[[Page 133 STAT. 1079]]

Public Law 116-54
116th Congress

An Act

To amend chapter 11 of title 11, United States Code, to address
reorganization of small businesses, and for other purposes. <>

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled, <>
SECTION 1. SHORT TITLE.

This Act may be cited as the ``Small Business Reorganization Act of
2019''.
SEC. 2. REORGANIZATION OF SMALL BUSINESS DEBTORS.

(a) In General.--Chapter 11 of title 11, United States Code, is
amended <> by adding at the end the following:

``SUBCHAPTER V--SMALL BUSINESS DEBTOR REORGANIZATION

``Sec. 1181. <> Inapplicability of other
sections

``(a) In General.--Sections 105(d), 1101(1), 1104, 1105, 1106, 1107,
1108, 1115, 1116, 1121, 1123(a)(8), 1123(c), 1127, 1129(a)(15), 1129(b),
1129(c), 1129(e), and 1141(d)(5) of this title do not apply in a case
under this subchapter.
``(b) Court Authority.--Unless the court for cause orders otherwise,
paragraphs (1), (2), and (4) of section 1102(a) and sections 1102(b),
1103, and 1125 of this title do not apply in a case under this
subchapter.
``(c) Special Rule for Discharge.--If a plan is confirmed under
section 1191(b) of this title, section 1141(d) of this title shall not
apply, except as provided in section 1192 of this title.
``Sec. 1182. <> Definitions

``In this subchapter:
``(1) Debtor.--The term `debtor' means a small business
debtor.
``(2) Debtor in possession.--The term `debtor in possession'
means the debtor, unless removed as debtor in possession under
section 1185(a) of this title.
``Sec. 1183. <> Trustee

``(a) In General.--If the United States trustee has appointed an
individual under section 586(b) of title 28 to serve as standing trustee
in cases under this subchapter, and if such individual qualifies as a
trustee under section 322 of this title, then that individual shall
serve as trustee in any case under this subchapter. Otherwise, the
United States trustee shall appoint one disinterested person

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to serve as trustee in the case or the United States trustee may serve
as trustee in the case, as necessary.
``(b) Duties.--The trustee shall--
``(1) perform the duties specified in paragraphs (2), (5),
(6), (7), and (9) of section 704(a) of this title;
``(2) perform the duties specified in paragraphs (3), (4),
and (7) of section 1106(a) of this title, if the court, for
cause and on request of a party in interest, the trustee, or the
United States trustee, so orders;
``(3) appear and be heard at the status conference under
section 1188 of this title and any hearing that concerns--
``(A) the value of property subject to a lien;
``(B) confirmation of a plan filed under this
subchapter;
``(C) modification of the plan after confirmation;
or
``(D) the sale of property of the estate;
``(4) ensure that the debtor commences making timely
payments required by a plan confirmed under this subchapter;
``(5) if the debtor ceases to be a debtor in possession,
perform the duties specified in section 704(a)(8) and paragraphs
(1), (2), and (6) of section 1106(a) of this title, including
operating the business of the debtor;
``(6) if there is a claim for a domestic support obligation
with respect to the debtor, perform the duties specified in
section 704(c) of this title; and
``(7) facilitate the development of a consensual plan of
reorganization.

``(c) Termination of Trustee Service.--
``(1) In general.--If the plan of the debtor is confirmed
under section 1191(a) of this title, the service of the trustee
in the case shall terminate when the plan has been substantially
consummated, except that the United States trustee may reappoint
a trustee as needed for performance of duties under subsection
(b)(3)(C) of this section and section 1185(a) of this title.
``(2) <> Service of notice of substantial
consummation.--Not later than 14 days after the plan of the
debtor is substantially consummated, the debtor shall file with
the court and serve on the trustee, the United States trustee,
and all parties in interest notice of such substantial
consummation.
``Sec. 1184. <> Rights and powers of a debtor
in possession

``Subject to such limitations or conditions as the court may
prescribe, a debtor in possession shall have all the rights, other than
the right to compensation under section 330 of this title, and powers,
and shall perform all functions and duties, except the duties specified
in paragraphs (2), (3), and (4) of section 1106(a) of this title, of a
trustee serving in a case under this chapter, including operating the
business of the debtor.
``Sec. 1185. <> Removal of debtor in
possession

``(a) In General.--On request of a party in interest, and after
notice and a hearing, the court shall order that the debtor shall not be
a debtor in possession for cause, including fraud, dishonesty,
incompetence, or gross mismanagement of the affairs of the debtor,
either before or after the date of commencement of the case, or for
failure to perform the obligations of the debtor under a plan confirmed
under this subchapter.

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``(b) Reinstatement.--On request of a party in interest, and after
notice and a hearing, the court may reinstate the debtor in possession.
``Sec. 1186. <> Property of the estate

``(a) Inclusions.--If a plan is confirmed under section 1191(b) of
this title, property of the estate includes, in addition to the property
specified in section 541 of this title--
``(1) all property of the kind specified in that section
that the debtor acquires after the date of commencement of the
case but before the case is closed, dismissed, or converted to a
case under chapter 7, 12, or 13 of this title, whichever occurs
first; and
``(2) earnings from services performed by the debtor after
the date of commencement of the case but before the case is
closed, dismissed, or converted to a case under chapter 7, 12,
or 13 of this title, whichever occurs first.

``(b) Debtor Remaining in Possession.--Except as provided in section
1185 of this title, a plan confirmed under this subchapter, or an order
confirming a plan under this subchapter, the debtor shall remain in
possession of all property of the estate.
``Sec. 1187. <> Duties and reporting
requirements of debtors

``(a) Filing Requirements.--Upon electing to be a debtor under this
subchapter, the debtor shall file the documents required by
subparagraphs (A) and (B) of section 1116(1) of this title.
``(b) Other Applicable Provisions.--A debtor, in addition to the
duties provided in this title and as otherwise required by law, shall
comply with the requirements of section 308 and paragraphs (2), (3),
(4), (5), (6), and (7) of section 1116 of this title.
``(c) <> Separate Disclosure Statement
Exemption.--If the court orders under section 1181(b) of this title that
section 1125 of this title applies, section 1125(f) of this title shall
apply.
``Sec. 1188. <> Status conference

``(a) <> In General.--Except as provided in
subsection (b), not later than 60 days after the entry of the order for
relief under this chapter, the court shall hold a status conference to
further the expeditious and economical resolution of a case under this
subchapter.

``(b) Exception.--The court may extend the period of time for
holding a status conference under subsection (a) if the need for an
extension is attributable to circumstances for which the debtor should
not justly be held accountable.
``(c) Report.--Not later than 14 days before the date of the status
conference under subsection (a), the debtor shall file with the court
and serve on the trustee and all parties in interest a report that
details the efforts the debtor has undertaken and will undertake to
attain a consensual plan of reorganization.
``Sec. 1189. <> Filing of the plan

``(a) Who May File a Plan.--Only the debtor may file a plan under
this subchapter.
``(b) <> Deadline.--The debtor shall file a plan
not later than 90 days after the order for relief under this chapter,
except that the court may extend the period if the need for the
extension

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is attributable to circumstances for which the debtor should not justly
be held accountable.
``Sec. 1190. <> Contents of plan

``A plan filed under this subchapter--
``(1) shall include--
``(A) a brief history of the business operations of
the debtor;
``(B) <> a liquidation analysis;
and
``(C) projections with respect to the ability of the
debtor to make payments under the proposed plan of
reorganization;
``(2) shall provide for the submission of all or such
portion of the future earnings or other future income of the
debtor to the supervision and control of the trustee as is
necessary for the execution of the plan; and
``(3) notwithstanding section 1123(b)(5) of this title, may
modify the rights of the holder of a claim secured only by a
security interest in real property that is the principal
residence of the debtor if the new value received in connection
with the granting of the security interest was--
``(A) not used primarily to acquire the real
property; and
``(B) used primarily in connection with the small
business of the debtor.
``Sec. 1191. <> Confirmation of plan

``(a) Terms.--The court shall confirm a plan under this subchapter
only if all of the requirements of section 1129(a), other than paragraph
(15) of that section, of this title are met.
``(b) Exception.--Notwithstanding section 510(a) of this title, if
all of the applicable requirements of section 1129(a) of this title,
other than paragraphs (8), (10), and (15) of that section, are met with
respect to a plan, the court, on request of the debtor, shall confirm
the plan notwithstanding the requirements of such paragraphs if the plan
does not discriminate unfairly, and is fair and equitable, with respect
to each class of claims or interests that is impaired under, and has not
accepted, the plan.
``(c) Rule of Construction.--For purposes of this section, the
condition that a plan be fair and equitable with respect to each class
of claims or interests includes the following requirements:
``(1) With respect to a class of secured claims, the plan
meets the requirements of section 1129(b)(2)(A) of this title.
``(2) As of the effective date of the plan--
``(A) <> the plan provides
that all of the projected disposable income of the
debtor to be received in the 3-year period, or such
longer period not to exceed 5 years as the court may
fix, beginning on the date that the first payment is due
under the plan will be applied to make payments under
the plan; or
``(B) the value of the property to be distributed
under the plan in the 3-year period, or such longer
period not to exceed 5 years as the court may fix,
beginning on the date on which the first distribution is
due under the plan is not less than the projected
disposable income of the debtor.

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``(3)(A)(i) The debtor will be able to make all payments
under the plan; or
``(ii) there is a reasonable likelihood that the debtor will
be able to make all payments under the plan; and
``(B) the plan provides appropriate remedies, which may
include the liquidation of nonexempt assets, to protect the
holders of claims or interests in the event that the payments
are not made.

``(d) <> Disposable Income.--For purposes of
this section, the term `disposable income' means the income that is
received by the debtor and that is not reasonably necessary to be
expended--
``(1) for--
``(A) the maintenance or support of the debtor or a
dependent of the debtor; or
``(B) a domestic support obligation that first
becomes payable after the date of the filing of the
petition; or
``(2) for the payment of expenditures necessary for the
continuation, preservation, or operation of the business of the
debtor.

``(e) Special Rule.--Notwithstanding section 1129(a)(9)(A) of this
title, a plan that provides for the payment through the plan of a claim
of a kind specified in paragraph (2) or (3) of section 507(a) of this
title may be confirmed under subsection (b) of this section.
``Sec. 1192. <> Discharge

``If the plan of the debtor is confirmed under section 1191(b) of
this title, as soon as practicable after completion by the debtor of all
payments due within the first 3 years of the plan, or such longer period
not to exceed 5 years as the court may fix, unless the court approves a
written waiver of discharge executed by the debtor after the order for
relief under this chapter, the court shall grant the debtor a discharge
of all debts provided in section 1141(d)(1)(A) of this title, and all
other debts allowed under section 503 of this title and provided for in
the plan, except any debt--
``(1) on which the last payment is due after the first 3
years of the plan, or such other time not to exceed 5 years
fixed by the court; or
``(2) of the kind specified in section 523(a) of this title.
``Sec. 1193. <> Modification of plan

``(a) Modification Before Confirmation.--The debtor may modify a
plan at any time before confirmation, but may not modify the plan so
that the plan as modified fails to meet the requirements of sections
1122 and 1123 of this title, with the exception of subsection (a)(8) of
such section 1123. After the modification is filed with the court, the
plan as modified becomes the plan.
``(b) Modification After Confirmation.--If a plan has been confirmed
under section 1191(a) of this title, the debtor may modify the plan at
any time after confirmation of the plan and before substantial
consummation of the plan, but may not modify the plan so that the plan
as modified fails to meet the requirements of sections 1122 and 1123 of
this title, with the exception of subsection (a)(8) of such section
1123. The plan, as modified under this subsection, becomes the plan only
if circumstances warrant the modification and the court, after notice
and a hearing, confirms the plan as modified under section 1191(a) of
this title.

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``(c) Certain Other Modifications.--If a plan has been confirmed
under section 1191(b) of this title, the debtor may modify the plan at
any time within 3 years, or such longer time not to exceed 5 years, as
fixed by the court, but may not modify the plan so that the plan as
modified fails to meet the requirements of section 1191(b) of this
title. The plan as modified under this subsection becomes the plan only
if circumstances warrant such modification and the court, after notice
and a hearing, confirms such plan, as modified, under section 1191(b) of
this title.
``(d) Holders of a Claim or Interest.--If a plan has been confirmed
under section 1191(a) of this title, any holder of a claim or interest
that has accepted or rejected the plan is deemed to have accepted or
rejected, as the case may be, the plan as modified, unless, within the
time fixed by the court, such holder changes the previous acceptance or
rejection of the holder.
``Sec. 1194. <> Payments

``(a) Retention and Distribution by Trustee.--Payments and funds
received by the trustee shall be retained by the trustee until
confirmation or denial of confirmation of a plan. If a plan is
confirmed, the trustee shall distribute any such payment in accordance
with the plan. If a plan is not confirmed, the trustee shall return any
such payments to the debtor after deducting--
``(1) any unpaid claim allowed under section 503(b) of this
title;
``(2) any payment made for the purpose of providing adequate
protection of an interest in property due to the holder of a
secured claim; and
``(3) any fee owing to the trustee.

``(b) Other Plans.--If a plan is confirmed under section 1191(b) of
this title, except as otherwise provided in the plan or in the order
confirming the plan, the trustee shall make payments to creditors under
the plan.
``(c) Payments Prior to Confirmation.--Prior to confirmation of a
plan, the court, after notice and a hearing, may authorize the trustee
to make payments to the holder of a secured claim for the purpose of
providing adequate protection of an interest in property.
``Sec. 1195. <> Transactions with
professionals

``Notwithstanding section 327(a) of this title, a person is not
disqualified for employment under section 327 of this title, by a debtor
solely because that person holds a claim of less than $10,000 that arose
prior to commencement of the case.''.
(b) Clerical Amendment.--The table of subchapters at the beginning
of chapter 11 of title 11, United States Code, <> is amended by adding at the end the following:

``subchapter v--small business debtor reorganization

``1181. Inapplicability of other sections.
``1182. Definitions.
``1183. Trustee.
``1184. Rights and powers of a debtor in possession.
``1185. Removal of debtor in possession.
``1186. Property of the estate.
``1187. Duties and reporting requirements of debtors.
``1188. Status conference.
``1189. Filing of the plan.
``1190. Contents of plan.
``1191. Confirmation of plan.

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``1192. Discharge.
``1193. Modification of plan.
``1194. Payments.
``1195. Transactions with professionals.''.

SEC. 3. PREFERENCES; VENUE OF CERTAIN PROCEEDINGS.

(a) Preferences.--Section 547(b) of title 11, United States Code, is
amended by inserting ``, based on reasonable due diligence in the
circumstances of the case and taking into account a party's known or
reasonably knowable affirmative defenses under subsection (c),'' after
``may''.
(b) Venue of Certain Proceedings.--Section 1409(b) of title 28,
United States Code, is amended by striking ``$10,000'' and inserting
``$25,000''.
SEC. 4. CONFORMING AMENDMENTS.

(a) Title 11.--Title 11, United States Code, is amended--
(1) in section 101--
(A) in paragraph (51C), by inserting ``and has not
elected that subchapter V of chapter 11 of this title
shall apply'' after ``is a small business debtor''; and
(B) in paragraph (51D)--
(i) in subparagraph (A)--
(I) by striking ``or operating real
property or activities incidental
thereto'' and inserting ``single asset
real estate''; and
(II) by striking ``for a case in
which'' and all that follows and
inserting ``not less than 50 percent of
which arose from the commercial or
business activities of the debtor;
and''; and
(ii) in subparagraph (B)--
(I) by striking the period at the
end and inserting a semicolon;
(II) by striking ``does not include
any member'' and inserting the
following: ``does not include--
``(i) any member''; and
(III) by adding at the end the
following:
``(ii) any debtor that is a corporation
subject to the reporting requirements under
section 13 or 15(d) of the Securities Exchange Act
of 1934 (15 U.S.C. 78m, 78o(d)); or
``(iii) any corporation that--
``(I) is subject to the reporting
requirements under section 13 or 15(d)
of the Securities Exchange Act of 1934
(15 U.S.C. 78m, 78o(d)); and
``(II) is an affiliate of a
debtor.'';
(2) in section 103--
(A) by redesignating subsections (i) through (k) as
subsections (j) through (l), respectively; and
(B) by inserting after subsection (h) the following:

``(i) Subchapter V of chapter 11 of this title applies only in a
case under chapter 11 in which a small business debtor elects that
subchapter V of chapter 11 shall apply.'';
(3) in section 322(a), by inserting ``1183,'' after
``1163,'';
(4) in section 326--
(A) in subsection (a), by inserting ``, other than a
case under subchapter V of chapter 11'' after ``7 or
11''; and

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(B) in subsection (b), by inserting ``subchapter V
of chapter 11 or'' after ``In a case under'';
(5) in section 347--
(A) in subsection (a)--
(i) by inserting ``1194,'' after ``726,''; and
(ii) by inserting ``subchapter V of chapter
11,'' after ``chapter 7,''; and
(B) in subsection (b), by inserting ``1194,'' after
``1173,'';
(6) in section 363(c)(1), by inserting ``1183, 1184,'' after
``1108,'';
(7) in section 364(a), by inserting ``1183, 1184,'' after
``1108,'';
(8) in section 523(a), in the matter preceding paragraph
(1), by inserting ``1192'' after ``1141,'';
(9) in section 524--
(A) in subsection (a)--
(i) in paragraph (1), by inserting ``1192,''
after ``1141,''; and
(ii) in paragraph (3), by inserting ``1192,''
after ``523,'';
(B) in subsection (c)(1), by inserting ``1192,''
after ``1141,''; and
(C) in subsection (d), by inserting ``1192,'' after
``1141,'';
(10) in section 557(d)(3), by inserting ``1183,'' after
``1104,'';
(11) in section 1102(a), by striking paragraph (3) and
inserting the following:
``(3) Unless the court for cause orders otherwise, a
committee of creditors may not be appointed in a small business
case or a case under subchapter V of this chapter.''; and
(12) in section 1146(a), by inserting ``or 1191'' after
``1129''.

(b) Title 28.--Title 28 United States Code, is amended--
(1) in section 586--
(A) in subsection (a)(3), by inserting ``(including
subchapter V of chapter 11)'' after ``7, 11'';
(B) in subsection (b), by inserting ``subchapter V
of chapter 11 or'' after ``cases under'' the first place
it appears;
(C) in subsection (d)(1), by inserting ``subchapter
V of chapter 11 or'' after ``cases under'' each place
that term appears; and
(D) in subsection (e)--
(i) in paragraph (1), by inserting
``subchapter V of chapter 11 or'' after ``cases
under'';
(ii) in paragraph (2), by inserting
``subchapter V of chapter 11 or'' after ``cases
under'' each place that term appears; and
(iii) by adding at the end the following:

``(5) In the event that the services of the trustee in a case under
subchapter V of chapter 11 of title 11 are terminated by dismissal or
conversion of the case, or upon substantial consummation of a plan under
section 1183(c)(1) of that title, the court shall award compensation to
the trustee consistent with services performed by the trustee and the
limits on the compensation of the trustee established pursuant to
paragraph (1) of this subsection.'';
(2) in section 589b--
(A) in subsection (a)(1), by inserting ``subchapter
V of chapter 11 and'' after ``cases under''; and

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(B) in subsection (d)--
(i) in the matter preceding paragraph (1), by
inserting ``subchapter V of chapter 11 and'' after
``trustees under''; and
(ii) in the undesignated matter following
paragraph (8), by inserting ``subchapter V of
chapter 11 and'' after ``cases under''; and
(3) in section 1930(a)(6)(A), by inserting ``, other than
under subchapter V,'' after ``chapter 11 of title 11''.
SEC. 5. <> EFFECTIVE DATE.

This Act and the amendments made by this Act shall take effect 180
days after the date of enactment of this Act.
SEC. 6. DETERMINATION OF BUDGETARY EFFECTS.

The budgetary effects of this Act, for the purpose of complying with
the Statutory Pay-As-You-Go Act of 2010, shall be determined by
reference to the latest statement titled ``Budgetary Effects of PAYGO
Legislation'' for this Act, submitted for printing in the Congressional
Record by the Chairman of the House Budget Committee, provided that such
statement has been submitted prior to the vote on passage.

Approved August 23, 2019.

LEGISLATIVE HISTORY--H.R. 3311:
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