Category Archives: Bankruptcy
The Importance of Business Valuation in Chapter 11
Business valuation is a fundamental aspect of a business filing for Chapter 11 bankruptcy. One element of a Chapter 11 plan is a liquidation analysis, which shows what creditors would receive if the case were converted to a Chapter 7. The debtor must calculate the value of its property, including any collateral pledged for its […]
Hurdles to Creditors Getting Paid in Chapter 11
In a Chapter 11 bankruptcy, creditors often face an uncertain terrain when it comes to recovering payment on their claims. The Bankruptcy Code’s “absolute priority rule” controls in what order available funds are used to satisfy creditors of different types. However, several external factors can impact the timeline for payment, the amount of recovery and […]
Deciding on a 3-Year or 5-Year Chapter 13 Repayment Plan
In a Chapter 13 bankruptcy, debtors repay a portion their unsecured debts over a period of three or five years and then are granted a discharge of the remainder. All debtors have the option of taking five years to complete a repayment plan, but some may be able to select a three-year schedule, which has […]
Positive Steps to Prepare for Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a legal process designed to help businesses reorganize their debts while continuing operations. It allows the company to create a plan for restructuring its obligations and paying creditors over time, often while renegotiating contracts and eliminating burdensome liabilities. Chapter 11 enables the business to remain operational, making it especially useful for […]
Priorities for Companies Emerging from Chapter 11 Bankruptcy
The goal of a Chapter 11 bankruptcy is to allow a business to regain solvency and return to profitable operation. While the restructuring process allows a company to reduce its debts and reorganize its operations, the work doesn’t end once Chapter 11 is over. There are important challenges to be met in order to restore […]
Advantages of Lien Stripping in Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is a procedure for steady wage earners to reorganize their heavy debt by paying off a portion of it over time. A structured repayment plan proposed by the debtor is approved by the court and managed by an appointed trustee. It provides a way to reduce debt burdens, lower monthly payments, […]
What Can Cause a Chapter 11 Case to be Dismissed?
Chapter 11 of the U.S. Bankruptcy Code is meant to help financially distressed businesses get protection from creditors and stay in operation so that they can return to solvency. However, not every case stays on track to a successful outcome. The bankruptcy court may dismiss a Chapter 11 case upon finding good cause to do […]
Do’s and Don’ts for Seeking Debtor-in-Possession (DIP) Financing
Chapter 11 bankruptcy can be a lifeline for a business in financial distress. One vital aspect of successfully using this debt relief remedy is obtaining debtor-in-possession financing. DIP financing provides a company with the liquidity needed to cover operating expenses, including payroll, rent and other overhead. However, securing this type of financing requires careful planning […]
Benefits of Asset Sales During Chapter 11
In a Chapter 11 bankruptcy, a debtor company retains control of its operations while reorganizing its debts and assets. One of the key strategies a company can employ during this process is selling assets. An asset sale can provide a way to generate immediate cash flow, which can be used to pay down debts, fund […]
Company Equity Holders’ Rights and Remedies in Chapter 11
In a Chapter 11 bankruptcy, company equity holders (shareholders) occupy a precarious position in the hierarchy of claims. They are typically last in line to receive payment due to their subordinate position in the capital structure. However, through negotiations and the infusion of new capital, they can sometimes retain a portion of their equity or […]
