§ 556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract

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.

1. 1982

   Pub. L. 97–222 § 6(a) · 96 Stat. 235

   Enacted · 11 U.S.C. § 556

   Added Pub. L. 97–222, § 6(a), July 27, 1982, 96 Stat. 236

   Source evidence

   Code source credit
   Added Pub. L. 97–222, § 6(a), July 27, 1982, 96 Stat. 236

   Enacted provision · exact public law section
   (a) Chapter 5 of title 11, United States Code, is amended by adding at the end thereof the following new sections: “§ 555. Contractual right to liquidate a securities contract “The exercise of a contractual right of a stockbroker or securities clearing agency to cause the liquidation of a securities contract, as defined in section 741(7), because of a condition of the kind specified in section 365(e)(1) of this title shall not be stayed, avoided, or 11 USC 365. otherwise limited by operation of any provision of this title or by order of a court or administrative agency in any proceeding under this title unless such order is authorized under the provisions of the Securities Investor Protection Act of 1970 (15 U.S.C. 78aaa et seq.) or any statute administered by the Securities and Exchange Commission. As used in this section, the term ‘contractual right’ includes a “Contractual right.” right set forth in a rule or bylaw of a national securities exchange, a national securities association, or a securities clearing agency. “§ 556. Contractual right to liquidate a commodities contract or forward contract “The contractual right of a commodity broker or forward contract merchant to cause the liquidation of a commodity contract, as defined in section 761(4), or forward contract because of a condition 11 USC 761. of the kind specified in section 365(e)(1) of this title, and the right to 11 USC 365. a variation or maintenance margin payment received from a trustee with respect to open commodity contracts or forward contracts, shall not be stayed, avoided, or otherwise limited by operation of any provision of this title or by the order of a court in any proceeding under this title. As used in this section, the term ‘contractual right’ “Contractual right.” includes a right set forth in a rule or bylaw of a clearing organization or contract market or in a resolution of the governing board thereof.”.

2. 1990

   Pub. L. 101–311 title II § 205 · 104 Stat. 267

   Inserted · 11 U.S.C. § 556

   Pub. L. 101–311 inserted before period at end “and a right, whether or not evidenced in writing, arising under common law, under law merchant or by reason of normal business practice”

   Source evidence

   Code amendment note
   Pub. L. 101–311 inserted before period at end “and a right, whether or not evidenced in writing, arising under common law, under law merchant or by reason of normal business practice”.

   Enacted provision · exact public law section
   SEC. 205. CONTRACTUAL RIGHT TO LIQUIDATE A COMMODITY CONTRACT OR FORWARD CONTRACT. Section 556 of title 11, United States Code, is amended by striking the period at the end of the last sentence of the section and inserting “and a right, whether or not evidenced in writing, arising under common law, under law merchant or by reason of normal business practice.”.

3. 1994

   Bankruptcy Reform Act of 1994

   Pub. L. 103–394 title V § 501(b)(7) · 108 Stat. 4106

   Substituted · 11 U.S.C. § 556

   Pub. L. 103–394 substituted “section 761 of this title” for “section 761(4)”

   Source evidence

   Code amendment note
   Pub. L. 103–394 substituted “section 761 of this title” for “section 761(4)”.

   Enacted provision · exact public law section
   (7) Section 556 of title 11, United States Code, is amended by striking “section 761(4)” and inserting “section 761 of this title”.

4. 2005

   Pub. L. 109–8 § 907 · 119 Stat. 23

   Inserted · 11 U.S.C. § 556

   Pub. L. 109–8, § 907(o)(8), inserted “, financial participant,” after “commodity broker” in first sentence

   Source evidence

   Code amendment note
   Pub. L. 109–8, § 907(o)(8), inserted “, financial participant,” after “commodity broker” in first sentence.

   Enacted provision · exact public law section
   SEC. 907. BANKRUPTCY LAW AMENDMENTS. (a) Definitions of Forward Contract, Repurchase Agreement, Securities Clearing Agency, Swap Agreement, Commodity Contract, and Securities Contract.— Title 11, United States Code, is amended— (1) in section 101— (A) in paragraph (25)— (i) by striking “means a contract” and inserting “means— “(A) a contract” ; (ii) by striking “, or any combination thereof or option thereon;” and inserting “, or any other similar agreement;”; and (iii) by adding at the end the following: “(B) any combination of agreements or transactions referred to in subparagraphs (A) and (C); “(C) any option to enter into an agreement or transaction referred to in subparagraph (A) or (B); “(D) a master agreement that provides for an agreement or transaction referred to in subparagraph (A), (B), or (C), together with all supplements to any such master agreement, without regard to whether such master agreement provides for an agreement or transaction that is not a forward contract under this paragraph, except that such master agreement shall be considered to be a forward contract under this paragraph only with respect to each agreement or transaction under such master agreement that is referred to in subparagraph (A), (B), or (C); or “(E) any security agreement or arrangement, or other credit enhancement related to any agreement or transaction referred to in subparagraph (A), (B), (C), or (D), including any guarantee or reimbursement obligation by or to a forward contract merchant or financial participant in connection with any agreement or transaction referred to in any such subparagraph, but not to exceed the damages in connection with any such agreement or transaction, measured in accordance with section 562;” ; (B) in paragraph (46), by striking “on any day during the period beginning 90 days before the date of” and inserting “at any time before”; (C) by amending paragraph (47) to read as follows: “(47) ‘repurchase agreement’ (which definition also applies to a reverse repurchase agreement)— “(A) means— “(i) an agreement, including related terms, which provides for the transfer of one or more certificates of deposit, mortgage related securities (as defined in section 3 of the Securities Exchange Act of 1934), mortgage loans, interests in mortgage related securities or mortgage loans, eligible bankers’ acceptances, qualified foreign government securities (defined as a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the Organization for Economic Cooperation and Development), or securities that are direct obligations of, or that are fully guaranteed by, the United States or any agency of the United States against the transfer of funds by the transferee of such certificates of deposit, eligible bankers’ acceptances, securities, mortgage loans, or interests, with a simultaneous agreement by such transferee to transfer to the transferor thereof certificates of deposit, eligible bankers’ acceptance, securities, mortgage loans, or interests of the kind described in this clause, at a date certain not later than 1 year after such transfer or on demand, against the transfer of funds; “(ii) any combination of agreements or transactions referred to in clauses (i) and (iii); “(iii) an option to enter into an agreement or transaction referred to in clause (i) or (ii); “(iv) a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), or (iii), together with all supplements to any such master agreement, without regard to whether such master agreement provides for an agreement or transaction that is not a repurchase agreement under this paragraph, except that such master agreement shall be considered to be a repurchase agreement under this paragraph only with respect to each agreement or transaction under the master agreement that is referred to in clause (i), (ii), or (iii); or “(v) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in clause (i), (ii), (iii), or (iv), including any guarantee or reimbursement obligation by or to a repo participant or financial participant in connection with any agreement or transaction referred to in any such clause, but not to exceed the damages in connection with any such agreement or transaction, measured in accordance with section 562 of this title; and “(B) does not include a repurchase obligation under a participation in a commercial mortgage loan;” ; (D) in paragraph (48), by inserting “, or exempt from such registration under such section pursuant to an order of the Securities and Exchange Commission,” after “1934”; and (E) by amending paragraph (53B) to read as follows: “(53B) ‘swap agreement’— “(A) means— “(i) any agreement, including the terms and conditions incorporated by reference in such agreement, which is— “(I) an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, rate collar, cross-currency rate swap, and basis swap; “(II) a spot, same day-tomorrow, tomorrow-next, forward, or other foreign exchange or precious metals agreement; “(III) a currency swap, option, future, or forward agreement; “(IV) an equity index or equity swap, option, future, or forward agreement; “(V) a debt index or debt swap, option, future, or forward agreement; “(VI) a total return, credit spread or credit swap, option, future, or forward agreement; “(VII) a commodity index or a commodity swap, option, future, or forward agreement; or “(VIII) a weather swap, weather derivative, or weather option; “(ii) any agreement or transaction that is similar to any other agreement or transaction referred to in this paragraph and that— “(I) is of a type that has been, is presently, or in the future becomes, the subject of recurrent dealings in the swap markets (including terms and conditions incorporated by reference therein); and “(II) is a forward, swap, future, or option on one or more rates, currencies, commodities, equity securities, or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic consequence, or economic or financial indices or measures of economic or financial risk or value; “(iii) any combination of agreements or transactions referred to in this subparagraph; “(iv) any option to enter into an agreement or transaction referred to in this subparagraph; “(v) a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), (iii), or (iv), together with all supplements to any such master agreement, and without regard to whether the master agreement contains an agreement or transaction that is not a swap agreement under this paragraph, except that the master agreement shall be considered to be a swap agreement under this paragraph only with respect to each agreement or transaction under the master agreement that is referred to in clause (i), (ii), (iii), or (iv); or “(vi) any security agreement or arrangement or other credit enhancement related to any agreements or transactions referred to in clause (i) through (v), including any guarantee or reimbursement obligation by or to a swap participant or financial participant in connection with any agreement or transaction referred to in any such clause, but not to exceed the damages in connection with any such agreement or transaction, measured in accordance with section 562; and “(B) Applicability. is applicable for purposes of this title only, and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any swap agreement under any other statute, regulation, or rule, including the Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, the Securities Investor Protection Act of 1970, the Commodity Exchange Act, the Gramm-Leach-Bliley Act, and the Legal Certainty for Bank Products Act of 2000;” ; (2) in section 741(7), by striking paragraph (7) and inserting the following: “(7) ‘securities contract’— “(A) means— “(i) a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan or any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including an interest therein or based on the value thereof), or option on any of the foregoing, including an option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option; “(ii) any option entered into on a national securities exchange relating to foreign currencies; “(iii) the guarantee by or to any securities clearing agency of a settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, or mortgage loans or interests therein (including any interest therein or based on the value thereof), or option on any of the foregoing, including an option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option; “(iv) any margin loan; “(v) any other agreement or transaction that is similar to an agreement or transaction referred to in this subparagraph; “(vi) any combination of the agreements or transactions referred to in this subparagraph; “(vii) any option to enter into any agreement or transaction referred to in this subparagraph; “(viii) a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), (iii), (iv), (v), (vi), or (vii), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this subparagraph, except that such master agreement shall be considered to be a securities contract under this subparagraph only with respect to each agreement or transaction under such master agreement that is referred to in clause (i), (ii), (iii), (iv), (v), (vi), or (vii); or “(ix) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this subparagraph, including any guarantee or reimbursement obligation by or to a stockbroker, securities clearing agency, financial institution, or financial participant in connection with any agreement or transaction referred to in this subparagraph, but not to exceed the damages in connection with any such agreement or transaction, measured in accordance with section 562; and “(B) does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan;” ; and (3) in section 761(4)— (A) by striking “or” at the end of subparagraph (D); and (B) by adding at the end the following: “(F) any other agreement or transaction that is similar to an agreement or transaction referred to in this paragraph; “(G) any combination of the agreements or transactions referred to in this paragraph; “(H) any option to enter into an agreement or transaction referred to in this paragraph; “(I) a master agreement that provides for an agreement or transaction referred to in subparagraph (A), (B), (C), (D), (E), (F), (G), or (H), together with all supplements to such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a commodity contract under this paragraph, except that the master agreement shall be considered to be a commodity contract under this paragraph only with respect to each agreement or transaction under the master agreement that is referred to in subparagraph (A), (B), (C), (D), (E), (F), (G), or (H); or “(J) any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this paragraph, including any guarantee or reimbursement obligation by or to a commodity broker or financial participant in connection with any agreement or transaction referred to in this paragraph, but not to exceed the damages in connection with any such agreement or transaction, measured in accordance with section 562;” . (b) Definitions of Financial Institution, Financial Participant, and Forward Contract Merchant.— Section 101 of title 11, United States Code, is amended— (1) by striking paragraph (22) and inserting the following: “(22) ‘financial institution’ means— “(A) a Federal reserve bank, or an entity (domestic or foreign) that is a commercial or savings bank, industrial savings bank, savings and loan association, trust company, federally-insured credit union, or receiver, liquidating agent, or conservator for such entity and, when any such Federal reserve bank, receiver, liquidating agent, conservator or entity is acting as agent or custodian for a customer in connection with a securities contract (as defined in section 741) such customer; or “(B) in connection with a securities contract (as defined in section 741) an investment company registered under the Investment Company Act of 1940;” ; (2) by inserting after paragraph (22) the following: “(22A) ‘financial participant’ means— “(A) an entity that, at the time it enters into a securities contract, commodity contract, swap agreement, repurchase agreement, or forward contract, or at the time of the date of the filing of the petition, has one or more agreements or transactions described in paragraph (1), (2), (3), (4), (5), or (6) of section 561(a) with the debtor or any other entity (other than an affiliate) of a total gross dollar value of not less than $1,000,000,000 in notional or actual principal amount outstanding on any day during the previous 15-month period, or has gross mark-to-market positions of not less than $100,000,000 (aggregated across counterparties) in one or more such agreements or transactions with the debtor or any other entity (other than an affiliate) on any day during the previous 15-month period; or “(B) a clearing organization (as defined in section 402 of the Federal Deposit Insurance Corporation Improvement Act of 1991);” ; and (3) by striking paragraph (26) and inserting the following: “(26) ‘forward contract merchant’ means a Federal reserve bank, or an entity the business of which consists in whole or in part of entering into forward contracts as or with merchants in a commodity (as defined in section 761) or any similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade;” . (c) Definition of Master Netting Agreement and Master Netting Agreement Participant.— Section 101 of title 11, United States Code, is amended by inserting after paragraph (38) the following new paragraphs: “(38A) ‘master netting agreement’— “(A) means an agreement providing for the exercise of rights, including rights of netting, setoff, liquidation, termination, acceleration, or close out, under or in connection with one or more contracts that are described in any one or more of paragraphs (1) through (5) of section 561(a), or any security agreement or arrangement or other credit enhancement related to one or more of the foregoing, including any guarantee or reimbursement obligation related to 1 or more of the foregoing; and “(B) if the agreement contains provisions relating to agreements or transactions that are not contracts described in paragraphs (1) through (5) of section 561(a), shall be deemed to be a master netting agreement only with respect to those agreements or transactions that are described in any one or more of paragraphs (1) through (5) of section 561(a); “(38B) ‘master netting agreement participant’ means an entity that, at any time before the date of the filing of the petition, is a party to an outstanding master netting agreement with the debtor;” . (d) Swap Agreements, Securities Contracts, Commodity Contracts, Forward Contracts, Repurchase Agreements, and Master Netting Agreements Under the Automatic-Stay.— (1) In general.— Section 362(b) of title 11, United States Code, as amended by sections 224, 303, 311, 401, and 718, is amended— (A) in paragraph (6), by inserting “, pledged to, under the control of,” after “held by”; (B) in paragraph (7), by inserting “, pledged to, under the control of,” after “held by”; (C) by striking paragraph (17) and inserting the following: “(17) under subsection (a), of the setoff by a swap participant or financial participant of a mutual debt and claim under or in connection with one or more swap agreements that constitutes the setoff of a claim against the debtor for any payment or other transfer of property due from the debtor under or in connection with any swap agreement against any payment due to the debtor from the swap participant or financial participant under or in connection with any swap agreement or against cash, securities, or other property held by, pledged to, under the control of, or due from such swap participant or financial participant to margin, guarantee, secure, or settle any swap agreement;” ; and (D) by inserting after paragraph (26) the following: “(27) under subsection (a), of the setoff by a master netting agreement participant of a mutual debt and claim under or in connection with one or more master netting agreements or any contract or agreement subject to such agreements that constitutes the setoff of a claim against the debtor for any payment or other transfer of property due from the debtor under or in connection with such agreements or any contract or agreement subject to such agreements against any payment due to the debtor from such master netting agreement participant under or in connection with such agreements or any contract or agreement subject to such agreements or against cash, securities, or other property held by, pledged to, under the control of, or due from such master netting agreement participant to margin, guarantee, secure, or settle such agreements or any contract or agreement subject to such agreements, to the extent that such participant is eligible to exercise such offset rights under paragraph (6), (7), or (17) for each individual contract covered by the master netting agreement in issue; and” . (2) Limitation.— Section 362 of title 11, United States Code, as amended by sections 106, 305, 311, and 441, is amended by adding at the end the following: “(o) The exercise of rights not subject to the stay arising under subsection (a) pursuant to paragraph (6), (7), (17), or (27) of subsection (b) shall not be stayed by any order of a court or administrative agency in any proceeding under this title.” . (e) Limitation of Avoidance Powers Under Master Netting Agreement.— Section 546 of title 11, United States Code, is amended— (1) in subsection (g) (as added by section 103 of Public Law 101–311)— (A) by striking “under a swap agreement”; (B) by striking “in connection with a swap agreement” and inserting “under or in connection with any swap agreement”; and (C) by inserting “or financial participant” after “swap participant”; and (2) by adding at the end the following: “(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 548(b) the trustee may not avoid a transfer made by or to a master netting agreement participant under or in connection with any master netting agreement or any individual contract covered thereby that is made before the commencement of the case, except under section 548(a)(1)(A) and except to the extent that the trustee could otherwise avoid such a transfer made under an individual contract covered by such master netting agreement.” . (f) Fraudulent Transfers of Master Netting Agreements.— Section 548(d)(2) of title 11, United States Code, is amended— (1) in subparagraph (C), by striking “and” at the end; (2) in subparagraph (D), by striking the period and inserting “; and”; and (3) by adding at the end the following new subparagraph: “(E) a master netting agreement participant that receives a transfer in connection with a master netting agreement or any individual contract covered thereby takes for value to the extent of such transfer, except that, with respect to a transfer under any individual contract covered thereby, to the extent that such master netting agreement participant otherwise did not take (or is otherwise not deemed to have taken) such transfer for value.” . (g) Termination or Acceleration of Securities Contracts.— Section 555 of title 11, United States Code, is amended— (1) by amending the section heading to read as follows: “§ 555. Contractual right to liquidate, terminate, or accelerate a securities contract” ; and (2) in the first sentence, by striking “liquidation” and inserting “liquidation, termination, or acceleration”. (h) Termination or Acceleration of Commodities or Forward Contracts.— Section 556 of title 11, United States Code, is amended— (1) by amending the section heading to read as follows: “§ 556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract” ; (2) in the first sentence, by striking “liquidation” and inserting “liquidation, termination, or acceleration”; and (3) in the second sentence, by striking “As used” and all that follows through “right,” and inserting “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right,”. (i) Termination or Acceleration of Repurchase Agreements.— Section 559 of title 11, United States Code, is amended— (1) by amending the section heading to read as follows: “§ 559. Contractual right to liquidate, terminate, or accelerate a repurchase agreement” ; (2) in the first sentence, by striking “liquidation” and inserting “liquidation, termination, or acceleration”; and (3) in the third sentence, by striking “As used” and all that follows through “right,” and inserting “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right,”. (j) Liquidation, Termination, or Acceleration of Swap Agreements.— Section 560 of title 11, United States Code, is amended— (1) by amending the section heading to read as follows: “§ 560. Contractual right to liquidate, terminate, or accelerate a swap agreement” ; (2) in the first sentence, by striking “termination of a swap agreement” and inserting “liquidation, termination, or acceleration of one or more swap agreements”; (3) by striking “in connection with any swap agreement” and inserting “in connection with the termination, liquidation, or acceleration of one or more swap agreements”; and (4) in the second sentence, by striking “As used” and all that follows through “right,” and inserting “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right,”. (k) Liquidation, Termination, Acceleration, or Offset Under a Master Netting Agreement and Across Contracts.— (1) In general.— Title 11, United States Code, is amended by inserting after section 560 the following: “§ 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 that the party has positive net equity in the commodity accounts at the debtor, as calculated under such subchapter; and “(B) another commodity broker may not net or offset an obligation to the debtor arising under, or in connection with, a commodity contract entered into or held on behalf of a customer of the debtor and 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). “(3) No provision of subparagraph (A) or (B) of paragraph (2) shall prohibit the offset of claims and obligations that arise under— “(A) a cross-margining agreement or similar arrangement that has been approved by the Commodity Futures Trading Commission or submitted to the Commodity Futures Trading Commission under paragraph (1) or (2) of section 5c(c) of the Commodity Exchange Act and has not been abrogated or rendered ineffective by the Commodity Futures Trading Commission; or “(B) any other netting agreement between a clearing organization (as defined in section 761) and another entity that has been approved by the Commodity Futures Trading Commission. “(c) As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof, and a right, whether or not evidenced in writing, arising under common law, under law merchant, or by reason of normal business practice. “(d) Any provisions of this title relating to securities contracts, commodity contracts, forward contracts, repurchase agreements, swap agreements, or master netting agreements shall apply in a case under chapter 15, so that enforcement of contractual provisions of such contracts and agreements in accordance with their terms will not be stayed or otherwise limited by operation of any provision of this title or by order of a court in any case under this title, and to limit avoidance powers to the same extent as in a proceeding under chapter 7 or 11 of this title (such enforcement not to be limited based on the presence or absence of assets of the debtor in the United States).” . (2) Conforming amendment.— The table of sections for chapter 5 of title 11, United States Code, is amended by inserting after the item relating to section 560 the following: “561. Contractual right to terminate, liquidate, accelerate, or offset under a master netting agreement and across contracts; proceedings under chapter 15.”. (l) Commodity Broker Liquidations.— Title 11, United States Code, is amended by inserting after section 766 the following: “§ 767. Commodity broker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, financial participants, securities clearing agencies, swap participants, repo participants, and master netting agreement participants   “Notwithstanding any other provision of this title, the exercise of rights by a forward contract merchant, commodity broker, stockbroker, financial institution, financial participant, securities clearing agency, swap participant, repo participant, or master netting agreement participant under this title shall not affect the priority of any unsecured claim it may have after the exercise of such rights.” . (m) Stockbroker Liquidations.— Title 11, United States Code, is amended by inserting after section 752 the following: “§ 753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, financial participants, securities clearing agencies, swap participants, repo participants, and master netting agreement participants   “Notwithstanding any other provision of this title, the exercise of rights by a forward contract merchant, commodity broker, stockbroker, financial institution, financial participant, securities clearing agency, swap participant, repo participant, or master netting agreement participant under this title shall not affect the priority of any unsecured claim it may have after the exercise of such rights.” . (n) Setoff.— Section 553 of title 11, United States Code, is amended— (1) in subsection (a)(2)(B)(ii), by inserting before the semicolon the following: “(except for a setoff of a kind described in section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 560, or 561)”; (2) in subsection (a)(3)(C), by inserting before the period the following: “(except for a setoff of a kind described in section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 560, or 561)”; and (3) in subsection (b)(1), by striking “362(b)(14),” and inserting “362(b)(17), 362(b)(27), 555, 556, 559, 560, 561,”. (o) Securities Contracts, Commodity Contracts, and Forward Contracts.— Title 11, United States Code, is amended— (1) in section 362(b)(6), by striking “financial institutions,” each place such term appears and inserting “financial institution, financial participant,”; (2) in sections 362(b)(7) and 546(f), by inserting “or financial participant” after “repo participant” each place such term appears; (3) in section 546(e), by inserting “financial participant,” after “financial institution,”; (4) in section 548(d)(2)(B), by inserting “financial participant,” after “financial institution,”; (5) in section 548(d)(2)(C), by inserting “or financial participant” after “repo participant”; (6) in section 548(d)(2)(D), by inserting “or financial participant” after “swap participant”; (7) in section 555— (A) by inserting “financial participant,” after “financial institution,”; and (B) by striking the second sentence and inserting the following: “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act), or in a resolution of the governing board thereof, and a right, whether or not in writing, arising under common law, under law merchant, or by reason of normal business practice.”; (8) in section 556, by inserting “, financial participant,” after “commodity broker”; (9) in section 559, by inserting “or financial participant” after “repo participant” each place such term appears; and (10) in section 560, by inserting “or financial participant” after “swap participant”. (p) Conforming Amendments.— Title 11, United States Code, is amended— (1) in the table of sections for chapter 5— (A) by amending the items relating to sections 555 and 556 to read as follows: “555. Contractual right to liquidate, terminate, or accelerate a securities contract. “556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract.”; and (B) by amending the items relating to sections 559 and 560 to read as follows: “559. Contractual right to liquidate, terminate, or accelerate a repurchase agreement. “560. Contractual right to liquidate, terminate, or accelerate a swap agreement.”; and (2) in the table of sections for chapter 7— (A) by inserting after the item relating to section 766 the following: “767. Commodity broker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, financial participants, securities clearing agencies, swap participants, repo participants, and master netting agreement participants.”; and (B) by inserting after the item relating to section 752 the following: “753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, financial participants, securities clearing agencies, swap participants, repo participants, and master netting agreement participants.”.

   Effective date note
   Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title.

5. 2005

   Pub. L. 109–8 § 907(h) · 119 Stat. 23

   1. Substituted · 11 U.S.C. § 556

      Pub. L. 109–8, § 907(h), substituted “Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract” for “Contractual right to liquidate a commodities contract or forward contract” in second sentence

   2. Substituted · 11 U.S.C. § 556

      Pub. L. 109–8, § 907(h), substituted “liquidation, termination, or acceleration” for “liquidation” in second sentence

   3. Substituted · 11 U.S.C. § 556

      Pub. L. 109–8, § 907(h), substituted “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right,” for “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a clearing organization or contract market or in a resolution of the governing board thereof and a right,” in second sentence

   Target inherited from the preceding amendment note.

   Source evidence

   Code amendment note
   Pub. L. 109–8, § 907(h), substituted “Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract” for “Contractual right to liquidate a commodities contract or forward contract” in section catchline, “liquidation, termination, or acceleration” for “liquidation” in first sentence, and “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right,” for “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a clearing organization or contract market or in a resolution of the governing board thereof and a right,” in second sentence.

   Enacted provision · exact public law section
   (h) Termination or Acceleration of Commodities or Forward Contracts.— Section 556 of title 11, United States Code, is amended— (1) by amending the section heading to read as follows: “§ 556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract” ; (2) in the first sentence, by striking “liquidation” and inserting “liquidation, termination, or acceleration”; and (3) in the second sentence, by striking “As used” and all that follows through “right,” and inserting “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right,”.

   Effective date note
   Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title.

7 of 7 references resolved to an enrolled provision