U.S. Code » Title 11 » Chapter CHAPTER 5— CREDITORS, THE DEBTOR, AND THE ESTATE › Subchapter SUBCHAPTER III— THE ESTATE

11 U.S.C. § 562

Timing of damage measurement in connection with swap agreements, securities contracts, forward contracts, commodity contracts, repurchase agreements, and master netting agreements

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(a) If the trustee rejects a swap agreement, securities contract (as defined in section 741), forward contract, commodity contract (as defined in section 761), repurchase agreement, or master netting agreement pursuant to section 365(a), or if a forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial participant, master netting agreement participant, or swap participant liquidates, terminates, or accelerates such contract or agreement, damages shall be measured as of the earlier of—(1) the date of such rejection; or(2) the date or dates of such liquidation, termination, or acceleration.(b) If there are not any commercially reasonable determinants of value as of any date referred to in paragraph (1) or (2) of subsection (a), damages shall be measured as of the earliest subsequent date or dates on which there are commercially reasonable determinants of value.(c) For the purposes of subsection (b), if damages are not measured as of the date or dates of rejection, liquidation, termination, or acceleration, and the forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial participant, master netting agreement participant, or swap participant or the trustee objects to the timing of the measurement of damages—(1) the trustee, in the case of an objection by a forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial participant, master netting agreement participant, or swap participant; or(2) the forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial participant, master netting agreement participant, or swap participant, in the case of an objection by the trustee,has the burden of proving that there were no commercially reasonable determinants of value as of such date or dates.(Added Pub. L. 109–8, title IX, § 910(a)(1), Apr. 20, 2005, 119 Stat. 184.)Statutory Notes and Related SubsidiariesEffective Date

Section effective 180 days after Apr. 20, 2005, and not applicable with respect to cases commenced under this title before such effective date, except as otherwise provided, see section 1501 of Pub. L. 109–8, set out as an Effective Date of 2005 Amendment note under section 101 of this title.

Notes of Decisions
Cited in 15 cases (1 in the last 5 years), 1946–2024 · leading case: Crédit Agricole Corp. & Inv. Bank New York Branch v. Am. Home Mortg. Holdings, Inc., 637 F.3d 246 (3rd Cir. 2011).
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Crédit Agricole Corp. & Inv. Bank New York Branch v. Am. Home Mortg. Holdings, Inc., 637 F.3d 246 (3rd Cir. 2011). · cites it 6× “11 U.S.C. § 562 (emphasis added). The parties stipulated to four possible valuation dates of the Loan Portfolio: August 1, 2007 (the Acceleration Date), September 30, 2007 (before the Debtor sold another large Loan Portfolio), January 30, 2008 (after the Bankruptcy Court's…”
Wells Fargo v. Bear Stearns Co Inc, 945 F.3d 801 (3rd Cir. 2019). · cites it 3× “§ 101 (47)(A)(v), requires a non-breaching party to bring a legal claim for damages or merely experience a post- liquidation loss for the conditions of 11 U.S.C. § 562 to apply; (3) whether the safe harbor protections of 11 U.”
Taunton Mun. Lighting Plant v. Enron Corp. (In Re Enron Corp.), 354 B.R. 652 (S.D.N.Y. 2006). · cites it 3× “11 U.S.C. § 562 . Enron argues that the recent adoption of this provision, which largely codifies Taunton’s position in this case for those contracts covered by the new section, 2 demonstrates that the pre- *658 existing law did not provide for damages to be calculated in this…”
In Re Am. Home Mortg. Holdings, Inc., 411 B.R. 181 (Bankr. D. Del. 2009). · cites it 3× “11 U.S.C. § 562 . 13 . Prior to the claim objection hearing, the parties stipulated to limit the number of possible dates to value the Loan Portfolio to four: August 1, 2007 (the Acceleration Date), September 30, 2007 (shortly before the Debtors sold another large loan portfolio…”
In re Lehman Bros. Holdings Inc., 602 B.R. 564 (Bankr. S.D.N.Y. 2019). “11 U.S.C. § 562 (a). Subparagraphs (A)(i) and (A)(x) of section 741 of the Bankruptcy Code define a "securities contract" to include, among other things, "a contract for the purchase, sale, or loan of a security" and "a master agreement that provides for an agreement or…”
Conway Hosp., Inc. v. Lehman Bros. Holdings Inc., 531 B.R. 339 (Bankr. S.D.N.Y. 2015). “” 11 U.S.C. § 562 (a); see also Taunton Mun.”
Maverick Long Enhanced Fund, Ltd. v. Lehman Bros. Holdings Inc. (In re Lehman Bros. Holdings Inc.), 594 B.R. 564 (S.D. Ill. 2018). “11 U.S.C. § 562 (a) (emphasis added). Relying on this language, Lehman argues that damages should be measured as of the date the Settlement Agreement became effective, which operated, it contends, to terminate all of the relevant agreements, including the Guarantee.”
Sec. Inv. Prot. Corp. v. Bernard L. Madoff Inv. Sec. LLC (In re Madoff), 490 B.R. 59 (S.D.N.Y. 2013). “The Settlement Does Not Violate 11 U.S.C. § 562 (a)(1) Section 362(a)(1) of the Bankruptcy Code provides that the automatic stay applies to any action arising pre-petition “against the debtor .”
Duggan v. Sansberry, 327 U.S. 499 (1946). “” In connection with § 161, see §' 162, 11 U. S. C. § 562 . 10 National’s petition for reorganization alleged: “This subsidiary corporation is unable to meet its debts as they mature .”
Hutson v. Smithfield Packing Co. (In Re Nat'l Gas Distributors, LLC), 369 B.R. 884 (Bankr. E.D.N.C. 2007). “See 11 U.S.C. § 562 . These exceptions to the trustee’s avoidance powers were intended to avoid the greater danger of market disruption and instability in the financial markets due to the domino effect likely as a result of some types of transfer avoidance.”
Sec. Inv. Prot. Corp. v. Lehman Bros., 433 B.R. 127 (Bankr. S.D.N.Y. 2010). “” 11 U.S.C. § 562 . In addition, because the parties’ practice of offsetting or netting their respective obligations across multiple securities contracts constituted a “master netting agreement,” Section 561 of the Bankruptcy Code provides “yet another level of protection to…”
Wells Fargo Bank, N.A. v. HomeBanc Corp. (In re HomeBanc Mortg. Corp.), 573 B.R. 495 (Bankr. D. Del. 2017). “11 U.S.C. § 562 . . AMH II, 637 F.3d at 257 .”
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