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U.S. Code as of:
01/19/04
Section 726. Distribution of property of the estate
(a) Except as provided in section 510 of this title, property of
the estate shall be distributed -
(1) first, in payment of claims of the kind specified in, and
in the order specified in, section 507 of this title, proof of
which is timely filed under section 501 of this title or tardily
filed before the date on which the trustee commences distribution
under this section;
(2) second, in payment of any allowed unsecured claim, other
than a claim of a kind specified in paragraph (1), (3), or (4) of
this subsection, proof of which is -
(A) timely filed under section 501(a) of this title;
(B) timely filed under section 501(b) or 501(c) of this
title; or
(C) tardily filed under section 501(a) of this title, if -
(i) the creditor that holds such claim did not have notice
or actual knowledge of the case in time for timely filing of
a proof of such claim under section 501(a) of this title; and
(ii) proof of such claim is filed in time to permit payment
of such claim;
(3) third, in payment of any allowed unsecured claim proof of
which is tardily filed under section 501(a) of this title, other
than a claim of the kind specified in paragraph (2)(C) of this
subsection;
(4) fourth, in payment of any allowed claim, whether secured or
unsecured, for any fine, penalty, or forfeiture, or for multiple,
exemplary, or punitive damages, arising before the earlier of the
order for relief or the appointment of a trustee, to the extent
that such fine, penalty, forfeiture, or damages are not
compensation for actual pecuniary loss suffered by the holder of
such claim;
(5) fifth, in payment of interest at the legal rate from the
date of the filing of the petition, on any claim paid under
paragraph (1), (2), (3), or (4) of this subsection; and
(6) sixth, to the debtor.
(b) Payment on claims of a kind specified in paragraph (1), (2),
(3), (4), (5), (6), (7), or (8) of section 507(a) of this title, or
in paragraph (2), (3), (4), or (5) of subsection (a) of this
section, shall be made pro rata among claims of the kind specified
in each such particular paragraph, except that in a case that has
been converted to this chapter under section 1009,(!1) 1112, 1208,
or 1307 of this title, a claim allowed under section 503(b) of this
title incurred under this chapter after such conversion has
priority over a claim allowed under section 503(b) of this title
incurred under any other chapter of this title or under this
chapter before such conversion and over any expenses of a custodian
superseded under section 543 of this title.
(c) Notwithstanding subsections (a) and (b) of this section, if
there is property of the kind specified in section 541(a)(2) of
this title, or proceeds of such property, in the estate, such
property or proceeds shall be segregated from other property of the
estate, and such property or proceeds and other property of the
estate shall be distributed as follows:
(1) Claims allowed under section 503 of this title shall be
paid either from property of the kind specified in section
541(a)(2) of this title, or from other property of the estate, as
the interest of justice requires.
(2) Allowed claims, other than claims allowed under section 503
of this title, shall be paid in the order specified in subsection
(a) of this section, and, with respect to claims of a kind
specified in a particular paragraph of section 507 of this title
or subsection (a) of this section, in the following order and
manner:
(A) First, community claims against the debtor or the
debtor's spouse shall be paid from property of the kind
specified in section 541(a)(2) of this title, except to the
extent that such property is solely liable for debts of the
debtor.
(B) Second, to the extent that community claims against the
debtor are not paid under subparagraph (A) of this paragraph,
such community claims shall be paid from property of the kind
specified in section 541(a)(2) of this title that is solely
liable for debts of the debtor.
(C) Third, to the extent that all claims against the debtor
including community claims against the debtor are not paid
under subparagraph (A) or (B) of this paragraph such claims
shall be paid from property of the estate other than property
of the kind specified in section 541(a)(2) of this title.
(D) Fourth, to the extent that community claims against the
debtor or the debtor's spouse are not paid under subparagraph
(A), (B), or (C) of this paragraph, such claims shall be paid
from all remaining property of the estate.
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