Subchapter II - Collection, Liquidation, and Distribution of the Estate

721 Authorization to operate business
722 Redemption
Rights of partnership trustee against general partners
Treatment of certain liens
Disposition of certain property
Distribution of property of the estate
Discharge
Special tax revisions

§ 721. Authorization to operate business

The court may authorize the trustee to operate the business of the debtor for a limited period, is such operation is in the best interest of the estate and consistent with the orderly liquidation of the estate.

§ 722. Redemption

An individual debtor may, whether or not the debtor has waived the right to redeem under this section redeem tangible personal property intended primarily for personal, family, or household use, from a lien securing a discharge able consumer debt, if such property is exempted under section 522 of this title or has been abandoned under section 554 of this title, by paying the holder of such lien the amount of the allowed secured claim of such holder that is secured by such lien.

§ 723. Rights of partnership trustee against general partners

If there is a deficiency of property of the estate to pay in full all claims which are allowed in a case under this chapter concerning a partnership and with respect to which a general partner of the partnership is personally liable, the trustee shall have a claim against such general partner to the extent that under applicable nonbankruptcy law such general partner is personally liable for such deficiency.
To the extent practicable, the trustee shall first seek recovery such deficiency from any general partner in such partnership that is not a debtor in a case under this title. Pending determination of such deficiency, the court may order any such partner to provide the estate with indemnity for, or assurance of payment of, any deficiency recoverable from such partner, or not to dispose of property.
Notwithstanding section 728(c) of this title, the trustee has a claim against the estate of each general partner in such partnership that is a debtor in a case under this title for the full amount of all claims of creditors allowed in the case concerning such partnership. Notwithstanding section 502 of this title there shall not be allowed in such partner’s case a claim against such partner on which both such partner and such partnership are liable, except to any extent that such claim is secured only by property of such partner and not by property of such partnership. The claim of the trustee under this subsection is entitled to distribution in such partner’s case under section 726(a) of this title the same as any other claim of a kind specified in such section.
If the aggregate that the trustee recovers from the estates of general partners under subsection (c) of this section is greater than any deficiency not recovered under subsection (b) of this section, the court, after notice and a hearing, shall determined an equitable distribution of the surplus to the estates of the general partners in such partnership according to such determination.

§ 724. Treatment of certain liens

The trustee may avoid a lien that secures a claim of a kind specified in section 726(a)(4) of this title.
Property in which the estate has an interest and that is subject to a lien that is not avoidable under this tile and that secured an allowed claim for a tax, or proceeds of such property, shall be distributed –
1. first, to any holder of an allowed claim secured by a lien on such property that is not avoidable under this title and that is senior to such tax lien;
2. second, to any holder of a claim of a kind specified in section 507(a)(1), 507(a)(2), 507(a)(3), 507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of this title, to the extent of the amount of such allowed tax claim that is secured by such tax lien;
3. third, to the holder of such tax lien, to any extent that such holder’s allowed tax claim that is secured by such tax lien exceeds any amount distributed under paragraph (2) of this subsection;
4. fourth, to any holder of an allowed claim secured by a lien on such property that is not avoidable under this title and that is junior to such tax lien;
5. fifth, to the holder of such tax lien, to the extent that such holder’s allowed claims secured by a such tax lien is not paid under paragraph (3) of this subsection; and
6. sixth, to the estate.
If more than one holder of a claim is entitled to distribution under a particular paragraph of subsection (b) of this section, distribution to such holders under such paragraph shall be in the same order as distributions to such holders would have been other than under this section.
A statutory lien the priority of which is determined in the same manner as the priority of a tax lien under section 6323 of the Internal Revenue Code of 1986 shall be treated under subsection (b) of this section the same as if such lien were a tax lien.

§ 725. Disposition of certain property

After the commencement of a case under this chapter, but before final distribution of property of the estate under section 726 of this title, the trustee, after notice and a hearing, shall dispose of any property in which an entity other than the estate has an interest, such as a lien, and that has not been disposed under another section of this title.

§ 726. Distribution of property of the estate

Except as provided in section 510 of this title, property of the estate shall be distributed –
1. first, in payment of claims of the kind specified in, and in the order specified in, section 507 of this title, proof of which is timely filed under section 501 of this title or tardily filed before the date of which the trustee commences distribution under this section;
2. second, in payment of any allowed unsecured claim, other than a claim of a kind specified in paragraph (1), (3), or (4) of this subsection, proof of which is –
  1. timely filed under section 501(a) of this title;
  2. timely filed under section 501(b) or 501(c) of this title; or
  3. tardily filed under section 501(a) of this title, if –
    1. the creditor that holds such claim did not have notice or actual knowledge of the case in time for timely filing of a proof of such claim under section 501(a) of this title; and
    2. proof of such claim is filed in time to permit payment of such claim;
3. third, in payment of any allowed unsecured claim proof of which is tardily filed under section 501(a) of this title, other than a claim of the kind specified in paragraph (2)(C) of this subsection;
4. fourth, in payment of any allowed claim, whether secured or unsecured, for any fine, penalty, or forfeiture, or for multiple, exemplary, or punitive damages, arising before the earlier of the order for relief or the appointment of a trustee, to the extent that such fine, penalty, forfeiture, or damages are not compensation for actual pecuniary loss suffered by the holder of such claim;
5. fifth, in payment of interest at the legal rate from the date of the filing of the petition, on any claim paid under paragraph (1), (2), (3), or (4) of this subsection; and
6. sixth, to the debtor.
Payment on claims of a kind specified in paragraph (1), (2), (3), (4), (5), (6), (7), or (8) of section 507(a) of this title, or in paragraph (2), (3), (4), or (5) of subsection (a) of this section, shall be made pro rate among claims of the kind specified in each such particular paragraph, except that in a case that has been converted to this chapter under section [1009], 1112, 1208 or 1307 of this title, a claim allowed under section 503(b) of this title incurred under this chapter after such conversion has priority over a claim allowed under section 503(b) of this title incurred under any other chapter of this title or under this chapter before such conversion and over expenses of a custodian superseded under section 543 of this title.
Notwithstanding subsections (a) and (b) of this section, if there is property of a kind specified in section 541(a)(2) of this title, or proceeds of such property, in the estate, such property or proceeds shall be segregated from other property of the estate, and such property or proceeds and other property of the estate shall be distributed as follows:
1. Claims allowed under section 503 of this title shall be paid either from property of the kind specified in section 541(a)(2) of this title, or from other property of the estate, as the interest of justice requires.
2. Allowed claims, other than claims allowed under section 503 of this title, shall be paid in the order specified in subsection (a) of this section, and, with respect to claims of a kind specified in a particular paragraph of section 507 of this title or subsection (a) of this section, in the following order and manner:
  1. First, community claims against the debtor or the debtor’s spouse shall be paid from property of the kind specified in section 541(a)(2) of this title, except to the extent that such property is solely liable for debts of the debtor.
  2. Second, to the extent that community claims against the debtor are not paid under subparagraph (A) of this paragraph, such community claims shall be paid from property of the kind specified in section 541(a)(2) of this title that is solely liable for debts of the debtor.
  3. Third, to the extent that all claims against the debtor including community claims against the debtor are not paid under subparagraph (A) or (B) of this paragraph such claims shall be paid from property of the estate other than property of the kind specified in section 541(a)(2) of this title.
  4. Fourth, to the extent that community claims against the debtor or the debtor’s spouse are not paid under subparagraph (A), (B), or (C) of this paragraph, such claims shall be paid from all remaining property of the estate.

§ 727. Discharge

The court shall grant the debtor a discharge, unless –
1. the debtor is not an individual;
2. the debtor, with intent to hinder, delay, or defraud a creditor or an officer of the estate charged with custody of property under this title, has transferred, removed, destroyed, mutilated, or concealed, or has permitted to be transferred, removed, destroyed, mutilated, or concealed –
  1. property of the debtor, within one year before the date of the filing of the petition; or
  2. property of the estate, after the date of the filing of the petition;
3. the debtor has concealed, destroyed, mutilated, falsified, or failed to keep or preserve any recorded information, including books, documents, records, and papers, from which the debtor’s financial condition or business transactions might be ascertained, unless such act or failure to act was justified under all of the circumstances of the case;
4. the debtor knowingly and fraudulently, in or in connection with the case –
  1. made a false oath or account;
  2. presented or used a false claim;
  3. gave, offered, received, or attempted to obtain money, property, or advantage, or a promise of money, property, or advantage, for acting or forbearing to act; or
  4. withheld from an officer of the estate entitled to possession under this title, any recorded information, including books, documents, records and papers, relating to the debtor’s property or financial affairs;
5. the debtor has failed to explain satisfactorily, before determination of denial of discharge under this paragraph, any loss of assets or deficiency of assets to meet the debtor’s liabilities;
6. the debtor has refused, in the case –
  1. to obey any lawful order of the court, other than an order to respond to a material question or to testify;
  2. on the ground of privilege against self-incrimination, to respond to a material question approved by the court or to testify, after the debtor has granted immunity with respect to the matter concerning which such privilege was invoked; or
  3. on a ground other than the property invoked privilege against self-incrimination, to respond to a material question approved by the court or to testify;
7. the debtor has committed any act specified in paragraph (2), (3), (4), (5), or (6) of this subsection, on or within one year before the date of the filing of the petition, or during the case, in connection with another case, under this title or under the Bankruptcy Act, concerning as insider;
8. the debtor has been granted a discharge under this section, under section 1141 of this title, or under section 14, 371, or 476 of the Bankruptcy Act, in a case commenced within six years before the date of the filing of the petition ;
9. the debtor has been granted a discharge under section 1228, or 1328 of this title, or under section 660 or 661 of the Bankruptcy Act, in a case commenced within six years before the date of the filing of the petition, unless payments under the plan in such case totaled at least –
  1. 100 percent of the allowed unsecured claims is such case; or
  2. 1. 70 percent of such claims; and
    2. the plan was proposed by the debtor in good faith, and was the debtor’s best effort;
  or
10. the court approves a written waiver of discharge executed by the debtor after the order for relief under this chapter.
Except as provided in section 523 of this title, a discharge under subsection (a) of this section discharges the debtor from all debts that arose before the date of the order for relief under this chapter, and any liability on a claim that is determined under section 502 of this title as if such claim has arisen before the commencement of the case, whether or not a proof of claim based on any such debt or liability is filed under section 501 of this title, and whether or not a claim based on any such debt or liability is allowed under section 502 of this title.
1. The trustee, a creditor, or the United States trustee may object to the granting of a discharge under subsection (a) of this section.
2. On request of a party in interest, the court may order the trustee to examine the acts and conduct of the debtor to determine whether a ground exists for denial of discharge.
On request of the trustee, a creditor, or the United States trustee, and after notice and a hearing, the court shall revoke a discharge granted under subsection (a) of this section if –
1. such discharge was obtained through the fraud of the debtor, and the requesting party did not know of such fraud until after the granting of such discharge;
2. the debtor acquired property that is property of the estate, or became entitled to acquire property that would be property of the estate, and knowingly and fraudulently failed to report the acquisition of or entitlement to such property, or to deliver or surrender such property to the trustee; or
3. the debtor committed an act specified in subsection (a)(6) of this section.
The trustee, a creditor, or the United States trustee may request a revocation of a discharge –
1. under subsection (d)(1) of this section within one year after such discharge is granted; or
2. under subsection (d)(2) or (d)(3) of this section before the later of –
  1. one year after the granting of such discharge; and
  2. the date the case is closed.

§ 728. Special tax provisions

For the purposes of any State or local law imposing a tax on or measured by income, the taxable period of a debtor that is an individual shall terminate on the date of the order for relief under this chapter, unless the case was converted under section 112 or 1208 of this title.
Notwithstanding any State or local law imposing a tax on or measured of income by income, the trustee shall make tax returns of income for the estate of an individual debtor in a case under this chapter or for a debtor that is a corporation in a case under this chapter or for a debtor that is a corporation has net taxable income for the entire period after the order for relief under this chapter during which the case is pending. If such entity has such income, or if the debtor is a partnership, then the trustee shall make and file a return of income for each taxable period during which the case was pending after the order for relief under this chapter.
If there are pending a case under this chapter concerning a partnership and a case under this chapter concerning a partner in such partnership, a governmental unit’s claim for any unpaid liability of such partner for a State or local tax on or measured by income, to the extent that such liability arose from the inclusion in such partner’s taxable income of earnings of such partnership that were not withdrawn by such partner, is a claim only against such partnership.
Notwithstanding section 541 of this title, if there are pending a case under this chapter concerning a partnership and a case under this chapter concerning a partner in such partnership, then any State or local tax refund or reduction of tax of such partner that would have otherwise been property of the estate of such partner under section 541 of this title –
1. is property of the estate of such partnership to the extent that such tax refund of reduction of tax is fairly apportionable to losses sustained by such partnership and not reimbursed by such partners; and
2. is otherwise property of the estate of such partner.

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