February 2006 Market Clearing in the Energy Industry 56 © Copyright 2006, CCRO. All rights reserved. party or intermediary, even if the counterparty is otherwise subject to an automatic stay in bankruptcy proceedings. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was enacted on April 20, 2005, and it revised many important provisions of the U.S. Bankruptcy Code with respect to clearing and netting. The central change proposed by the legislation to netting in the energy industry is re-printed below: Sec. 561. Contractual right to terminate, liquidate, accelerate, or offset under a master netting agreement and across contracts proceedings under chapter 15 (a) Subject to subsection (b), the exercise of any contractual right, because of a condition of the kind specified in section 365(e)(1), to cause the termination, liquidation, or acceleration of or to offset or net termination values, payment amounts, or other transfer obligations arising under or in connection with one or more (or the termination, liquidation, or acceleration of one or more)-- (1) securities contracts, as defined in section 741(7) (2) commodity contracts, as defined in section 761(4) (3) forward contracts (4) repurchase agreements (5) swap agreements or (6) master netting agreements, shall not be stayed, avoided, or otherwise limited by operation of any provision of this title or by any order of a court or administrative agency in any proceeding under this title. (b)(1) A party may exercise a contractual right described in subsection (a) to terminate, liquidate, or accelerate only to the extent that such party could exercise such a right under section 555, 556, 559, or 560 for each individual contract covered by the master netting agreement in issue. (2) If a debtor is a commodity broker subject to subchapter IV of chapter 7-- (A) a party may not net or offset an obligation to the debtor arising under, or in connection with, a commodity contract traded on or subject to the rules of a contract market designated under the Commodity Exchange Act or a derivatives transaction execution facility registered under the Commodity Exchange Act against any claim arising under, or in connection with, other instruments, contracts, or agreements listed in subsection (a) except to the extent