Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 11– REORGANIZATION

Sub Chapter IV – Railroad Reorganization

Sec. 1172. Contents of plan

 (a) In addition to the provisions required or permitted under 
section 1123 of this title, a plan--
        (1) shall specify the extent to and the means by which the 
    debtor's rail service is proposed to be continued, and the extent to 
    which any of the debtor's rail service is proposed to be terminated; 
    and
        (2) may include a provision for--
            (A) the transfer of any or all of the operating railroad 
        lines of the debtor to another operating railroad; or
            (B) abandonment of any railroad line in accordance with 
        section 1170 of this title.

    (b) If, except for the pendency of the case under this chapter, 
transfer of, or operation of or over, any of the debtor's rail lines by 
an entity other than the debtor or a successor to the debtor under the 
plan would require approval by the Board under a law of the United 
States, then a plan may not propose such a transfer or such operation 
unless the proponent of the plan initiates an appropriate application 
for such a transfer or such operation with the Board and, within such 
time as the court may fix, not exceeding 180 days, the Board, with or 
without a hearing, as the Board may determine, and with or without 
modification or condition, approves such application, or does not act on 
such application. Any action or order of the Board approving, modifying, 
conditioning, or disapproving such application is subject to review by 
the court only under sections 706(2)(A), 706(2)(B), 706(2)(C), and 
706(2)(D) of title 5.
    (c)(1) In approving an application under subsection (b) of this 
section, the Board shall require the rail carrier to provide a fair 
arrangement at least as protective of the interests of employees as that 
established under section 11347 \1\ of title 49.
---------------------------------------------------------------------------
    \1\ See References in Text note below.
---------------------------------------------------------------------------
    (2) Nothing in this subsection shall be deemed to affect the 
priorities or timing of payment of employee protection which might have 
existed in the absence of this subsection.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2644; Pub. L. 96-448, title II, 
Sec. 227(b), Oct. 14, 1980, 94 Stat. 1931; Pub. L. 104-88, title III, 

Sec. 302(2), Dec. 29, 1995, 109 Stat. 943.)


                      Historical and Revision Notes

                         legislative statements

    Section 1172 of the House amendment is derived from section 1171 of 
the House bill in preference to section 1170 of the Senate amendment 
with the exception that section 1170(4) of the Senate amendment is 
incorporated into section 1172(a)(1) of the House amendment.
    Section 1172(b) of the House amendment is derived from section 
1171(c) of the Senate amendment. The section gives the Interstate 
Commerce Commission the exclusive power to approve or disapprove the 
transfer of, or operation of or over, any of the debtor's rail lines 
over which the Commission has jurisdiction, subject to review under the 
Administrative Procedures Act [5 U.S.C. 551 et seq. and 701 et seq.]. 
The section does not apply to a transfer of railroad lines to a 
successor of the debtor under a plan of reorganization by merger or 
otherwise.
    The House amendment deletes section 1171(a) of the Senate amendment 
as a matter to be determined by the Rules of Bankruptcy Procedure. It is 
anticipated that the rules will specify the period of time, such as 18 
months, within which a trustee must file with the court a proposed plan 
of reorganization for the debtor or a report why a plan cannot be 
formulated. Incorporation by reference of section 1121 in section 1161 
of title 11 means that a party in interest will also have a right to 
file a plan of reorganization. This differs from the position taken in 
the Senate amendment which would have permitted the Interstate Commerce 
Commission to file a plan of reorganization.


                        senate report no. 95-989

    Section 1170 adds to the general provisions required or permitted in 
reorganization plans by section 1123. Subsection (1) requires that a 
reorganization plan under the railroad subchapter specify the means by 
which the value of the claims of creditors and the interests of equity 
holders which are materially and adversely affected by the plan are to 
be realized. Subsection (2) permits a plan to include provisions for the 
issuance of warrants. Subsection (3) requires that the plan provide for 
fixed charges by probable earnings for their payment. Subsection (4) 
requires that the plan specify the means by which, and the extent to 
which, the debtor's rail service is to be continued, and shall identify 
any rail service to be terminated. Subsection (5) permits other 
appropriate provisions not inconsistent with the chapter. With the 
exception of subsection (4), the requirements are comparable to those of 
present section 77(b) [section 205(b) of former title 11]; subsection 
(4) emphasizes the public interest in the preservation of rail 
transportation.
    Section 1171 imposes on the court, rather than the Interstate 
Commerce Commission, as in present section 77 [section 205 of former 
title 11], the responsibility for the plan of reorganization. The 
Commission is empowered to make final decisions subject only to review 
by the court under the standards of the Administrative Procedure Act [5 
U.S.C. 551 et seq. and 701 et seq.] as to any part of the plan which 
deals with transportation matters, such as the grant of operating rights 
of or over, or transfer of, the debtor's rail lines to other carriers.
    Subsection (a) requires the trustee to file a plan of reorganization 
within 18 months after the petition is filed, and permits the court, for 
good cause shown, to extend such time limit. Subsection (b) permits a 
plan to be proposed by any interested person, and permits the trustee to 
revise his plan at any time before it is approved by the court.
    Subsections (c), (d) and (e) require the court, when a plan is 
submitted by the trustee or, if the court deems it worthy of 
consideration, a plan submitted is proposed by any other person proposes 
the transfer of, or operation of or over, any of the debtor's lines by 
other carriers, to refer to such provisions of the plan to the 
Interstate Commerce Commission. The Commission, within 240 days, and 
after a hearing if the Commission so determines, is to report to the 
court the effects of such provisions of the plan in the light of 
national transportation policy and sections 5(3)(f)(A), (B), and (D), 
(F)-(I) of the Interstate Commerce Act [49 U.S.C. 11350(b)(1), (2), (4), 
(6)-(9)]. The report of the Commission is conclusive in all further 
hearings on the plan by the court, subject only to review pursuant to 5 
U.S.C. 706(2)(A)-(D).


                         house report no. 95-595

    [Section 1171 (enacted as section 1172)] A plan in a railroad 
reorganization case may include provisions in addition to those required 
and permitted under an ordinary reorganization plan. It may provide for 
the transfer of any or all of the operating railroad lines of the debtor 
to another operating railroad.
    Paragraph (1) contemplates a liquidating plan for the debtor's rail 
lines, much as occurred in the Penn Central case by transfer of 
operating lines to ConRail. Such a liquidating plan is not per se 
contrary to the public interest, and the court will have to determine on 
a case-by-case basis, with the guidance of the Interstate Commerce 
Commission and of other parties in interest, whether the particular plan 
proposed is in the public interest, as required under proposed 11 U.S.C. 
1172(3).
    The plan may also provide for abandonment in accordance with section 
1169, governing abandonment generally. Neither of these provisions in a 
plan, transfer or abandonment of lines, requires ICC approval. 
Confirmation of the plan by the court authorizes the debtor to comply 
with the plan in accordance with section 1142(a) notwithstanding any 
bankruptcy law to the contrary.

                       References in Text

    Section 11347 of title 49, referred to in subsec. (c)(1), was 
omitted in the general amendment of subtitle IV of Title 49, 
Transportation, by Pub. L. 104-88, title I, Sec. 102(a), Dec. 29, 1995, 
109 Stat. 804. For provisions similar to those contained in section 
11347, see section 11326(a) of Title 49.


                               Amendments

    1995--Subsecs. (b), (c)(1). Pub. L. 104-88 substituted ``Board'' for 
``Commission'' wherever appearing.
    1980--Subsec. (c). Pub. L. 96-448 added subsec. (c).


                    Effective Date of 1995 Amendment

    Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2 of 
Pub. L. 104-88, set out as an Effective Date note under section 701 of 
Title 49, Transportation.


                    Effective Date of 1980 Amendment

    Amendment by Pub. L. 96-448 effective Oct. 1, 1980, see section 
710(a) of Pub. L. 96-448, set out as a note under section 1170 of this 
title.


                      Nonapplication of Subsec. (c)

    For provision that subsec. (c) of this section does not apply to 
Amtrak and its employees, see section 142(d) of Pub. L. 105-134, set out 
in an Employee Protection Reforms note under section 24706 of Title 49, 
Transportation.

                  Section Referred to in Other Sections

    This section is referred to in section 1165 of this title.


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