Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 5–CREDITORS, THE DEBTOR, AND THE ESTATE

Sub Chapter III – The Estate

Sec. 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, product, offspring, rents, or profits 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.
    (b) A custodian shall--
        (1) deliver to the trustee any property of the debtor held by or 
    transferred to such custodian, or proceeds, product, offspring, 
    rents, or profits 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, product, offspring, rents, or profits 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 or proceeds, product, 
    offspring, rents, or profits of 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 
    that has been approved, after notice and a hearing, by a court of 
    competent jurisdiction before the commencement of the case under 
    this title.

    (d) After notice and hearing, the bankruptcy court--
        (1) may 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, and
        (2) shall excuse compliance with subsections (a) and (b)(1) of 
    this section if the custodian is 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, unless 
    compliance with such subsections is necessary to prevent fraud or 
    injustice.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2595; Pub. L. 98-353, title III, 
Sec. 458, July 10, 1984, 98 Stat. 376; Pub. L. 103-394, title V, 
Sec. 501(d)(17), Oct. 22, 1994, 108 Stat. 4146.)


                      Historical and Revision Notes

                         legislative statements

    Section 543(a) is a modification of similar provisions contained in 
the House bill and the Senate amendment. The provision clarifies that a 
custodian may always act as is necessary to preserve property of the 
debtor. Section 543(c)(3) excepts from surcharge a custodian that is an 
assignee for the benefit of creditors, who was appointed or took 
possession before 120 days before the date of the filing of the 
petition, whichever is later. The provision also prevents a custodian 
from being surcharged in connection with payments made in accordance 
with applicable law.


                        senate report no. 95-989

    This section requires a custodian appointed before the bankruptcy 
case to deliver to the trustee and to account for property that has come 
into his possession, custody, or control as a custodian. ``Property of 
the debtor'' in section (a) includes property that was property of the 
debtor at the time the custodian took the property, but the title to 
which passed to the custodian. The section requires the court to protect 
any obligations incurred by the custodian, provide for the payment of 
reasonable compensation for services rendered and costs and expenses 
incurred by the custodian, and to surcharge the custodian for any 
improper or excessive disbursement, unless it has been approved by a 
court of competent jurisdiction. Subsection (d) reinforces the general 
abstention policy in section 305 by permitting the bankruptcy court to 
authorize the custodianship to proceed notwithstanding this section.


                               Amendments

    1994--Subsec. (d)(1). Pub. L. 103-394 struck out comma after 
``section''.
    1984--Subsec. (a). Pub. L. 98-353, Sec. 458(a), inserted ``, 
product, offspring, rents, or profits'' after ``proceeds''.
    Subsec. (b)(1). Pub. L. 98-353, Sec. 458(b)(1), inserted ``held by 
or'' after ``debtor'', and ``, product, offspring, rents, or profits'' 
after ``proceeds''.
    Subsec. (b)(2). Pub. L. 98-353, Sec. 458(b)(2), inserted ``, 
product, offspring, rents, or profits'' after ``proceeds''.
    Subsec. (c)(1). Pub. L. 98-353, Sec. 458(c)(1), inserted ``or 
proceeds, product, offspring, rents, or profits of such property'' after 
``property''.
    Subsec. (c)(3). Pub. L. 98-353, Sec. 458(c)(2), inserted ``that has 
been'' before ``approved''.
    Subsec. (d). Pub. L. 98-353, Sec. 458(d), designated existing 
provisions as par. (1) and added par. (2).


                    Effective Date of 1994 Amendment

    Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not 
applicable with respect to cases commenced under this title before Oct. 
22, 1994, see section 702 of Pub. L. 103-394, set out as a note under 
section 101 of this title.


                    Effective Date of 1984 Amendment

    Amendment by Pub. L. 98-353 effective with respect to cases filed 90 
days after July 10, 1984, see section 552(a) of Pub. L. 98-353, set out 
as a note under section 101 of this title.

                  Section Referred to in Other Sections

    This section is referred to in sections 106, 349, 502, 503, 522, 
541, 726 of this title.



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Legal Resource Center: United States Code TITLE 11 Filing Bankruptcy Forms Software