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TITLE 11.
BANKRUPTCY · UNITED STATES CODE
Chapter 7.
Liquidation
Subchapter II. Collection, Liquidation, and Distribution of
the Estate
11
USC § 723. Rights of partnership trustee against general partners
(a) 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.
(b) To the extent practicable, the trustee shall first seek recovery of
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.
(c) Notwithstanding section
728(c) [sic--Section 728 was deleted by BAPCPA]
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.
(d) 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 determine an equitable distribution of the surplus so
recovered, and the trustee shall distribute such surplus to the estates of the
general partners in such partnership according to such determination.
[Rev. 5-20-05]
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