Financial Advisors Committee

Volume 2, Number 3 / May 2005

In This Issue:

• Summary of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005
• Things to Look For in Future Newsletters

• Committee Officers
• What's New at ABI
• Upcoming Events
• Contribute to the Newsletter
• ABI World
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• Editor: Ian Fredericks
  Young Conaway Stargatt & Taylor LLP

Summary of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005

by Brendan Linehan Shannon1 and Ian S. Fredericks2, Young Conaway Stargatt & Taylor LLP, Wilmington, Del.

On April 20, 2005, President Bush signed into law the Bankruptcy Abuse Prevention and Consumer Protection Act (hereinafter, the “BAPCPA” or the “Act”). The Act has an effective date of October 17, 2005 and, with some exceptions, its provisions will apply only to cases filed after the effective date.

The BAPCPA has received an enormous amount of both positive and negative media coverage over the past year. That attention, however, has focused almost exclusively on the Act’s provisions affecting consumer bankruptcy. In fact, the BAPCPA contains many provisions directly affecting corporate restructurings under chapter 11—provisions that create new opportunities and obligations for debtors, and potential traps for unwary practitioners.

The Act’s business bankruptcy provisions promise to make it more difficult for distressed companies to successfully reorganize. From limiting timeframes for plan exclusivity and lease assumption, to drastically curtailing a debtor’s ability to structure and implement an employee retention plan, the Act appears to curtail a debtor’s flexibility in formulating a reorganization plan.

This summary briefly addresses some of the key provisions affecting chapter 11 debtors and their professionals. For convenience, what follows immediately as Section I is a short summary describing the most significant changes to the Bankruptcy Code and their practical effects. Section II contains a section-by-section summary of the more important business bankruptcy changes.

The Act also contains a new “chapter 15” of the Bankruptcy Code, which will incorporate the Model Law on Cross-border Insolvencies. However, a discussion of chapter 15 is beyond the scope of this article. We hope that lawyers, financial advisors and other professionals in the restructuring industry will find these materials helpful as new cases are filed under the BAPCPA.3

Section I: Highlights of the BAPCPA

Plan Exclusivity

BAPCPA amends §1121 of the Code, presumably in response to criticism that bankruptcy courts too often extended exclusivity for years, and now imposes an absolute prohibition on extending a debtor’s exclusivity period beyond 18 months from the petition date. Similarly, solicitation of a plan may not be extended beyond 20 months.

Real Property Leases

The current 60-day period under §365(d)(4) within which to assume or reject unexpired leases of non-residential real property is extended under the Act to 120 days from the petition date. Under BAPCPA, a debtor may obtain a 90-day extension of this deadline (for a maximum total of 210 days). Any further extension can be granted only with the affected landlord’s written consent.

This provision will have an immediate impact on retail debtors, by requiring them to quickly decide to assume or reject site and store leases. Apparently in partial recognition of this Hobson’s choice, the Act limits the administrative claims arising from rejection of previously assumed leases to monetary obligations due in the two years following rejection.

The bottom line for retail debtors is that they will be required to make quick decisions on leases, often well before the critical holiday sales season. For landlords, despite the claim limitation described above, the amendment vastly increases their leverage. It is not unreasonable to expect that a lively market may arise where large landlords can extract significant concessions or payments in exchange for the required written consent to further deadline extensions.

Reclamation and Similar Claims

The BAPCPA provides sellers of goods with substantially enhanced rights to payment. First, administrative expense priority will be accorded to claims for goods delivered within 20 days of the petition date. Second, a seller of goods received by the debtor within 45 days of the petition date can submit a reclamation demand to the debtor within the later of 45 days after receipt of the goods or 20 days after the filing. Interestingly, the Act appears to eliminate the current Code provisions permitting a court to substitute a lien or administrative claim for return of the goods. If debtors are actually going to be required to identify, segregate and return goods, such a requirement will impose a huge financial and operational burden on debtors in the first days of their cases. It should also be noted that this provision of the Act will likely end the current controversy and split among the courts over “critical vendor” orders.

Executive Compensation

In the recent spate of mega cases, issues of executive compensation have received more media and public attention than any other aspect of these cases, save perhaps the accounting fraud scandals. Predictably, then, the BAPCPA clamps down on KERP programs, executive severance and similar senior management compensation schemes.

As a threshold matter, BAPCPA prohibits payments and obligations to an insider (in this context, generally officers and directors of the debtor) for the purpose of inducing the insider to “remain with the debtor’s business” unless the payment or obligation “is essential to the retention of the person because the individual has a bona fide offer from another business at the same or greater rate of compensation,” “the services provided by the person are essential to the survival of the business,” and the amount does not exceed 10 times the mean of similar payments made to non-management employees “for any purpose during the calendar year” or, if no such payments were made, 25 percent of any similar transfer made to the insider in the prior year.

Severance for executives is similarly limited. A severance program may be approved only if it is available to all full-time employees, and the insider’s payment may not exceed 10 times the mean severance given to non-management employees in the same year.

Finally, BAPCPA permits the avoidance of a transfer to an insider under an employment contract, irrespective of the debtor’s financial condition or solvency at the time of the contract, if the transfer was outside the ordinary course of business and the debtor received less than reasonably equivalent value in exchange. Accordingly, one should expect that all transactions with a debtor’s executives within two years of the petition date will receive increased scrutiny. Indeed, the amendment may be an invitation to sue former management.

Utilities

The BAPCPA enhances the rights of utilities by providing that their entitlement to “adequate assurance” under Bankruptcy Code §366 requires payment of cash or a similar deposit. More specifically, the Act provides that prior payment history, proof of post-petition financing and allowance of an administrative claim cannot constitute adequate assurance. At a minimum, a debtor with a large number of locations, or heavy energy needs, will have to budget for substantial deposits or letters of credit.

Preference Claims

The BAPCPA contains provisions that will greatly enhance the ability of recipients of potentially preferential transfers to defend against avoidance actions brought by debtors and trustees. Under current law, the “ordinary course” defense to preference liability provides a defense to recovery if the transferee can show that the payment was both in the ordinary course and according to business terms in the industry. The Act amends current practice by permitting a debtor to show either (but not necessarily both) that the payment was in the ordinary course of both parties, or according to ordinary business terms in the industry.

Official Committees

Resolving an open question in the bankruptcy courts, the Act expressly grants courts authority to direct the U.S. Trustee to modify the composition of an official committee if necessary to ensure adequate representation. This provision is almost certainly going to give rise to litigation early in cases as frustrated candidates for committee membership take their grievances directly to the court.

Investment Bankers

Under current law, an investment banker is not “disinterested,” and thus not eligible to serve as a professional to a debtor, if the banker was an underwriter for securities of the debtor within three years of the petition date. The Act repeals this prohibition, thus increasing opportunities for investment bankers in the chapter 11 context.

Sharing of Information

The BAPCPA will require committees to provide their constituents with access to information received from the debtor. Presumably the Act will not be construed to preclude a requirement that creditors may receive such information only upon execution of satisfactory confidentiality provisions.

Section II: Summary of Selected Amendments4

11 U.S.C. §101(14) “Disinterested Person”

A person that is or was an investment banker for a security of the debtor can now be a “disinterested person.” Under the amendment, the only provision that would render investment banks or investment bankers not disinterested is the general prohibition that they may not have an interest materially adverse to the estate or any class of creditors or equity security holders.

11 U.S.C. §101(22) “Financial Institution”

A financial institution also includes a federally insured credit union and a liquidating agent of any of the entities that are included in the definition.

11 U.S.C. §101(23) “Foreign Proceeding”

A foreign proceeding is now defined as a collective judicial or administrative proceeding in a foreign country, including an interim proceeding, under a law relating to insolvency or adjustment of debt and in which the assets and affairs of the debtor are subject to the control and supervision of a foreign court for the purpose of liquidation or reorganization.

11 U.S.C. §101(24) “Foreign Representative”

A person or body, including an interim person or body, appointed or authorized to administer the reorganization or liquidation of the debtor in a foreign country.

11 U.S.C. §101(27A) “Health Care Facility”

The term is defined as any public or private entity, profit or otherwise, engaged in offering to the general public facilities and services for, among other things, medical treatment.

11 U.S.C. §101(51B) “Single Asset Real Estate”

The $9 million cap on the value of the real estate was deleted.

11 U.S.C. §101(51C) “Small Business Case”

A chapter 11 case in which the debtor is small business debtor (as defined below).

11 U.S.C. §101(51D) “Small Business Debtor”

A person engaged in commercial or business activities, including any affiliates that have also filed petitions, whose noncontingent liquidated debts do not exceed $2 million, excluding any debts to insiders or affiliates, and in which a committee has not been appointed or in which a judge determines that the committee is not sufficiently active to provide effective oversight. Also, it does not include a member of a group of affiliated debtors whose debts are less than $2 million.

11 U.S.C. §101(54) “Transfer”

The creation of a lien, the retention of title as a security interest, and foreclosure of the debtor’s equity of redemption come within the definition. The term still includes the disposal of property or an interest in property.

11 U.S.C. §103 “Applicability of Chapters”

This section was amended to include chapter 15. The section makes clear which provisions of the Bankruptcy Code apply in case under chapter 15, and that §§1505, 1513 and 1514 of chapter 15 apply to all cases under Title 11. Finally, §1509 applies whether or not a case is pending under Title 11.

11 U.S.C. §105(d) “Power of Court”

This deleted the portion relating a permissive status conference and makes status conferences mandatory to the extent that they are necessary to further the expeditious and economical resolution of the case.

11 U.S.C. §304 “Cases Ancillary to Foreign Proceedings”

This section was deleted in its entirety.

11 U.S.C. §305 “Abstention”

The new provisions permit a court to suspend or dismiss a case if a chapter 15 petition has been filed and the purposes of chapter 15, relating to foreign proceedings, would be served.

11 U.S.C. §306 “Debtor Reporting Requirements”

This section applies to “small business debtors” only and sets forth specific reporting requirements, including periodic reports of cash receipts and cash disbursements, whether the debtor is in compliance with tax filings and other governmental filings, and such other matters that are in the best interests of the debtor, its creditors and its estate.

11 U.S.C. §328 “Limitations on Compensation of Professional Persons”

Professional persons, under §327, can now be employed on a fixed or percentage fee basis.

11 U.S.C. §330 “Compensation of Officers”

In awarding compensation, the court may now consider whether a professional person is board certified or has otherwise demonstrated skill and experience in the bankruptcy field. Also, in determining the amount of reasonable compensation for a trustee, the court is required to treat the compensation as a commission under §326.

11 U.S.C. §341 “Meeting of Creditors and Equity Security Holders”

If the debtor has filed a pre-packaged or pre-arranged plan and solicited acceptance of that plan prior to the petition date, on request of a party in interest and for cause shown, the court may order that a meeting of creditors and/or equity security holders not be held.

11 U.S.C. §342 “Notice”

When notice is required to be given to a creditor, the notice must now contain the debtor’s name, address and last four digits of the debtor’s taxpayer identification number. Also, if within 90 days of the petition date, the debtor receives two communications from a creditor and the communications contain the current account number and the current address to receive correspondence, then notice to the creditor should be at that address and include the account number.

If the notice concerns an amendment to the schedules, the debtor must include the full taxpayer identification number on the notice to the creditor, but only the last four digits with the notice filed with the court.

Notice that does not comply with §342 is ineffective until the notice is brought to the attention of the creditor. Finally, where a creditor designates a person or subdivision to be responsible for receiving notices under Title 11 and establishes reasonable procedures under which notices received by the creditor are forwarded to such person or subdivision, notice is ineffective until it is received by such person or subdivision.

11 U.S.C. §346 “Special Provisions Related to Treatment of State and Local Taxes”

Essentially, this section was amended to conform state and local tax filing requirements to the requirements in the Internal Revenue Code (“IRC”). For example, if the IRC treats the debtor’s estate as a separate taxable entity, for tax return filing purposes, state and local governments must treat the estate as a separate legal entity. This section was also amended to address tax attributes, dispositions of property and taxable events, and treatment of discharge of indebtedness income by the state and local governments. Finally, considerable portions of this section were deleted.

11 U.S.C. §362 “Automatic Stay”

The filing of a petition does operate as a stay against:

• (a)(8)—The commencement or continuation of a proceeding before the U.S. Tax Court concerning a corporate debtor’s tax liability for a taxable period the bankruptcy may determine. Previously, the stay applied to any proceeding before the tax court that concerned the debtor.

The filing of a petition does not operate as a stay against:

• (b)(24)—A transfer that is not avoidable under §544 or 549.
• (b)(25)—The commencement or continuation of an investigation or action by a securities self regulatory organization to enforce such organization’s police or regulatory power; or the enforcement of an order, other than for monetary sanctions; or any act to delist, delete or refuse to permit quotation of any stock that does not meet the regulatory agency’s standards.
• (b)(26)—Setoff of an income tax refund, provided that there is not a pending action to determine tax liability.

With respect to single-asset real estate cases, §362(d)(3) was amended to permit the debtor to use rents or other income from the property to make monthly payments to the secured creditor, notwithstanding the requirement in §363(c)(2) of consent or court approval to use cash collateral.

Relief from the automatic stay may be sought by:

• (d)(4)—A secured creditor with an interest secured by real property if the debtor’s petition was part of a scheme to delay, hinder or defraud creditors and involved either a transfer of property without consent or court approval or multiple petitions.
• (j)—A party may request an order confirming that the automatic stay has been terminated.

11 U.S.C. §365 “Executory Contracts and Unexpired Leases”

All aircraft and aircraft terminal provisions were deleted.

(b)(1)(A)—The trustee is not required to cure or provide adequate assurance that the trustee will cure a default that arises from a non-monetary obligation under an unexpired lease of real property, if it is impossible for the trustee to cure such default by performing non-monetary acts. However, if the default arises from a failure to operate in accordance with a non-residential real property lease, then such default must be cured by performance and the trustee must compensate the landlord for any pecuniary loss resulting from the default.

(d)(4)—The trustee has 120 days to assume or assign an unexpired lease of non-residential real property. However, the court may grant one 90-day extension, for cause shown, if the request is made before the expiration of the 120-day period. Finally, if the landlord consents, the court may order additional extensions.

11 U.S.C. §366 “Utility Services”

Section 366(c) was added to provide, among other substantive provisions, a detailed definition of “assurance of payment” and an express mandate that administrative priority on account of a utility claim shall not qualify as “assurance of payment.” Also, if the debtor does not provide assurance of payment that the utility believes is satisfactory, the utility may alter, refuse or discontinue service after 30 days after the petition date.

11 U.S.C. §503 “Allowance of Administrative Expenses”

(b)(1)(A)(ii) is new and provides administrative priority status for wages and benefits awarded pursuant to a judicial proceeding or proceeding before the NLRB for back pay that is attributable to periods after the commencement of the case.

(b)(1)(B) Any tax incurred by the estate, whether secured or unsecured and including property taxes, in rem, in personum or both. A governmental unit is not required to file a request for payment of a claim, under sections (b)(1)(B) or (C), as a condition to having an allowed administrative expense.

(b)(7)—If a non-residential real property lease is assumed and later rejected, the lessor is granted an administrative expense equal to the sum of all monetary obligations due for the two (2)-year period following the later to occur of the rejection date or the date of actual turnover of the property, without reduction or setoff unless sums are received or to be received from an entity other than the debtor by the landlord. Any remaining monetary obligations under the lease are a claim under §502(b)(6).

(b)(8)—The actual and necessary costs and expenses of closing a health care facility that are incurred by the trustee, a federal agency, or a state agency or political subdivision, including costs associated with disposing of patient records and transferring patients.

(b)(9)—The value of any goods received by the debtor within 20 days of the commencement of the case, if the goods were sold to the debtor in the ordinary course of the debtor’s business.

(c)(1)—This subsection addresses key employment and severance programs. It provides that, notwithstanding that an expense may be entitled to administrative priority status under subsection (b), a transfer to or for the benefit of an insider for the purposes of inducing such insider to remain with the debtor’s business must be approved by the court or it will not be allowed nor paid. In approving such transfer, the court must find that the transfer is:

1. essential to the retention of the person because the person has a bona fide job offer from another business at equal or greater compensation;
2. the services provided by the person are essential to the survival of the business; and
3. either
   1. the transfer is not greater than 10 times the mean transfer to non-management employees for any purpose during the calendar year when the transfer was made or obligation was incurred, or
   2. if no such transfers were made, an amount not greater than 25 percent of an amount of any similar transfer or obligation made or incurred during the calendar year proceeding the transfer.

(c)(2)—Severance payments are not allowable or payable, unless they are part of a program that is generally applicable to all full-time employees and the amount incurred is not greater than 10 times the mean severance pay to non-management employees during the calendar year in which the payment is made.

(c)(3)—All other transfers or obligations incurred on account of officers, managers, or consultants, which are outside of the ordinary course of business and not justified by the facts and circumstances of the case, are also not allowable or payable as administrative expenses.

11 U.S.C §507 “Priorities”

The amounts entitled to priority for employee wages and pension benefit contributions were increased from $4,925 to $10,000. Effective April 20, 2005 and applies to all cases filed on or after that date.

11 U.S.C. §541 “Property of the Estate”

Subsection (b) was amended to make clear that amounts withheld by an employer, or contributed by an employee to a health insurance plan, retirement plan or for wage taxes are not property of the estate.

Subsection (e) is new and provides that property held by a debtor that is a corporation described in §501(c)(3) of the IRC, and exempt from tax under §501(a) of the IRC, may be transferred to an entity that is not a corporation of that type only under the same conditions that a transfer would be permitted if a case under Title 11 had not been filed.

11 U.S.C. §546 “Reclamation”

Historically, the seller’s right to reclaim goods the debtor received while insolvent extends to 10 days before the commencement of the case. Section 546(c) has been amended to extend that right to 45 days before commencement of the case. This makes primary health of even greater importance and will lead to further efforts to distinguish the decision.

11 U.S.C. §547 “Preferences”

The ordinary course of business defense was amended. The three-part test was deleted in favor of a two-part test. The defense may be invoked (1) if the transfer was in payment of a debt incurred in the ordinary course of business between the debtor and the transferee, and (2)(i) the transfer was made in the ordinary course of business between the debtor and transferee, or (ii) made according to ordinary business terms.

Under subsection (c)(3), a secured creditor now has 30 days instead of 20 days to perfect a security interest after the debtor receives the goods.

Under subsection (e)(1), the time periods were increased from 10 days to 30 days. Thus, the perfection of a security interest can relate back to the date the transfer took effect between the debtor and the transferee (usually, the signing of the security agreement) if it is perfected within 30 days.

11 U.S.C. §548 “Fraudulent Conveyances”

Subsection (e) is new and permits a trustee to avoid a transfer of an interest of the debtor in property that is made within 10 years of the petition date to a self settled trust.

Effective April 20, 2005, and applies to all cases filed on or after that date, except that §548(a) and (b) shall apply only to cases filed more than one (1) year after April 20, 2005.

11 U.S.C. §1102 “Creditors and Equity Security Holders’ Committees”

Subsection (a)(4) is new and provides that a party in interest may request that the court order the U.S. Trustee to change the make-up of a committee appointed under this section if the court determines that it is necessary to ensure adequate representation of creditors or equity holders.

Subsection (b)(3) is new and provides that a committee must provide its constituents access to information that is relevant to the case, and must solicit and receive comments from those constituents on matters relevant to the case. Also, the committee can be compelled to provide additional information and disclosures by the court.

Finally, this section suggests that a small business holding a large claim against the debtor, i.e. disproportionate in relation to the small business’ gross income, can be added to the creditors’ committee and thereby plan an active role in the case and limit its direct costs.

11 U.S.C. §1104 “Appointment of Trustee or Examiner”

Subsection (a)(3) is new and provides that, if grounds exist to dismiss or convert a case under 1112, the court may appoint a chapter 11 trustee in the alternative upon a finding that it is in the best interests of creditors of the estate.

Subsection (e) is new and provides that the U.S. Trustee must move for appointment of a trustee if there are reasonable grounds to suspect that members of the debtor’s governing or management bodies engaged in actual fraud, dishonesty or criminal conduct in managing the debtor or reporting its financial affairs.

Effective April 20, 2005, and applies to all cases filed on or after that date.

11 U.S.C. §1112 “Conversion or Dismissal”

Absent unusual circumstances that establish that dismissal or conversion is not in the best interests of creditors, the court must dismiss or convert a case if the movant establishes “cause.” Cause is specifically defined in this section and includes, among other things, gross mismanagement, failure to fees and costs of the estate, diminution in value, among other acts or omissions. After a party moves for relief under this section, the court must hold a hearing within 30 days and must rule on the motion within 15 days, unless the movant consents to longer time periods.

11 U.S.C. §1114 “Payment of Insurance Benefits to Retired Employees”

Subsection (l) is new and provides that, if the debtor modified retiree benefits within 180 days of the petition date and was insolvent at the time the modification was made, upon motion and after notice and hearing, the court must reinstate the benefits in effect before the modification, unless the balance of equities favor the modification.

Effective April 20, 2005, and applies to all cases filed on or after that date.

11 U.S.C. §1116 “Duties of Trustee or Debtor in Possession in Small Business Case”

This section sets forth additional requirements for the trustee or debtor in possession in a small business case, as that term in defined in §101(51C). For the most part, the requirements do not differ much from the traditional requirements of a debtor in possession, not in a small business case. That section sets out a list of seven duties for the trustee or debtor in possession in small business cases. Among the duties are filing financial statements and tax returns within seven days of the date of the order for relief, meeting with the U.S. Trustee prior to the §341 meeting, timely filing other documents and tax returns during the case, and permitting the U.S. Trustee to inspect the debtor’s premises and books and records.

11 U.S.C. §1121 “Who May File a Plan”

Subsection (d) was amended to limit the amount of time within which the debtor has the exclusive right to file and solicit acceptance of a plan. Under the amendments, the debtor’s exclusive right to file a plan may not be extended beyond a date that is 18 months after the petition date. The debtor’s exclusive right to solicit acceptance of a plan may not be extended beyond a date that is 20 months after the petition date.

This section also has additional requirements that are applicable only to small business cases, including that a plan and disclosure statement, if any, must be filed within 300 days of the petition date.

11 U.S.C. §1125 “Post-petition Disclosure and Solicitation”

Subsection (a)(1), “Adequate Information,” was amended to require a discussion of the potential material federal tax consequences of the plan as to the debtor, a successor to the debtor and a hypothetical investor typical of the holders of claims or interests in the case.

Although subsection (b) of this section prohibits solicitation of a plan without first transmitting a disclosure statement to a claimant or interest holder, subsection (g), which is new, permits the continued solicitation of plan commenced prior to commencement of a chapter 11 case if (1) the claimant or interest holder was solicited pre-petition and (2) such solicitation complied with applicable non-bankruptcy law.

In determining whether the debtor has provided “adequate information,” the court can consider the complexity of the case, the benefit of providing additional information and the cost of providing additional information.

Finally, this section was amended to provide less restrictive and less burdensome requirements for small business cases, including using standard disclosure statement forms and/or a waiver of the requirement to file a disclosure statement.

11 U.S.C. §1127 “Modification of Plan”

Subsection (f) is new and provides that any modification of a plan must comply with the requirements of §§1121–1129. The modified plan becomes the plan only if there has been adequate disclosure under §1125 as the court directs, notice and a hearing, and the modification is approved by the court.

11 U.S.C. §1129 “Confirmation of Plan”

Subsection (a)(9)(C), relating to priority claims under §507(a)(8), was amended to provide additional requirements for treatment of those claims under a plan. Holders of claims under §507(a)(8) must receive installment payments in cash over a period ending not later than five years after the order for relief in the case. Also, the holders of those claims cannot receive treatment under the plan that is less favorable than the most favored non-priority unsecured class of claims (other than a convenience class under 1122(b)).

Effective April 20, 2005, and applies to all cases filed before or after that date, except that “the court shall not confirm a plan under chapter 11… without considering whether this section [as amended] would substantially affect the rights of a party in interest who first acquired rights with respect to the debtor after the date of the filing of the petition.”

11 U.S.C. §1141 “Effect of Confirmation”

Subsection (d)(6) is new and provides that confirmation of a plan does not discharge a corporation of a debt described in §523(a)(2)(A) [a debt incurred under false pretences or fraud], §523(a)(2)(B) [a debt incurred as a result of a false statement regarding the debtor’s financial condition], that is owed to a domestic governmental unit, or that is owed to a person as a result of an action under Title 37, chapter 37, subchapter III or similar state statute. Also, a corporation does not receive a discharge for a tax with respect to which the debtor made a fraudulent return or willfully attempted to evade or defeat a tax.

Effective April 20, 2005, and applies to all cases filed on or after that date.

28 U.S.C. §1409 “Venue of Proceedings Arising Under Title 11 or Arising in, or Related to Cases Under Title 11”

This section was amended to restrict the district in which the trustee (or the debtor) may bring an action to recover a business debt (or property) worth less than $10,000 to the district in which the defendant resides. The previous amount was $1,000, which remains in effect for actions against insiders.