Section 725 of the House amendment adopts the substance contained in both the House bill and Senate amendment but transfers an administrative function to the trustee in accordance with the general thrust of this legislation to separate the administrative and the judicial functions where appropriate.
senate report no. 95–989
This section requires the court to determine the appropriate disposition of property in which the estate and an entity other than the estate have an interest. It would apply, for example, to property subject to a lien or property co-owned by the estate and another entity. The court must make the determination with respect to property that is not disposed of under another section of the bankruptcy code, such as by abandonment under section
, by sale or distribution under 363, or by allowing foreclosure by a secured creditor by lifting the stay under section
. The purpose of the section is to give the court appropriate authority to ensure that collateral or its proceeds is returned to the proper secured creditor, that consigned or bailed goods are returned to the consignor or bailor and so on. Current law is curiously silent on this point, though case law has grown to fill the void. The section is in lieu of a section that would direct a certain distribution to secured creditors. It gives the court greater flexibility to meet the circumstances, and it is broader, permitting disposition of property subject to a co-ownership interest.
1984—Pub. L. 98–353
substituted “distribution of property of the estate” for “distribution”.
Amendment by Pub. L. 98–353
effective with respect to cases filed 90 days after July 10, 1984, see section 552(a) ofPub. L. 98–353
, set out as a note under section
of this title.