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Common Definitions Used by Bankruptcy Attorneys in a Chapter 11 Plan

June 9, 2014 by  
Filed under Blog

Bankruptcy attorneys often use specialized terms to communicate with each other and the Court. This can be confusing for anyone who is not a bankruptcy attorney. Attached is a list of terms commonly used in a Chapter 11 Bankruptcy Plan, along with their definitions. Moreover, many of these terms are also used in chapter 7 and chapter 13 of bankruptcy. An experienced bankruptcy attorney will be able to help you with the terminology used in bankruptcy cases. Here are some common terms and the way they are often defined in a Chapter 11 Bankruptcy:

1. “Administrative Claim”  means a Claim for administrative costs or expenses entitled to priority under Section 507(a)(1) or (b) of the Bankruptcy Code, including, without limitation, the actual, necessary costs and expenses of preserving the estate and operating the business of the Debtor. Such sums shall include wages, salaries or commissions due employees and others for services rendered after the commencement of the Case, compensation for legal and other professional services and reimbursement of expenses awarded under Sections 330(a) or 331 of the Code and all lawful fees and charges assessed against the estate under title 28 of the United States Code.

2. “Allowed Administrative Claim” means all or that portion of a Claim which both constitutes an Allowed Claim and which has been specifically allowed as an “Administrative Claim” pursuant to 11 U.S.C. §507(a)(1) or (b).

3. “Allowed Amount”  means the amount of any Allowed Claim recognized by the Debtor as valid or allowed by a Final Order of this Court.

4. “Allowed Claim or Allowed Interest” means a Claim or Interest having the following characteristics:

a) Either such Claim or Interest was listed in the Chapter 11 Schedules of the Debtor filed with the United States Bankruptcy Court for the District of Nevada (hereafter, the “Court”) pursuant to Section 521 of the Code; and (1) such Claim or Interest was not identified in those schedules as “disputed”, “contingent” or “unliquidated”; or (2) proof of such Claim or Interest has been filed with the Court in the time and in the manner prescribed by the Court, the Code and the Federal Rules of Bankruptcy Procedure; and

b) No objection to the allowance of such Claim or Interest has been interposed within the periods of limitation fixed by the Court, the Code or the Federal Rules of Bankruptcy Procedure or any order resolving any objection to the allowance of such Claim or Interest has become a Final Order.

5. “Allowed Secured Claim”  means all or that portion of a Claim which both constitutes an Allowed Claim and which has been specifically allowed as a “secured claim” pursuant to Section 506(a) of the Code.

6. “Allowed Priority Claim” means all or that portion of a Claim which both constitutes an Allowed Claim and which is entitled to priority under Section 507(a), except for those Allowed Claims entitled to priority under Section 507(a)(8).

7. “Allowed Priority Tax Claim”  means all or that portion of a Claim which both constitutes an Allowed Claim and which is entitled to priority under Section 507(a)(8).

8. “Allowed Unsecured Claim” means an Allowed Claim which is not an Allowed Administrative Claim, an Allowed Secured Claim, an Allowed Priority Claim or an Allowed Priority Tax Claim.

9. “Avoidance Claim” means a claim or cause of action of a bankruptcy estate to avoid transfers made by the debtor to the extent such claim arises under §§ 544-551 of the Bankruptcy Code.

10. “Bankruptcy Code” or “Code” means the federal statutes commonly referred to as the “Bankruptcy Code” and which are set forth in Title 11 of the United States Code (11 U.S.C. § 101, et seq.).

11. “Bankruptcy Court” means the United States Bankruptcy Court.

12. “Case” shall mean a Chapter 11 bankruptcy cases of Debtor, pending in the United States Bankruptcy Court.

13. “Claim”  means a “claim,” as defined by Section 101(5) of the Code, against the Debtor, against property of the Debtor or against property of the Estate.

14. “Class” shall mean any class into which Allowed Claims or Allowed Interests are classified pursuant to this Plan.

15. “Collateral” shall mean any real or personal property in which a person holding a Claim asserts a lien.

16. “Confirmation” shall mean the signing, by a United States Bankruptcy Judge or United States District Judge acting as a trial judge and not as an appellate judge, of all orders necessary to confirm the Plan.

17. “Confirmation Order” shall mean the order (or orders) confirming the Plan, signed by a United States Bankruptcy Judge or United States District Judge, acting as a trial judge and not as an appellate judge, after entry of such order (or orders) on the court’s docket.

18. “Consummation of the Plan” shall mean the accomplishment of all things contained or provided for in the Plan and the entry of an order closing the Case pursuant to Rule 3022 of the Federal Rules of Bankruptcy Procedure.

19. “Court” shall mean Bankruptcy Court as defined in this section of the Plan. When not capitalized, the word “court” shall mean such court exercising proper jurisdiction in the case as the context of the Plan makes appropriate. For example, as used in the phrase “entry of an order on the docket of the court”, the term “court” can refer to the United States Bankruptcy Court , the United States District Court, the Circuit Court or the United States Supreme Court, depending upon which court has issued the order in the Case.

20. “Creditor” shall mean any entity holding a Claim.

21. “Cure Amount” shall mean the amount necessary to cure any payment arrearages with respect to any executory contracts and leases to be assumed by the Debtor.

22. “Debtor” shall means the entity commencing a voluntary Case.

23. “DIP” shall mean Debtor-in-Possession.

24. “Disallowed Claim” shall mean any Claim or any portion thereof that (i) has been disallowed by a Final Order of the Bankruptcy Court, (ii) is listed in the Schedules as “$0,” contingent, disputed or unliquidated and as to which a proof of claim bar date has been established but no Proof of Claim has been timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy Court or otherwise deemed timely filed under applicable law, (iii) has been agreed to be equal to “$0″ or to be expunged pursuant to the Claims Settlement Procedures Order or otherwise or (iv) is not listed on the Schedules and as to which a proof of claim bar date has been established but no Proof of Claim has been timely filed or deemed timely filed with the Bankruptcy Court pursuant to either the Bankruptcy Code or any Final Order of the Bankruptcy Court or otherwise deemed timely filed under applicable law.

25. “Disclosure Statement” shall mean the written disclosure statement the Debtor filed in this Case and approved by the Court pursuant to Section 1125 of the Code.

26. “Disputed Claim” or “Disputed Interest” shall mean either (a) a Claim or an Interest listed in the Chapter 11 schedules filed by the Debtor pursuant to 11 U.S.C. §521 and designated as “disputed”, “contingent” or “unliquidated”; or (b) a Claim or an Interest to which an objection has been filed by a party-in-interest and which objection has not been resolved by an order which has become a Final Order on or before the Effective Date.

27. “Distribution Date” shall mean any of (i) the Initial Distribution Date, (ii) each Interim Distribution Date and (iii) each Final Distribution Date.

28. “Effective Date” shall means that date designated by the plan usually the date which is  fourteen (14) days following the date of the entry of the Confirmation Order.

29. “Estate” shall mean the estate created in this Case under Section 541 of the Bankruptcy Code.

30. “Equity Holder” shall mean any holder of an Interest.

31. “Federal Rules of Bankruptcy Procedure” shall mean those rules of procedure governing bankruptcy cases and contested matters and adversary proceedings in those cases which have been promulgated pursuant to 28 U.S.C. § 2075, and any amendments to those rules applicable to this Case.

32. “Final Order” shall mean an order or judgment entered on the Court’s official docket and which: (a) has sufficient finality under applicable law to be appealable as of right, (b) has been entered on the court’s docket for a sufficient period of time such that the filing of any notice of appeal from it is subject to being dismissed as commencing an untimely appeal, (c) has not been reversed, (d) is not stayed, (e) is not the subject of a pending motion seeking relief from it, reconsideration of it, or to alter or amend it, and (f) is not the subject of a pending appeal or a pending motion for review or rehearing on appeal.

33. “General Unsecured Claim” shall mean a Claim, other than an Administrative Claim, a Priority Tax Claim, or a Secured Claim.

34. “Impaired” shall mean any Claim or Interest that is impaired within the meaning of section 1124 of the Bankruptcy Code.

35. “Impaired Claims” shall mean any claim or interest which is modified by this Plan.

36. “Insider” of a Person shall mean a person or entity that would be an “insider” of such Person under § 101(31) of the Bankruptcy Code, if such Person were a Debtor.

37. “Interest” shall mean the interests, whether or not asserted, of any holder of an equity security of the Debtor on the Order For Relief Date, as defined in Bankruptcy Code section 101(17) of the Bankruptcy Code.

38. “Lien” has the meaning set forth in section 101(37) of the Bankruptcy Code.

39. “Petition” shall mean the petition for relief under Chapter 11 of Title 11, United States Code filed by the Debtor on 12th, 2012.

40. Petition Date” shall mean the date upon which the Debtor filed its voluntary petitions for relief under Chapter 11 of Title 11, United States Code.

41. “Plan” shall mean this Chapter 11 Plan of Reorganization, including all exhibits to this Plan, either in their present form or as they may be altered, amended or modified from time to time in accordance with the provisions of this Plan, the Code and the Federal Rules of Bankruptcy Procedure.

42. “Priority Claim” shall mean a Claim entitled to priority against the Estate under Section 507(a), except for those Claims arising under Section 507(a)(8). Priority Claims do not include any Claims incurred after the Order For Relief Date.

43. “Priority Tax Claim” shall mean a Claim entitled to priority against the Estate under Section 507(a)(8). Priority Tax Claims do not include any Claims incurred after the Order For Relief Date.

49. “Professional” shall mean a person retained in the Chapter 11 Cases by separate Bankruptcy Court order pursuant to sections 327 and 1103 of the Bankruptcy Code or otherwise, but not including any person retained pursuant to the Ordinary Course Professionals Order.

44. “Proof of Claim” means a proof of claim filed by a holder of a Claim in accordance with the Bar Date Order.

45. “Reorganized Debtor” shall mean the Debtor, as reorganized, and having the rights, powers, duties and interests granted to the “Reorganized Debtor” under the Plan and the Bankruptcy Code.

46. “Schedules” means the schedules of assets and liabilities and the statements of financial affairs filed by the Debtors pursuant to section 521 of the Bankruptcy Code, as such schedules and statements have been or may be supplemented, modified or amended from time to time.

47. “Secured Creditor” shall mean any Creditor holding a lien, security interest, or other encumbrance which either (a) had been properly perfected, as required by law, with respect to the property owned by the Debtor on the Petition Date or (b) which had been conveyed to that Creditor following the date of the Petition and approval by the Court; and which is neither subject to a pending proceeding seeking to vacate or disallow it nor vacated or disallowed by court order or operation of law.

48. “Secured Parties” shall mean all secured creditors referenced in this Plan and the Disclosure Statement.

49. “Unimpaired” refers to any Claim or Interest that is not Impaired.

50. “Unsecured Claims” shall mean the class of allowed general unsecured claims.

51. “Unsecured Creditor” shall mean any holder of an Allowed Unsecured Claim.

52. “Unsecured Creditor Class” shall mean the class of holders of Allowed Unsecured Claims.

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