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Title 11, BankruptcyRelease 119-110

§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 5 — CREDITORS, THE DEBTOR, AND THE ESTATE › SUBCHAPTER III — THE ESTATE › § 562

Last updated Sep 22, 2026|Official source

Summary

When a trustee rejects or a counterparty ends certain finance deals—like swaps, securities, forwards, commodity contracts, repurchase agreements, or master netting agreements—any money owed for the break is figured as of the earlier of the rejection date or the date(s) the deal was ended. If no fair market values exist on those dates, the amount is figured on the next date when reasonable market values do exist. If one side challenges that timing, then if a merchant-type party (like a broker, bank, or swap participant) objects, the trustee must prove there were no reasonable values on the earlier date(s); if the trustee objects, the merchant-type party must prove it.

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,
has the burden of proving that there were no commercially reasonable determinants of value as of such date or dates.

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

Sep 22, 2026

Release point: 119-110