11 U.S.C. § 750 — Distribution of securities

Page 213 TITLE 11—BANKRUPTCY § 751 (A) nonconvertible stock having fixed pref- erential dividend and liquidation rights; or (B) interests of limited partners in a lim- ited partnership; (3) a limited partner with a participation of at least five percent in the net assets or net profits of the debtor; or (4) an entity that, directly or indirectly, through agreement or otherwise, exercised or had the power to exercise control over the management or policies of the debtor. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2613; Pub. L. 97–222, § 13, July 27, 1982, 96 Stat. 238.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 Section 747 subordinates to other customer claims, all claims of a customer who is an insider, a five per- cent owner of the debtor, or otherwise in control of the debtor. Editorial Notes AMENDMENTS 1982—Pub. L. 97–222 substituted ‘‘the transaction giv- ing rise to such claim occurred’’ for ‘‘such claim arose’’ in provisions preceding par. (1). § 748. Reduction of securities to money As soon as practicable after the date of the order for relief, the trustee shall reduce to money, consistent with good market practice, all securities held as property of the estate, ex- cept for customer name securities delivered or reclaimed under section 751 of this title. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2614.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 Section 748 requires the trustee to liquidate all secu- rities, except for customer name securities, of the es- tate in a manner consistent with good market practice. The trustee should refrain from flooding a thin market with a large percentage of shares in any one issue. If the trustee holds restricted securities or securities in which trading has been suspended, then the trustee must arrange to liquidate such securities in accordance with the securities laws. A private placement may be the only exemption available with the customer of the debtor the best prospect for such a placement. The sub- section does not permit such a customer to bid in his net equity as part of the purchase price; a contrary re- sult would permit a customer to receive a greater per- centage on his net equity claim than other customers. § 749. Voidable transfers (a) Except as otherwise provided in this sec- tion, any transfer of property that, but for such transfer, would have been customer property, may be avoided by the trustee, and such prop- erty shall be treated as customer property, if and to the extent that the trustee avoids such transfer under section 544, 545, 547, 548, or 549 of this title. For the purpose of such sections, the property so transferred shall be deemed to have been property of the debtor and, if such transfer was made to a customer or for a customer’s ben- efit, such customer shall be deemed, for the pur- poses of this section, to have been a creditor. (b) Notwithstanding sections 544, 545, 547, 548, and 549 of this title, the trustee may not avoid a transfer made before seven days after the order for relief if such transfer is approved by the Commission by rule or order, either before or after such transfer, and if such transfer is— (1) a transfer of a securities contract entered into or carried by or through the debtor on be- half of a customer, and of any cash, security, or other property margining or securing such securities contract; or (2) the liquidation of a securities contract entered into or carried by or through the debt- or on behalf of a customer. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2614; Pub. L. 97–222, § 14, July 27, 1982, 96 Stat. 238; Pub. L. 111–16, § 2(8), May 7, 2009, 123 Stat. 1607.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 Section 749 indicates that if the trustee avoids a transfer, property recovered is customer property to any extent it would have been customer property but for the transfer. The section clarifies that a customer who receives a transfer of property of the debtor is a creditor and that property in a customer’s account is property of a creditor for purposes of the avoiding pow- ers. Editorial Notes AMENDMENTS 2009—Subsec. (b). Pub. L. 111–16 substituted ‘‘seven days’’ for ‘‘five days’’ in introductory provisions. 1982—Pub. L. 97–222 substituted ‘‘(a) Except as other- wise provided in this section, any’’ for ‘‘Any’’, and ‘‘but’’ for ‘‘except’’, inserted ‘‘such property’’, sub- stituted ‘‘or 549’’ for ‘‘549, or 724(a)’’, and added subsec. (b). Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2009 AMENDMENT Amendment by Pub. L. 111–16 effective Dec. 1, 2009, see section 7 of Pub. L. 111–16, set out as a note under section 109 of this title. § 750. Distribution of securities The trustee may not distribute a security ex- cept under section 751 of this title. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2614.) HISTORICAL AND REVISION NOTES SENATE REPORT NO. 95–989 Section 750 forbids the trustee from distributing a se- curity other than a customer name security. The term ‘‘distribution’’ refers to a distribution to customers in satisfaction of net equity claims and is not intended to preclude the trustee from liquidating securities under proposed 11 U.S.C. 748. § 751. Customer name securities The trustee shall deliver any customer name security to or on behalf of the customer entitled to such security, unless such customer has a negative net equity. With the approval of the trustee, a customer may reclaim a customer name security after payment to the trustee, within such period as the trustee allows, of any claim of the debtor against such customer to the extent that such customer will not have a nega- tive net equity after such payment. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2614.)