(a) If the trustee is authorized to operate the business of the 
debtor under section 721, 1108, 1203, 1204, or 1304 of this title, 
unless the court orders otherwise, the trustee may obtain unsecured 
credit and incur unsecured debt in the ordinary course of business 
allowable under section 503(b)(1) of this title as an administrative 
expense.
    (b) The court, after notice and a hearing, may authorize the trustee 
to obtain unsecured credit or to incur unsecured debt other than under 
subsection (a) of this section, allowable under section 503(b)(1) of 
this title as an administrative expense.
    (c) If the trustee is unable to obtain unsecured credit allowable 
under section 503(b)(1) of this title as an administrative expense, the 
court, after notice and a hearing, may authorize the obtaining of credit 
or the incurring of debt--
        (1) with priority over any or all administrative expenses of the 
    kind specified in section 503(b) or 507(b) of this title;
        (2) secured by a lien on property of the estate that is not 
    otherwise subject to a lien; or
        (3) secured by a junior lien on property of the estate that is 
    subject to a lien.

    (d)(1) The court, after notice and a hearing, may authorize the 
obtaining of credit or the incurring of debt secured by a senior or 
equal lien on property of the estate that is subject to a lien only if--
        (A) the trustee is unable to obtain such credit otherwise; and
        (B) there is adequate protection of the interest of the holder 
    of the lien on the property of the estate on which such senior or 
    equal lien is proposed to be granted.

    (2) In any hearing under this subsection, the trustee has the burden 
of proof on the issue of adequate protection.
    (e) The reversal or modification on appeal of an authorization under 
this section to obtain credit or incur debt, or of a grant under this 
section of a priority or a lien, does not affect the validity of any 
debt so incurred, or any priority or lien so granted, to an entity that 
extended such credit in good faith, whether or not such entity knew of 
the pendency of the appeal, unless such authorization and the incurring 
of such debt, or the granting of such priority or lien, were stayed 
pending appeal.
    (f) Except with respect to an entity that is an underwriter as 
defined in section 1145(b) of this title, section 5 of the Securities 
Act of 1933, the Trust Indenture Act of 1939, and any State or local law 
requiring registration for offer or sale of a security or registration 
or licensing of an issuer of, underwriter of, or broker or dealer in, a 
security does not apply to the offer or sale under this section of a 
security that is not an equity security.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2574; Pub. L. 99-554, title II, 
Sec. 257(l), Oct. 27, 1986, 100 Stat. 3115; Pub. L. 103-394, title V, 
Sec. 501(d)(9), Oct. 22, 1994, 108 Stat. 4144.)


                      Historical and Revision Notes

                         legislative statements

    Section 364(f) of the House amendment is new. This provision 
continues the exemption found in section 3(a)(7) of the Securities Act 
of 1933 [15 U.S.C. 77c(a)(7)] for certificates of indebtedness issued by 
a trustee in bankruptcy. The exemption applies to any debt security 
issued under section 364 of title 11. The section does not intend to 
change present law which exempts such securities from the Trust 
Indenture Act, 15 U.S.C. 77aaa, et seq. (1976).


                        senate report no. 95-989

    This section is derived from provisions in current law governing 
certificates of indebtedness, but is much broader. It governs all 
obtaining of credit and incurring of debt by the estate.
    Subsection (a) authorizes the obtaining of unsecured credit and the 
incurring of unsecured debt in the ordinary course of business if the 
business of the debtor is authorized to be operated under section 721, 
1108, or 1304. The debts so incurred are allowable as administrative 
expenses under section 503(b)(1). The court may limit the estate's 
ability to incur debt under this subsection.
    Subsection (b) permits the court to authorize the trustee to obtain 
unsecured credit and incur unsecured debts other than in the ordinary 
course of business, such as in order to wind up a liquidation case, or 
to obtain a substantial loan in an operating case. Debt incurred under 
this subsection is allowable as an administrative expense under section 
503(b)(1).
    Subsection (c) is closer to the concept of certificates of 
indebtedness in current law. It authorizes the obtaining of credit and 
the incurring of debt with some special priority, if the trustee is 
unable to obtain unsecured credit under subsection (a) or (b). The 
various priorities are (1) with priority over any or all administrative 
expenses: (2) secured by a lien on unencumbered property of the estate; 
or (3) secured by a junior lien on encumbered property. The priorities 
granted under this subsection do not interfere with existing property 
rights.
    Subsection (d) grants the court the authority to authorize the 
obtaining of credit and the incurring of debt with a superiority, that 
is a lien on encumbered property that is senior or equal to the existing 
lien on the property. The court may authorize such a superpriority only 
if the trustee is otherwise unable to obtain credit, and if there is 
adequate protection of the original lien holder's interest. Again, the 
trustee has the burden of proof on the issue of adequate protection.
    Subsection (e) provides the same protection for credit extenders 
pending an appeal of an authorization to incur debt as is provided under 
section 363(l) for purchasers: the credit is not affected on appeal by 
reversal of the authorization and the incurring of the debt were stayed 
pending appeal. The protection runs to a good faith lender, whether or 
not he knew of the pendency of the appeal.
    A claim arising as a result of lending or borrowing under this 
section will be a priority claim, as defined in proposed section 
507(a)(1), even if the claim is granted a super-priority over 
administrative expenses and is to be paid in advance of other first 
priority claims.

                       References in Text

    Section 5 of the Securities Act of 1933, referred to in subsec. (f), 
is classified to section 77e of Title 15, Commerce and Trade.
    The Trust Indenture Act of 1939, referred to in subsec. (f), is 
title III of act May 27, 1933, ch. 38, as added Aug. 3, 1939, ch. 411, 
53 Stat. 1149, as amended, which is classified generally to subchapter 
III (Sec. 77aaa et seq.) of chapter 2A of Title 15. For complete 
classification of this Act to the Code, see section 77aaa of Title 15 
and Tables.


                               Amendments

    1994--Subsec. (a). Pub. L. 103-394, Sec. 501(d)(9)(A), substituted 
``1203, 1204, or 1304'' for ``1304, 1203, or 1204''.
    Subsec. (f). Pub. L. 103-394, Sec. 501(d)(9)(B), struck out ``(15 
U.S.C. 77e)'' after ``Act of 1933'' and ``(15 U.S.C. 77aaa et seq.)'' 
after ``Act of 1939''.
    1986--Subsec. (a). Pub. L. 99-554 inserted reference to sections 
1203 and 1204 of this title.


                    Effective Date of 1994 Amendment

    Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not 
applicable with respect to cases commenced under this title before Oct. 
22, 1994, see section 702 of Pub. L. 103-394, set out as a note under 
section 101 of this title.


                    Effective Date of 1986 Amendment

    Amendment by Pub. L. 99-554 effective 30 days after Oct. 27, 1986, 
but not applicable to cases commenced under this title before that date, 
see section 302(a), (c)(1) of Pub. L. 99-554, set out as a note under 
section 581 of Title 28, Judiciary and Judicial Procedure.

                  Section Referred to in Other Sections

    This section is referred to in sections 106, 361, 507, 901, 921, 
922, 1205, 1304 of this title.