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PT Glossary of Terms

 

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ABANDONMENT -- The act, usually of a Chapter 7 trustee, of declaring a potential estate asset valueless which moves the property from the estate to its original owner. The automatic stay protects property in both places, the discharge only protects property in the estate from a secured creditor's action.


THE ACT -- The federal bankruptcy law prior to the Bankruptcy Reform Act of 1977 is referred to as the Act. The current law is referred to as the Bankruptcy Code.

 

ADMINISTRATION OF ESTATE -- The process of collecting, selling and distributing that occurs in the bankruptcy process.

 

ADMINISTRATIVE EXPENSES -- An expense incurred by a trustee or debtor in possession administering an estate given higher priority than most other estate pay outs.

 

ADVERSARY PROCEEDING -- A court action beyond the base case. They are formal matters where most federal rules of civil procedure apply.

 

AFFIRMATION -- A misspelling or lazy pronunciation of reaffirmation.


AMENDMENTS -- Bankruptcy schedules are complex and detailed. The Federal Bankruptcy Rules allow amendments liberally. Although subsequent filings may involve additional filing fees and late disclosures are always suspect, creditors are routinely forgotten at filing and added later when they first are remembered.

 

ASSETS OF THE ESTATE -- The debtor's property rights as determined by state and federal law on the petition filing date together with post-petition accumulations where the law gathers property.

 

AUTOMATIC STAY -- The significant protection a debtor receives immediately upon filing bankruptcy, which stops creditor collection procedures.

 

BALLOTS -- The forms used to collect consents or objections in reorganization proceeding, especially Chapter 11.

 

BANKRUPTCY CODE -- See The Act.

 

BUZZ WORD -- Vocabulary used in a trade, industry or group that takes on local meaning -- this glossary contains the main

bankruptcy buzz words.


CASH COLLATERAL -- Cash on hand in a debtor's estate which is secured creditor's collateral, usually "proceeds", which raises a higher burden of adequate protection and requires official court permission or consent prior to use, as well as segregated accountings.


CHAPTER 7 -- The operating chapter of the bankruptcy code under which a debtor loses all non-exempt property in exchange for bankruptcy protection.

 

CHAPTER 9 -- The operating chapter of the bankruptcy code whereby a municipality may reorganize.

 

CHAPTER 11 -- The operating chapter of the bankruptcy code whereby significant enterprises reorganize.

 

CHAPTER 12 -- The operating chapter of the bankruptcy code whereby certain agricultural enterprises may reorganize.

 

CHAPTER 13 -- The operating chapter of the bankruptcy code whereby individuals, or husband and wives, with regular incomes may pay payments in lieu of giving up assets to obtain bankruptcy relief.

 

CLAIMS AND INTERESTS -- Obligations owed to creditors are considered unsecured or secured claims by the bankruptcy code. Interests are the equity position of stock holders or partners.

 

CODE -- See The Act.


CREDITORS' COMMITTEE -- A statutory requirement of Chapter 11 is to appoint such a committee to make possible pooling the twenty largest unsecured creditors, to allow action as a group to save expenses.


COMMITTEE OF CREDITORS -- See Creditors' Committee.


COMPROMISE OF CONTROVERSY -- Under a bankruptcy rule, any settlement made by a bankruptcy trustee or debtor-in-possession must be approved by the court after notice and hearing.


CONFIRMATION -- The process whereby court approval is obtained for a plan of reorganization.

 

CONSUMER CASE -- A case where the predominant portion of the claims listed are for consumer transactions.

 

CONSUMER CREDITOR -- A creditor who provides personal rather than business related credit.


CONTEMPT -- The civil power of a court to punish (quasi-criminal) wrongdoing.

 

CONTESTED MATTERS -- Raised on motions format, rather than formal complaint form that include most non-adversary matters brought before the bankruptcy code.


CONVERSION -- The process whereby a bankruptcy case where relief is sought under one Chapter, is converted to a case whereby relief is sought under another chapter. (i.e. a Chapter 13 debtor may convert a case not previously converted to a Chapter 7 case).


CREDITOR -- Now either an unsecured claimant or a secured claimant based entirely on the value of the claimant's equity in collateral.

 

DEBTOR -- The entity petitioning or being petitioned against, for bankruptcy relief, becomes a debtor.


DEBTOR-IN-POSSESSION (D.I.P.) -- A Chapter 11 debtor where no trustee is appointed. By definition a debtor-in-possession has all the power of a bankruptcy trustee.

 

DISCHARGE -- The final order giving a debtor permanent relief from a creditor's ability to collect an obligation.

 

DISCHARGEABILITY -- The applicability of a discharge to an individual debt.


DISCLOSURE STATEMENT -- The formal presentation required in Chapter 11 prior to the circulation of a Chapter 11 plan for confirmation.

 

ESTATE -- The property administered for the benefit of creditors in a bankruptcy proceeding.

 

EXEMPT PROPERTY -- Property removed, by a debtor's claiming same as a right under law, from inclusion in a bankruptcy estate. 


EX PARTE -- Latin for "without the other party". Bankruptcy judges are not to be contacted ex parte.

 

EXECUTORY CONTRACTS -- The bankruptcy code terminology used for leases and other contracts where one party's performance is continually required.

 

EXAMINER -- An official possibly appointed by the court on request of a party in interest in Chapter 11 proceedings to investigate a debtor's affairs. Usually they check into wrongdoing.


FEDERAL BANKRUPTCY RULES -- The official rules adopted for U.S. bankruptcy courts by the U.S. Supreme Court. Together with the substantive law of the bankruptcy code, they govern bankruptcy courts.

 

FINAL DECREE -- The order closing a bankruptcy case off the court docket.


FINANCIAL AFFAIRS STATEMENT -- A required written submission by every debtor normally filed with the petition.

 

FINANCIAL REPORTING -- In Chapter 11 cases, and some Chapter 12 and 13 cases, periodic reports of the debtor's financial actions are required.


HUSBAND AND WIFE -- A unit allowed to petition for bankruptcy relief and pay one filing fee under operative Chapters 7, 11, 12, and 13.


INDIVIDUAL DEBT ADJUSTMENT -- Probably a reference to the bankruptcy act, now occasionally used by old timers to refer to the current operative Chapter 13.

 

INTERIM TRUSTEE -- The official appointed initially by the U.S. Trustee to administer Chapter 7 estates. In most cases, the same person also serves as permanent trustee.

 

INTERLOCUTORY ORDER -- An order of the bankruptcy court that lacks appealability because it is not final or dispositive of all of the issues.


JOINT ADMINISTRATION -- In closely related cases it is possible to have notices and hearings consolidated for administrative purposes.


JURISDICTION -- The power of a court to act over 1) subject matter; and 2) the parties involved.


LIQUIDATION -- The process that occurs in Chapter 7 cases and that requires a calculation in Chapters 11, 12 and 13, as each must pay out as much to creditors as would a chapter 7.

 

LOCAL BANKRUPTCY RULES -- The official Bankruptcy Court Rules allow each local court to adopt rules and sign general orders that govern certain policies within a local district. These are normally referred to as the Local District Court's Rules and may govern significant procedural requirements.

 

MEETING OF CREDITORS/341 MEETING -- The bankruptcy court process involves at least one meeting of the debtor with creditors pursuant to code Section 341.

 

NOTICE AND HEARING -- A term of art in the bankruptcy code.  It means not an actual hearing, but only such notice as appropriate and an opportunity for a hearing if one is required.

 

OFFICIAL FORMS -- The U.S. Court system adopts rules which contain certain official forms that set the standard for many bankruptcy court pleadings. Substantial similarity is required of any form used as an alternative.


PETITION -- The single pleading a debtor signs and files in a bankruptcy court requesting relief under an operative Chapter of the bankruptcy code. Used collectively, that form and its sundry attachments.

 

PLAN -- The document conveying the proponent's intentions in a Chapter 11, 12 or 13, which is put into effect by confirmation (e.g. how and when the creditors are going to be paid).


POST-PETITION -- That period in time after a debtor files a bankruptcy petition in a bankruptcy court.


POST-PETITION TRANSFERS -- A transfer of property (including collateral) after a petition in bankruptcy court has been filed.


PREFERENCE -- A transfer that prefers one creditor over other creditors in the same class, avoidable by statutory trustee powers.

 

PRIORITY -- The order of claim distribution.

 

PROOF OF CLAIM -- The form a creditor or interest holder files to participate

 

   

 

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