- 27 -
cally title 11 exempt property of a debtor in bankruptcy, includ-
ing property exempt from the claims of creditors under applicable
State law, in determining whether that debtor is insolvent for
purposes of the Federal bankruptcy laws. See S. Rept. 96-1035 at
24 (1980), 1980-2 C.B. 620, 632.12 However, Congress decided to,
and did, adopt a different definition of the term “insolvent” in
section 108(d)(3) for purposes of section 108. Unlike the
definition of the term “insolvent” in section 101(26) of the 1978
Bankruptcy Act, 11 U.S.C. sec. 101(26) (Supp. II, 1978), which
Congress adopted for purposes of the Federal bankruptcy laws, the
definition of that term which Congress adopted for purposes of
section 108 does not specifically exclude assets of a debtor that
are exempt from the claims of creditors under applicable State
law or any other title 11 exempt property in determining whether
the debtor is insolvent. We conclude that the decision of
12The Senate report accompanying the 1980 Bankruptcy Tax Act
states in pertinent part:
Under bankruptcy law, the commencement of a liqui-
dation or reorganization case involving an individual
debtor creates an “estate” which consists of property
formerly belonging to the debtor. The bankruptcy
estate generally is administered by a trustee for the
benefit of creditors, and it may derive its own income
and incur expenditures. At the same time, the individ-
ual is given a “fresh start”–-that is, wages earned by
the individual after commencement of the case and
after-acquired property do not become part of the
bankruptcy estate, but belong to the individual, and
certain property may be set aside as exempt.
S. Rept. 96-1035 at 24 (1980), 1980-2 C.B. 620, 632.
Page: Previous 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 NextLast modified: May 25, 2011