One more quick poll: off the top of your head, what lingo/cryptic terms do business bankruptcy professionals use regularly that are important to understanding the operation of the system in the real world (e.g., DIPs, cramdown, roll-ups, carve-out, stalking horse)? We talk about lingo in the basic bankruptcy class, but I want students to engage more with the concepts in the advanced class. Please list the first ones that come to your mind in the comments; you are also welcome to use bankruptcyprof@gmail.com.
Thanks, in advance, for your helpful feedback!
Comments
13 responses to “Your Favorite Business Bankruptcy/Restructuring Lingo?”
Cash collateral
First day motions
Lien free sale
363 sales
503(b)9 claims (aka “reclamation claims”)
Preferences / preferential transfers
KERP/KEIP
“Tips” (payments to unsecured creditors that should be out of the money per the absolute priority rule)
Rejection damages claims
The WARN Act
Evergreen retainer
Pre-Pack
Cross-collateralization
liquidating trust
“top hat” plans (ERISA plan term)
WIP
break up fee
priming loan
NOL carry-forward
reversed leveraged buyout
revolver or revolving credit agreement
credit bid
SIPC
inter-creditor agreement
D&O insurance
There are slang terms for different types of Chapter 11 plans. But I am not practicing in SDNY or Delaware, so I don’t know/remember what the cool kids call them these days.
So many of the truly strange ones have already been listed — although never forget: stalking horse, tranche, and roll-up, to name some personal favorites.
But even bankruptcy terms we consider commonplace often leave non-bankruptcy lawyers (and judges) baffled, including, believe it or not: automatic stay, discharge injunction, and especially adversary proceeding (which the court of appeals for my circuit insists on calling “adversarial proceeding” for some reason).
Oh, I almost forgot. “Reaffirmation agreement.” Trot out that one in casual conversation with your average district judge and watch his eyes glaze over. The effect is quite amazing.
The term “fraudulent conveyance” is downright confusing, since it doesn’t imply that the recipient of the conveyance (the defendant in such an action) did anything fraudulent at all. Always sounds to them like an accusation, though.
There’s also COMI, which sounds pretty self-explanatory once you spell it out as “center of main interest” but (a) lawyers never spell it out, and (b) it isn’t really self-explanatory even when they do!
gifting
structured dismissal
de facto plan
chief restructuring officer (CRO)
prepack
lock-up agreement
sales procedures order
“schmuck insurance”, “tip” and “hope certificates”
these refer to the same thing – small distributions of equity or similar interests under plans (PoRs) to out of the money constituencies to get them to vote for a plan. The distributions are usually in the form of out of the money warrants that only have value in a dramatic upside scenario.
Death trap – a plan treatment of a class that is arguably out of the money that gives them a distribution only if the class votes to accept the plan.
cram-down
strip-down
carve-out
gerrymandering
bar date
exclusivity
new value exception
PMSI
prime
sub-con
channeling order, bar order
pooling
stalking horse
strong-arm
clawback
reachback
sub rosa plan
PDI
hanging paragraph
A few years back there was an amusing law review article on bankruptcy jargon. I used to have it in a file, but I can’t find the file, and a couple of Westlaw searches didn’t turn it up either. I’ll look further and will post the citation here if I find it.
One more that none of us should overlook:
BAPCPA (pron. “bapseepuh’)
This term, and especially this pronunciation, so irritated a judge on our court of appeals during an oral argument some time back that he stopped the lawyer pronouncing the name this way and insisted that the lawyer call it simply “the 2005 Act.”
Bankruptcy Judge,
Some of us call BAPCPA “The Debt Slavery Act of 2005.”
Prof. Jacoby,
Mezzanine
Structural subordination
Found the article:
Richard I. Aaron, Hooray for Gibberish! A Glossary of Bankruptcy Slang for the Occasional Practitioner or Bewildered Judge , 3 DePaul Bus. & Com. L.J. 141(2005).