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;
(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
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
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
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
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.
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.
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
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,
Section Referred to in Other Sections
This section is referred to in section 1165 of this title.