A liability that occurs prior to a company's filing for bankruptcy protection. Because the liability is on the balance sheet prior to petition, the creditor can expect to retrieve only a fraction of the debt. Opposite of post-petition liability, incurred after bankruptcy.
Related information about prepetition liability:
- Prepetition Liability Definition | Investopedia
A term that refers to liabilities that arise prior to a company filing of bankruptcy. A company has to petition for bankruptcy protection; once this is done, liabilities ...
- Prepetition Liability - Financial Dictionary - The Free Dictionary
A liability that a company incurs before filing for bankruptcy protection. Most prepetition liabilities are reduced or discharged in bankruptcy proceedings; the ...
- What is prepetition liability? definition and meaning
Definition of prepetition liability: A liability that occurs prior to a company's filing for bankruptcy protection. Because the liability is on the balance sheet prior to ...
- Internal Revenue Manual - 5.9.4 Common Bankruptcy Issues
a Chapter 7 trustee requests turnover of a prepetition income tax refund credit for the estate, and the court does not allow the offset or no prepetition liability ...
- memorandum - Internal Revenue Service
collection period for the prepetition liability has expired, and there are no other periods to which a setoff could be made, must the Service refund overpayments to ...
- Bryant v. Commissioner of Internal Revenue | ABI Volo Project
The bankruptcy court held that the IRS could offset a prepetition obligation against a prepetition liability, but could not offset a postpetition overpayment against a ...
- 962 F.2d 1463
The IRS determined that Mr. Fullmer owed an outstanding prepetition liability of $11,366.72 in taxes, interest and penalties. Accordingly, the IRS filed an ...
- Civil Resource Manual 65. Setoff and Recoupment in Bankruptcy
S.D.N.Y. 1993) (when obligation stems from a contractual obligation, even a postpetition breach will be treated as giving rise to a prepetition liability if the ...