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Equity Security Holders

An equity security holder is a person who holds equity interest of the debtor in a bankruptcy case.  Equity security include shares in a corporation; an interest of a limited partner in a limited partnership; or a right to buy, sell, or subscribe to a share, security, or interest of a share in a corporation or an interest in a limited partnership.

Equity security holders possess certain rights and privileges.  An equity security holder may vote on the plan of reorganization and may file a proof of interest.  An equity security holder whose interest is not scheduled or is scheduled as disputed, contingent, or unliquidated must file a proof of interest in order to be treated as a creditor for purposes of voting on the plan and distribution under it.  A properly filed proof of interest supersedes any scheduling of that interest.  A proof of interest is deemed filed for any interest that appears in the debtor’s schedules, unless it is scheduled as disputed, contingent, or unliquidated.

In a Chapter 11 reorganization case, unless otherwise ordered by the court, the clerk or some other person as the court may direct must give notice to all equity security holders of:

  • the order for relief;
  • any meeting of equity security holders held pursuant to the Bankruptcy Code;
  • the hearing on the proposed sale of all or substantially all of the debtor’s assets;
  • the hearing on the dismissal or conversion of a case to another chapter;
  • the time fixed for filing objections to and the hearing to consider approval of a disclosure statement;
  • the time fixed for filing objections to and the hearing to consider confirmation of a plan; and
  • the time fixed to accept or reject a proposed modification of a plan.

Inside Equity Security Holders