Bankruptcy Forms: Filing Bankruptcy Chapter 7 Bankruptcy Software Chapter 13

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TITLE 11–BANKRUPTCY

CHAPTER 7–LIQUIDATION

Sub Chapter III – Stockbroker Liquidation

Sec. 742. Effect of section 362 of this title in this subchapter

   Notwithstanding section 362 of this title, SIPC may file an 
application for a protective decree under the Securities Investor 
Protection Act of 1970. The filing of such application stays all 
proceedings in the case under this title unless and until such 
application is dismissed. If SIPC completes the liquidation of the 
debtor, then the court shall dismiss the case.

(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2613; Pub. L. 97-222, Sec. 9, 
July 27, 1982, 96 Stat. 237; Pub. L. 103-394, title V, Sec. 501(d)(26), 
Oct. 22, 1994, 108 Stat. 4146.)


                      Historical and Revision Notes

                         legislative statements

    Section 742 of the House amendment deletes a sentence contained in 
the Senate amendment requiring the trustee in an interstate stock-
brokerage liquidation to comply with the provisions of subchapter IV of 
chapter 7 if the debtor is also a commodity broker. The House amendment 
expands the requirement to require the SIPC trustee to perform such 
duties, if the debtor is a commodity broker, under section 7(b) of the 
Securities Investor Protection Act [15 U.S.C. 78ggg(b)]. The requirement 
is deleted from section 742 since the trustee of an intrastate 
stockbroker will be bound by the provisions of subchapter IV of chapter 
7 if the debtor is also a commodity broker by reason of section 103 of 
title 11.


                        senate report no. 95-989

    Section 742 indicates that the automatic stay does not prevent SIPC 
from filing an application for a protective decree under SIPA. If SIPA 
does file such an application, then all bankruptcy proceedings are 
suspended until the SIPC action is completed. If SIPC completes 
liquidation of the stockbroker then the bankruptcy case is dismissed.

                       References in Text

    The Securities Investor Protection Act of 1970, referred to in text, 
is Pub. L. 91-598, Dec. 30, 1970, 84 Stat. 1636, as amended, which is 
classified generally to chapter 2B-1 (Sec. 78aaa et seq.) of Title 15, 
Commerce and Trade. For complete classification of this Act to the Code, 
see section 78aaa of Title 15 and Tables.


                               Amendments

    1994--Pub. L. 103-394 struck out ``(15 U.S.C. 78aaa et seq.)'' after 
``Act of 1970''.
    1982--Pub. L. 97-222 substituted ``title'' for ``chapter'' after 
``all proceedings in the case under this''.


                    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.

                  Section Referred to in Other Sections

    This section is referred to in section 349 of this title.



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