---
kind: "section"
citation: "11 U.S.C. § 747"
title: "11"
title_heading: "Bankruptcy"
number: "747"
heading: "Subordination of certain customer claims"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/11/747"
units:
  - "Chapter 7 — Liquidation"
  - "Subchapter III — Stockbroker Liquidation"
---

# §747. Subordination of certain customer claims


Except as provided in [section 510 of this title](/usc/11/510.md), unless all other [customer](/usc/11/741.md?p=2) [net equity](/usc/11/741.md?p=6) [claims](/usc/11/101.md?p=5) have been paid in full, the trustee may not pay in full or pay in part, directly or indirectly, any [net equity](/usc/11/741.md?p=6) [claim](/usc/11/101.md?p=5) of a [customer](/usc/11/741.md?p=2) that was, on the date the transaction giving rise to such [claim](/usc/11/101.md?p=5) occurred—

- (1) an [insider](/usc/11/101.md?p=31);
- (2) a beneficial owner of at least five percent of any class of [equity securities](/usc/11/101.md?p=16) of the [debtor](/usc/11/101.md?p=13), other than—
  - (A) nonconvertible stock having fixed preferential dividend and liquidation rights; or
  - (B) interests of limited partners in a limited partnership;
- (3) a limited partner with a participation of at least five percent in the net assets or net profits of the [debtor](/usc/11/101.md?p=13); or
- (4) an [entity](/usc/11/101.md?p=15) that, directly or indirectly, through agreement or otherwise, exercised or had the power to exercise control over the management or policies of the [debtor](/usc/11/101.md?p=13).

## Source credit

(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2613; Pub. L. 97–222, § 13, July 27, 1982, 96 Stat. 238.)

## Notes

### Historical and Revision Notes

### senate report no. 95–989

Section 747 subordinates to other customer claims, all claims of a customer who is an insider, a five percent owner of the debtor, or otherwise in control of the debtor.

### Editorial Notes

### Amendments

1982—Pub. L. 97–222 substituted “the transaction giving rise to such claim occurred” for “such claim arose” in provisions preceding par. (1).