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Glossary of Chapter 11 Bankruptcy Terms

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Chapter 11 Petition   -  refers to the document, the "Petition," filed with the Bankruptcy Court to commence a bankruptcy proceeding under Chapter 11 of the Bankruptcy Code. Chapter 11 proceedings seek to "reorganize" a debtor's financial affairs. The debtor and the debtor's business are allowed to continue to operate under the supervision of the Bankruptcy Court. With the filing of the Chapter 11, an "automatic stay" prevents creditors from proceeding against the debtor outside of the jurisdiction of the Bankruptcy Court.

Chapter 15 Proceeding  -  Chapter 15 Proceeding

Chapter 9 Proceeding  -  Chapter 9 Proceeding

Creditors' Committee List  -  the Unsecured Creditors Committee is the leading Committee body for Chapter 11 proceedings; the Committee purports to represent the interest of the unsecured creditor body. The Creditors Committee List is the list of creditors who are on the Creditors Committee itself. This list is usually made up of the holders of the largest unsecured debts in the proceedings.

Disclosure Statement   -  the Disclosure Statement, filed with a Plan of Reorganization, discloses to parties-in-interest the history of the debtor and its operation, especially the debtor's financial operation. The Disclosure Statement explains how the debtor got into bankruptcy, and how, through its efforts and the Plan, it can get out of bankruptcy and succeed into the future. Necessarily, therefore, the Disclosure Statement will contain financial reporting information on the debtor's past, the debtor's operations in Chapter 11, and projections on how the debtor will perform in the future. For it to be approved, the Court must find that it contains adequate information to allow parties-in-interest to cast informed votes on the Plan of Reorganization.

Liquidation Analysis  -  In Chapter 11, to justify a Plan of Reorganization, the debtor must demonstrate through the liquidation analysis that the creditor body is better off by proceeding forward with the Plan of Reorganization than under a simple liquidation of the debtor's assets. If it is not clear that proceeding forward with the Plan will, essentially, be more beneficial to the creditors than a simple liquidation of the debtor's assets, then there is no justification for the debtor remaining in a reorganization.

Monthly Operating Report  -  Debtors in Chapter 11 are required to file Monthly Operating Reports with the U.S. Trustee’s Office, which is the watchdog agency for the bankruptcy process. On a monthly basis, debtors are required to file reports showing its receipts and disbursements, changes in its liability/asset picture, and verification that it is timely paying its ongoing obligations, including taxes and insurance.

Plan Confirmation Order   -  Plan Confirmation Order – refers to the order entered by the Bankruptcy Court approving a Plan of Reorganization. The Plan Confirmation Order requires a debtor to comply with the terms of the Chapter 11 Plan. The Plan and Order are, essentially, a contract between the debtor and its creditors for when the debtor "emerges from bankruptcy."

Plan of Reorganization   -  in Chapter 11 proceedings a plan proponent (usually the debtor) may file a Plan of Reorganization. The Plan of Reorganization is the proposal for getting the debtor out of bankruptcy. The creditor body is allowed to vote on the Plan of Reorganization. In larger bankruptcy proceedings, there are also various committees that weigh into the process and influence the Court's decision to approve a Plan of Reorganization. Chapter 11 Plans are voted on by parties-in-interest, by way of classes of claims. Generally, Plan approval requires a two-thirds vote of the amount of debt of a class and one-half of the number of creditors in the class. Once approved, the Plan of Reorganization is akin to a contract between the debtor and the creditor body in the in post-bankruptcy phase.

Post Petition Financing/Debtor in Possession Agreement  -  refers to post-filing arrangements made between a debtor and a creditor to finance the debtor's operations once the bankruptcy case has commenced. This funding is usually on a secured basis and memorialized in an order which must be approved by the Bankruptcy Court.

Schedules  -  Schedules A-J of assets and liabilities

Statement of Financial Affairs  -  Statement of Financial Affairs

Summary of Schedules  -  refers to the document filed by a debtor which summarizes what is contained in the initial schedules it files with the court. The one page list summarizes what is contained in the other schedules, such as total secured debt, total unsecured debt, real and personal property, etc.

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