Title 11 — Bankruptcy
Chapter 5 — Creditors, the Debtor, and the Estate
§ 543. Turnover of property by a custodian
Statutory text
A custodian with knowledge of the commencement of a case under this title concerning the debtor may not make any disbursement from, or take any action in the administration of, property of the debtor, proceeds, product, offspring, rents, or profits of such property, or property of the estate, in the possession, custody, or control of such custodian, except such action as is necessary to preserve such property.
A custodian shall—
deliver to the trustee any property of the debtor held by or transferred to such custodian, or proceeds, product, offspring, rents, or profits of such property, that is in such custodian’s possession, custody, or control on the date that such custodian acquires knowledge of the commencement of the case; and
file an accounting of any property of the debtor, or proceeds, product, offspring, rents, or profits of such property, that, at any time, came into the possession, custody, or control of such custodian.
The court, after notice and a hearing, shall—
protect all entities to which a custodian has become obligated with respect to such property or proceeds, product, offspring, rents, or profits of such property;
provide for the payment of reasonable compensation for services rendered and costs and expenses incurred by such custodian; and
surcharge such custodian, other than an assignee for the benefit of the debtor’s creditors that was appointed or took possession more than 120 days before the date of the filing of the petition, for any improper or excessive disbursement, other than a disbursement that has been made in accordance with applicable law or that has been approved, after notice and a hearing, by a court of competent jurisdiction before the commencement of the case under this title.
After notice and hearing, the bankruptcy court—
may excuse compliance with subsection (a), (b), or (c) of this section if the interests of creditors and, if the debtor is not insolvent, of equity security holders would be better served by permitting a custodian to continue in possession, custody, or control of such property, and
shall excuse compliance with subsections (a) and (b)(1) of this section if the custodian is an assignee for the benefit of the debtor’s creditors that was appointed or took possession more than 120 days before the date of the filing of the petition, unless compliance with such subsections is necessary to prevent fraud or injustice.
Legislative history
Reconstructed from this section’s Code source credit and amendment notes, resolved against the local Statutes at Large. Editorial notes are evidence, not the law that made the change.
Pub. L. 95–598 · 92 Stat. 2549
Enacted · 11 U.S.C. § 543
Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2595
Source evidence
Code source credit
Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2595Pub. L. 98–353 § 458(a) · 98 Stat. 333
Inserted · 11 U.S.C. § 543(a)
Pub. L. 98–353, § 458(a), inserted “, product, offspring, rents, or profits” after “proceeds”
Source evidence
Code amendment note
Subsec. (a). Pub. L. 98–353, § 458(a), inserted “, product, offspring, rents, or profits” after “proceeds”.Enacted provision · exact public law section
(a) Section 543(a) of title 11 of the United States Code is amended by inserting “, product, offspring, rents, or profits” after “proceeds”.Pub. L. 98–353 § 458(b)(1) · 98 Stat. 333
Inserted · 11 U.S.C. § 543(b)(1)
Pub. L. 98–353, § 458(b)(1), inserted “held by or” after “debtor”, and “, product, offspring, rents, or profits” after “proceeds”
Source evidence
Code amendment note
Subsec. (b)(1). Pub. L. 98–353, § 458(b)(1), inserted “held by or” after “debtor”, and “, product, offspring, rents, or profits” after “proceeds”.Enacted provision · exact public law section
(1) in paragraph (1), by— (A) inserting “held by or” after “debtor”; and (B) inserting “, product, offspring, rents, or profits” after “proceeds”; andPub. L. 98–353 § 458(b)(2) · 98 Stat. 333
Inserted · 11 U.S.C. § 543(b)(2)
Pub. L. 98–353, § 458(b)(2), inserted “, product, offspring, rents, or profits” after “proceeds”
Source evidence
Code amendment note
Subsec. (b)(2). Pub. L. 98–353, § 458(b)(2), inserted “, product, offspring, rents, or profits” after “proceeds”.Enacted provision · exact public law section
(2) in paragraph (2), by inserting “, product, offspring, rents, or profits” after “proceeds”.Pub. L. 98–353 § 458(c)(1) · 98 Stat. 333
Inserted · 11 U.S.C. § 543(c)(1)
Pub. L. 98–353, § 458(c)(1), inserted “or proceeds, product, offspring, rents, or profits of such property” after “property”
Source evidence
Code amendment note
Subsec. (c)(1). Pub. L. 98–353, § 458(c)(1), inserted “or proceeds, product, offspring, rents, or profits of such property” after “property”.Enacted provision · exact public law section
(1) in paragraph (1), by inserting “or proceeds, product, off-spring, rents, or profits of such property” after “property”; andPub. L. 98–353 § 458(c)(2) · 98 Stat. 333
Inserted · 11 U.S.C. § 543(c)(3)
Pub. L. 98–353, § 458(c)(2), inserted “that has been” before “approved”
Source evidence
Code amendment note
Subsec. (c)(3). Pub. L. 98–353, § 458(c)(2), inserted “that has been” before “approved”.Enacted provision · exact public law section
(2) in paragraph (3), by inserting “that has been” before “approved”.Pub. L. 98–353 § 458(d) · 98 Stat. 333
Amended · 11 U.S.C. § 543(d)
Pub. L. 98–353, § 458(d), designated existing provisions as par. (1)
Added · 11 U.S.C. § 543(d)
Pub. L. 98–353, § 458(d), added par. (2)
Source evidence
Code amendment note
Subsec. (d). Pub. L. 98–353, § 458(d), designated existing provisions as par. (1) and added par. (2).Enacted provision · exact public law section
(d) Section 543(d) of title 11 of the United States Code is amended to read as follows: “(d) After notice and hearing, the bankruptcy court— “(1) may excuse compliance with subsection (a), (b), or (c) of this section, if the interests of creditors and, if the debtor is not insolvent, of equity security holders would be better served by permitting a custodian to continue in possession, custody, or control of such property, and “(2) shall excuse compliance with subsections (a) and (b)(1) of this section if the custodian is an assignee for the benefit of the debtor’s creditors that was appointed or took possession more than 120 days before the date of the filing of the petition, unless compliance with such subsections is necessary to prevent fraud or injustice.”.Bankruptcy Reform Act of 1994
Pub. L. 103–394 title V § 501(d)(17) · 108 Stat. 4106
Struck · 11 U.S.C. § 543(d)(1)
Pub. L. 103–394 struck out comma after “section”
Source evidence
Code amendment note
Subsec. (d)(1). Pub. L. 103–394 struck out comma after “section”.Enacted provision · exact public law section
(17) in section 543(d)(1) by striking “section,” and inserting “section”,Effective date note
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.
8 of 9 references resolved to an enrolled provision · 1 partial
Notes
Historical and Revision Notes
legislative statements
Section 543(a) is a modification of similar provisions contained in the House bill and the Senate amendment. The provision clarifies that a custodian may always act as is necessary to preserve property of the debtor. Section 543(c)(3) excepts from surcharge a custodian that is an assignee for the benefit of creditors, who was appointed or took possession before 120 days before the date of the filing of the petition, whichever is later. The provision also prevents a custodian from being surcharged in connection with payments made in accordance with applicable law.
senate report no. 95–989
This section requires a custodian appointed before the bankruptcy case to deliver to the trustee and to account for property that has come into his possession, custody, or control as a custodian. “Property of the debtor” in section (a) includes property that was property of the debtor at the time the custodian took the property, but the title to which passed to the custodian. The section requires the court to protect any obligations incurred by the custodian, provide for the payment of reasonable compensation for services rendered and costs and expenses incurred by the custodian, and to surcharge the custodian for any improper or excessive disbursement, unless it has been approved by a court of competent jurisdiction. Subsection (d) reinforces the general abstention policy in section 305 by permitting the bankruptcy court to authorize the custodianship to proceed notwithstanding this section.
Editorial Notes
Amendments1984–1994 · 2 rounds
1994
Subsec. (d)(1). Pub. L. 103–394 struck out comma after “section”.
1984
Subsec. (a). Pub. L. 98–353, § 458(a), inserted “, product, offspring, rents, or profits” after “proceeds”.
Subsec. (b)(1). Pub. L. 98–353, § 458(b)(1), inserted “held by or” after “debtor”, and “, product, offspring, rents, or profits” after “proceeds”.
Subsec. (b)(2). Pub. L. 98–353, § 458(b)(2), inserted “, product, offspring, rents, or profits” after “proceeds”.
Subsec. (c)(1). Pub. L. 98–353, § 458(c)(1), inserted “or proceeds, product, offspring, rents, or profits of such property” after “property”.
Subsec. (c)(3). Pub. L. 98–353, § 458(c)(2), inserted “that has been” before “approved”.
Subsec. (d). Pub. L. 98–353, § 458(d), designated existing provisions as par. (1) and added par. (2).
Statutory Notes and Related Subsidiaries
Effective Date of 1994 Amendment
Amendment by Pub. L. 103–394 effective , and not applicable with respect to cases commenced under this title before , see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title.
Effective Date of 1984 Amendment
Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after , see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title.
Credits
1978–1994 · 3 acts
- 1978Pub. L. 95–598, , 92 Stat. 2595
- 1984Pub. L. 98–353, title III, § 458, , 98 Stat. 376
- 1994Pub. L. 103–394, title V, § 501(d)(17), , 108 Stat. 4146.
Show as published
(Pub. L. 95–598, , 92 Stat. 2595; Pub. L. 98–353, title III, § 458, , 98 Stat. 376; Pub. L. 103–394, title V, § 501(d)(17), , 108 Stat. 4146.)