§ 702. Election of trustee

Statutory text

A creditor may vote for a candidate for trustee only if such creditor—

holds an allowable, undisputed, fixed, liquidated, unsecured claim of a kind entitled to distribution under section 726(a)(2), 726(a)(3), 726(a)(4), 752(a), 766(h), or 766(i) of this title;

does not have an interest materially adverse, other than an equity interest that is not substantial in relation to such creditor’s interest as a creditor, to the interest of creditors entitled to such distribution; and

is not an insider.

At the meeting of creditors held under section 341 of this title, creditors may elect one person to serve as trustee in the case if election of a trustee is requested by creditors that may vote under subsection (a) of this section, and that hold at least 20 percent in amount of the claims specified in subsection (a)(1) of this section that are held by creditors that may vote under subsection (a) of this section.

A candidate for trustee is elected trustee if—

creditors holding at least 20 percent in amount of the claims of a kind specified in subsection (a)(1) of this section that are held by creditors that may vote under subsection (a) of this section vote; and

such candidate receives the votes of creditors holding a majority in amount of claims specified in subsection (a)(1) of this section that are held by creditors that vote for a trustee.

If a trustee is not elected under this section, then the interim trustee shall serve as trustee in the case.

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.

1978
Pub. L. 95–598 · 92 Stat. 2549
Enacted · 11 U.S.C. § 702
Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2604
Source evidence
Code source credit
Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2604
1982
Pub. L. 97–222 § 7 · 96 Stat. 235
Substituted · 11 U.S.C. § 702(a)(1)
Pub. L. 97–222 substituted “726(a)(4), 752(a), 766(h), or 766(i)” for “or 726(a)(4)”
Source evidence
Code amendment note
Subsec. (a)(1). Pub. L. 97–222 substituted “726(a)(4), 752(a), 766(h), or 766(i)” for “or 726(a)(4)”.
Enacted provision · exact public law section
Sec. 7. Section 702(a)(1) of title 11, United States Code, is amended by striking out “or 726(a)(4)” and inserting in lieu thereof “726(a)(4), 752(a), 766(h), or 766(i)”.
1984
Pub. L. 98–353 § 472(a) · 98 Stat. 333
Inserted · 11 U.S.C. § 702(b)
Pub. L. 98–353, § 472(a), inserted “held” after “meeting of creditors”
Source evidence
Code amendment note
Subsec. (b). Pub. L. 98–353, § 472(a), inserted “held” after “meeting of creditors”.
Enacted provision · exact public law section
(a) Section 702(b) of title 11 of the United States Code is amended by inserting “held” after “meeting of creditors”.
Effective date note
Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title.
1984
Pub. L. 98–353 § 472(b)(1) · 98 Stat. 333
Inserted · 11 U.S.C. § 702(c)(1)
Pub. L. 98–353, § 472(b)(1), inserted “of a kind” after “claims”
Source evidence
Code amendment note
Subsec. (c)(1). Pub. L. 98–353, § 472(b)(1), inserted “of a kind” after “claims”.
Enacted provision · exact public law section
(1) in paragraph (1), by inserting “of a kind” after “claims”; and
Effective date note
Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title.
1984
Pub. L. 98–353 § 472(b)(2) · 98 Stat. 333
Substituted · 11 U.S.C. § 702(c)(2)
Pub. L. 98–353, § 472(b)(2), substituted “for a trustee” for “for trustee”
Source evidence
Code amendment note
Subsec. (c)(2). Pub. L. 98–353, § 472(b)(2), substituted “for a trustee” for “for trustee”.
Enacted provision · exact public law section
(2) in paragraph (2), by inserting “a” after “for”.
Effective date note
Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title.
1984
Pub. L. 98–353 § 472(c) · 98 Stat. 333
Substituted · 11 U.S.C. § 702(d)
Pub. L. 98–353, § 472(c), substituted “this section” for “subsection (c) of this section”
Source evidence
Code amendment note
Subsec. (d). Pub. L. 98–353, § 472(c), substituted “this section” for “subsection (c) of this section”.
Enacted provision · exact public law section
(c) Section 702(d) of title 11 of the United States Code is amended by striking out “subsection (c) of”.
Effective date note
Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title.

5 of 6 references resolved to an enrolled provision · 1 partial

Notes

Historical and Revision Notes

legislative statements

The House amendment adopts section 702(a)(2) of the Senate amendment. An insubstantial equity interest does not disqualify a creditor from voting for a candidate for trustee.

senate report no. 95–989

Subsection (a) of this section specifies which creditors may vote for a trustee. Only a creditor that holds an allowable, undisputed, fixed, liquidated, unsecured claim that is not entitled to priority, that does not have an interest materially adverse to the interest of general unsecured creditors, and that is not an insider may vote for a trustee. The phrase “materially adverse” is currently used in the Rules of Bankruptcy Procedure, rule 207(d). The application of the standard requires a balancing of various factors, such as the nature of the adversity. A creditor with a very small equity position would not be excluded from voting solely because he holds a small equity in the debtor. The Rules of Bankruptcy Procedure also currently provide for temporary allowance of claims, and will continue to do so for the purposes of determining who is eligible to vote under this provision.

Subsection (b) permits creditors at the meeting of creditors to elect one person to serve as trustee in the case. Creditors holding at least 20 percent in amount of the claims specified in the preceding paragraph must request election before creditors may elect a trustee. Subsection (c) specifies that a candidate for trustee is elected trustee if creditors holding at least 20 percent in amount of those claims actually vote, and if the candidate receives a majority in amount of votes actually cast.

Subsection (d) specifies that if a trustee is not elected, then the interim trustee becomes the permanent trustee and serves in the case permanently.

Editorial Notes

Amendments1982–1984 · 2 rounds

1984

Subsec. (b). Pub. L. 98–353, § 472(a), inserted “held” after “meeting of creditors”.

Subsec. (c)(1). Pub. L. 98–353, § 472(b)(1), inserted “of a kind” after “claims”.

Subsec. (c)(2). Pub. L. 98–353, § 472(b)(2), substituted “for a trustee” for “for trustee”.

Subsec. (d). Pub. L. 98–353, § 472(c), substituted “this section” for “subsection (c) of this section”.

1982

Subsec. (a)(1). Pub. L. 97–222 substituted “726(a)(4), 752(a), 766(h), or 766(i)” for “or 726(a)(4)”.

Statutory Notes and Related Subsidiaries

Effective Date of 1984 Amendment

Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title.

Credits

1978–1984 · 3 acts

1978Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2604
1982Pub. L. 97–222, § 7, July 27, 1982, 96 Stat. 237
1984Pub. L. 98–353, title III, § 472, July 10, 1984, 98 Stat. 380.

Show as published

(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2604; Pub. L. 97–222, § 7, July 27, 1982, 96 Stat. 237; Pub. L. 98–353, title III, § 472, July 10, 1984, 98 Stat. 380.)