Section 746 - Extent of Customer Claims


Title 11 of the United States Code - Bankruptcy
LIQUIDATION – CHAPTER 7


Extent of Customer Claims- Section 746
11 USCS § 746



(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.


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