HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. The House amendment deletes section 701(d) of the Senate amendment. It is anticipated that the Rules of Bankruptcy Procedure will require the appointment of an interim trustee at the earliest practical moment in commodity broker bankruptcies, but no later than noon of the day after the date of the filing of the peti- tion, due to the volatility of such cases. SENATE REPORT NO. 95–989 This section requires the court to appoint an interim trustee. The appointment must be made from the panel of private trustees established and maintained by the Director of the Administrative Office under proposed 28 U.S.C. 604(e). Subsection (a) requires the appointment of an in- terim trustee to be made promptly after the order for relief, unless a trustee is already serving in the case, such as before a conversion from a reorganization to a liquidation case. Subsection (b) specifies that the appointment of an interim trustee expires when the permanent trustee is elected or designated under section 702. Subsection (c) makes clear that an interim trustee is a trustee in a case under the bankruptcy code. Subsection (d) provides that in a commodity broker case where speed is essential the interim trustee must be appointed by noon of the business day immediately following the order for relief. AMENDMENTS
HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. Section 704(8) of the Senate amendment is deleted in the House amendment. Trustees should give construc- tive notice of the commencement of the case in the manner specified under section 549(c) of title 11. SENATE REPORT NO. 95–989 The essential duties of the trustee are enumerated in this section. Others, or elaborations on these, may be prescribed by the Rules of Bankruptcy Procedure to the extent not inconsistent with those prescribed by this section. The duties are derived from section 47a of the Bankruptcy Act [section 75(a) of former title 11]. The trustee’s principal duty is to collect and reduce to money the property of the estate for which he serves, and to close up the estate as expeditiously as is compatible with the best interests of parties in inter- est. He must be accountable for all property received, and must investigate the financial affairs of the debtor. If a purpose would be served (such as if there are assets that will be distributed), the trustee is required to ex- amine proofs of claims and object to the allowance of any claim that is improper. If advisable, the trustee must oppose the discharge of the debtor, which is for the benefit of general unsecured creditors whom the trustee represents. The trustee is responsible to furnish such informa- tion concerning the estate and its administration as is requested by a party in interest. If the business of the debtor is authorized to be operated, then the trustee is required to file with governmental units charged with the responsibility for collection or determination of any tax arising out of the operation of the business periodic reports and summaries of the operation, in- cluding a statement of receipts and disbursements, and such other information as the court requires. He is re- quired to give constructive notice of the commence- ment of the case in the manner specified under section 342(b).
HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. Section 705(a) of the House amendment adopts a pro- vision contained in the Senate amendment that limits a committee of creditors to not more than 11; the House xxxx contained no maximum limitation. SENATE REPORT NO. 95–989 This section is derived from section 44b of the Bank- ruptcy Act [section 72(b) of former title 11] without substantial change. It permits election by general unse- cured creditors of a committee of not fewer than 3 members and not more than 11 members to consult with the trustee in connection with the administration of the estate, to make recommendations to the trustee respecting the performance of his duties, and to submit to the court any question affecting the administration of the estate. There is no provision for compensation or reimbursement of its counsel. AMENDMENTS 1986—Subsec. (b). Pub. L. 99–554 inserted ‘‘or the United States trustee’’ in three places. EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by Pub. L. 99–554 dependent upon the judicial district in- volved, see section 302(d), (e) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure.
HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. Section 726(a)(4) adopts a provision contained in the Senate amendment subordinating prepetition penalties and penalties arising in the involuntary gap period to the extent the penalties are not compensation for ac- tual pecuniary laws. The House amendment deletes a provision following section 726(a)(6) of the Senate amendment providing that the term ‘‘claim’’ includes interest due owed be- fore the date of the filing of the petition as unnecessary since a right to payment for interest due is a right to payment which is within the definition of ‘‘claim’’ in section 101(4) of the House amendment. SENATE REPORT NO. 95–989 This section is the general distribution section for liquidation cases. It dictates the order in which dis- tribution of property of the estate, which has usually been reduced to money by the trustee under the re- quirements of section 704(1). First, property is distributed among priority claim- ants, as determined by section 507, and in the order pre- scribed by section 507. Second, distribution is to gen- eral unsecured creditors. This class excludes priority creditors and the two classes of subordinated creditors specified below. The provision is written to permit dis- tribution to creditors that tardily file claims if their tardiness was due to lack of notice or knowledge of the case. Though it is in the interest of the estate to en- courage timely filing, when tardy filing is not the re- xxxx of a failure to act by the creditor, the normal sub- ordination penalty should not apply. Third distribution is to general unsecured creditors who tardily file. Fourth distribution is to holders of fine, penalty, for- feiture, or multiple, punitive, or exemplary damage claims. More of these claims are disallowed entirely under present law. They are simply subordinated here. Paragraph (4) provides that punitive penalties, in- cluding prepetition tax penalties, are subordinated to the payment of all other classes of claims, except claims for interest accruing during the case. In effect, these penalties are payable out of the estate’s assets only if and to the extent that a surplus of assets would otherwise remain at the close of the case for distribu- tion back to the debtor. Paragraph (5) provides that postpetition interest on prepetition claims is also to be paid to the creditor in a subordinated position. Like prepetition penalties, such interest will be paid from the estate only if and to the extent that a surplus of assets would otherwise re- m...
HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. The House amendment adopts section 702(a)(2) of the Senate amendment. An insubstantial equity interest does not disqualify a creditor from voting for a can- didate for trustee. SENATE REPORT NO. 95–989 Subsection (a) of this section specifies which credi- tors may vote for a trustee. Only a creditor that holds an allowable, undisputed, fixed, liquidated, unsecured claim that is not entitled to priority, that does not have an interest materially adverse to the interest of general unsecured creditors, and that is not an insider may vote for a trustee. The phrase ‘‘materially ad- verse’’ is currently used in the Rules of Bankruptcy Procedure, rule 207(d). The application of the standard requires a balancing of various factors, such as the na- ture of the adversity. A creditor with a very small eq- uity position would not be excluded from voting solely because he holds a small equity in the debtor. The Rules of Bankruptcy Procedure also currently provide for temporary allowance of claims, and will continue to do so for the purposes of determining who is eligible to vote under this provision.
HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. Section 706(a) of the House amendment adopts a pro- vision contained in the Senate amendment indicating that a waiver of the right to convert a case under sec- tion 706(a) is unenforceable. The explicit reference in title 11 forbidding the waiver of certain rights is not in- tended to imply that other rights, such as the right to file a voluntary bankruptcy case under section 301, may be waived. Section 706 of the House amendment adopts a similar provision contained in H.R. 8200 as passed by the House. Competing proposals contained in section 706(c) and section 706(d) of the Senate amendment are rejected. SENATE REPORT NO. 95–989 Subsection (a) of this section gives the debtor the one-time absolute right of conversion of a liquidation case to a reorganization or individual repayment plan case. If the case has already once been converted from chapter 11 or 13 to chapter 7, then the debtor does not have that right. The policy of the provision is that the debtor should always be given the opportunity to repay his debts, and a waiver of the right to convert a case is unenforceable.
HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. Section 725 of the House amendment adopts the sub- stance contained in both the House xxxx and Senate amendment but transfers an administrative function to the trustee in accordance with the general thrust of this legislation to separate the administrative and the judicial functions where appropriate. SENATE REPORT NO. 95–989 This section requires the court to determine the ap- propriate disposition of property in which the estate and an entity other than the estate have an interest. It would apply, for example, to property subject to a lien or property co-owned by the estate and another entity. The court must make the determination with respect to property that is not disposed of under another sec- tion of the bankruptcy code, such as by abandonment under section 554, by sale or distribution under 363, or by allowing foreclosure by a secured creditor by lifting the stay under section 362. The purpose of the section is to give the court appropriate authority to ensure that collateral or its proceeds is returned to the proper secured creditor, that consigned or bailed goods are re- turned to the consignor or xxxxxx and so on. Current law is curiously silent on this point, though case law has grown to fill the void. The section is in lieu of a section that would direct a certain distribution to se- cured creditors. It gives the court greater flexibility to meet the circumstances, and it is broader, permitting disposition of property subject to a co-ownership inter- est.
HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. Section 742 of the House amendment deletes a sen- tence contained in the Senate amendment requiring the trustee in an interstate stock-brokerage liquida- tion to comply with the provisions of subchapter IV of chapter 7 if the debtor is also a commodity broker. The House amendment expands the requirement to require the SIPC trustee to perform such duties, if the debtor is a commodity broker, under section 7(b) of the Secu- rities Investor Protection Act [15 U.S.C. 78ggg(b)]. The requirement is deleted from section 742 since the trust- ee of an intrastate stockbroker will be bound by the provisions of subchapter IV of chapter 7 if the debtor is also a commodity broker by reason of section 103 of title 11. SENATE REPORT NO. 95–989 Section 742 indicates that the automatic stay does not prevent SIPC from filing an application for a pro- tective decree under SIPA. If SIPA does file such an ap- plication, then all bankruptcy proceedings are sus- pended until the SIPC action is completed. If SIPC completes liquidation of the stockbroker then the bankruptcy case is dismissed. REFERENCES IN TEXT The Securities Investor Protection Act of 1970, re- ferred to in text, is Pub. L. 91–598, Dec. 30, 1970, 84 Stat. 1636, as amended, which is classified generally to chap- ter 2B–1 (§ 78aaa et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 78aaa of Title 15 and Tables. AMENDMENTS 1994—Pub. L. 103–394 struck out ‘‘(15 U.S.C. 78aaa et seq.)’’ after ‘‘Act of 1970’’.
HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. Subchapter IV of chapter 7 represents a compromise between similar chapters in the House xxxx and Senate amendment. Section 761(2) of the House amendment de- fines ‘‘clearing organization’’ to cover an organization that clears commodity contracts on a contract market or a board of trade; the expansion of the definition is intended to include clearing organizations that clear commodity options. Section 761(4) of the House amend- ment adopts the term ‘‘commodity contract’’ as used in section 761(5) of the Senate amendment but with the more precise substantive definitions contained in sec- tion 761(8) of the House xxxx. The definition is modified to insert ‘‘board of trade’’ to cover commodity options. Section 761(5) of the House amendment adopts the defi- nition contained in section 761(6) of the Senate amend- ment in preference to the definition contained in sec- tion 761(4) of the House xxxx which erroneously included onions. Section 761(9) of the House amendment rep- resents a compromise between similar provisions con- tained in section 761(10) of the Senate amendment and section 761(9) of the House xxxx. The compromise adopts the substance contained in the House xxxx and adopts the terminology of ‘‘commodity contract’’ in lieu of ‘‘contractual commitment’’ as suggested in the Senate amendment. Section 761(10) of the House amendment represents a compromise between similar sections in the House xxxx and Senate amendment regarding the definition of ‘‘customer property.’’ The definition of ‘‘distribution share’’ contained in section 761(12) of the Senate amendment is deleted as unnecessary. Section 761(12) of the House amendment adopts a definition of ‘‘foreign futures commission merchant’’ similar to the definition contained in section 761(14) of the Senate amendment. The definition is modified to cover either an entity engaged in soliciting orders or the purchase or sale of a foreign future, or an entity that accepts cash, a security, or other property for credit in connec- tion with such a solicitation or acceptance. Section 761(13) of the House amendment adopts a definition of ‘‘leverage transaction’’ identical to the definition con- tained in section 761(15) of the Senate amendment. Sec- tion 761(15) of the House amendment adopts the defini- tion of ‘‘margin payment’’ contained in section 761(17) of the Senate amendment. Section 761(17) of the House amendment adopts a definition of ‘‘net equity’’ derived from section 761(15) of the House xxxx. SENATE RE...
HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS. Chapter 9 of the House amendment represents a com- promise between chapter 9 of the House xxxx and 9 of the Senate amendment. In most respects this chapter fol- lows current law with respect to the adjustment of debts of a municipality. Stylistic changes and minor substantive revisions have been made in order to con- form this chapter with other new chapters of the bank- ruptcy code. There are few major differences between the House xxxx and the Senate amendment on this issue. Section 901 indicates the applicability of other sections of title 11 in cases under chapter 9. Included are sec- tions providing for creditors’ committees under sec- tions 1102 and 1103. HOUSE REPORT NO. 95–595 Section 901 makes applicable appropriate provisions of other chapters of proposed title 11. The general rule set out in section 103(e) is that only the provisions of chapters 1 and 9 apply in a chapter 9 case. Section 901 is the exception, and specifies other provisions that do apply. They are as follows:
