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Page:United States Statutes at Large Volume 92 Part 2.djvu/1300

 92 STAT. 2580

PUBLIC LAW 95-598—NOV. 6, 1978

debtor in connection with an employment tax on wages, salaries, or commissions earned from the debtor. (c) There shall be estimated for purpose of allowance under this section— (1) any contingent or unliquidated claim, fixing or liquidation of which, as the case may be, would unduly delay the closing i^n:.'].?^i • of the case; or (2) any right to an equitable remedy for breach of performance if such breach gives rise to a right to payment. (d) Notwithstanding subsections (a) and (b) of this section, the court shall disallow any claim of any entity from which property is Post, pp. 2601, recoverable under section 542, 543, 550, or 553 of this title or that is 2602. a transferee of a transfer avoidable under section 522(f), 522(h), Post, pp. 2601, 544, 545, 547, 548, 549, or 724(a) of this title, unless such entity or 2607. transferee has paid the amount, or turned over any such property, r for which such entity or transferee is liable under section 522(i), 542, 543,550, or 553 of this title. (e)(1) Notwithstanding subsections (a) and (b) of this section and paragraph (2) of this subsection, the court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor on, or has secured, the claim of a creditor, to the extent that— > <^i^ -; '•''•••"' (A) such creditor's claim against the estate is disallowed; (B) such claim for reimbursement or contribution is contingent as of the time of allowance of such claim for reimbursement or contribution; or (C) such entity requests subrogation under section 509 of this title to the rights of such creditor. (2) A claim for reimbursement or contribution of such an entity that becomes fixed after the commencenient of the case shall be determined, and shall be allowed under subsection (a), (b), or (c) of this section, or disallowed under subsection (d) of this section, the same as if such claim had become fixed before the date of the filing of the petition. (f) In an involuntary case, a claim arising in the ordinary course of the debtor's business or financial affairs after the commencement of the case but before the earlier of the appointment of a trustee and the order for relief shall be determined as of the date such claim arises, and shall be allowed under subsection (a), (b), or (c) of this section or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition. (g) A claim arising from the rejection, under section 365 of this Post, pp. 2621, title or under a plan under chapter 9, 11, or 13 of this title, of an 2626, 2645. executory contract or unexpired lease of the debtor that has not been assumed shall be determined, and shall be allowed under subsection (a), (b), o r (c) of this section or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition. (h) A claim arising from the recovery of property under section 522(i), 550, or 553 of this title shall be determined, and shall be allowed under subsection (a), (b), or (c) of this section, or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition. (i) A claim that does not arise until after the commencement of the case for a tax entitled to priority under section 507(a)(6) of this title shall be determined, and shall be allowed under subsection (a),

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1301

 PUBLIC LAW 95-598—NOV. 6, 1978 (b), or (c) of this section, or disallowed under subsection (d) or (e) of this section, the same as if such claim had arisen before the date of the filing of the petition. (j) Before a case is closed, a claim that has been allowed may be reconsidered for cause, and reallowed or disallowed according to the equities of the case. § 503. Allowance of administrative expenses (a) An entity may file a request for payment of an administrative expense. (b) After notice and a hearing, there shall be allowed, administrative expenses, other than claims allowed under section 502(f) of this title, including— (1)(A) the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement of the case; (B) any tax— (i) incurred by the estate, except a tax of a kind specified in section 507(a)(6) of this title; or (ii) attributable to an excessive allowance of a tentative carryback adjustment that the estate received, whether the taxa,ble year to which such adjustment relates ended before or after the commencement of the case; and (C) any fine, penalty, or reduction in credit, relating to a tax of a kind specified in subparagraph (B) of this paragraph; (2) compensation and reimbursement awarded under section 3a0 of this title; (3) the actual, necessary expenses, other than compensation J and reimbursement specified in paragraph (4) of this subsection incurred by— (A) a creditor that files a petition under section 303 of this title; (B) a creditor that recovers, after the court's approval, for the benefit of the estate any property transferred or concealed by the debtor; (C) a creditor in connection with the prosecution of a criminal offense relating to the case, or to the business or property of the debtor; " (D) a creditor, an indenture trustee, an equity security holder, or a committee representing creditors or equity security holders other than a committee appointed under section 1102 of this title, in making a substantial contribution in a case under chapter 9 or 11 of this title; or (E) a custodian superseded under section 543 of this title, and compensation for the services of such custodian; (4) reasonable compensation for professional services rendered by an attorney or an accountant of an entity whose expense is allowable under paragraph (3) of this subsection, based on the time, the nature, the extent, and the value of such services, and the cost of comparable services other than in a case under this title, and reimbursement for actual, necessary expenses incurred by such attorney or accountant; (5) reasonable compensation for services rendered by an indenture trustee in making a substantial contribution in a case under chapter 9 or 11 of this title, based on the time, the nature, the extent, and the value of such services, and the cost of comparable services other than in a case under this title; and

92 STAT. 2581

11 USC 503.

.

Ante, p. 2559.

Post, p. 2626. Post, pp. 2621, 2626.

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1302

 92 STAT. 2582 28 USC 1821 et iTusC 504

11 USC 505.

,.

PUBLIC LAW 95-598—NOV. 6, 1978 (6) the fees and mileage payable under chapter 119 of title 28. § ^^^' Sharing of compensation (a) Except as provided in subsection (b) of this section, a person receiving compensation or reimbursement under section 603(b)(2) or 503(b)(4) of this title may not share or agree to share— (1) any such compensation or reimbursement with another person; or (2) any compensation or reimbursement received by another person under such sections. (b)(1) A member, partner, or regular associate in a professional association, corporation, or partnership may share compensation or reimbursement received under section 503(b)(2) or 503(b)(4) of this title with another member, partner, or regular associate in such association, corporation, or partnership, and may share in any compensation or reimbursement received under such sections by another member, partner, or regular associate in such association, corporation, or partnership. (2) An attorney for a creditor that files a petition under section 303 of this title may share compensation and reimbursement received under section 503(b)(4) of this title with any other attorney contributing to the services rendered or expenses incurred by such creditor's attorney. § 505. Determination of tax liability (a)(1) Except as provided in paragraph (2) of this subsection, the court may determine the amount or legality of any tax, any fine or penalty relating to a tax, or any addition to tax, whether or not previously assessed, whether or not paid, and whether or not contested before and adjudicated by a judicial or administrative tribunal of competent jurisdiction. (2) The court may not so determine^— (A) the amount or legality of a tax, fine, penalty, or addition to tax if such amount or legality was contested before and adjudicated by a judicial or administrative tribunal of competent juris, diction before the commencement of the case under this title; or (B) any right of the estate to a tax refund, before the earlier of— (i) 120 days after the trustee properly requests such refund from the governmental unit from which such refund is claimed; and (ii) a determination by such governmental unit of such request. (b) A trustee may request a determination of any unpaid liability of the estate for any tax incurred during the administration of the case by submitting a tax return for such tax and a request for such a determination to the governmental unit charged with responsibility for collection or determination of such tax. Unless such return is fraudulent, or contains a material misrepresentation, the trustee, the debtor, and any successor to the debtor are discharged from any liability for such tax— (1) upon payment of the tax shown on such return, if— (A) such governmental unit does not notify the trustee, within 60 days after such request, that such return has been J selected for examination; or ' i. (B) such governmental unit does not complete such an examination and notify the trustee of any tax due, within 180

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1303

 PUBLIC L\W 95-598—NOV. 6, 1978

92 STAT. 2583

days after such request or within such additional time as the court, for cause, permits; (2) upon payment of the tax determined by the court, after notice and a hearing, after completion by such governmental unit of such examination; or (3) upon payment of the tax determined by such governmental unit to be due. (c) Notwithstanding section 362 of this title, after determination by the court of a tax under this section, the governmental unit charged with responsibility for collection of such tax may assess such tax against the estate, the debtor, or a successor to the debtor, as the case may be, subject to any otherwise applicable law. § 506. Determination of secured status 11 USC 506, (a) An allowed claim of a creditor secured by a lien on property in which the estate has an interest, or that is subject to setoff under section 553 of this title, is a secured claim to the extent of the value of such creditor's interest in the estate's interest in such property, or to the extent of the amount subject to setoff, as the case may be, and is an unsecured claim to the extent that the value of such creditor's interest or the amount so subject to setoff is less than the amount of such allowed claim. Such value shall be determined in light of the purpose of the valuation and of the proposed disposition or use of such property, and in conjunction with any hearing on such disposition or use or on a plan affecting such creditor's interest. (b) To the extent that an allowed secured claim is secured by property the value of which, after any recovery under subsection (c) of this section, is greater than the amount of such claim, there shall be allowed to the holder of such claim, interest on such claim, and any reasonable fees, costs, or charges provided under the agreement under which such claim arose. (c) The trustee may recover from property securing an allowed secured claim the reasonable, necessary costs and expenses of preserving, or disposing of, such property to the extent of any benefit to the holder of such claim. (d) To the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void, unless— (1) a party in interest has not requested that the court determine and allow or disallow such claim under section 502 of this title; or (2) such claim was disallowed only under section 502(e) of this title. § 507. Priorities 11 USC 507. (a) The following expenses and claims have priority in the following order: (1) First, administrative expenses allowed under section 503(b) of this title, and any fees and charges assessed against the estate under chapter 123 of title 28. 28 USC 1911 ef (2) Second, unsecured claims allowed under section 502(f) of seq. this title. (3) Third, allowed unsecured claims for wages, salaries, or comJ missions, including vacation, severance and sick leave pay— (A) earned by an individual within 90 days before the date of the filing of the petition or the date of the cessation of the debtor's business, whichever occurs first; but only (B) to the extent of $2,000 for each such individual.

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1304

 92 STAT. 2584

PUBLIC LAW 95-598—NOV. 6, 1978 (4) Fourth, allowed unsecured claims for contributions to employee benefit plans— (A) arising from services rendered within 180 days before the date of the filing of the petition or the date of the cessation of the debtor's business, whichever occurs first; but only (B) for each such plan, to the extent of— (i) the number of employees covered by such plan multiplied by $2,000; less (ii) the aggregate amount paid to such employees under paragraph (3) of this subsection, plus the aggregate amount paid by the estate on behalf of such employees to any other employee benefit plan. (5) Fifth, allowed unsecured claims of individuals, to the extent of $900 for each such individual, arising from the deposit, before the commencement of the case, of money in connection with the purchase, lease, or rental of property, or the purchase of services, for the personal, family, or household use of such individuals, that were not delivered or provided. (6) Sixth, allowed unsecured claims of governmental units, to the extent that such claims are for— (A) a tax on or measured by income or gross receipts— (i) for a taxable year ending on or before the date of the filing of the petition for which a return, if required, i is last due, including extensions, after three years before the date of the filing of the petition; (ii) assessed within 240 days, plus any time plus 30 days during which an oflFer in compromise with respect to such tax that was made within 240 days after such assessment was pending, before the date of the filing of ' = the petition; or (iii) other than a tax of a kind specified in section 523 (a)(1)(B) or 523(a)(1)(C) of this title, not assessed before, but assessable, under applicable law or by agreement, after, the commencement of the case; (B) a property tax assessed before the commencement of w the case and last payable without penalty after one year before the date of the filing of the petition; (C) a tax required to be collected or withheld and for which the debtor is liable in whatever capacity; (D) an employment tax on a wage, salary, or commission of a kind specified in paragraph (3) of this subsection earned from the debtor before the date of the filing of the petition, whether or not actually paid before such date, for which a return is last due, under applicable law or under any extension, after three years before the date of the filing of the petition; (E) an excise tax on— (i) a transaction occurring before the date of the filing of the petition for which a return, if required, is last due, under applicable law or under any extension, after three years before the date of the filing of the petition; or (ii) if a return is not required, a transaction occurring during the three years immediately preceding the date of the filing of the petition; (F) a customs duty arising out of the importation of merchandise—

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1305

 PUBLIC LAW 95-598—NOV. 6, 1978

92 STAT. 2585

(i) entered for consumption within one year before the date of the filing of the petition; (ii) covered by an entry liquidated or reliquidated within one year before the date of the filing of the peti' tion; or (iii) entered for consumption within four years before the date of the filing of the petition but unliquidated on such date, if the Secretary of the Treasury certifies that failure to liquidate such entry was due to an investigation pending on such date into assessment of antidumping or countervailing duties or fraud, or if informatic/n needed for the proper appraisement or classification of such merchandise was not available to the appropriate customs officer before such date; or (G) a penalty related to a claim of a kind specified in this paragraph and in compensation for actual pecuniary loss. (b) If the trustee, under section 362, 363, or 364 of this title, provides adequate protection of the interest of a holder of a claim secured by a lien on'property of the debtor and if, notwithstanding such pro,j. tection, such creditor has a claim allowable under subsection (a)(1) of this section arising from the stay of action against such property under section 362 of this title, from the use, sale, or lease of such property under section 363 of this title, or from the granting of a lien under section 364(d) of this title, then such creditor's claim under such subsection shall have priority over every other claim allowable under such subsection. (c) For the purpose of subsection (a) of this section, a claim of a governmental unit arising from an erroneous refund or credit of a tax shall be treated the same as a claim for the tax to which such refund or credit relates. (d) An entity that is subrogated to the rights of a holder of a claim of a kind specified in subsection (a)(3), (a)(4), (a)(5), or (a)(6) of this section is not subrogated to the right of the holder of such claim to priority under such subsection. § 508. Effect of distribution other than under this title 11 USC 508. (a) If a creditor receives, in a foreign proceeding, payment of, or a transfer of property on account of, a claim that is allowed under this title, such creditor may not receive any payment under this title on account of such claim until each of the other holders of claims on ac;; count of, which such holders are entitled to share equally with such creditor under this title has received payment under this title equal in value to the consideration received by such creditor in such foreign proceeding. (b) If a creditor of a partnership debtor receives, from a general partner that is not a debtor in a case under chapter 7 of this title, payment of, or a transfer of property on account of, a claim that is allowed under this title and that is not secured by a lien on property of such partner, such creditor may not receive any payment under this title on account of such claim until each of the other holders of claims on account of which such holders are entitled to share equally with such creditor under this title has received payment under this title equal in value to the consideration received by such creditor from such general partner. § 509. Claims of codebtors H USC 509. (a) Except as provided in subsections (b) and (c) of this section, an entity that is liable with the debtor on, or that has secured, a claim

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1306

 92 STAT. 2586

11 USC 510.

PUBLIC LAW 95-598—NOV. 6, 1978 of a creditor, and that pays such claim, is subrogated to the rights of such creditor to the extent of such payment. (b) Such entity is not subrogated to the rights of such creditor to the extent that— (1) a claim of such entity for reimbursement or contribution i > on account of a payment of such creditor's claim is— (A) allowed under section 502 of this title; (B) disallowed other than under section 502(e) of this title; or (C) subordinated under section 510 of this title; or (2) as between the debtor and such entity, such entity received the consideration for the claim held by such creditor. (c) The court shall subordinate to the claim of a creditor and for the benefit of such creditor an allowed claim, by way of subrogation under section 509 of this title, or for reimbursement or contribution, of an entity that is liable with the debtor on, or that has secured, such creditor's claim, until such creditor's claim is paid in full, either through payments under this title or otherwise. §510. Subordination (a) A subordination agreement is enforceable in a case under this title to the same extent that such agreement is enforceable under applicable nonbankruptcy law. (b) Any claim for recission of a purchase or sale of a security of the debtor or of an affiliate or for damages arising from the purchase or sale of such a security shall be subordinated for purposes of distribution to all claims and interests that are senior or equal to the claim or interest represented by such security. (c) Notwithstanding subsections (a) and (b) of this section, after notice and a hearing, the court may— (1) under principles of equitable subordination, subordinate for purposes of distribution all or part of an allowed claim to all or part of another allowed claim or all or part of an allowed interest to all or part of another allowed interest; or (2) order that any lien securing such a subordinated claim be transferred to the estate.

SUBCHAPTER II—DEBTOR'S DUTIES AND BENEFITS 11 USC 521.

11 USC 522.

§521. Debtor's duties The debtor shall— (1) file a list of creditors, and unless the court orders otherwise, a schedule of assets and liabilities, and a statement of the debtor's financial affairs; (2) if a trustee is serving in the case, cooperate with the trustee as necessary to enable the trustee to perform the trustee's duties under this title; (3) if a trustee is serving in the case, surrender to the trustee all property of the estate and any recorded information, including books, documents, records, and papers, relating to property of the estate; and (4) appear at the hearing required under section 524(d) of this title. §522. Exemptions ^ (a) In this section—

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1307

 PUBLIC LAW 95-598—NOV. 6, 1978

92 STAT. 2587

(1) "dependent" includes spouse, whether or not actually dependent; and (2) "value" means fair market value as of the date of the filing of tile petition. (b) Notwithstanding section 541 of this title, an individual debtor may exempt from property of the estate either— (1) property that is specified under subsection (d) of this section, unless the State law that is applicable to the debtor under paragraph (2)(A) of this subsection specifically does not so authorize; or, in the alternative, (2)(A) any property that is exempt under Federal law, other than subsection (d) of this section, or State or local law that is applicable on the date of the filing of the petition at the place in which the debtor's domicile has been located for the 180 days immediately preceding the date of the filing of the petition, or for a longer portion of such 180-day period than in any other place; and (B) any interest in property in which the debtor had, immediately before the commencement of the case, an interest as a tenant by the entirety or joint tenant to the extent that such interest as a tenant by the entirety or joint tenant is exempt from process under applicable nonbankruptcy law. (c) Unless the case is dismissed, property exempted under this section is not liable during or after the case for any debt of the debtor that arose, or that is determined under section 502 of this title as if such claim had arisen before the commencement of the case, except— (1) a debt of a kind specified in section 523(a)(1) or section 523(a)(5) of this title; or (2) a lien that is— (A) not avoided under section 544, 545, 547, 548, 549, or 724(a) of this title; Post, p. 2607. (B) notvoidedunder section 506(d) of this title; or (C)(i) a tax lien, notice of which is properly filed; and (ii) avoided under section 545(2) of this title. (d) The following property may be exempted under subsection (b)(1) of this section: (1) The debtor's aggregate interest, not to exceed $7,500 in value, in real property or personal property that the debtor or a dependent of the debtor uses as a residence, in a cooperative that owns property that the debtor or a dependent of the debtor uses as a residence, or in a burial plot for the debtor or a dependent of the debtor. (2) The debtor's interest, not to exceed $1,200 in value, in one motor vehicle. (3) The debtor's interest, not to exceed $200 in value in any particular item, in household furnishings, household goods, wearing apparel, appliances, books, animals, crops, or musical instruments, that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor. (4) The debtor's aggregate interest, not to exceed $500 in value, in jewelry held primarily for the personal, family, or household use of the debtor or a dependent of the debtor. (5) The debtor's aggregate interest, not to exceed in value $400 plus any unused amount of the exemption provided under paragraph (1) of this subsection, in any property. (6) The debtor's aggregate interest, not to exceed $750 in value,

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1308

 92 STAT. 2588

Waiver.

PUBLIC LAW 95-598—NOV. 6, 1978 in any implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor. x»;. (7) Any unmatured life insurance contract owned by the debtor, other than a credit life insurance contract. 1I (8) The debtor's aggregate interest, not to exceed in value $4,000 less any amount of property of the estate transferred in the manner specified in section 542(d) of this title, in any accrued dividend or interest under, or loan value of, any unmatured life insurance contract owned by the debtor under which the insured is the debtor or an individual of whom the debtor is a dependent. (9) Professionally prescribed health aids for the debtor or a dependent of the debtor. (10) The debtor's right to receive— (A) a social security benefit, unemployment compensation, or a local public assistance benefit; (B) a veterans' benefit; (C) a disability, illness, or unemployment benefit; (D) alimony, support, or separate maintenance, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; (E) a payment under a stock bonus, pension, profitsharing, annuity, or similar plan or contract on account of illness, disability, death, age, or length of service, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor, unless— (i) such plan or contract was established by or under the auspices of an insider that employed the debtor at the time the debtor's rights under such plan or contract arose; (ii) such payment is on account of age or length of service; and (iii) such plan or contract does not qualify under section 401(a), 403(a), 403(b), 408, or 409 of the Internal Revenue Code of 1954 (26 U.S.C. 401 (a), 403(a), 403 (b), 408,or409)._ (11) The debtor's right to receive, or property that is traceable to— (A) an award under a crime victim's reparation law; (B) a payment on account of the wrongful death of an individual of whom the debtor was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; (C) a payment under a life insurance contract that insured the life of an individual of whom the debtor was a dependent on the date of such individual's death, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor; (D) a payment, not to exceed $7,500, on account of personal bodily injury, not including pain and suffering or compensation for actual pecuniary loss, of the debtor or an individual of whom the debtor is a dependent; or (E) a payment in compensation of loss of future earnings of the debtor or an individual of whom the debtor is or was a dependent, to the extent reasonably necessary for the support of the debtor and any dependent of the debtor. (e) A waiver of exemptions executed in favor of a creditor that holds an unsecured claim against the debtor is unenforceable in a case

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1309

 PUBLIC LAW 95-598—NOV. 6, 1978

92 STAT. 2589

under this title with respect to such claim against property that the debtor may exempt under subsection (b) of this section. A waiver by the debtor of a power under subsection (f) or (h) of this section to avoid a transfer, under subsection (g) or (i) of this section to exempt property, or under subsection (i) of this section to recover property or to preserve a transfer, is unenforceable in a case under this title. (f) Notwithstanding any waiver of exemptions, the debtor may avoid the fixing of a lien on an interest of the debtor in property to the extent that such lien impairs an exemption to which the debtor would have been entitled under subsection (b) of this section, if such lien is— (1) a judicial lien; or t (2) a nonpossessory, nonpurchase-money security interest in any— (A) household furnishings, household goods, wearing apparel, appliances, books, animals, crops, musical instruments, or jewelry that are held primarily for the personal, family, or household use of the debtor or a dependent of the debtor; (B) implements, professional books, or tools, of the trade of the debtor or the trade of a dependent of the debtor; or (C) professionally prescribed health aids for the debtor or a dependent of the debtor. (g) Notwithstanding sections 550 and 551 of this title, the debtor may exempt under subsection (b) of this section property that the trustee recovers under section 510(c)(2), 542, 543, 550, 551, or 553 of this title, to the extent that the debtor could have exempted such property under subsection (b) of this section if such property had not been transferred, if— (1)(A) such transfer was not a voluntary transfer of such property by the debtor; and (B) the debtor did not conceal such property; or (2) the debtor could have avoided such transfer under subsection (f)(2) of this section. (h) The debtor may avoid a transfer of property of the debtor or recover a setoff to the extent that the debtor could have exempted such property under subsection (g)(1) of this section if the trustee had avoided such transfer, if— (1) such transfer is avoidable by the trustee under section 544, 545, 547, 548, 549, or 724(a) of this title or recoverable by the trustee under section 553 of this title; and (2) the trustee does not attempt to avoid such transfer. (i)(1) If the debtor avoids a transfer or recovers a setoff under subsection (f) or (h) of this section, the debtor may recover in the manner prescribed by, and subject to the limitations of, section 550 of this title, the same as if the trustee had avoided such transfer, and may exempt any property so recovered under subsection (b) of this section. (2) Notwithstanding section 551 of this title, a transfer avoided under section 544, 545, 547, 548, 549, or 724(a) of this title, under subsection (f) or (h) of this section, or property recovered under section 553 of this title, may be preserved for the benefit of the debtor to the extent that the debtor may exempt such property under subsection (g) of his section or paragraph (1) of this subsection. (j) Notwithstanding subsections (g) and (i) of this section, the debtor may exempt a particular kind of property under subsections (g) and (i) of this section only to the extent that the debtor has

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1310

 92 STAT. 2590

11 USC 523. Post, pp. 2638, 2650.

PUBLIC LAW 95-598—NOV. 6, 1978 exempted less property in value of such kind than that to which the debtor is entitled under subsection (b) of this section, (k) Property that the debtor exempts under this section is not liable for payment of any administrative expense except— (1) the aliquot share of the costs and expenses of avoiding a transfer of property that the debtor exempts under subsection (g) ,;. of this section, or of recovery of such property, that is attributable to the value of the portion of such property exempted in relation to the value of the property recovered; and (2) any costs and expenses of avoiding a transfer under subsection (f) or (h) of this section, or of recovery of property under subsection (i)(1) of this section, that the debtor has not paid. (1) The debtor shall file a list of property that the debtor claims as exempt under subsection (b) of this section. If the debtor does not file such a list, a dependent of the debtor may file such a list, or may claim property as exempt from property of the estate on behalf of the debtor. Unless a party in interest objects, the property claimed as exempt on such list is exempt. (m) This section shall apply separately with respect to each debtor in a joint case. § 523. Exceptions to discharge (a) A discharge under section 727, 1141, or 1328(b) of this title does not discharge an individual debtor from any debt-(1) for a tax or a customs duty— (A) of the kind and for the periods specified in section 507(a)(2) or 507(a)(6) of this title, whether or not a claim . for such tax was filed or allowed; (B) with respect to which a return, if required— (i) was not filed; or (ii) was filed after the date on which such return was last due, under applicable law or under any extension, and after two years before the date of the filing of the petition; or (C) with respect to which the debtor made a fraudulent return or willfully attempted in any manner to evade or defeat such tax; (2) for obtaining money, property, services, or an extension, renewal, or refinance of credit, by— (A) false pretenses, a false representation, or actual fraud, other than a statement respecting the debtor's or an insider's financial condition; or (B) use of a statement in writing— (i) that is materially false; (ii) respecting the debtor's or an insider's financial ' condition; (iii) on which the creditor to whom the debtor is liable for obtaining such money, property, services, or credit (iv) that the debtor caused to be made or published with intent to deceive; (3) neither listed nor scheduled under section 521(1) of this title, with the name, if known to the debtor, of the creditor to whom such debt is owed, in time to permit— (A) if such debt is not of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim, unless such creditor had notice or actual knowledge of the case in time for such timely filing; or
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Page:United States Statutes at Large Volume 92 Part 2.djvu/1311

 PUBLIC LAW 95-598—NOV. 6, 1978

92 STAT. 2591

(B) if such debt is of a kind specified in paragraph (2), (4), or (6) of this subsection, timely filing of a proof of claim and timely request for a determination of dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request; (4) for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny; (5) to a spouse, former spouse, or child of the debtor, for alimony to, maintenance for, or support of such spouse or child, in connection with a separation agreement, divorce decree, or property settlement agreement, but not to the extent that— (A) such debt is assigned to another entity, voluntarily, by operation of law, or otherwise; or (B) such debt includes a liability designated as alimony, • maintenance, or support, unless such liability is actually in the nature of alimony, maintenance, or support; (6) for willful and malicious injury by the debtor to another entity or to the property of another entity; (7) to the extent such debt is for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, and is not compensation for actual pecuniary loss, other than a tax penalty— (A) relating to a tax of a kind not specified in paragraph (1) 01 this subsection; or (B) imposed with respect to a transaction or event that occurred before three years before the date of the filing of the petition; (8) to a governmental unit, or a nonprofit institution of higher education, for an educational loan, unless— (A) such loan first became due before five years before the date of the filing of the petition; or (B) excepting such debt from discharge under this paragraph will impose an undue hardship on the debtor and the debtor's dependents; or (9) that was or could have been listed or scheduled by the debtor in a prior case concerning the debtor under this title or under the Bankruptcy Act in which the debtor waived discharge, 11 USC prec. 1. or was denied a discharge under section 727(a)(2), (3), (4), (5), (6), or (7) of this title, or under section 14c (1), (2), (3), (4), (6), or (7) of such Act. 11 USC 32. (b) Notwithstanding subsection (a) of this section, a debt that was excepted from discharge under subsection (a)(1), (a)(3), or (a)(8) of this section, under section l 7 a (l), l7a(3), or 17a(5) of the Bankruptcy Act, under section 439A of the Higher Education Act of 1965 11 USC 35. (20 tJ.S.C. 1087-3), or under section 733(g) of the Public Health Services Act (42 U.S.C. 294f) in a prior case concerning the debtor under this title, or under the Bankruptcy Act, is dischargeable in a case under this title unless, by the terms of subsection (a) of this section, such debt is not dischargeable in the case under this title. (c) Except as provided in subsection (a)(3)(B) of this section, the debtor shall be discharged from a debt specified in paragraph (2), (4), or (6) of subsection (a) of this section, unless, on request of the creditor to whom such debt is owed, and after notice and a hearing, the court determines such debt to be excepted from discharge under paragraph (2), (4), or (6), as the case may be, of subsection (a) of this section.

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1312

 92 STAT. 2592

11 USC 524.

Post, pp. 2624, 2638, 2650.

Post, p. 2650.

11 USC prec. 1. • ^'

'

PUBLIC LAW 95-598—NOV. 6, 1978 (d) If a creditor requests a determination of dischargeability of a consumer debt under subsection (a)(2) of this section, and such debt is discharged, the court shall grant judgment against such creditor and in favor of the debtor for the costs of, and a reasonable attorney's fee for, the proceeding to determine dischargeability, unless such granting of judgment would be clearly inequitable. § 524. Effect of discharge (a) A discharge in a case under this title— (1) voids any judgment at any time obtained, to the extent that such judgment is a determination of the personal liability of the debtor with respect to any debt discharged under section 727, 944, 1141, or 1328 of this title, whether or not discharge of such debt is waived; (2) operates as an injunction against the commencement or continuation of an action, the employment of process, or any act, to collect, recover or offset any such debt as a personal liability of the debtor, or from property of the debtor, whether or not discharge of such debt is waived; and (3) operates as an injunction against the commencement or continuation of an action, the employment of process, or any act, to collect or recover from, or offset against, property of the debtor of the kind specified in section 541(a)(2) of this title that is acquired after the commencement of the case, on account of any allowable community claim, except a community claim that is excepted from discharge under section 523 or 1328(c)(1) of this title, or that would be so excepted, determined in accordance with the provisions of sections 523(c) and 523(d) of this title, in a case concerning the debtor's spouse commenced on the date of the filing of the petition in the case concerning the debtor, whether or not discharge of the debt based on such community claim is waived. (b) Subsection (a)(3) of this section does not apply if— (1)(A) the debtor's spouse is a debtor in a case under this title, or a bankrupt or a debtor in a case under the Bankruptcy Act, commenced within six years of the date of the filing of the petition in the case concerning the debtor; and (B) the court does not grant the debtor's spouse a discharge , in such case concerning the debtor's spouse; or (2)(A) the court would not grant the debtor's spouse a discharge in a case under chapter 7 of this title concerning such ' ' spouse commenced on the date of the filing of the petition in the case concerning the debtor; and (B) a determination that the court would not so grant such discharge is made by the bankruptcy court within the time and in the manner provided for a determination under section 727 of this title of whether a debtor is granted a discharge. (c) An agreement between a holder of a claim and the debtor, the consideration for which, in whole or in part, is based on a debt that is dischargeable in a case under this title is enforceable only to any extent enforceable under applicable nonbankruptcy law, whether or not discharge of such debt is waived, only if— (1) such agreement was made before the granting of the discharge under section 727, 1141, or 1328 of this title; (2) the debtor has not rescinded such agreement within 30 days after such agreement becomes enforceable;

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1313

 PUBLIC LAW 95-598—NOV. 6, 1978 (3) the provisions of subsection (d) of this section have been complied with; and (4) in a case concerning an individual, to the extent that such debt is a consumer debt that is not secured by real property of the debtor, the court approves such agreement as— (A)(i) not imposing an undue hardship on the debtor or a dependent of the debtor; and (ii) in the best interest of the debtor; or (B)(i) entered into in good faith; and -f'* (ii) in settlement of litigation under section 523 of this title, or providing for redemption under section 722 of this title. (d) In a case concerning an individual, when the court has determined whether to grant or not to grant a discharge under section 727, 1141, or 1328 of this title, the court shall hold a hearing at which the debtor shall appear in person. At such hearing, the court shall inform the debtor that a discharge has been granted or the reason why a discharge has not been granted. If a discharge has been granted and if the debtor desires to make an agreement of the kind specified in subsection (c) of this section, then at such hearing the court shall— (1) inform the debtor— (A) that such an agreement is not required under this title, under nonbankruptcy law, or under any agreement not made % in accordance with the provisions of subsection (c) of this section; and (B) of the legal effect and consequences of— -, (i) an agreement of the kind specified in subsection (c) of this section; and (ii) a default under such an agreement; (2) determine whether the agreement that the debtor desires to make complies with the requirements of subsection (c)(4) of this subsection, if the consideration for such agreement is based in whole or in part on a consumer debt that is not secured by real property of the debtor. (e) Except as provided in subsection (a)(3) of this section, discharge of a debt of the debtor does not affect the liability of any other entity on, or the property of any other entity for, such debt. §525. Protection against discriminatory treatment Except as provided in Perishable Agricultural Commodities Act, 1930 (7 U.S.C. 499a-499s), the Packers and Stockyards Act, 1921 (7 U.S.C. 181-229), and section 1 of the Act entitled "An Act making appropriations for the Department of Agriculture for the fiscal year ending June 30, 1944, and for other purposes," approved July 12, 1943 (57 Stat. 422; 7 U.S.C. 204), a governmental unit may not deny, revoke, suspend, or refuse to renew a license, permit, charter, franchise, or other similar grant to, condition such a grant to, discriminate with respect to such a grant against, deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act, or another person with whom such bankrupt or debtor has been associated, solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.

92 STAT. 2593

Hearing, Post, pp. 2638, 2650.

11 USC 525.

11 USC prec. 1.

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1314

 92 STAT. 2594

PUBLIC LAW 95-598—NOV. 6, 1978 f '

11 USC 541. Ante, pp. 2558, 2559.

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SUBCHAPTER III — THE ESTATE

§ 541. Property of the estate (a) The commencement of a case under under section 301, 302, or 303 of this title creates an estate. Such estate is comprised of all the following property, wherever located: (1) Except as provided in subsections (b) and (c)(2) of this section, all legal or equitable interests of the debtor in property as of the commencement of the case. (2) All interests of the debtor and the debtor's spouse in community property as of the commencement of the case that is— (A) under the sole, equal, or joint management and control of the debtor; or (B) liable for an allowable claim against the debtor, or for both an allowable claim against the debtor and an allowable claim against the debtor's spouse, to the extent that such interest is so liable. (3) Any interest in property that the trustee recovers under section 643, 550, 553, or 723 of this title. (4) Any interest in property preserved for the benefit of or ordered transferred to the estate under section 510(c) or 551 of this title. (5) An interest in property that would have been property of the estate if such interest had been an interest of the debtor on the date of the filing of the petition, and that the debtor acquires or r: becomes entitled to acquire within 180 days after such date— (A) by bequest, devise, or inheritance; (B) as a result of a property settlement agreement with the debtor's spouse, or of an interlocutory or final divorce decree; or (C) as a beneficiary of a life insurance policy or of a death i. • benefit plan. (6) Proceeds, product, offspring, rents, and profits of or from property of the estate, except such as are earnings from services performed by an individual debtor after the commencement of the case. (7) Any interest in property that the estate acquires after the commencement of the case. (b) Property of the estate does not include any power that the debtor may only exercise solely for the benefit of an entity other than the debtor. (c)(1) Except as provided in paragraph (2) of this subsection, an interest of the debtor in property becomes property of the estate under subsection (a)(1), (a)(2), or (a)(5) of this section notwithstanding any provision— (A) that restricts or conditions transfer of such interest by the debtor; or (B) that is conditioned on the insolvency or financial condition of the debtor, on the commencement of a case under this title, or ^^ Q^^ appointment of or the taking possession by a trustee in a case under this title or a custodian, and that effects or gives an option to effect a forfeiture, modification, or termination of the debtor's interest in property. (2) A restriction on the transfer of a beneficial interest of the debtor in a trust that is enforceable under applicable nonbankruptcy law is enforceable in a case under this title. „,^ ,^.„,,

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1315

 PUBLIC LAW 95-598—NOV. 6, 1978

92 STAT. 2595

(d) Property in which the debtor holds, as of the commencement of the case, only legal title and not an equitable interest, such as a mortgage secured by real property, or an interest in such a mortgage, sold by the debtor but as to which the debtor retains legal title to service or supervise the servicing of such mortgage or interest, becomes property of the estate under subsection (a) of this section only to the extent of the debtor's legal title to such property, but not to the extent of any equitable interest in such property that the debtor does not hold. (e) The estate shall have the benefit of any defense available to the debtor as against an entity other than the estate, including statutes of limitation, statutes of frauds, usury, and other personal defenses, A waiver of any such defense by the debtor after the commencement of the case does not bind the estate. § 542. Turnover of property to the estate (a) Except as provided in subsection (c) or (d) of this section, an entity, other than a custodian, in possession, custody, or control, during the case, of property that the trustee may use, sell, or lease under section 363 of this title, or that the debtor may exempt under section 522 of this title, shall deliver to the trustee, and account for, such property or the value of such property, unless such property is of inconsequential value or benefit to the estate. (b) Except as provided in subsection (c) or (d) of this section, an entity that owes a debt that is property of the estate and that is matured, payable on demand, or payable on order, shall pay such debt to, or on the order of, the trustee, except to the extent that such debt may be offset under section 553 of this title against a claim against the debtor. (c) Except as provided in section 362(a)(7) of this title, an entity that has neither actual notice nor actual knowledge of the commencement of the case concerning the debtor may transfer property of the estate, or pay a debt owing to the debtor, in good faith and other than in the manner specified in subsection (d) of this section, to an entity other than the trustee, with the same effect as to the entity making such transfer or payment as if the case under this title concerning the debtor had not been commenced. (d) A life insurance company may transfer property of the estate or property of the debtor to such company in good faith, with the same effect with respect to such company as if the case under this title concerning the debtor had not been commenced, if such transfer is to pay a premium or to carry out a nonforfeiture insurance option, and is required to be made automatically, under a life insurance contract with such company that was entered into before the date of the filing of the petition and that is property of the estate. (e) Subject to any applicable privilege, after notice and a hearing, the court may order an attorney, accountant, or other person that holds recorded information, including books, documents, records, and papers, relating to the debtor's property or financial affairs, to disclose such recorded information to the trustee. § 543. Turnover of property by a custodian (a) A custodian with knowledge of the commencement of a case under this title concerning the debtor may not make any disbursement from, or take any action in the administration of, property of the debtor, proceeds of such property, or property of the estate, in the possession, custody, or control of such custodian, except such action as is necessary to preserve such property.

-^'^t >" -. ' -;'""•'• ' 11 USC 542.

Ante, p. 2572.

Ante, p. 2570.

H USC 543.

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1316

 92 STAT. 2596

Notice and hearing. ,^^,.._ ^"^ " ' ^ ,,. '

11 USC 544.

^^- 5*;.

PUBLIC LAW 95-598—NOV. 6, 1978 (b) A custodian shall— (1) deliver to the trustee any property of the debtor transferred to such custodian, or proceeds of such property, that is in such custodian's possession, custody, or control on the date that such custodian acquires knowledge of the commencement of the case; and (2) file an accounting of any property of the debtor, or proceeds of such property, that, at any time, came into the possession, custody, or control of such custodian. (c) The court, after notice and a hearing, shall— (1) protect all entities to which a custodian has become obligated with respect to such property; (2) provide for the payment of reasonable compensation for services rendered and costs and expenses incurred by such custodian; and (3) surcharge such custodian, other than an assignee for the benefit of the debtor's creditors that was appointed or took possession more than 120 days before the date of the filing of the petition, for any improper or excessive disbursement, other than a disbursement that has been made in accordance with applicable law or approved, after notice and a hearing, by a court of competent jurisdiction before the commencement of the case under this title, (d) The bankruptcy court may, after notice and a hearing, excuse compliance with subsection (a), (b), or (c) of this section, if the interests of creditors, and, if the debtor is not insolvent, of equity security holders, would be better served by permitting a custodian to continue in possession, custody, or control of such property. § 544. Trustee as lien creditor and as successor to certain creditors and purchasers (a) The trustee shall have, as of the commencement of the case, and without regard to any knowledge of the trustee or of any creditor, the rights and powers of, or may avoid any transfer of property of the debtor or any obligation incurred by the debtor that is voidable by— (1) a creditor that extends credit to the debtor at the time of the commencement of the case, and that obtains, at such time and with respect to such credit, a judicial lien on all property on which a creditor on a simple contract could have obtained a judicial lien, whether or not such a creditor exists; (2) a creditor that extends credit to the debtor at the time of the commencement of the case, and obtains, at such time and with respect to such credit, an execution against the debtor that is returned unsatisfied at such time, whether or not such a creditor exists; and (3) a bona fide purchaser of real property from the debtor, against whom applicable law permits such transfer to be perfected, that obtains the status of a bona fide purchaser at the time of the commencement of the case, whether or not such a purchaser exists. (b) The trustee may avoid any transfer of an interest of the debtor in property or any obligation incurred by the debtor that is voidable under applicable law by a creditor holding an unsecured claim that is allowable under section 502 of this title or that is not allowable only under section 502(e) of this title.

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1317

 PUBLIC LAW 95-598—NOV. 6, 1978

92 STAT. 2597

§ 545. Statutory liens The trustee may avoid the fixing of a statutory lien on property of the debtor to the extent that such lien— (1) first becomes effective against the debtor— (A) when a case under this title concerning the debtor is is commenced; (B) when an insolvency proceeding other than under this title concerning the debtor is commenced; (C) when a custodian is apponted or takes possession; (D) when the debtor becomes insolvent; (E) when the debtor's financial condition fails to meet a specified standard; or (F) at the time of an execution against property of the '' debtor levied at the instance of an entity other than the holder of such statutory lien; (2) is not perfected or enforceable on the date of the filing of the petition against a bona fide purchaser that purchases such property on the date of the filing of the petition, whether or not such a purchaser exists; (3) IS for rent; or (4) is a lien of distress for rent. § 546. Limitations on avoiding powers (a) An action or proceeding under section 544, 545, 547, 548, or 553 of this title may not be commenced after the earlier of— (1) two years after the appointment of a trustee under section 702, 1104, 1163, or 1302 of this title; and (2) the time the case is closed or dismissed. (b) The rights and powers of the trustee under section 544, 545, or 549 of this title are subject to any generally applicable law that permits perfection of an interest in property to be effective against an entity that acquires rights in such property before the date of such perfection. If such law requires seizure of such property or commencement of an action to accomplish such perfection, and such property has not been seized or such action has not been commenced before the date of the filing of the petition, such interest in such property shall be perfected by notice within the time fixed by such law for such seizure or commencement. (c) The rights and powers of the trustee under sections 544(a), 545, 547, and 549 of this title are subject to any statutory right or commonlaw right of a seller, in the ordinary course of such seller's business, of goods to the debtor to reclaim such goods if the debtor has received such goods while insolvent, but— (1) such a seller may not reclaim any such goods unless such seller demands in writing reclamation of such goods before ten days after receipt of such goods by the debtor; and (2) the court may deny reclamation to a seller with such a right of reclamation that has made such a demand only if court— (A) grants the claim of such a seller priority as an administrative expense; or (B) secures such claim by a lien. § 547. Preferences (a) I n this section— (1) "inventory" means personal property leased or furnished, held for sale or lease, or to be furnished under a contract for

H USC 545.

11 USC 546.

Post, pp. 2627, 2641, 2645.

11 USC 547. Definitions.

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1318

 92 STAT. 2598 SM:>aiJ if

PUBLIC LAW 95-598—NOV. 6, 1978

service, raw materials, work in process, or materials used or con•'.,. sumed in a business, including farm products such as crops or livestock, held for sale or lease; (2) "new value" means money or money's worth in goods, services, or new credit, or release by a transferee of property previously transferred to such transferee in a transaction that is neither void nor voidable by the debtor or the trustee under any applicable law, but does not include an obligation substituted for an existing obligation; (3) "receivable" means right to payment, whether or not such right has been earned by performance; and (4) a debt for a tax is incurred on the day when such tax is last payable, including any extension, without penalty. (b) Except as provided in subsection (c) of this section, the trustee may avoid any transfer of property of the debtor— (1) to or for the benefit of a creditor; (2) for or on account of an antecedent debt owed by the debtor before such transfer was made; (3) made while the debtor was insolvent; (4) made— (A) on or within 90 days before the date of the filing of 1,,.,. ^^^ petition; or >?<!'..,e J ^g^ between 90 days and one year before the date of the ^ filing of the petition, if such creditor, at the time of such transfer— • (i) was an insider; and (ii) had reasonable cause to believe the debtor was " '- '^ insolvent at the time of such transfer; and (5) that enables such creditor to receive more than such creditor would receive if— (A) the case were a case under chapter 7 of this title; (B) the transfer had not been made; and (C) such creditor received payment of such debt to the extent provided by the provisions of this title. (c) The trustee may not avoid under this section a transfer— (1) to the extent that such transfer was— (A) intended by the debtor and the creditor to or for whose benefit such transfer was made to be a contemporaneous exchange for new value ^ v e n to the debtor; and (B) m fact a substantially contemporaneous exchange; (2) to the extent that such transfer was— (A) in payment of a debt incurred in the ordinary course of business or financial affairs of the debtor and the transferee; (B) made not later than 45 days after such debt was incurred; (C) made in the ordinary course of business or financial affairs of the debtor and the transferee; and , (D) made according to ordinary business terms; (3) of a security interest in property acquired by the debtor— (A) to the extent such security interest secures new value that was— (i) given at or after the signing of a security agreement that contains a description of such property as collateral; (ii) given by or on behalf of the secured party under such agreement;

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1319

 PUBLIC LAW 95-598—NOV. 6, 1978 .• '>

(iii) given to enable the debtor to acquire such property; and (iv) in fact used by the debtor to acquire such property; and (B) that is perfected before 10 days after such security interest attaches; (4) to or for the benefit of a creditor, to the extent that, after such transfer, such creditor gave new value to or for the benefit of the debtor— (A) not secured by an otherwise unavoidable security interest; and (B) on account of which new value the debtor did not make an otherwise unavoidable transfer to or for the benefit of such creditor; (5) of a perfected security interest in inventory or a receivable or the proceeds of either, except to the extent that the aggregate of all such transfers to the transferee caused a reduction, as of the date of the filing of the petition and to the prejudice of other creditors holding unsecured claims, of any amount by which the debt secured by such security interest exceeded the value of all security interest for such debt on the later of— (A)(i) with respect to a transfer to which subsection (b)(4)(A) of this section applies, 90 days before the date of the filing of the petition; or (ii) with respect to a transfer to which subsection (b)(4) (B) of this section applies, one year before the date of the filing of the petition; and (B) the date on which new value was first given under the security agreement creating such security interest; or (6) that is the fixing of a statutory lien that is not avoidable under section 545 of this title. (d) A trustee may avoid a transfer of property of the debtor transferred to secure reimbursement of a surety that furnished a bond or other obligation to dissolve a judicial lien that would have been avoidable by the trustee under subsection (b) of this section. The liability of such surety under such bond or obligation shall be discharged to the extent of the value of such property recovered by the trustee or the amount paid to the trustee. (e)(1) For the purposes of this section— (A) a transfer of real property other than fixtures, but including the interest of a seller or purchaser under a contract for the sale of real property, is perfected when a bona fide purchaser of such property from the debtor against whom applicable law permits such transfer to be perfected cannot acquire an interest that is superior to the interest of the transferee; and (B) a transfer of a fixture or property other than real property is perfected when a creditor on a simple contract cannot acquire a judicial lien that is superior to the interest of the transferee. (2) For the purposes of this section, except as provided in paragraph (3) of this subsection, a transfer is made— (A) at the time such transfer takes effect between the transferor and the transferee, if such transfer is perfected at, or within 10 days after, such time; (B) at the time such transfer is perfected, if such transfer is perfected after such 10 days; or

92 STAT. 2599

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1320

 92 STAT. 2600

,

11 USC 548.

"Value".

PUBLIC LAW 95-598—NOV. 6, 1978

(C) immediately before the date of the filing of the petition, if such transfer is not perfected at the later of— (i) the commencement of the case; and (ii) 10 days after such transfer takes effect between the transferor and the transferee. (3) For the purposes of this section, a transfer is not made until the debtor has acquired rights in the property transferred. (f) For the purposes of this section, the debtor is presumed to have been insolvent on and during the 90 days immediately preceding the date of the filing of the petition. § 548. Fraudulent transfers and obligations (a) The trustee may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, if the debtor— (1) made such transfer or incurred such obligation with actual intent to hinder, delay, or defraud any entity to which the debtor was or became, on or after the date that such transfer occurred or such obligation was incurred, indebted; or (2)(A) received less than a reasonably equivalent value in exchange for such transfer or obligation; and (B)(i) was insolvent on the date that such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation; (ii) was engaged in business, or was about to engage in business or a transaction, for which any property remaining with the debtor was an unreasonably small capital; or (iii) intended to incur, or believed that the debtor would incur, debts that would be beyond the debtor's ability to pay as such debts matured. (b) The trustee of a partnership debtor may avoid any transfer of an interest of the debtor in property, or any obligation incurred by the debtor, that was made or incurred on or within one year before the date of the filing of the petition, to a general partner in the debtor, if the debtor was insolvent on the date such transfer was made or such obligation was incurred, or became insolvent as a result of such transfer or obligation. (c) Except to the extent that a transfer or obligation voidable under this section is voidable under section 544, 545, or 547 of this title, a transferee or obligee of such a transfer or obligation that takes for value and in good faith has a lien on any interest transferred, may retain any lien transferred, or may enforce any obligation incurred, as the case may be, to the extent that such transferee or obligee gave value to the debtor in exchange for such transfer or obligation. (d)(1) For the purposes of this section, a transfer is made when such transfer becomes so far perfected that a bona fide purchaser from the debtor against whom such transfer could have been perfected cannot acquire an interest in the property transferred that is superior to the interest in such property of the transferee, but if such transfer is not so perfected before the commencement of the case, such transfei' occurs immediately before the date of the filing of the petition. (2) In this section— (A) "value" means property, or satisfaction or securing of a present or antecedent debt of the debtor, but does not include an unperformed promise to furnish support to the debtor or to a relative of the debtor; and

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1321

 PUBLIC LAW 95-598—NOV. 6, 1978

92 STAT. 2601

(B) a commodity broker or forward contract merchant that receives a margin payment, as defined in section 761(15) of this title, takes for value. § 549. Postpetition transactions 11 USC 549. (a) Except as provided in subsection (b) and (c) of this section, the trustee may avoid a transfer of property of the estate— (1) that occurs after the commencement of the case; and (2)(A) that is authorized under section 303(f) or 542(c) of Ante, p. 2559. this title; or (B) that is not authorized under this title or by the court, (b) I n an involuntary case, a transfer that occurs after the com- fti^si'?" I's? mencement of such case but before the order for relief is valid against the trustee to the extent of any value, including services, but not including satisfaction or securing of a debt that arose before the commencement of the case, given after the commencement of the case in exchange for such transfer, notwithstanding any notice or knowledge of the case that the transferee has. (c) The trustee may not avoid under subsection (a) o,f this section a transfer, to a good faith purchaser without knowledge of the commencement of the case and for present fair equivalent value or to a purchaser at a judicial sa^e, of real property located other than in the county in which the case is commenced, unless a copy of the petition was filed in the office where conveyances of real property in such county are recorded befoie such transfer was so far perfected that a •. ••bona fide purchaser of such property against whom applicable law permits such transfer to be perfected cannot acquire an interest that is superior to the interest of such good faith or judicial sale purchaser. A good faith purchaser, without knowledge of the commencement of , the case and for less than present fair equivalent value, of real property located other than in the county in which the case is commenced, under a transfer that the trustee may avoid under this section, has a lien on the property transferred to the extent of any present value given, unless a copy of the petition was so filed before such transfer was so perfected. (d) A n action or proceeding under this section may not be com• '». - -i;? menced after the earlier of— (1) two years after the date of the transfer sought to be avoided; and (2) the time the case is closed or dismissed. § 550. Liability of transferee of avoided transfer 11 USC 550. (a) Except as otherwise provided in this section, to the extent that a transfer is avoided under section 544, 545, 547, 548, 549, or 724(a) of this title, the trustee may recover, for the benefit of the estate, the property transferred, or, if the court so orders, the value of such property, from— (1) the initial transferee of such transfer or the entity for whose benefit such transfer was m a d e; or ' r -. l (2) any immediate or mediate transferee of such initial transferee. (b) The trustee may not recover under section (a)(2) of this section from— (1) a transferee that takes for value, including satisfaction or securing of a present or antecedent debt, in good faith, and without knowledge of the voidability of the transfer avoided; or ^ ' (2) any immediate or mediate good faith transferee of such transferee.
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text:
Page:United States Statutes at Large Volume 92 Part 2.djvu/1322

 92 STAT. 2602

PUBLIC LAW 95-598—NOV. 6, 1978 (c) The trustee is entitled to only a single satisfaction under subsection (a) of this section. (d)(1) A good faith transferee from whom the trustee may recover under subsection (a) of this section has a lien on the property recovered to secure the lesser of— (A) the cost, to such transferee, of any improvement made after the transfer, less the amount of any profit realized by such

j3,|i

^t^rit

transferee from such property; and

"Improvement".

'

11 USC 551.

11 USC 552.

Ante, p. 2572.

^ 11 USC 553. Ante, p. 2570.

Ante, p. 2579.

(B) any increase m value as a result of such improvement, of the property transferred. (2) In this subsection, "improvement" includes— (A) physical additions or changes to the property transferred; (B) repairs to such property; ^C) payment of any tax on such property; (D) payment of any debt secured by a lien on such property; (E) discharge of any lien against such property that is superior or equal to the rights of the trustee; and (F) preservation of such property. (e) An action or proceeding under this section may not be commenced after the earlier of— (1) one year after the avoidance of the transfer on account of which recovery under this section is sought; and (2) the time the case is closed or dismissed. § 551. Automatic preservation of avoided transfer Any transfer avoided under section 522, 544, 545, 547, 648, 549, or 724(a) of this title, or any lien void under section 506(d) of this title, is preserved for the benefit of the estate but only with respect to property of the estate. § 552. Postpetition effect of security interest (a) Except as provided in subsection (b) of this section, property acquired by the estate or by the debtor after the commencement of the case is not subject to any lien resulting from any security agreement entered into by the debtor before the commencement of the case. (b) Except as provided in sections 363, 506(c), 544, 545, 547, and 548 of this title, if the debtor and a secured party enter into a security agreement before the commencement of the case and if the security interest created by such security agreement extends to property of the debtor acquired before the commencement of the case and to proceeds, product, offspring, rents, or profits of such property, then such security interest extends to such proceeds, product, offspring, rents, or profits acquired by the estate after the commencement of the case to the extent provided by such security agreement and by applicable nonbankruptcy law, except to the extent that the court, after notice and a hearing and based on the equities of the case, orders otherwise. § 553. Setoff (a) Except as otherwise provided in this section and in sections 362 and 363 of this title, this title does not affect any right of a creditor to offset a mutual debt owing by such creditor to the debtor that arose before the commencement of the case under this title against a claim of such creditor against the debtor that arose before the commencement of the case, except to the extent that— (1) the claim of such creditor against the debtor is disallowed other than under section 502(b)(3) of this title; (2) such claim was transferred, by an entity other than the debtor, to such creditor—

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text:
Page:United States Statutes at Large Volume 92 Part 2.djvu/1323

 PUBLIC LAW 95-598—NOV. 6, 1978

92 STAT. 2603

fiti *i\?r

^^^ after the commencement of the case; or (B)(i) after 90 days before the date of the filing of the petition; and (ii) while the debtor was insolvent; or (3) the debt owed to the debtor by such creditor was incurred by such creditor— (A) after 90 days before the date of the filing of the petition; (B) while the debtor was insolvent; and (C) for the purpose of obtaining a right of setoff against the debtor. (b)(1) Except with respect to a setoff of a kind described in section 362(b)(6) or 365(h)(1) of this title, if a creditor offsets a mutual debt owing to the debtor against a claim against the debtor on or within 90 days before the date of the filing of the petition, then the trustee may recover from such creditor the amount so offset to the extent that any insufficiency on the date of such setoff is less than the insufficiency on the later of— (A) 90 days before the date of the filing of the petition; and (B) the first date during the 90 days immediately preceding the date of the filing of the petition on which there is an insufficiency. (2) In this subsection, "insufficiency" means amount, if any, by which a claim against the debtor exceeds a mutual debt owing to the debtor by the holder of such claim. (c) For the purposes of this section, the debtor is presumed to have been insolvent on and during the 90 days immediately preceding the date of the filing of the petition. § 554. Abandonment of property of the estate (a) After notice and a hearing, the trustee may abandon any property of the estate that is burdensome to the estate or that is of inconsequential value to the estate. (b) On request of a party in interest and after notice and a hearing, the court may order the trustee to abandon any property of the estate that is burdensome to the estate or that is of mconsequential value to the estate. (c) Unless the court orders otherwise, any property that is scheduled under section 521(1) of this title and that is not administered before a case is closed under section 350 of this title is deemed abandoned. (d) Unless the court orders otherwise, property of the estate that is not abandoned under section (a) or (b) of this section and that is not administered in the case remains property of the estate.

Ante, fp. 2570, 2574.

"insufficiency",

11 USC 554. ' *- ' -*

Ante, p. 2569. ^; M\ V'N J 11

CHAPTER 7—LIQUIDATION SUBCHAPTER I—OFFICERS AND ADMINISTRATION Sec.

701. 702. 703. 704. 705. 706.

Interim trustee. Election of trustee. Succesor trustee. Duties of trustee. Creditors' committee. Conversion.

707. D i s m i s s a l.

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1324

 92 STAT. 2604

PUBLIC LAW 95-598—NOV. 6, 1978 SUBCHAPTER II—COLLECTION, LIQUIDATION, AND DISTRIBUTION OF THE ESTATE

721. 722. 723. 724. 725. 726. 727. 728.

Authorization to operate business. Redemption. Rights of partnership trustee against general partners. Treatment of certain liens. Disposition of certain property. Distribution of property of the estate. Discharge. Special tax provisions. SUBCHAPTER III—STOCKBROKER LIQUIDATION

741. 742. 743. 744. 745. 746. 747. 748. 749. 750. 751. 752.

.:

Definitions for this subchapter. Effect of section 362 of this title in this subchapter. Notice. Executory contracts. Treatment of accounts. Extent of customer claims. Subordination of certain customer claims. Reduction of securities to money. Voidable transfers. Distribution of securities. Customer name securities. Customer property. SUBCHAPTER IV—COMMODITY BROKER LIQUIDATION

'*

761. 762. 763. 764. 765. 766.

Definitions for this subchapter. Notice to the Commission and right to be heard. Treatment of accounts. Voidable transfers. Customer instructions. Treatment of customer property.

SUBCHAPTER I—OFFICERS AND ADMINISTRATION 11 USC 701.

Ante, p. 2562. 11 USC 702.

Ante, p. 2564.

§ 701. Interim trustee (a) Promptly after the order for relief under this chapter, the court shall appoint one disinterested person that is a member of the panel of private trustees established under section 604(f) of title 28 or that was serving as trustee in the case immediately before the order for relief under this chapter to serve as interim trustee in the case. (b) The service of an interim trustee under this section terminates when a trustee elected or designated under section 702 of this title to serve as trustee in the case qualifies under section 322 of this title. (c) An interim trustee serving under this section is a trustee in a case under this title. §702. Election of trustee (a) A creditor may vote for a candidate for trustee only if such creditor— (1) holds an allowable, imdisputed, fixed, liquidated, unsecured claim of a kind entitled to distribution under section 726(a)(2), 726(a)(3), or 726 (a)(4) of this title; (2) does not have an interest materially adverse, other than an equity interest that is not substantial in relation to such creditor's interest as a creditor, to the interest of creditors entitled to such distribution; and (3) is not an insider. (b) At the meeting of creditors under section 341 of this title, creditors may elect one person to serve as trustee in the case if election

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1325

 PUBLIC LAW 95-598—NOV. 6, 1978 of a trustee is requested by creditors that may vote under subsection (a) of this section, and that hold at least 20 percent in amount of the claims specified in subsection (a)(1) of this section that are held by creditors that may vote under subsection (a) of this section. (c) A candidate for trustee is elected trustee if— (1) creditors holding at least 20 percent in amount of the claims specified in subsection (a)(1) of this section that are held by creditors that may vote under subsection (a) of this section vote; and _ (2) such candidate receives the votes of creditors holding a majority in amount of claims specified in subsection (a)(1) of this section that are held by creditors that vote for trustee. (d) If a trustee is not elected under subsection (c) of this section, then the interim trustee shall serve as trustee in the case. § 703. Successor trustee (a) If a trustee dies or resigns during a case, fails to qualify under section 322 of this title, or is removed under section 324 of this title. creditors may elect, in the manner specified in section 702 of this title, a person to fill the vacancy in the office of trustee. (b) Pending election of a trustee under subsection (a) of this section, if necessary to preserve or prevent loss to the estate, the court may appoint an interim trustee in the manner specified in section 701(a) of this title. Sections 701(b) and 701(c) of this title apply to such interim trustee. (c) If creditors do not elect a successor trustee under subsection (a) of this section, or if a trustee is needed in a case reopened under section 350 of this title, then the court shall appoint one disinterested person that is a member of the panel of private trustees established under section 604(f) of title 28 to serve as trustee in the case. § 704. Duties of trustee The trustee shall— (1) collect and reduce to money the property of the estate for which such trustee serves, and close up such estate as expeditiously as is compatible with the best interests of parties in interest; (2) be accountable for all property received; (3) investigate the financial affairs of the debtor; (4) if a purpose would be served, examine proofs of claims and object to the allowance of any claim that is improper; (5) if advisable, oppose the discharge of the debtor; (6) unless the court orders otherwise, furnish such information concerning the estate and the estate's administration as is requested by a party in interest; (7) if the business of the debtor is authorized to be operated, file with the court and with any governmental unit charged with responsibility for collection or determination of any tax arising out of such operation, periodic reports and summaries of the operation of such business, including a statement of receipts and disbursements, and such other information as the court requires; and (8) make a final report and file a final account of the administration of the estate with the court. § 705. Creditors' committee (a) At the meeting under section 341(a) of this title, creditors that may vote for a trustee under section 702(a) of this title may elect a

92 STAT. 2605

,«,. li t£

,,^.^ ^

11 USC 703. Ante, p. 2562.

vOt >£iJ i

Ante, p. 2569. 11 USC 704.

'

".• '

'

^.^.

11 USC 705. Ante, p. 2564.

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Page:United States Statutes at Large Volume 92 Part 2.djvu/1326

 92 STAT. 2606

PUBLIC LAW 95-598—NOV. 6, 1978

committee of not fewer than three, and not more than eleven, creditors, each of whom holds an allowable unsecured claim of a kind entitled to distribution under section 726(a)(2) of this title. (b) A committee elected under subsection (a) of this section may consult with the trustee in connection with the administration of the estate, make recommendations to the trustee respecting the performance of the trustee's duties, and submit to the court any question affecting the administration of the estate. 11 USC 706. § 706. Conversion (a) The debtor may convert a case under this chapter to a case Post, pp. 2626, under chapter 11 or 13 of this title at any time, if the case has not been 2645. converted under section 1112 or 1307 of this title. Any waiver of the Post, pp. 2630, right to convert a case under this subsection is unenforceable. 2^^(b) On request of a party in interest and after notice and a hearing, the court may convert a case under this chapter to a case under chapter 11 of this title at any time. (c) The court may not convert a case under this chapter to a case under chapter 13 of this title unless the debtor requests such conversion. (d) Notwithstanding any other provision of this section, a case may not be converted to a case under another chapter of this title unless the debtor may be a debtor under such chapter. 11 USC 707. § 707. Dismissal The court may dismiss a case under this chapter only after notice and a hearing and only for cause, including— (1) unreasonable delay by the debtor that is prejudicial to creditors; and (2) nonpayment of any fees and charges required under 28 USC 1911 et chapter 123 of title 28. SUBCHAPTER II—COLLECTION, LIQUIDATION, AND DISTRIBUTION OF THE E S T A T E 11 USC 721.

11 USC 722.

Ante, p. 2586. 11 USC 723.

§ 721. Authorization to operate business The court may authorize the trustee to operate the business of the debtor for a limited period, if such operation is in the best interest of the estate and consistent with the orderly liquidation of the estate. § 722. Redemption An individual debtor may, whether or not the debtor has waived the right to redeem under this section, redeem tangible personal property intended primarily for personal, family, or household use, from a Hen securing a dischargeable consumer debt, if such property is exempted under section 522 of this title or has been abandoned under section 554 of this title, by paying the holder of such lien the amount of the allowed secured claim of such holder that is secured by such lien. § 723. Rights of partnership trustee against general partners (a) If there is a deficiency of property of the estate to pay in full all claims allowed in a case under this title concerning a partnership, then each general partner in such partnership is liable to the trustee for the full amount of such deficiency. (b) To the extent practicable, the trustee shall first seek recovery of such deficiency from any general partner in such partnership that is not a debtor in a case under this title. Pending determination of such deficiency, the court may order any such partner to provide the estate

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text:
Page:United States Statutes at Large Volume 92 Part 2.djvu/1327

 PUBLIC LAW 95-598—NOV. 6, 1978 with indemnity for, or assurance of payment of, any deficiency recoverable from such partner, or not to dispose of property. (c) Notwithstanding section 728(c) of this title, the trustee has a claim against the estate of each general partner in such partnership that is a debtor in a case under this title for the full amount of all claims of creditors allowed in the case concerning such partnership. Notwithstanding section 502 of this title, there shall not be allowed in such case a claim against such partner on which both such partner and such partnership are liable, except to any extent that such claim is secured only by property of such partner and not be property of such partnership. The claim of the trustee under this subsection is entitled to distribution in such case under section 726(a) of this title the same as any other claim of the kind specified in such section. (d) If the aggregate that the trustee recovers from the estates of general partners under subsection (c) of this section is greater than any deficiency not recovered under subsection (b) of this section, the court, after notice and a hearing, shall determine an equitable distribution of the surplus so recovered, and the trustee shall distribute such surplus to the estates of the general partners in such partnership according to such determination. § 724. Treatment of certain liens (a) The trustee may avoid a lien that secures a claim of a kind specified in section 726(a)(4) of this title. (b) Property in which the estate has an interest and that is subject to a lien that is not avoidable under this title and that secures an allowed claim for taxes, or proceeds of such property, shall be distributed— (1) first, to any holder of an allowed claim secured by a lien on such property that is not avoidable under this title and that is senior to such tax lien; (2) second, to claims specified in sections 507(a)(1), 507(a) (2), 507(a)(3), 507(a)(4), and 507(a)(5) of this title, to the extent of the amount of such allowed tax claim that is secured by such tax lien; (3) third, to the holder of such tax lien, to any extent that such holder's allowed claim that is secured by such tax lien exceeds any amount distributed under paragraph (2) of this subsection; (4) fourth, to any holder of an allowed claim secured by a lien on such property that is not avoidable under this title and that is junior to such tax lien; (5) fifth, to the holder of such tax lien, to the extent that such holder's allowed claim secured by such tax lien is not paid under paragraph (3) of this subsection; and (6) sixth, to the estate. (c) If more than one creditor is entitled to distribution under a particular paragraph of subsection (b) of this section, distribution to such creditor's under such paragraph shall be in the same order as distribution to such creditors would have been other than under this section. (d) A statutory lien whose priority is determined in the same manner as the priority of a tax lien under section 6323 of the Internal Revenue Code of 1954 (26 U.S.C. 6323) shall be treated under subsection (b) of this section the same as a tax lien. § 725. Disposition of certain property After the commencement of a case under this chapter, but before

92 STAT. 2607 ./v,-

Ante, p. 2579. ? •^'^•^^-

-"<' • -"•"•'

11 USC 724.

Ante, p. 2583.

11 USC 725.

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text:
Page:United States Statutes at Large Volume 92 Part 2.djvu/1328

 92 STAT. 2608 Infra.

final

PUBLIC LAW 95-598—NOV. 6, 1978

distribution under section 726 of this title, the trustee, after notice and a hearing, shall dispose of any property in which an entity other than the estate has an interest, such as a lien, and that has not been disposed of under another section of this title. 11 USC 726. § 726. Distribution of property of the estate Ante, p. 2586. (a) Except as provided in section 510 of this title, property of the estate shall be distributed— (1) first, in payment of claims of the kind specified in, and in Ante, p. 2583. the order specified in, section 507 of this title; (2) second, in payment of any allowed unsecured claim, other than a claim of a kind specified in paragraph (1), (3), or (4) of this subsection, proof of which is— Ante, p. 2578. (-^) timely filed under section 501(a) of this title; (B) timely filed under section 501(b) or 501(c) of this title; or (C) tardily filed under section 501(a) of this title, if— (i) the creditor that holds such claim did not have notice or actual knowledge of the case in time for timely filing of a proof of such claim under section 501(a) of this title; and (ii) proof of such claim is filed in time to permit pay<-r.; ment of such claim; (3) third, in payment of any allowed unsecured claim proof of which is tardily filed under section 501(a) of this title, other than a claim of the kind specified in paragraph (2)(C) of this subsection; (4) fourth, in payment of any allowed claim, whether secured or unsecured, for any fine, penalty, or forfeiture, or for multiple, exemplary, or punitive damages, arising before the earlier of the order for relief or the appointment of a trustee, to the extent that r.'oT'c ',,.i\i such fine, penalty, forfeiture, or damages are not compensation for actual pecuniary loss suffered by the holder of such claim; (5) fifth, in payment of interest at the legal rate from the date of the filing of the petition, on any claim paid under paragraph (1), (2), (3), or (4) of this subsection; and (6) sixth, to the debtor. (b) Payment on claims of a kind specified in paragraph (1), (2). (3), (4), (5), or (6) of section 507(a) of this title, or in paragraph (2), (3), (4), or (5) of subsection (a) of this section, shall be made pro rata among claims of the kind specified in a particular paragraph, except that in a case that has been converted to this chapter under Post, pp. 2630, section 1112 or 1307 of this title, administrative expenses incurred 2647. under this chapter after such conversion have priority over administrative expenses incurred under any other chapter of this title or under this chapter before such conversion and over any expenses of a custodian superseded under section 543 of this title. (c) Notwithstanding subsections (a) and (b) of this section, if there is property of the kind specified in section 541(a)(2) of this title, or proceeds of such property, in the estate, such property or proceeds shall be segregated from other property of the estate, and such property or proceeds and other property of the estate shall be distributed as follows: (1) Administrative expenses shall be paid either from property IS'^ S M a f ^^ ^^ kind specified in section 541(a)(2) of this title, or from other property of the estate, as the interest of justice requires. (2) Claims other than for administrative expenses shall be paid
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Page:United States Statutes at Large Volume 92 Part 2.djvu/1329

 PUBLIC LAW 95-598—NOV. 6, 1978 '

92 STAT. 2609

in the order specified in subsection (a) of this section, and, with respect to claims of a kind specified in a particular paragraph of section 507 of this title or subsection (a) of this section, in the following order and manner: (A) First, community claims against the debtor or the debtor's spouse shall be paid from property of the kind specified in section 541(a)(2) of this title, except to the extent that such property is solely liable for debts of the debtor. (B) Second, to the extent that community claims against the debtor are not paid under subparagraph (A) of this paragraph, such community claims shall be paid from property of the kind specified in section 541(a)(2) of this title that is solely liable for debts of the debtor. (C) Third, to the extent that all claims against the debtor including community claims against the debtor are not paid under subparagraph (A) or (B) of this paragraph such claims shall be paid from property of the estate other than property of the kind specified in section 541(a)(2) of this title. (D) Fourth, to the extent that community claims against the debtor or the debtor's spouse are not paid under subparagraph (A), (B), or (C) of this paragraph, such claims shall be paid from all remaining property of the estate. § 727. Discharge 11 USC 727. (a) The court shall grant the debtor a discharge, unless— (1) the debtor is not an individual; (2) the debtor, with intent to hinder, delay, or defraud a creditor or an oflEicer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, _, -.4.,-• v?. destroyed, mutilated, or concealed— (A) property of the debtor, within one year before the date of the filing of the petition; or ^*;,,,T..,-. (B) property of the estate, after the date of the filing of the petition; (3) the debtor has concealed, destroyed, mutilated, falsified, or p:; >, 3,.... failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor's financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case; (4) the debtor knowingly and fraudulently, in or in connection with the case— (A) made a false oath or account; (B) presented or used a false claim; (C) gave, offered, received, or attempted to obtain money, property, or advantage, or a promise of money, property, or advantage, for acting or forbearing to act; or (D) withheld from an officer of the estate entitled to possession under this title, any recorded information, including books, documents, records, and papers, relating to the debtor's property or financial affairs; (5) the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor's liabilities; (6) the debtor has refused, in the case—

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