A bill to amend the bankruptcy law to provide for special revenue bonds, and for other purposes.

(Measure passed House, amended)

Amends Federal bankruptcy provisions relating to the adjustment of debts of a municipality to revise rules relating to the treatment of special revenue bonds.

Treats as an administrative expense any claim against a debtor municipality if the debtor provides adequate protection of the interest of the holder of a claim secured by a lien on property of the debtor and if the creditor has a claim from a stay of action against such property. Specifies that the filing of a bankruptcy petition does not operate as a stay of application of pledged special revenues to payment of indebtedness secured by such revenues.

Specifies that the transfer of property of the debtor to or for the benefit of any holder of a bond or note, on account of such bond or note, may not be avoided.

Provides that the holder of a claim payable solely from special revenues of a debtor municipality under applicable nonbankruptcy law shall not be treated as having recourse against the debtor as an unsecured creditor.

Provides that special revenues acquired by the debtor after the commencement of the case shall remain subject to any lien resulting from any security agreement entered into by the debtor before the commencement of the case. Specifies that any such lien on special revenues derived from a project or system shall be subject to the necessary operating expenses of such project or system.

Specifies that a lease to a municipality shall not be treated as an executory contract or unexpired lease by reason of its being subject to termination in the event the debtor fails to appropriate rent.