Article XII-General Provisions

Sec. 676. (11 U.S.C. § 1076.) Suspension of Statutes of Limitation, etc.

All statutes of limitation affecting claims provable under this chapter and the running of all periods of time prescribed by this Act in respect to the commission of acts of bankruptcy, the recovery of preferences and the avoidance of liens and transfers shall be suspended while a proceeding under this chapter is pending and until it is finally dismissed.

Sec. 677. (11 U.S.C. § 1077.) Notice by Mail

Unless otherwise directed by the court, all notices required by this chapter may be given by mail to the parties entitled thereto to their addresses ascertained in the manner prescribed for other notices in section 58 of this Act.

Sec. 678. (11 U.S.C. § 1078.) Secretary of Treasury; Notices and Information to

The clerk and, in the case of a reference, the referee after such reference, shall forthwith transmit to the Secretary of the Treasury copies of

(1) all petitions filed under sections 621 and 622 of this Act; (2) all notices given in a proceeding under this chapter;

(3) all orders dismissing proceedings or directing that bankruptcy be proceeded with, discharging debtors, closing estates and setting aside confirmations;

(4) all orders approving modifications or alterations in plans, together with copies of such alterations or modifications;

(5) all orders confirming plans, together with copies of such plans;

(6) all orders increasing or reducing the amount of installment payments under plans, and all orders extending or shortening the time for such payments; and

(7) such other papers filed in the proceedings as the Secretary of the Treasury may request or which the court may direct to be transmitted to him.

Any order fixing the time for confirming an arrangement which affects claims of the United States shall include a notice to the Secretary of the Treasury of not less than ten days.

Sec. 679. (11 U.S.C. § 1079.) Taxes; Income or Profit from Modification of Indebtedness

No income or profit, taxable under any law of the United States or of any State now in force or which may hereafter be enacted, shall, in respect to the adjustment of the indebtedness of a debtor

Bankruptcy Act Anno. 5th Ed.-20

§§ 676-679

in a proceeding under this chapter, be deemed to have accrued to or to have been realized by a debtor by reason of a modification in or cancellation in whole or in part of any such indebtedness in a proceeding under this chapter: Provided, however, That if it shall be made to appear that the plan had for one of its principal purposes the evasion of any income tax, the exemption provided by this section shall be disallowed.

Sec. 680. (11 U.S.C. § 1080.) Same; Payment; Acceptance of Arrangement by Taxing Agency

Any provision in this chapter to the contrary notwithstanding, all taxes which may be found to be owing to the United States or any State from a debtor within one year from the date of the filing of a petition under this chapter, and have not been assessed prior to the date of the confirmation of a plan under this chapter, and all taxes which may become owing to the United States or any State from a debtor shall be assessed against, may be collected from, and shall be paid by the debtor: Provided, however, That the United States or any State may in writing accept the provisions of any plan dealing with the assumption, settlement, or payment of any such tax.

Article XIII-When Chapter Takes Effect

Sec. 686. (11 U.S.C. § 1086.)

Applies

Proceedings to Which Chapter

(1) On and after the effective date of this amendatory Act, this chapter shall apply to debtors and their creditors, whether their rights, claims, and interests of any nature whatsoever have been acquired or created before or after such date;

(2) a petition may be filed under this chapter in a proceeding in bankruptcy which is pending on the effective date of this amendatory Act;

(3) the provisions of sections 73 and 74, as amended, of the Act entitled "An Act to establish a uniform system of bankruptcy throughout the United States," approved July 1, 1898, shall continue in full force and effect with respect to proceedings pending under those sections upon the effective date of this amendatory Act;

(4) section 679 of this Act shall apply to compositions and extensions confirmed under section 74 before the effective date of this amendatory Act and to compositions and extensions which may be confirmed under section 74 on and after such effective date; and

(5) confirmation of a plan under this chapter shall not be refused because of a discharge granted or a composition confirmed prior to the effective date of this amendatory Act.

Chapter XIV

MARITIME COMMISSION LIENS

Sec. 701. (11 U.S.C. § 1101.) United States Maritime Commission as Trustee or Receiver; Corporations Op

erating Vessels to Foreign Countries

Notwithstanding any provision of law, in any proceeding in a bankruptcy, equity, or admiralty court of the United States in which a receiver or trustee may be appointed for any corporation engaged in the operation of one or more vessels of United States registry between the United States and any foreign country, upon which the United States holds mortgages, the court upon finding that it will inure to the advantage of the estate and the parties in interest and that it will tend to further the purposes of the Merchant Marine Act, 1936, may constitute and appoint the United States Maritime Commission as sole trustee or receiver, subject to the directions and orders of the court, and in any such proceeding the appointment of any person other than the Commission as trustee or receiver shall become effective upon the ratification thereof by the Commission without a hearing, unless the Commission shall deem a hearing necessary. In no such proceeding shall the Commission be constituted as trustee or receiver without its express consent.

Sec. 702. (11 U.S.C. § 1102.) Continued Operation of Vessels; Payment of Operating Loss

If the court, in any such proceeding, is unwilling to permit the trustee or receiver to operate such vessels in such service pending the termination of such proceeding, without financial aid from the Government, and the Commission certifies to the court that the continued operation of such vessels is, in the opinion of the Commission, essential to the foreign commerce of the United States and is reasonably calculated to carry out the purposes and policy of the Merchant Marine Act, 1936, as amended, the court may permit the Commission to operate the vessels subject to the orders of the court and upon terms decreed by the court sufficient to protect all the parties in interest, for the account of the trustee or receiver, directly or through a managing agent or operator employed by the Commission, if the Commission undertakes to pay all operating losses resulting from such operation, and comply with the terms imposed by the court, and such vessel shall be considered to be a vessel of the United States within the meaning of the Suits in Admiralty Act. The Commission shall have no claim against the corporation, its estate, or its assets for the amount of

such payments, but the Commission may pay such sums for depreciation as it deems reasonable and such other sums as the court may deem just. The payment of such sums, and compliance with other terms duly imposed by the court, together with the payment of the operating losses, shall be in satisfaction of all claims against the Commission on account of the operation of such vessels.

Sec. 703. (11 U.S.C. § 1103.) Injunction Powers; United States as Creditor under Preferred Ship Mortgage

No injunction powers vested in the courts of bankruptcy under the Act entitled "An Act to establish a uniform system of bankruptcy throughout the United States," approved July 1, 1898, and Acts amendatory thereof and supplementary thereto, shall be construed or be deemed to affect or apply to the United States as a creditor under a preferred ship mortgage, as defined in the Ship Mortgage Act, 1920, as amended, unless the Commission files with the court a written waiver of the provisions of this section.

SECTIONS OF THE CHANDLER ACT

The great bulk of the Chandler amendments were embraced in the first unnumbered section of that Act, 52 Stat. 840-939, covering straight bankruptcy and Chapters X-XIV. That is the portion of the Act embodying the proposals of the National Bankruptcy Conference. Section 2 made minor amendments to section 75 of the Bankruptcy Act, section 3 made minor amendments to section 83 of the Bankruptcy Act, and the first sentence of section 4 repealed section 76 of the Bankruptcy Act, as above noted at pp. 122, 124, 171.

The following general provisions comprise the closing sections of the Chandler Act: "Sec. 4. Except to the extent necessary to give effect to the provisions of section 6 of this amendatory Act, all Acts or parts of Acts inconsistent with any provisions of this amendatory Act are hereby repealed.

"Sec. 5.

Severability; Headings.—a. If any provision of this amendatory Act or the application thereof to any person or circumstances is held invalid such invalidity shall not affect other provisions or applications of this amendatory Act which can be given effect without the invalid provision or application, and to this end the provisions of this amendatory Act are declared to be severable.

"b. Sections and subdivision headings shall not be taken to govern or limit the scope of the sections or subdivisions to which they relate.

"Sec. 6. Effect of This Amendatory Act.—a. Nothing herein contained shall have the effect to release or extinguish any penalty, forfeiture, or liability incurred under any Act or Acts of which this Act is amendatory. "b. Except as otherwise provided in this amendatory Act, the provisions of this amendatory Act shall govern proceedings so far as practicable in cases pending when it takes effect; but proceedings in cases then pending to which the provisions of this amendatory Act are not applicable shall be disposed of conformably to the provisions of said Act approved July 1, 1898, and the Acts amendatory thereof and supplementary thereto.

"Sec. 7. This amendatory Act shall take effect and be in force on and after three months from the date of its approval."

For consideration of various aspects of the Chandler Act, see Gerdes, "Section 77B, the Chandler Bill and other Proposed Revisions," 35 Mich.L. Rev. 361 (1937); Glenn, "Proposed Revision of the National Bankruptcy Act: Corporate Reorganization and Stockbrokers," 25 Geo.L.J. 628 (1937); Hunt, "Progress of the Chandler Bankruptcy Bill" and "Changing Complexion of the Chandler Bill," 42 Com.L.J. 195, 443 (1937); Laporte, "Changes in Corporate Reorganization Procedure Proposed by the Chandler and Lea Bills," 51 Harv.L.Rev. 672 (1938); Lashly, "The Chandler Bill," 23 Va.L.Rev. 54, 880 (1936-1937); McLaughlin, "Aspects of the Chandler Bill to Amend the Bankruptcy Act," 4 U. of Chi.L.Rev. 369 (1937); Symposium, "Recommendations of the Securities and Exchange Commission," 38 Col.L.Rev. 223-290 (1938); Symposium, "Chandler Act," 12 J.N.A.Ref.Bankr. 124 et seq. (1938): Notes, "Bankruptcy Reform and the Chandler Bill," 46 Yale L.J. 1177 (1937); "Venue under the Chandler Bill in Corporate Bankruptcy and Reorganization," 5 U. of Chi.L.Rev. 272 (1938); Legislation, "Proposed Changes in the Bankruptcy Act Relative to Compositions, Extensions, and Corporate Reorganizations," 23 Va.L.Rev. 74 (1936); "Corporate Reorganization, the Revised Chandler Bill," 24 Va.L.Rev. 309 (1938).

TERMINAL SECTIONS OF REFEREES' SALARY ACT

The closing sections of the Referees' Salary Act 1946 read as follows: Sec. 18. Sections 1 and 10 of this amendatory Act and so much of section 4 of this amendatory Act as amends subdivision b of section 37 of the Act entitled "An Act to establish a uniform system of bankruptcy throughout the United States", approved July 1, 1898, as amended, shall be effective upon approval of this amendatory Act. All other provisions of this amendatory Act shall become effective sixty days after promulgation of the determinations of the conference, as provided in the said subdivision b of section 37, as amended by this amendatory Act: Provided, however, That the references contained in paragraph (1) of subdivision b of section 37 as amended by this amendatory Act to "subdivision a of this section, and required for subdivisions a and c of section 40, paragraph (2) of section 633, and paragraph (3) of section 659 of this Act" are intended to refer to those subdivisions and paragraphs as they will be amended when sections 6, 16, and 17 of this amendatory Act become effective, and section 4 of this amendatory Act becomes fully effective.

Sec. 19. a. All Acts or parts of Acts inconsistent with any provisions of this amendatory Act are hereby repealed.

b. Nothing herein contained shall have the effect to release or extinguish any penalty, forfeiture, or liability incurred under any Act or Acts of which this Act is amendatory.

C. If any provision of this amendatory Act or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of this amendatory Act which can be given effect without the invalid provision or application, and to this end the provisions of this amendatory Act are declared to be severable.

d. Section and subdivision headings shall not be taken to govern or limit the scope of the sections or subdivisions to which they relate. Approved June 28, 1946.

For discussion of the Referees' Salary Act see the debates, 92 Congressional Record 1946, 6506 et seq., 7125 et seq., reprinted in 20 J.N.A.Ref.Bankr. 105 (1946).

Chandler's Act, note-Referee's Salary Act, note