Representatives

To amend Title 28 of the United States Code to authorize the appointment of additional bankruptcy judges, and for other purposes.

To amend title 28, United States Code, to authorize the appointment of additional bankruptcy judges, and for other purposes.

To amend title 11 of the United States Code to make nondischargeable a debt for death or injury caused by the debtor's operation of watercraft or aircraft while intoxicated.

To revise the banking and bankruptcy insolvency laws with respect to the termination and netting of financial contracts, and for other purposes.

To authorize bankruptcy courts to take certain actions with respect to mortgage loans in bankruptcy, and for other purposes.

To provide for the continuation of agricultural programs through fiscal year 2011.

To make technical corrections to title 11, United States Code, and for other purposes.
Web posted
and Copyright © June 25, 1997, American
Bankruptcy Institute.

Technical Corrections Bill Advances in House

Editor's Note:

The electronic version of the bill at Thomas will not
reflect the changes described below for 2-3 days.

On June 25, 1997, the House Subcommittee on Commercial and
Administrative Law unanimously approved an amendment in the
nature of a substitute bill to H.R. 764 by Rep. George Gekas (R-PA), the
Chairman of the Subcommittee.

While much of the bill's provisions are of a technical nature,
there are several substantive law changes. Questions were raised
about several provisions in H.R. 764 as introduced, and the new
version seeks to address these concerns.

The new bill would raise the cap on the special treatment for
single asset real estate bankruptcies from the current $4 million
to $15 million. The version of H.R. 764 as introduced removed
the cap entirely.

The new bill also seeks to clarify the provision on curing
non-monetary defaults of leases of real property, or defaults of
non-monetary provisions in executory contracts, in the wake of
the 9th Circuit's Claremont opinion. The bill would
strike current §365(b)(1)(D) and replace it with three
subsections, (D), (E) and (F), as follows:

"(D) the satisfaction of any penalty rate or penalty
provision relating to a default arising from a failure to
perform nonmonetary obligations under an executory contract
or under an unexpired lease of real or personal property;

"(E) the satisfaction of any provision (other than a
penalty rate or penalty provision) relating to a default
arising from any failure to perform nonmonetary obligations
under an unexpired lease of real property, if it is
impossible for the trustee to cure such default by
performing nonmonetary acts at and after the time of
assumption; or

"(F) the satisfaction of any provision (other than a
penalty rate or penalty provision) relating to a default
arising from any failure to perform nonmonetary obligations
under an executory contract, if it is impossible for the
trustee to cure such default by performing nonmonetary acts
at and after the time of assumption and if the court
determines, based on the equities of the case, that
paragraph (1) should not apply with respect to such
default."

Among its other provisions, the substitute seeks to address
the so-called McConville problem by making clear that
post-petition transfers immune from attack under sections 544 and
549 of the Code would not be void or voidable as made in
violation of the automatic stay, and makes a further
clarification to the "Deprizio" amendment in the 1994 Reform Act.

The bill adds "watercraft" and "aircraft" to the motor
vehicles in §523, making losses arising from the operation
of these while intoxicated nondischargeable.

The changes made by the bill would apply only to cases
commenced on or after the date of enactment of the Act.

To amend the Securities Investor Protection Act of 1970 to confirm that a customer's net equity claim is based on the customer's last statement and that certain recoveries are prohibited, to change how trustees are appointed, and for other purposes.

Dear Representative Nadler:
Thank you for your letter of March 4, 1999, to the President regarding bankruptcy reform. He has asked me to respond on his behalf. The President appreciates your kind words about the role that he and the First Lady played during last year’s debate on bankruptcy reform. He also appreciates your continued dedication to this issue.
Web posted and Copyright © March 24,
1999, American Bankruptcy Institute.

EXECUTIVE OFFICE OF THE PRESIDENT

OFFICE OF MANAGEMENT AND BUDGET

WASHINGTON, D.C. 20503

March 23, 1999

The Honorable Jerrold Nadler

Subcommittee on Commercial and Administrative Law

Committee on the Judiciary

U.S. House of Representatives

Washington, DC 20515

Dear Representative Nadler:

Thank you for your letter of March 4, 1999, to the President regarding bankruptcy
reform. He has asked me to respond on his behalf. The President appreciates your kind
words about the role that he and the First Lady played during last year’s debate on
bankruptcy reform. He also appreciates your continued dedication to this issue.

As you know, the President supports responsible bankruptcy reform that is balanced,
would reduce abuses of the bankruptcy system, and would require debtors and creditors
alike to act responsibly. The President was disappointed that the last Congress failed to
produce legislation that he could support. He remains hopeful that bipartisan consultation
and compromise will result in legislation that he can enthusiastically sign this year.

Last year the Administration expressed its strong opposition to the House-passed
version of H.R. 3150. We encouraged passage of the Senate bill "as an important step
toward balanced bankruptcy reform," but noted that the Administration would support
its enactment "only if the essential reforms incorporated by the Senate
managers’ amendment [were] preserved and strengthened and the unbalanced and
arbitrary elements of the current House bill [were] omitted." Although we thought
that the Senate bill could be further improved, we believed that the extraordinary
bipartisan support for the Senate bill was an endorsement of balance and moderation. We
were disappointed that the Conference Report failed to include key provisions of the
Senate bill, thus failing the test of balance. In my letter to Congressional leadership
dated October 9, 1998, I noted that the President’s senior advisors recommended that
the President veto the Conference Report. Our position from last year has not changed.

During this year’s debate, the Administration will continue to encourage Congress
to find an appropriate balance. Among the issues that must be addressed are:

• Access to Chapter 7: Any "means test" imposed should deny access to
  Chapter 7 only to those who genuinely have the capacity to repay a portion of their debts
  successfully under a Chapter 13 repayment plan. Thus, debtors affected by a means test
  must be given a meaningful opportunity to have their specific circumstances considered by
  bankruptcy courts with discretion to determine whether they genuinely have the capacity to
  repay a portion of their debts. In addition, the time periods and thresholds used in any
  means test should be set to ensure that only those debtors with a strong likelihood of
  success are denied access to Chapter 7.
• Nondischargeable Debts: It is generally inappropriate to make
  post-bankruptcy credit card debt a new category of nondischargeable debt. The Bankruptcy
  Code makes debts nondischargeable only where there is an overriding public purpose, as
  with debts for child support and alimony payments, education loans, tax obligations, or
  debts incurred by fraud. We remain skeptical that the current protections against fraud
  and debt run-up prior to bankruptcy are ineffective and that the additional debts made
  nondischargeable by this bill meet the standard of an overriding public purpose. If new
  categories of nondischargeable debt are to be created, however, they should be narrowly
  tailored and limited to situations where the debtor is clearly abusing the system, such as
  when the debtor: (1) incurred the debt to pay nondischargeable debt with an intent to
  avoid the debt in bankruptcy; and/or (2) incurred the debt on the eve of bankruptcy for
  goods and services that are not reasonably acquired to support the debtor's household.
• Coercive Credit Practices: Particularly if we are to provide new
  opportunities for creditors to challenge debtors' use of the bankruptcy system under the
  707(b) abuse test, it is imperative that we adequately limit prevalent abusive creditor
  practices such as coercive reaffirmations and violations of the automatic stay. While the
  Senate bill initially took laudable steps in this direction, the Conference Report rolled
  back existing consumer protections by denying consumers an effective means for remedying
  the harm from such practices and eliminating the current authorization for penalties for
  intentional violation of debtor rights.
• Consumer Information and Protection: The challenge posed by the
  unprecedented level of bankruptcy filings requires us to ask greater responsibility of
  both debtors and creditors. Credit card companies must give consumers more and better
  information so that they can understand and better manage their debts.
• Homestead Exemptions: At the same time that we are creating a system
  that will deny certain moderate-income Americans access to the traditional "fresh
  start," we should also close the loopholes that allow the wealthy to shield hundreds
  of thousands of dollars of wealth from their creditors.

We look forward to working with you and your colleagues on both sides of the aisle to
address these and other important concerns and to produce responsible, balanced bankruptcy
reform.

Sincerely,

Jacob J. Lew

Director

Identical Letter Sent to the Honorable John Conyers, Jr.

To amend the Securities Exchange Act of 1934 to provide shareholders with an advisory vote on executive compensation and to prevent perverse incentives in the compensation practices of financial institutions.