Property of the Estate

Summary

This practice note provides an overview of Section 541 of the Bankruptcy Code, entitled "Property of the Estate." Understanding whether or not an asset is property of the bankruptcy estate and subject to the jurisdiction of the bankruptcy court when a case is filed is the first step to understanding the bankruptcy risk inherent in any transaction. The inquiry is under state or other applicable non-bankruptcy law. It requires parties to look at the property and property rights at issue and determine whether or not any part of that bundle of rights would become property of the estate, if one party to the transaction were to become a debtor under the Bankruptcy Code. This gating issue is of paramount importance, since the bankruptcy court presiding over a bankruptcy will have exclusive jurisdiction over any and all property of the estate. 28 U.S.C. § 1334(e). The term property of the estate is defined in Section 541(a) of the Bankruptcy Code.