a provision in a statute that shields a person from liability for breach
of a statutory duty, on condition that the person meets minimum
standards of good faith compliance. (E.g., under §1125, a person
who solicits acceptance or rejection of a plan in compliance with
the Code is protected from liability for any violation of securities
Sale Free and Clear of Liens
a sale held pursuant to 11 U.S.C. §363(f). Such a sale seeks court
approval to sell liened property over the objection of any lienholder.
A penalty or other type of enforcement used to bring about compliance with the law or with rules and regulations.
Documents that the debtor must file detailing the assets and liabilities to commence a bankruptcy case.
Schedules of Assets and Liabilities
a fundamental bankruptcy pleading consisting of a
prioritized and itemized list of a debtor's assets
(property) and liabilities (debt).
a creditor with collateral that may satisfy part or all of the creditor's
A secured debt is one where the creditor takes personal or real property as collateral. A creditor whose debt is secured has a right to take property to satisfy a debt in default.
commercial documents used to evidence an ownership interest in
any entity, among other things. Section 101(43) of the Bankruptcy
Code defines security.
an agreement creating a security interest. A security interest is a
consensual lien created by agreement. Section 101(44) of the
Bankruptcy Code defines security agreement.
although this term is sometimes used to denote a lien of any kind, it
is usually confined to mean a consensual lien. (§101(51))
the pursuit of a remedy without court proceedings, such as a lien-
holder's seizure of collateral upon default without court authority.
Self-help seizure and foreclosure are permitted only in connection
with certain liens and are subject to restrictions even when allowed.
A federal judge who, after attaining the requisite age and length of judicial experience, takes senior status, thus creating a vacancy among a court's active judges. A senior judge retains the judicial office and may cut back his or her workload by as much as 75 percent, but many opt to keep a larger caseload.
The punishment ordered by a court for a defendant convicted of a crime.
A set of rules and principles established by the United States Sentencing Commission that trial judges use to determine the sentence for a convicted defendant.
To separate. Sometimes juries are sequestered from outside influences during their deliberations.
an equitable remedy, similar to attachment, under which the plaintiff
may remove property from the defendant's control pending the final
resolution of a case. Sequestration is usually available only when the
defendant's property interest is equitable in nature and cannot be
reached by attachment.
a debtor who files a second (or third) bankruptcy proceeding after
dismissal of one or more prior proceedings.
Service of process
The delivery of writs or summonses to the appropriate party.
Parties to a lawsuit resolve their dispute without having a trial. Settlements often involve the payment of compensation by one party in at least partial satisfaction of the other party's claims, but usually do not include the admission of fault.
real property which generates substantially all the gross income of a
debtor and on which no substantial business is conducted other than
operation of the property and activities thereto and which has less
than $4 million of secured debt and does not include residential real
property with three or fewer units. Single asset real estate is the
subject of Bankruptcy Code Section 101(51B).
Small business case
A special type of chapter 11 case in which there is no creditors' committee (or the creditors' committee is deemed inactive by the court) and in which the debtor is subject to more oversight by the U.S. trustee than other chapter 11 debtors. The Bankruptcy Code contains certain provisions designed to reduce the time a small business debtor is in bankruptcy.
Small Business Debtor
a Chapter 11 debtor with liquidated debts not in excess of $2 million
who elects treatment as a small business debtor, excluding a debtor
whose primary activity is owning and operating real estate. Small
business debtors are the subject of Bankruptcy Code Section
an estate capable of paying all claims in full and returning assets
to the debtor.
a trust containing a clause precluding invasion of the trust assets
to satisfy the debts of a beneficiary.
individual joint debtors claiming state and federal exemptions.
Standard of Proof
Degree of proof required. In criminal cases, prosecutors must prove a defendant's guilt "beyond a reasonable doubt." The majority of civil lawsuits require proof "by a preponderance of the evidence" (50 percent plus), but in some the standard is higher and requires "clear and convincing" proof.
a person appointed by the U.S. Trustee to serve as trustee for all
Chapter 12 and 13 cases filed in a region. (More than one standing
trustee may be appointed if the volume of cases is large.)
Statement of Financial Affairs
a fundamental bankruptcy pleading consisting of a question-
aire concerning a debtor's financial affairs.
Statement of Intention
a notice to be given, within 30 days after a filing, to the holders of
collateral security the repayment of consumer debt. The debtor must
advise any affected creditor of the debtor's intention regarding the
collateral. The debtor may reaffirm the contact, redeem or return the
collateral, or avoid the lien under specific defined circumstances.
Statements and Schedules
common name of the Statement of Financial Affairs and Schedules of
Assets and Liabilities filed by any debtor within the bankruptcy
system. These pleadings will be the most important initial pleadings
in any bankruptcy proceeding.
A law passed by a legislature.
Statute of Limitations
The time within which a lawsuit must be filed or a criminal prosecution begun. The deadline can vary, depending on the type of civil case or the crime charged.
a lien created by operation of law other than a court order. A state
law mechanic's lien is a statutory lien. Section 101(47) of the
Bankruptcy Code defines statutory lien.
a method of foreclosure under which the lienholder acquires owner-
ship of the collateral in full satisfaction of the debt and is not required
to conduct a foreclosure sale. The lienholder is therefore not account-
able to the debtor for any value in the collateral in excess of the debt
and may not claim any deficiency from the debtor if the collateral is
worth less than the debt. Strict foreclosure is available only in
connection with some liens, and is subject to restrictions, even where
Strong Arm Clause
the trustee's rights as a super-creditor, which are contained in the
Bankruptcy Code Section 544.
Latin, meaning "of its own will." Often refers to a court taking an action in a case without being asked to do so by either side.
the regulation of a claim to a lesser status than it is otherwise entitled
to under the Bankruptcy Code. A creditor may consent to sub-
ordination or the court may order subordination for equitable reasons.
Subordination is the subject of Section 510.
A command, issued under a court's authority, to a witness to appear and give testimony.
Subpoena duces tecum
A command to a witness to appear and produce documents.
Substance abuse treatment
A special condition the court imposes that requires an individual to undergo testing and treatment for abuse of illegal drugs, prescription drugs, or alcohol. Treatment may include inpatient or outpatient counseling and detoxification.
an abuse of the spirit and purpose of Chapter 7 by a consumer debtor
that provides grounds for dismissal of the case under §707(b).
the taking of an irrevocable act in performance of a Chapter 11
plan, such as closing escrow or repaying a substantial portion
of a dividend.
an exchange taking place in the normal course of business.
Putting the assets and liabilities of two or more related debtors into a single pool to pay creditors. (Courts are reluctant to allow substantive consolidation since the action must not only justify the benefit that one set of creditors receives, but also the harm that other creditors suffer as a result.)
A decision made on the basis of statements and evidence presented for the record without a trial. It is used when it is not necessary to resolve any factual disputes in the case. Summary judgment is granted when — on the undisputed facts in the record — one party is entitled to judgment as a matter of law.
Special priority classifications given to two types of claim:
(1) Priority at the top of the administrative expense category, granted
by §507(b) to a claimant where adequate protection was attempted
but proved to be insufficient to fully protect its interest; (2) An even
more elevated priority position, senior to all administrative expenses
(including superpriority claims under §507(b), granted to a post-
petition financier under §364(c) as consideration for the extension of
credit to the estate.
term of supervision served after a person is released from prison. The court imposes supervised release during sentencing in addition to the sentence of imprisonment. Unlike parole, supervised release does not replace a portion of the sentence of imprisonment but is in addition to the time spent in prison. U.S. probation officers supervise persons on supervised release.
Statutory proceedings in aid of execution, under which a
judgment creditor may seek discovery of executable assets or
take other steps to subject the debtor's executable property to
the satisfaction of the judgment.
the amount in excess of the debt after collateral or property seized in
execution has been realized. Seedeficiency; equity cushion.
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