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. 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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