§ 78fff. — General provisions of a liquidation proceeding.
[Laws in effect as of January 24, 2002]
[Document not affected by Public Laws enacted between
January 24, 2002 and December 19, 2002]
[CITE: 15USC78fff]
TITLE 15--COMMERCE AND TRADE
CHAPTER 2B-1--SECURITIES INVESTOR PROTECTION
Sec. 78fff. General provisions of a liquidation proceeding
(a) Purposes
The purposes of a liquidation proceeding under this chapter shall
be--
(1) as promptly as possible after the appointment of a trustee
in such liquidation proceeding, and in accordance with the
provisions of this chapter--
(A) to deliver customer name securities to or on behalf of
the customers of the debtor entitled thereto as provided in
section 78fff-2(c)(2) of this title; and
(B) to distribute customer property and (in advance thereof
or concurrently therewith) otherwise satisfy net equity claims
of customers to the extent provided in this section;
(2) to sell or transfer offices and other productive units of
the business of the debtor;
(3) to enforce rights of subrogation as provided in this
chapter; and
(4) to liquidate the business of the debtor.
(b) Application of title 11
To the extent consistent with the provisions of this chapter, a
liquidation proceeding shall be conducted in accordance with, and as
though it were being conducted under chapters 1, 3, and 5 and
subchapters I and II of chapter 7 of title 11. For the purposes of
applying such title in carrying out this section, a reference in such
title to the date of the filing of the petition shall be deemed to be a
reference to the filing date under this chapter.
(c) Determination of customer status
In a liquidation proceeding under this chapter, whenever a person
has acted with respect to cash or securities with the debtor after the
filing date and in a manner which would have given him the status of a
customer with respect to such cash or securities had the action occurred
prior to the filing date, and the trustee is satisfied that such action
was taken by the customer in good faith and prior to the appointment of
the trustee, the date on which such action was taken shall be deemed to
be the filing date for purposes of determining the net equity of such
customer with respect to such cash or securities.
(d) Apportionment
In a liquidation proceeding under this chapter, any cash or
securities remaining after the liquidation of a lien or pledge made by a
debtor shall be apportioned between his general estate and customer
property in the proportion in which the general property of the debtor
and the cash and securities of the customers of such debtor contributed
to such lien or pledge. Securities apportioned to the general estate
under this subsection shall be subject to the provisions of section
78lll(5)(A) of this title.
(e) Costs and expenses of administration
All costs and expenses of administration of the estate of the debtor
and of the liquidation proceeding shall be borne by the general estate
of the debtor to the extent it is sufficient therefor, and the
priorities of distribution from the general estate shall be as provided
in section 726 of title 11. Costs and expenses of administration shall
include payments pursuant to section 78fff-2(e) of this title and
section 78fff-3(c)(1) of this title (to the extent such payments
recovered securities which were apportioned to the general estate
pursuant to subsection (d) of this section) and costs and expenses of
SIPC employees utilized by the trustee pursuant to section 78fff-1(a)(2)
of this title. All funds advanced by SIPC to a trustee for such costs
and expenses of administration shall be recouped from the general estate
under section 507(a)(1) of title 11.
(Pub. L. 91-598, Sec. 6, Dec. 30, 1970, 84 Stat. 1646; Pub. L. 95-283,
Sec. 8, May 21, 1978, 92 Stat. 259; Pub. L. 95-598, title III,
Sec. 308(g), (h), Nov. 6, 1978, 92 Stat. 2675.)
References in Text
This chapter, referred to in subsecs. (a)(1), (3), (b), (c), and
(d), was in the original ``this Act'', meaning Pub. L. 91-598, Dec. 30,
1970, 84 Stat. 1636. For complete classification of this Act to the
Code, see Tables.
Amendments
1978--Pub. L. 95-283 substituted ``General provisions of a
liquidation proceeding'' for ``Liquidation proceedings'' in section
catchline.
Subsec. (a). Pub. L. 95-283 in heading substituted ``Purposes'' for
``General purposes of liquidation proceeding'', in introductory text
substituted provisions relating to purposes of liquidation proceedings
under this chapter, for provisions relating to purposes of any
proceeding in which a trustee has been appointed under section
78eee(b)(3) of this title, in par. (1) substituted provisions requiring
execution of authorities to deliver customer name securities and
distribute customer property in accordance with this chapter, for
provisions requiring execution of authorities to return specifically
identifiable property and distribute the single and separate fund in
accordance with this section, and in par. (2) substituted provisions
authorizing sale, etc., of productive units of the debtor, for
provisions authorizing operation of the business of the debtor.
Subsec. (b). Pub. L. 95-598, Sec. 308(g), in heading substituted
``title 11'' for ``Bankruptcy Act'' and in text ``under chapters 1, 3,
and 5 and subchapters I and II of chapter 7 of title 11. For the
purposes of applying such title in carrying out this section, a
reference in such title to the date of the filing of the petition shall
be deemed to be a reference to the filing date under this chapter.'' for
``under, the Bankruptcy Act. For purposes of applying the Bankruptcy Act
to this chapter, any reference in the Bankruptcy Act to the date of
commencement of proceedings under the Bankruptcy Act shall be deemed to
be a reference to the filing date under this chapter.''
Pub. L. 95-283 in heading substituted ``Application of Bankruptcy
Act'' for ``Powers and Duties of Trustee'', and in text substituted
provisions relating to applicability of Bankruptcy Act to liquidation
proceedings, for provisions relating to the powers and duties of
trustees. See section 78fff-1 of this title.
Subsec. (c). Pub. L. 95-283 in heading substituted ``Determination
of customer status'' for ``Application of Bankruptcy Act'', and in text
substituted provisions relating to determination of status of a customer
with respect to cash or securities, for provisions setting forth general
and special provisions of the Bankruptcy Act applicable to liquidation
proceedings, and defining terms for purposes of such applicability and
the provisions of this section. See subsec. (b) of this section and
section 78fff-2(c) of this title.
Subsec. (d). Pub. L. 95-283 in heading substituted ``Apportionment''
for ``Completion of open contractual commitments'', and in text
substituted provisions relating to apportionment of cash or securities
remaining after the liquidation of a lien or pledge made by a debtor,
for provisions relating to completion by the trustee of open contractual
commitments, which were made in the ordinary course of the debtor's
business and which were outstanding on the filing date. See section
78fff-2(e) of this title.
Subsec. (e). Pub. L. 95-598, Sec. 308(h), substituted in first
sentence ``section 726 of title 11'' for ``the Bankruptcy Act'' and in
last sentence ``under section 507(a)(1) of title 11'' for ``as a first
priority under the Bankruptcy Act''.
Pub. L. 95-283 in heading substituted ``Costs and expense of
administration'' for ``Notice'', and in text substituted provisions
relating to costs and expenses of administration of the estate of the
debtor and of the liquidation proceeding, for provisions relating to
notice requirements for the trustee subsequent to appointment as
trustee. See section 78fff-2(a)(l) of this title.
Subsec. (f). Pub. L. 95-283 struck out subsec. (f) requiring
advances by the SIPC to the trustee for customers' claims and completion
of open contractual commitments, and authorizing discretionary advances
to the trustee for compensation of personnel deemed necessary for the
liquidation proceeding. See section 78fff-3 of this title.
Subsec. (g). Pub. L. 95-283 struck out subsec. (g) setting forth
provisions relating to payments to customers by the trustee, and
provisions respecting the quantum of proof of claim required for such
payment. See section 78fff-2(a)(2) and (b) of this title.
Subsec. (h). Pub. L. 95-283 struck out subsec. (h) relating to
nonapplicability of provisions to proof of claim by associates and
others connected in some way with the debtor. See section 78fff-2(a)(2)
of this title.
Subsec. (i). Pub. L. 95-283 struck out subsec. (i) setting forth
provisions relating to reports by the trustee to the court. See section
78fff-1(c) of this title.
Subsec. (j). Pub. L. 95-283 struck out subsec. (j) which related to
nonapplicability of provisions to rights of persons to establish by
formal proof such claims as they may have to payment or delivery of
specific securities. See section 78fff-2(a)(4) of this title.
Effective Date of 1978 Amendment
Amendment by Pub. L. 95-598 effective Oct. 1, 1979, see section
402(a) of Pub. L. 95-598, set out as an Effective Date note preceding
section 101 of Title 11, Bankruptcy.
Section Referred to in Other Sections
This section is referred to in sections 78fff-2, 78lll of this
title.
