Glossary

• Jurisdiction: United States

Glossary

The following definitions are provided to assist the reader in understanding some of the terms used in the Creditors' Committee Manual and in chapter 11 proceedings generally. For more detailed and exact definitions, please consult the Bankruptcy Code and legal counsel.

Administrative Claims: Fees of court-authorized professionals, trustee's commissions and claims of trade creditors and others for credit extended after the entry of the order for relief. Administrative claims are generally entitled to be paid before any pre-petition unsecured creditors.

Adversary Proceeding. A lawsuit filed within a bankruptcy case. The pleadings and orders in an adversary proceeding appear under a docket separate from the docket of the bankruptcy case itself. Common types of adversary proceedings include preference and fraudulent transfer litigation, proceedings to determine the validity, priority or extent of a lien, equitable subordination claims and suits to recover money or property.

Automatic Stay: When a chapter 11 petition is filed, creditors are automatically prohibited from attempting to collect their pre-petition claims from the debtor or proceeding against property of the debtor without first obtaining permission from the court to do so.

Cash Collateral: Cash and cash equivalents that serve as collateral for a secured creditor's claim. Included in this category are cash, bank deposits, proceeds from the sale of assets, accounts receivable collections and rents.

Class of Creditors: Creditors are normally divided into classes in a plan of reorganization. The claims of general unsecured creditors are usually grouped together as one class, although there are on occasion sufficient distinctions among the general unsecured creditors to justify dividing them into two or more classes.

Confirmation: The approval by the court of a plan of reorganization.

Consensual Plan: A plan of reorganization accepted by every class of creditors and equity-holders. It is rare that a consensual plan is not approved by the court.

Conversion: In general, bankruptcy courts allow debtors to reorganize under chapter 11 or be liquidated under chapter 7. A case may be changed, or "converted," from administration under one chapter to another by order of the court or upon request of the debtor, any creditor, the U.S. Trustee or any other party in interest. Creditors will often move to convert a chapter 11 case to chapter 7 if it does not appear that the debtor will reorganize or if...