Claim in bankruptcy


A Proof of 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 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:
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 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 with other members of the class.