Prepetition Liability

(redirected from Pre-Petition Liability)

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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The bankruptcy trustee's attorney said in a filing, "Keeping the insurance policy current is in the best interest of the estate, as it preserves the trustee's ability to obtain 'tail coverage' that will provide extended coverage for pre-petition liability claims against the estate.
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