11 U.S.C. § 554 — Abandonment of property of the estate

Page 183 TITLE 11—BANKRUPTCY § 554 §§ 205(b), 222(b), title V, § 501(d)(19), Oct. 22, 1994, 108 Stat. 4123, 4129, 4146; Pub. L. 109–8, title IX, § 907(n), Apr. 20, 2005, 119 Stat. 181.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 553 of the House amendment is derived from a similar provision contained in the Senate amend- ment, but is modified to clarify application of a two- point test with respect to setoffs. SENATE REPORT NO. 95–989 This section preserves, with some changes, the right of setoff in bankruptcy cases now found in section 68 of the Bankruptcy Act [section 108 of former title 11]. One exception to the right is the automatic stay, discussed in connection with proposed 11 U.S.C. 362. Another is the right of the trustee to use property under section 363 that is subject to a right of setoff. The section states that the right of setoff is unaf- fected by the bankruptcy code except to the extent that the creditor’s claim is disallowed, the creditor ac- quired (other than from the debtor) the claim during the 90 days preceding the case while the debtor was in- solvent, the debt being offset was incurred for the pur- pose of obtaining a right of setoff, while the debtor was insolvent and during the 90-day prebankruptcy period, or the creditor improved his position in the 90-day pe- riod (similar to the improvement in position test found in the preference section 547(c)(5)). Only the last excep- tion is an addition to current law. As under section 547(f), the debtor is presumed to have been insolvent during the 90 days before the case. Editorial Notes AMENDMENTS 2005—Subsec. (a)(2)(B)(ii). Pub. L. 109–8, § 907(n)(1), in- serted ‘‘(except for a setoff of a kind described in sec- tion 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 560, or 561)’’ before semicolon. Subsec. (a)(3)(C). Pub. L. 109–8, § 907(n)(2), inserted ‘‘(except for a setoff of a kind described in section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 560, or 561)’’ before period. Subsec. (b)(1). Pub. L. 109–8, § 907(n)(3), substituted ‘‘362(b)(17), 362(b)(27), 555, 556, 559, 560, 561,’’ for ‘‘362(b)(14),’’ in introductory provisions. 1994—Subsec. (a)(1). Pub. L. 103–394, § 501(d)(19)(A), struck out before semicolon at end ‘‘other than under section 502(b)(3) of this title’’. Subsec. (b)(1). Pub. L. 103–394, § 501(d)(19)(B), sub- stituted ‘‘section 362(b)(14),’’ for ‘‘section 362(b)(14),,’’. Pub. L. 103–394, § 222(b), which directed the amend- ment of section 553(b)(1) by inserting ‘‘546(h),’’ after ‘‘365(h),’’ was executed by making the insertion in sec- tion 553(b)(1) of this title to reflect the probable intent of Congress. Pub. L. 103–394, § 205(b), substituted ‘‘365(h)’’ for ‘‘365(h)(2)’’. 1990—Subsec. (b)(1). Pub. L. 101–311 substituted ‘‘362(b)(7), 362(b)(14),’’ for ‘‘362(b)(7),’’. 1984—Subsec. (b)(1). Pub. L. 98–353 inserted ‘‘, 362(b)(7),’’ after ‘‘362(b)(6)’’, and substituted ‘‘, 365(h)(2), or 365(i)(2)’’ for ‘‘or 365(h)(1)’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 554. Abandonment of property of the estate (a) After notice and a hearing, the trustee may abandon any property of the estate that is bur- densome to the estate or that is of inconsequen- tial value and benefit to the estate. (b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of in- consequential value and benefit to the estate. (c) Unless the court orders otherwise, any property scheduled under section 521(a)(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title. (d) Unless the court orders otherwise, property of the estate that is not abandoned under this section and that is not administered in the case remains property of the estate. (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2603; Pub. L. 98–353, title III, § 468, July 10, 1984, 98 Stat. 380; Pub. L. 99–554, title II, § 283(p), Oct. 27, 1986, 100 Stat. 3118; Pub. L. 111–327, § 2(a)(23), Dec. 22, 2010, 124 Stat. 3560.) HISTORICAL AND REVISION NOTES LEGISLATIVE STATEMENTS Section 554(b) is new and permits a party in interest to request the court to order the trustee to abandon property of the estate that is burdensome to the estate or that is of inconsequential value to the estate. SENATE REPORT NO. 95–989 Under this section the court may authorize the trust- ee to abandon any property of the estate that is bur- densome to the estate or that is of inconsequential value to the estate. Abandonment may be to any party with a possessory interest in the property abandoned. In order to aid administration of the case, subsection (b) deems the court to have authorized abandonment of any property that is scheduled under section 521(1) and that is not administered before the case is closed. That property is deemed abandoned to the debtor. Sub- section (c) specifies that if property is neither aban- doned nor administered it remains property of the es- tate. Editorial Notes AMENDMENTS 2010—Subsec. (c). Pub. L. 111–327 substituted ‘‘521(a)(1)’’ for ‘‘521(1)’’. 1986—Subsec. (c). Pub. L. 99–554 substituted ‘‘521(1)’’ for ‘‘521(a)(1)’’. 1984—Subsecs. (a), (b). Pub. L. 98–353, § 468(a), inserted ‘‘and benefit’’ after ‘‘value’’. Subsec. (c). Pub. L. 98–353, § 468(b), amended subsec. (c) generally. Prior to amendment, subsec. (c) read as follows: ‘‘Unless the court orders otherwise, any prop- erty that is scheduled under section 521(1) of this title and that is not administered before a case is closed under section 350 of this title is deemed abandoned.’’ Subsec. (d). Pub. L. 98–353, § 468(c), struck out ‘‘sec- tion (a) or (b) of’’ after ‘‘not abandoned under’’. Page 184 TITLE 11—BANKRUPTCY § 555 Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 1986 AMENDMENT Amendment by Pub. L. 99–554 effective 30 days after Oct. 27, 1986, see section 302(a) of Pub. L. 99–554, set out as a note under section 581 of Title 28, Judiciary and Judicial Procedure. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 555. Contractual right to liquidate, terminate, or accelerate a securities contract The exercise of a contractual right of a stock- broker, financial institution, financial partici- pant, or securities clearing agency to cause the liquidation, termination, or acceleration of a se- curities contract, as defined in section 741 of this title, because of a condition of the kind specified in section 365(e)(1) of this title shall not be stayed, avoided, or otherwise limited by operation of any provision of this title or by order of a court or administrative agency in any proceeding under this title unless such order is authorized under the provisions of the Securi- ties Investor Protection Act of 1970 or any stat- ute administered by the Securities and Ex- change Commission. As used in this section, the term ‘‘contractual right’’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Ex- change Act), a multilateral clearing organiza- tion (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a na- tional securities exchange, a national securities association, a securities clearing agency, a con- tract market designated under the Commodity Exchange Act, a derivatives transaction execu- tion facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act), or in a resolu- tion of the governing board thereof, and a right, whether or not in writing, arising under com- mon law, under law merchant, or by reason of normal business practice. (Added Pub. L. 97–222, § 6(a), July 27, 1982, 96 Stat. 236; amended Pub. L. 98–353, title III, § 469, July 10, 1984, 98 Stat. 380; Pub. L. 103–394, title V, § 501(b)(6), (d)(20), Oct. 22, 1994, 108 Stat. 4143, 4146; Pub. L. 109–8, title IX, § 907(g), (o)(7), Apr. 20, 2005, 119 Stat. 177, 182.) Editorial Notes REFERENCES IN TEXT The Securities Investor Protection Act of 1970, re- ferred to in text, is Pub. L. 91–598, Dec. 30, 1970, 84 Stat. 1636, as amended, which is classified generally to chap- ter 2B–1 (§ 78aaa et seq.) of Title 15, Commerce and Trade. For complete classification of this Act to the Code, see section 78aaa of Title 15 and Tables. The Commodity Exchange Act, referred to in text, is act Sept. 21, 1922, ch. 369, 42 Stat. 998, as amended, which is classified generally to chapter 1 (§ 1 et seq.) of Title 7, Agriculture. For complete classification of this Act to the Code, see section 1 of Title 7 and Tables. The Federal Deposit Insurance Corporation Improve- ment Act of 1991, referred to in text, is Pub. L. 102–242, Dec. 19, 1991, 105 Stat. 2236, as amended. For complete classification of this Act to the Code, see Short Title of 1991 Amendment note set out under section 1811 of Title 12, Banks and Banking, and Tables. AMENDMENTS 2005—Pub. L. 109–8, § 907(g)(1), substituted ‘‘Contrac- tual right to liquidate, terminate, or accelerate a secu- rities contract’’ for ‘‘Contractual right to liquidate a securities contract’’ in section catchline. Pub. L. 109–8, § 907(g)(2), (o)(7), in first sentence, in- serted ‘‘financial participant,’’ after ‘‘financial institu- tion,’’ and substituted ‘‘liquidation, termination, or ac- celeration’’ for ‘‘liquidation’’, and substituted second sentence for former second sentence which read as fol- lows: ‘‘As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw of a national securities exchange, a national securities as- sociation, or a securities clearing agency.’’ 1994—Pub. L. 103–394 substituted ‘‘section 741 of this title’’ for ‘‘section 741(7)’’ and struck out ‘‘(15 U.S.C. 78aaa et seq.)’’ after ‘‘Act of 1970’’. 1984—Pub. L. 98–353 inserted ‘‘, financial institution,’’ after ‘‘stockbroker’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE OF 2005 AMENDMENT Amendment by Pub. L. 109–8 effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1994 AMENDMENT Amendment by Pub. L. 103–394 effective Oct. 22, 1994, and not applicable with respect to cases commenced under this title before Oct. 22, 1994, see section 702 of Pub. L. 103–394, set out as a note under section 101 of this title. EFFECTIVE DATE OF 1984 AMENDMENT Amendment by Pub. L. 98–353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as a note under section 101 of this title. § 556. Contractual right to liquidate, terminate, or accelerate a commodities contract or for- ward contract The contractual right of a commodity broker, financial participant, or forward contract mer- chant to cause the liquidation, termination, or acceleration of a commodity contract, as de- fined in section 761 of this title, or forward con- tract because of a condition of the kind specified in section 365(e)(1) of this title, and the right to a variation or maintenance margin payment re- ceived from a trustee with respect to open com- modity contracts or forward contracts, shall not be stayed, avoided, or otherwise limited by oper- ation of any provision of this title or by the order of a court in any proceeding under this title. As used in this section, the term ‘‘contrac- tual right’’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a mul- tilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improve- ment Act of 1991), a national securities ex- change, a national securities association, a secu- rities clearing agency, a contract market des- ignated under the Commodity Exchange Act, a derivatives transaction execution facility reg- istered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity