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Title 11 — BankruptcyRelease 119-73

§562 Timing of damage measurement in connection with swap agreements, securities contracts, forward contracts, commodity contracts, repurchase agreements, and master netting agreements

Title 11 › Chapter CHAPTER 5— - CREDITORS, THE DEBTOR, AND THE ESTATE › Subchapter SUBCHAPTER III— - THE ESTATE › § 562

Last updated Apr 6, 2026|Official source

Summary

When a trustee rejects or a market counterparty ends certain contracts (like swaps, securities, forwards, commodities, repos, or master netting deals), any money owed for damages must be figured on the earlier of two dates: the date the trustee rejects the contract, or the date(s) the counterparty liquidates, ends, or speeds up the contract. If no reliable market value exists on those dates, the damages are figured on the next date when a reliable market value does exist. If damages are figured later and either the trustee or a counterparty objects to that timing, the law says which side must take the next step: the trustee acts when a counterparty objects, and the counterparty acts when the trustee objects.

Full Legal Text

Title 11, §562

Bankruptcy — Source: USLM XML via OLRC

(a)If the trustee rejects a swap agreement, securities contract (as defined in section 741), forward contract, commodity contract (as defined in section 761), repurchase agreement, or master netting agreement pursuant to section 365(a), or if a forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial participant, master netting agreement participant, or swap participant liquidates, terminates, or accelerates such contract or agreement, damages shall be measured as of the earlier of—
(1)the date of such rejection; or
(2)the date or dates of such liquidation, termination, or acceleration.
(b)If there are not any commercially reasonable determinants of value as of any date referred to in paragraph (1) or (2) of subsection (a), damages shall be measured as of the earliest subsequent date or dates on which there are commercially reasonable determinants of value.
(c)For the purposes of subsection (b), if damages are not measured as of the date or dates of rejection, liquidation, termination, or acceleration, and the forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial participant, master netting agreement participant, or swap participant or the trustee objects to the timing of the measurement of damages—
(1)the trustee, in the case of an objection by a forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial participant, master netting agreement participant, or swap participant; or
(2)the forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial participant, master netting agreement participant, or swap participant, in the case of an objection by the trustee,

Legislative History

Notes & Related Subsidiaries

Statutory Notes and Related Subsidiaries

Effective Date

Section 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 an

Effective Date

of 2005 Amendment note under section 101 of this title.

Reference

Citations & Metadata

Citation

11 U.S.C. § 562

Title 11 — Bankruptcy

Last Updated

Apr 6, 2026

Release point: 119-73