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11 U.S.C. § 725 — Disposition of certain property

Federal law — U.S. Code and appendices · legal_authorities

11 U.S.C. § 725 — Disposition of certain property

After the commencement of a case under this chapter, but before final distribution of property of the estate under [section 726 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section726&num=0&edition=prelim), the trustee, after notice and a hearing, shall dispose of any property in which an entity other than the estate has an interest, such as a lien, and that has not been disposed of under another section of this title.

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Source file: Laws/federal/codes/united-states-code/title-11/section-725-disposition-of-certain-property--326c2ff5d4.md
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Source location: Title 11, Chapter 7, § 725; chapter-007-liquidation.md

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Federal law — U.S. Code and appendices · legal_authorities

11 U.S.C. § 726 — Distribution of property of the estate

**(a)** Except as provided in [section 510 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section510&num=0&edition=prelim), property of the estate shall be distributed— (1) first, in payment of claims of the kind specified in, and in the order specified in, [section 507 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section507&num=0&edition=prelim), proof of which is timely filed under [section 501 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section501&num=0&edition=prelim) or tardily filed on or before the earlier of— (A) the date that is 10 days after the mailing to creditors of the summary of the trustee’s final report; or (B) the date on which the trustee commences final distribution under this section; (2) second, in payment of any allowed unsecured claim, other than a claim of a kind specified in paragraph (1), (3), or (4) of this subsection, proof of which is— (A) timely filed under [section 501(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section501/a&num=0&edition=prelim); (B) timely filed under section 501(b) or 501(c) of this title; or (C) tardily filed under [section 501(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section501/a&num=0&edition=prelim), if— (i) the creditor that holds such claim did not have notice or actual knowledge of the case in time for timely filing of a proof of such claim under [section 501(a) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section501/a&num=0&edition=prelim); and (ii) proof of such claim is filed in time to permit payment of such claim; (3) third, in payment of a

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Federal law — U.S. Code and appendices · legal_authorities

11 U.S.C. § 101 — Definitions

In this title the following definitions shall apply: (1) The term “accountant” means accountant authorized under applicable law to practice public accounting, and includes professional accounting association, corporation, or partnership, if so authorized. (2) The term “affiliate” means— (A) entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than an entity that holds such securities— (i) in a fiduciary or agency capacity without sole discretionary power to vote such securities; or (ii) solely to secure a debt, if such entity has not in fact exercised such power to vote; (B) corporation 20 percent or more of whose outstanding voting securities are directly or indirectly owned, controlled, or held with power to vote, by the debtor, or by an entity that directly or indirectly owns, controls, or holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than an entity that holds such securities— (i) in a fiduciary or agency capacity without sole discretionary power to vote such securities; or (ii) solely to secure a debt, if such entity has not in fact exercised such power to vote; (C) person whose business is operated under a lease or operating agreement by a debtor, or person substantially all of whose property is operated under an operating agreement with the debtor; or (D) entity that operates the business or substantially all of the property of the debtor under a lease or operating agreement. (3) The term “assisted person” means any person whose debts consist primarily of consumer debts and the value of whose nonexempt property is less than $150,000.11 See Adjustment of Dollar Amounts not

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Federal law — U.S. Code and appendices · legal_authorities

11 U.S.C. § 725 — Disposition of certain property

Page 202 TITLE 11—BANKRUPTCY § 725 sets are to be distributed from the debtor’s estate to pay higher priority claims before the tax claims are paid, even though the tax claims are properly secured. Under present law and the Senate amendment only tax liens on personal property, but not on real property, are subordinated to the payment of claims having a pri- ority above the priority for tax claims. SENATE REPORT NO. 95–989 Subsection (a) of section 724 permits the trustee to avoid a lien that secures a fine, penalty, forfeiture, or multiple, punitive, or exemplary damages claim to the extent that the claim is not compensation for actual pecuniary loss. The subsection follows the policy found in section 57j of the Bankruptcy Act [section 93(j) of former title 11] of protecting unsecured creditors from the debtor’s wrongdoing, but expands the protection af- forded. The lien is made voidable rather than void in chapter 7, in order to permit the lien to be revived if the case is converted to chapter 11 under which penalty liens are not voidable. To make the lien void would be to permit the filing of a chapter 7, the voiding of the lien, and the conversion to a chapter 11, simply to avoid a penalty lien, which should be valid in a reorga- nization case. Subsection (b) governs tax liens. This provision re- tains the rule of present bankruptcy law (§ 67(C)(3) of the Bankruptcy Act [section 107(c)(3) of former title 11]) that a tax lien on personal property, if not avoid- able by the trustee, is subordinated in payment to un- secured claims having a higher priority than unsecured tax claims. Those other claims may be satisfied from the amount that would otherwise have been applied to the tax lien, and any excess of the amount of the lien is then applied

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