11 U.S.C. § 366 — Utility service

submitted 48 years ago by Pub. L. 95-598 to r/title-11-BANKRUPTCY · 440 words · no verdicts yet

in plain englishAI-generated · not legal advice

A utility usually can't cut off service to a bankrupt debtor. It can't punish the debtor for filing bankruptcy or owing an old debt. But the debtor must give the utility a deposit or other security to keep service.

(a) Normally, a utility cannot change, refuse, or discontinue service to the trustee or the debtor — or treat them worse than other customers — just because the debtor filed for bankruptcy, or because a bill from before the case wasn't paid. This is subject to (b) and (c) below. (b) The utility can still change, refuse, or discontinue service if the trustee or debtor doesn't give it "adequate assurance of payment" — a deposit or other security — for service going forward, within 20 days after the case starts. If someone with a stake asks, and after notice and a hearing, the court can adjust how big that deposit or security needs to be. (c) Special rules for Chapter 11 cases: (1)(A) "Assurance of payment" means a cash deposit, a letter of credit, a certificate of deposit, a surety bond, prepaying for utility use, or another form of security both the utility and the debtor or trustee agree to. (B) Having priority as an administrative expense claim does not, by itself, count as assurance of payment. (2) Subject to (3) and (4) below, in a Chapter 11 case a utility can change, refuse, or discontinue service if it doesn't receive assurance of payment that satisfies it within the first 30 days after the case is filed. (3)(A) If someone with a stake asks, and after notice and a hearing, the court can adjust the amount of assurance required. (B) In deciding whether the assurance is adequate, the court cannot count: (i) the fact that there was no security before the case was filed; (ii) the fact that the debtor paid utility bills on time before filing; or (iii) the debtor's administrative-expense priority. (4) No matter what other law says, a utility can use or offset a deposit the debtor gave it before filing, without needing the court's permission or notice.

the actual law source: uscode.house.gov ↗public domain

(a)

Except as provided in subsections (b) and (c) of this section, a utility may not alter, refuse, or discontinue service to, or discriminate against, the trustee or the debtor solely on the basis of the commencement of a case under this title or that a debt owed by the debtor to such utility for service rendered before the order for relief was not paid when due.

(b)

Such utility may alter, refuse, or discontinue service if neither the trustee nor the debtor, within 20 days after the date of the order for relief, furnishes adequate assurance of payment, in the form of a deposit or other security, for service after such date. On request of a party in interest and after notice and a hearing, the court may order reasonable modification of the amount of the deposit or other security necessary to provide adequate assurance of payment.

(c)

(1)

(A)

For purposes of this subsection, the term “assurance of payment” means—

(i)

a cash deposit;

(ii)

a letter of credit;

(iii)

a certificate of deposit;

(iv)

a surety bond;

(v)

a prepayment of utility consumption; or

(vi)

another form of security that is mutually agreed on between the utility and the debtor or the trustee.

(B)

For purposes of this subsection an administrative expense priority shall not constitute an assurance of payment.

(2)

Subject to paragraphs (3) and (4), with respect to a case filed under chapter 11, a utility referred to in subsection (a) may alter, refuse, or discontinue utility service, if during the 30-day period beginning on the date of the filing of the petition, the utility does not receive from the debtor or the trustee adequate assurance of payment for utility service that is satisfactory to the utility.

(3)

(A)

On request of a party in interest and after notice and a hearing, the court may order modification of the amount of an assurance of payment under paragraph (2).

(B)

In making a determination under this paragraph whether an assurance of payment is adequate, the court may not consider—

(i)

the absence of security before the date of the filing of the petition;

(ii)

the payment by the debtor of charges for utility service in a timely manner before the date of the filing of the petition; or

(iii)

the availability of an administrative expense priority.

(4)

Notwithstanding any other provision of law, with respect to a case subject to this subsection, a utility may recover or set off against a security deposit provided to the utility by the debtor before the date of the filing of the petition without notice or order of the court.

Source credit: (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2578; Pub. L. 98–353, title III, § 443, July 10, 1984, 98 Stat. 373; Pub. L. 109–8, title IV, § 417, Apr. 20, 2005, 119 Stat. 108; Pub. L. 116–260, div. FF, title X, § 1001(h), Dec. 27, 2020, 134 Stat. 3221.)

history & why it existsrecord from the source credit

1978Enacted · Pub. L. 95-598 · 92 Stat. 2578
1984Amended · Pub. L. 98-353 · 98 Stat. 373
2005Amended · Pub. L. 109-8 · 119 Stat. 108
2020Amended · Pub. L. 116-260 · 134 Stat. 3221

A history note hasn’t been published yet. The record shows enactment by Pub. L. 95-598 on 1978-11-06.

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