11 U.S.C. § 344 — Self-incrimination; immunity

Page 65 TITLE 11—BANKRUPTCY § 344 commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 343. Examination of the debtor The debtor shall appear and submit to exam- ination under oath at the meeting of creditors under section 341(a) of this title. Creditors, any indenture trustee, any trustee or examiner in the case, or the United States trustee may ex- amine the debtor. The United States trustee may administer the oath required under this section. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2565; Pub. L. 98–353, title III, § 436, July 10, 1984, 98 Stat. 370; Pub. L. 99–554, title II, § 213, Oct. 27, 1986, 100 Stat. 3099.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 This section, derived from section 21a of the Bank- ruptcy Act [section 44(a) of former title 11], requires the debtor to appear at the meeting of creditors and submit to examination under oath. The purpose of the examination is to enable creditors and the trustee to determine if assets have improperly been disposed of or concealed or if there are grounds for objection to dis- charge. The scope of the examination under this sec- tion will be governed by the Rules of Bankruptcy Pro- cedure, as it is today. See rules 205(d), 10–213(c), and 11–26. It is expected that the scope prescribed by these rules for liquidation cases, that is, ‘‘only the debtor’s acts, conduct, or property, or any matter that may af- fect the administration of the estate, or the debtor’s right to discharge’’ will remain substantially un- changed. In reorganization cases, the examination would be broader, including inquiry into the liabilities and financial condition of the debtor, the operation of his business, and the desirability of the continuance thereof, and other matters relevant to the case and to the formulation of the plan. Examination of other per- sons in connection with the bankruptcy case is left completely to the rules, just as examination of wit- nesses in civil cases is governed by the Federal Rules of Civil Procedure. Editorial Notes AMENDMENTS 1986—Pub. L. 99–554 amended section generally. Prior to amendment, section read as follows: ‘‘The debtor shall appear and submit to examination under oath at the meeting of creditors under section 341(a) of this title. Creditors, any indenture trustee, or any trustee or examiner in the case may examine the debtor.’’ 1984—Pub. L. 98–353 substituted ‘‘examine’’ for ‘‘examiner’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by Pub. L. 99–554 dependent upon the judicial district in- volved, see section 302(d), (e) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. PARTICIPATION BY BANKRUPTCY ADMINISTRATOR AT MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS A bankruptcy administrator or the bankruptcy ad- ministrator’s designee may examine debtor at meeting of creditors and may administer oath required by this section, see section 105 of Pub. L. 103–394, set out as a note under section 341 of this title. § 344. Self-incrimination; immunity Immunity for persons required to submit to examination, to testify, or to provide informa- tion in a case under this title may be granted under part V of title 18. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2565.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 Part V [§ 6001 et seq.] of title 18 of the United States Code governs the granting of immunity to witnesses be- fore Federal tribunals. The immunity provided under part V is only use immunity, not transactional immu- nity. Part V applies to all proceedings before Federal courts, before Federal grand juries, before administra- tive agencies, and before Congressional committees. It requires the Attorney General or the U. S. attorney to request or to approve any grant of immunity, whether before a court, grand jury, agency, or congressional committee. This section carries part V over into bankruptcy cases. Thus, for a witness to be ordered to testify before a bankruptcy court in spite of a claim of privilege, the U. S. attorney for the district in which the court sits would have to request from the district court for that district the immunity order. The rule would apply to both debtors, creditors, and any other witnesses in a bankruptcy case. If the immunity were granted, the witness would be required to testify. If not, he could claim the privilege against self-incrimination. Part V is a significant departure from current law. Under section 7a(10) of the Bankruptcy Act [section 25(a)(10) of former title 11], a debtor is required to tes- tify in all circumstances, but any testimony he gives may not be used against him in any criminal pro- ceeding, except testimony given in any hearing on ob- jections to discharge. With that exception, section 7a(10) amounts to a blanket grant of use immunity to all debtors. Immunity for other witnesses in bank- ruptcy courts today is governed by part V of title 18. The consequences of a claim of privileges by a debtor under proposed law and under current law differ as well. Under section 14c(6) of current law [section 32(c)(6) of former title 11], any refusal to answer a ma- terial question approved by the court will result in the denial of a discharge, even if the refusal is based on the privilege against self incrimination. Thus, the debtor is confronted with the choice between losing his dis- charge and opening himself up to possible criminal prosecution. Under section 727(a)(6) of the proposed title 11, a debt- or is only denied a discharge if he refuses to testify after having been granted immunity. If the debtor claims the privilege and the U. S. attorney does not re- quest immunity from the district courts, then the debt- or may refuse to testify and still retain his right to a discharge. It removes the Scylla and Charibdis choice for debtors that exists under the Bankruptcy Act [former title 11]. Page 66 TITLE 11—BANKRUPTCY § 345 § 345. Money of estates (a) A trustee in a case under this title may make such deposit or investment of the money of the estate for which such trustee serves as will yield the maximum reasonable net return on such money, taking into account the safety of such deposit or investment. (b) Except with respect to a deposit or invest- ment that is insured or guaranteed by the United States or by a department, agency, or in- strumentality of the United States or backed by the full faith and credit of the United States, the trustee shall require from an entity with which such money is deposited or invested— (1) a bond— (A) in favor of the United States; (B) secured by the undertaking of a cor- porate surety approved by the United States trustee for the district in which the case is pending; and (C) conditioned on— (i) a proper accounting for all money so deposited or invested and for any return on such money; (ii) prompt repayment of such money and return; and (iii) faithful performance of duties as a depository; or (2) the deposit of securities of the kind speci- fied in section 9303 of title 31; unless the court for cause orders otherwise. (c) An entity with which such moneys are de- posited or invested is authorized to deposit or invest such moneys as may be required under this section. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2565; Pub. L. 97–258, § 3(c), Sept. 13, 1982, 96 Stat. 1064; Pub. L. 98–353, title III, § 437, July 10, 1984, 98 Stat. 370; Pub. L. 99–554, title II, § 214, Oct. 27, 1986, 100 Stat. 3099; Pub. L. 103–394, title II, § 210, Oct. 22, 1994, 108 Stat. 4125.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS The House amendment moves section 345(c) of the House bill to chapter 15 as part of the pilot program for the U.S. trustees. The bond required by section 345(b) may be a blanket bond posted by the financial deposi- tory sufficient to cover deposits by trustees in several cases, as is done under current law. SENATE REPORT NO. 95–989 This section is a significant departure from section 61 of the Bankruptcy Act [section 101 of former title 11]. It permits a trustee in a bankruptcy case to make such deposit of investment of the money of the estate for which he serves as will yield the maximum reasonable net return on the money, taking into account the safe- ty of such deposit or investment. Under current law, the trustee is permitted to deposit money only with banking institutions. Thus, the trustee is generally un- able to secure a high rate of return on money of estates pending distribution, to the detriment of creditors. Under this section, the trustee may make deposits in savings and loans, may purchase government bonds, or make such other deposit or investment as is appro- priate. Under proposed 11 U.S.C. 541(a)(6), and except as provided in subsection (c) of this section, any interest or gain realized on the deposit or investment of funds under this section will become property of the estate, and will thus enhance the recovery of creditors. In order to protect the creditors, subsection (b) re- quires certain precautions against loss of the money so deposited or invested. The trustee must require from a person with which he deposits or invests money of an estate a bond in favor of the United States secured by approved corporate surety and conditioned on a proper accounting for all money deposited or invested and for any return on such money. Alternately, the trustee may require the deposit of securities of the kind speci- fied in section 15 of title 6 of the United States Code [31 U.S.C. 9303], which governs the posting of security by banks that receive public moneys on deposit. These bonding requirements do not apply to deposits or in- vestments that are insured or guaranteed the United States or a department, agency, or instrumentality of the United States, or that are backed by the full faith and credit of the United States. These provisions do not address the question of ag- gregation of funds by a private chapter 13 trustee and are not to be construed as excluding such possibility. The Rules of Bankruptcy Procedure may provide for aggregation under appropriate circumstances and ade- quate safeguards in cases where there is a significant need, such as in districts in which there is a standing chapter 13 trustee. In such case, the interest or return on the funds would help defray the cost of admin- istering the cases in which the standing trustee serves. Editorial Notes AMENDMENTS 1994—Subsec. (b). Pub. L. 103–394 substituted semi- colon for period at end of par. (2) and inserted con- cluding provisions after par. (2). 1986—Subsec. (b). Pub. L. 99–554 amended subsec. (b) generally, substituting ‘‘approved by the United States trustee for the district’’ for ‘‘approved by the court for the district’’ in par. (1)(B). 1984—Subsec. (c). Pub. L. 98–353 added subsec. (c). 1982—Subsec. (b)(2). Pub. L. 97–258 substituted ‘‘sec- tion 9303 of title 31’’ for ‘‘section 15 of title 6’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1986 AMENDMENT Effective date and applicability of amendment by Pub. L. 99–554 dependent upon the judicial district in- volved, see section 302(d), (e) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 346. Special provisions related to the treatment of State and local taxes (a) Whenever the Internal Revenue Code of 1986 provides that a separate taxable estate or entity is created in a case concerning a debtor under this title, and the income, gain, loss, de- ductions, and credits of such estate shall be taxed to or claimed by the estate, a separate taxable estate is also created for purposes of any State and local law imposing a tax on or meas- ured by income and such income, gain, loss, de- ductions, and credits shall be taxed to or