Prepetition Liability

(redirected from Pre-Petition Liabilities)

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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References in periodicals archive ?
When the Plan of Adjustment is confirmed by the court, the pre-petition liabilities that are subject to the plan are discharged, and the government is bound to the new debt and payment terms m the plan.
* Pre-petition liabilities subject to compromise -- including liabilities that may be impaired by a plan, and that are eligible for compromise because they are either unsecured or undersecured.
Realize, however, that filing a petition generally causes the payment of unsecured or undersecured pre-petition liabilities to be prohibited before the plan is confirmed.
The balance sheet clearly should distinguish pre-petition liabilities subject to compromise from those that are not and identify post-petition liabilities.
Further, use of allowed amounts is consistent with measurement principles used for other pre-petition liabilities and, therefore, comparability is enhanced.
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