CIRA flashcards
CIRA · Build recall with a focused review session.
32 cards. Read the term and the definition here. The deck at the top of this page is optional.
- Automatic stay
- Injunction under 11 U.S.C. §362 that takes effect on the petition date and prohibits collection actions, foreclosure, and lien enforcement against the debtor or estate property.
- Preference
- Transfer to a creditor within 90 days before petition (one year for insiders) while the debtor is insolvent that enables the creditor to receive more than in a Chapter 7 distribution.
- Fraudulent transfer
- Transfer made with actual intent to hinder creditors or constructively fraudulent when the debtor received less than reasonably equivalent value while insolvent, within the lookback period.
- Means test
- Chapter 7 eligibility screen under §707(b) comparing current monthly income to state median; above-median debtors must pass the disposable income test.
- Chapter 11 exclusivity
- Period during which only the debtor may file a plan, initially 120 days and extendable to 18 months, after which creditors may propose competing plans.
- Section 507 priorities
- Order of payment of unsecured claims: administrative expenses, gap claims, employee wages up to the statutory cap, benefit plan contributions, and certain tax claims.
- DIP financing
- Post-petition loan to a Chapter 11 debtor, often secured by a priming lien and super-priority claim, subject to budget and milestone covenants.
- 13-week cash flow
- Weekly forecast of receipts and disbursements used to identify liquidity gaps, set borrowing needs, and monitor covenant compliance during a turnaround.
- Altman Z-score
- Weighted combination of five financial ratios (working capital, retained earnings, EBIT, market equity, sales) used to predict bankruptcy risk; below 1.81 indicates distress.
- Cramdown
- Confirmation of a Chapter 11 plan over a dissenting class that is fair and equitable and does not discriminate unfairly, respecting the absolute priority rule.
- Section 363 sale
- Asset sale outside a plan, free and clear of liens and claims, often with a stalking horse bidder, break-up fee, and overbid procedures approved by the court.
- Stakeholder waterfall
- Order of distribution in a restructuring: secured creditors, administrative and priority claims, unsecured creditors, then equity holders receiving residual value.
- Covenant headroom
- Percentage by which actual performance exceeds or falls short of a covenant threshold, calculated as (actual − threshold) ÷ threshold, used to gauge default risk.
- Operational turnaround
- Set of actions to restore profitability, including cost reduction, working capital release, pricing changes, and divestiture of underperforming assets.
- Enterprise value
- Market capitalization plus debt, preferred stock, and minority interest minus cash; the total value of a company's operations used in valuation multiples.
- WACC
- Weighted average cost of capital: (E/V)×cost of equity + (D/V)×cost of debt×(1−tax rate), used to discount free cash flows in a DCF.
- CAPM
- Capital asset pricing model: cost of equity equals risk-free rate plus beta times equity risk premium, often with a size premium added.
- Terminal value
- Value of cash flows beyond the forecast period, computed by Gordon growth (FCFF×(1+g)/(WACC−g)) or an exit multiple applied to final-year EBITDA.
- Adjusted EBITDA
- EBITDA plus non-recurring items, stock compensation, restructuring costs, and run-rate synergies; lenders typically cap add-backs at a percentage of EBITDA.
- Orderly liquidation value
- Value of assets sold in an orderly manner over a reasonable period, as opposed to forced liquidation value, used in collateral and recovery analysis.
- Solvency test
- Balance sheet test (assets at fair value exceed liabilities) and equitable test (ability to pay debts as they come due), used to assess fraudulent transfer and plan feasibility.
- Proof of claim
- Official Form 410 filed by a creditor to assert a claim, with supporting documentation, by the court-set bar date; prima facie evidence of validity once filed.
- Claim objection
- Motion under §502 challenging a claim for lack of documentation, duplication, or contingency; once filed, the burden shifts to the claimant to prove the claim.
- Administrative expense
- Post-petition claim for goods or services that benefit the estate, entitled to priority under §503(b) and §507(a)(2) ahead of general unsecured claims.
- Setoff
- Right under §553 to offset mutual pre-petition debts between debtor and creditor, preserved unless the claim is disallowed or a preference occurred within 90 days.
- Reclamation
- Seller's right under §546(c) to reclaim goods received within 45 days before petition if written demand is made within 45 days after receipt or 20 days after petition.
- Dischargeability complaint
- Adversary proceeding under §523 seeking to except a debt from discharge for fraud, false financial statement, or willful injury; must be timely filed.
- Bar date
- Court-ordered deadline for filing proofs of claim, commonly 70 days after the petition date in Chapter 11, after which late claims may be disallowed.
- Absolute priority rule
- Chapter 11 principle that a dissenting class must be paid in full before a junior class receives anything, unless the junior class contributes new value.
- Section 341 meeting
- Meeting of creditors conducted by the trustee or U.S. Trustee where the debtor is examined under oath about assets, liabilities, and financial affairs.
- Avoidance powers
- Trustee or debtor-in-possession authority under §§544, 547, and 548 to recover preferential and fraudulent transfers and preserve the estate for creditors.
- Recovery analysis
- Estimate of distribution to creditors based on collateral value, priority, and claim amount; deficiency claim equals debt minus collateral value.