The Professional
Bankruptcy Dictionary




effective date

The date on which an approved chapter 11 plan of reorganization becomes operational; may also be used to describe the operational date of a chapter 13 plan.

election of trustee

in a chapter 7 case, the creditors have the option to elect a trustee, at the meeting of creditors, to replace the interim trustee. For such an election to occur, creditors representing at least 20% of the claims must request a vote and a majority of the creditors voting must approve the candidate. In a chapter 11 case, if a trustee appointment has been ordered by the court, any party in interest may within a certain time request an election to replace the trustee.

11 U.S.C. § 702

enabling loan

purchase money security interest

Blum, Bankruptcy and Debtor/Creditor (Aspen, 1999).


a mortgage, UCC-1 security agreement, judgment lien, statutory lien, purchase money security interest or other security interest attaching to a particular property


includes person, estate, trust, governmental unit, and United States trustee;

Sec. 101. Definitions

entireties property

in certain states, typically real or personal property owned by husband and wife in a form of indivisible co-ownership that upon death of one, survivor takes title to the whole estate.


the value of an asset over and above any encumbrances, such as mortgages, liens or other security interests; the hypothetical net proceeds after sale and payoff of any balance owed and expenses of sale

Common usage. See, "net equity," this dictionary

equity security

means -

(A) share in a corporation, whether or not transferable or denominated ''stock'', or similar security;

(B) interest of a limited partner in a limited partnership;


(C) warrant or right, other than a right to convert, to purchase, sell, or subscribe to a share, security, or interest of a kind specified in subparagraph (A) or (B) of this paragraph;

Sec. 101. Definitions

equity security holder

means holder of an equity security of the debtor;

Sec. 101. Definitions

equitable lien

A lien recognized under principles of equity in the absence of legal lien rights

Blum, Bankruptcy and Debtor/Creditor (Aspen, 1999).

equitable subordination

The demotion of a claim under principles of equity, appropriate where fairness so requires, typically when the claimant has behaved in a dishonest or inequitable manner to othe prejudice of a more junior party.

Blum, Bankruptcy and Debtor/Creditor (Aspen, 1999).

equity cushion

The amount of surplus equity in a property, in excess of the lienholder's claim, sufficient to prevent the lienholder's claim from becoming less valuable due to nonpayment of the mortgage or other monthly payment

equity security

A share in a corporation or a limited partner's interest in a partnership


The commencement of a bankruptcy case creates an "estate." The estate technically becomes the temporary legal owner of all of the debtor's property. The estate consists of all legal or equitable interests of the debtor in property as of the commencement of the case, including property owned or held by another person if the debtor has an interest in the property. Generally speaking, the debtor's creditors are paid from nonexempt property of the estate.

Public Information Series of the Bankruptcy Judges Division


A person appointed by the court to investigate the management or conduct of the debtor in Chapter 11.

Blum, Bankruptcy And Debtor/Creditor (Aspen 1999).

exception from discharge

a category of debt that is not dischargeable in bankruptcy

Sec. 523; Sec. 507; Sec. 1328

exclusivity period

The period following the filing of a Chapter 11 petition, during which the debtor has the exclusive right to file a plan.

Blum, Bankruptcy And Debtor/Creditor (Aspen 1999).

executory contract

a contract in which both parties have duties remaining to be satisfied

Common usage

exemption, exempt property

category of debtor's property that is not taken from the debtor to satisfy debts; the debtor gets to keep it.

Sec. 522