2015 US Code
Title 11 - Bankruptcy (Sections 101 - 1532)
Chapter 7 - Liquidation (Sections 701 - 784)
Subchapter III - Stockbroker Liquidation (Sections 741 - 753)
Sec. 746 - Extent of customer claims
Publication Title | United States Code, 2012 Edition, Supplement 3, Title 11 - BANKRUPTCY |
Category | Bills and Statutes |
Collection | United States Code |
SuDoc Class Number | Y 1.2/5: |
Contained Within | Title 11 - BANKRUPTCY CHAPTER 7 - LIQUIDATION SUBCHAPTER III - STOCKBROKER LIQUIDATION Sec. 746 - Extent of customer claims |
Contains | section 746 |
Date | 2015 |
Laws In Effect As Of Date | January 3, 2016 |
Positive Law | Yes |
Disposition | standard |
Source Credit | Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2613; Pub. L. 97-222, §12, July 27, 1982, 96 Stat. 238. |
Statutes at Large References | 92 Stat. 2613 96 Stat. 238 |
Public and Private Laws | Public Law 95-598, Public Law 97-222 |
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(a) If, after the date of the filing of the petition, an entity enters into a transaction with the debtor, in a manner that would have made such entity a customer had such transaction occurred before the date of the filing of the petition, and such transaction was entered into by such entity in good faith and before the qualification under section 322 of this title of a trustee, such entity shall be deemed a customer, and the date of such transaction shall be deemed to be the date of the filing of the petition for the purpose of determining such entity's net equity.
(b) An entity does not have a claim as a customer to the extent that such entity transferred to the debtor cash or a security that, by contract, agreement, understanding, or operation of law, is—
(1) part of the capital of the debtor; or
(2) subordinated to the claims of any or all creditors.
(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2613; Pub. L. 97–222, §12, July 27, 1982, 96 Stat. 238.)
HISTORICAL AND REVISION NOTESSENATE REPORT NO. 95–989Section 746(a) protects entities who deal in good faith with the debtor after the filing of the petition and before a trustee is appointed by deeming such entities to be customers. The principal application of this section will be in an involuntary case before the order for relief, because §701(b) requires prompt appointment of an interim trustee after the order for relief.
Subsection (b) indicates that an entity who holds securities that are either part of the capital of the debtor or that are subordinated to the claims of any creditor of the debtor is not a customer with respect to those securities. This subsection will apply when the stockbroker has sold securities in itself to the customer or when the customer has otherwise placed such securities in an account with the stockbroker.
AMENDMENTS1982—Pub. L. 97–222, §12(c), substituted "claims" for "claim" in section catchline.
Subsec. (a). Pub. L. 97–222, §12(a), substituted "enters into" for "effects, with respect to cash or a security,", struck out "with respect to such cash or security" wherever appearing, and substituted "the date of the filing of the petition" for "such date", and "entered into" for "effected".
Subsec. (b). Pub. L. 97–222, §12(b), substituted "transferred to the debtor" for "has a claim for" in provisions preceding par. (1), and struck out "is" in par. (2).
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