A BILL TO BE ENTITLED
AN ACT TO extend authorization to seek chapter nine BANKRUPTCY RELIEF to additional governmental units, TO UPDATE references TO BANKRUPTCY LAWS APPEARING THROUGHOUT THE GENERAL STATUTES, and to allow a receiver to sell assets of the receivership free and clear of interests in the assets.
The General Assembly of North Carolina enacts:

PART I. MUNICIPALITIES AND OTHER GOVERNMENTAL UNITS SEEKING BANKRUPTCY RELIEF
SECTION 1.(a)  Article 7 of Chapter 23 of the General Statutes reads as rewritten:
"Article 7.
"Municipalities and Other Governmental Units Authorized for Bankruptcy Relief.
"§ 23‑48.  Municipalities and other governmental units authorized for bankruptcy relief.

(a)	The following governmental entities may seek any relief afforded under Chapter 9 of Title 11 of the United States Code:
(1)	A taxing district, local improvement district, county, or municipality, with the approval of the Local Government Commission.
(2)	A correction enterprise as described in Article 14 of Chapter 148 of the General Statutes, with the approval of the Secretary of Public Safety.
(3)	A local school administrative unit, with the approval of the State Board of Education.
(4)	A community college, with the approval of the State Board of Community Colleges. However, a community college shall not seek relief under Chapter 9 of Title 11 of the United States Code if the filing of a bankruptcy petition would result in the community college's loss of eligibility for federally funded financial aid.
(b)	A governmental unit that is denied approval under this section may appeal the decision to the superior court. The superior court shall review whether the decision is arbitrary or capricious.
"§ 23‑49.  Additional working capital.
Notwithstanding any other provision of the General Statutes, a governmental unit that is authorized to seek bankruptcy relief under G.S. 23‑48 may use or borrow additional working capital pursuant to a plan of adjustment confirmed by a United States Bankruptcy Court or pursuant to an order issued by a United States Bankruptcy Court. Nothing in this section prescribes a method of composition of indebtedness, as described in 11 U.S.C. § 903."
SECTION 1.(b)  This section becomes effective October 1, 2017.

PART II. UPDATE REFERENCES TO BANKRUPTCY LAWS
SECTION 2.  G.S. 1‑245 reads as rewritten:
"§ 1‑245.  Notice of judgments discharged through bankruptcy proceedings.
(a)	When a debtor in bankruptcy or other party‑in‑interest furnishes the clerk of the superior court of any county in this State a written form, order, or certificate from a United States Bankruptcy Court to the effect that (i) a debtor has been discharged, (ii) the plaintiff or judgment creditor in whose favor judgments against the defendant debtor are docketed in the office of the clerk of the superior court have received due notice as provided by law, and (iii) the judgments have been discharged or avoided in whole or in part, the clerk of the superior court shall file the form, order, or certificate and enter a notation thereof on the margin of the judgments.
(b)	The effect of any form, order, or certificate filed by the clerk pursuant to this section is governed by Title 11 of the United States Code and other applicable federal law. This section shall apply to judgments already docketed as well as to future judgments."
SECTION 3.  G.S. 44A‑12(a) reads as rewritten:
"(a)	Place of Filing. – All claims of lien on real property shall be filed in the office of the clerk of superior court in each county where the real property subject to the claim of lien on real property is located. The clerk of superior court shall note the claim of lien on real property on the judgment docket and shall index the claim under the name of the record owner of the real property at the time the claim is filed. An additional copy of the claim of lien on real property may also be filed with any receiver, bankruptcy trustee, debtor in possession, or assignee for benefit of creditors who obtains legal authority over the real property."
SECTION 4.  G.S. 44A‑13(a) reads as rewritten:
"(a)	Where and When Action Commenced. – An action to enforce a claim of lien on real property may be commenced in any county where venue is otherwise proper. No action may be commenced later than 180 days after the last furnishing of labor or materials at the site of the improvement by the person claiming the claim of lien on real property. If the title to the real property against which the claim of lien on real property is asserted is by law vested in a receiver or is subject to the control of a bankruptcy court, the claim of lien on real property shall be enforced in accordance with the orders of the court having jurisdiction over the real property. The following filings within the time required by this section satisfy the requirement for the commencement of a civil action:
(1)	The filing of a proof of claim with a receiver.
(2)	The filing of a notice of lis pendens in each county where the real property subject to the claim of lien on real property is located.
(3)	The filing of a proof of claim pursuant to 11 U.S.C. § 501."
SECTION 5.  G.S. 47‑29 reads as rewritten:
"§ 47‑29.  Recording of bankruptcy records.
A copy of the petition with the schedules omitted beginning a proceeding under Title 11 of the United States Code or of any form, order, or certificate of a United States Bankruptcy Court in the proceeding shall be recorded in the office of any register of deeds in North Carolina, and it shall be the duty of the register of deeds, on request, to record the form, order, or certificate. The register of deeds is entitled to the same fees for the registration as the register of deeds is entitled to for recording conveyances."
SECTION 6.  G.S. 59‑32(1) reads as rewritten:
"(1)	"Bankrupt" means to be any of the following:
a.	A debtor having filed a petition under any applicable chapter of Title 11 of the United States Code.
b.	A debtor against which an order for relief has been entered pursuant to 11 U.S.C. § 303.
c.	Insolvent under any State insolvent act."
SECTION 7.  G.S. 84‑5(a)(2)l. reads as rewritten:
"l.	Performing legal services in insolvency proceedings or before a United States Bankruptcy Court."
SECTION 8.  G.S. 96‑10(c) reads as rewritten:
"(c)	Priorities under Legal Dissolution or Distributions. – In the event of any distribution of an employer's assets pursuant to an order of any court under the laws of this State, including any receivership, assignment for benefit of creditors, adjudicated insolvency, composition, or similar proceeding, contributions then or thereafter due shall be paid in full prior to all other claims except taxes, and claims for remuneration of not more than two hundred fifty dollars ($250.00) to each claimant, earned within six months of the commencement of the proceeding.
A receiver of any covered employer placed into an operating receivership pursuant to an order of any court of this State shall pay to the Division any contributions, penalties, or interest then due out of moneys or assets on hand or coming into the receiver's possession before any of the moneys or assets may be used in any manner to continue the operation of the business of the employer while it is in receivership."

PART III. SALE OF PROPERTY BY RECEIVER
SECTION 9.(a)  Article 38 of Chapter 1 of the General Statutes is amended by adding a new section to read:
"§ 1‑505.1.  Power of sale with liens attached to proceeds.
In a sale of property ordered under G.S. 1‑505, a receiver may sell assets of the receivership free and clear of interests in the assets in the manner provided by 11 U.S.C. § 363."
SECTION 9.(b)  This section becomes effective October 1, 2017, and applies to sales of property ordered on or after that date.

PART IV. EFFECTIVE DATE
SECTION 10.  The headings to the parts of this act are a convenience to the reader and are for reference only. The headings do not expand, limit, or define the text of this act.
SECTION 11.  Except as otherwise provided, this act is effective when it becomes law.