TITLE 11–BANKRUPTCY
CHAPTER 5–CREDITORS, THE DEBTOR, AND THE ESTATE
Sub Chapter III – The Estate
Sec. 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 such 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; or
(3) a bona fide purchaser of real property, other than fixtures,
from the debtor, against whom applicable law permits such transfer
to be perfected, that obtains the status of a bona fide purchaser
and has perfected such transfer at the time of the commencement of
the case, whether or not such a purchaser exists.
(b)(1) Except as provided in paragraph (2), 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.
(2) Paragraph (1) shall not apply to a transfer of a charitable
contribution (as that term is defined in section 548(d)(3)) that is not
covered under section 548(a)(1)(B), by reason of section 548(a)(2). Any
claim by any person to recover a transferred contribution described in
the preceding sentence under Federal or State law in a Federal or State
court shall be preempted by the commencement of the case.
(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2596; Pub. L. 98-353, title III,
Sec. 459, July 10, 1984, 98 Stat. 377; Pub. L. 105-183, Sec. 3(b), June
19, 1998, 112 Stat. 518.)
Historical and Revision Notes
legislative statements
Section 544(a)(3) modifies similar provisions contained in the House
bill and Senate amendment so as not to require a creditor to perform the
impossible in order to perfect his interest. Both the lien creditor test
in section 544(a)(1), and the bona fide purchaser test in section
544(a)(3) should not require a transferee to perfect a transfer against
an entity with respect to which applicable law does not permit
perfection. The avoiding powers under section 544(a)(1), (2), and (3)
are new. In particular, section 544(a)(1) overrules Pacific Finance
Corp. v. Edwards, 309 F.2d 224 (9th Cir. 1962), and In re Federals,
Inc., 553 F.2d 509 (6th Cir. 1977), insofar as those cases held that the
trustee did not have the status of a creditor who extended credit
immediately prior to the commencement of the case.
The House amendment deletes section 544(c) of the House bill.
senate report no. 95-989
Subsection (a) is the ``strong arm clause'' of current law, now
found in Bankruptcy Act Sec. 70c [section 110(c) of former title 11]. It
gives the trustee the rights of a creditor on a simple contract with a
judicial lien on the property of the debtor as of the date of the
petition; of a creditor with a writ of execution against the property of
the debtor unsatisfied as of the date of the petition; and a bona fide
purchaser of the real property of the debtor as of the date of the
petition. ``Simple contract'' as used here is derived from Bankruptcy
Act Sec. 60a(4) [section 96(a)(4) of former title 11]. The third status,
that of a bona fide purchaser of real property, is new.
Subsection (b) is derived from current section 70e [section 110(e)
of former title 11]. It gives the trustee the rights of actual unsecured
creditors under applicable law to void transfers. It follows Moore v.
Bay, 284 U.S. 4 (1931), and overrules those cases that hold section 70e
gives the trustee the rights of secured creditors.
Amendments
1998--Subsec. (b). Pub. L. 105-183 designated existing provisions as
par. (1), substituted ``Except as provided in paragraph (2), the
trustee'' for ``The trustee'', and added par. (2).
1984--Subsec. (a)(1). Pub. L. 98-353, Sec. 459(1), inserted ``such''
after ``obtained''.
Subsec. (a)(2). Pub. L. 98-353, Sec. 459(2), substituted ``; or''
for ``; and''.
Subsec. (a)(3). Pub. L. 98-353, Sec. 459(3), inserted ``, other than
fixtures,'' after ``property'', and ``and has perfected such transfer''
after ``purchaser'' the second place it appeared.
Effective Date of 1998 Amendment
Pub. L. 105-183, Sec. 5, June 19, 1998, 112 Stat. 518, provided
that: ``This Act [amending this section and sections 546, 548, 707, and
1325 of this title and enacting provisions set out as notes under this
section and section 101 of this title] and the amendments made by this
Act shall apply to any case brought under an applicable provision of
title 11, United States Code, that is pending or commenced on or after
the date of enactment of this Act [June 19, 1998].''
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.
Construction of 1998 Amendment
Pub. L. 105-183, Sec. 6, June 19, 1998, 112 Stat. 519, provided
that: ``Nothing in the amendments made by this Act [amending this
section and sections 546, 548, 707, and 1325 of this title] is intended
to limit the applicability of the Religious Freedom Restoration Act of
1993 (42 U.S.C. 2002bb [2000bb] et seq.).''
Section Referred to in Other Sections
This section is referred to in sections 106, 303, 349, 502, 522,
541, 546, 548, 550, 551, 552, 749, 764, 901, 926 of this title; title 28
section 1409.
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