A bill to amend chapter IX of the Bankruptcy Act, relating to proceedings involving certain local governments.

States that courts of bankruptcy shall exercise original jurisdiction as provided in this Act for the adjustment of debts of any public agency or instrumentality or political subdivision of a State if not prohibited from filing a petition by applicable State law.

Provides that, upon the filing of a petition, the court may, in addition to the jurisdiction, powers, and duties conferred and imposed upon it: (1) permit the rejection of executory contracts of the petitioner, upon notice to the parties to such contracts and to such other parties in interest as the court may designate; (2) upon such notice as the court may prescribe and for cause shown, permit the issuance of certificates of indebtedness for cash, property, or other consideration approved by the court, upon such terms and conditions and with such security and priority in payment over existing obligations, secured or unsecured, as in the particular case may be equitable.

Specifies the contents of a petition to be filed under this Act.

Provides for notice to and representation of creditors and other parties in interest.

States that a bankruptcy petition filed under this Act shall operate as a stay of enforcement of claims against the petitioner.

Authorizes relief, in the discretion of the court, from an automatic stay.

States that a petitioner's plan may include provisions modifying or altering the rights of creditors generally, or of any class of them, secured or unsecured, either through issuance of new securities of any character, or otherwise, and may contain such other provisions and agreements not inconsistent with Federal bankruptcy law as the parties may desire, including, but not limited to rejection of any executory contract.

Establishes a system of priorities for paying creditors under such plan.

Authorizes any qualified creditor to accept or reject such plans and modifications thereof.