1) The act of a trustee to remove from the property of the estate assets that are burdensome or of inconsequential value to the estate. An asset with no equity or a meritless personal injury claim are common examples. 2) With reference to the debtor’s homestead: The debtor’s permanent termination of residence in the property, so that it no longer qualifies for the exemption. Abandonment is governed by Section 554 of the Bankruptcy Code.
Absolute Priority Rule
In a Chapter 11 case, the principle that no junior class of claims or interests may receive anything of value from the estate unless a more senior nonaccepting class of unsecured claims or interests is paid in full. (§ § 1129(b)(2)(B) and (C).
the court’s dismissal or suspension of a bankruptcy case, or its refusal to entertain related proceedings, on grounds of fairness or in deference to another court. (§305; 28 U.S.C. §1334(c)
the termination of the debtor’s right to pay a debt in installments or at a future maturity date, so that the debt becomes immediately payable.
a contractual provision entitling the creditor to accelerate payment under the contract upon the happening of a specified event, usually the debtor’s default.
Acceptance (of a Chapter 11 Plan)
The determination, by a majority vote of the members of a class of claims or interests, to acquiesce in a proposed Chapter 11 plan. (§1126)
a right to payment for goods sold or services rendered. (Also called a “receivable” or “account receivable.”)
an accounting method that measures all financial transactions of an entity. A debt owed is an accrued expense. An account receivable is accrued income.
A jury verdict that a criminal defendant is not guilty, or the finding of a judge that the evidence is insufficient to support a conviction.
A judge in the full-time service of the court. Compare to senior judge.
the providing of adequate protection to a nondebtor party to an executory contract subject to Bankruptcy Code Section 365. A trustee or debtor-in-possession assuming an executory contract must provide the nondebtor party to the contract with adequate assurance of future performance. An assignee of an executory contract must also provide adequate assurance of future performance. Providing adequate assurance includes curing existing defaults and convincing the creditor and the court that future performance will be rendered by the debtor.
methods of protecting a creditor’s interest in property of the estate during the pendency of the automatic stay. The making of periodic payments or the providing of additional or replacement collateral are methods of adequate protection. Section 361 statutorily defines adequate protection.
generally, all expenses incurred by a bankruptcy estate after a bank- ruptcy filing. Trustee’s fees, auctioneer fees, attorney’s fees, and postpetition rent are common Chapter 7 administrative expenses.
Administrative Office of the United States Courts (AO)
The federal agency responsible for collecting court statistics, administering the federal courts’ budget, and performing many other administrative and programmatic functions, under the direction and supervision of the Judicial Conference of the United States.
A term used to describe evidence that may be considered by a jury or judge in civil and criminal cases.
A lawsuit filed in the bankruptcy court which is related to the debtor’s bankruptcy case, such as complaints to determine the dischargeability of a debt or to determine the extent and validity of liens.
A written or printed statement made under oath.
a nondebtor entity owning or controlling 20 percent or more interest in a debtor or a debtor entity owning or controlling 20 percent or more interest in a nondebtor entity. Section 101(2) of the Bankruptcy Code defines affiliate.
In the practice of the court of appeals, it means that the court of appeals has concluded that the lower court decision is correct and will stand as rendered by the lower court.
collateral property acquired by the debtor that by contract or operation of law, automatically becomes subject to a lien created in advance of the debtor’s acquisition of the property.
“After Notice And A Hearing”
a phrase statutorily defined in Section 102(1) of the Bankruptcy Code. Use of this or a similar phrase in any Bankruptcy Code provision triggers the notice requirements of Section 102(1), as placed into practice by Federal Rules of Bankruptcy Procedure 2002 and 9006. Generally, 23-day notice by mail to all creditors and parties in interest is necessary to properly accomplish many bankruptcy procedures.
a second writ of execution, issued after the first writ failed to generate sufficient proceeds to satisfy the judgment.
a claim entitled to receive a dividend from a bankruptcy estate.
A juror selected in the same manner as a regular juror who hears all the evidence but does not help decide the case unless called on to replace a regular juror.
Alternative Dispute Resolution (ADR)
A procedure for settling a dispute outside the courtroom. Most forms of ADR are not binding on the parties, and involve referral of the case to a neutral party such as an arbitrator or mediator.
Latin for “friend of the court.” It is advice formally offered to the court in a brief filed by an entity interested in, but not a party to, the case.
The formal written statement by a defendant in a civil case that responds to a complaint, articulating the grounds for defense.
a debt incurred or existing before the making of a transfer.
a federal statute, 41 U.S.C. §15, which prohibits the assignment of a federal government contract except upon the government’s consent.
a provision in a contract or in law that prohibits the transfer of rights or the delegation of duties by the original holder of those rights and duties. See assignment.
AppealA request made after a trial by a party that has lost on one or more issues that a higher court review the decision to determine if it was correct. To make such a request is “to appeal” or “to take an appeal.” One who appeals is called the “appellant;” the other party is the “appellee.”
The party who appeals a district court’s decision, usually seeking reversal of that decision.
About appeals; an appellate court has the power to review the judgment of a lower court (trial court) or tribunal. For example, the U.S. circuit courts of appeals review the decisions of the U.S. district courts.
The party who opposes an appellant’s appeal, and who seeks to persuade the appeals court to affirm the district court’s decision.
A proceeding in which a criminal defendant is brought into court, told of the charges in an indictment or information, and asked to plead guilty or not guilty.
The unpaid and overdue amount as of the date the bankruptcy case is filed. The word “arrears” is usually used when referring to back child support, back alimony owed, or the amount that is past due on mortgage payments (including interest and penalties).
Article III Judge
A federal judge who is appointed for life, during “good behavior,” under Article III of the Constitution. Article III judges are nominated by the President and confirmed by the Senate.
a common law lien (now codified in many states) that may be asserted in personal property by a person who has repaired or improved it. The lien secures the agreed or reasonable cost of the work performed. At common law, it must be perfected by possession, but a statutory alternative of perfection by filing may be available.
Personal possessions of value, including cash, real estate, vehicles and investments.
Assignment (of contract)
strictly speaking, assignment is the transfer of rights under a contract. The transfer of contractual duties is called “delegation.” However, “assignment” is often used to mean the transfer of both rights and duties by one of the parties to a contract. It is used in this sense in §365, which empowers the trustee to assume (i.e., take transfer of) an executory contract of the debtor and then to realize its value by assigning (i.e. selling) the debtor’s package of rights and obligations to a third party.
Assignment For The Benefit Of Creditors
the assignment of assets to a third party, in trust, to sell the assets and apply the proceeds to the payment of creditor claims.
An agreement to continue performing duties under a contract or lease.
Assumption (of contract)
The estate’s adoption of an executory contract entered into by the debtor prior to bankruptcy, so that the estate is substituted for the debtor as party to the contract. (§365)
1. A prejudgment remedy under which property of the defendant is seized by the sheriff and held in legal custody pending final resolution of the case, so that it can be sold in execution if the plaintiff succeeds in obtaining judgment. 2. The creation of a lien, valid and enforceable as between the lienholder and the debtor. (For most liens, the further step of perfection is required to make the lien effective against any third parties who acquire rights in the property.)
a judicial lien obtained by the creditor on property levied upon under a writ of attachment. The lien secures the plaintiff’s claim while the case is pending, and the property is executed upon to satisfy the claim if the plaintiff ultimately obtains judgment.
the perfection of a lien immediately upon its attachment, without the need for any further action by the lienholder.
An injunction which halts lawsuits, foreclosure, garnishments and all collection activity against the debtor from the date a bankruptcy petition is filed Bankruptcy, allowing the individual to restructure or relieve themselves of debts and liabilities.
to annul; to make void or cancel.
The Bankruptcy Code permits the debtor to eliminate some kinds of liens that interfere with an exemption claimed in the bankruptcy. Most judgment liens that have attached to the debtor’s home can be avoided if the total of the liens (mortgages, judgment liens and statutory liens) is greater than the value of the property in which the exemption is claimed. This is sometimes called “lien stripping.”
Rights given to the bankruptcy trustee or the debtor in possession to recover certain transfers of property such as preferences or fraudulent transfers or to void liens created before the commencement of a bankruptcy case.
a prepetition transfer of estate property in full or partial payment of an antecedent debt, subject to the trustee’s avoiding powers. Avoidable preferences are the subject of Bankruptcy Code Section 547.
the ability of a trustee to set aside certain pre-or post-filing transactions that might otherwise be valid under nonbankruptcy law. Preferences, fraudulent transfers, and the ability to set aside unauthorized postpetition transfers are the most common of the trustee’s avoiding powers.