San Marino Bankruptcy Attorney, Bankruptcy Lawyer, Bankruptcy Code 11 USC Section 746

TITLE 11 - BANKRUPTCY
CHAPTER 7 - LIQUIDATION
    SUBCHAPTER III - STOCKBROKER LIQUIDATION

-HEAD-
    Sec. 746. Extent of customer claims

-STATUTE-
      (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 entity's 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.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2613; Pub. L. 97-222, Sec.
    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 Sec. 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, Sec. 12(c), substituted "claims" for
    "claim" in section catchline.
      Subsec. (a). Pub. L. 97-222, Sec. 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, Sec. 12(b), substituted "transferred
    to the debtor" for "has a claim for" in provisions preceding par.
    (1), and struck out "is" in par. (2).

-End-
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