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Bill94th CongressFiled Oct 30, 1975Finance and Financial Sector
S. 2597

A bill to amend the Bankruptcy Act to add a new chapter thereto providing for the adjustment of the debts of major municipalities.

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What it doesSummary reported to senate with amendment(s) (Nov 18, 1975)

(Reported to Senate from the Committee on the Judiciary with amendment, S. Rept. 94-458)

Adds a new chapter to the Bankruptcy Act entitled "Adjustment of Indebtednesses of Major Municipalities." Grants to courts of bankruptcy the jurisdiction over the composition and extension of the debts of specified public agencies or instrumentalities or political divisions. Allows such courts to permit the rejection of executory contracts of the petitioner, upon notice. Retains in the State the legislative and other powers, including expenditure therefor, over public agencies or instrumentalities or political subdivisions.

Makes eligible for relief under this chapter any municipality, public agency, instrumentality, or political subdivision of the State if the municipality is first specifically authorized to petition under this chapter by the chief executive, legislature, or other appropriate power of the State. Permits such petitions to be voluntary. Prescribes the procedures for filing such petitions. Makes such filing operate to stay the commencement or the continuation of any court or other proceeding against the petitioner or its property, and to stay the recognition or enforcement of any setoff effected within three months of filing. Requires the earliest possible hearing on a complaint seeking relief from such a stay.

Prohibits any stay, order, or decree of the court from interfering with the political or governmental powers of the petitioner; any of the property or revenues of the petitioner necessary for essential purposes; or the petitioner's use or enjoyment of any income-producing property.

Permits creditors to file complaints in the court to contest the petition for refief under this chapter.

Requires the petitioner to give prompt notice of the commencement of a proceeding or dismissal of the petition under this chapter to the State, the Securities and Exchange Commission, and creditors. Requires such a petitioner to also give notice to creditors of appropriate dates of specified actions in opposition to such petition.

Authorizes the judge to permit labor organizations of the debtor petitioner to be heard on the economic soundness of the plan affecting the interests of the represented employees.

Requires the petitioner to list creditors and amounts owed each.

Permits the court to authorize the petitioner to issue certificates of indebtedness for cash, property or other consideration, with such security and priority in payment as the court may approve.

Lists the priority of debts.

Requires, for confirmation of a petitioner's plan, the affirmative vote of creditors who hold two-thirds in amount and 51 percent in number of each class materially and adversely affected. Permits any creditor materially and adversely affected by such a plan to file a complaint in objection.

Requires a hearing on confirmation or modification of such a plan. Requires a dismissal of a proceeding under this chapter where any person promoting such a plan is compensated by both petitioner and any creditor.

Provides that the court shall confirm such a plan if it is fair, equitable, feasible, and not unfairly discriminatory in favor of any creditor, if it appears from the petitioner's current and projected revenues and expenditures that the budget of the petitioner will be in balance within a reasonable time, and if additional specified requirements are met.

Permits the judge to refer any special issues of fact to a referee in bankruptcy or special master for consideration, taking of testimony and a report if the judge finds his docket allows insufficient time.

Allows eligible petitioners who have filed under chapter IX of the Bankruptcy Act to apply to have the case proceed under this chapter.

What just happenedDec 10, 1975

Measure indefinitely postponed in Senate, H.R. 10624 passed in lieu.

Who’s behind it

Sen. Burdick, Quentin N. [D-ND](D-ND)Sponsor
5 cosponsors1 D4 R
Read on Congress.gov
5cosponsors1committees8actions2related bills10subjects
  1. Dec 10, 1975Floor

    Measure indefinitely postponed in Senate, H.R. 10624 passed in lieu.

  2. Dec 10, 1975Floor

    Measure considered in Senate.

  3. Dec 9, 1975Floor

    Measure considered in Senate.

  4. Dec 9, 1975Floor

    Call of calendar in Senate.

  5. Nov 18, 1975Committee

    Reported to Senate from the Committee on the Judiciary with amendment, S. Rept. 94-458.

    Judiciary Committee
  6. Nov 18, 1975Committee14000

    Reported to Senate from the Committee on the Judiciary with amendment, S. Rept. 94-458.

    Judiciary Committee
  7. Oct 30, 1975IntroReferral

    Referred to Senate Committee on the Judiciary.

    Judiciary Committee
  8. Oct 30, 1975IntroReferral10000

    Introduced in Senate

Reported to Senate with amendment(s)Nov 18, 197501
(Reported to Senate from the Committee on the Judiciary with amendment, S. Rept. 94-458)

Adds a new chapter to the Bankruptcy Act entitled "Adjustment of Indebtednesses of Major Municipalities." Grants to courts of bankruptcy the jurisdiction over the composition and extension of the debts of specified public agencies or instrumentalities or political divisions. Allows such courts to permit the rejection of executory contracts of the petitioner, upon notice. Retains in the State the legislative and other powers, including expenditure therefor, over public agencies or instrumentalities or political subdivisions.

Makes eligible for relief under this chapter any municipality, public agency, instrumentality, or political subdivision of the State if the municipality is first specifically authorized to petition under this chapter by the chief executive, legislature, or other appropriate power of the State. Permits such petitions to be voluntary. Prescribes the procedures for filing such petitions. Makes such filing operate to stay the commencement or the continuation of any court or other proceeding against the petitioner or its property, and to stay the recognition or enforcement of any setoff effected within three months of filing. Requires the earliest possible hearing on a complaint seeking relief from such a stay.

Prohibits any stay, order, or decree of the court from interfering with the political or governmental powers of the petitioner; any of the property or revenues of the petitioner necessary for essential purposes; or the petitioner's use or enjoyment of any income-producing property.

Permits creditors to file complaints in the court to contest the petition for refief under this chapter.

Requires the petitioner to give prompt notice of the commencement of a proceeding or dismissal of the petition under this chapter to the State, the Securities and Exchange Commission, and creditors. Requires such a petitioner to also give notice to creditors of appropriate dates of specified actions in opposition to such petition.

Authorizes the judge to permit labor organizations of the debtor petitioner to be heard on the economic soundness of the plan affecting the interests of the represented employees.

Requires the petitioner to list creditors and amounts owed each.

Permits the court to authorize the petitioner to issue certificates of indebtedness for cash, property or other consideration, with such security and priority in payment as the court may approve.

Lists the priority of debts.

Requires, for confirmation of a petitioner's plan, the affirmative vote of creditors who hold two-thirds in amount and 51 percent in number of each class materially and adversely affected. Permits any creditor materially and adversely affected by such a plan to file a complaint in objection.

Requires a hearing on confirmation or modification of such a plan. Requires a dismissal of a proceeding under this chapter where any person promoting such a plan is compensated by both petitioner and any creditor.

Provides that the court shall confirm such a plan if it is fair, equitable, feasible, and not unfairly discriminatory in favor of any creditor, if it appears from the petitioner's current and projected revenues and expenditures that the budget of the petitioner will be in balance within a reasonable time, and if additional specified requirements are met.

Permits the judge to refer any special issues of fact to a referee in bankruptcy or special master for consideration, taking of testimony and a report if the judge finds his docket allows insufficient time.

Allows eligible petitioners who have filed under chapter IX of the Bankruptcy Act to apply to have the case proceed under this chapter.

Introduced in SenateOct 30, 197500

Provides that any municipality with a population in excess of one million inhabitants is eligible to file a petition for relief under this Act, if first authorized by the State, for the adjustment of the indebtedness of such municipality by a court of bankruptcy.

States that a petition shall be insufficient to involve jurisdiction of the court unless accompanied by a plan made in good faith for the composition or extension of debts and a statement of petitioner's current and projected revenues and expenditures adequate to establish that the budget of petitioner will be in balance within a reasonable time after adoption of the plan.

Provides for notice of the provisions of such plan to the State, the Securities and Exchange Commission and creditors or others who may be materially and adversely affected by the plan.

Sets forth the priorities with respect to payment of debts in advance of any distribution to creditors in the settlement of obligations under this Act.

Provides for a hearing for all interested parties on the confirmation of the plan.

States that a plan of composition or extension may be confirmed only if, of the creditors voting in writing to accept or reject the plan, those holding two-thirds in amount of each class materially and adversely affected have voted to accept. Provides that no such acceptance shall be required from any class which, under the plan, is to be paid in cash the value of its claims or is to be afforded such method of protection as will, consistent with the circumstances of the particular case, equitably and fairly provide for the realization of the value of its claims.

Prescribes the findings to be made by the judge in entering a decree confirming the plan.