11 U.S.C. § 544
HISTORICAL AND REVISION NOTES
LEGISLATIVE STATEMENTSSection 544(a)(3) modifies similar provisions contained in the House bill and Senate amendment so as not to require a creditor to perform the impossible in order to perfect his interest. Both the lien creditor test in section 544(a)(1), and the bona fide purchaser test in section 544(a)(3) should not require a transferee to perfect a transfer against an entity with respect to which applicable law does not permit perfection. The avoiding powers under section 544(a)(1), (2), and (3) are new. In particular, section 544(a)(1) overrules Pacific Finance Corp. v. Edwards, 309 F.2d 224 (9th Cir. 1962), and In re Federals, Inc., 553 F.2d 509 (6th Cir. 1977), insofar as those cases held that the trustee did not have the status of a creditor who extended credit immediately prior to the commencement of the case.The House amendment deletes section 544(c) of the House bill.
SENATE REPORT NO. 95-989Subsection (a) is the "strong arm clause" of current law, now found in Bankruptcy Act §70c [section 110(c) of former title 11]. It gives the trustee the rights of a creditor on a simple contract with a judicial lien on the property of the debtor as of the date of the petition; of a creditor with a writ of execution against the property of the debtor unsatisfied as of the date of the petition; and a bona fide purchaser of the real property of the debtor as of the date of the petition. "Simple contract" as used here is derived from Bankruptcy Act §60a(4) [section 96(a)(4) of former title 11]. The third status, that of a bona fide purchaser of real property, is new.Subsection (b) is derived from current section 70e [section 110(e) of former title 11]. It gives the trustee the rights of actual unsecured creditors under applicable law to void transfers. It follows Moore v. Bay, 284 U.S. 4 (1931), and overrules those cases that hold section 70e gives the trustee the rights of secured creditors.
AMENDMENTS1998-Subsec. (b). Pub. L. 105-183 designated existing provisions as par. (1), substituted "Except as provided in paragraph (2), the trustee" for "The trustee", and added par. (2).1984-Subsec. (a)(1). Pub. L. 98-353, §459(1), inserted "such" after "obtained".Subsec. (a)(2). Pub. L. 98-353, §459(2), substituted "; or" for "; and".Subsec. (a)(3). Pub. L. 98-353, §459(3), inserted ", other than fixtures," after "property", and "and has perfected such transfer" after "purchaser" the second place it appeared.
STATUTORY NOTES AND RELATED SUBSIDIARIES
EFFECTIVE DATE OF 1998 AMENDMENT Pub. L. 105-183, §5, June 19, 1998, 112 Stat. 518, provided that: "This Act [amending this section and sections 546, 548, 707, and 1325 of this title and enacting provisions set out as notes under this section and section 101 of this title] and the amendments made by this Act shall apply to any case brought under an applicable provision of title 11, United States Code, that is pending or commenced on or after the date of enactment of this Act [June 19, 1998]."
EFFECTIVE DATE OF 1984 AMENDMENTAmendment by Pub. L. 98-353 effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353 set out as a note under section 101 of this title.
CONSTRUCTION OF 1998 AMENDMENT Pub. L. 105-183, §6, June 19, 1998, 112 Stat. 519, provided that: "Nothing in the amendments made by this Act [amending this section and sections 546, 548, 707, and 1325 of this title] is intended to limit the applicability of the Religious Freedom Restoration Act of 1993 ( 42 U.S.C. 2002bb [2000bb] et seq.)."
- The term "claim" means-(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured, or unsecured.
- The term "debtor" means person or municipality concerning which a case under this title has been commenced.(13A) The term "debtor's principal residence"-(A) means a residential structure if used as the principal residence by the debtor, including incidental property, without regard to whether that structure is attached to real property; and(B) includes an individual condominium or cooperative unit, a mobile or manufactured home, or trailer if used as the principal residence by the debtor.
- The term "entity" includes person, estate, trust, governmental unit, and United States trustee.
- judicial lien
- The term "judicial lien" means lien obtained by judgment, levy, sequestration, or other legal or equitable process or proceeding.
- The term "lien" means charge against or interest in property to secure payment of a debt or performance of an obligation.
- The term "petition" means petition filed under section 301, 302, 303 and 3 1504 of this title, as the case may be, commencing a case under this title.(42A) The term "production payment" means a term overriding royalty satisfiable in cash or in kind-(A) contingent on the production of a liquid or gaseous hydrocarbon from particular real property; and(B) from a specified volume, or a specified value, from the liquid or gaseous hydrocarbon produced from such property, and determined without regard to production costs.
- The term "purchaser" means transferee of a voluntary transfer, and includes immediate or mediate transferee of such a transferee.
- The term "transfer" means-(A) the creation of a lien;(B) the retention of title as a security interest;(C) the foreclosure of a debtor's equity of redemption; or(D) each mode, direct or indirect, absolute or conditional, voluntary or involuntary, of disposing of or parting with-(i) property; or(ii) an interest in property.(54A) The term "uninsured State member bank" means a State member bank (as defined in section 3 of the Federal Deposit Insurance Act) the deposits of which are not insured by the Federal Deposit Insurance Corporation.