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Prepetition Liability

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Prepetition Liability
A liability that a company incurs before filing for bankruptcy protection. Most prepetition liabilities are reduced or discharged in bankruptcy proceedings; the person or company to whom a prepetition liability is due should not expect to receive the full value of the liability unless it is secured by some asset. A prepetition liability contrasts with a postpetition liability, which usually must be paid in full.


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If the election is made, the member's tax liability for the first short taxable year will be a prepetition liability that is a charge against the bankruptcy estate, though it is not dischargeable.
Because this amount is considered a prepetition liability under the Bankruptcy Code, the timing of payment is subject to Bankruptcy Court approval and has not yet been determined.
 
 
 
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