Title 11 — Bankruptcy — § 547. Preferences
Summary
Pages 172 to 176 of Title 11 of the United States Code, printing § 547, Preferences, with its statutory notes, and the opening of § 548, Fraudulent transfers and obligations. Section 547(b) lets the trustee, based on reasonable due diligence, avoid a transfer of an interest of the debtor in property to or for the benefit of a creditor, on account of an antecedent debt, made while the debtor was insolvent and within set periods before the petition. Subsection (c) lists transfers the trustee may not avoid, including those made in the ordinary course of business, and subsection (f) presumes the debtor insolvent during the 90 days immediately preceding the date of the filing of the petition. The notes record amendments such as Pub. L. 98–353 and Judicial Conference adjustments, including the change in subsection (c)(9) from 6,825 to 7,575 effective Apr. 1, 2022.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
§ 547 TITLE 11—BANKRUPTCY Page 172
1984—Subsec. (a)(1). Pub. L. 98–353, § 461(a), sub- materials, work in process, or materials used
stituted ‘‘; or’’ for ‘‘; and’’. or consumed in a business, including farm
Subsec. (b). Pub. L. 98–353, § 461(b), substituted ‘‘a products such as crops or livestock, held for
trustee under sections 544, 545, and’’ for ‘‘the trustee
under sections 544, 545, or’’.
sale or lease;
Subsec. (c). Pub. L. 98–353, §§ 351(1), 461(c)(1)–(4), sub- (2) ‘‘new value’’ means money or money’s
stituted ‘‘Except as provided in subsection (d) of this worth in goods, services, or new credit, or re-
section, the’’ for ‘‘The’’, substituted ‘‘a trustee’’ for lease by a transferee of property previously
‘‘the trustee’’, struck out ‘‘right’’ before ‘‘or common- transferred to such transferee in a transaction
law’’, inserted ‘‘of goods that has sold goods to the that is neither void nor voidable by the debtor
debtor’’ after ‘‘seller’’, and struck out ‘‘of goods to the or the trustee under any applicable law, in-
debtor’’ after ‘‘business,’’. cluding proceeds of such property, but does
Subsec. (c)(2). Pub. L. 98–353, § 461(c)(5)(A), inserted
not include an obligation substituted for an
‘‘the’’ after ‘‘if’’ in provisions preceding subpar. (A).
Subsec. (c)(2)(A). Pub. L. 98–353, § 461(c)(5)(B), sub- existing obligation;
stituted ‘‘a claim of a kind specified in section 503(b) of (3) ‘‘receivable’’ means right to payment,
this title’’ for ‘‘an administrative expense’’. whether or not such right has been earned by
Subsec. (d). Pub. L. 98–353, § 351(3), added subsec. (d). performance; and
Former subsec. (d) redesignated (e). (4) a debt for a tax is incurred on the day
Subsec. (e). Pub. L. 98–353, §§ 351(2), 461(d), redesig- when such tax is last payable without penalty,
nated former subsec. (d) as (e) and inserted ‘‘financial including any extension.
institution’’ after ‘‘stockbroker’’.
Subsec. (f). Pub. L. 98–353, § 393, added subsec. (f). (b) Except as provided in subsections (c) and
1982—Subsec. (d). Pub. L. 97–222 added subsec. (d). (i) of this section, the trustee may, based on rea-
sonable due diligence in the circumstances of
Statutory Notes and Related Subsidiaries the case and taking into account a party’s
known or reasonably knowable affirmative de-
EFFECTIVE DATE OF 2006 AMENDMENT
fenses under subsection (c), avoid any transfer of
Amendment by Pub. L. 109–390 not applicable to any an interest of the debtor in property—
cases commenced under this title or to appointments (1) to or for the benefit of a creditor;
made under any Federal or State law, before Dec. 12, (2) for or on account of an antecedent debt
2006, see section 7 of Pub. L. 109–390, set out as a note
under section 101 of this title.
owed by the debtor before such transfer was
made;
EFFECTIVE DATE OF 2005 AMENDMENT (3) made while the debtor was insolvent;
Amendment by Pub. L. 109–8 effective 180 days after (4) made—
Apr. 20, 2005, and not applicable with respect to cases (A) on or within 90 days before the date of
commenced under this title before such effective date, the filing of the petition; or
except as otherwise provided, see section 1501 of Pub. L. (B) between ninety days and one year be-
109–8, set out as a note under section 101 of this title. fore the date of the filing of the petition, if
EFFECTIVE DATE OF 1998 AMENDMENT
such creditor at the time of such transfer
was an insider; and
Amendment by Pub. L. 105–183 applicable to any case
brought under an applicable provision of this title that (5) that enables such creditor to receive
is pending or commenced on or after June 19, 1998, see more than such creditor would receive if—
section 5 of Pub. L. 105–183, set out as a note under sec- (A) the case were a case under chapter 7 of
tion 544 of this title. this title;
(B) the transfer had not been made; and
EFFECTIVE DATE OF 1994 AMENDMENT
(C) such creditor received payment of such
Amendment by Pub. L. 103–394 effective Oct. 22, 1994, debt to the extent provided by the provisions
and not applicable with respect to cases commenced of this title.
under this title before Oct. 22, 1994, see section 702 of
Pub. L. 103–394, set out as a note under section 101 of (c) The trustee may not avoid under this sec-
this title. tion a transfer—
(1) to the extent that such transfer was—
EFFECTIVE DATE OF 1986 AMENDMENT
(A) intended by the debtor and the creditor
Amendment by section 257 of Pub. L. 99–554 effective to or for whose benefit such transfer was
30 days after Oct. 27, 1986, but not applicable to cases made to be a contemporaneous exchange for
commenced under this title before that date, see sec- new value given to the debtor; and
tion 302(a), (c)(1) of Pub. L. 99–554, set out as a note
under section 581 of Title 28, Judiciary and Judicial
(B) in fact a substantially contempora-
Procedure. neous exchange;
Amendment by section 283 of Pub. L. 99–554 effective (2) to the extent that such transfer was in
30 days after Oct. 27, 1986, see section 302(a) of Pub. L. payment of a debt incurred by the debtor in
99–554.
the ordinary course of business or financial af-
EFFECTIVE DATE OF 1984 AMENDMENT fairs of the debtor and the transferee, and such
Amendment by Pub. L. 98–353 effective with respect
transfer was—
to cases filed 90 days after July 10, 1984, see section (A) made in the ordinary course of busi-
552(a) of Pub. L. 98–353, set out as a note under section ness or financial affairs of the debtor and
101 of this title. the transferee; or
(B) made according to ordinary business
§ 547. Preferences terms;
(a) In this section— (3) that creates a security interest in prop-
(1) ‘‘inventory’’ means personal property erty acquired by the debtor—
leased or furnished, held for sale or lease, or to (A) to the extent such security interest se-
be furnished under a contract for service, raw cures new value that was—
Page 173 TITLE 11—BANKRUPTCY § 547
(i) given at or after the signing of a secu- (e)(1) For the purposes of this section—
rity agreement that contains a description (A) a transfer of real property other than fix-
of such property as collateral; tures, but including the interest of a seller or
(ii) given by or on behalf of the secured purchaser under a contract for the sale of real
party under such agreement; property, is perfected when a bona fide pur-
(iii) given to enable the debtor to acquire chaser of such property from the debtor
such property; and against whom applicable law permits such
(iv) in fact used by the debtor to acquire transfer to be perfected cannot acquire an in-
such property; and terest that is superior to the interest of the
(B) that is perfected on or before 30 days transferee; and
after the debtor receives possession of such (B) a transfer of a fixture or property other
property; than real property is perfected when a creditor
on a simple contract cannot acquire a judicial
(4) to or for the benefit of a creditor, to the
lien that is superior to the interest of the
extent that, after such transfer, such creditor
transferee.
gave new value to or for the benefit of the
debtor— (2) For the purposes of this section, except as
(A) not secured by an otherwise unavoid- provided in paragraph (3) of this subsection, a
able security interest; and transfer is made—
(B) on account of which new value the (A) at the time such transfer takes effect be-
debtor did not make an otherwise unavoid- tween the transferor and the transferee, if
able transfer to or for the benefit of such such transfer is perfected at, or within 30 days
creditor; after, such time, except as provided in sub-
(5) that creates a perfected security interest section (c)(3)(B);
in inventory or a receivable or the proceeds of (B) at the time such transfer is perfected, if
either, except to the extent that the aggregate such transfer is perfected after such 30 days; or
of all such transfers to the transferee caused a (C) immediately before the date of the filing
reduction, as of the date of the filing of the pe- of the petition, if such transfer is not per-
tition and to the prejudice of other creditors fected at the later of—
holding unsecured claims, of any amount by (i) the commencement of the case; or
which the debt secured by such security inter- (ii) 30 days after such transfer takes effect
est exceeded the value of all security interests between the transferor and the transferee.
for such debt on the later of— (3) For the purposes of this section, a transfer
(A)(i) with respect to a transfer to which is not made until the debtor has acquired rights
subsection (b)(4)(A) of this section applies, 90 in the property transferred.
days before the date of the filing of the peti- (f) For the purposes of this section, the debtor
tion; or is presumed to have been insolvent on and dur-
(ii) with respect to a transfer to which sub- ing the 90 days immediately preceding the date
section (b)(4)(B) of this section applies, one of the filing of the petition.
year before the date of the filing of the peti- (g) For the purposes of this section, the trust-
tion; or ee has the burden of proving the avoidability of
(B) the date on which new value was first a transfer under subsection (b) of this section,
given under the security agreement creating and the creditor or party in interest against
such security interest; whom recovery or avoidance is sought has the
(6) that is the fixing of a statutory lien that burden of proving the nonavoidability of a
is not avoidable under section 545 of this title; transfer under subsection (c) of this section.
(7) to the extent such transfer was a bona (h) The trustee may not avoid a transfer if
fide payment of a debt for a domestic support such transfer was made as a part of an alter-
obligation; native repayment schedule between the debtor
(8) if, in a case filed by an individual debtor and any creditor of the debtor created by an ap-
whose debts are primarily consumer debts, the proved nonprofit budget and credit counseling
aggregate value of all property that con- agency.
stitutes or is affected by such transfer is less (i) If the trustee avoids under subsection (b) a
than $600; or transfer made between 90 days and 1 year before
(9) if, in a case filed by a debtor whose debts the date of the filing of the petition, by the
are not primarily consumer debts, the aggre- debtor to an entity that is not an insider for the
gate value of all property that constitutes or benefit of a creditor that is an insider, such
is affected by such transfer is less than $5,000.1 transfer shall be considered to be avoided under
(d) The trustee may avoid a transfer of an in- this section only with respect to the creditor
terest in property of the debtor transferred to or that is an insider.
for the benefit of a surety to secure reimburse- (Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2597; Pub. L.
ment of such a surety that furnished a bond or 98–353, title III, §§ 310, 462, July 10, 1984, 98 Stat.
other obligation to dissolve a judicial lien that 355, 377; Pub. L. 99–554, title II, § 283(m), Oct. 27,
would have been avoidable by the trustee under 1986, 100 Stat. 3117; Pub. L. 103–394, title II, § 203,
subsection (b) of this section. The liability of title III, § 304(f), Oct. 22, 1994, 108 Stat. 4121, 4133;
such surety under such bond or obligation shall Pub. L. 109–8, title II, §§ 201(b), 217, title IV,
be discharged to the extent of the value of such §§ 403, 409, title XII, §§ 1213(a), 1222, Apr. 20, 2005,
property recovered by the trustee or the amount 119 Stat. 42, 55, 104, 106, 194, 196; Pub. L. 116–54,
paid to the trustee. § 3(a), Aug. 23, 2019, 133 Stat. 1085; Pub. L. 116–260,
div. FF, title X, § 1001(g)(1), (2)(A), Dec. 27, 2020,
1 See Adjustment of Dollar Amounts notes below. 134 Stat. 3219, 3220.)
§ 547 TITLE 11—BANKRUPTCY Page 174
HISTORICAL AND REVISION NOTES debtor before the transfer was made. Third, the trans-
fer must have been made when the debtor was insol-
LEGISLATIVE STATEMENTS vent. Fourth, the transfer must have been made during
No limitation is provided for payments to commodity the 90 days immediately preceding the commencement
brokers as in section 766 of the Senate amendment of the case. If the transfer was to an insider, the trustee
other than the amendment to section 548 of title 11. may avoid the transfer if it was made during the period
Section 547(c)(2) protects most payments. that begins one year before the filing of the petition
Section 547(b)(2) of the House amendment adopts a and ends 90 days before the filing, if the insider to
provision contained in the House bill and rejects an al- whom the transfer was made had reasonable cause to
ternative contained in the Senate amendment relating believe the debtor was insolvent at the time the trans-
to the avoidance of a preferential transfer that is pay- fer was made.
ment of a tax claim owing to a governmental unit. As Finally, the transfer must enable the creditor to
provided, section 106(c) of the House amendment over- whom or for whose benefit it was made to receive a
rules contrary language in the House report with the greater percentage of his claim than he would receive
result that the Government is subject to avoidance of under the distributive provisions of the bankruptcy
preferential transfers. code. Specifically, the creditor must receive more than
Contrary to language contained in the House report, he would if the case were a liquidation case, if the
payment of a debt by means of a check is equivalent to transfer had not been made, and if the creditor received
a cash payment, unless the check is dishonored. Pay- payment of the debt to the extent provided by the pro-
ment is considered to be made when the check is deliv- visions of the code.
ered for purposes of sections 547(c)(1) and (2). The phrasing of the final element changes the appli-
Section 547(c)(6) of the House bill is deleted and is cation of the greater percentage test from that em-
treated in a different fashion in section 553 of the House ployed under current law. Under this language, the
amendment. court must focus on the relative distribution between
Section 547(c)(6) represents a modification of a simi- classes as well as the amount that will be received by
lar provision contained in the House bill and Senate the members of the class of which the creditor is a
amendment. The exception relating to satisfaction of a member. The language also requires the court to focus
statutory lien is deleted. The exception for a lien cre- on the allowability of the claim for which the pref-
ated under title 11 is deleted since such a lien is a stat- erence was made. If the claim would have been entirely
utory lien that will not be avoidable in a subsequent disallowed, for example, then the test of paragraph (5)
bankruptcy. will be met, because the creditor would have received
Section 547(e)(1)(B) is adopted from the House bill and nothing under the distributive provisions of the bank-
Senate amendment without change. It is intended that ruptcy code.
the simple contract test used in this section will be ap- The trustee may avoid a transfer of a lien under this
plied as under section 544(a)(1) not to require a creditor section even if the lien has been enforced by sale before
to perfect against a creditor on a simple contract in the the commencement of the case,
Subsection (b)(2) of this section in effect exempts
event applicable law makes such perfection impossible.
from the preference rules payments by the debtor of
For example, a purchaser from a debtor at an improp-
tax liabilities, regardless of their priority status.
erly noticed bulk sale may take subject to the rights of
Subsection (c) contains exceptions to the trustee’s
a creditor on a simple contract of the debtor for 1 year
avoiding power. If a creditor can qualify under any one
after the bulk sale. Since the purchaser cannot perfect
of the exceptions, then he is protected to that extent.
against such a creditor on a simple contract, he should
If he can qualify under several, he is protected by each
not be held responsible for failing to do the impossible.
to the extent that he can qualify under each.
In the event the debtor goes into bankruptcy within a The first exception is for a transfer that was intended
short time after the bulk sale, the trustee should not by all parties to be a contemporaneous exchange for
be able to use the avoiding powers under section new value, and was in fact substantially contempora-
544(a)(1) or 547 merely because State law has made some neous. Normally, a check is a credit transaction. How-
transfers of personal property subject to the rights of ever, for the purposes of this paragraph, a transfer in-
a creditor on a simple contract to acquire a judicial volving a check is considered to be ‘‘intended to be con-
lien with no opportunity to perfect against such a cred- temporaneous’’, and if the check is presented for pay-
itor. ment in the normal course of affairs, which the Uni-
Preferences: The House amendment deletes from the form Commercial Code specifies as 30 days, U.C.C.
category of transfers on account of antecedent debts § 3–503(2)(a), that will amount to a transfer that is ‘‘in
which may be avoided under the preference rules, sec- fact substantially contemporaneous.’’
tion 547(b)(2), the exception in the Senate amendment The second exception protects transfers in the ordi-
for taxes owed to governmental authorities. However, nary course of business (or of financial affairs, where a
for purposes of the ‘‘ordinary course’’ exception to the business is not involved) transfers. For the case of a
preference rules contained in section 547(c)(2), the consumer, the paragraph uses the phrase ‘‘financial af-
House amendment specifies that the 45-day period re- fairs’’ to include such nonbusiness activities as pay-
ferred to in section 547(c)(2)(B) is to begin running, in ment of monthly utility bills. If the debt on account of
the case of taxes from the last due date, including ex- which the transfer was made was incurred in the ordi-
tensions, of the return with respect to which the tax nary course of both the debtor and the transferee, if the
payment was made. transfer was made not later than 45 days after the debt
SENATE REPORT NO. 95–989
was incurred, if the transfer itself was made in the or-
dinary course of both the debtor and the transferee,
This section is a substantial modification of present and if the transfer was made according to ordinary
law. It modernizes the preference provisions and brings business terms, then the transfer is protected. The pur-
them more into conformity with commercial practice pose of this exception is to leave undisturbed normal fi-
and the Uniform Commercial Code. nancial relations, because it does not detract from the
Subsection (a) contains three definitions. Inventory, general policy of the preference section to discourage
new value, and receivable are defined in their ordinary unusual action by either the debtor or his creditors
senses, but are defined to avoid any confusion or uncer- during the debtor’s slide into bankruptcy.
tainty surrounding the terms. The third exception is for enabling loans in connec-
Subsection (b) is the operative provision of the sec- tion with which the debtor acquires the property that
tion. It authorizes the trustee to avoid a transfer if five the loan enabled him to purchase after the loan is actu-
conditions are met. These are the five elements of a ally made.
preference action. First, the transfer must be to or for The fourth exception codifies the net result rule in
the benefit of a creditor. Second, the transfer must be section 60c of current law [section 96(c) of former title
for or on account of an antecedent debt owed by the 11]. If the creditor and the debtor have more than one
Page 175 TITLE 11—BANKRUPTCY § 547
exchange during the 90-day period, the exchanges are 2019—Subsec. (b). Pub. L. 116–54 inserted ‘‘, based on
netted out according to the formula in paragraph (4). reasonable due diligence in the circumstances of the
Any new value that the creditor advances must be un- case and taking into account a party’s known or rea-
secured in order for it to qualify under this exception. sonably knowable affirmative defenses under sub-
Paragraph (5) codifies the improvement in position section (c),’’ after ‘‘may’’ in introductory provisions.
test, and thereby overrules such cases as DuBay v. Wil- 2005—Subsec. (b). Pub. L. 109–8, § 1213(a)(1), sub-
liams, 417 F.2d 1277 (C.A.9, 1966), and Grain Merchants of stituted ‘‘subsections (c) and (i)’’ for ‘‘subsection (c)’’ in
Indiana, Inc. v. Union Bank and Savings Co., 408 F.2d 209 introductory provisions.
(C.A.7, 1969). A creditor with a security interest in a Subsec. (c)(2). Pub. L. 109–8, § 409(1), added par. (2) and
floating mass, such as inventory or accounts receiv- struck out former par. (2) which read as follows: ‘‘to
able, is subject to preference attack to the extent he the extent that such transfer was—
improves his position during the 90-day period before ‘‘(A) in payment of a debt incurred by the debtor in
bankruptcy. The test is a two-point test, and requires the ordinary course of business or financial affairs of
determination of the secured creditor’s position 90 days the debtor and the transferee;
before the petition and on the date of the petition. If ‘‘(B) made in the ordinary course of business or fi-
new value was first given after 90 days before the case, nancial affairs of the debtor and the transferee; and
the date on which it was first given substitutes for the ‘‘(C) made according to ordinary business terms;’’.
90-day point. Subsec. (c)(3)(B). Pub. L. 109–8, § 1222, substituted ‘‘30
Paragraph (6) excepts statutory liens validated under days’’ for ‘‘20 days’’.
Subsec. (c)(7). Pub. L. 109–8, § 217, amended par. (7)
section 545 from preference attack. It also protects
generally. Prior to amendment, par. (7) read as follows:
transfers in satisfaction of such liens, and the fixing of
‘‘to the extent such transfer was a bona fide payment
a lien under section 365(j), which protects a vendee
of a debt to a spouse, former spouse, or child of the
whose contract to purchase real property from the
debtor, for alimony to, maintenance for, or support of
debtor is rejected.
such spouse or child, in connection with a separation
Subsection (d), derived from section 67a of the Bank-
agreement, divorce decree or other order of a court of
ruptcy Act [section 107(a) of former title 11], permits
record, determination made in accordance with State
the trustee to avoid a transfer to reimburse a surety
or territorial law by a governmental unit, or property
that posts a bond to dissolve a judicial lien that would
settlement agreement, but not to the extent that such
have been avoidable under this section. The second sen-
debt—
tence protects the surety from double liability.
‘‘(A) is assigned to another entity, voluntarily, by
Subsection (e) determines when a transfer is made for
operation of law, or otherwise; or
the purposes of the preference section. Paragraph (1) ‘‘(B) includes a liability designated as alimony,
defines when a transfer is perfected. For real property, maintenance, or support, unless such liability is ac-
a transfer is perfected when it is valid against a bona tually in the nature of alimony, maintenance or sup-
fide purchaser. For personal property and fixtures, a port; or’’.
transfer is perfected when it is valid against a creditor Subsec. (c)(9). Pub. L. 109–8, § 409(2), (3), added par. (9).
on a simple contract that obtains a judicial lien after Subsec. (e)(2). Pub. L. 109–8, § 403, substituted ‘‘30’’ for
the transfer is perfected. ‘‘Simple contract’’ as used ‘‘10’’ wherever appearing.
here is derived from Bankruptcy Act § 60a(4) [section Subsec. (h). Pub. L. 109–8, § 201(b), added subsec. (h).
96(a)(4) of former title 11]. Paragraph (2) specifies that Subsec. (i). Pub. L. 109–8, § 1213(a)(2), added subsec. (i).
a transfer is made when it takes effect between the 1994—Subsec. (c)(3)(B). Pub. L. 103–394, § 203(1), sub-
transferor and the transferee if it is perfected at or stituted ‘‘20’’ for ‘‘10’’.
within 10 days after that time. Otherwise, it is made Subsec. (c)(7), (8). Pub. L. 103–394, § 304(f), added par.
when the transfer is perfected. If it is not perfected be- (7) and redesignated former par. (7) as (8).
fore the commencement of the case, it is made imme- Subsec. (e)(2)(A). Pub. L. 103–394, § 203(2), inserted be-
diately before the commencement of the case. Para- fore semicolon at end ‘‘, except as provided in sub-
graph (3) specifies that a transfer is not made until the section (c)(3)(B)’’.
debtor has acquired rights in the property transferred. 1986—Subsec. (b)(4)(B). Pub. L. 99–554 inserted ‘‘and’’
This provision, more than any other in the section, after the semicolon.
overrules DuBay and Grain Merchants, and in combina- 1984—Subsec. (a)(2). Pub. L. 98–353, § 462(a)(1), inserted
tion with subsection (b)(2), overrules In re King-Porter ‘‘including proceeds of such property,’’ after ‘‘law,’’.
Co., 446 F.2d 722 (5th Cir. 1971). Subsec. (a)(4). Pub. L. 98–353, § 462(a)(2), struck out
Subsection (e) is designed to reach the different re- ‘‘, without penalty’’ after ‘‘any extension’’, and in-
sults under the 1962 version of Article 9 of the U.C.C. serted ‘‘without penalty’’ after ‘‘payable’’.
and under the 1972 version because different actions are Subsec. (b). Pub. L. 98–353, § 462(b)(1), substituted ‘‘of
required under each version in order to make a security an interest of the debtor in property’’ for ‘‘of property
agreement effective between the parties. of the debtor’’ in provisions preceding par. (1).
Subsection (f) creates a presumption of insolvency for Subsec. (b)(4)(B). Pub. L. 98–353, § 462(b)(2), amended
the 90 days preceding the bankruptcy case. The pre- subpar. (B) generally. Prior to amendment, subpar. (B)
sumption is as defined in Rule 301 of the Federal Rules read as follows: ‘‘between 90 days and one year before
of Evidence, made applicable in bankruptcy cases by the date of the filing of the petition, if such creditor,
sections 224 and 225 of the bill. The presumption re- at the time of such transfer—
quires the party against whom the presumption exists ‘‘(i) was an insider; and
to come forward with some evidence to rebut the pre- ‘‘(ii) had reasonable cause to believe the debtor was
sumption, but the burden of proof remains on the party insolvent at the time of such transfer; and’’.
in whose favor the presumption exists. Subsec. (c)(2)(A). Pub. L. 98–353, § 462(d)(1), inserted
‘‘by the debtor’’ after ‘‘incurred’’.
Subsec. (c)(2)(B) to (D). Pub. L. 98–353, § 462(c), struck
Editorial Notes out subpar. (B) which read as follows: ‘‘made not later
AMENDMENTS than 45 days after such debt was incurred;’’ and redesig-
nated subpars. (C) and (D) as (B) and (C), respectively.
2020—Subsec. (b). Pub. L. 116–260, § 1001(g)(2)(A)(i), Subsec. (c)(3). Pub. L. 98–353, § 462(d)(2), substituted
substituted ‘‘and (i)’’ for ‘‘, (i), and (j)’’ in introductory ‘‘that creates’’ for ‘‘of’’.
provisions. Subsec. (c)(3)(B). Pub. L. 98–353, § 462(d)(3), inserted
Pub. L. 116–260, § 1001(g)(1)(A), substituted ‘‘, (i), and ‘‘on or’’ after ‘‘perfected’’, and substituted ‘‘the debtor
(j)’’ for ‘‘and (i)’’ in introductory provisions. receives possession of such property’’ for ‘‘such secu-
Subsec. (j). Pub. L. 116–260, § 1001(g)(2)(A)(ii), struck rity interest attaches’’.
out subsec. (j) which related to covered payments of Subsec. (c)(5). Pub. L. 98–353, § 462(d)(4), substituted
rental and supplier arrearages. ‘‘that creates’’ for ‘‘of’’, and ‘‘all security interests’’ for
Pub. L. 116–260, § 1001(g)(1)(B), added subsec. (j). ‘‘all security interest’’.
§ 548 TITLE 11—BANKRUPTCY Page 176
Subsec. (c)(5)(A)(ii). Pub. L. 98–353, § 462(d)(5), sub- By notice dated Feb. 16, 2016, 81 F.R. 8748, effective
stituted ‘‘or’’ for ‘‘and’’. Apr. 1, 2016, in subsec. (c)(9), dollar amount ‘‘6,225’’ was
Subsec. (c)(7). Pub. L. 98–353, § 310(3), added par. (7). adjusted to ‘‘6,425’’.
Subsec. (d). Pub. L. 98–353, § 462(e), substituted ‘‘The’’ By notice dated Feb. 12, 2013, 78 F.R. 12089, effective
for ‘‘A’’ before ‘‘trustee may avoid’’, inserted ‘‘an inter- Apr. 1, 2013, in subsec. (c)(9), dollar amount ‘‘5,850’’ was
est in’’ after ‘‘transfer of’’, inserted ‘‘to or for the ben- adjusted to ‘‘6,225’’.
efit of a surety’’ after ‘‘transferred’’, and inserted By notice dated Feb. 19, 2010, 75 F.R. 8747, effective
‘‘such’’ after ‘‘reimbursement of’’. Apr. 1, 2010, in subsec. (c)(9), dollar amount ‘‘5,475’’ was
Subsec. (e)(2)(C)(i). Pub. L. 98–353, § 462(f), substituted adjusted to ‘‘5,850’’.
‘‘or’’ for ‘‘and’’. By notice dated Feb. 7, 2007, 72 F.R. 7082, effective
Subsec. (g). Pub. L. 98–353, § 462(g), added subsec. (g). Apr. 1, 2007, in subsec. (c)(9), dollar amount ‘‘5,000’’ was
adjusted to ‘‘5,475’’.
Statutory Notes and Related Subsidiaries
§ 548. Fraudulent transfers and obligations
EFFECTIVE DATE OF 2020 AMENDMENT
(a)(1) The trustee may avoid any transfer (in-
Pub. L. 116–260, div. FF, title X, § 1001(g)(2)(A), Dec. 27,
2020, 134 Stat. 3220, provided that the amendment made cluding any transfer to or for the benefit of an
by section 1001(g)(2)(A) is effective on the date that is insider under an employment contract) of an in-
2 years after Dec. 27, 2020. terest of the debtor in property, or any obliga-
Pub. L. 116–260, div. FF, title X, § 1001(g)(2)(B), Dec. 27, tion (including any obligation to or for the ben-
2020, 134 Stat. 3221, provided that: ‘‘Notwithstanding efit of an insider under an employment con-
the amendments made by subparagraph (A) [amending tract) incurred by the debtor, that was made or
this section], the amendments made by paragraph (1) incurred on or within 2 years before the date of
[amending this section] shall apply in any case com-
the filing of the petition, if the debtor volun-
menced under title 11, United States Code, before the
date that is 2 years after the date of enactment of this tarily or involuntarily—
Act [Dec. 27, 2020].’’ (A) made such transfer or incurred such obli-
gation with actual intent to hinder, delay, or
EFFECTIVE DATE OF 2019 AMENDMENT defraud any entity to which the debtor was or
Amendment by Pub. L. 116–54 effective 180 days after became, on or after the date that such transfer
Aug. 23, 2019, see section 5 of Pub. L. 116–54, set out as was made or such obligation was incurred, in-
a note under section 101 of this title. debted; or
EFFECTIVE DATE OF 2005 AMENDMENT (B)(i) received less than a reasonably equiva-
lent value in exchange for such transfer or ob-
Pub. L. 109–8, title XII, § 1213(b), Apr. 20, 2005, 119 Stat.
195, provided that: ‘‘The amendments made by this sec- ligation; and
tion [amending this section] shall apply to any case (ii)(I) was insolvent on the date that such
that is pending or commenced on or after the date of transfer was made or such obligation was in-
enactment of this Act [Apr. 20, 2005].’’ curred, or became insolvent as a result of such
Amendment by Pub. L. 109–8 effective 180 days after transfer or obligation;
Apr. 20, 2005, and not applicable with respect to cases (II) was engaged in business or a transaction,
commenced under this title before such effective date, or was about to engage in business or a trans-
except as otherwise provided, see section 1501 of Pub. L.
action, for which any property remaining with
109–8, set out as a note under section 101 of this title.
the debtor was an unreasonably small capital;
EFFECTIVE DATE OF 1994 AMENDMENT (III) intended to incur, or believed that the
Amendment by Pub. L. 103–394 effective Oct. 22, 1994, debtor would incur, debts that would be be-
and not applicable with respect to cases commenced yond the debtor’s ability to pay as such debts
under this title before Oct. 22, 1994, see section 702 of matured; or
Pub. L. 103–394, set out as a note under section 101 of (IV) made such transfer to or for the benefit
this title. of an insider, or incurred such obligation to or
EFFECTIVE DATE OF 1986 AMENDMENT for the benefit of an insider, under an employ-
ment contract and not in the ordinary course
Amendment by Pub. L. 99–554 effective 30 days after
Oct. 27, 1986, see section 302(a) of Pub. L. 99–554, set out of business.
as a note under section 581 of Title 28, Judiciary and (2) A transfer of a charitable contribution to a
Judicial Procedure. qualified religious or charitable entity or orga-
EFFECTIVE DATE OF 1984 AMENDMENT nization shall not be considered to be a transfer
Amendment by Pub. L. 98–353 effective with respect
covered under paragraph (1)(B) in any case in
to cases filed 90 days after July 10, 1984, see section which—
552(a) of Pub. L. 98–353, set out as a note under section (A) the amount of that contribution does not
101 of this title. exceed 15 percent of the gross annual income
of the debtor for the year in which the transfer
Court Rules and Judicial Documents of the contribution is made; or
ADJUSTMENT OF DOLLAR AMOUNTS (B) the contribution made by a debtor ex-
ceeded the percentage amount of gross annual
The dollar amounts specified in this section were ad- income specified in subparagraph (A), if the
justed by notices of the Judicial Conference of the
United States pursuant to section 104 of this title as
transfer was consistent with the practices of
follows: the debtor in making charitable contributions.
By notice dated Jan. 31, 2022, 87 F.R. 6625, effective (b) The trustee of a partnership debtor may
Apr. 1, 2022, in subsec. (c)(9), dollar amount ‘‘6,825’’ was avoid any transfer of an interest of the debtor in
adjusted to ‘‘7,575’’. See notice of the Judicial Con-
ference of the United States set out as a note under
property, or any obligation incurred by the
section 104 of this title. debtor, that was made or incurred on or within
By notice dated Feb. 5, 2019, 84 F.R. 3488, effective 2 years before the date of the filing of the peti-
Apr. 1, 2019, in subsec. (c)(9), dollar amount ‘‘6,425’’ was tion, to a general partner in the debtor, if the
adjusted to ‘‘6,825’’. debtor was insolvent on the date such transfer
File and source
- File
- USCODE-mostrecent-title11-sec547.pdf
- Size
- 160,583 bytes
- SHA-256
- 200a8ba2e3af661fe13463179e389d185e07173070fcd13ceab7033b110cfea6
- Original
- www.govinfo.gov