11 U.S.C. § 1164 — Right to be heard

Page 280 TITLE 11—BANKRUPTCY § 1161 EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases 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 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. SUBCHAPTER IV—RAILROAD REORGANIZATION § 1161. Inapplicability of other sections Sections 341, 343, 1102(a)(1), 1104, 1105, 1107, 1129(a)(7), and 1129(c) of this title do not apply in a case concerning a railroad. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2641.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 This section makes inapplicable sections of the bill which are either inappropriate in railroad reorganiza- tions, or relate to matters which are otherwise dealt with in subchapter IV. § 1162. Definition In this subchapter, ‘‘Board’’ means the ‘‘Sur- face Transportation Board’’. (Added Pub. L. 104–88, title III, § 302(1), Dec. 29, 1995, 109 Stat. 943.) Editorial Notes PRIOR PROVISIONS A prior section 1162, Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2641, defined ‘‘Commission’’, prior to repeal by Pub. L. 104–88, title III, § 302(1), Dec. 29, 1995, 109 Stat. 943. Statutory Notes and Related Subsidiaries EFFECTIVE DATE Section effective Jan. 1, 1996, see section 2 of Pub. L. 104–88, set out as a note under section 1301 of Title 49, Transportation. § 1163. Appointment of trustee As soon as practicable after the order for relief the Secretary of Transportation shall submit a list of five disinterested persons that are quali- fied and willing to serve as trustees in the case. The United States trustee shall appoint one of such persons to serve as trustee in the case. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2641; Pub. L. 99–554, title II, § 226, Oct. 27, 1986, 100 Stat. 3102.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 1163 of the House amendment represents a compromise between the House bill and Senate amend- ment with respect to the appointment of a trustee in a railroad reorganization. As soon as practicable after the order for relief, the Secretary of Transportation is required to submit a list of five disinterested persons who are qualified to serve as trustee and the court will than appoint one trustee from the list to serve as trust- ee in the case. The House amendment deletes section 1163 of the Senate amendment in order to cover intrastate rail- roads in a case under subchapter IV of chapter 11. The bill does not confer jurisdiction on the Interstate Com- merce Commission with respect to intrastate railroads. SENATE REPORT NO. 95–989 [Section 1166 (enacted as section 1163)] Requires the court to appoint a trustee in every case. Since the trustee may employ whatever help he needs, multiple trusteeships are unnecessary and add to the cost of ad- ministration. The present requirement of section 77(c)(1) [section 205(c)(1) of former title 11] that the trustee be approved by the Interstate Commerce Com- mission is unnecessary, since the trustee will be se- lected either from the panel established under section 606(f) of title 28, or someone certified by the Director of the Administrative Office of the United States Courts as qualified to become a member of that panel. HOUSE REPORT NO. 95–595 [Section 1162] This section [enacted as section 1163] requires the appointment of an independent trustee in a railroad reorganization case. The court may appoint one or more disinterested persons to serve as trustee in the case. Editorial Notes AMENDMENTS 1986—Pub. L. 99–554 amended section generally, sub- stituting ‘‘relief the Secretary’’ for ‘‘relief, the Sec- retary’’ and ‘‘The United States trustee shall appoint’’ for ‘‘The court shall appoint’’. 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. § 1164. Right to be heard The Board, the Department of Transportation, and any State or local commission having regu- latory jurisdiction over the debtor may raise and may appear and be heard on any issue in a case under this chapter, but may not appeal from any judgment, order, or decree entered in the case. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2641; Pub. L. 104–88, title III, § 302(2), Dec. 29, 1995, 109 Stat. 943.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 1164 of the Senate amendment is deleted as a matter to be left to the Rules of Bankruptcy Proce- dure. It is anticipated that the rules will require a peti- tion in a railroad reorganization to be filed with the Interstate Commerce Commission and the Secretary of Transportation in a case concerning an interstate rail- road. Section 1164 of the House amendment is derived from section 1163 of the House bill. The section makes clear that the Interstate Commerce Commission, the Depart- ment of Transportation, and any State or local com- mission having regulatory jurisdiction over the debtor may raise and appear and be heard on any issue in a case under subchapter IV of chapter 11, but may not ap- peal from any judgment, order, or decree in the case. As under section 1109 of title 11, such intervening par- ties are not parties in interest. Page 281 TITLE 11—BANKRUPTCY § 1166 HOUSE REPORT NO. 95–595 [Section 1163] This section [enacted as section 1164] gives the same right to raise, and appear and be heard on, any issue in a railroad reorganization case to the Interstate Commerce Commission, the Department of Transportation, and any State or local commission having regulatory jurisdiction over the debtor as is given to the SEC and indenture trustees under section 1109 in ordinary reorganization cases. The right of ap- peal is denied the ICC, the Department of Transpor- tation, and State and local regulatory agencies, the same as it is denied the SEC. Editorial Notes AMENDMENTS 1995—Pub. L. 104–88 substituted ‘‘Board’’ for ‘‘Com- mission’’. Statutory Notes and Related Subsidiaries 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 1301 of Title 49, Transpor- tation. § 1165. Protection of the public interest In applying sections 1166, 1167, 1169, 1170, 1171, 1172, 1173, and 1174 of this title, the court and the trustee shall consider the public interest in ad- dition to the interests of the debtor, creditors, and equity security holders. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2641.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 1165 of the House amendment represents a modification of sections 1165 and 1167 of the Senate amendment requiring the court and the trustee to con- sider the broad, general public interest in addition to the interests of the debtor, creditors, and equity secu- rity holders in applying specific sections of the sub- chapter. SENATE REPORT NO. 95–989 Section 1165 requires the court, in consideration of the relief to be granted upon the filing of an involun- tary petition, to take into account the ‘‘public inter- est’’ in the preservation of the debtor’s rail service. This is an important factor in railroad reorganization, which distinguishes them from other business reorga- nizations. Hence, this section modifies the provisions in sections 303 and 305 that govern generally when the business of a debtor may continue to operate, when re- lief under the Act sought should be granted, and when the petition should be dismissed. Section 1167 [enacted as section 1165] imposes on the trustee the obligations, in addition to his other duties and responsibilities, to take into account the ‘‘public interest’’ in the preservation of the debtor’s rail serv- ice. § 1166. Effect of subtitle IV of title 49 and of Fed- eral, State, or local regulations Except with respect to abandonment under section 1170 of this title, or merger, modification of the financial structure of the debtor, or issuance or sale of securities under a plan, the trustee and the debtor are subject to the provi- sions of subtitle IV of title 49 that are applicable to railroads, and the trustee is subject to orders of any Federal, State, or local regulatory body to the same extent as the debtor would be if a petition commencing the case under this chap- ter had not been filed, but— (1) any such order that would require the ex- penditure, or the incurring of an obligation for the expenditure, of money from the estate is not effective unless approved by the court; and (2) the provisions of this chapter are subject to section 601(b) of the Regional Rail Reorga- nization Act of 1973. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2642; Pub. L. 97–449, § 5(a)(2), Jan. 12, 1983, 96 Stat. 2442; Pub. L. 98–353, title III, § 518, July 10, 1984, 98 Stat. 388; Pub. L. 103–394, title V, § 501(d)(34), Oct. 22, 1994, 108 Stat. 4146.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 1166 of the House amendment is derived from sections 1164 and 1165 of the House bill. An alternative proposal contained in section 1168(1) of the Senate bill is rejected as violative of the principle of equal treat- ment of all creditors under title 11. SENATE REPORT NO. 95–989 Section 1168 [enacted as section 1166] makes the trustee subject to the Interstate Commerce Act [49 U.S.C. 10101 et seq.] and to lawful orders of the Inter- state Commerce Commission, the U.S. Department of Transportation, and State and regulatory bodies. The approval of the court is required, however, if the order requires the expenditure of money or the incurring of an expenditure other than the payment of certain interline accounts. The limitation of ‘‘lawful orders’’ of State commissions to those involving ‘‘safety, location of tracks, and terminal facilities,’’ which is contained in present section 77(c)(2) [section 205(c)(2) of former title 11], is eliminated. Subsection (1) further provides that the debtor must pay in cash all amounts owed other carriers for current balances owed for interline freight, passenger and per diem, including incentive per diem, for periods both prior and subsequent to the filing of the petition, with- out the necessity of court approval. Subsection (2) makes the provisions of the chapter subject to section 601(b) of the Regional Rail Reorga- nization Act [45 U.S.C. 791(b)], which excludes the Interstate Commerce Commission from any participa- tion in the reorganization of certain northeast rail- roads that have transferred their rail properties to Con- solidated Rail Corporation (Conrail). HOUSE REPORT NO. 95–595 Section 1164 [enacted as section 1166] makes the debt- or railroad subject to the provisions of the Interstate Commerce Act [49 U.S.C. 10101 et seq.] that are applica- ble to railroads, and the trustee subject to the orders of the Interstate Commerce Commission to the same ex- tent as the debtor would have been if the case had not been commenced. There are several exceptions. The section does not apply with respect to abandonment of rail lines, which is provided for under section 1169, or with respect to merger under a plan, modification of the financial structure of the debtor by reason of the plan, or the issuance or sale of securities under a plan. Further, the orders of the ICC are not effective if the order would require the expenditure or the incurring of an obligation for the expenditure of money from the es- tate, unless approved by the court, and the provisions of this chapter are subject to section 601(b) of the Re- gional Rail Reorganization Act of 1973 [45 U.S.C. 791(b)]. [Section 1165 (enacted as section 1166)] The same rules apply with respect to Federal, State, or local regula- tions. The trustee is subject to the orders of a Federal, State, or local regulatory body to the same extent as the debtor would be if the case had not been com-