Source: https://www.mcrazlaw.com/a-bankruptcy-lexicon-2/
Timestamp: 2019-12-16 08:59:29
Document Index: 363546952

Matched Legal Cases: ['§ 554', '§ 361', '§ 363', '§ 707', '§ 1325', '§ 1129', '§ 1129', '§ 524', '§ 1125', '§ 101', '§ 365', '§ 548', '§ 101', '§ 365', '§ 362', '§ 523', '§ 1129', '§ 547']

A Bankruptcy Lexicon - Mesch Clark Rothschild
Order of the Bankruptcy Court or trustee disavowing any interest of the bankruptcy estate in particular property. (§ 554 of the Bankruptcy Code).
2. ADEQUATE PROTECTION.
That which need be afforded a secured creditor to enable a debtor to use the bankruptcy stay to hold off creditor’s attempts to foreclose. Adequate protection can take the form of equity cushion, periodic payments, additional collateral in the form of replacement liens, or the “indubitable equivalent.” Adequate protection should be sufficient security to the creditor so as to insure that he will eventually be paid his principal, accrued interest and expenses. (§ 361).
3. CASH COLLATERAL/CASH COLLATERAL ORDERS.
Cash or its equivalent in which a creditor has a security interest. Most commonly rents, or the proceeds of accounts receivable. Can be used by debtors only with the consent of the creditor or by Court order. Agreements governing the use of cash collateral are strangely known as cash collateral agreements, and usually need to be approved by the Court after notice to all creditors in a case. (§ 363).
Area of bankruptcy law in which cases are dismissed, often on subjective grounds by a Court deeming particular bankruptcy filings to be an abuse of the system. Good faith is required by provisions in Chapter 7 (§ 707(b)); in Chapter 13 for confirmation of a plan (§ 1325(a)(3); and for the confirmation of a plan in Chapter 11 (§ 1129(a)(3)).
Liquidation section of the Bankruptcy Code in which a debtor gives up non-exempt property in exchange for a discharge of indebtedness. Typically used by individuals.
6. CHAPTER 9.
Municipal reorganization used by cities, school districts, governmental subdivisions; e.g., In re the City of South Tucson.
7. CHAPTER 11.
Reorganization chapter of the Bankruptcy Code available to individuals, corporations or partnerships. Involves a restructuring of debt or a payment of a portion of amounts owed to unsecured creditors. Chapter 11 may also be used for the orderly liquidation of a business.
8. CHAPTER 12.
Adjustment of Debts of a Family Farmer with Regular Annual Income. Added to the Bankruptcy Code in an attempt to address the crisis in the Midwest with family farmers losing their property. Incorporates provisions of both Chapter 13 and Chapter 11.
9. CHAPTER 13.
Adjustment of Debts of an Individual with Regular Income. Usually used by consumers to make up arrearages on mortgages, car loans or tax obligations. Contemplates periodic payments to a trustee who then disburses money to the estate’s creditors.
10. BANKRUPTCY CODE/BANKRUPTCY ACT.
Bankruptcy Code designates the legislation more formally known as the Bankruptcy Reform Act of 1978. Cases filed under the Code are denominated by arabic numbers, e.g., Chapter 7. Cases filed under the Act or the Bankruptcy Act of 1898 were typically designated by roman numeral designations for the various chapters, e.g., Chapter XI. (Title 11 United States Code).
11. CRAMDOWN.
The confirmation of a Chapter 11 plan over the objection of a voting class of creditors. In Chapters 11 and 13, the confirmation of a plan which pays a secured creditor less than the amount of the debt owed it, instead, paying only the value of its collateral. (§§ 1129(b) and 1325(a)(5)).
12. DEBTOR-IN-POSSESSION.
The label affixed to the “new entity” created under bankruptcy law upon the filing of a petition for relief by a debtor who retains control of its property (Chapter 11 or Chapter 13). A debtor-in-possession is able to continue to control the financial affairs while a reorganization is put together. May be supplanted by a trustee for cause.
13. DISCHARGE.
The order entered after a petition for relief which renders a debtor’s obligations uncollectible at law and voids judgments against the debtor, and finally operates as an injunction against the commencement of an action to recover a pre-petitioned debt. (§ 524).
14. DISPOSABLE INCOME.
A Chapter 13 debtor’s income, after allowed expenses and domestic support obligations, which must be paid into a Chapter 13 plan for 3 to 5 years, which funds are used to repay creditors.
15. DISCLOSURE STATEMENT.
The document provided to creditors prior to the confirmation of a plan of reorganization which is to provide creditors sufficient information so as to make an intelligent decision on whether to vote for acceptance or rejection of the proposed plan. (§ 1125).
16. DROP DEAD AGREEMENT.
A contract entered into between a debtor and a secured creditor, typically approved by the Court, which provides that the automatic stay will automatically terminate so as to allow a secured creditor to foreclose its collateral if the debtor has not successfully reinstated the loan, paid it off or confirmed a plan of reorganization by an agreed upon date.
17. EQUITY CUSHION.
A ratio of the equity in property to the debt against particular property, used to determine if a secured creditor is adequately protected. While the range varies, some courts will find that a 20% equity cushion offers adequate protection to the secured creditor, justifying the denial of motions for relief from the stay.
18. EQUITY SECURITY HOLDERS.
Stockholders or limited partners. Equity participants. (§ 101(17)).
19. ESTATE.
The fictitious legal entity created upon the filing of a petition for relief under the bankruptcy laws, which takes title to all property previously held by the debtor. In Chapter 13, the Estate also includes post-petition wages and property acquired by the debtor after the commencement of the case but before a resolution.
20. EXECUTORY CONTRACT.
A contract or unexpired lease under which the obligation of both the debtor and the other party are so far unperformed that the failure of either to complete performance would constitute a material breach excusing performance of the other. Susceptible to being rejected by reorganizing debtors under particular circumstances. (§ 365).
21. FRAUDULENT CONVEYANCE.
Essentially, the transfer of an asset by a debtor with the intent to hinder, delay or defraud a creditor or for less than fair consideration within one year prior to the filing of the petition. A conveyance may also be rendered fraudulent where it renders the debtor insolvent or unable to meet its future obligations. By employing state law in Arizona, the analysis can look back at transactions occurring within the four years prior to the petition date. (§ 548).
22. INSIDER.
A person affiliated with the debtor, including a relative, a partner, an affiliate or a person in control. (§ 101(31)).
23. IPSO FACTO CLAUSES.
The common boilerplate provisions of security agreements or notes which provide that it will be a default of said agreements for the debtor to file bankruptcy or otherwise be economically embarrassed. Bankruptcy Code generally prohibits the enforcement of default based only such provisions. (§ 365).
24. LIFT STAY.
Refers to a motion or an action commenced by a creditor, usually a secured creditor, seeking the Bankruptcy Court’s permission to proceed against the debtor or Estate property, typically for the foreclosure of property in which the creditor has a security interest. (§ 362).
25. LIQUIDATION.
Typically a reference to Chapter 7 of the Bankruptcy Code which grants an individual debtor a discharge of its obligations in exchange for an attachment of the debtor’s non-exempt property.
26. LOCAL RULES OF PROCEDURE.
Like most courts, the Bankruptcy Court in the District of Arizona has promulgated local rules of procedure.
27. NON-DISCHARGEABLE DEBTS.
Obligations which are not susceptible to being discharged in Chapter 7 proceeding, and upon which there may be restrictions in Chapter 11 or 13 plans. Includes alimony and support, most taxes, student loans, debts induced by fraudulent means, obligations arising out of malicious acts and drunk driving. (§ 523(a)).
28. ORDER FOR RELIEF.
Upon the filing of a petition, the Bankruptcy Court immediately enters this order which grants relief per the Bankruptcy Code. It includes the automatic stay. No opportunity is afforded creditors to answer or controvert a petition. Instead, the order for relief is immediately entered upon receipt of petition, subject only to subsequent challenges by creditors that a discharge would be inappropriate.
29. PETITION.
That pleading filed by a debtor to commence a bankruptcy case, which results in the Court immediately issuing an order for relief. No other pleadings in a bankruptcy case are properly denominated petitions.
30. PLAN OF REORGANIZATION.
In Chapter 11, the proposal of a debtor for the restructuring of its indebtedness which need be accepted by at least one group of creditors and approved by the Court. In Chapter 13, a restructuring which will be approved by the Court so long as it meets the statutory criteria. (§§ 1129 and 1325).
31. PREFERENCE.
The transfer of an interest in property within ninety days prior to the filing of a bankruptcy petition or within one year to an insider which results in that creditor receiving more than it would under the pro rata distribution of assets through the bankruptcy process. A preference is susceptible to being set aside and the money recaptured by the trustee. (§ 547).
32. RULES OF BANKRUPTCY PROCEDURE.
As the title indicates, those rules of procedure which have been adopted by the Untied States Supreme Court setting forth practice and procedure for the bankruptcy process.
33. SALES FREE AND CLEAR OF LIENS AND INTERESTS.
Procedure peculiar to bankruptcy which allows the Court to issue an order selling estate property free and clear of all liens, claims and interests under particular circumstances. An effective means of selling estate property before lien priorities, validity of liens and other interests are determined.
34. SINGLE ASSET REAL ESTATE.
To which different standards apply in stay lift proceedings. A single real estate project or property, with less than four residential units, which generates substantially all of the debtor’s income, upon which no operating business is being conducted and which is encumbered by less than $4 million of secured debt.
To which expedited procedures may apply for simultaneous consideration of a Chapter 11 plan and disclosure statement. A business or person whose unsecured debt is $2 million or less, and who elects to be treated as a small business.
36. TRUSTEE.
An individual regularly appointed in Chapter 7 cases to administer, liquidate and distribute proceeds from the debtor’s non-exempt property. In Chapter 13 cases, the trustee is merely a disbursing agent who received the debtor’s periodic payments and disburses them amongst the creditors. In Chapter 11, a trustee may be appointed upon the finding of malfeasance or misfeasance by the debtor for the administration of the reorganization or for conversion of the case to Chapter 7.