Practical Law Glossary Item 8-382-3736 (Approx. 2 pages)
Glossary
Redemption
In a debt transaction, the repayment by a company of the principal amount of an outstanding debt before its maturity date.
In an equity transaction, the return by a company of a stockholder's principal investment by buying back all or a portion of the equity securities held by such stockholder.
In a Chapter 7 bankruptcy, the option for an individual debtor to redeem tangible personal property from a secured creditor'slien by paying the creditor the fair market value of the property. The debtor can then retain the property (§ 722, Bankruptcy Code).
For information on these types of transactions, see the following Practice Notes: