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Bankruptcy Basics
Bankruptcy Judges Division
Administrative Office of the United States Courts
APRIL 2006
Revised Third Edition
For cases filed on or after October 17, 2005



The Discharge in Bankruptcy

Chapter 7. Liquidation Under the Bankruptcy Code

Chapter 13. Individual Debt Adjustment

Chapter 11. Reorganization Under the Bankruptcy Code

Chapter 12. Family Farmer Bankruptcy

Chapter 9. Municipality Bankruptcy

Chapter 15. Ancillary and Other Cross-Border Cases

SCRA. Servicemembers' Civil Relief Act

SIPA. Securities Investor Protection Act

Bankruptcy Terminology

Securities Investor Protection Act


Upon receipt of a written statement of claim, the trustee promptly discharges obligations of the debtor relating to cash and securities by delivering securities or making payments to or on behalf of the customer insofar as such obligations are ascertainable from books and records of the debtor, or are otherwise established to the satisfaction of the trustee. The value of securities delivered in this regard are calculated as of the close of business on the filing date. 15 U.S.C. 78fff-2(b).

The court must authorize the trustee to satisfy claims out of monies advanced by SIPC for this purpose, notwithstanding that the estate may not have sufficient funds for such payment. 15 U.S.C. 78fff-2(b)(1). The court is generally not involved in the process except to the extent that a dispute arises between the trustee and customers regarding specific claims. Simple objections stay with the initial adversary proceeding. Occasionally, however, significant litigation arises in this area which generates related actions in the form of additional adversary proceedings.