United States 116th Congress ✓ Enacted · P.L. 116-54 Bipartisan · 2 R · 2 D cosponsors

HR 3311 — Small Business Reorganization Act of 2019

Last action — Became Public Law No: 116-54.

  1. ✓
    Introduced
  2. ✓
    In Committee
  3. ✓
    Passed House
  4. ✓
    Passed Senate
  5. ✓
    To Executive
  6. 6
    Enacted

This bill has been enacted into law. Introduced June 18, 2019. Enacted.

Odds of enactment

High chance

Based on the sponsor, cosponsors, and committee posture, this bill has a high chance of becoming law.

Upgrade to see the exact probability and what's driving it.

A statistical estimate from our own model of past outcomes — an insight, not a guarantee. Policymaking is volatile.

Prognosis

Likely to advance 74% · moderate confidence

  • Enacted

    Current position in the legislative process.

  • 4 sponsors

    1 primary, 3 co-sponsors signed on.

  • Bipartisan support

    Sponsored across 2 parties (2 R · 2 D) — cross-party backing.

Based on stage, sponsorship breadth, committee status, recorded votes, and cross-state momentum — a description of the observable signals, not a prediction.

Summary

Small Business Reorganization Act of 2019 This bill creates new bankruptcy procedures for small businesses filing for reorganization under Chapter 11 and otherwise revises provisions related to venue and trustee responsibilities in Chapter 11 bankruptcies. (Sec. 2) The bill provides for the appointment of a trustee for a small business debtor filing under these new procedures. The trustee must assist in developing a reorganization plan, account for the property of the debtor, attend certain hearings and conferences, and ensure that the debtor complies with payments required under the plan. As under current law, a debtor may operate their business as a debtor in possession during the reorganization. The bill sets forth the rights and powers of a debtor in possession, as well as the procedures for removing a debtor in possession. The bill provides reporting requirements for debtors and reduces the amount of disclosures required by debtors under current law. Under these new procedures, only a debtor is allowed to file a reorganization plan. Currently, creditors may also submit plans for court approval for small businesses filing under Chapter 11. The bill sets forth requirements regarding the filing and contents of a plan of reorganization. A debtor must submit all or a portion of future income to the trustee as needed to execute the plan. The bill provides authority to the bankruptcy court to approve a reorganization plan for small businesses over the objections of the creditors. However, the plan may not discriminate unfairly, and must be fair and equitable towards each class of claims or interests that is impaired under, and has not accepted, the plan. Currently, creditors must generally vote to approve such a plan. Under a fair and equitable plan as established by this bill, a debtor's projected disposable income for at least three years, but no longer than five, must go towards payments under the plan. (Sec. 3) The bill also provides additional standards a trustee must meet in order to void a preferential transfer for all Chapter 11 filers. (Preferential transfers generally occur when a debtor transfers property before filing bankruptcy that is beneficial to one creditor to the detriment of others.) Specifically, a trustee may only void such a transfer based on reasonable due diligence and must take into account a party's known or reasonably knowable affirmative defenses. The bill also revises venue criteria for proceedings connected with a Chapter 11 bankruptcy case. Currently, an action to recover a debt against a noninsider (i.e., those that are not relatives, general partners, and directors or officers of the debtor) of less than $13,650 must be brought in the district court where the defendant resides. The bill increases that amount to $25,000. (Sec. 5) This bill takes effect 180 days after enactment.

Bill Text

What changed in the latest version

182 added · 167 removed

Plain-language change summary

The amendment adds new sections to the bill, specifically Sec. 1181, which states that certain sections of the title do not apply in cases involving small business reorganizations. This means that specific procedural rules and requirements that typically govern bankruptcy cases may not be enforced in these instances. Additionally, the term "debtor in possession" is clarified, indicating it refers to the debtor unless removed under a specified section. These changes aim to simplify the process for small businesses undergoing reorganization.

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[Congressional Bills 116th Congress] [From the U.S.
[116th Congress Public Law 54] [From the U.S.
Government Publishing Office] [H.R.
Government Publishing Office] [[Page 133 STAT.
3311 Received in Senate (RDS)] <DOC> 116th CONGRESS 1st Session H.
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.
R.
<<NOTE:
3311 _______________________________________________________________________ IN THE SENATE OF THE UNITED STATES July 24, 2019 Received _______________________________________________________________________ AN ACT To amend chapter 11 of title 11, United States Code, to address reorganization of small businesses, and for other purposes.
Aug.
Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, SECTION 1.
23, 2019 - [H.R.
3311]>> Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, <<NOTE:
Small Business Reorganization Act of 2019.
11 USC 101 note.>> SECTION 1.
(a) In General.--Chapter 11 of title 11, United States Code, is amended by adding at the end the following:
(a) In General.--Chapter 11 of title 11, United States Code, is amended <<NOTE:
11 USC 1181 prec.>> by adding at the end the following:
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.
<<NOTE:
11 USC 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.
Definitions ``In this subchapter:
<<NOTE:
11 USC 1182.>> Definitions ``In this subchapter:
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.
<<NOTE:
Otherwise, the United States trustee shall appoint one disinterested person to serve as trustee in the case or the United States trustee may serve as trustee in the case, as necessary.
11 USC 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 [[Page 133 STAT.
1080]] to serve as trustee in the case or the United States trustee may serve as trustee in the case, as necessary.
``(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.
``(2) <<NOTE:
Deadline.>> 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.
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.
<<NOTE:
11 USC 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.
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.
<<NOTE:
``(b) Reinstatement.--On request of a party in interest, and after notice and a hearing, the court may reinstate the debtor in possession.
11 USC 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.
[[Page 133 STAT.
1081]] ``(b) Reinstatement.--On request of a party in interest, and after notice and a hearing, the court may reinstate the debtor in possession.
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;
<<NOTE:
11 USC 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;
``(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.
``(b) Debtor Remaining in Possession.--Except as provided in section 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.
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.
<<NOTE:
11 USC 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.
``(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.
``(c) <<NOTE:
Applicability.>> 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.
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.
<<NOTE:
11 USC 1188.>> Status conference ``(a) <<NOTE:
Deadline.>> 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.
Filing of the plan ``(a) Who May File a Plan.--Only the debtor may file a plan under this subchapter.
<<NOTE:
``(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 is attributable to circumstances for which the debtor should not justly be held accountable.
11 USC 1189.>> Filing of the plan ``(a) Who May File a Plan.--Only the debtor may file a plan under this subchapter.
``(b) <<NOTE:
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Extension.>> 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 [[Page 133 STAT.
1082]] is attributable to circumstances for which the debtor should not justly be held accountable.
Contents of plan ``A plan filed under this subchapter-- ``(1) shall include-- ``(A) a brief history of the business operations of the debtor;
<<NOTE:
``(B) a liquidation analysis;
11 USC 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) <<NOTE:
Analysis.>> a liquidation analysis;
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.
<<NOTE:
11 USC 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.
``(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;
``(2) As of the effective date of the plan-- ``(A) <<NOTE:
Time periods.>> 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;
``(3)(A)(i) The debtor will be able to make all payments under the plan;
[[Page 133 STAT.
1083]] ``(3)(A)(i) The debtor will be able to make all payments under the plan;
``(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;
``(d) <<NOTE:
Definition.>> 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;
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;
<<NOTE:
11 USC 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;
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 and 1123 of this title, with the exception of subsection (a)(8) of such section 1123.
<<NOTE:
11 USC 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 and 1123 of this title, with the exception of subsection (a)(8) of such section 1123.
``(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 and 1123 of this title, with the exception of subsection (a)(8) of such section 1123.
``(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.
``(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.
[[Page 133 STAT.
1084]] ``(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.
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.
<<NOTE:
11 USC 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.
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.''.
<<NOTE:
(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:
11 USC 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, <<NOTE:
11 USC 1101 prec.>> is amended by adding at the end the following:
``1192.
[[Page 133 STAT.
1085]] ``1192.
and (B) in subsection (b), by inserting ``subchapter V of chapter 11 or'' after ``In a case under'';
and [[Page 133 STAT.
1086]] (B) in subsection (b), by inserting ``subchapter V of chapter 11 or'' after ``In a case under'';
and (B) in subsection (d)-- (i) in the matter preceding paragraph (1), by inserting ``subchapter V of chapter 11 and'' after ``trustees under'';
and [[Page 133 STAT.
1087]] (B) in subsection (d)-- (i) in the matter preceding paragraph (1), by inserting ``subchapter V of chapter 11 and'' after ``trustees under'';
EFFECTIVE DATE.
<<NOTE:
11 USC 101 note.>> EFFECTIVE DATE.
Passed the House of Representatives July 23, 2019.
Approved August 23, 2019.
Attest:
LEGISLATIVE HISTORY--H.R.
CHERYL L.
3311:
JOHNSON, Clerk.
--------------------------------------------------------------------------- HOUSE REPORTS:
No.
116-171 (Comm.
on the Judiciary).
CONGRESSIONAL RECORD, Vol.
165 (2019):
July 23, considered and passed House.
Aug.
1, considered and passed Senate.
<all>
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Action History

  1. Introduced in House

  2. Introduced in House

  3. Referred to the House Committee on the Judiciary.

  4. Referred to the Subcommittee on Antitrust, Commercial, and Administrative Law.

  5. Committee Consideration and Mark-up Session Held.

  6. Ordered to be Reported by Voice Vote.

  7. Reported by the Committee on Judiciary. H. Rept. 116-171.

  8. Reported by the Committee on Judiciary. H. Rept. 116-171.

  9. Placed on the Union Calendar, Calendar No. 131.

  10. Mr. Cicilline moved to suspend the rules and pass the bill, as amended.

  11. Considered under suspension of the rules. (consideration: CR H7217-7220)

  12. DEBATE - The House proceeded with forty minutes of debate on H.R. 3311.

  13. Passed/agreed to in House: On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote.(text: CR H7217-7219)

  14. On motion to suspend the rules and pass the bill, as amended Agreed to by voice vote. (text: CR H7217-7219)

  15. Motion to reconsider laid on the table Agreed to without objection.

  16. Received in the Senate, read twice.

  17. Passed/agreed to in Senate: Passed Senate without amendment by Voice Vote.(consideration: CR S5321)

  18. Passed Senate without amendment by Voice Vote. (consideration: CR S5321)

  19. Message on Senate action sent to the House.

  20. Presented to President.

  21. Presented to President.

  22. Signed by President.

  23. Signed by President.

  24. Became Public Law No: 116-54.

  25. Became Public Law No: 116-54.

Sponsors

Sponsorship breakdown

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1 sponsors · 3 co-sponsors · 543 not signed on

Sponsors (1)

Co-sponsors (3)

Not signed on (543)

543 members have not signed on to this bill.

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"Not signed on" means a member has not sponsored or co-sponsored this bill — it does not imply opposition. Members flagged Voted No have a recorded No vote on this bill.

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Frequently asked questions

What does HR 3311 do?
Small Business Reorganization Act of 2019 This bill creates new bankruptcy procedures for small businesses filing for reorganization under Chapter 11 and otherwise revises provisions related to venue and trustee responsibilities in Chapter 11 bankruptcies. (Sec. 2) The bill provides for the appointment of a trustee for a small business debtor filing under these new procedures. The trustee must assist in developing a reorganization plan, account for the property of the debtor, attend certain hearings and conferences, and ensure that the debtor complies with payments required under the plan. As under current law, a debtor may operate their business as a debtor in possession during the reorganization. The bill sets forth the rights and powers of a debtor in possession, as well as the procedures for removing a debtor in possession. The bill provides reporting requirements for debtors and reduces the amount of disclosures required by debtors under current law. Under these new procedures, only a debtor is allowed to file a reorganization plan. Currently, creditors may also submit plans for court approval for small businesses filing under Chapter 11. The bill sets forth requirements regarding the filing and contents of a plan of reorganization. A debtor must submit all or a portion of future income to the trustee as needed to execute the plan. The bill provides authority to the bankruptcy court to approve a reorganization plan for small businesses over the objections of the creditors. However, the plan may not discriminate unfairly, and must be fair and equitable towards each class of claims or interests that is impaired under, and has not accepted, the plan. Currently, creditors must generally vote to approve such a plan. Under a fair and equitable plan as established by this bill, a debtor's projected disposable income for at least three years, but no longer than five, must go towards payments under the plan. (Sec. 3) The bill also provides additional standards a trustee must meet in order to void a preferential transfer for all Chapter 11 filers. (Preferential transfers generally occur when a debtor transfers property before filing bankruptcy that is beneficial to one creditor to the detriment of others.) Specifically, a trustee may only void such a transfer based on reasonable due diligence and must take into account a party's known or reasonably knowable affirmative defenses. The bill also revises venue criteria for proceedings connected with a Chapter 11 bankruptcy case. Currently, an action to recover a debt against a noninsider (i.e., those that are not relatives, general partners, and directors or officers of the debtor) of less than $13,650 must be brought in the district court where the defendant resides. The bill increases that amount to $25,000. (Sec. 5) This bill takes effect 180 days after enactment.
Who sponsors HR 3311?
HR 3311 is sponsored by Cline, Ben (Republican), Cicilline, David N. (Democratic), Collins, Doug (Republican), and Cohen, Steve (Democratic).
What is the current status of HR 3311?
This bill has been enacted into law. Introduced June 18, 2019. Enacted.
Where can I track HR 3311?
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