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11 U.S.C. § 543 — Turnover of property by a custodian
Federal law — U.S. Code and appendices · legal_authorities
**(a)** A custodian with knowledge of the commencement of a case under this title concerning the debtor may not make any disbursement from, or take any action in the administration of, property of the debtor, proceeds, product, offspring, rents, or profits of such property, or property of the estate, in the possession, custody, or control of such custodian, except such action as is necessary to preserve such property.
**(b)** A custodian shall—
(1) deliver to the trustee any property of the debtor held by or transferred to such custodian, or proceeds, product, offspring, rents, or profits of such property, that is in such custodian’s possession, custody, or control on the date that such custodian acquires knowledge of the commencement of the case; and
(2) file an accounting of any property of the debtor, or proceeds, product, offspring, rents, or profits of such property, that, at any time, came into the possession, custody, or control of such custodian.
**(c)** The court, after notice and a hearing, shall—
(1) protect all entities to which a custodian has become obligated with respect to such property or proceeds, product, offspring, rents, or profits of such property;
(2) provide for the payment of reasonable compensation for services rendered and costs and expenses incurred by such custodian; and
(3) surcharge such custodian, other than an assignee for the benefit of the debtor’s creditors that was appointed or took possession more than 120 days before the date of the filing of the petition, for any improper or excessive disbursement, other than a disbursement that has been made in accordance with applicable law or that has been approved, after notice and a hearing, by a court of competent jurisdiction before the commencement of the case under this title.
**(
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Source file: Laws/federal/codes/united-states-code/title-11/section-543-turnover-of-property-by-a-custodian--f9e3b760ee.md
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Source location: Title 11, Chapter 5, § 543; chapter-005-creditors-the-debtor-and-the-estate.md
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**(a)** A custodian with knowledge of the commencement of a case under this title concerning the debtor may not make any disbursement from, or take any action in the administration of, property of the debtor, proceeds, product, offspring, rents, or profits of such property, or property of the estate, in the possession, custody, or control of such custodian, except such action as is necessary to preserve such property.
**(b)** A custodian shall—
(1) deliver to the trustee any property of the debtor held by or transferred to such custodian, or proceeds, product, offspring, rents, or profits of such property, that is in such custodian’s possession, custody, or control on the date that such custodian acquires knowledge of the commencement of the case; and
(2) file an accounting of any property of the debtor, or proceeds, product, offspring, rents, or profits of such property, that, at any time, came into the possession, custody, or control of such custodian.
**(c)** The court, after notice and a hearing, shall—
(1) protect all entities to which a custodian has become obligated with respect to such property or proceeds, product, offspring, rents, or profits of such property;
(2) provide for the payment of reasonable compensation for services rendered and costs and expenses incurred by such custodian; and
(3) surcharge such custodian, other than an assignee for the benefit of the debtor’s creditors that was appointed or took possession more than 120 days before the date of the filing of the petition, for any improper or excessive disbursement, other than a disbursement that has been made in accordance with applicable law or that has been approved, after notice and a hearing, by a court of competent jurisdiction before the commencement of the case under this title.
**(d)** After notice and hearing, the bankruptcy court—
(1) may excuse compliance with subsection (a), (b), or (c) of this section if the interests of creditors and, if the debtor is not insolvent, of equity security holders would be better served by permitting a custodian to continue in possession, custody, or control of such property, and
(2) shall excuse compliance with subsections (a) and (b)(1) of this section if the custodian is an assignee for the benefit of the debtor’s creditors that was appointed or took possession more than 120 days before the date of the filing of the petition, unless compliance with such subsections is necessary to prevent fraud or injustice.
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Federal law — U.S. Code and appendices · legal_authorities
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
**(a)** An involuntary case may be commenced only under chapter 7 or 11 of this title, and only against a person, except a farmer, family farmer, or a corporation that is not a moneyed, business, or commercial corporation, that may be a debtor under the chapter under which such case is commenced.
**(b)** An involuntary case against a person is commenced by the filing with the bankruptcy court of a petition under chapter 7 or 11 of this title—
(1) by three or more entities, each of which is either a holder of a claim against such person that is not contingent as to liability or the subject of a bona fide dispute as to liability or amount, or an indenture trustee representing such a holder, if such noncontingent, undisputed claims aggregate at least $10,000 11 See Adjustment of Dollar Amounts notes below. more than the value of any lien on property of the debtor securing such claims held by the holders of such claims;
(2) if there are fewer than 12 such holders, excluding any employee or insider of such person and any transferee of a transfer that is voidable under section 544, 545, 547, 548, 549, or 724(a) of this title, by one or more of such holders that hold in the aggregate at least $10,000 1 of such claims;
(3) if such person is a partnership—
(A) by fewer than all of the general partners in such partnership; or
(B) if relief has been ordered under this title with respect to all of the general partners in such partnership, by a general partner in such partnership, the trustee of such a general partner, or a holder of a claim against such partnership; or
(4) by a foreign representative of the estate in a foreign proceeding concerning such person.
**(c)** After the filing of a petition under this section but before the case is dismissed or relief is ordere
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Federal law — U.S. Code and appendices · legal_authorities
**(a)** Unless the court, for cause, orders otherwise, the dismissal of a case under this title does not bar the discharge, in a later case under this title, of debts that were dischargeable in the case dismissed; nor does the dismissal of a case under this title prejudice the debtor with regard to the filing of a subsequent petition under this title, except as provided in [section 109(g) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section109/g&num=0&edition=prelim).
**(b)** Unless the court, for cause, orders otherwise, a dismissal of a case other than under [section 742 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section742&num=0&edition=prelim)—
(1) reinstates—
(A) any proceeding or custodianship superseded under [section 543 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section543&num=0&edition=prelim);
(B) any transfer avoided under section 522, 544, 545, 547, 548, 549, or 724(a) of this title, or preserved under section 510(c)(2), 522(i)(2), or 551 of this title; and
(C) any lien voided under [section 506(d) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section506/d&num=0&edition=prelim);
(2) vacates any order, judgment, or transfer ordered, under section 522(i)(1), 542, 550, or 553 of this title; and
(3) revests the property of the estate in the entity in which such property was vested immediately before the commencement of the case under this title.
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Federal law — U.S. Code and appendices · legal_authorities
**(a)** An entity may timely file a request for payment of an administrative expense, or may tardily file such request if permitted by the court for cause.
**(b)** After notice and a hearing, there shall be allowed administrative expenses, other than claims allowed under [section 502(f) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section502/f&num=0&edition=prelim), including—
(1)
(A) the actual, necessary costs and expenses of preserving the estate including—
(i) wages, salaries, and commissions for services rendered after the commencement of the case; and
(ii) wages and benefits awarded pursuant to a judicial proceeding or a proceeding of the National Labor Relations Board as back pay attributable to any period of time occurring after commencement of the case under this title, as a result of a violation of Federal or State law by the debtor, without regard to the time of the occurrence of unlawful conduct on which such award is based or to whether any services were rendered, if the court determines that payment of wages and benefits by reason of the operation of this clause will not substantially increase the probability of layoff or termination of current employees, or of nonpayment of domestic support obligations, during the case under this title;
(B) any tax—
(i) incurred by the estate, whether secured or unsecured, including property taxes for which liability is in rem, in personam, or both, except a tax of a kind specified in [section 507(a)(8) of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title11-section507/a/8&num=0&edition=prelim); or
(ii) attributable to an excessive allowance of a tentative carryback adjustment that the estate received, whether the taxable year t
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Federal law — U.S. Code and appendices · legal_authorities
**(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
Page 166
TITLE 11—BANKRUPTCY
§ 543
the same effect as to the entity making such
transfer or payment as if the case under this
title concerning the debtor had not been com-
menced.
(d) A life insurance company may transfer
property of the estate or property of the debtor
to such company in good faith, with the same ef-
fect with respect to such company as if the case
under this title concerning the debtor had not
been commenced, if such transfer is to pay a
premium or to carry out a nonforfeiture insur-
ance option, and is required to be made auto-
matically, under a life insurance contract with
such company that was entered into before the
date of the filing of the petition and that is
property of the estate.
(e) Subject to any applicable privilege, after
notice and a hearing, the court may order an at-
torney, accountant, or other person that holds
recorded information, including books, docu-
ments, records, and papers, relating to the
debtor’s property or financial affairs, to turn
over or disclose such recorded information to
the trustee.
(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2595; Pub. L.
98–353, title III, § 457, July 10, 1984, 98 Stat. 376;
Pub. L. 103–394, title V, § 501(d)(16), Oct. 22, 1994,
108 Stat. 4146.)
HISTORICAL AND REVISION NOTES
LEGISLATIVE STATEMENTS
Section 542(a) of the House amendment modifies simi-
lar provisions contained in the House bill and the Sen-
ate amendment treating with turnover of property to
the estate. The section makes clear that any entity,
other than a custodian, is required to deliver property
of the estate to the trustee or debtor in possession
whenever such property is acquired by the entity dur-
ing the case, if the trustee or debtor in possession may
use, sell, or lease the property under sectio
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