Title 11 — Bankruptcy
Chapter 7 — Liquidation
§ 746. Extent of customer claims
Statutory text
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.
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—
part of the capital of the debtor; or
subordinated to the claims of any or all creditors.
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. § 746
Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2613
Source evidence
Code source credit
Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2613Pub. L. 97–222 § 12(c) · 96 Stat. 235
Substituted · 11 U.S.C. § 746
Pub. L. 97–222, § 12(c), substituted “claims” for “claim” in section catchline
Source evidence
Code amendment note
Pub. L. 97–222, § 12(c), substituted “claims” for “claim” in section catchline.Enacted provision · exact public law section
(c) The heading for section 746 of title 11, United States Code, is amended by striking out “claim” and inserting in lieu thereof “claims”.Pub. L. 97–222 § 12(a) · 96 Stat. 235
Substituted · 11 U.S.C. § 746(a)
Pub. L. 97–222, § 12(a), substituted “enters into” for “effects, with respect to cash or a security,”
Struck · 11 U.S.C. § 746(a)
Pub. L. 97–222, § 12(a), struck out “with respect to such cash or security” wherever appearing
Substituted · 11 U.S.C. § 746(a)
Pub. L. 97–222, § 12(a), substituted “the date of the filing of the petition” for “such date”
Substituted · 11 U.S.C. § 746(a)
Pub. L. 97–222, § 12(a), substituted “entered into” for “effected”
Source evidence
Code amendment note
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”.Enacted provision · exact public law section
(a) Section 746(a) of title 11, United States Code, is amended— (1) by striking out “effects, with respect to cash or a security,” and inserting in lieu thereof “enters into”, (2) by striking out “with respect to such cash or security” each place it appears, (3) by striking out “such date” and inserting in lieu thereof “the date of the filing of the petition”, and (4) by striking out “effected” and inserting in lieu thereof “entered into”.Pub. L. 97–222 § 12(b) · 96 Stat. 235
Substituted · 11 U.S.C. § 746(b)
Pub. L. 97–222, § 12(b), substituted “transferred to the debtor” for “has a claim for” in provisions preceding par. (1)
Struck · 11 U.S.C. § 746(b)
Pub. L. 97–222, § 12(b), struck out “is” in par. (2)
Source evidence
Code amendment note
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).Enacted provision · exact public law section
(b) Section 746(b) of title 11, United States Code, is amended— (1) by striking out “has a claim for” and inserting in lieu thereof “transferred to the debtor”, and (2) in paragraph (2) by striking out “is”.
7 of 8 references resolved to an enrolled provision · 1 partial
Notes
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.
Editorial Notes
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).
Credits
1978–1982 · 2 acts
- 1978Pub. L. 95–598, , 92 Stat. 2613
- 1982Pub. L. 97–222, § 12, , 96 Stat. 238.
Show as published
(Pub. L. 95–598, , 92 Stat. 2613; Pub. L. 97–222, § 12, , 96 Stat. 238.)