. L. 103-394 effective on Oct. 22, 1994, and applicable with respect to cases commenced under Title 11 of the United States Code before, on, and after Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a note under section 101 of this title.

The Federal Rules of Bankruptcy Procedure, referred to in subsec. (a)(3) and (5), are set out in this title.

Senate Report No. 95-989. Subsection (a) of this section makes all papers filed in a bankruptcy case and the dockets of the bankruptcy court public and open to examination at reasonable times without charge. "Docket" includes the claims docket, the proceedings docket, and all papers filed in a case.

Subsection (b) permits the court, on its own motion, and requires the court, on the request of a party in interest, to protect trade secrets, confidential research, development, or commercial information, and to protect persons against scandalous or defamatory matter.

Extension of time: The House amendment adopts section 108(c)(1) of the Senate amendment which expressly includes any special suspensions of statutes of limitation periods on collection outside bankruptcy when assets are under the authority of a court. For example, section 6503(b) of the Internal Revenue Code [Title 26] suspends collection of tax liabilities while the debtor's assets are in the control or custody of a court, and for 6 months thereafter. By adopting the language of the Senate amendment, the House amendment insures not only that the period for collection of the taxes outside bankruptcy will not expire during the title 11 proceedings, but also that such period will not expire until at least 6 months thereafter, which is the minimum suspension period provided by the Internal Revenue Code [Title 26].

1986 Acts (Pub. L. 99-554). House Report No. 99-764 and House Conference Report No. 99-958.

Senate Report No. 95-989. Subsections (a) and (b), derived from Bankruptcy Act section 11 [section 29 of former Title 11], permit the trustee, when he steps into the shoes of the debtor, an extension of time for filing an action or doing some other act that is required to preserve the debtor's rights. Subsection (a) extends any statute of limitation for commencing or continuing an action by the debtor for two years after the date of the order for relief, unless it would expire later. Subsection (b) gives the trustee 60 days to take other actions not covered under subsection (a), such as filing a pleading, demand, notice, or proof of claim or loss (such as an insurance claim), unless the period for doing the relevant act expires later than 60 days after the date of the order for relief.

Subsection (c) extends the statute of limitations for creditors. Thus, if a creditor is stayed from commencing or continuing an action against the debtor because of the bankruptcy case, then the creditor is permitted an additional 30 days after notice of the event by which the stay is terminated, whether that event be relief from the automatic stay under proposed 11 U.S.C. 362 or 1301, the closing of the bankruptcy case (which terminates the stay), or the exception from discharge of the debts on which the creditor claims.

In the case of Federal tax liabilities, the Internal Revenue Code [Title 26] suspends the statute of limitations on a tax liability of a taxpayer from running while his assets are in the control or custody of a court and for 6 months thereafter (sec. 6503(b) of the Code) [Title 26]. The amendment applies this rule in a title 11 proceeding. Accordingly, the statute of limitations on collection of a nondischargeable Federal tax liability of a debtor will resume running after 6 months following the end of the period during which the debtor's assets are in the control or custody of the bankruptcy court. This rule will provide the Internal Revenue Service adequate time to collect nondischargeable taxes following the end of the title 11 proceedings.

Subsec. (b). Pub. L. 99-554, § 257(b)(1), added reference to section 1201 of this title.

Subsec. (c). Pub. L. 99-554, § 257(b)(2), added references to section 1201 of this title wherever appearing. See Codifications note under this section relating to amendment to subsec. (c)(2).

Subsec. (a). Pub. L. 98-353, § 424(b), added "nonbankruptcy" after "applicable" and "entered in a" in provisions preceding par. (1).

Subsec. (a)(1). Pub. L. 98-353, § 424(a), substituted "or" for "and" after the semicolon.

Subsec. (b). Pub. L. 98-353, § 424(b), added "nonbankruptcy" after "applicable" and "entered in a" in provisions preceding par. (1).

Subsec. (b)(1). Pub. L. 98-353, § 424(a), substituted "or" for "and" after the semicolon.

Subsec. (c). Pub. L. 98-353, § 424(b), added "nonbankruptcy" after "applicable" and "entered in a" in provisions preceding par. (1).

Subsec. (c)(1). Pub. L. 98-353, § 424(a), substituted "or" for "and" after the semicolon.

Amendment by Pub. L. 99-554, § 257(b)(2)(B), has been executed to text following "922" as the probable intent of Congress, notwithstanding directory language requiring execution of amendment following "722".

[SIC] BAPCPA § 1203 provides that BC 108(c)(2) is "amended by striking '922' and all that follows through 'or', and inserting '922, 1201, or'." This language has the rather absurd effect of striking the language "922, 1201, or" and reinserting the identical language ("922, 1201, or"), thereby effecting no change! • House Report 109-31 •

Section 109(b) of the House amendment adopts a provision contained in H.R. 8200 as passed by the House. Railroad liquidations will occur under chapter 11, not chapter 7.

Section 109(c) contains a provision which tracks the Senate amendment as to when a municipality may be a debtor under chapter 11 of title 11. As under the Bankruptcy Act [former Title 11], State law authorization and prepetition negotiation efforts are required.

Section 109(e) represents a compromise between H.R. 8200 as passed by the House and the Senate amendment relating to the dollar amounts restricting eligibility to be a debtor under chapter 13 of title 11. The House amendment adheres to the limit of $100,000 placed on unsecured debts in H.R. 8200 as passed by the House. It adopts a midpoint of $350,000 as a limit on secured claims, a compromise between the level of $500,000 in H.R. 8200 as passed by the House and $200,000 as contained in the Senate amendment.

1986 Acts (Pub. L. 99-554). House Report No. 99-764 and House Conference Report No. 99-958.

1982 Acts (Pub. L. 97-320). Senate Report No. 97-536 and Senate Conference Report No. 97- 641.

Senate Report No. 95-989. This section specifies eligibility to be a debtor under the bankruptcy laws. The first criterion, found in the current Bankruptcy Act section 2a(1) [section 11(a)(1) of former Title 11] requires that the debtor reside or have a domicile, a place of business, or property in the United States.

Subsection (b) defines eligibility for liquidation under chapter 7. All persons are eligible except insurance companies, and certain banking institutions. These exclusions are contained in current law. However, the banking institution exception is expanded in light of changes in various banking laws since the current law was last amended on this point. A change is also made to clarify that the bankruptcy laws cover foreign banks and insurance companies not engaged in the banking or insurance business in the United States but having assets in the United States. Banking institutions and insurance companies engaged in business in this country are excluded from liquidation under the bankruptcy laws because they are bodies for which alternate provision is made for their liquidation under various State or Federal regulatory laws. Conversely, when a foreign bank or insurance company is not engaged in the banking or insurance business in the United States, then those regulatory laws do not apply, and the bankruptcy laws are the only ones available for administration of any assets found in United States.

The first clause of subsection (b) provides that a railroad is not a debtor except where the requirements of section 1174 are met.

Subsection (d)establishes dollar limitations on the amount of indebtedness that an individual with regular income can incur and yet file under chapter 13.

House Report No. 95-595. Subsection (c) defines eligibility for chapter 9. Only a municipality that is unable to pay its debts as they mature, and that is not prohibited by State law from proceeding under chapter 9, is permitted to be a chapter 9 debtor. The subsection is derived from Bankruptcy Act section 84 [section 404 of former Title 11], with two changes. First, section 84 requires that the municipality be "generally authorized to file a petition under this chapter by the legislature, or by a governmental officer or organization empowered by State law to authorize the filing of a petition." The "generally authorized" language is unclear, and has generated a problem for a Colorado Metropolitan District that attempted to use chapter IX [chapter 9 of former Title 11] in 1976. The "not prohibited" language provides flexibility for both the States and the municipalities involved, while protecting State sovereignty as required by Ashton v. Cameron County Water District No. 1, 298 U.S. 513 (1936) [56 S.Ct. 892, 80 L.Ed. 1309, 31 Am.Bankr.Rep.N.S. 96, rehearing denied 57 S.Ct. 5, 299 U.S. 619, 81 L.Ed. 457] and Bekins v. United States, 304 U.S. 27 (1938) [58 S.Ct. 811, 82 L.Ed. 1137, 36 Am.Bankr.Rep.N.S. 187, rehearing denied 58 S.Ct. 1043, 1044, 304 U.S. 589, 82 L.Ed. 1549].

The second change deletes the four prerequisites to filing found in section 84 [section 404 of former Title 11]. The prerequisites require the municipality to have worked out a plan in advance, to have attempted to work out a plan without success, to fear that a creditor will attempt to obtain a preference, or to allege that prior negotiation is impracticable. The loopholes in those prerequisites are larger than the requirement itself. It was a compromise from pre-1976 chapter IX [chapter 9 of former Title 11] under which a municipality could file only if it had worked out an adjustment plan in advance. In the meantime, chapter IX protection was unavailable. There was some controversy at the time of the enactment of current chapter IX concerning deletion of the pre- negotiation requirement. It was argued that deletion would lead to a rash of municipal bankruptcies. The prerequisites now contained in section 84 were inserted to assuage that fear. They are largely cosmetic and precatory, however, and do not offer any significant deterrent to use of chapter IX. Instead, other factors, such as a general reluctance on the part of any debtor, especially a municipality, to use the bankruptcy laws, operates as a much more effective deterrent against capricious use.

Subsection (d) permits a person that may proceed under chapter 7 to be a debtor under chapter 11, Reorganization, with two exceptions. Railroads, which are excluded from chapter 7, are permitted to proceed under chapter 11. Stockbrokers and commodity brokers, which are permitted to be debtors under chapter 7, are excluded from chapter 11. The special rules for treatment of customer accounts that are the essence of stockbroker and commodity broker liquidations are available only in chapter 7. Customers would be unprotected under chapter 11. The special protective rules are unavailable in chapter 11 because their complexity would make reorganization very difficult at best, and unintelligible at worst. The variety of options available in reorganization cases make it extremely difficult to reorganize and continue to provide the special customer protection necessary in these cases.

Subsection (e) specifies eligibility for chapter 13, Adjustment of Debts of an Individual with Regular Income. An individual with regular income, or an individual with regular income and the individual's spouse, may proceed under chapter 13. As noted in connection with the definition of the term "individual with regular income", this represents a significant departure from current law. The change might have been too great, however, without some limitation. Thus, the debtor (or the debtor and spouse) must have unsecured debts that aggregate less than $100,000, and secured debts that aggregate less than $500,000. These figures will permit the small sole proprietor, for whom a chapter 11 reorganization is too cumbersome a procedure, to proceed under chapter 13. It does not create a presumption that any sole proprietor within that range is better off in chapter 13 than chapter 11. The conversion rules found in section 1307 will govern the appropriateness of the two chapters for any particular individual. The figures merely set maximum limits.

Whether a small business operated by a husband and wife, the so-called "mom and pop grocery store," will be a partnership and thus excluded from chapter 13, or a business owned by an individual, will have to be determined on the facts of each case. Even if partnership papers have not been filed, for example, the issue will be whether the assets of the grocery store are for the benefit of all creditors of the debtor or only for business creditors, and whether such assets may be the subject of a chapter 13 proceeding. The intent of the section is to follow current law that a partnership by estoppel may be adjudicated in bankruptcy and therefore would not prevent a chapter 13 debtor from subjecting assets in such a partnership to the reach of all creditors in a chapter 13 case. However, if the partnership is found to be a partnership by agreement, even informal agreement, then a separate entity exists and the assets of that entity would be exempt from a case under chapter 13.

Subsec. (b)(2). Pub. L. 106-554, § 1(a)(8)[§ 1(e)], inserted "a New Markets Venture Capital company as defined in section 351 of the Small Business Investment Act of 1958,," after "homestead association".

Pub. L. 106-554, § 1(a)(5) [Title I, § 112(c)(1)], struck "; or" and inserted the following: " , 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".

Subsec. (d). Pub. L. 106-554, § 1(a)(5) [Title I, § 112(c)(2)], revised subsec. (d). Prior to revision, subsec. (d) read as follows: "(d) Only a person that may be a debtor under chapter 7 of this title, except a stockbroker or a commodity broker, and a railroad may be a debtor under chapter 11 of this title."

Subsec. (b)(2). Pub. L. 103-394, § 220, added 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 to the list of institutions which may not be debtors under chapter 7 of this title.

Pub. L. 103-394, § 501(d)(2), struck out "(12 U.S.C. 1813(h))" following "Federal Deposit Insurance Act".

Subsec. (c)(2). Pub. L. 103-394, § 402, substituted "specifically authorized, in its capacity as a municipality or by name," for "generally authorized".

Subsec. (e). Pub. L. 103-394, § 108(a), substituted "$250,000" for "$100,000", wherever appearing, and substituted "$750,000" for "$350,000", wherever appearing. (c)(3). Pub. L. 100-597 deleted from definition of debtor an entity "unable to meet such entity's debts as such debts mature".

Subsec. (f). Pub. L. 99-554, § 253(1)(B), (2), added subsec. (f). Former subsec. (f) was redesignated (g).

Subsec. (g). Pub. L. 99-554, § 253(1), redesignated former subsec. (f) as (g) and, as so redesignated, added reference to family farmer.

Subsec. (a). Pub. L. 98-353, § 425(a), struck out "in the United States," after "only a person that resides".

Subsec. (c)(5)(D). Pub. L. 98-353, § 425(b), substituted "transfer that is avoidable under section 547 of this title" for "preference".

Subsec. (d). Pub. L. 98-353, § 425(c), substituted "stockbroker" for "stockholder".

1982 — Subsec. (b)(2). Pub. L. 97-320 inserted reference to industrial banks or similar institutions which are insured banks as defined in section 3(h) of the Federal Deposit Insurance Act (12 U.S.C. 1813(h) ).

1994 Acts. Amendments by Pub. L. 103-394 effective on Oct. 22, 1994, and not to apply with respect to cases commenced under Title 11 of the United States Code before Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a note under section 101 of this title.

1988 Acts. Amendment by Pub. L. 100-597 effective Nov. 3, 1988, but not applicable to any case commenced under this title before that date, see section 12 of Pub. L. 100-597, set out as a note under section 101 of this title.

1986 Acts. Amendment by Pub. L. 99-554 effective 30 days after Oct. 27, 1986, but not applicable to cases commended under this title before that date, see section 302(a), (c)(1) of Pub. L. 99-554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure.

For adjustment of dollar amounts specified in subsec. (e) of this section by the Judicial Conference of the United States, effective Apr. 1, 2004, see note set out under 11 U.S.C. § 104.

By notice dated Feb. 18, 2004, 69 F.R. 8482, the Judicial Conference of the United States adjusted the dollar amounts in provisions specified in subsec. (e) of this section, effective Apr. 1, 2004, as follows:

By notice dated Feb. 20, 2001, 66 F.R. 10910, the Judicial Conference of the United States adjusted the dollar amounts in provisions specified in subsec. (e) of this section, effective Apr. 1, 2001, as follows:

By notice dated Feb. 3, 1998, 63 F.R. 7179, the Judicial Conference of the United States adjusted the dollar amounts in provisions specified in subsec. (e) of this section, effective Apr. 1, 1998, as follows:

Section 351 of the Small Business Investment Act of 1958, referred to in subsec. (b)(2), is section 351 of Pub. L. 85-699, which is classified to 15 U.S.C. § 689.

Subsection (c) or (d) of section 301 of the Small Business Investment Act of 1958, referred to in subsec. (b)(2), is subsection (c) or (d) of section 301 of Pub. L. 85-699, Title III, Aug. 21, 1958, which is classified to 15 U.S.C. § 681(c) or (d). Subsection (d) of section 301 was repealed by Pub. L. 104-208, Div. D, Title II, § 208(b)(3)(A), Sept. 30, 1996, 110 Stat. 3009-742.

Section 3 of the Federal Deposit Insurance Act, referred to in subsec. (b)(2), is section 2[3] of Act Sept. 21, 1950, c. 967, 64 Stat. 873, which is classified to 12 U.S.C. § 1813.

Section 25A of the Federal Reserve Act, referred to in subsecs. (b)(2) and (d), is Dec. 23, 1913, c. 6, § 25A, formerly § 25(a), as added Dec. 24, 1919, c. 18, 41 Stat. 378, as amended, which is classified to subchapter II of chapter 6 of Title 12 (12 U.S.C. § 611 et seq.).

Section 409 of the Federal Deposit Insurance Corporation Improvement Act of 1991, referred to in subsecs. (b)(2) and (d), is Pub. L. 102-242, Title IV, § 409, as added by Pub. L. 106-554, § 1(a)(5) [Title I, § 112(a)(3)], Dec. 21, 2000, 114 Stat. 2763, 2763A-391, which is classified as 12 U.S.C. § 4422.

Chapter 7 of this title, referred to in subsec. (d), is 11 U.S.C. § 701 et seq.

Chapter 11 of this title, referred to in subsec. (d), is 11 U.S.C. § 1101 et seq.

1994 Acts. Section effective on Oct. 22, 1994, and not to apply with respect to cases commenced under Title 11 of the United States Code before Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a note under section 101 of this title.

The Federal Rules of Bankruptcy Procedure, referred to in subsec. (i)(1), are set out in this title.

2005 Acts. Pub. L. 109-8, Title XV, § 1501, Apr. 20, 2005, 119 Stat. 66, 216, provided that, except as otherwise specifically provided, all amendments, except for amendments provided in Pub. L. 109-8, Title III, §§ 308, 322, and 330, are effective 180 days after enactment of the Act on April 20, 2005 (which occurs on October 17, 2005), and are inapplicable with respect to cases commenced under Title 11 before the effective date.