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108 STAT. 4106

PUBLIC LAW 103-394—OCT. 22, 1994

Public Law 103-394
103d Congress
An Act
Oct. 22, 1994
[H.R. 5116]

Bankruptcy
Reform
Act of 1994.

note

To amend title 11 of the United States Code.

Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
(^) SHORT TITLE.—This

Act may be cited as the "Bankruptcy
Reform Act of 1994".
(b) TABLE OF CONTENTS.—The table of contents is as follows:
Sec. 1. Short title.
TITLE I—IMPROVED BANKRUPTCY ADMINISTRATION
Sec. 101. Expedited hearing on automatic stay.
Sec. 102. Jurisdiction to review interlocutory orders increasing or reducing certain
time periods for filing plan.
Sec. 103. Expedited procedure for reaffirmation of debts.
Sec. 104. Powers of bankruptcy courts.
Sec. 105. Participation by bankruptcy administrator at meetings of creditors and
equity security holders.
Sec. 106. Definition relating to eligibility to serve on chapter 11 committees.
Sec. 107. Increased incentive compensation for trustees.
Sec. 108. Dollar adjustments.
Sec. 109. Premerger notification.
Sec. 110. Allowance of creditor committee expenses.
Sec. 111. Supplemental injunctions.
Sec. 112. Authority of bankruptcy judges to conduct jury trials in civil proceedings.
Sec. 113. Sovereign immunity.
Sec. 114. Service of process in bankruptcy proceedings on an insured depository
institution.
Sec. 115. Meetings of creditors and equity secmity holders.
Sec. 116. Tax assessment.
Sec. 117. Additional trustee compensation.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

201.
202.
203.
204.
205.
206.
207.
208.

Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

209.
210.
211.
212.
213.
214.

Sec. 215.
Sec. 216.
Sec. 217.

TITLE II—COMMERCIAL BANKRUPTCY ISSUES
Aircraft equipment and vessels; rolling stock equipment.
Limitation on liability of non-insider transferee for avoided transfer.
Perfection of purchase-money security interest.
Continued perfection.
Rejection of unexpired leases of real property or timeshare interests.
Contents of plan.
Priority for independent sales representatives.
Exclusion from the estate of interests in liquid and gaseous hydrocarbons
transferred by the debtor pursuant to production pajmtient agreements.
Seller's right to reclaim goods.
Investment of money of the estate.
Election of trustee under chapter 11.
Rights of partnership trustee against general partners.
Impairment of claims and interests.
Protection of security interest in post-petition rents and lodging payments.
Amendment to definition of swap agreement.
Limitation on avoiding powers.
Small businesses.

PUBLIC LAW 103-394—OCT. 22, 1994
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

218.
219.
220.
221.
222.
223.
224.
225.

108 STAT. 4107

Single asset real estate.
Leases of personal properly.
Ebcemption for small business investment companies.
Pajrment of taxes with borrowed funds.
Ret\im of goods.
Proceeds of money order agreements.
Trustee duties; professional fees.
Notices to creditors.

TITLE III—CONSUMER BANKRUPTCY ISSUES
Period for curing default relating to principal residence.
Nondischargeability of fine under chapter 13.
Impairment of exemptions.
Protection of child support and alimony.
Interest on interest.
Exception to discharge.
Payments under chapter 13.
Bankruptcy petition preparers.
Fairness to condominium and cooperative owners.
Nonavoidability of fixing of lien on tools and implements of trade, animals, and crops.
Sec. 311. Conversion of case under chapter 13.
Sec. 312. Bankruptcy fraud.
Sec. 313. Protection against discriminatory treatment of applications for student
loEois.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

301.
302.
303.
304.
305.
306.
307.
308.
309.
310.

TITLE IV—GOVERNMENTAL BANKRUPTCY ISSUES
Sec. 401. Exception from automatic stay for post-petition property taxes.
Sec. 402. Municipal bankruptcy.
TITLE V—TECHNICAL CORRECTIONS
Sec. 501. Amendments to bankruptcy definitions, necessitated by enactment of
Public Law 101-647.
Sec. 502. Title 28 of the United States Code.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.
Sec.

601.
602.
603.
604.
605.
606.
607.
608.
609.
610.

TITLE VI—BANKRUPTCY REVIEW COMMISSION
Short title.
Establishment.
Duties of the Commission.
Membership.
Compensation of the Commission.
Stan of Commission; experts and consultants.
Powers of the Commission.
Report.
Termination.
Authorization of appropriations.

TITLE VII—SEVERABILITY; EFFECTIVE DATE; APPLICATION OF
AMENDMENTS.
Sec. 701. Severability.
Sec. 702. Effective date; application of amendments.

TITLE I—IMPROVED BANKRUPTCY
ADMINISTRATION
SEC. 101. EXPEDITED HEARING ON AUTOMATIC STAY.

The last sentence of section 362(e) of title 11, United States
Code, is amended—
(1) by striking "commenced" and inserting "concluded", and
(2) by inserting before the period at the end the following:
", imless the 30-day period is extended with the consent of the
parties in interest or for a specific time which the court finds
is required by compeUing circumstances".

108 STAT. 4108

PUBLIC LAW 103-394—OCT. 22, 1994

SEC. 102. JURISDICTION TO REVIEW INTERLOCUTORY ORDERS
INCREASING OR REDUCING CERTAIN TIME PERIODS FOR
FILING PLAN.

Section 158(a) of title 28, United States Code, is amended
by striking "from" the first place it appears and all that follows
through "decrees,", and inserting the following:
"(1) from final judgments, orders, and decrees;
"(2) from interlocutory orders and decrees issued under
section 1121(d) of title 11 increasing or reducing the time
periods referred to in section 1121 of such title; and
"(3) with leave of the court, from other interlocutory orders
and decrees;".
SEC. 103. EXPEDITED PROCEDURE FOR REAFFIRMATION OF DEBTS.

(a) REAFFIRMATION.—Section 524(c) of title 11, United States
Code, is amended—
(1) in paragraph (2)—
(A) by inserting "(A)" after "(2)",
(B) by adding "and" at the end, and
(C) by inserting after subparagraph (A), as so designated, the following:
"(B) such agreement contains a clear and conspicuous
statement which advises the debtor that such agreement
is not required under this title, under nonbankruptcy law,
or under any agreement not in accordance with the provisions of this subsection;", and
(2) in paragraph (3)—
(A) in the matter preceding subparagraph (A) by striking "such agreement" the last place it appears,
(B) in subparagraph (A)—
(i) by inserting "such agreement" after "(A)", and
(ii) by striking "and" at the end,
(C) in subparagraph (B)—
(i) by inserting "such agreement" after "(B)", and
(ii) by adding "and" at the end, and
(3) by adding at the end the following:
"(C) the attorney fully advised the debtor of the legal
effect and consequences of—
"(i) an agreement of the kind specified in this
subsection; and
"(ii) any default under such an agreement;".
(b) EFFECT OF DISCHARGE.—The third sentence of section 524(d)
of title 11, United States Code, is amended in the matter preceding
paragraph (1) by inserting "and was not represented by an attorney
during the course of negotiating such agreement" after "this
section".
SEC. 104. POWERS OF BANKRUPTCY COURTS.
(a) STATUS CONFERENCES.—Section 105 of title 11, United
States Code, is amended by adding at the end the following:
"(d) The court, on its own motion or on the request of a party
in interest, may—
"(1) hold a status conference regarding any case or proceeding under this title after notice to the parties in interest;
and
"(2) unless inconsistent with another provision of this title
or with applicable Federal Rules of Bankruptcy Procedure,

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4109

issue an order at any such conference prescribing such limitations and conditions as the court deems appropriate to ensure
that the case is handled expeditiously and economically, including an order that—
"(A) sets the date by which the trustee must assume
or reject an executory contract or unexpired lease; or
"(B) in a case under chapter 11 of this title—
"(i) sets a date by which the debtor, or trustee
if one has been appointed, shall file a disclosure statement and plan;
"(ii) sets a date by which the debtor, or trustee
if one has been appointed, shall solicit acceptances
of a plan;
"(iii) sets the date by which a party in interest
other than a debtor may file a plan;
"(iv) sets a date by which a proponent of a plan,
other than the debtor, shall solicit acceptances of such
plan;
"(v) fixes the scope and format of the notice to
be provided regarding the hearing on approval of the
disclosure statement; or
"(vi) provides that the hearing on approval of the
disclosure statement may be combined with the hearing on confirmation of the plan.".
(b) ABSTENTION.—Section 1334 of title 28, United States Code,
is amended—
(1) by redesignating subsection (d) as subsection (e), and
(2) in the second sentence of subsection (c)(2)—
(A) by inserting "(other than a decision not to abstain
in a proceeding described in subsection (c)(2))" after "subsection", and
(B) by striking "Any" and inserting the following:
"(d) Any".
(c) ESTABLISHMENT, OPERATION, AND TERMINATION OF BANKRUPTCY APPELLATE PANEL SERVICE.—Section 158(b) of title 28,

United States Code, is amended—
(1) by striking paragraphs (3) and (4),
(2) by redesignating paragraph (2) as paragraph (4),
(3) by striking paragraph (1) and inserting the following:
"(1) The judicial council of a circuit shall establish a bankruptcy
appellate panel service composed of bankruptcy judges of the districts in the circuit who are appointed by the judicial council in
accordance with paragraph (3), to hear and determine, with the
consent of all the parties, appeals under subsection (a) unless
the judicial council finds that—
"(A) there are insufficient judicial resources available in
the circuit; or
"(B) establishment of such service would result in undue
delay or increased cost to parties in cases under title 11.
Not later than 90 days after making the finding, the judicial council
shall submit to the Judicial Conference of the United States a
report containing the factual basis of such finding.
"(2)(A) A judicial council may reconsider, at any time, the
finding described in paragraph (1).
"(B) On the request of a majority of the district judges in
a circuit for which a bankruptcy appellate panel service is established under paragraph (1), made after the expiration of the

Reports,

108 STAT. 4110

PUBLIC LAW 103-394—OCT. 22, 1994

1-year period beginning on the date such service is established,
the judicial council of the circuit shall determine whether a circumstance specified in subparagraph (A) or (B) of such paragraph
exists.
"(C) On its own motion, after the expiration of the 3-year
period beginning on the date a bankruptcy appellate panel service
is established under paragraph (1), the judicial council of the circuit
may determine whether a circumstance specified in subparagraph
(A) or (B) of such paragraph exists.
"(D) If the judicial council finds that either of such circumstances exists, the judicial council may provide for the completion of the appeals then pending before such service and the orderly
termination of such service.
"(3) Bankruptcy judges appointed under paragraph (1) shall
be appointed and may be reappointed under such paragraph.",
and
(4) by inserting after paragraph (4), as so redesignated,
the following:
"(5) An appeal to be heard under this subsection shall be
heard by a panel of 3 members of the bankruptcy appellate panel
service, except that a member of such service may not hear an
appeal originating in the district for which such member is
appointed or designated under section 152 of this title.
"(6) Appeals may not be heard under this subsection by a
panel of the bankruptcy appellate panel service unless the district
judges for the district in which the appeals occur, by majority
vote, have authorized such service to hear and determine appeals
originating in such district.".
(d) APPEALS T O B E HEARD BY BANKRUPTCY APPELLATE PANEL

SERVICE.—Section 158 of title 28, United States Code, is amended—
(1) in subsection (c) by striking "(c)" and inserting "(2)",
and
(2) by inserting after subsection (b) the following:
"(c)(1) Subject to subsection (b), each appeal under subsection
(a) shall be heard by a 3-judge panel of the bankruptcy appellate
panel service established under subsection (b)(1) unless—
"(A) the appellant elects at the time of filing the appeal;
or
"(B) any other party elects, not later than 30 days after
service of notice of the appeal;
to have such appeal heard by the district court.".
(e) RULES OF PROCEDURE AND EVIDENCE; METHOD OF PRESCRIB-

ING.—Section 2073 of title 28, United States Code, is amended—
(1) in subsection (a)(2) by striking "section 2072" and inserting "sections 2072 and 2075", and
(2) in subsections (d) and (e) by inserting "or 2075" after
"2072" each place it appears.
(f) EFFECTIVE DATE OF BANKRUPTCY RULES.—The third
undesignated paragraph of section 2075 of title 28, United States
Code, is amended to read as follows:
"The Supreme Court shall transmit to Congress not later than
May 1 of the year in which a rule prescribed under this section
is to become effective a copy of the proposed rule. The rule shall
take effect no earlier than December 1 of the year in which it
is transmitted to Congress unless otherwise provided by law.".

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4111

SEC. 105. PARTICIPATION BY BANKRUPTCY ADMINISTRATOR AT
MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS.

11 USC 341
note.

(a) PRESIDING OFFICER.—^A bankruptcy administrator appointed
under section 302(d)(3)(I) of the Bankruptcy Judges, United States
Trustees, and Family Farmer Bankruptcy Act of 1986 (28 U.S.C.
581 note; Public Law 99-554; 100 Stat. 3123), as amended by
section 317(a) of the Federal Courts Study Committee Implementation Act of 1990 (Public Law 101-650; 104 Stat. 5115), or the
bankruptcy administrator's designee may preside at the meeting
of creditors convened under section 341(a) of title 11, United States
Code. The bankruptcy administrator or the bankruptcy administrator's designee may preside at any meeting of equity security holders
convened under section 341(b) of title 11, United States Code.
(b) EXAMINATION OF THE DEBTOR.—^The bankruptcy administrator or the bankruptcy administrator's designee may examine
the debtor at the meeting of creditors and may administer the
oath required under section 343 of title 11, United States Code.
SEC. 106. DEFINITION RELATING TO ELIGIBIUTY TO SERVE ON CHAPTER 11 COMMITTEES.

Section 101(41) of title 11, United States Code, is amended
to read as follows:
"(41) 'person' includes individual, partnership, and corporation, but does not include governmental unit, except that a
governmental imit that—
"(A) acquires an asset from a person—
"(i) as a result of the operation of a loan guarantee
agreement; or
"(ii) as receiver or liquidating agent of a person;
"(B) is a guarantor of a pension benefit payable by
or on behalf of the debtor or an affiliate of the debtor;
or
"(C) is the legal or beneficial owner of an asset of—
"(i) an employee pension benefit plan that is a
governmental plan, as defined in section 414(d) of the
Internal Revenue Code of 1986; or
"(ii) an eligible deferred compensation plan, as
defined in section 457(b) of the Internal Revenue Code
of 1986;
shall be considered, for purposes of section 1102 of this title,
to be a person with respect to such asset or such benefit;".
SEC. 107. INCREASED INCENTIVE COMPENSATION FOR TRUSTEES.

Section 326(a) of title 11, United States Code, is amended by striking "fifteen" and all that follows through "$3,000" the last
place it appears, and inserting the following:
"25 percent on the first $5,000 or less, 10 percent on any amount
in excess of $5,000 but not in excess of $50,000, 5 percent on
any amount in excess of $50,000 but not in excess of $1,000,000,
and reasonable compensation not to exceed 3 percent of such moneys
in excess of $1,000,000".
SEC. 108. DOLLAR ADJUSTMENTS.

(a) W H O MAY B E A DEBTOR UNDER CHAPTER 13.—Section 109(e)
of title 11, United States Code, is amended—
(1) by striking "$100,000" each place it appears and inserting "$250,000", and

108 STAT. 4112

Federal
^^fcation

PUBLIC LAW 103-394—OCT. 22, 1994

(2) by striking "$350,000" each place it appears and inserting "$750,000".
(b) INVOLUNTARY CASES.—Section 303(b) of title 11, United
States Code, is amended—
(1) in paragraph (1) by striking "$5,000" and inserting
"$10,000", and
(2) in paragraph (2) by striking "$5,000" and inserting
"$10,000".
(c) PRIORITIES.—Section 507(a) of title 11, United States Code,
is amended—
(1) in paragraph (4)(B)(i) by striking "$2,000" and inserting
"$4,000",
(2) in paragraph (5) by striking "$2,000" and inserting
"$4,000", and
(3) in paragraph (6) by striking "$900" and inserting
"$1,800".
(d) EXEMPTIONS.—Section 522(d) of title 11, United States Code,
is amended—
(1) in paragraph (1) by striking "$7,500" and inserting
"$15,000",
(2) in paragraph (2) by striking "$1,200" and inserting
"$2,400",
(3) in paragraph (3)—
(A) by striking "$200" and inserting "$400", and
(B) by striking "$4,000" and inserting "$8,000",
(4) in paragraph (4) by striking "$500" and inserting
"$1,000",
(5) in paragraph (5)—
(A) by striking "$400" and inserting "$800", and
(B) by striking "$3,750" and inserting "$7,500",
(6) in paragraph (6) by striking "$750" and inserting
"$1,500",
(7) in paragraph (8) by striking "$4,000" and inserting
"$8,000", and
(8) in paragraph (11)(D) by striking "$7,500" and inserting
"$15,000".
(e) FUTURE ADJUSTMENTS.—Section 104 of title 11, United
States Code, is amended—
(1) by inserting "(a)" before "The", and
(2) by adding at the end the following:
"(b)(1) On April 1, 1998, and at each 3-year interval ending
on April 1 thereafter, each dollar amount in effect under sections
109(e), 303(b), 507(a), 522(d), and 523(a)(2)(C) immediately before
such April 1 shall be adjusted—
"(A) to reflect the change in the Consumer Price Index
for All Urban Consumers, published by the Department of
Labor, for the most recent 3-year period ending immediately
before January 1 preceding such April 1, and
"(B) to round to the nearest $25 the dollar amount that
represents such change.
"(2) Not later than March 1, 1998, and at each 3-year interval
ending on March 1 thereafter, the Judicial Conference of the United
States shall publish in the Federal Register the dollar amounts
that will become effective on such April 1 under sections 109(e),
303(b), 507(a), 522(d), and 523(a)(2)(C) of this title.

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4113

"(3) Adjustments made in accordance with paragraph (1) shall
not apply with respect to cases commenced before the date of
such adjustments.".
SEC. 109. PREMERGER NOTIFICATION.

Subparagraphs (A) and (B) of section 363(b)(2) of title 11,
United States Code, are amended to read as follows:
"(A) notwithstanding subsection (a) of such section,
the notification required by such subsection to be given
by the debtor shall be given by the trustee; and
"(B) notwithstanding subsection (b) of such section,
the required waiting period shall end on the 15th day
after the date of the receipt, by the Federal Trade Commission and the Assistant Attorney General in charge of the
Antitrust Division of the Department of Justice, of the
notification required under such subsection (a), unless such
waiting period is extended—
"(i) pursuant to subsection (e)(2) of such section,
in the same manner as such subsection (e)(2) applies
to a cash tender offer;
"(ii) pursuant to subsection (g)(2) of such section;
or
"(iii) by the court after notice and a hearing.".
SEC. 110. ALLOWANCE OF CREDITOR COMMITTEE EXPENSES.

Section 503(b)(3) of title 11, United States Code, is amended—
(1) in subparagraph (D) by striking "or" at the end,
(2) in subparagraph (E) by inserting "or" at the end, and
(3) by adding at the end the following:
"(F) a member of a committee appointed under section
1102 of this title, if such expenses are incurred in the
performance of the duties of such committee;".
SEC. 111. SUPPLEMENTAL INJUNCTIONS.
(a) SUPPLEMENTAL INJUNCTIONS.—Section 524 of title 11,

United States Code, is amended by adding at the end the following:
"(g)(1)(A) After notice and hearing, a court that enters an
order confirming a plan of reorganization under chapter 11 may
issue, in connection with such order, an injunction in accordance
with this subsection to supplement the injunctive effect of a discharge under this section.
"(B) An injunction may be issued under subparagraph (A) to
enjoin entities from taking legal action for the purpose of directly
or indirectly collecting, recovering, or receiving pajonent or recovery
with respect to any claim or demand that, under a plan of reorganization, is to be paid in whole or in part by a trust described
in paragraph (2)(B)(i), except such legal actions as are expressly
allowed by the injunction, the confirmation order, or the plan of
reorganization.
"(2)(A) Subject to subsection (h), if the requirements of subparagraph (B) are met at the time an injunction described in paragraph
(1) is entered, then after entry of such injunction, any proceeding
that involves the validity, application, construction, or modification
of such injunction, or of this subsection with respect to such injunction, may be commenced only in the district court in which such
injunction was entered, and such court shall have exclusive jurisdiction over any such proceeding without regard to the amount in
controversy.

108 STAT. 4114

PUBLIC LAW 103-394—OCT. 22, 1994

"(B) The requirements of this subparagraph are that—
"(i) the injunction is to be implemented in connection with
a trust that, pursuant to the plan of reorganization—
"(I) is to assume the liabilities of a debtor which at
the time of entry of the order for relief has been named
as a defendant in personal injury, wrongful death, or property-damage actions seeking recovery for damages allegedly
caused by the presence of, or exposure to, asbestos or
asbestos-containing products;
"(II) is to be funded in whole or in part by the securities
of 1 or more debtors involved in such plan and by the
obligation of such debtor or debtors to make future payments, including dividends;
"(III) is to own, or by the exercise of rights granted
under such plan would be entitled to own if specified contingencies occur, a majority of the voting shares of—
"(aa) each such debtor;
"(bb) the parent corporation of each such debtor;
or
"(cc) a subsidiary of each such debtor that is also
a debtor; and
"(IV) is to use its assets or income to pay claims and
demands; and
"(ii) subject to subsection (h), the court determines that—
"(I) the debtor is likely to be subject to substantial
future demands for payment arising out of the same or
similar conduct or events that gave rise to the claims
that are addressed by the injunction;
"(II) the actual amounts, numbers, and timing of such
future demands cannot be determined;
"(III) pursuit of such demands outside the procedures
prescribed by such plan is likely to threaten the plan's
purpose to deal equitably with claims and future demands;
"(IV) as part of the process of seeking confirmation
of such plan—
"(aa) the terms of the injunction proposed to be
issued under paragraph (1)(A), including any provisions barring actions against third parties pursuant
to paragraph (4)(A), are set out in such plan and in
any disclosure statement supporting the plan; and
"(bb) a separate class or classes of the claimants
whose claims are to be addressed by a trust described
in clause (i) is established and votes, by at least 75
percent of those voting, in favor of the plan; and
"(V) subject to subsection (h), pursuant to court orders
or otherwise, the trust will operate through mechanisms
such as structured, periodic, or supplemental payments,
pro rata distributions, matrices, or periodic review of estimates of the numbers and values of present claims and
future demands, or other comparable mechanisms, that
provide reasonable assurance that the trust will value,
and be in a financial position to pay, present claims and
future demands that involve similar claims in substantially
the same manner.
"(3)(A) If the requirements of paragraph (2)(B) are met and
the order confirming the plan of reorganization was issued or
affirmed by the district court that has jurisdiction over the reorga-

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4115

nization case, then after the time for appeal of the order that
issues or affirms the plan—
"(i) the injunction shall be valid and enforceable and may
not be revoked or modified by any court except through appeal
in accordance with paragraph (6);
"(ii) no entity that pursuant to such plan or thereafter
becomes a direct or indirect transferee of, or successor to any
assets of, a debtor or trust that is the subject of the injunction
shall be liable with respect to any claim or demand made
against such entity by reason of its becoming such a transferee
or successor; and
"(iii) no entity that pursuant to such plan or thereafter
makes a loan to such a debtor or trust or to such a successor
or transferee shall, by reason of making the loan, be liable
with respect to any claim or demand made against such entity,
nor shall any pledge of assets made in connection with such
a loan be upset or impaired for that reason;
"(B) Subparagraph (A) shall not be construed to—
"(i) imply that an entity described in subparagraph (A)
(ii) or (iii) would, if this paragraph were not applicable, necessarily be liable to any entity by reason of any of the acts
described in subparagraph (A);
"(ii) relieve any such entity of the duty to comply with,
or of liability under, any Federal or State law regarding the
making of a fraudulent conveyance in a transaction described
in subparagraph (A) (ii) or (iii); or
"(iii) relieve a debtor of the debtor's obligation to comply
with the terms of the plan of reorganization, or affect the
power of the court to exercise its authority under sections
1141 and 1142 to compel the debtor to do so.
"(4)(A)(i) Subject to subparagraph (B), an injunction described
in paragraph (1) shall be valid and enforceable against all entities
that it addresses.
"(ii) Notwithstanding the provisions of section 524(e), such an
injunction may bar any action directed against a third party who
is identifiable from the terms of such injunction (by name or as
part of an identifiable group) and is alleged to be directly or
indirectly liable for the conduct of, claims against, or demands
on the debtor to the extent such alleged liability of such third
party arises by reason of—
"(I) the third party's ownership of a financial interest in
the debtor, a past or present affiliate of the debtor, or a predecessor in interest of the debtor;
"(II) the third party's involvement in the management of
the debtor or a predecessor in interest of the debtor, or service
as an officer, director or employee of the debtor or a related
party;
"(III) the third party's provision of insurance to the debtor
or a related party; or
"(IV) the third party's involvement in a transaction changing the corporate structure, or in a loan or other financial
transaction affecting the financial condition, of the debtor or
a related party, including but not limited to—
"(aa) involvement in providing financing (debt or
equity), or advice to an entity involved in such a transaction; or

108 STAT. 4116

PUBLIC LAW 103-394—OCT. 22, 1994

"(bb) acquiring or selling a financial interest in an
entity as part of such a transaction,
"(iii) As used in this subparagraph, the term 'related party'
means—
"(I) a past or present affiliate of the debtor;
"(11) a predecessor in interest of the debtor; or
"(HI) any entity that owned a financial interest in—
"(aa) the debtor;
"(bb) a past or present affiliate of the debtor; or
"(cc) a predecessor in interest of the debtor.
"(B) Subject to subsection (h), if, under a plan of reorganization,
a kind of demand described in such plan is to be paid in whole
or in part by a trust described in paragraph (2)(B)(i) in connection
with which an injunction described in paragraph (1) is to be implemented, then such injunction shall be valid and enforceable with
respect to a demand of such kind made, after such plan is confirmed,
against the debtor or debtors involved, or against a third party
described in subparagraph (A)(ii), if—
"(i) as part of the proceedings leading to issuance of such
injunction, the court appoints a legal representative for the
purpose of protecting the rights of persons that might subsequently assert demands of such kind, and
"(ii) the court determines, before entering the order
confirming such plan, that identifying such debtor or debtors,
or such third party (by name or as part of an identifiable
group), in such injunction with respect to such demands for
purposes of this subparagraph is fair and equitable with respect
to the persons that might subsequently assert such demands,
in light of the benefits provided, or to be provided, to such
trust on behalf of such debtor or debtors or such third party.
"(5) In this subsection, the term 'demand' means a demand
for payment, present or future, that—
"(A) was not a claim during the proceedings leading to
the confirmation of a plan of reorganization;
"(B) arises out of the same or similar conduct or events
that gave rise to the claims addressed by the injunction issued
under paragraph (1); and
"(C) pursuant to the plan, is to be paid by a trust described
in paragraph (2)(B)(i).
"(6) Paragraph (3)(A)(i) does not bar an action taken by or
at the direction of an appellate court on appeal of an injunction
issued under paragraph (1) or of the order of confirmation that
relates to the injunction.
"(7) This subsection does not affect the operation of section
1144 or the power of the district court to refer a proceeding under
section 157 of title 28 or any reference of a proceeding made
prior to the date of the enactment of this subsection.

"(h) APPLICATION

TO EXISTING INJUNCTIONS.—For

purposes of

subsection (g)—
"(1) subject to paragraph (2), if an injunction of the kind
described in subsection (g)(1)(B) was issued before the date
of the enactment of this Act, as part of a plan of reorganization
confirmed by an order entered before such date, then the injunction shall be considered to meet the requirements of subsection
(g)(2)(B) for purposes of subsection (g)(2)(A), and to satisfy
subsection (g)(4)(A)(ii), if—

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4117

"(A) the court determined at the time the plan was
confirmed that the plan was fair and equitable in accordance with the requirements of section 1129(b);
"(B) as part of the proceedings leading to issuance
of such injunction and confirmation of such plan, the court
had appointed a legal representative for the purpose of
protecting the rights of persons that might subsequently
assert demands described in subsection (g)(4)(B) with
respect to such plan; and
"(C) such legal representative did not object to confirmation of such plan or issuance of such injunction; and
"(2) for purposes of paragraph (1), if a trust described
in subsection (g)(2)(B)(i) is subject to a court order on the
date of the enactment of this Act staying such trust from
settling or paying further claims—
"(A) the requirements of subsection (g)(2)(B)(ii)(V) shall
not apply with respect to such trust until such stay is
lifted or dissolved; and
"(B) if such trust meets such requirements on the
date such stay is lifted or dissolved, such trust shall be
considered to have met such requirements continuously
from the date of the enactment of this Act.".
(b) RULE OF CONSTRUCTION.—^Nothing in subsection (a), or in

the amendments made by subsection (a), shall be construed to
modify, impair, or supersede any other authority the court has
to issue injunctions in connection with an order confirming a plan
of reorganization.
SEC. 112. AUTHORITY OF BANKRUPTCY JUDGES TO CONDUCT JURY
TRIALS IN CIVIL PROCEEDINGS.

Section 157 of title 28, United States Code, is amended by
adding at the end the following:
"(e) If the right to a jury trial applies in a proceeding that
may be heard under this section by a bankruptcy judge, the bankruptcy judge may conduct the jury trial if specially designated
to exercise such jurisdiction by the district court and with the
express consent of all the parties.".
SEC. 113. SOVEREIGN IMMUNITY.

Section 106 of title 11, United States Code, is amended to
read as follows:
"§ 106. Waiver of sovereign immunity
"(a) Notwithstanding an assertion of sovereign immunity, sovereign immunity is abrogated as to a governmental unit to the
extent set forth in this section with respect to the following:
"(1) Sections 105, 106, 107, 108, 303, 346, 362, 363, 364,
365, 366, 502, 503, 505, 506, 510, 522, 523, 524, 525, 542,
543, 544, 545, 546, 547, 548, 549, 550, 551, 552, 553, 722,
724, 726, 728, 744, 749, 764, 901, 922, 926, 928, 929, 944,
1107, 1141, 1142, 1143, 1146, 1201, 1203, 1205, 1206, 1227,
1231, 1301, 1303, 1305, and 1327 of this title.
"(2) The court may hear and determine any issue arising
with respect to the application of such sections to governmental
units.
"(3) The court may issue against a governmental unit an
order, process, or judgment under such sections or the Federal
Rules of Bankruptcy Procedure, including an order or judgment

ii use 524

note,

108 STAT. 4118

PUBLIC LAW 103-394—OCT. 22, 1994

awarding a money recovery, but not including an award of
punitive damages. Such order or judgment for costs or fees
under this title or the Federal Rules of Bankruptcy Procedure
against any governmental unit shall be consistent with the
provisions and limitations of section 2412(d)(2)(A) of title 28.
"(4) The enforcement of any such order, process, or judgment against any governmental unit shall be consistent with
appropriate nonbankruptcy law applicable to such governmental unit and, in the case of a money judgment against
the United States, shall be paid as if it is a judgment rendered
by a district court of the United States.
"(5) Nothing in this section shall create any substantive
claim for relief or cause of action not otherwise existing under
this title, the Federal Rules of Bankruptcy Procedure, or
nonbankruptcy law.
"(b) A governmental unit that has filed a proof of claim in
the case is deemed to have waived sovereign immunity with respect
to a claim against such governmental unit that is property of
the estate and that arose out of the same transaction or occurrence
out of which the claim of such governmental unit arose.
"(c) Notwithstanding any assertion of sovereign immunity by
a governmental unit, there shall be offset against a claim or interest
of a governmental unit any claim against such governmental unit
that is property of the estate.".
SEC, 114. SERVICE OF PROCESS IN BANKRUPTCY PROCEEDINGS ON
AN INSURED DEPOSITORY INSTITUTION.

11 use app.

Mail.

Rule 7004 of the Federal Rules of Bankruptcy Procedure is
amended—
(1) in subdivision (b) by striking "In addition" and inserting
"Except as provided in subdivision (h), in addition", and
(2) by adding at the end the following:
"(h) SERVICE OF PROCESS ON AN INSURED DEPOSITORY INSTITUTION.—Service on an insured depository institution (as defined in
section 3 of the Federal Deposit Insurance Act) in a contested
matter or adversary proceeding shall be made by certified mail
addressed to an officer of the institution unless—
"(1) the institution has appeared by its attorney, in which
case the attorney shall be served by first class mail;
"(2) the court orders otherwise after service upon the
institution by certified mail of notice of an application to permit
service on the institution by first class mail sent to an officer
of the institution designated by the institution; or
"(3) the institution has waived in writing its entitlement
to service by certified mail by designating an officer to receive
service.".
SEC. 115. MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS.

Section 341 of title 11, United States Code, is amended by
adding at the end the following:
"(d) Prior to the conclusion of the meeting of creditors or equity
security holders, the trustee shall orally examine the debtor to
ensure that the debtor in a case under chapter 7 of this title
is aware of—
"(1) the potential consequences of seeking a discharge in
bankruptcy, including the effects on credit history;
"(2) the debtor's ability to file a petition under a different
chapter of this title;

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4119

"(3) the effect of receiving a discharge of debts under this
title; and
"(4) the effect of reaffirming a debt, including the debtor's
knowledge of the provisions of section 524(d) of this title.".
SEC. 116. TAX ASSESSMENT.

Section 362(b)(9) of title 11, United States Code, is amended
to read as follows:
"(9) under subsection (a), of—
"(A) an audit by a governmental unit to determine
tax liability;
"(B) the issuance to the debtor by a governmental
unit of a notice of tax deficiency;
"(C) a demand for tax returns; or
"(D) the making of an assessment for any tax and
issuance of a notice and demand for payment of such an
assessment (but any tax lien that would otherwise attach
to property of the estate by reason of such an assessment
shall not take effect unless such tax is a debt of the
debtor that will not be discharged in the case and such
property or its proceeds are transferred out of the estate
to, or otherwise revested in, the debtor).".
SEC. 117. ADDITIONAL TRUSTEE COMPENSATION.

Section 330(b) of title 11, United States Code, is amended—
(1) by inserting "(1)" after "(b)", and
(2) by adding at the end thereof the following:
"(2) The Judicial Conference of the United States—
"(A) shall prescribe additional fees of the same kind as
prescribed under section 1914(b) of title 28; and
"(B) may prescribe notice of appearance fees and fees
charged against distributions in cases under this title;
to pay $15 to trustees serving in cases after such trustees' services
are rendered. Beginning 1 year after the date of the enactment
of the Bankruptcy Reform Act of 1994, such $15 shall be paid
in addition to the amount paid under paragraph (1).".

TITLE II—COMMERCIAL BANKRUPTCY
ISSUES
SEC. 201. AIRCRAFT EQUIPMENT AND VESSELS; ROLLING
EQUIPMENT.

STOCK

(a) AMENDMENT OF SECTION 1110.—Section 1110 of title 11,
United States Code, is amended to read as follows:
"§ 1110. Aircraft equipment and vessels
"(a)(1) The right of a secured party with a security interest
in equipment described in paragraph (2) or of a lessor or conditional
vendor of such equipment to take possession of such equipment
in compliance with a security agreement, lease, or conditional sale
contract is not affected by section 362, 363, or 1129 or by any
power of the court to enjoin the taking of possession unless—
"(A) before the date that is 60 days after the date of
the order for relief under this chapter, the trustee, subject
to the court's approval, agrees to perform all obligations of
the debtor that become due on or after the date of the order

108 STAT. 4120

PUBLIC LAW 103-394—OCT. 22, 1994

under such security agreement, lease, or conditional sale contract; and
"(B) any default, other than a default of a kind specified
in section 365(b)(2), under such security agreement, lease, or
conditional sale contract—
"(i) that occurs before the date of the order is cured
before the expiration of such 60-day period; and
"(ii) that occurs after the date of the order is cured
before the later of—
"(I) the date that is 30 days after the date of
the default; or
"(II) the expiration of such 60-day period.
"(2) Equipment is described in this paragraph if it is—
"(A) an aircraft, aircraft engine, propeller, appliance, or
spare part (as defined in section 40102 of title 49) that is
subject to a security interest granted by, leased to, or conditionally sold to a debtor that is a citizen of the United States
(as defined in section 40102 of title 49) holding an air carrier
operating certificate issued by the Secretary of Transportation
pursuant to chapter 447 of title 49 for aircraft capable of
carrying 10 or more individuals or 6,000 pounds or more of
cargo; or
"(B) a documented vessel (as defined in section 30101(1)
of title 46) that is subject to a security interest granted by,
leased to, or conditionally sold to a debtor that is a water
carrier that holds a certificate of public convenience and necessity or permit issued by the Interstate Commerce Commission.
"(3) Paragraph (1) applies to a secured party, lessor, or conditional vendor acting in its own behalf or acting as trustee or
otherwise in behalf of another party.
"(b) The trustee and the secured party, lessor, or conditional
vendor whose right to take possession is protected under subsection
(a) may agree, subject to the court's approval, to extend the
60-day period specified in subsection (a)(1).
"(c) With respect to equipment first placed in service on or
prior to the date of enactment of this subsection, for purposes
of this section—
"(1) the term 'lease' includes any written agreement with
respect to which the lessor and the debtor, as lessee, have
expressed in the agreement or in a substantially contemporaneous writing that the agreement is to be treated as a lease
for Federal income tax purposes; and
"(2) the term 'security interest' means a purchase-money
equipment security interest.".
(b) AMENDMENT OF SECTION 1168.—Section 1168 of title 11,
United States Code, is amended to read as follows:
'*§ 1168. Rolling stock equipment
"(a)(1) The right of a secured party with a security interest
in or of a lessor or conditional vendor of equipment described
in paragraph (2) to take possession of such equipment in compliance
with an equipment security agreement, lease, or conditional sale
contract is not affected by section 362, 363, or 1129 or by any
power of the court to enjoin the taking of possession, unless—
"(A) before the date that is 60 days after the date of
commencement of a case under this chapter, the trustee, subject
to the court's approval, agrees to perform all obligations of

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4121

the debtor that become due on or after the date of commencement of the case under such security agreement, lease, or
conditional sale contract; and
"(B) any default, other than a default of a kind described
in section 365(b)(2), under such security agreement, lease, or
conditional sale contract—
"(i) that occurs before the date of commencement of
the case and is an event of default therewith is cured
before the expiration of such 60-day period; and
"(ii) that occurs or becomes an event of default after
the date of commencement of the case is cured before
the later of—
"(I) the date that is 30 days after the date of
the default or event of default; or
"(II) the expiration of such 60-day period.
"(2) Equipment is described in this paragraph if it is rolling
stock equipment or accessories used on such equipment, including
superstructures and racks, that is subject to a security interest
granted by, leased to, or conditionally sold to the debtor.
"(3) Paragraph (1) applies to a secured party, lessor, or conditional vendor acting in its own behalf or acting as trustee or
otherwise in behalf of another party.
"(b) The trustee and the secured party, lessor, or conditional
vendor whose right to take possession is protected under subsection
(a) may agree, subject to the court's approval, to extend the
60-day period specified in subsection (a)(1).
"(c) With respect to equipment first placed in service on or
prior to the date of enactment of this subsection, for purposes
of this section—
"(1) the term 'lease' includes any written agreement with
respect to which the lessor and the debtor, as lessee, have
expressed in the agreement or in a substantially contemporaneous writing that the agreement is to be treated as a lease
for Federal income tax purposes; and
"(2) the term 'security interest' means a purchase-money
equipment security interest.
"(d) With respect to equipment first placed in service after
the date of enactment of this subsection, for purposes of this section,
the term 'rolling stock equipment' includes rolling stock equipment
that is substantially rebuilt and accessories used on such equipment.".
SEC. 202. LIMITATION ON LIABILITY OF NON-INSIDER TRANSFEREE
FOR AVOIDED TRANSFER.

Section 550 of title 11, United States Code, is amended—
(1) by redesignating subsections (c), (d), and (e) as subsections (d), (e), and (f), respectively, and
(2) by inserting after subsection (b) the following:
"(c) If a transfer made between 90 days and one year before
the filing of the petition—
"(1) is avoided under section 547(b) of this title; and
"(2) was made for the benefit of a creditor that at the
time of such transfer was an insider;
the trustee may not recover under subsection (a) from a transferee
that is not an insider.".
SEC. 203. PERFECTION OF PURCHASE-MONEY SECURITY INTEREST.

Section 547 of title 11, United States Code, is amended—

108 STAT. 4122

PUBLIC LAW 103-394—OCT. 22, 1994
(1) in subsection (c)(3)(B) by striking "10" and inserting
"20", and
(2) in subsection (e)(2)(A) by inserting ", except as provided
in subsection (c)(3)(B)" before the semicolon at the end.

SEC. 204. CONTINUED PERFECTION.
(a) AUTOMATIC STAY.—Section 362(b)(3) of title 11, United

States Code, is amended by inserting ", or to maintain or continue
the perfection of," after "to perfect".
(b) LIMITATIONS ON AVOIDING POWERS.—Section 546(b) of title
11, United States Code, is amended to read as follows:
"(b)(1) The rights and powers of a trustee under sections 544,
545, and 549 of this title are subject to any generally applicable
law that—
"(A) permits perfection of an interest in property to be
effective against an entity that acquires rights in such property
before the date of perfection; or
"(B) provides for the maintenance or continuation of perfection of an interest in property to be effective against an entity
that acquires rights in such property before the date on which
action is taken to effect such maintenance or continuation.
"(2) If—
"(A) a law described in paragraph (1) requires seizure of
such property or commencement of an action to accomplish
such perfection, or maintenance or continuation of perfection
of an interest in property; and
"(B) such property has not been seized or such an action
has not been commenced before the date of the filing of the
petition;
such interest in such property shall be perfected, or perfection
of such interest shall be maintained or continued, by giving notice
within the time fixed by such law for such seizure or such
commencement.".
SEC. 205. REJECTION OF UNEXPIRED LEASES OF REAL PROPERTY OR
TIMESHARE INTERESTS.

(a) AMENDMENT TO SECTION 365.—Section 365(h) of title 11,
United States Code, is amended to read as follows:
"(h)(1)(A) If the trustee rejects an unexpired lease of real property under which the debtor is the lessor and—
"(i) if the rejection by the trustee amounts to such a breach
as would entitle the lessee to treat such lease as terminated
by virtue of its terms, applicable nonbankruptcy law, or any
agreement made by the lessee, then the lessee under such
lease may treat such lease as terminated by the rejection;
or
"(ii) if the term of such lease has commenced, the lessee
may retain its rights under such lease (including rights such
as those relating to the amount and timing of payment of
rent and other amounts payable by the lessee and any right
of use, possession, quiet enjoyment, subletting, assignment,
or hypothecation) that are in or appurtenant to the real property for the balance of the term of such lease and for any
renewal or extension of such rights to the extent that such
rights are enforceable under applicable nonbankruptcy law.
"(B) If the lessee retains its rights under subparagraph (A)(ii),
the lessee may offset against the rent reserved under such lease
for the balance of the term after the date of the rejection of such

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4123

lease and for the term of any renewal or extension of such lease,
the value of any damage caused by the nonperformance after the
date of such rejection, of any obligation of the debtor under such
lease, but the lessee shall not have any other right against the
estate or the debtor on account of any damage occurring after
such date caused by such nonperformance.
"(C) The rejection of a lease of real property in a shopping
center with respect to which the lessee elects to retain its rights
under subparagraph (A)(ii) does not affect the enforceability under
applicable nonbankruptcy law of any provision in the lease pertaining to radius, location, use, exclusivity, or tenant mix or balance.
"(D) In this paragraph, 'lessee' includes any successor, assign,
or mortgagee permitted under the terms of such lease.
"(2)(A) If the trustee rejects a timeshare interest under a
timeshare plan under which the debtor is the timeshare interest
seller and—
"(i) if the rejection amounts to such a breach as would
entitle the timeshare interest purchaser to treat the timeshare
)lan as terminated under its terms, applicable nonbankruptcy
aw, or any agreement made by timeshare interest purchaser,
the timeshare interest purchaser under the timeshare plan
may treat the timeshare plan as terminated by such rejection;
or
"(ii) if the term of such timeshare interest has commenced,
then the timeshare interest purchaser may retain its rights
in such timeshare interest for the balance of such term and
for any term of renewal or extension of such timeshare interest
to the extent that such rights are enforceable under applicable
nonbankruptcy law.
"(B) If the timeshare interest purchaser retains its rights under
subparagraph (A), such timeshare interest purchaser may offset
against the moneys due for such timeshare interest for the balance
of the term after the date of the rejection of such timeshare interest,
and the term of any renewal or extension of such timeshare interest,
the value of any damage caused by the nonperformance after the
date of such rejection, of any obligation of the debtor under such
timeshare plan, but the timeshare interest purchaser shall not
have any right against the estate or the debtor on account of
any damage occurring after such date caused by such nonperformance.".
(b) TECHNICAL AMENDMENT.—Section 553(b)(1) of title 11,
United States Code, is amended by striking "365(h)(2)" and inserting "365(h)".

f

SEC. 206. CONTENTS OF PLAN.

Section 1123(b) of title 11, United States Code, is amended—
(1) in paragraph (4) by striking "and" at the end,
(2) by redesignating paragraph (5) as paragraph (6), and
(3) by inserting after paragraph (4) the following:
"(5) modify the rights of holders of secured claims, other
than a claim secured only by a security interest in real property
that is the debtor's principal residence, or of holders of
unsecured claims, or leave unaffected the rights of holders
of any class of claims; and".
SEC. 207. PRIORITY FOR INDEPENDENT SALES REPRESENTATIVES.

Section 507(a)(3) of title 11, United States Code, is amended
to read as follows:

108 STAT. 4124

PUBLIC LAW 103-394—OCT. 22, 1994
"(3) Third, allowed unsecured clsiims, but only to the extent
of $4,000 for each individual or corporation, as the case may
be, earned within 90 days before the date of the filing of
the petition or the date of the cessation of the debtor's business,
whichever occurs first, for—
"(A) wages, salaries, or commissions, including vacation, severance, and sick leave pay esimed by an individual;
or
"(B) sales commissions earned by an individual or by
a corporation with only 1 employee, acting as an independent contractor in the sale of goods or services for the
debtor in the ordinary course of the debtor's business if,
and only if, during tiie 12 months preceding that date,
at least 75 percent of the amount that the individual or
corporation earned by acting as an independent contractor
in the sale of goods or services was earned fix>m the
debtor;".

SEC. 208. EXCLUSION FROM THE ESTATE OF INTERESTS IN LIQUID
AND GASEOUS HYDROCARBONS TRANSFERRED BY THE
DEBTOR PURSUANT TO PRODUCTION PAYMENT AGREEMENTS.

(a) DEFINITION.—Section 101 of titie 11, United States Code,
is amended—
(1) by inserting after paragraph (42) the following:
"(42A) ^production payment* means a term overriding royalty satisfiable in cash or in kind—
"(A) contingent on the production of a Uquid or gaseous
hydrocarbon fi^m particular real property; and
"(B) fi^m a specified volume, or a specified value, from
the liquid or gaseous hydrocarbon producedfix>msuch property, and determined without regard to production costs;",
and
(2) by inserting after the first paragraph (56) the following:
"(56A) 'term overriding royalty means an interest in liquid
or gaseous hydrocarbons in place or to be produced from
particular real property that entities the owner thereof to a
share of production, or the value thereof, for a term limited
by time, quantity, or value reaHzed;".
(b) PROPERTY OF THE ESTATE.—Section 541(b)(4) of titie 11,
United States Code, is amended—
(1) in subparagraph (A) by striking "(A)" and inserting
"(A)(i)",
(2) in subparagraph (B)—
(A) by striking "(B)" and inserting 'Xii)",
(B) by striking "such interesr' and inserting "the
interest referred to in clause (i)", and
(C) by striking the period at the end and inserting
"; oi'', and
(3) by adding at the end the following:
"(B)(i) tiie debtor has transferred such interest pursuant to a written conveyance of a production payment to
an entity that does not participate in the operation of
tlie property from which such production payment is transferred; and

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4125

"(ii) but for the operation of this paragraph, the estate
could include the interest referred to in clause (i) only
by virtue of section 542 of this title;".
SEC. 209. SELLER'S RIGHT TO RECLAIM GOODS.

Section 546(c)(1) of title 11, United States Code, is amended
to read as follows:
"(1) such a seller may not reclaim any such goods unless
such seller demands in writing reclamation of such goods—
"(A) before 10 days aiter receipt of such goods by
the debtor; or
"(B) if such 10-day period expires after the commencement of the case, before 20 days after receipt of such
goods by the debtor, and".
SEC. 210. INVESTMENT OF MONEY OF THE ESTATE.

Section 3450^) of titie 11, United States Code, is amended—
(1) in paragraph (2) by striking the period at the end
and inserting a semicolon, smd
(2) by aoding at the end the following:
"unless the court for cause orders otherwise.".
SEC. 211. ELECTION OF TRUSTEE UNDER CHAPTER 11.
(a) ELECTION AUTHORIZED.—Section 1104 of titie 11 of the
United States Code is amended—
(1) by redesignating subsections (b) and (c) as subsections
(c) and (d), respectively, and
(2) by inserting after subsection (a) the following:
"(b) Except as provided in section 1163 of this titie, on the
request of a party in interest made not later than 30 davs after
the court orders the appointment of a trustee under subsection
(a), the United States trustee shall convene a meeting of creditors
for the purpose of electing one disinterested person to serve as
trustee m m e case. The election of a trustee shall be conducted
in the manner provided in subsections (a), (b), and (c) of section
702 of this titie.".
(b) CONFORMING AMENDMENT.—Section 1106(b) of titie 11,
United States Code, is amended by striking "1104(c)" and inserting
"1104(d)".
SEC. 212. RIGHTS OF PARTNERSHIP TRUSTEE AGAINST GENERAL
PARTNERS.

Section 723(a) of titie 11, United States Code, is amended
by striking "for the ftdl amount of the deficiency" and inserting
"to the extent that under applicable nonbginkruptcy law such general partner is personally liable for such deficiency".
SEC. 213. IMPAIRMENT OF CLAIMS AND INTERESTS.

(a) OBJECTION TO CLAIMS FILED UNTIMELY.—Section 502(b)
of title 11, United States Code, is amended—
(1) in paragraph (7) by striking "or" at the end,
(2) in paragraph (8) by striking the period at the end
and inserting "; or", and
(3) by adding at the end the following:
"(9) proof of such claim is not timely filed, except to the
extent tardily filed as permitted under paragraph (1), (2), or
(3) of section 726(a) of this titie or under the Federal Rules
of Bankruptcy Procedure, except that a claim of a governmental

108 STAT. 4126

PUBLIC LAW 103-394—OCT. 22, 1994

unit shall be timely filed if it is filed before 180 days after
the date of the order for relief or such later time as the
Federal Rules of Bankruptcy Procedure may provide.".
(b) TARDILY FILED PRIORITY CLAIMS.—Section 726(a)(1) of title
11, United States Code, is amended by adding before the semicolon
the following: ", proof of which is timely filed under section 501
of this title or tardily filed before the date on which the trustee
commences distribution under this section".
(c) FILING OF REQUEST FOR ADMINISTRATIVE EXPENSES.—Sec-

tion 503(a) of title 11, United States Code, is amended—
(1) by inserting "timely" after "may", and
(2) by inserting ", or may tardily file such request if permitted
by the court for cause" before the period at the end.
(d) IMPAIRMENT OF CLAIMS OR INTERESTS.—Section 1124 of

title 11, United States Code, is amended—
(1) in paragraph (1) by inserting "or" at the end,
(2) in paragraph (2) by striking "; or" at the end and
inserting a period, and
(3) by striking paragraph (3).
SEC. 214. PROTECTION OF SECURITY INTEREST IN POST-PETITION
RENTS AND LODGING PAYMENTS.
(a) PosTPETiTiON E F F E C T O F SECURITY INTEREST.—Section

552(b) of title 11, United States Code, is amended—
(1) by inserting "(1)" after "(b)",
(2) by striking "rents," each place it appears, and
(3) by adding at the end the following:
"(2) Except as provided in sections 363, 506(c), 522, 544, 545,
547, and 548 of this title, and notwithstanding section 546(b) of
this title, if the debtor and an entity entered into a security agreement before the commencement of the case and if the security
interest created by such security agreement extends to property
of the debtor acquired before the commencement of the case and
to amounts paid as rents of such property or the fees, charges,
accounts, or other payments for the use or occupancy of rooms
and other public facilities in hotels, motels, or other lodging properties, then such security interest extends to such rents and such
fees, charges, accounts, or other payments acquired by the estate
after the commencement of the case to the extent provided in
such security agreement, except to any extent that the court, after
notice and a hearing and based on the equities of the case, orders
otherwise.".
(b) U S E SALE, OR LEASE OF PROPERTY.—Section 363(a) of title

11, United States Code, is amended by inserting: "and the fees,
charges, accounts or other payments for the use or occupancy of
rooms and other public facilities in hotels, motels, or other lodging
properties" after "property".
SEC. 215. AMENDMENT TO DEFINITION OF SWAP AGREEMENT.

Subparagraph (A) of the first paragraph (55) of section 101
of title 11, United States Code, is amended by inserting "spot
foreign exchange agreement," after "forward foreign exchange
agreement,".
SEC. 216. LIMITATION ON AVOIDING POWERS.

Section 546(a)(1) of title 11, United States Code, is amended
to read as follows:
"(1) the later of—

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4127

"(A) 2 years after the entry of the order for relief;
or

"(B) 1 year after the appointment or election of the
first trustee under section 702, 1104, 1163, 1202, or 1302
of this title if such appointment or such election occurs
before the expiration of the period specified in subparagraph (A); or".
SEC. 217. SMALL BUSINESSES.

(a) DEFINITION.—Section 101 of title 11, United States Code,
is amended by inserting after paragraph (51) the following:
"(51C) 'small business' means a person engaged in commercial or business activities (but does not include a person whose
primary activity is the business of owning or operating real
property and activities incidental thereto) whose aggregate
noncontingent liquidated secured and unsecured debts as of
the date of the petition do not exceed $2,000,000;".
(b) CREDITORS' COMMITTEES.—Section 1102(a) of title 11, United
States Code, is amended—
(1) in paragraph (1) by striking "As" and inserting "Except
as provided in paragraph (3), as"; and
(2) by adding at the end the following:
"(3) On request of a party in interest in a case in which
the debtor is a small business and for cause, the court may order
that a committee of creditors not be appointed.".
(c) CONVERSION OR DISMISSAL.—Section 1112(b) of title 11,
United States Code, is amended by inserting "or bankruptcy
administrator" after "United States trustee".
(d) W H O MAY FILE A PLAN.—Section 1121 of title 11, United

States Code, is amended by adding at the end the following:
"(e) In a case in which the debtor is a small business and
elects to be considered a small business—
"(1) only the debtor may file a plan until after 100 days
after the date of the order for relief under this chapter;
"(2) all plans shall be filed within 160 days after the
date of the order for relief; and
"(3) on request of a party in interest made within the
respective periods specified in paragraphs (1) and (2) and after
notice and a hearing, the court may—
"(A) reduce the 100-day period or the 160-day period
specified in paragraph (1) or (2) for cause; and
"(B) increase the 100-day period specified in paragraph
(1) if the debtor shows that the need for an increase is
caused by circumstances for which the debtor should not
be held accountable.".
(e) PosTPETiTiON DISCLOSURE.—Section 1125 of title 11, United
States Code, is amended by adding at the end the following:
"(f) Notwithstanding subsection (b), in a case in which the
debtor has elected under section 1121(e) to be considered a small
business—
"(1) the court may conditionally approve a disclosure statement subject to final approval after notice and a hearing;
"(2) acceptances and rejections of a plan may be solicited
based on a conditionally approved disclosure statement as long
as the debtor provides adequate information to each holder
of a claim or interest that is solicited, but a conditionally
approved disclosure statement shall be mailed at least 10 days

108 STAT. 4128

PUBLIC LAW 1 0 3 - 3 9 4 - O C T . 22, 1994
prior to the date of the hearing on confirmation of the plan;
and
"(3) a hearing on the disclosure statement may be combined
with a hearing on confirmation of a plan.".

SEC. 218. SINGLE ASSET REAL ESTATE.

(a) DEFINITION.—Section 101 of title 11, United States Code,
is amended by inserting after paragraph (51) the following:
"(5IB) 'single asset real estate' means real properhr constituting a single property or project, other than residential
real property with fewer than 4 residential units, which generates substantially all of the gross income of a debtor and
on which no substantial business is being conducted by a debtor
other than the business of operating the real property and
activities incidental thereto naving aggregate noncontingent,
Uquidated secured debts in an amount no more than
$4,000,000;".
(b) AUTOMATIC STAY.—Section 362(d) of title 11, United States
Code, is amended—
(1) in paragraph (1) by striking "or" at the end,
(2) in paragraph (2) by striking the period at the end
and inserting "; or", and
(3) by adding at the end the following:
"(3) with respect to a stay of an act against single asset
real estate under subsection (a), by a creditor whose claim
is secured by an interest in such real estate, unless, not later
than the date that is 90 days after the entry of the order
for relief (or such later date as the court may determine for
cause by order entered witMn that 90-day period)—
"(A) the debtor has filed a plan of reorgginization that
has a resisonable possibility of being confirmed within a
reasonable time; or
"(B) the debtor has conmienced monthly payments to
each creditor whose claim is secured by such real estate
(other than a claim secured by a judgment Uen or by
an unmatured statutory Uen), which payments are in an
amount equal to interest at a current fair market rate
on the value of the creditor's interest in the real estate.".
SEC. 219. LEASES OF PERSONAL PROPERTY.
(a) ASSUMPTION.—Section 365(b)(2) of titie 11, United States
Code, is amended—
(1) in subparagraph (B) by striking "or" at the end,
(2) in subparagraph (C) by striking the period and inserting
";or",
(3) by addm^ at the end the following:
"(D) the satisfaction of any penalty rate or provision relating to a default arising fi*om any failure by the debtor to
perform nonmonetary obHgations under the executory contract
or unexpired lease.".
(b) PERFORMANCE.—Section 365(d) of titie 11, United States
Code, is amended by adding at the end the following:
"(10) The trustee shall timely perform all of the obligations
of the debtor, except those specified in section 365(b)(2), first
arising fix)m or after 60 days after the order for relief in
a case imder chapter 11 of this titie under an unexpired lease
of personal property (other than personal property leased to
an individual primarily for personal, family, or household pur-

-^*, -.-•

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4129

poses), until such lease is assumed or rejected notwithstanding
section 503(b)(1) of this title, unless tiie court, after notice
Eind a hearing and based on the equities of the case, orders
otherwise with respect to the obligations or timely performance
thereof. This subsection shall not be deemed to affect the trustee's obhgations under the provisions of subsection (b) or (f).
Acceptance of any such performance does not constitute waiver
or rehnquishment of the lessor's rights under such lease or
under this title.".
(c) LIMITATION.—Section 363(e) of title 11, United States Code
is amended by adding at the end the following:
"This subsection also apphes to property that is subject to any
unexpired lease of personal property (to the exclusion of such property being subject to an order to grant rehef from the stay under
section 362).".
SEC. 220. EXEMPTION FOR SMALL BUSINESS INVESTMENT COMPANIES.

Section 109(b)(2) of title 11, United States Code, is amended
by inserting after "homestead association," the following: "a small
business investment company hcensed by the Small Business
Administration under subsection (c) or (d) of section 301 of the
Small Business Investment Act of 1958,".
SEC. 221. PAYMENT OF TAXES WITH BORROWED FUNDS.
Section 523(a) of title 11, United States Code, is amended—
(1) in paragraph (13) by striking the period at the end
and inserting a semicolon, and
(2) by adding at the end the following:
"(14) incurred to pay a tax to the United States that would
be nondischargeable pursuant to paragraph (1);".
SEC. 222. RETURN OF GOODS.

(a) LIMITATION ON AVOIDING POWERS.—Section 546 of title 11,
United States Code, is amended by adding at the end the following:
"(g) Notwithstanding the rights and powers of a trustee under
sections 544(a), 545, 547, 549, and 553, if the court determines
on a motion by the trustee made not later than 120 days after
the date of the order for rehef in a case under chapter 11 of
this title and after notice and a hearing, that a return is in the
best interests of the estate, the debtor, with the consent of a
creditor, may return goods shipped to the debtor by the creditor
before the commencement of the case, and the creditor may offset
the purchase price of such goods against any claim of the creditor
against the debtor that arose before tlie commencement of the
case.".
(b) SETOFF.—Section 553(b)( 1) is amended by inserting "546(h),"
after "365(h),".
SEC. 223. PROCEEDS OF MONEY ORDER AGREEMENTS.

Section 541(b) of titie 11, United States Code, is amended—
(1) in paragraph (3) by striking "or" at the end and inserting a semicolon,
(2) in paragraph (4) by striking the period at the end
and inserting "; or", and
(3) by inserting after paragraph (4) the following:

11 USC 553.

108 STAT. 4130

PUBLIC LAW 103-394—OCT. 22, 1994
"(5) any interest in cash or cash equivalents that constitute
proceeds of a sale by the debtor of a money order that is
made—
"(A) on or after the date that is 14 days prior to
the date on which the petition is filed; and
"(B) under an agreement with a money order issuer
that prohibits the commingling of such proceeds with property of the debtor (notwitiistanding that, contrary to the
agreement, the proceeds may have been commingled with
property of the debtor),
unless the money order issuer had not taken action, prior
to the fihng of tiie petition, to require compHance with the
prohibition.".

SEC. 224. TRUSTEE DUTIES; PROFESSIONAL FEES.

Courts.

(a) TRUSTEE'S DUTIES.—Section 586(a)(3)(A) of title 28, United
States Code, is amended to read as follows:
"(A)(i) reviewing, in accordance with procedural guidelines adopted by the Executive Office of tiie United States
Trustee (which guideUnes shall be apphed uniformly by
the United States trustee except when circimistEinces warrant different treatment), applications filed for compensation and reimbursement under section 330 of title 11; and
**(ii) filing with the court comments with respect to
such appUcation and, if the United States Trustee considers
it to be appropriate, objections to such appUcation.".
(b) PROFESSIONAL FEES.—Section 330(a) of title 11, United
States Code, is amended to read as follows:
"(a)(1) After notice to the parties in interest and the United
States Trustee and a hearing, and subject to sections 326, 328,
and 329, the court may award to a trustee, an examiner, a professional person employed under section 327 or 1103—
"(A) reasonable compensation for actual, necessary services
rendered by the trustee, examiner, professional person, or attorney and by any paraprofessional person employed by any such
person; and
"(B) reimbursement for actual, necessary expenses.
"(2) The court may, on its own motion or on the motion of
the United States Trustee, the United States Trustee for the District
or Region, the trustee for the estate, or any other party in interest,
award compensation that is less than the amount of compensation
that is requested.
"(3)(A) In determining the amount of reasonable compensation
to be awarded, the court shall consider the nature, the extent,
and the value of such services, taking into account all relevant
factors, including—
"(A) the time spent on such services;
"(B) the rates charged for such services;
"(C) whether the services were necessary to the administration of, or beneficial at the time at which the service was
rendered toward the completion of, a case under this title;
"(D) whether the services were performed within a reasonable amount of time commensurate with the complexity, importance, and nature of the problem, issue, or task addressed;
and

'-'•. •> A * ^ « .

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4131

"(E) whether the compensation is reasonable based on the
customary compensation charged by comparably skilled
practitioners in cases other than cases under this title.
(4)(A) Except as provided in subparagraph (B), the court shall
not allow compensation for—
"(i) unnecessary duplication of services; or
"(ii) services that were not—
"(I) reasonably likely to benefit the debtor's estate;
or
"(II) necessary to the administration of the case.
"(B) In a chapter 12 or chapter 13 case in which the debtor
is an individual, the court may allow reasonable compensation
to the debtor's attorney for representing the interests of the debtor
in connection with the bankruptcy case based on a consideration
of the benefit and necessity of such services to the debtor and
the other factors set forth in this section.
"(5) The court shall reduce the amount of compensation Courts,
awarded under this section by the amount of any interim compensation awarded under section 331, and, if the amount of such interim
compensation exceeds the amount of compensation awarded under
this section, may order the return of the excess to the estate.
"(6) Any compensation awarded for the preparation of a fee
application shall be based on the level and skill reasonably required
to prepare the application.".
SEC. 225. NOTICES TO CREDITORS.

Section 342 of title 11, United States Code, is amended by
adding at the end the following:
"(c) If notice is required to be given by the debtor to a creditor
under this title, any rule, any applicable law, or any order of
the court, such notice shall contain the name, address, and taxpayer
identification number of the debtor, but the failure of such notice
to contain such information shall not invalidate the legal effect
of such notice.".

TITLE III—CONSUMER BANKRUPTCY
ISSUES
SEC. 301. PERIOD FOR CURING DEFAULT RELATING TO PRINCIPAL
RESIDENCE.

Section 1322 of title 11, United States Code, is amended—
(1) by redesignating subsection (c) as subsection (d), and
(2) by inserting after subsection (b) the following:
"(c) Notwithstanding subsection (b)(2) and applicable
nonbankruptcy law—
"(1) a default with respect to, or that gave rise to, a lien
on the debtor's principal residence may be cured under paragraph (3) or (5) of subsection (b) until such residence is sold
at a foreclosure sale that is conducted in accordance with
applicable nonbankruptcy law; and
"(2) in a case in which the last payment on the original
payment schedule for a claim secured only by a security interest
in real property that is the debtor's principal residence is due
before the date on which the final pa3anent under the plan
is due, the plan may provide for the payment of the claim
as modified pursuant to section 1325(a)(5) of this title.".

79-194 O—95—21 : QL 3 Part 5

108 STAT. 4132

PUBLIC LAW 103-394—OCT. 22, 1994

SEC. 302. NONDISCHARGEABILrrY OF FINE UNDER CHAPTER 13.

Section 1328(a)(3) of title 11, United States Code, is amended
by inserting ", or a criminal fine," after "restitution".
SEC. 303. IMPAIRMENT OF EXEMPTIONS.

Section 522(f) of titie 11, United States Code, is amended—
(1) in paragraph (2)—
(A) by redesignating subparagraphs (A), (B), and (C)
as clauses (i), (ii), and (in), respectively, and
(B) by striking "(2)" and inserting "(B)",
(2) by redesignating paragraph (1) as subparagraph (A),
(3) by inserting "(1)" before "Notwithstanding", and
(4) by adding at the end the following:
"(2)(A) For the purposes of this subsection, a Uen shaU be
considered to impair an exemption to the extent tiiat the sum
of—
"(i) the hen;
"(ii) all other liens on the property; and
"(iii) the amount of the exemption that the debtor could
claim if there were no hens on the property;
exceeds the value that the debtor's interest in the property would
have in the absence of any Uens.
"(B) In the case of a property subject to more than 1 hen,
a hen that has been avoided shall not be considered in making
the calculation under subparagraph (A) with respect to other liens.
"(C) This paragraph snail not apply with respect to a judgment
arising out of a mortgage foreclosure. .
SEC. 304. PROTECTION OF CHILD SUPPORT AND ALIMONY.

(a) DEFINITION.—Section 101 of titie 11, United States Code,
is amended by insertiDg after paragraph (12) tlie following:
"(12A) 'debt tor child support* means a debt of a kind
specified in section 523(a)(5) of this titie for maintenance or
support of a child of the debtor,".
(b) RELIEF FROM AUTOMATIC STAY.—Section 362(b)(2) of titie
11, United States Code, is amended to read as foUows:
"(2) under subsection (a) of this section—
"(A) of the commencement or continuation of an action
or proceeding foi-*(i) the establishment of paternity; or
"(ii) the estabhshment or modification of an order
for alimony, maintenance, or support; or
"(B) of the collection of alimony, maintenance, or support fi^m property that is not propertir of the estate, .
(c) PRIORITY OF CLAIMS.—Section 507(a) of titie 11, United
States Code, is amended—
(1) in paragraph (8) by striking "(8) Eighth" and inserting
"(9)Nmtili",
(2) in paragraph (7) by striking "(7) Seventh" and inserting
"(8) Eightii", and
(3) by inserting after paragraph (6) the following:
"(7) Seventh, aUowed claims for debts to a spouse, former
spouse, or child of the debtor, for alimony to, maintenance
for, or support of such spouse or chUd, in connection with
a separation agreement, divorce decree or other order of a
court of record, determination made in accordance with State

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4133

or territorial law by a governmental unit, or property settlement
agreement, but not to the extent that such debt—
"(A) is assigned to anothei^ entity, voluntarily, by operation of law, or otherwise; or
"(B) includes a Uability designated as alimony, maintenance, or support, unless such liability is actuEuly in the
nature of alimony, maintenance or support".
(d) PROTECTION OF LIENS.—Section 522(f)(1)(A) of title 11,
United States Code, as amended by section 303, is amended by
inserting after "hen" the following:
", other than a judicial lien that secures a debt—
"(i) to a spouse, former spouse, or child of the debtor,
for alimony to, maintenance for, or support of such spouse
or child, in connection with a separation agreement, divorce
decree or other order of a court of record, determination
made in accordance with State or territorial law by a
governmental unit, or property settlement agreement; and
*(ii) to the extent that such debt—
"(I) is not assigned to another entity, voluntarily,
by operation of law, or otherwise; and
"(II) includes a liability designated as alimony,
maintenance, or support, unless such liabiUty is actually in the nature of alimony, maintenance or support".
(e) EXCEPTION TO DISCHARGE.—Section 523 of title 11, United
States Code, as amended by section 221, is amended by adding
at the end the following:
"(15) not of the kind described in paragraph (5) that is
incurred by the debtor in the course of a divorce or separation
or in connection with a separation agreement, divorce decree
or other order of a court of record, a determination made
in accordance with State or territorial law by a governmental
imit unless—
"(A) the debtor does not have the abiUty to pay such
debt from income or property of the debtor not reasonably
necessary to be expended for the maintenance or support
of the debtor or a dependent of the debtor and, if the
debtor is engaged in a business, for the payment of expenditures necessary for the continuation, preservation, and
operation of such business; or
"(B) discharging such debt would result in a benefit
to the debtor that outweighs tlie detrimental consequences
to a spouse, former spouse, or child of the debtor;", and
(2) in subsection (c)(l) by striking "or (6)" each place it
appears and inserting "(6), or (15)".
(t) PROTECTION AGAINST TRUSTEE AVOIDANCE.—Section 547(c)
of title 11, United States Code, is amended—
(1) in paragraph (6) by striking "or" at the end,
(2) by redesignating paragraph (7) as p a r a ^ p h (8), and
(3) by inserting after paragrapn (6) the following:
"(7) to the extent such transfer was a bona fide payment
of a debt to a spouse, former spouse, or child of the debtor,
for alimony to, maintenance for, or support of such spouse
or child, in connection with a SCT)aration agreement, divorce
decree or other order of a court of record, determination made
in accordance with State or territorial law by a governmental
imit, or property settlement agreement, but not to the extent
that such debt—

108 STAT. 4134

PUBLIC LAW 103-394—OCT. 22, 1994
"(A) is assigned to another entity, voluntarily, by operation of law, or otherwise; or
"(B) includes a Hability designated as alimony, maintenance, or support, unless such Habihty is actually in the
nature of ahmony, maintenance or support; or".

11 use 501
note.

(g) APPEARANCE BEFORE COURT.—Child support creditors or

their representatives shall be permitted to appear and intervene
without charge, and without meeting any special local court rule
requirement for attorney appearances, in any bankruptcy case or
proceeding in any bankruptcy court or district coiul; of the United
States if such creditors or representatives file a form in such court
that contains information detailing the child support debt, its status,
and other characteristics.
(h) CONFORMING AMENDMENTS.—Title 11 of the United States

Code is Eunended—
(1) in section 502(i) by striking "507(a)(7)" and inserting
"507(a)(8)",
(2) in section 503(b)(l)(B)(i) by striking "507(a)(7r and
inserting "507(a)(8)'',
(3) in section 523(a)(1)(A) by striking "507(a)(7)" and inserting "507(a)(8)'',
(4) in section 724(b)(2) by striking "or 507(a)(6)'' and inserting "507(a)(6), or 507(a)(7)'',
(5) in section 726(b) by striking "or (7)" and inserting
",(7), or (8)",
(6) in section 1123(a)(1) by striking "507(a)(7)'' and inserting "507(a)(8)'',
(7) in section 1129(a)(9>—
(i) in subparagraph (B) by striking "or 507(a)(6)'' and
inserting ", 507(a)(6), or 507(a)(7)", and
(ii) in subparagraph (C) by striking "507(a)(7)" and
inserting "507(a)(8)".
SEC. 305. INTEREST ON INTEREST.

(a) CHAPTER 11.—Section 1123 of title 11, United States Code,
is amended by adding a t the end the following:
"(d) Notwithsteinding subsection (a) of this section and sections
506(b), 1129(a)(7), and 1129(b) of this titie, if it is proposed in
a plan to cure a default the amount necessary to cure the default
shall be determined in accordsince with the underlying agreement
and applicable nonbankruptcy law.".
(b) CHAPTER 12.—Section 1222 of titie 11, United States Code,
is amended by adding a t the end the following:
"(d) Notwithstanding subsection (b)(2) of this section and sections 506(b) and 1225(a)(5) of this title, if it is proposed in a
plan to cure a default, the amoimt necessary to cure m e default,
shall be determined in accordance with the underlying agreement
and appHcable nonbankruptcy law.".
(c) CHAPTER 13.—Section 1322 of titie 11, United States Code,
is amended by adding a t the end the following:
"(e) Notwithstanding subsection (b)(2) of this section and sections 506(b) and 1325(a)(5) of this title, if it is proposed in a
plan to cure a default, the amount necessary to cure tiie default,
shall be determined in accordance with the underlying agreement
and applicable nonbankruptcy law.".

,,«?•>*.•

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4135

SEC. 306. EXCEPTION TO DISCHARGE.

Section 523(a)(2)(C) of title 11, ,United States Code, is
amended—
(1) by striking "$500" and inserting "$ 1,000",
(2) by striking "forty" and inserting "60", and
(3) by striking "twenty" and inserting "60".
SEC. 307. PAYMENTS UNDER CHAPTER 13.

Section 1326(a)(2) of title 11, United States Code, is amended
in the second sentence by striking the period and inserting "as
soon as practicable.".
SEC. 308. BANKRUPTCY PETITION PREPARERS.

(a) AMENDMENT OF CHAPTER 1.—Chapter 1 of title 11, United
States Code, is amended by adding at the end the following:
"§110. Penalty for persons who negligently or fraudulently
prepare bankruptcy petitions
"(a) In this section—
"(1) 'bankruptcy petition preparer' means a person, other
than an attorney or an employee of an attorney, who prepares
for compensation a document for filing; and
"(2) 'document for filing* means a petition or any other
document prepared for filing by a debtor in a United States
bankruptcy court or a United States district court in connection
with a case under this title.
"(b)(1) A bankruptcy petition preparer who prepares a document
for filing shall sign the document and print on the document the
preparer's name and address.
"(2) A bankruptcy petition preparer who fails to comply with
paragraph (1) may be fined not more than $500 for each such
failure unless the failure is due to reasonable cause.
"(c)(1) A bankruptcy petition preparer who prepares a document
for filing shall place on the document, after the preparer's signature,
an identifying number that identifies individuals who prepared
the document.
"(2) For purposes of this section, the identifying number of
a bankruptcy petition preparer shall be the Social Security account
number of each individual who prepared the document or assisted
in its preparation.
"(3) A bankruptcy petition preparer who fails to comply with
paragraph (1) may be fined not more than $500 for each such
failure unless the failure is due to reasonable cause.
"(d)(1) A bankruptcy petition preparer shall, not later than
the time at which a document for filing is presented for the debtor's
signature, furnish to the debtor a copy of the document.
"(2) A bankruptcy petition preparer who fails to comply with
paragraph (1) may be fined not more than $500 for each such
failure unless the failure is due to reasonable cause.
"(e)(1) A bankruptcy petition preparer shall not execute any
document on behalf of a debtor.
"(2) A bankruptcy petition preparer may be fined not more
than $500 for each document executed in violation of paragraph
(1).
"(f)(1) A bankruptcy petition preparer shall not use the word
'legal' or any similar term in any advertisements, or advertise

108 STAT. 4136

Courts.

PUBLIC LAW 103-394—OCT. 22, 1994

under any category that includes the word 'legal' or any similar
term.
"(2) A bankruptcy petition preparer shall be fined not more
than $500 for each violation of paragraph (1).
"(g)(1) A bankruptcy petition preparer shall not collect or
receive any payment from the debtor or on behalf of the debtor
for the court fees in connection with filing the petition.
"(2) A bankruptcy petition preparer shall be fined not more
than $500 for each violation of paragraph (1).
"(h)(1) Within 10 days after the date of the filing of a petition,
a bankruptcy petition preparer shall file a declaration under penalty
of perjury disclosing any fee received from or on behalf of the
debtor within 12 months immediately prior to the filing of the
case, and any unpaid fee charged to the debtor.
"(2) The court shall disallow and order the immediate turnover
to the bankruptcy trustee of any fee referred to in paragraph
(1) found to be in excess of the value of services rendered for
the documents prepared. An individual debtor may exempt any
funds so recovered under section 522(b).
"(3) The debtor, the trustee, a creditor, or the United States
trustee may file a motion for an order under paragraph (2).
"(4) A bankruptcy petition preparer shall be fined not more
than $500 for each failure to comply with a court order to turn
over funds within 30 days of service of such order.
"(i)(l) If a bankruptcy case or related proceeding is dismissed
because of the failure to file bankruptcy papers, including papers
specified in section 521(1) of this title, the negligence or intentional
disregard of this title or the Federal Rules of Bankruptcy Procedure
by a bankruptcy petition preparer, or if a bankruptcy petition
preparer violates this section or commits any fraudulent, unfair,
or deceptive act, the bankruptcy court shall certify that fact to
the district court, and the district court, on motion of the debtor,
the trustee, or a creditor and after a hearing, shall order the
bankruptcy petition preparer to pay to the debtor—
"(A) the debtor's actual damages;
"(B) the greater of—
"(i) $2,000; or
"(ii) twice the amount paid by the debtor to the bankruptcy petition preparer for the preparer's services; and
"(C) reasonable attorneys' fees and costs in moving for
damages under this subsection.
"(2) If the trustee or creditor moves for damages on behalf
of the debtor under this subsection, the bankruptcy petition preparer shall be ordered to pay the movant the additional amount
of $1,000 plus reasonable attorneys' fees and costs incurred.
"(j)(l) A debtor for whom a bankruptcy petition preparer has
prepared a document for filing, the trustee, a creditor, or the United
States trustee in the district in which the bankruptcy petition
preparer resides, has conducted business, or the United States
trustee in any other district in which the debtor resides may bring
a civil action to enjoin a bankruptcy petition preparer from engaging
in any conduct in violation of this section or from further acting
as a bankruptcy petition preparer.
"(2)(A) In an action under paragraph (1), if the court finds
that—
"(i) a bankruptcy petition preparer has—

•«1«?4?j?',-

PUBLIC LAW 103-394-OCT. 22, 1994

108 STAT. 4137

"(I) engaged in conduct in violation of this section
or of any provision of this title a violation of which subjects
a person to criminal penalty;
"(II) misrepresented the preparer's experience or education as a bankruptcy petition preparer; or
"(III) engaged in any other fraudulent, unfair, or deceptive conduct; and
"(ii) injunctive relief is appropriate to prevent the recurrence of such conduct,
the court may enjoin the bankruptcy petition preparer from engaging in such conduct.
"(B) If the court finds that a bankruptcy petition preparer
has continually engaged in conduct described in subclause (I), (II),
or (III) of clause (i) and that an injunction prohibiting such conduct
would not be sufficient to prevent such person's interference with
the proper administration of this title, or has not paid a penalty
imposed under this section, the court may enjoin the person from
acting as a bankruptcy petition preparer.
"(3) The court shall award to a debtor, trustee, or creditor
that brings a successful action under this subsection reasonable
attorney's fees and costs of the action, to be paid by the bankruptcy
petition preparer.
"(k) Nothing in this section shall be construed to permit activities that are otherwise prohibited by law, including rules and laws
that prohibit the unauthorized practice of law.".
(b) The chapter analysis for chapter 1 of title 11, United States
Code, is amended by adding at the end the following new item:
"110. Penalty for persons who negligently or fraudulently prepare bankruptcy petitions.".
SEC. 309. FAIRNESS TO CONDOMINIUM AND COOPERATIVE OWNERS.

Section 523(a) of title 11, United States Code, as amended
by sections 221 and 304, is amended by adding at the end the
following:
"(16) for a fee or assessment that becomes due and payable
after the order for relief to a membership association with
respect to the debtor's interest in a dwelling unit that has
condominium ownership or in a share of a cooperative housing
corporation, but only if such fee or assessment is payable for
a period during which—
"(A) the debtor physically occupied a dwelling unit
in the condominium or cooperative project; or
"(B) the debtor rented the dwelling unit to a tenant
and received payments from the tenant for such period,
but nothing in this paragraph shall except from discharge the
debt of a debtor for a membership association fee or assessment
for a period arising before entry of the order for relief in
a pending or subsequent bankruptcy case.".
SEC. 310. NONAVOIDABILITY OF FIXING OF LIEN ON TOOLS AND
IMPLEMENTS OF TRADE, ANIMALS, AND CROPS.

Section 522(f) of title 11, United States Code, as amended
by sections 303 and 304, is amended—
(1) in paragraph (1) by inserting "but subject to paragraph
(3)" after "waiver of exemptions", and
(2) by adding at the end the following:
"(3) In a case in which State law that is applicable to the
debtor—

108 STAT. 4138

PUBLIC LAW 103-394—OCT. 22, 1994

"(A) permits a person to voluntarily waive a right to claim
exemptions under subsection (d) or prohibits a debtor from
claiming exemptions under subsection (d); and
"(B) either permits the debtor to claim exemptions under
State law without limitation in amount, except to the extent
that the debtor has permitted the fixing of a consensual lien
on any property or prohibits avoidance of a consensual lien
on property otherwise eligible to be claimed as exempt property;
the debtor may not avoid the fixing of a lien on an interest of
the debtor or a dependent of the debtor in property if the lien
is a nonpossessory, nonpurchase-money security interest in implements, professional books, or tools of the trade of the debtor or
a dependent of the debtor or farm animals or crops of the debtor
or a dependent of the debtor to the extent the value of such
implements, professional books, tools of the trade, animals, and
crops exceeds $5,000.".
SEC, 311. CONVERSION OF CASE UNDER CHAPTER 13.
Section 348 of title 11, United States Code, is amended by
adding at the end the following:
"(f)(1) Except as provided in paragraph (2), when a case under
chapter 13 of this title is converted to a case under another chapter
under this title—
"(A) property of the estate in the converted case shall
consist of property of the estate, as of the date of filing of
the petition, that remains in the possession of or is under
the control of the debtor on the date of conversion; and
"(B) valuations of property and of allowed secured claims
in the chapter 13 case shall apply in the converted case, with
allowed secured claims reduced to the extent that they have
been paid in accordance with the chapter 13 plan.
"(2) If the debtor converts a case under chapter 13 of this
title to a case under another chapter under this title in bad faith,
the property in the converted case shall consist of the property
of the estate as of the date of conversion.".
SEC. 312. BANKRUPTCY FRAUD.
(a) IN GENERAL.—

(1) OFFENSES.—Chapter 9 of title 18, United States Code,
is amended—
(A) by amending sections 152, 153, and 154 to read
as follows:
**§ 152. Concealment of assets; false oaths and claims; bribery
"A person who—
"(1) knowingly and fraudulently conceals from a custodian,
trustee, marshal, or other officer of the court charged with
the control or custody of property, or, in connection with a
case under title 11, from creditors or the United States Trustee,
any property belonging to the estate of a debtor;
"(2) knowingly and fraudulently makes a false oath or
account in or in relation to any case under title 11;
"(3) knowingly and fraudulently makes a false declaration,
certificate, verification, or statement under penalty of perjury
as permitted under section 1746 of title 28, in or in relation
to any case under title 11;
"(4) knowingly and fraudulently presents any false claim
for proof against the estate of a debtor, or uses any such

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4139

claim in any case under title 11, in a personal capacity or
as or through an agent, proxy, or attorney;
"(5) knowingly and fraudulently receives any material
amount of property from a debtor after the filing of a case
under title 11, with intent to defeat the provisions of title
11;
"(6) knowingly and fraudulently gives, offers, receives, or
attempts to obtain any money or property, remuneration, compensation, reward, advantage, or promise thereof for acting
or forbearing to act in any case under title 11;
"(7) in a personal capacity or as an agent or officer of
any person or corporation, in contemplation of a case under
title 11 by or against the person or any other person or corporation, or with intent to defeat the provisions of title 11, knowingly and fraudulently transfers or conceals any of his property
or the property of such other person or corporation;
"(8) after the filing of a case under title 11 or in contemplation thereof, knowingly and fraudulently conceals, destroys,
mutilates, falsifies, or makes a false entry in any recorded
information (including books, documents, records, and papers)
relating to the property or financial affairs of a debtor; or
"(9) after the filing of a case under title 11, knowingly
and fraudulently withholds from a custodian, trustee, marshal,
or other officer of the court or a United States Trustee entitled
to its possession, any recorded information (including books,
documents, records, and papers) relating to the property or
financial affairs of a debtor,
shall be fined not more than $5,000, imprisoned not more than
5 years, or both.
'*§ 153. Embezzlement against estate
"(a) OFFENSE.—^A person described in subsection (b) who knowingly and fraudulently appropriates to the person's own use, embezzles, spends, or transfers any property or secretes or destroys any
document belonging to the estate of a debtor shall be fined not
more than $5,000, imprisoned not more than 5 years, or both.

"(b)

PERSON TO WHOM SECTION APPLIES.—A

person described

in this subsection is one who has access to property or documents
belonging to an estate by virtue of the person's participation in
the administration of the estate as a trustee, custodian, marshal,
attorney, or other officer of the court or as an agent, employee,
or other person engaged by such an officer to perform a service
with respect to the estate.
^§ 154. Adverse interest and conduct of officers
"A person who, being a custodian, trustee, marshal, or other
officer of the court—
"(1) knowingly purchases, directly or indirectly, any property of the estate of which the person is such an officer in
a case under title 11;
"(2) knowingly refuses to permit a reasonable opportunity
for the inspection by parties in interest of the documents and
accounts relating to the affairs of estates in the person's charge
by parties when directed by the court to do so; or
"(3) knowingly refuses to permit a reasonable opportunity
for the inspection by the United States Trustee of the docu-

108 STAT. 4140

PUBLIC LAW 103-394—OCT. 22, 1994

ments and accounts relating to the affairs of an estate in
the person's charge,
shall be fined not more than $5,000 and shall forfeit the person's
office, which shall thereupon become vacant."; and
(B) by adding at the end the following:
"§ 156. Knowing disregard of bankruptcy law or rule
"(a) DEFINITIONS.—In this section—
"'bankruptcy petition preparer' means a person, other than
the debtor's attorney or an employee of such an attorney, who
prepares for compensation a document for filing.
"'document for filing' means a petition or any other document prepared for filing by a debtor in a United States bankruptcy court or a United States district court in connection
with a case under this title.
"(b) OFFENSE.—If a bankruptcy case or related proceeding is
dismissed because of a knowing attempt by a bankruptcy petition
preparer in any manner to disregard the requirements of title
11, United States Code, or the Federal Rules of Bankruptcy Procedure, the bankruptcy petition preparer shall be fined under this
title, imprisoned not more than 1 year, or both.
"§ 157. Bankruptcy fraud
"A person who, having devised or intending to devise a scheme
or artifice to defraud and for the purpose of executing or concealing
such a scheme or artifice or attempting to do so—
"(1) files a petition under title 11;
"(2) files a document in a proceeding under title 11; or
"(3) makes a false or fraudulent representation, claim, or
promise concerning or in relation to a proceeding under title
11, at any time before or after the filing of the petition, or
in relation to a proceeding falsely asserted to be pending under
such title,
shall be fined under this title, imprisoned not more than 5 years,
or both.".
(2) TECHNICAL AMENDMENTS.—^The chapter analysis for
chapter 9 of title 18, United States Code, is amended—
(A) by amending the item relating to section 153 to
read as follows:
"Sec. 153. Embezzlement against estate.";

and
(B) by adding at the end the following new items:
"Sec. 156. Knowing disregard of bankruptcy law or rule.
"Sec. 157. Bankruptcy fraud.".

(b) RICO.—Section 1961(1)(D) of title 18, United States Code,
is amended by inserting "(except a case under section 157 of that
title)" after "title 11".
SEC. 313. PROTECTION AGAINST DISCRIMINATORY TREATMENT OF
APPLICATIONS FOR STUDENT LOANS.

Section 525 of title 11, United States Code, is amended by
adding at the end the following:
"(c)(1) A governmental unit that operates a student grant or
loan program and a person engaged in a business that includes
the making of loans guaranteed or insured under a student loan
program may not deny a grant, loan, loan guarantee, or loan insurance to a person that is or has been a debtor under this title

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4141

or a bankrupt or debtor under the Bankruptcy Act, or another
person with whom the debtor or bankrupt has been associated,
because the debtor or bankrupt is or has been a debtor under
this title or a bankrupt or debtor under the Bankruptcy Act, has
been insolvent before the commencement of a case under this title
or during the pendency of the case but before the debtor is granted
or denied a discharge, or has not paid a debt that is dischargeable
in the case under this title or that was discharged under the
Bankruptcy Act.
"(2) In this section, 'student loan program' means the program
operated under part B, D, or E of title IV of the Higher Education
Act of 1965 or a similar program operated under State or local
law.".

TITLE IV—GOVERNMENTAL
BANKRUPTCY ISSUES
SEC. 401. EXCEPTION FROM AUTOMATIC STAY FOR POST-PETITION
PROPERTY TAXES.

Section 362(b) of title 11, United States Code, is amended
by inserting after paragraph (16) the following:
"(18) under subsection (a) of the creation or perfection
of a statutory lien for an ad valorem property tax imposed
by the District of Columbia, or a political subdivision of a
State, if such tax comes due after the filing of the petition.".
SEC. 402. MUNICIPAL BANKRUPTCY.

Section 109(c)(2) of title 11, United States Code, is amended
by striking "generally authorized" and inserting "specifically authorized, in its capacity as a municipality or by name,".

TITLE V—TECHNICAL CORRECTIONS
SEC. 501. AMENDMENTS TO BANKRUPTCY DEFINITIONS, NECESSITATED BY ENACTMENT OF PUBUC LAW 101-647.
(a) ALPHABETIZING AND REDESIGNATING DEFINITIONS.—Section

101 of title 11 of the United States Code, as amended by sections
208, 217, 218, and 304, is amended—
(1) by redesignating paragraph (3) as paragraph (2 IB) and
transferring such paragraph so as to insert it after paragraph
(2 LA),
(2) by redesignating paragraph (39) as paragraph (51A)
and transferring such paragraph so as to insert it after paragraph (51),
(3) by redesignating paragraphs (54) through (57), as so
redesignated by section 2522(e) of Public Law 101-647, as
paragraphs (53A) through (53D), respectively,
(4) by redesignating paragraph (56) as in effect immediately
before the enactment of Public Law 101-647, as paragraph
(35A) and transferring such paragraph so as to insert it after
paragraph (35), and
(5) by redesignating paragraph (57), as in effect immediately before the enactment of Public Law 101-647, as paragraph (39) and transferring such paragraph so as to insert
it after paragraph (38).

108 STAT. 4142

PUBLIC LAW 103-394—OCT. 22, 1994

(b) CONFORMING AND RELATED AMENDMENTS TO TITLE 11 OF
THE UNITED STATES CODE, BASED ON REDESIGNATED DEFINITIONS.—

(1) Section 101 of title 11 of the United States Code, as amended
by subsection (a), is amended—
(A) in paragraph (6) by striking "section 761(9)" and inserting "section 761",
(B) in paragraph (22) by striking "section 741(7)" and
inserting "section 741",
(C) in paragraph (35)(B) by striking "paragraphs (3)" and
inserting "paragraphs (2IB)",
(D) in paragraph (49)(B)(ii) by striking "section 761(13)"
and inserting "section 761", and
(E) in paragraph (53A)(A), as so redesignated, by striking
"section 741(2)" and inserting "section 741".
(2) Section 362(b) of title 11, United States Code, is amended—
(A) in paragraph (6)—
(i) by striking "section 761(4)" and inserting "section
761",
(ii) by striking "section 741(7)" and inserting "section
741",
(iii) by striking "section 101(34), 741(5), or 761(15)"
and inserting "section 101, 741, or 761", and
(iv) by striking "section 101(35) or 741(8)" and inserting
"section 101 or 741", and
(B) in paragraph (7)-—
(i) by striking "section 741(5) or 761(15)" and inserting
"section 741 or 761", and
(ii) by striking "section 741(8)" and inserting "section
741".
(3) Section 507(a)(5) of title 11, United States Code, is
amended—
(A) by striking "section 557(b)(1)" and inserting "section
557(b)", and
(B) by striking "section 557(b)(2)" and inserting "section
557(b)".
(4) Section 546 of title 11, United States Code, is amended—
(A) in subsection (e)—
(i) by striking "section 101(34), 741(5), or 761(15)" and
inserting "section 101, 741, or 761", and
(ii) by striking "section 101(35) or 741(8)" and inserting
"section 101 or 741", and
(B) in subsection (f)—
(i) by striking "section 741(5) or 761(15)" and inserting
"section 741 or 761", and
(ii) by striking "section 741(8)" and inserting "section
741".
(5) Section 548(d)(2) of title 11, United States Code, is
amended—
(A) in subparagraph (B)—
(i) by striking "section 101(34), 741(5) or 761(15)" and
inserting "section 101, 741, or 761", and
(ii) by striking "section 101(35) or 741(8)" and inserting
"section 101 or 741", and
(B) in subparagraph (C)—
(i) by striking "section 741(5) or 761(15)" and inserting
"section 741 or 761", and

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4143

(ii) by striking "section 741(8)" and inserting "section
741".
(6) Section 555 of title 11, United States Code, is amended
by striking "section 741(7)" and inserting "section 741 of this title".
(7) Section 556 of title 11, United States Code, is amended
by striking "section 761(4)" and inserting "section 761 of this title".
(c) CONFORMING AMENDMENTS TO OTHER LAWS BASED ON

REDESIGNATED DEFINITIONS.—(1) Section 207(c)(8)(D) of the Federal
Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is amended—
(A) in clause (ii)(I) by striking "section 741(7)" and inserting
"section 741",
(B) in clause (iii) by striking "section 101(24)" and inserting
"section 101",
(C) in clause (iv)(I) by striking "section 101(41)" and inserting "section 101", and
(D) in clause (v) by striking "section 101(50)" and inserting
"section 101".
(2) Section 11(e)(8)(D) of the Federal Deposit Insurance Act
(12 U.S.C. 1821(e)(8)(D)) is amended—
(A) in clause (ii)(I) by striking "section 741(7)" and inserting
"section 741",
(B) in clause (iii) by striking "section 761(4)" and inserting
"section 761",
(C) in clause (iv) by striking "section 101(24)" and inserting
"section 101",
(D) in clause (v)(I) by striking "section 101(41)" and inserting "section 101", and
(E) in clause (viii) by striking "section 101(50)" and inserting "section 101".
(d) OTHER TECHNICAL AMENDMENTS.—^Title 11 of the United
States Code is amended—
(1) in section 101—
(A) in paragraph (33)—
(i) in subparagraph (A) by striking "(12 U.S.C.
1813(u))", and
(ii) in subparagraph (B) by striking "(12 U.S.C.
1786(r))",
(B) in paragraph (34) by striking "(12 U.S.C. 1752(7))",
(C) in paragraph (35)(A) by striking "(12 U.S.C.
1813(c)(2))",
(D) in paragraph (48)—
(i) by striking "(15 U.S.C. 78q-l)", and
(ii) by striking "(15 U.S.C. 78c(12))",
(E) in paragraph (49)—
(i) in subparagraph (A)(xii)—
(I) by striking "(15 U.S.C. 77a et seq.)", and
(II) by striking "(15 U.S.C. 77c(b))", and
(ii) in subparagraph (B)(vi) by striking "(15 U.S.C.
77c(b))", and
(F) in paragraph (53D), as so redesignated by subsection (a), by striking the period at the end and inserting
a semicolon,
(2) in section 109(b)(2) by striking "(12 U.S.C. 1813(h))",
(3) in section 322(a) by striking "1302, or 1202" and inserting "1202, or 1302",
(4) in section 346—

108 STAT. 4144

PUBLIC LAW 103-394—OCT. 22, 1994
(A) in subsection (a) by striking "Internal Revenue
Code of 1954 (26 U.S.C. 1 et seq.)" and inserting "Internal
Revenue Code of 1986", and
(B) in subsection (g)(1)(C) by striking "Internal Revenue Code of 1954 (26 U.S.C. 371)" and inserting "Internal
Revenue Code of 1986",
(5) in section 348—
(A) in subsection (b) by striking "1301(a), 1305(a),
1201(a), 1221, and 1228(a)" and inserting "1201(a), 1221,
1228(a), 1301(a), and 1305(a)", and
(B) in subsections (b), (c), (d), £ind (e) by striking "1307,
or 1208" each place it appears and inserting "1208, or
1307",
(6) in section 349(a) by striking "109(f)" and inserting
"109(g)",
(7) in section 362—
(A) in subsection (a) by striking "(15 U.S.C.
78eee(a)(3))", and
(B) in subsection (b)—
(i) by striking "(15 U.S.C. 78eee(a)(3))",
(ii) in paragraph (10) by striking "or" at the end,
(iii) in paragraph (12)—
(I) by striking "the Ship Mortgage Act, 1920
(46 App. U.S.C. 911 et seq.)" and inserting "section
31325 oftitle 46", and
(II) by striking "(46 App. U.S.C. 1117 and
1271 et seq., respectively)",
(iv) in paragraph (13)—
(I) by striking "the Ship Mortgage Act, 1920
(46 App. U.S.C. 911 et seq.)" each place it appears
and inserting "section 31325 oftitle 46",
(II) by striking "(46 App. U.S.C. 1117 and
1271 et seq., respectively)", and
(III) by striking "or" at the end,
(v) in paragraph (15), as added by Public Law
101-508, by striking "or" at the end,
(vi) in paragraph (16), as added by Public Law
101-508—
(I) by striking "(20 U.S.C. 1001 et seq.)", and
(II) by striking the period at the end and
inserting a semicolon, and
(vii) in paragraph (14), as added by Public Law
101-311—
(I) by striking the period at the end and inserting "; or",
(II) by redesignating such paragraph as paragraph (17), and
(III) by transferring such paragraph so as to
insert such paragraph after paragraph (16),
(8) in section 363—
(A) in subsection (b)(2) by striking "(15 U.S.C. 18a)",
and
(B) in subsection (c)(1) by striking "1304, 1203, or
1204" and inserting "1203, 1204, or 1304",
(9) in section 364—
(A) in subsection (a) by striking "1304, 1203, or 1204"
and inserting "1203, 1204, or 1304", and

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4145

(B) in subsection (f)—
(i) by striking "(15 U.S.C. TTe)", and
(ii) by striking "(15 U.S.C. 77aaa et seq.)",
(10) in section 365—
(A) in subsection (d)(6)(C) by striking "the Federal
Aviation Act of 1958 (49 U.S.C. 1301)" and inserting "section 40102 of titie 49",
(B) in subparagraphs (A) and (B) of subsection (g)(2)
by strildng "1307, or 1208" each place it appears and inserting "1208, or 1307",
(C) in subsection (n)(l)(B) by striking "to to" and inserts
ing"to",
(D) in subsection (o) by striking "the Federal" the first
place it appears and all that follows through "successors,",
and inserting "a Federal depository institutions regulatory
agency (or predecessor to such agency)", and
(E) by striking subsection (p),
(11) in section 507, as amended by section 304—
(A) in subsection (a)(9) by striking "the Federal" the
first place it appears and aU that foUows through "successors, , and inserting "a Federal depository institutions regulatory agency (or predecessor to such agency)", and
(B) in subsection (d) by striking "or (a)(6)" and inserting
"(a)(6), (a)(7), (a)(8), or (a)(9)",
(12) in section 522—
(A) in subsection (b) by striking "Bankruptcy Rules"
and inserting 'Tederal Rules of Bankruptcy Procediure",
and
(B) in subsection (d)(10)(E)(iii)—
(i) by striking "408, or 409" the first place it
appears and inserting "or 408", and
(ii) by striking "Internal Revenue Code of 1954
(26 U.S.C. 401(a), 403(a), 4030)), 408, or 409)" and
inserting "Internal Revenue Code of 1986",
(13) in section 523—
(A) in subsection (a)—
(i) by striking "1141,," and inserting "1141,", and
(ii) in paragraph (2)(C) by striking "(15 U.S.C.
1601 et seq.)",
(B) in subsection (b)—
(i) by striking "(20 U.S.C. 1087-3)", and
(ii) bv striking "(42 U.S.C. 294f)", and
(C) in subsection (e) by striking "depository institution
or insured credit union" and inserting 'Insured depository
institution",
(14) in section 524—
(A) in subsection (a)(3) by striking "1328(c)(1)" and
inserting "1328(a)(1)",
(B) in subsection (c)(4) by striking "recission" and
inserting "rescission", and
(C) in subsection (d)(lXB)(ii) by adding "and" at the
end,
(15) in section 525(a)—
(A) by striking "(7 U.S.C. 499a-499s)",
(B) by striking "(7 U.S.C. 181-229)", and
(C) by striking "(57 S t a t 422; 7 U.S.C. 204)",

108 STAT. 4146

PUBLIC LAW 103-394—OCT. 22, 1994
(16) in section 542(e) by sticking "to to" £Uid inserting
"to^
(17) in section 543(d)(1) by striking "section," and inserting
"section",
(18) in section 549(b) inserting "the trustee may not avoid
under subsection (a) of this section" after "involuntary case,",
(19) in section 553—
(A) in subsection (a)(1) by striking "other than under
section 502(b)(3) of this titie", and
(B) in subsection (b)(1) by striking "362(b)(14)„" and
inserting "362(b)(14),",
(20) in section 555 by striking "(15 U.S.C. 78aaa et seq.)",
(21) in section 559 by striking "(15 U.S.C. TSaaa et seq.)",
(22) in section 706(a) by striking "1307, or 1208" and inserting "1208, or 130r',
(23) in section 724(d) by striking "Internal Revenue Code
of 1954 (26 U.S.C. 6323)" and inserting "Internal Revenue
Code of 1986",
(24) in section 726(b)—
(A) inserting a comma after "section 1112", and
(B) by inserting "1009," after "chapter under section",
(25) in section 741(4)(A)(iii) by striking "(15 U.S.C. 78a
et seq.)",
(26) in section 742 by striking "(15 U.S.C. 78aaa et seq.)",
(27) in section 743 by striking "342(a)" and inserting "342",
(28) in section 745(c) by striking "Internal Revenue Code
of 1954 (26 U.S.C. 1 et seq.)" and inserting "Internal Revenue
Code of 1986",
(29) in section 761—
(A) in paragraph (1) by striking "(7 U.S.C. 1 et seq.)",
(B) in paragraph (5) by striking "(7 U.S.C. 6c(b))",
and
(C) in paragraph (13) by striking "(7 U.S.C. 23)",
(30) in section 1104(d), as redesignated by section 211,
inserting a comma after "interest",
(31) in section 1123(a)(1) inserting a comma after "titie"
the last place it appears,
(32) in section 1129—
(A) in subsection (a)—
(i) in paragraph (4) by striking the semicolon at
the end and inserting a period, and
(ii) in paragrapn (12) inserting "of titie 28" after
"section 1930", and
(B) in subsection (d) by striking "(15 U.S.C. 77e)",
(33) in section 1145—
(A) in subsection (a)—
(i) by striking "does" and inserting "do",
(ii) by striking "(15 U.S.C. 77e)", and
(iii) m paragraph (3)(B)(i) by striking "(15 U.S.C.
78m or 78o(d))",
(B) in subsection (b)(1) by striking "(15 U.S.C.
77b(ll))", and
(C) in subsection (d) by striking "(15 U.S.C. 77aaa
et seq.)",
(34) in section 1166(2) by striking "(45 U.S.C. 791(b))",
(35) in section 1167—
(A) by striking "(45 U.S.C. 151 et seq.)", and

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4147

(B) by striking "(45 U.S.C. 156)",
(36) in section 1226(b)(2)—
(A) by striking "1202(d)" and inserting "1202(c)", and
(B) by striking "1202(er and inserting n202(d)",
(37) in section 1302(b)(3) by striking "and" at tbe end,
(38) in section 1328(a)—
(A) in paragraph (2) by striking "(5) or (8)" and inserting "(5), (8), or (9)", and
(B) by striking the last paragraph (3), and
(39) in the table of chapters by striking the item relating
to chapter 15.
SEC. 502. TITLE 28 OF THE UNITED STATES CODE.

Section 586(a)(3) of titie 28, United States Code, is amended
in the matter preceding subparagraph (A) by inserting "12," after
"11,".

TITLE VI—BANKRUPTCY REVIEW
COMMISSION
SEC. 601. SHORT TITLE.

National
Bankruptcy
Review
Commission
Act.
11 u s e prec.
101 note.

This titie may be cited as the "National Bankruptcy Review
Commission Act".
SEC. 602. ESTABLISHMENT.

There is established the National Bankruptcy Review Commission (referred to as the "Commission").
SEC. 603. DUTIES OF THE COMMISSION.

The duties of the Commission are—
(1) to investigate and study issues and problems relating
to title 11, Unitea States Code (commonly known as the "Bankruptcy Code");
(2) to evaluate the advisabiUty of proposals and current
arrangements with respect to such issues and problems;
(3) to prepare and submit to the Congress, the Chief Justice, and tiie President a report in accordance with section
608; and
(4) to soUcit divergent views of all parties concerned with
the operation of the bankruptcy system.
SEC. 604. MEMBERSHIP.
(a) NUMBER AND AI'POINTMENT.—The Commission shall be composed of 9 members as follows:
(1) Three members appointed by the President, 1 of whom
shall be designated as chairman by me President.
(2) One member shall be appointed by the President pro
tempore of the Senate.
(3) One member shall be appointed by the Minority Leader
of the Senate.
(4) One member shall be appointed by the Speaker of
the House of Representatives.
(5) One member shall be appointed by the Minority Leader
of the House of Representatives.
(6) Two members appointed by the Chief Justice.

President,

108 STAT. 4148

PUBLIC LAW 103-394—OCT. 22, 1994

Members of Congress, and officers and employees of the executive
branch, shall be ineligible for appointment to the Commission.
(b) TERM.—^Members of the Commission shall be appointed
for the life of the Commission.
(c) QUORUM.—Five members of the Commission shall constitute
a quorum, but a lesser number may conduct meetings.
(d) APPOINTMENT DEADLINE.—^The first appointments made
under subsection (a) shall be made within 60 days after the date
of enactment of this Act.
(e) FIRST MEETING.—^The first meeting of the Commission shall
be called by the chairman and shall be held within 210 days
after the date of enactment of this Act.
(f) VACANCY.—A vacancy on the Commission resulting from
the death or resignation of a member shall not affect its powers
and shall be filled in the same manner in which the original
appointment was made.
(g) CONTINUATION OF MEMBERSHIP.—If any member of the

P>«8»dent.

Commission who was appointed to the Commission as an officer
or employee of a government leaves that office, or if any member
of the Commission who was not appointed in such a capacity
becomes an officer or employee of a government, the member may
continue as a member of the Commission for not longer than the
90-day period beginning on the date the member leaves that office
or becomes such an officer or employee, as the case may be.
(h) CONSULTATION PRIOR TO APPOINTMENT.—^Prior to the
appointment of members of the Commission, the President, the
President pro tempore of the Senate, the Speaker of the House
of Representatives, and the Chief Justice shall consult with each
other to ensure fair and equitable representation of various points
of view in the Commission and its staff.
SEC. 605. COMPENSATION OF THE COMMISSION.
(a) PAY.—
(1) NONGOVERNMENT EMPLOYEES.—Each member of the

Commission who is not otherwise employed by the United
States Government shall be entitled to receive the daily equivalent of the annual rate of basic pay payable for level IV of
the Executive Schedule under section 5315 of title 5, United
States Code, for each day (including travel time) during which
he or she is engaged in the actual performance of duties as
a member of the Commission.
(2) GOVERNMENT EMPLOYEES.—^A member of the Commis-

sion who is an officer or employee of the United States Government shall serve without additional compensation.
(b) TRAVEL.—Members of the Commission shall be reimbursed
for travel, subsistence, and other necessary expenses incurred by
them in the performance of their duties.
SEC. 606. STAFF OF COMMISSION; EXPERTS AND CONSULTANTS.
(a) STAFF.—

(1) APPOINTMENT.—^The chairman of the Commission may,
without regard to the civil service laws and regulations, appoint,
and terminate an executive director and such other personnel
as are necessary to enable the Commission to perform its
duties. The employment of an executive director shall be subject
to confirmation by the Commission.
(2) COMPENSATION.—^The chairman of the Commission may
fix the compensation of the executive director and other person-

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4149

nel without regard to the provisions of chapter 51 and subchapter II of chapter 53 of title 5, United States Code, relating
to classification of positions and General Schedule pay rates,
except that the rate of pay for the executive director and
other personnel may not exceed the rate payable for level
V of the Executive Schedule under section 5316 of that title.
(b) EXPERTS AND CONSULTANTS.—^The Commission may procure
temporary and intermittent services of experts and consultants
under section 3109(b) of title 5, United States Code.

/

SEC. 607. POWERS OF THE COMMISSION.
(a) HEARINGS AND MEETINGS.—The

Commission or, on
authorization of the Commission, a member of the Commission,
may hold such hearings, sit and act at such time and places,
take such testimony, and receive such evidence, as the Commission
considers appropriate. The Commission or a member of the Commission may administer oaths or affirmations to witnesses appearing
before it.
(b) OFFICIAL DATA.—^The Commission may secure directly from
any Federal department, agency, or court information necessary
to enable it to carry out this title. Upon request of the chairman
of the Commission, the head of a Federal department or agency
or chief judge of a Federal court shall furnish such information,
consistent with law, to the Commission.
(c) FACILITIES AND SUPPORT SERVICES.—The Administrator of
General Services shall provide to the Commission on a reimbursable
basis such facilities and support services as the Commission may
request. Upon request of the Commission, the head of a Federal
department or agency may make any of the facilities or services
of the agency available to the Commission to assist the Commission
in carrying out its duties under this title.
(d) EXPENDITURES AND CONTRACTS.—The Commission or, on
authorization of the Commission, a member of the Commission
may make expenditures and enter into contracts for the procurement of such supplies, services, and property as the Commission
or member considers appropriate for the purposes of carrying out
the duties of the Commission. Such expenditures and contracts
may be made only to such extent or in such amounts as are
provided in appropriation Acts.
(e) MAILS.—^The Commission may use the United States mails
in the same manner and under the same conditions as other Federal
departments and agencies of the United States.
(f) GIFTS.—^The Commission may accept, use, and dispose of
gifts or donations of services or property.
SEC. 608. REPORT.

The Commission shall submit to the Congress, the Chief Justice, and the President a report not later than 2 years after the
date of its first meeting. The report shall contain a detailed statement of the findings and conclusions of the Commission, together
with its recommendations for such legislative or administrative
action as it considers appropriate.
SEC. 609. TERMINATION.

The Commission shall cease to exist on the date that is 30
days after the date on which it submits its report under section
608.

108 STAT. 4150

PUBLIC LAW 103-394—OCT. 22, 1994

SEC. 610. AUTHORIZATION OF APPROPRIATIONS.

There is authorized to be appropriated $1,500,000 to carry
out this title.

TITLE VII—SEVERABILITY; EFFECTIVE
DATE; APPLICATION OF AMENDMENTS.
11 u s e 101
note.

SEC. 701. SEVERABILITY.

If any provision of this Act or amendment made by this Act
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.
11 u s e 101
note.

SEC. 702. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

(a) EFFECTIVE DATE.—Except as provided in subsection (b),
this Act shall take effect on the date of the enactment of this
Act.
(b) APPLICATION OF AMENDMENTS.—(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.
(2)(A) Paragraph (1) shall not apply with respect to the amendment made by section 111.
(B) The amendments made by sections 113 and 117 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.
(C) Section 1110 of title 11, United States Code, as amended
by section 201 of this Act, 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.

PUBLIC LAW 103-394—OCT. 22, 1994

108 STAT. 4151

(D) The amendments made by section 305 shall apply only
to agreements entered into after the date of enactment of this
Act.
Approved October 22, 1994.

LEGISLATIVE HISTORY—H.R. 5116:
HOUSE REPORTS: No. 103-835 (Ck)mm. on the Judiciary).
CONGRESSIONAL RECORD, Vol. 140 (1994):
Oct. 4, considered and p£issed House.
Oct. 6, considered and passed Senate.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 30 (1994):
Oct. 22, Presidential statement.


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