Claim in bankruptcy


Claim in bankruptcy

A claim in bankruptcy, in United States bankruptcy law, is a document filed with the Court so as to register a claim against the assets of the bankruptcy estate. The claim sets out the amount that is owed to the creditor as of the date of the bankruptcy filing and, if relevant, any priority status. Although a document called a Claim in Bankruptcy is used in proceedings in both Canada and the United States, in the United States, the document is properly termed a Proof of Claim. The form is different although they share many similar aspects.

Upon receipt of a claim, the Trustee in bankruptcy must notify the claimant (or creditor) whether the estate will object to the claim or whether it will, as is the default case, allow the claim.

Some of the reasons a creditor's claim may be objected to are that:

  • the claim is not liquidated, such as a claim for damages for pain and suffering that is not the result of a judgment debt. This assertion is not fatal as the claim may be liquidated in Bankruptcy Court;
  • the claim omits appropriate set-offs to which the bankrupt entity ("the debtor") is entitled by operation of law;
  • the amount of the claim is in dispute, such as a bill for defective goods, in which case the matter may be litigated in Bankruptcy Court;
  • the creditor is claiming a higher priority than they are entitled to, such as an ordinary creditor claiming priority to estate assets.

If a claim is objected to, the bankruptcy court may set a hearing and, if necessary, conduct a trial, in order to resolve the dispute.

There is usually a deadline (termed the Bar Date) for filing claims to allow the trustee to determine the distribution of any funds obtained from the liquidation of the estate. Claims are paid out first to administrative creditors, then to priority unsecured creditors according to their statutory priority, and finally to the non-priority unsecured creditors, with all claims paid pro rata with other members of the class.

Companies buy these bankruptcy claims. One such company is International Funding Corporation (Internationalfundingcorp.com) based out of the USA.

See also


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Look at other dictionaries:

  • claim in bankruptcy — See: creditor s claim Category: Bankruptcy, Foreclosure & Debt → Bankruptcy Nolo’s Plain English Law Dictionary. Gerald N. Hill, Kathleen Thompson Hill. 2009 …   Law dictionary

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  • claim in bankruptcy — A proof of claim against the bankrupt. See proof of claim; provable debt …   Ballentine's law dictionary

  • filing claim in bankruptcy — The delivery of a proof of claim against a bankrupt to the clerk of the district court, the referee, if the case has been referred, or to the trustee in bankruptcy. 9 Am J2d Bankr § 449 …   Ballentine's law dictionary

  • claim — A right to payment (SA Bankruptcy.com) A right to payment, whether or not fixed, contingent, liquidated, disputed, or matured. (Bernstein s Dictionary of Bankruptcy Terminology) BAR DATE The date by which claims must be filed with the Bankruptcy… …   Glossary of Bankruptcy

  • claim provable in bankruptcy — Any claim or liability that is provable in a proceeding under the Bankruptcy and insolvency Act. (Dictionary of Canadian Bankruptcy Terms) United Glossary of Bankruptcy Terms 2012 …   Glossary of Bankruptcy

  • bankruptcy estate — all legal or equitable interests of the debtor in property at the time of the bankruptcy filing. The estate includes all property in which the debtor has an interest, even if it is owned or held by another person (Glossary of Common Bankruptcy… …   Glossary of Bankruptcy

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  • Claim Jumper — restaurant, Fresno, California Claim Jumper is a restaurant chain headquartered in Irvine, California with 45 locations in Arizona, California, Illinois, Colorado, Nevada, Washington, Wisconsin and Oregon. Founder Craig Nickoloff opened the first …   Wikipedia


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