Glossary of Chapter 11 Terms

AUTOMATIC STAY
The filing of a Chapter 11 petition automatically triggers a halt or stay in the continued prosecution of pending legal actions and the commencement of new legal actions based on pre-filing conduct.

BANKRUPTCY CODE
The Federal Bankruptcy statute is commonly referred to as the Bankruptcy Code.

BANKRUPTCY COURT
A unit of the United States District Court (federal court) specializing in the handling of Chapter 11 reorganization cases.

BANKRUPTCY PETITION
The legal instrument filed with the Court that initiates a bankruptcy case.

BUSINESS PLAN
A strategic plan prepared by company management that states the company’s objectives as well as the specific steps taken to achieve those goals.

CHAPTER 11
The chapter in the United States Bankruptcy Code that contains the provisions for court-supervised reorganization of debtor companies.

CLAIM
A right to payment, either fixed or not, that can be contingent, liquidated, disputed or matured.

CLASS OF CREDITORS
A group of creditors entitled to similar treatment under a Chapter 11 reorganization plan.

CONFIRMATION
The final approval by the Court of a debtor’s plan of reorganization.  Confirmation generally takes place after creditors have approved the reorganization plan.

CREDITOR
A party, such as a vendor, bank lender or bondholder, to whom a debt is owed.

CREDITORS’ COMMITTEE
The Creditors’ Committee is comprised of representatives of the unsecured creditors. This committee represents the unsecured creditors, consults with the debtor in possession, reviews and gathers information about the debtor in possession’s activities and financial condition, and participates in the negotiation of a Chapter 11 plan of reorganization.

DEBTOR
A person or company who files a voluntary petition for bankruptcy.

DEBTOR IN POSSESSION (DIP)
A company that continues to operate while under bankruptcy protection. Chapter 11 can give the debtor a fresh start, subject to the debtor's fulfillment of its obligations under its plan of reorganization.

DISCLOSURE STATEMENT
A document that is presented to the Court, and ultimately to creditors, that discloses the terms of the company’s plan of reorganization.  The disclosure statement has sufficient information so that holders of claims against the company can make an informed decision as to whether to vote for or against the reorganization plan.

ESTATE
The estate of a company filing for Chapter 11 includes all assets of the company.

EXCLUSIVITY PERIOD
The 120-day period of exclusivity, which follows the filing of a Chapter 11 petition, during which time the debtor is the only party able to file a Chapter 11 reorganization plan. The exclusivity period may be extended or shortened by the Court.

PLAN OF REORGANIZATION (POR)
The plan filed by a company in Chapter 11 provides a roadmap for the company’s post-bankruptcy business strategy and the resolution of all creditor claims. The plan requires the approval of the creditors and the bankruptcy court, but in some instances can be approved by the Court without the approval of all creditor classes. Filing a POR is the first step in the final phase of reorganization and ultimate emergence from Chapter 11.

PROOF OF CLAIM
Proof of claim is the form filed with the Court, or a claims agent designated by the Court, setting forth a pre-filing claim.

REORGANIZED DEBTOR
The debtor company after the reorganization plan has been confirmed by the Bankruptcy Court and is no longer in Chapter 11.

SCHEDULES OF ASSETS AND LIABILITIES
Lists of assets and liabilities, which every debtor is required to file with the Court.

SECURED CREDITORS
One of two general types of creditors. Secured creditors have a lien on the property of a company and have priority among creditors classes.

UNSECURED CREDITORS
Unsecured creditors have no lien on the property of the company and are subordinate to secured creditors.