Title 11 — BankruptcyRelease 119-73
§559 Contractual right to liquidate, terminate, or accelerate a repurchase agreement
Title 11 › Chapter CHAPTER 5— - CREDITORS, THE DEBTOR, AND THE ESTATE › Subchapter SUBCHAPTER III— - THE ESTATE › § 559
Summary
Lets a repo or financial participant liquidate, end, or speed up a repurchase agreement when a condition like those in section 365(e)(1) happens. Bankruptcy rules, courts, or agencies cannot stop or limit that action, except if the debtor is a stockbroker or a securities clearing agency and the order is allowed under the Securities Investor Protection Act of 1970 or laws the SEC enforces. If a participant sells assets during liquidation, any money received above the stated repurchase prices and the costs of selling goes into the bankruptcy estate, but it is subject to any valid setoff rights. "Contractual right" includes rights in exchange or clearinghouse rules and bylaws, rights of boards of trade, and rights from common law or normal business practice.
Full Legal Text
Title 11, §559
Bankruptcy — Source: USLM XML via OLRC
The exercise of a contractual right of a repo participant or financial participant to cause the liquidation, termination, or acceleration of a repurchase agreement 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, where the debtor is a stockbroker or securities clearing agency, such order is authorized under the provisions of the Securities Investor Protection Act of 1970 or any statute administered by the Securities and Exchange Commission. In the event that a repo participant or financial participant liquidates one or more repurchase agreements with a debtor and under the terms of one or more such agreements has agreed to deliver assets subject to repurchase agreements to the debtor, any excess of the market prices received on liquidation of such assets (or if any such assets are not disposed of on the date of liquidation of such repurchase agreements, at the prices available at the time of liquidation of such repurchase agreements from a generally recognized source or the most recent closing bid quotation from such a source) over the sum of the stated repurchase prices and all expenses in connection with the liquidation of such repurchase agreements shall be deemed property of the estate, subject to the available rights of setoff. 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 Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right, whether or not evidenced in writing, arising under common law, under law merchant or by reason of normal business practice.
Legislative History
Notes & Related Subsidiaries
Editorial Notes
References in Text
The Securities Investor Protection Act of 1970, referred to in text, is Pub. L. 91–598, Dec. 30, 1970, 84 Stat. 1636, which is classified generally to chapter 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, 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 Improvement Act of 1991, referred to in text, is Pub. L. 102–242, Dec. 19, 1991, 105 Stat. 2236. 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(o)(9), inserted “or financial participant” after “repo participant” in two places. Pub. L. 109–8, § 907(i), substituted “Contractual right to liquidate, terminate, or accelerate a repurchase agreement” for “Contractual right to liquidate a repurchase agreement” in section catchline, “liquidation, termination, or acceleration” for “liquidation” in first sentence, and “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 Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution facility registered under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the governing board thereof and a right,” for “As used in this section, the term ‘contractual right’ includes a right set forth in a rule or bylaw, applicable to each party to the repurchase agreement, of a national securities exchange, a national securities association, or a securities clearing agency, and a right,” in third sentence. 1994—Pub. L. 103–394 struck out “(15 U.S.C. 78aaa et seq.)” after “Act of 1970”.
Statutory Notes and Related Subsidiaries
Effective Date
of 2005 AmendmentAmendment 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 AmendmentAmendment 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
Section effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98–353, set out as an
Effective Date
of 1984 Amendment note under section 101 of this title.
Reference
Citations & Metadata
Citation
11 U.S.C. § 559
Title 11 — Bankruptcy
Last Updated
Apr 6, 2026
Release point: 119-73