Also known as reinstate. In bankruptcy, the ability to restore debt under its original terms. This is possible only if a proposed plan of reorganization cures or provides compensation for any defaults and does not otherwise alter a creditor's legal, equitable, or contractual rights (§ 1124, Bankruptcy Code). Defaults relating to insolvency or financial condition (such as the act of filing for bankruptcy) do not preclude reinstatement (§ 1124(2)(A), Bankruptcy Code).

Creditors are deemed unimpaired if their debt can be reinstated. If they are unimpaired, they are deemed to have accepted the plan and are not entitled to vote (§ 1126(f), Bankruptcy Code).

For more information on reinstatement, see Practice Note, Reinstatement of Prepetition Loans in Bankruptcy.