11 U.S. Code § 364 - Obtaining credit
(a)
If the trustee is authorized to operate the business of the debtor under section
721,
1108,
1203,
1204, or
1304
of this title, unless the court orders otherwise, the trustee may
obtain unsecured credit and incur unsecured debt in the ordinary course
of business allowable under section
503
(b)(1) of this title as an administrative expense.
(b)
The court, after notice and a hearing, may
authorize the trustee to obtain unsecured credit or to incur unsecured
debt other than under subsection (a) of this section, allowable under
section
503
(b)(1) of this title as an administrative expense.
(c)
If the trustee is unable to obtain unsecured credit allowable under section
503
(b)(1)
of this title as an administrative expense, the court, after notice and
a hearing, may authorize the obtaining of credit or the incurring of
debt—
(d)
(e)
The reversal or modification on appeal of
an authorization under this section to obtain credit or incur debt, or
of a grant under this section of a priority or a lien, does not affect
the validity of any debt so incurred, or any priority or lien so
granted, to an entity that extended such credit in good faith, whether
or not such entity knew of the pendency of the appeal, unless such
authorization and the incurring of such debt, or the granting of such
priority or lien, were stayed pending appeal.
(f)
Except with respect to an entity that is an underwriter as defined in section
1145
(b)
of this title, section 5 of the Securities Act of 1933, the Trust
Indenture Act of 1939, and any State or local law requiring registration
for offer or sale of a security or registration or licensing of an
issuer of, underwriter of, or broker or dealer in, a security does not
apply to the offer or sale under this section of a security that is not
an equity security.
Source
(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2574; Pub. L. 99–554, title II, § 257(l),Oct. 27, 1986, 100 Stat. 3115; Pub. L. 103–394, title V, § 501(d)(9),Oct. 22, 1994, 108 Stat. 4144.)
Historical and Revision Notes
legislative statements
Section 364(f) of the House amendment is
new. This provision continues the exemption found in section 3(a)(7) of
the Securities Act of 1933 [15 U.S.C. 77c
(a)(7)]
for certificates of indebtedness issued by a trustee in bankruptcy. The
exemption applies to any debt security issued under section
364 of title
11. The section does not intend to change present law which exempts such securities from the Trust Indenture Act, 15 U.S.C. 77aaa, et seq. (1976).
senate report no. 95–989
This section is derived from provisions in
current law governing certificates of indebtedness, but is much
broader. It governs all obtaining of credit and incurring of debt by the
estate.
Subsection (a) authorizes the obtaining of
unsecured credit and the incurring of unsecured debt in the ordinary
course of business if the business of the debtor is authorized to be
operated under section
721,
1108, or
1304. The debts so incurred are allowable as administrative expenses under section
503
(b)(1). The court may limit the estate’s ability to incur debt under this subsection.
Subsection (b) permits the court to
authorize the trustee to obtain unsecured credit and incur unsecured
debts other than in the ordinary course of business, such as in order to
wind up a liquidation case, or to obtain a substantial loan in an
operating case. Debt incurred under this subsection is allowable as an
administrative expense under section
503
(b)(1).
Subsection (c) is closer to the concept of
certificates of indebtedness in current law. It authorizes the
obtaining of credit and the incurring of debt with some special
priority, if the trustee is unable to obtain unsecured credit under
subsection (a) or (b). The various priorities are (1) with priority over
any or all administrative expenses: (2) secured by a lien on
unencumbered property of the estate; or (3) secured by a junior lien on
encumbered property. The priorities granted under this subsection do not
interfere with existing property rights.
Subsection (d) grants the court the
authority to authorize the obtaining of credit and the incurring of debt
with a superiority, that is a lien on encumbered property that is
senior or equal to the existing lien on the property. The court may
authorize such a superpriority only if the trustee is otherwise unable
to obtain credit, and if there is adequate protection of the original
lien holder’s interest. Again, the trustee has the burden of proof on
the issue of adequate protection.
Subsection (e) provides the same
protection for credit extenders pending an appeal of an authorization to
incur debt as is provided under section
363
(l)
for purchasers: the credit is not affected on appeal by reversal of the
authorization and the incurring of the debt were stayed pending appeal.
The protection runs to a good faith lender, whether or not he knew of
the pendency of the appeal.
A claim arising as a result of lending or borrowing under this section will be a priority claim, as defined in proposed section
507
(a)(1),
even if the claim is granted a super-priority over administrative
expenses and is to be paid in advance of other first priority claims.
References in Text
Section 5 of the Securities Act of 1933, referred to in subsec. (f), is classified to section
77e of Title
15, Commerce and Trade.
The Trust Indenture Act of 1939, referred
to in subsec. (f), is title III of act May 27, 1933, ch. 38, as added
Aug. 3, 1939, ch. 411, 53 Stat. 1149, as amended, which is classified generally to subchapter III (§ 77aaa et seq.) of chapter
2A of Title
15. For complete classification of this Act to the Code, see section
77aaa of Title
15 and Tables.
Amendments
1994—Subsec. (a). Pub. L. 103–394, § 501(d)(9)(A), substituted “1203, 1204, or 1304” for “1304, 1203, or 1204”.
Subsec. (f). Pub. L. 103–394, § 501(d)(9)(B), struck out “(15 U.S.C. 77e)” after “Act of 1933” and “(15 U.S.C. 77aaa et seq.)” after “Act of 1939”.
Effective Date of 1994 Amendment
Amendment by Pub. L. 103–394effective
Oct. 22, 1994, and not applicable with respect to cases commenced under
this title before Oct. 22, 1994, see section 702 ofPub. L. 103–394, set out as a note under section
101 of this title.
Effective Date of 1986 Amendment
Amendment by Pub. L. 99–554effective
30 days after Oct. 27, 1986, but not applicable to cases commenced
under this title before that date, see section 302(a), (c)(1) ofPub. L. 99–554, set out as a note under section
581 of Title
28, Judiciary and Judicial Procedure.
The table below lists the classification updates, since Jan. 3, 2012, for this section. Updates to a broader range of sections may be found at the update page for containing chapter, title, etc.
The most recent Classification Table update that we have noticed was Tuesday, August 13, 2013
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