Sub Chapter III Stockbroker Liquidation
Sec. 746. Extent of customer claims
(a) If, after the date of the filing of the petition, an entity
enters into a transaction with the debtor, in a manner that would have
made such entity a customer had such transaction occurred before the
date of the filing of the petition, and such transaction was entered
into by such entity in good faith and before the qualification under
section 322 of this title of a trustee, such entity shall be deemed a
customer, and the date of such transaction shall be deemed to be the
date of the filing of the petition for the purpose of determining such
entity's net equity.
(b) An entity does not have a claim as a customer to the extent that
such entity transferred to the debtor cash or a security that, by
contract, agreement, understanding, or operation of law, is--
(1) part of the capital of the debtor; or
(2) subordinated to the claims of any or all creditors.
(Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2613; Pub. L. 97-222, Sec. 12,
July 27, 1982, 96 Stat. 238.)
Historical and Revision Notes
senate report no. 95-989
Section 746(a) protects entities who deal in good faith with the
debtor after the filing of the petition and before a trustee is
appointed by deeming such entities to be customers. The principal
application of this section will be in an involuntary case before the
order for relief, because Sec. 701(b) requires prompt appointment of an
interim trustee after the order for relief.
Subsection (b) indicates that an entity who holds securities that
are either part of the capital of the debtor or that are subordinated to
the claims of any creditor of the debtor is not a customer with respect
to those securities. This subsection will apply when the stockbroker has
sold securities in itself to the customer or when the customer has
otherwise placed such securities in an account with the stockbroker.
1982--Pub. L. 97-222, Sec. 12(c), substituted ``claims'' for
``claim'' in section catchline.
Subsec. (a). Pub. L. 97-222, Sec. 12(a), substituted ``enters into''
for ``effects, with respect to cash or a security,'', struck out ``with
respect to such cash or security'' wherever appearing, and substituted
``the date of the filing of the petition'' for ``such date'', and
``entered into'' for ``effected''.
Subsec. (b). Pub. L. 97-222, Sec. 12(b), substituted ``transferred
to the debtor'' for ``has a claim for'' in provisions preceding par.
(1), and struck out ``is'' in par. (2).