§747 Subordination of certain customer claims

Summary

Unless section 510 allows it, the trustee must not pay, either in full or in part and either directly or indirectly, any customer's net equity claim until all other customers’ net equity claims are paid in full. This rule applies if, on the date of the transaction, that customer was one of four types: an insider; anyone owning at least five percent of any class of the debtor’s stock (with two exceptions: certain nonconvertible preferred stock and limited partnership interests); a limited partner with at least five percent of the debtor’s net assets or net profits; or an entity that controlled the debtor’s management or policies.