Bankruptcy Code

Bankruptcy is a legal declaration that allows some debtors to discharge their unsecured debts. The text of this statute is provided as general information to the public. It may be amended, revised, or rescinded at any time without notice. This information is not intended to be legal advice. For more information, please see our disclaimer.

11 U.S.C. § 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 [11 USCS § 322] 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.