Definitions R-S

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Definitions R-S

***All definitions provided in this section are from "Bankruptcy and Debtor/Creditor, 7th Edition. Brian Blum and Samir Parikh. Wolters Kluwer.***

Reach back period- The period immediately before the filing of a bankruptcy petition, within which transfers are vulnerable to avoidance.

Reaffirmation- The debtor's contractual undertaking, executed in compliance with §524 during the period between the petition and discharge, to pay an otherwise dischargeable debt.

Receivership- A proceeding, originating in equity, under which a person (receiver) is appointed to take control of property, and to preserve and administer it as the court directs.

Reclamation- A seller's limited right to reclaim goods when the buyer was insolvent upon receipt of the good and the seller was unaware of the insolvency. Reclamation is governed by UCC §2.702 and is given qualified recognition in bankruptcy by §546(c).

Redelivery bond- A bond posted by the debtor for the purpose of regaining possession of attached property pending final determination of the suit. In the bond, the debtor undertakes to redeliver the property or its value if the creditor ultimately obtains judgment. Compare Discharging/ Dissolution bond. Unlike a discharging bond, a redelivery bond does not release the attachment lien.

Redemption- The debtor's right to buy back property that has been foreclosed upon or otherwise subjected to realization for the satisfaction of debt. Redemption is available only where recognized by principles of equity or by statute (e.g. execution statutes or §722). In some cases, creditors junior to the foreclosing party are also given redemption rights. See also Equity of redemption.

Rehabilitation- In a general sense, resolution of the debtor's financial difficulties through bankruptcy, so that the debtor's fiscal viability is restored. More specifically, bankruptcy relief by means of a plan under Ch.11 or Ch. 13 as distinct from liquidation.

Rejection of contract- The estate's repudiation of a prepetition executory contract of the debtor, so that the estate acquires no performance rights and obligations under the contract, and the other party has a general unsecured claim for damages. Compare Assumption.

Related proceedings- Litigation concerning a matter of nonbankruptcy law, the outcome of which affects the rights, liabilities, or administration of the estate. Because the controversy has an impact on the estate, it falls within the nonexclusive jurisdiction of the district court. In the absence of consent by the parties, related proceedings cannot be fully determined by the bankruptcy court but must be returned to the district court for final judgment. Contrast Core proceeding.

Relation-back- See Backdating.

Remand- The bankruptcy court's return of a matter to the court from which it was removed.

Removal- The transfer of related proceedings from another court to the bankruptcy court.

Reorganization- The rehabilitation of a debtor under Ch. 11. Sometimes this word is used in a more general sense to mean rehabilitation under other chapters of the Code as well.

Replevin- A possessory action for the recovery of specific tangible personal property that has been wrongfully taken or retained. As a prejudgment remedy, replevin enables a plaintiff to obtain provisional seizure and possession of property that is the subject matter of the underlying suit.

Return- The report submitted by the sheriff that states the action taken on a writ or other process.

Revival of judgment- The renewal of a judgment that has become dormant because it has not been executed upon during the period of enforceability. 

Ride-through- An arrangement between the debtor and a secured claimant under which the debtor is permitted to retain the collateral in return for a commitment to maintain payments on the debt as originally contracted. The "ride-through" is an alternative in Ch. 7 cases to the more formal reaffirmation. However, some courts have held that it is no-longer available to a debtor because of amendments to various Code provisions by BAPCPA.

Roll-up- An agreement between the debtor and a prepetition lender, under which the lender agrees to make a postpetition loan to the debtor on condition that the proceeds of the postpetition financing will be used first to repay the prepetition debt in full.

Safe harbor- A provision in a statute that shields a person from liability for breach of a statutory duty on condition that the person meets minimum standard 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 laws).

Secured debt/ claim- A debt is secured to the extent that the debtor's personal obligation to pay is reinforced by a lien on property of the debtor, so that if the debtor defaults, the secured creditor may have recourse to the property to satisfy the debt. In bankruptcy, provided that the secured debt is allowed as a claim, it is treated as secured to the extent of the value of the collateral (§506).

Security agreement- A contract under which a security interest is created (§§101(50) and(51)).

Security interest- Although this term is sometimes used to denote a lien of any kind, it is usually confined to mean a consensual lien (§101(51)).

Self-help- The  pursuit of a remedy without court proceedings, such as a lien holder's seizure of collateral upon default without court authority. Self-help and foreclosure are permitted only in connection with certain liens and are subject to restrictions even when allowed. 

Sequestration- 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.

Setoff- When two persons are mutually indebted, the two debts may be treated as cancelling each other out so that neither need be paid. If one of the debts is smaller than the other, setoff operates to the extent of the smaller debt.

Spendthrift trust- A trust with restrictions on alienation designed to protect the fund from dissipation by the beneficiary or seizure by the beneficiary's creditors.

Standing trustee- A person appointed by the U.S. Trustee to serve as trustee for al Ch. 13 cases filed in a region. 

Statutory lien- A lien arising by virtue of a statutory provision that confers lien rights on otherwise unsecured creditors in particular types of transactions, under specified circumstances. Statutory liens owe their existence to the rights conferred by statute and are not created by contract or judicial process (§101(53)).

Stay- See Automatic stay.

Straight bankruptcy-  Liquidation onder Ch. 7.

Strict foreclosure- A method of foreclosure under which the lien holder acquires ownership of the collateral in full satisfaction of the debt and is not required to conduct a foreclosure sale. The lien holder is therefore not accountable 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 permitted. 

Strong-arm clause- The traditional name given to the trustee's avoidance powers under §544(a) and its predecessor in the Bankruptcy Act.

Subordination- The demotion of a claim, either by consent of the claimant (consensual subordination) or under principles of equity (equitable subordination). Equitable subordination is appropriate where fairness so requires, typically when the claimant has behaved in a dishonest or inequitable manner to the prejudice of a more junior party or of creditors in general (§510).

Substantial abuse- The term used in §707(b) prior to its amendment by BAPCPA as a ground for dismissal. Section 707(b) no longer requires a showing of "substantial" abuse, but provides for dismissal of "abuse."

Superpriority- 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 the 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 postpetition financer under 364(c) as consideration for the extension of credit to the estate.

Surplus- The amount in excess of the debt after collateral or property seized in execution has been realized.

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