11-U.S.C.-746
§746 – Extent of Customer Claims
Pathway
Title 11 > Chapter 7 > Subchapter III > Section 746
Details
- Reference: Section 746
- Legend: §746 – Extent of Customer Claims
- USCode Year: 2013
Provision Content
(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 entitys 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 Notes
senate report no. 95–989
Section 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.
Amendments
1982—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).
U.S. Encyclopedia of Law Coverage
Subchapter III – Stockbroker Liquidation in the Legal Encyclopedia: Bankruptcy
In this entry about Subchapter III – Stockbroker Liquidation, find legal reference material, bibliographies and premiere content related to bankruptcy in the American Encyclopedia of Law, presenting a comprehensive view of the United States bankruptcy-specific issues, written by authorities in the field.
11-U.S.C.-741 in the Legal Encyclopedia: Liquidation
In this entry about 11-U.S.C.-741, find legal reference material, bibliographies and premiere content related to liquidation in the American Encyclopedia of Law, presenting a comprehensive view of the United States liquidation-specific issues, written by authorities in the field.
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