United States Trustees Act of 1986

(Measure passed Senate, amended, in lieu of S. 1923)

Title I: Bankruptcy Judges - Increases the number of bankruptcy judges: (1) from two to three for the Eastern and Western Districts of Arkansas; (2) from seven to nine for the Northern District of California; (3) from four to six for the Eastern District of California; (4) from 12 to 19 for the Central District of California; (5) from three to four for the Southern District of California; (6) from two to four for the Middle District of Florida; (7) from four to six for the Northern District of Georgia; (8) from one to two for the Southern District of Georgia; (9) from one to two for Idaho; (10) from eight to ten for the Northern District of Illinois; (11) from two to three for the Central District of Illinois; (12) from two to three for the Northern District of Indiana; (13) from one to two for the Northern District of Iowa; (14) from one to two for the Southern District of Iowa; (15) from two to three for the Western District of Kentucky; (16) from two to three for Maryland; (17) from two to three for the Western District of Michigan; (18) from one to two for Nebraska; (19) from two to three for Nevada; (20) from five to seven for New Jersey; (21) from one to two for the Western District of North Carolina; (22) from one to two for the Northern District of Oklahoma; (23) from two to three for the Western District of Oklahoma; (24) from four to five for Oregon; (25) from one to two for South Carolina; (26) from two to three for the Eastern District of Tennessee; (27) from two to three for the Western District of Tennessee; (28) from four to five for the Northern District of Texas; (29) from three to five for the Southern District of Texas; (30) from two to three for the Western District of Texas; (31) from two to three for Utah; (32) from three to four for the Eastern District of Virginia; (33) from one to two for the Eastern District of Washington; (34) from four to five for the Western District of Washington; and (35) from three to four for the Eastern District of Wisconsin.

Amends the Consolidated Farm and Rural Development Act to make the existing homestead protection program mandatory rather than discretionary for the Department of Agriculture and the Small Business Administration; and (2) revise eligibility requirements for occupying homestead property by reducing the minimum gross annual farm sales required in at least two of the calendar years of 1981 through 1985 from $40,000 to $15,000 and by reducing from 60 to 50 the percentage of gross annual family income required to be obtained from farming operations in two of such years.

Amends Federal bankruptcy provisions to prevent the discharge of any order, rule, or determination made pursuant to a State administrative process for obtaining and enforcing child or spousal support orders. Establishes separate Federal bankruptcy provisions governing family farm reorganizations.

Requires the court to appoint a trustee in a family farm reorganization case only if no U.S. trustee or standing trustee for personal bankruptcy cases has been appointed. Permits the court to appoint one or more standing trustees or a U.S. trustee to serve in a judicial district if warranted by the number of family farm reorganization cases. Sets forth duties and compensation of such trustees. Grants a debtor in possession in a family farm reorganization case the powers, functions, and duties, with specified exceptions, of a debtor in possession in a regular reorganization case. Requires the debtor, within 60 days after filing a bankruptcy petition and at 60-day intervals thereafter, to file with the clerk a report that includes a statement of intention concerning the disposition of property of the estate, projections of income and expenses for the debtor's farming operations, and a statement of the debtor's strategy for reorganization. Authorizes the debtor in possession or the trustee to operate the debtor's farming and other businesses, unless the court orders otherwise.

Requires the court or an appointed U.S. trustee to order the appointment of a committee of three unsecured creditors. Sets forth the powers and duties of such committee in a family farm reorganization case.

Authorizes a party in interest, the Department of Agriculture, the U.S. Attorney General, or the chief officer of the agricultural agency of any State in which property of the debtor is located to raise, appear, and be heard on any issue in a family farm reorganization case.

Provides for: (1) the removal of a debtor as the debtor in possession for cause or in the best interest of creditors; and (2) the reinstatement of a debtor as debtor in possession on request of a party in interest.

Permits the debtor to convert a family farm reorganization case to a liquidation case at any time. Prohibits the court from converting a family farm reorganization case to a liquidation case if the debtor is: (1) a family farmer; or (2) a farmer or a corporation which is not a moneyed business or commercial corporation. Specifies grounds for dismissal of a case by the court.

Allows any party in interest to file a family farm reorganization plan only if: (1) the debtor is not a debtor in possession; or (2) the debtor has not filed a plan or had a plan confirmed within specified periods. Sets forth required contents of a plan proposed by the debtor. Specifies restrictions on plan modifications. Sets forth conditions for court confirmation of a plan proposed by the debtor which allow deferred cash payments over up to six years on certain unsecured claims of governmental units. Provides that provisions governing the following aspects of a plan filed in a regular reorganization case shall apply to a plan filed in a family farm reorganization case: (1) required contents of a plan filed by a party in interest other than the debtor; (2) post-petition disclosure and solicitation; (3) acceptance of the plan by interest and claim holders; (4) confirmation of a plan filed by a party in interest other than the debtor; (5) the effect of confirmation; (6) distribution under the plan; (7) revocation of an order of confirmation; (8) securities laws exemption; and (9) aircraft equipment and vessels.

Authorizes adequate protection to be provided in a family farm reorganization case by the debtor paying to the trustee reasonable rent for the use of farmland.

Authorizes the trustee in a family farm reorganization case to sell estate property free and clear of any interest of an entity other than the estate if the property is farmland or farm equipment. Provides for the filing and allowance of property claims and interest.

Permits the court in a family farm reorganization case to authorize the obtaining of credit for emergency care of the debtor's stock without notice or a hearing if: (1) irreparable loss or damage will result if such authorization is delayed; and (2) such authorization is in the best interests of the estate.

Establishes a $200 filing fee for a family farm reorganization case.

Repeals this Act five years after its enactment.

Directs the Administrative Office of the United States Courts to report to the Congress within four months after enactment of this Act on the feasibility of a court fee system that would recover all costs of operating and maintaining the Bankruptcy Courts of the United States.

Directs a court to hold a hearing in a bankruptcy case concerning an individual in order to inform the debtor of his or her rights and duties relating to a discharge.

Authorizes Federal district court to be held in Lawrence, Kansas.

Prohibits consolidation of a bankruptcy clerk of court office with a district clerk of court office without the prior approval of the Judicial Conference and the Congress.

Title II: United States Trustees Program - United States Trustees Act of 1986 - Establishes a new United States trustee system providing for the appointment of U.S. trustees to supervise the administration of bankruptcy cases.

Part A: Amendments to Title 28, United States Code - Requires a bankruptcy clerk appointed to a judicial district to be the official custodian of the records of the court and of the dockets of all bankruptcy cases and proceedings.

Requires the Attorney General to direct United States trustees appointed to bankruptcy cases in discharging their duties. Authorizes the Attorney General to investigate the official acts, records, and accounts of such trustees.

Directs the Attorney General to appoint one U.S. trustee for each of 30 bankruptcy regions constituted of specified Federal judicial districts. Reduces a U.S. trustee's term of office from seven to four years. Subjects a U.S. trustee to removal by the Attorney General without cause. Eliminates the 90-day limitation on service by an acting U.S. trustee. Permits the Attorney General to authorize a U.S. trustee designated to serve in more than one region to remain at his or her original official station.

Limits the maximum annual compensation for a person appointed as standing trustee in individual debt bankruptcy cases to step 1 of grade GS-16, generally, and up to step 6 of grade GS-16 if such person has significantly decreased actual expenses resulting in a decrease of his or her percentage fee. Authorizes the use of interest earned from the deposit of payments under plans in the cases for which such person serves to pay such person's actual, necessary expenses, without limitation, if the Attorney General approves.

Increases the maximum annual salary of a U.S. trustee to the rate of basic compensation for level IV of the Executive Schedule. Permits a U.S. trustee to employ staff without regard to provisions of Federal law governing appointments in the competitive service.

Repeals the rulemaking authority of the Director of the Administrative Office of the United States Courts.

Increases the filing fees required to commence bankruptcy cases to $100 for individual debt and liquidation cases, $500 for reorganization cases, and $1,000 for reorganization cases concerning a railroad. Requires a debtor to pay $400 to convert an individual debt or liquidation case to a reorganization case. Prescribes the portions of such fees to be transmitted to the Treasury by the clerk of the court. Prescribes monthly charges to be paid as administrative expenses to U.S. trustees in reorganization cases. Directs the U.S. trustees to transmit charges received to the Treasury. Allows the Attorney General to increase such fees and charges based on the amount necessary for repayment to the Treasury of amounts appropriated for the U.S. trustee system.

Part B: Amendments to Title 11 of the United States Code - Authorizes the bankruptcy court in an involuntary liquidation case to order the U.S. trustee to appoint an interim trustee on request by a party in interest. (Currently, the court makes such an appointment.) Authorizes the court, if it dismisses the petition for such case, to grant judgment against such party (currently, against all petitioners) for damages caused by the interim trustee taking possession of the debtor's property.

Authorizes the appropriate U.S. trustee to raise, appear, and be heard on any issue in any bankruptcy case or proceeding. Provides that the U.S. trustee for the judicial district in which a case is pending is eligible to serve as trustee in such case. Provides that the U.S. trustee qualifies whenever he or she serves in a bankruptcy case.

Requires the appropriate U.S. trustee (currently, the court) to determine the amount of, and sufficiency of the surety on, a bond required to be filed by an individual in order to qualify as a trustee in a bankruptcy case.

Prohibits the court from removing a U.S. trustee. Permits a U.S. trustee to remove a trustee in an individual debt or reorganization case or a trustee or examiner in a liquidation case after notice and a hearing, unless the court orders otherwise.

Prohibits compensation for service or reimbursement of expenses of U.S. trustees or standing trustees in individual debt bankruptcy cases. Requires any compensation paid to a U.S. trustee serving as trustee in a bankruptcy case to be paid to the Treasury.

Prohibits a trustee in a liquidation or reorganization case from employing a professional person who represents or is employed by a creditor, if the U.S. trustee objects.

Requires the U.S. trustee to convene and preside at a meeting of creditors after an order for relief has been filed in a bankruptcy case. Permits the U.S. trustee to examine the debtor at such meeting. Authorizes the U.S. trustee (currently, the court) to order a meeting of any equity security holders.

Permits a U.S. trustee to aggregate money of estates for which he or she serves as trustee for deposit or investment in order to increase earnings.

Provides for the appointment of original, interim, and successor trustees for liquidation cases by the U.S. trustee or by an officer or employee of the court in any judicial district which specifically elects not to be included in the bankruptcy regions established by this title. (Currently, the court has such authority.)

Requires a trustee in a liquidation case to: (1) file reports on the operation of a debtor's business and the administration of the debtor's estate with the appropriate U.S. trustee; and (2) provide the court with such information as may enable the court to carry out its responsibilities concerning dismissal of a case or the discharge of debts in a case. Permits a creditor's committee to consult with, and make recommendations to, the U.S. trustee concerning the performance of the trustee's duties.

Authorizes a court to dismiss a voluntary liquidation case if the debtor fails to file information on his or her financial affairs within 15 days or such additional time as the court may allow after filing the petition commencing the case.

Grants a U.S. trustee the same rights and responsibilities as a trustee in the discharge of a liquidation case.

Provides for the appointment of committees of creditors and equity security holders in reorganization cases by the appropriate U.S. trustee. (Currently, the court has such authority.) Authorizes the U.S. trustee to request the appointment of a trustee or examiner and the termination of the trustee's appointment to such a case. Directs the U.S. trustee (currently, the court) to appoint any successor trustee or examiner. Permits a court to dismiss a reorganization case or to convert such a case to a liquidation case at the request of a U.S. trustee. Includes as causes for dismissal: (1) nonpayment of court fees; (2) failure of a debtor in a voluntary case to file information on his or her financial affairs within 15 days after filing the petition commencing the case; and (3) failure of a debtor to file his or her intention for property securing consumer debts within the prescribed period.

Provides for the appointment of a standing trustee or the designation of a trustee in an individual debt bankruptcy case by the appropriate U.S. trustee. (Currently, the court has such authority.) Permits the U.S. trustee, other than an officer or employee of the court, to serve as such trustee.

Permits a court to dismiss an individual debt case or to convert such a case to a liquidation or reorganization case at the request of a U.S. trustee. Includes as a cause for dismissal the failure of a debtor to file: (1) information on his or her financial affairs within 15 days or such additional time as the court may allow after the filing of the petition commencing the case; or (2) his or her intentions for property securing consumer debts within the prescribed period.

Part C: Transition and Repealer - Repeals provisions that would repeal specified provisions providing for the appointment, compensation, staff, and termination of U.S. trustees as of September 30, 1986. Sets forth technical amendments providing for transition to the United States trustee system established by this title.

Provides that: (1) provisions of this title concerning the appointment of U.S. trustees for bankruptcy regions shall not apply to any judicial district which elects not to be included in such regions; and (2) such an election shall terminate the services of the U.S. trustee currently serving such district. Requires such an election to be granted upon request by any bankruptcy judge after a majority vote of the chief district judge and each bankruptcy judge in the judicial district approving such election, provided that the district makes such election with 60 days of enactment of this title. Allows such an election to be revoked. Authorizes the Attorney General to reconstitute any bankruptcy region wherein a judicial district has made such an election. Requires the court officers and employees of such district to perform the duties and functions granted to the U.S. trustee, with specified exceptions. Directs the Judicial Conference to promulgate regulations for the appointment and removal of such officers and employees.

Requires the Director of the Executive Office for United States Trustees to award a contract for a demonstration project of an electronic case management system in three judicial districts for use by the bankruptcy courts and U.S. trustees. Directs the Congress to evaluate the cost-effectiveness of the project in comparison to case management in districts which do not have electronic systems and in districts which participate in electronic case management systems maintained by the Administrative Office of the United States Courts. Provides for continuation of the project until the Congress acts upon its continuance, expansion, or termination. Specifies information to be provided by the system to the clerk of court and the U.S. trustee in each district. Establishes a fee to be charged for system access (with restrictions) to all entities except the Congress, the Executive Office for U.S. Trustees, the Administrative Office of the U.S. Courts, court clerks, trustees in pending cases, and the judges of the bankruptcy and district courts in the affected districts.

Part D: Authorization for Appropriations for Bankruptcy Administration - Authorizes appropriations to carry out this Act. Requires the use of bankruptcy filing fees to reimburse the Treasury for such appropriations.

Part E: The Rules of Bankruptcy Procedure - Provides that Part X of the Rules of Bankruptcy Procedure shall apply in any district in which a U.S. trustee is serving until such part is superseded by Rules of Bankruptcy Procedure as prescribed by the Supreme Court.

Part F: Short Title - Entitles this title as the United States Trustees Act of 1986.

Title III: Technical Corrections - Makes technical amendments and