11 U.S.C. § 749: Voidable transfers

Summary

A trustee can undo a transfer of property that would have been customer property if the trustee uses the powers in sections 544, 545, 547, 548, or 549. For those rules, the transferred items count as the debtor’s property. If the transfer went to a customer or for a customer’s benefit, that customer is treated like a creditor here. The trustee cannot undo a transfer made before seven days after the order for relief if the Commission has approved it by rule or order (before or after the transfer) and the transfer is either a securities contract the debtor carried or made for a customer together with any cash, securities, or other margin, or the liquidation of such a securities contract.

Title 11, §749

Bankruptcy, Source: USLM XML via OLRC

(a)Except as otherwise provided in this section, any transfer of property that, but for such transfer, would have been customer property, may be avoided by the trustee, and such property shall be treated as customer property, if and to the extent that the trustee avoids such transfer under section 544, 545, 547, 548, or 549 of this title. For the purpose of such sections, the property so transferred shall be deemed to have been property of the debtor and, if such transfer was made to a customer or for a customer’s benefit, such customer shall be deemed, for the purposes of this section, to have been a creditor.

(b)Notwithstanding section 544, 545, 547, 548, and 549 of this title, the trustee may not avoid a transfer made before seven days after the order for relief if such transfer is approved by the Commission by rule or order, either before or after such transfer, and if such transfer is—

(1)a transfer of a securities contract entered into or carried by or through the debtor on behalf of a customer, and of any cash, security, or other property margining or securing such securities contract; or

(2)the liquidation of a securities contract entered into or carried by or through the debtor on behalf of a customer.

Notes & Related Subsidiaries

Historical and Revision Notes

senate report no. 95–989

section 749 indicates that if the trustee avoids a transfer, property recovered is customer property to any extent it would have been customer property but for the transfer. The section clarifies that a customer who receives a transfer of property of the debtor is a creditor and that property in a customer’s account is property of a creditor for purposes of the avoiding powers.

Editorial Notes

Amendments

2009—Subsec. (b). Pub. L. 111–16 substituted “seven days” for “five days” in introductory provisions. 1982—Pub. L. 97–222 substituted “(a) Except as otherwise provided in this section, any” for “Any”, and “but” for “except”, inserted “such property”, substituted “or 549” for “549, or 724(a)”, and added subsec. (b).

Statutory Notes and Related Subsidiaries

Effective Date

of 2009 AmendmentAmendment by Pub. L. 111–16 effective Dec. 1, 2009, see section 7 of Pub. L. 111–16, set out as a note under section 109 of this title.

§749 Voidable Transfers