[Code of Federal Regulations]
[Title 17, Volume 1]
[Revised as of April 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 17CFR190.02]

[Page 617-620]
 
              TITLE 17--COMMODITY AND SECURITIES EXCHANGES
 
             CHAPTER I--COMMODITY FUTURES TRADING COMMISSION
 
PART 190_BANKRUPTCY--Table of Contents
 
Sec.  190.02  Operation of the debtor's estate subsequent to the filing date 

and prior to the primary liquidation date.

    Subsequent to the filing date and prior to the primary liquidation 
date, the debtor's estate shall be operated as follows:
    (a) Notices to the Commission and Designated Self-Regulatory 
Organizations--(1) General. Each commodity broker which files a petition 
in bankruptcy shall, at or before the time of such filing, and each 
commodity broker against which such a petition is filed shall, as soon 
as possible, but no later than one business day after the receipt of 
notice of such filing, notify the Commission and such broker's 
designated self-regulatory organization in accordance with Sec.  
190.10(a) of the filing date, the court in which the proceeding has been 
filed, and the docket number assigned to that proceeding by the court.
    (2) Of transfers under section 764(b) of the Bankruptcy Code. As 
soon as possible, but in no event later than the close of business on 
the third business day after the order for relief, the trustee, the 
applicable self-regulatory organization, or the commodity broker must 
notify the Commission in accordance with Sec.  190.10(a) whether such 
entity or organization intends to transfer or to apply to transfer open 
commodity contracts on behalf of the commodity broker in accordance with 
section 764(b) of the Bankruptcy Code and Sec.  190.06 (e) or (f).
    (b) Notices to customers--(1) Specifically identifiable property 
other than commodity contracts. The trustee must use its best efforts to 
promptly, but in no event later than two business days after entry of 
the order for relief, commence to publish in a daily newspaper or 
newspapers of general circulation approved by the court serving the 
location of each branch office of the commodity broker, for two 
consecutive days a notice to customers stating that all specifically 
identifiable property of customers other than open commodity contracts 
which has not otherwise been liquidated will be liquidated commencing on 
the fifth business day after the second publication date if the customer 
has not instructed the trustee in writing on or before the close of 
business on the fourth business day after the second publication date to 
return such property pursuant to the terms for distribution of 
specifically identifiable property contained in Sec.  190.08(d)(1) and, 
on the tenth business day after such second publication date, if such 
property has not been returned in accordance with such terms on or prior 
to that date. Such notice must describe specifically identifiable 
property in accordance with the definition in this part and must specify 
the terms upon which that property may be returned. Publication of the 
form of notice set forth in the appendix to this part will constitute 
sufficient notice for purposes of this paragraph (b)(1).
    (2) Request for instructions regarding transfer of open commodity 
contracts. The trustee must use its best efforts to request promptly, 
but in no event later than two business days after entry of an order for 
relief, customer instructions concerning the transfer or liquidation of 
the specifically identifiable open commodity contracts, if any, not 
required to be liquidated under paragraph (f)(1) of this section. The 
request for customer instructions required by this paragraph (b)(2) must 
state that the trustee is required to liquidate any such commodity 
contract for which transfer instructions have not been received on or 
before the close of business on the fifth business day after entry of 
the order for relief, and any such commodity contract for which 
instructions have been received which

[[Page 618]]

has not been transferred in accordance with Sec.  190.08(d)(2) on or 
before the close of business on the tenth business day after entry of 
the order for relief. A form of notice is set forth in the appendix to 
this part.
    (3) Involuntary cases. Prior to entry of an order for relief, and 
upon leave of the court, the trustee appointed in an involuntary 
proceeding may notify customers of the commencement of such proceeding 
and may request customer instructions with respect to the return, 
liquidation or transfer of specifically identifiable property, including 
open commodity contracts.
    (4) Notice of bankruptcy and request for proof of customer claim. 
The trustee must promptly notify each customer of record in writing that 
an order for relief has been entered and must instruct each such 
customer to file a proof of customer claim containing the information 
specified in paragraph (d) of this section. Such notice may be given 
separately from the notices required by paragraphs (b) (1) and (3) of 
this section.
    (c) Disposition of customer instructions in the event of a transfer 
pursuant to section 764(b) of the Bankruptcy Code. If the debtor's open 
commodity contracts have been, or are to be, transferred in accordance 
with section 764(b) of the Bankruptcy Code and Sec.  190.06, customer 
instructions previously received by the trustee with respect to open 
commodity contracts, or with respect to specifically identifiable 
property which is to be transferred with such contracts, shall be 
transmitted to the transferee of such contracts or property who shall 
comply therewith to the extent practicable.
    (d) Proof of customer claim. The trustee shall cause the proof of 
customer claim form referred to in paragraph (b)(4) of this section to 
set forth the bar date for its filing and to request that customers 
provide, to the extent reasonably possible, information sufficient to 
determine a customer's claim in accordance with the regulations 
contained in this part, including in the discretion of the trustee:
    (1) The class of commodity account upon which each claim is based;
    (2) The number of accounts held by each claimant, and the capacity 
in which they are held;
    (3) The equity as of the filing date of each account based on 
commodity transactions in that account;
    (4) Whether each account is a public or a non-public customer 
account;
    (5) Whether any account is a discretionary account;
    (6) A description of all claims against the debtor not based upon a 
commodity account of the claimant;
    (7) A description of all claims of the debtor against the claimant 
not included in the equity of a commodity account of the claimant;
    (8) A description of any deposits of money, securities or property 
with the debtor made by the claimant indicating the portion of such, if 
any, which was contained in the information provided in paragraph (d)(3) 
of this section and identifying any such property which would be 
specifically identifiable property as defined in Sec.  190.01(kk);
    (9) Whether the claimant is or was an ``affiliate,'' ``insider,'' or 
``relative'' of the debtor as these terms are defined by sections 101 
(2), (25), and (34), respectively, of the Bankruptcy Code;
    (10) The amount of the claimant's percentage interest in any joint 
account;
    (11) Whether the claimant's positions in security futures products 
are held in a futures account or a securities account, as these terms 
are defined in Sec. Sec.  1.3(vv) and (ww) of this chapter, 
respectively;
    (12) Whether the claimant wishes to receive payment in kind, to the 
extent possible, for any claim for securities; and
    (13) Copies of any documents which support the information contained 
in the proof of customer claim, including without limitation, customer 
confirmations, account statements, and statements of purchase or sale.

A proof of claim form which may be used by the trustee is set forth in 
the appendix to this part.
    (e) Transfers--(1) All cases. The trustee for a commodity broker 
must immediately use its best efforts to effect a transfer in accordance 
with Sec.  190.06 (e)

[[Page 619]]

and (f) no later than the close of business on the fourth business day 
after the order for relief of the open commodity contracts and equity 
held by the commodity broker for or on behalf of its customers.
    (2) Involuntary cases. A commodity broker against which an 
involuntary petition in bankruptcy is filed, or the trustee if a trustee 
has been appointed in such case, must use its best efforts to effect a 
transfer in accordance with Sec.  190.06 (e) and (f) of all open 
commodity contracts and equity held by the commodity broker for or on 
behalf of its customers and such other property as the Commission in its 
discretion may authorize, on or before the close of business on the 
fourth business day after the filing date, and immediately cease doing 
business: Provided, however, That the commodity broker may trade for 
liquidation only, unless otherwise directed by the Commission, by any 
applicable self-regulatory organization or by the court: And, Provided 
further, That if the commodity broker demonstrates to the Commission 
within such period that it was in compliance with the segregation and 
financial requirements of this chapter on the filing date, and the 
Commission determines, in its sole discretion, that such transfer or 
liquidation is neither appropriate nor in the public interest, the 
commodity broker may continue in business subject to applicable 
provisions of the Bankruptcy Code and of this chapter.
    (f) Liquidation or offset. After entry of the order for relief and 
subject to paragraph (e) of this section, which requires the trustee to 
attempt to make certain transfers permitted by Sec.  190.06 and section 
764(b) of the Bankruptcy Code, the following commodity contracts and 
other property held by or for the account of a debtor must be liquidated 
or offset by the trustee promptly and in an orderly manner, subject to 
limit moves and to applicable procedures under the Bankruptcy Code:
    (1) Open commodity contracts. All open commodity contracts except:
    (i) Dealer option contracts, if the dealer option grantor is not the 
debtor, which cannot be transferred on or before the close of business 
on the fourth business day after the order for relief; and
    (ii) Specifically identifiable commodity contracts as defined in 
Sec.  190.01(kk)(2) for which an instruction prohibiting liquidation is 
noted prominently in the accounting records of the debtor and timely 
received under paragraph (b)(2) of this section.

Notwithstanding the foregoing, an open commodity contract must be offset 
if: such contract is a futures contract which would otherwise remain 
open beyond the last day of trading, or the first day on which notice of 
intent to deliver may be tendered with respect thereto, whichever occurs 
first; such contract is a long option on a physical commodity which 
cannot be settled in cash and would be automatically exercised, has 
value and would remain open beyond the last day for exercise; such 
contract is a short option on a physical commodity which cannot be 
settled in cash; or, as otherwise specified in these rules.
    (2) Specifically identifiable property other than open commodity 
contracts. Specifically identifiable property other than open commodity 
contracts to the extent that:
    (i) The fair market value of such property is less than 90% of its 
fair market value on the date of entry of the order for relief; or
    (ii) The trustee has not received instructions to return, or has not 
returned, such property upon the terms contained in Sec.  190.08(d)(1) 
on or before the end of the period set forth in paragraph (b)(1) of this 
section.
    (3) All other property. All other property not required to be 
transferred or returned pursuant to customer instructions which has not 
been liquidated in accordance with paragraphs (f)(1) and (f)(2) of this 
section.
    (g) Treatment of open commodity contracts--(1) Margin payments by 
the trustee. Prior to the primary liquidation date, the trustee may make 
variation and maintenance margin payments to a commodity broker carrying 
the account of the debtor, as appropriate, pending liquidation of any 
open commodity contracts required to be liquidated under paragraph 
(f)(1) of this section, whether or not such contracts

[[Page 620]]

are specifically identifiable to a particular customer: Provided, That:
    (i) No payments may be made on behalf of accounts which are in 
deficit,
    (ii) No payments may be made on behalf of non-public customers or 
the debtor from funds which are segregated for the benefit of public 
customers,
    (iii) The trustee must make margin payments if payments of margin 
are received from customers after bankruptcy in response to margin 
calls, and
    (iv) No payments need be made to restore initial margin.
    (2) Margin calls. The trustee, or in the case of an involuntary 
bankruptcy, the commodity broker against which the petition is filed or 
the trustee if a trustee has been appointed, must issue margin calls 
with respect to any account in which the funded balance less the value 
on the date of return or transfer of any property previously returned or 
transferred does not equal or exceed:
    (i) 100% of the maintenance margin requirements of the applicable 
board of trade with respect to the open commodity contracts in such 
account; or
    (ii) If there are no such maintenance margin requirements, 100% of 
the clearing organization margin requirements applicable to the open 
commodity contracts in such account; or
    (iii) If there are no maintenance margin requirements or clearing 
organization margin requirements, then 50% of the initial margin 
applicable to the open commodity contracts in such account;

Provided, That no margin calls need be made by the trustee to restore 
initial margin. A margin call for such accounts should be made as soon 
as possible following the order for relief and the trustee shall be 
authorized, but not obligated, to liquidate any account for which such 
margin call is not met within a reasonable time as defined in Sec.  
190.04(e)(4): Provided, That the trustee must immediately liquidate any 
account which is in deficit.
    (3) Margin payments by the customer. The full amount of any margin 
payment by a customer in response to a margin call under paragraph 
(g)(2) of this section must be credited to the funded balance of the 
particular account for which it was made.

[48 FR 8739, Mar. 1, 1983, as amended at 67 FR 58298, Sept. 13, 2002]