Category Archives: Bankruptcy
How Cramdowns Can Overcome Creditors’ Objections in Chapter 11
In a Chapter 11 bankruptcy, the debtor proposes a reorganization plan that outlines how it will handle its debts, restructure its operations, and emerge from bankruptcy. Creditors, who are grouped into classes based on the nature of their claims, vote on this plan. For the plan to be confirmed through the normal route, each class […]
Strategic Planning in Chapter 11 for Restoring a Company’s Viability
Filing for Chapter 11 bankruptcy is not merely a legal procedure. It’s a comprehensive business strategy aimed at restoring a company’s financial health. To successfully navigate Chapter 11 and bring the company back to viability, a thoughtful and strategic plan must be in place, encompassing thorough analysis, realistic projections, and effective decision-making. The first step […]
Using DIP Financing to Fund a Chapter 11 Reorganization
When a business struggles to generate profit and exhausts available financing options, a Chapter 11 bankruptcy might be a viable solution to continue operations while restructuring debt. Chapter 11 can also unlock new financing opportunities that are essential for the reorganization process. Under Chapter 11 bankruptcy, the debtor, whether an individual or a corporation, typically […]
How Long a Chapter 11 Bankruptcy Case Typically Takes
Chapter 11 bankruptcy is designed for businesses aiming to reorganize their debts and remain operational. The duration of a Chapter 11 case can vary significantly based on the complexity of the case, the size of the business and the cooperation of creditors. Generally, a Chapter 11 case can take anywhere from a months to years […]
The Bankruptcy Trustee’s Power to Set Aside Certain Payments to Creditors
Debtors planning on bankruptcy often make payments to certain creditors weeks or months ahead of filing. When a debtor makes a payment that unfairly benefits one creditor over others, this is known as an avoidable preference. Whether the payment is made voluntarily (by writing a check to a creditor) or involuntarily (through wage garnishment), the […]
How Much Control Does a Chapter 11 Debtor Retain Over the Business?
Under Chapter 11 of the Bankruptcy Code, company owners, referred to as debtors in possession (DIP), are allowed to continue business operations, but the bankruptcy court retains control over significant business decisions. This balance allows the business to maintain some autonomy while ensuring that creditors’ interests are protected. The following aspects of the business are […]
Fending Off Creditors’ Challenges in Bankruptcy Adversary Proceedings
An adversary proceeding in bankruptcy is essentially a lawsuit within the context of a bankruptcy case. It is initiated by a creditor or another party who seeks to challenge certain aspects of the bankruptcy or to resolve disputes that arise within the bankruptcy process. These proceedings can significantly affect the debtor’s ability to obtain a […]
Benefits of Conducting a 363 Sale of Assets in a Chapter 11
A debtor-in-possession (DIP) in a Chapter 11 bankruptcy proceeding can seek court approval to sell some or all of the company’s assets at auction through a process known as a 363 sale. Named after Section 363 of the U.S. Bankruptcy Code, it facilitates the efficient liquidation of assets, often resulting in higher recovery values and […]
Getting the Most Out of the Automatic Stay in a Chapter 11 Bankruptcy
When a bankruptcy petition is filed, an automatic stay immediately goes into effect, giving debtors a reprieve from most collection activities. This is in effect a court order that halts lawsuits, garnishments, and all forms of creditor harassment, allowing the debtor breathing room to reorganize their financial affairs. In a Chapter 11 case, the stay […]
Is a Prepackaged Chapter 11 Right for Your Situation?
Prepackaged Chapter 11 bankruptcies, often referred to as “prepacks,” are a streamlined form of bankruptcy reorganization. Unlike traditional Chapter 11 proceedings, which can involve extensive negotiations and court hearings, prepackaged bankruptcies allows a company to negotiate the terms of a reorganization plan with creditors in advance. If the required majority of creditors approve the plan, […]
