11 U.S.C. § 702

Election of trustee

Read at: OLRCuscode.house.gov CornellLII GovInfogovinfo.gov JustiaTitle 11 CasesGoogle Scholar

(a) A creditor may vote for a candidate for trustee only if such creditor—(1) holds an allowable, undisputed, fixed, liquidated, unsecured claim of a kind entitled to distribution under section 726(a)(2), 726(a)(3), 726(a)(4), 752(a), 766(h), or 766(i) of this title;(2) does not have an interest materially adverse, other than an equity interest that is not substantial in relation to such creditor’s interest as a creditor, to the interest of creditors entitled to such distribution; and(3) is not an insider.(b) At the meeting of creditors held under section 341 of this title, creditors may elect one person to serve as trustee in the case if election of a trustee is requested by creditors that may vote under subsection (a) of this section, and that hold at least 20 percent in amount of the claims specified in subsection (a)(1) of this section that are held by creditors that may vote under subsection (a) of this section.(c) A candidate for trustee is elected trustee if—(1) creditors holding at least 20 percent in amount of the claims of a kind specified in subsection (a)(1) of this section that are held by creditors that may vote under subsection (a) of this section vote; and(2) such candidate receives the votes of creditors holding a majority in amount of claims specified in subsection (a)(1) of this section that are held by creditors that vote for a trustee.(d) If a trustee is not elected under this section, then the interim trustee shall serve as trustee in the case.(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2604; Pub. L. 97–222, § 7, July 27, 1982, 96 Stat. 237; Pub. L. 98–353, title III, § 472, July 10, 1984, 98 Stat. 380.)Historical and Revision Noteslegislative statements

The House amendment adopts section 702(a)(2) of the Senate amendment. An insubstantial equity interest does not disqualify a creditor from voting for a candidate for trustee.

senate report no. 95–989

Subsection (a) of this section specifies which creditors may vote for a trustee. Only a creditor that holds an allowable, undisputed, fixed, liquidated, unsecured claim that is not entitled to priority, that does not have an interest materially adverse to the interest of general unsecured creditors, and that is not an insider may vote for a trustee. The phrase “materially adverse” is currently used in the Rules of Bankruptcy Procedure, rule 207(d). The application of the standard requires a balancing of various factors, such as the nature of the adversity. A creditor with a very small equity position would not be excluded from voting solely because he holds a small equity in the debtor. The Rules of Bankruptcy Procedure also currently provide for temporary allowance of claims, and will continue to do so for the purposes of determining who is eligible to vote under this provision.

Subsection (b) permits creditors at the meeting of creditors to elect one person to serve as trustee in the case. Creditors holding at least 20 percent in amount of the claims specified in the preceding paragraph must request election before creditors may elect a trustee. Subsection (c) specifies that a candidate for trustee is elected trustee if creditors holding at least 20 percent in amount of those claims actually vote, and if the candidate receives a majority in amount of votes actually cast.

Subsection (d) specifies that if a trustee is not elected, then the interim trustee becomes the permanent trustee and serves in the case permanently.

Editorial NotesAmendments

1984—Subsec. (b). Pub. L. 98–353, § 472(a), inserted “held” after “meeting of creditors”.

Subsec. (c)(1). Pub. L. 98–353, § 472(b)(1), inserted “of a kind” after “claims”.

Subsec. (c)(2). Pub. L. 98–353, § 472(b)(2), substituted “for a trustee” for “for trustee”.

Subsec. (d). Pub. L. 98–353, § 472(c), substituted “this section” for “subsection (c) of this section”.

1982—Subsec. (a)(1). Pub. L. 97–222 substituted “726(a)(4), 752(a), 766(h), or 766(i)” for “or 726(a)(4)”.

Statutory Notes and Related SubsidiariesEffective Date of 1984 Amendment

Amendment 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.

Notes of Decisions

Cited in 292 cases (11 in the last 5 years), 1941–2026 · leading case: In Re Tbr USA, Inc., 429 B.R. 599 (Bankr. N.D. Ind. 2010).

Sort: Relevance Newest Treatment

In Re Tbr USA, Inc., 429 B.R. 599 (Bankr. N.D. Ind. 2010). · cites it 61× “Whether Diane Worstell is entitled to vote her interest in claim #2, *609 # 3 and # 4 in favor of the election of a Trustee pursuant to 11 U.S.C. § 702 (a)(1) on or after the date of filing.”

Matter of Lindell Drop Forge Co., 111 B.R. 137 (Bankr. W.D. Mich. 1990). · cites it 14× “Brenco and the UAW, through their respective attorneys, sought to elect Ken Kazerski, as the permanent trustee, pursuant to 11 U.S.C. § 702 (a). Robert Lee, the UAW Unit Chairman of the Debt- or; Clifford Kibiloski, a retiree from the Debtor; Jerry Lerma, Jr.”

In Re Blesi, 43 B.R. 45 (Bankr. D. Minn. 1984). · cites it 10× “The question arises under 11 U.S.C. § 702 of the Bankruptcy Code. For the reasons outlined below, I am confirming the election of Howard Maimón as Trustee of this Chapter 7 case.”

In re Barkany, 542 B.R. 662 (Bankr. E.D.N.Y. 2015). · cites it 9× “At issue is whether the Canadian Northern Creditors hold an interest materially adverse to other creditors of this bankruptcy estate, and therefore, are ineligible under 11 U.S.C. § 702 (a)(2) to request for and vote at the election of the permanent chapter 7 trustee.”

Caudill v. N.C. Mach., Inc. (In Re Am. Eagle Mfg., Inc.), 231 B.R. 320 (9th Cir. BAP 1999). · cites it 8× “11 U.S.C. § 702 (a). An election is valid only if creditors holding 20% of eligible claims request an election.”

Druker v. Green (In Re Carla Leather, Inc.), 50 B.R. 764 (S.D.N.Y. 1985). · cites it 3× “11 U.S.C. § 702 (1982). 4 The four creditors voted their claims for Andrew J.”

In Re: Wayne E. Bell, Jr., Debtor. Wayne E. Bell, Jr. v. Deborah Bell, 225 F.3d 203 (2d Cir. 2000). · cites it 2× “1992) (holding that post-conversion meeting of creditors required to elect Chapter 7 trustee, pursuant to 11 U.S.C. § 702 , is not meeting of creditors pursuant to Rule 2003(a)).”

Steege v. Lyons (In Re Lyons), 130 B.R. 272 (Bankr. N.D. Ill. 1991). · cites it 3× “Pursuant to 11 U.S.C. § 702 (d), the Trustee became the permanent trustee because the creditors did not elect a different trustee at that section 341 meeting of creditors.”

Commodity Futures Trading Comm'n v. Weintraub, 471 U.S. 343 (1985). “Respondents argue, however, that the trustee should not obtain control over the privilege because, unlike the management of a solvent corporation, the trustee’s primary loyalty goes not to shareholders but to creditors, who elect him and who often will be the only beneficiaries…”

In Re Sandhurst Sec., Inc., 96 B.R. 451 (Bankr. S.D.N.Y. 1989). · cites it 6× “Prudential-Bache’s claim was objected to as being disputed, and, therefore, it was asserted that Prudential-Bache was not eligible to vote pursuant to 11 U.S.C. § 702 (a)(1). Id., ¶ 7 . 2 The basis of the *453 dispute is grounded in an adversary proceeding commenced by the…”

Reading Co. v. Brown, 391 U.S. 471 (1968). · cites it 2× “NOTES [1] Section 302 of the Act, as set forth in 11 U. S. C. § 702 , provides in part as follows: "The provisions of chapters 1-7 of this title shall, insofar as they are not inconsistent with or in conflict with the provisions of this chapter [XI], apply in proceedings under…”

Matter of Blanchard Mgmt. Corp., 10 B.R. 186 (Bankr. S.D.N.Y. 1981). · cites it 5× “This decision turns on the provisions of 11 U.S.C. § 702 of the Bankruptcy Code. 2 Un *188 der the Bankruptcy Act 3 election of the person nominated to be trustee at the creditors meeting required a consensus of a majority in number and amount of the creditors who appeared to…”

Show all 292 citing cases →

Annotations are extracted automatically from the opinions in the Syfert caselaw corpus and ranked by authority, recency, and treatment. Dots show Syfertize treatment of the citing case itself.