A Bill: 112 Congress 1 S
A Bill: 112 Congress 1 S
A Bill: 112 Congress 1 S
S. ll
112TH CONGRESS
1ST SESSION
A BILL
To address remedies in bankruptcy for negligent, reckless,
or fraudulent assertion of claim.
2
1 ‘‘§ 113. Remedies for negligent, reckless, or fraudu-
2 lent assertion of claim
3
1 or claims in violation of subsection (b) a civil
2 penalty of not more than $5,000 for each such
3 claim;
4 ‘‘(B) an order or judgment requiring a per-
5 son in one or more cases, wherever situated, in
6 which the person has asserted a claim or claims
7 in violation of subsection (b), to pay actual
8 damages to an injured debtor, or trustee; and
9 ‘‘(C) an order or judgment imposing upon
10 a person in one or more cases, wherever situ-
11 ated, in which the person has asserted, or could
12 assert, a claim or claims in violation of sub-
13 section (b) of this section, other prospective or
14 retrospective relief, including but not limited to
15 declaratory relief, injunctive relief, or an audit-
16 ing requirement.
17 ‘‘(b) Notwithstanding any other provision of Federal
18 or State law, and in addition to any other remedy provided
19 under Federal or State law, if a court, on its own motion
20 or on the motion of the United States trustee (or bank-
21 ruptcy administrator, if any), finds, based upon a prepon-
22 derance of the evidence, that a person has, through neg-
23 ligence, recklessness, or fraud, improperly asserted a claim
24 in any case under chapter 7 or chapter 13 of this title
25 before the court, the court may—
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1 ‘‘(1) enter relief against the person in the case
2 before the court; and
3 ‘‘(2) enter relief against the person in any other
4 case under chapter 7 or chapter 13 that is pending
5 or might thereafter be filed under this title, wherever
6 situated, to the extent the court deems it nec-
7 essary—
8 ‘‘(A) to rectify the person’s negligent, reck-
9 less, or fraudulent assertion of a claim; or
10 ‘‘(B) to prevent the person from asserting
11 any negligent, reckless, or fraudulent claim.
12 ‘‘(c)(1) Civil penalties imposed under this section in
13 judicial districts served by United States trustees shall be
14 paid to the United States trustees, who shall deposit an
15 amount equal to such fines in the United States Trustee
16 Fund.
17 ‘‘(2) Civil penalties imposed under this section in ju-
18 dicial districts served by bankruptcy administrators shall
19 be deposited as offsetting receipts to the fund established
20 under section 1931 of title 28, and shall remain available
21 until expended to reimburse any appropriation for the
22 amount paid out of such appropriation for expenses of the
23 operation and maintenance of the courts of the United
24 States.’’.
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1 SEC. 3. DUTY OF THE UNITED STATES TRUSTEE TO AD-
2 DRESS CLAIMS.
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1 ‘‘(ii) filing, pursuing, or commenting
2 upon any civil action, or upon any civil
3 proceeding arising under title 11, or aris-
4 ing in or related to a case under title 11.’’.
5 SEC. 4. PROCEDURES FOR THE AUDITING OF PROOFS OF
6 CLAIM.
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1 sole discretion of the Director of the Executive
2 Office for United States Trustees; and
3 ‘‘(iii) establish procedures for providing,
4 not less frequently than annually, public infor-
5 mation concerning the aggregate results of such
6 audits, including the percentage of cases, by
7 district, in which inaccurate, untrue, or incom-
8 plete proofs of claim were filed.
9 ‘‘(2) The United States trustee for each district is
10 authorized to contract with auditors to perform audits of
11 proofs of claim designated by the United States trustee,
12 in accordance with the procedures established under para-
13 graph (1). An audit may, in the discretion of the United
14 States trustee, encompass multiple proofs of claim filed
15 by the same entity in one case or multiple cases, whether
16 in the same district or multiple districts. The United
17 States trustees from multiple regions may contract with
18 a single auditor to audit proofs of claim filed by the same
19 entity in districts within their regions.
20 ‘‘(3)(A) The report of each audit performed pursuant
21 to paragraph (2) shall be filed with the court where the
22 case is pending and transmitted to the United States
23 trustee and to any trustee serving in the case. Each such
24 report shall clearly and conspicuously specify any findings
25 that the claim asserted in the proof of claim is—
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1 ‘‘(i) not valid;
2 ‘‘(ii) not owed in the amount claimed; or
3 ‘‘(iii) not supported by adequate documentation.
4 ‘‘(B) If a claims audit report identifies deficiencies
5 in the proof of claim as described in paragraph (2)(A),
6 the United States trustee shall—
7 ‘‘(i) if appropriate, report the deficient filing to
8 the United States Attorney pursuant to section 3057
9 of title 18; and
10 ‘‘(ii) if advisable, take appropriate action, in-
11 cluding objecting to the proof of claim under section
12 502(b) of title 11, or commencing an action under
13 section 113(b) of title 11, against entities respon-
14 sible for the deficiencies.’’.
15 (b) TITLE 11.—Section 502(b) of title 11, United
16 States Code, is amended—
17 (1) in paragraph (8), by striking ‘‘or’’ at the
18 end;
19 (2) in paragraph (9), by striking the period at
20 the end and inserting ‘‘; or’’; and
21 (3) by adding at the end the following:
22 ‘‘(10) the court finds the entity filing a proof
23 of claim that was selected for audit under section
24 586(g) of title 28 failed to make available to the
25 auditor for inspection necessary accounts, papers,
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1 documents, financial records, files, or other papers,
2 that were requested by the auditor.’’.
3 SEC. 5. TREATMENT OF SERVICEMEMBERS IN FORE-
4 CLOSURE.
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1 after that date of enactment, except that the Director of
2 the Executive Office for United States Trustees may, in
3 the sole discretion of the Director, establish an earlier ef-
4 fective date by publishing notice in the Federal Register
5 at least 2 weeks before the proposed effective date.