Author Archives: Michael J. Berger
Preference Actions in Chapter 11: How to Defend Against Them
A preference in a Chapter 11 bankruptcy is generally defined as a debtor’s pre-filing transfer of property that unfairly favors one creditor over others. The bankruptcy code authorizes the trustee to bring an action to “claw back” the transfer and bring the property back into the bankruptcy estate. The purpose of a preference action, as […]
When Is a Trustee Appointed in Place of a Debtor in Possession?
During a Chapter 11 bankruptcy proceeding, company leaders usually can expect to remain in control as debtors in possession, which allows them to oversee the restructuring process and continue business operations. Appointing a Chapter 11 trustee is an exception to the usual practice and typically arises when there are serious concerns about the debtor in […]
When Can a Company File a Chapter 22 Bankruptcy Case?
Chapter 11 bankruptcy cases focus on relieving a company’s debt and restoring solvency. A Chapter 11 plan allows the company to continue operating while under protection from creditors, to renegotiate contracts and leases, to sell off nonprofitable assets, to restructure debt and payment obligations and to obtain new financing. A successful Chapter 11 lets the […]
How to Meet Subchapter V’s Engaged-in-Business Requirement
Subchapter V, created by the Small Business Reorganization Act of 2019, is a streamlined remedy designed for small businesses to reorganize faster and less expensively than in a traditional Chapter 11 proceeding. Businesses that qualify can obtain protection from creditors and restructure debt based on a self-created plan within the course of three or five […]
Why Might an Individual Debtor Opt for Chapter 11?
Chapter 11 bankruptcy is usually associated with business reorganizations, but it is available to individual debtors in certain circumstances. A Chapter 11 allows for a reorganization and partial repayment of debt over time, after which the individual’s remaining debt can be fully discharged. Individuals who may benefit from Chapter 11 include professionals, business owners, people […]
When Can Confirmation of a Chapter 11 Plan Be Revoked?
Once a Chapter 11 plan is confirmed by the bankruptcy court, it becomes the blueprint guiding the debtor’s future business operations and the distribution of payments to creditors. Confirmation is designed as a final, stabilizing event, on which debtors and creditors rely to plan their next steps. Due to its pivotal role, undoing or revoking […]
Preparing for Chapter 11: What to Do and What Not to Do
For a business facing financial distress, the weeks or months leading up to a Chapter 11 bankruptcy are often critical. The success or failure of a reorganization is frequently determined not by what happens in court but by steps or missteps made just before filing. Businesses unwittingly can undermine their own cases by delaying action, […]
Why the Disclosure Statement Serves as a Central Pillar in Chapter 11
In a Chapter 11 bankruptcy, the disclosure statement is a mandatory document that bridges the gap between a debtor’s reorganization plan and creditors’ rights to vote on that plan. Its function is to provide adequate information to creditors, enabling them to make an informed judgment about whether to accept or reject the proposed plan. The […]
How Cramdowns Can Help With a Chapter 11 Reorganization
A cramdown is a powerful tool available under the U.S. Bankruptcy Code, allowing a court to approve a business’s Chapter 11 reorganization plan even if certain creditors object. In essence, a cramdown prevents a single group of creditors from holding up a plan that would keep the business running, preserve jobs and potentially pay creditors […]
Ways to Overcome Objections to Chapter 11 Plan Confirmation
Objections by creditors can complicate a Chapter 11 reorganization. In reality, though, objections to plan confirmation process can often be surmounted. Experienced attorneys routinely address them and many can be resolved without ever heading to a contested hearing. The following are common grounds for creditor objections to plan confirmation: Feasibility concerns — A creditor may […]
