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Category Archives: Chapter 11

Assumption or Assignment of Executory Contracts and Unexpired Leases in Chapter 11

Chapter 11 bankruptcy for debtors and creditors

An important aspect of Chapter 11 bankruptcy for debtors and creditors is the treatment of executory contracts and unexpired leases. Chapter 11 gives the debtor in possession, or in some cases the bankruptcy trustee, significant power to decide the fate of such agreements, in which both parties still have unfulfilled obligations. The debtor might assume […]

The Impact of Chapter 11 Bankruptcy on Employees’ Wages and Benefits

Paycheck

The goal of a Chapter 11 bankruptcy is to keep an insolvent company in business and by securing protection from creditors and reorganizing debt. This means creating a plan that allows the company to meet its expenses, including overhead costs like wages and benefits for employees. The decisions made during a Chapter 11 can fall […]

What Are Your Responsibilities as a Chapter 11 Debtor in Possession?

Debtor in Possession

A Chapter 11 debtor in possession (DIP) holds a unique and multifaceted role. As a DIP, you are not only seeking financial reorganization but also acting as a fiduciary, entrusted with managing the business and assets for the benefit of all stakeholders. This dual nature encompasses a wide range of duties and carries a considerable […]

Can Chapter 11 Provide a Company Relief from PPP Loans?

Paycheck

Small businesses that used the Paycheck Protection Program to keep their workforces employed during the COVID-19 pandemic may now be looking for ways to relieve their financial burdens. One path for relief is PPP loan forgiveness through the U.S. Small Business Administration (SBA). Alternatively, a company might be able to use Chapter 11 bankruptcy to discharge […]

Planning Exit Strategies Before Filing a Chapter 11

Legal Strategy

Entering into agreements with key creditor groups before filing a Chapter 11 bankruptcy can be of great advantage for a business debtor, especially a smaller company that is more likely to be impacted by the costs of a bankruptcy. This prearranged approach is often memorialized in a restructuring support agreement (RSA), a contract that outlines […]

Overcoming Creditors’ Objections to Chapter 11 Plan Confirmation

Chapter 11 bankruptcy is a legal remedy that allows businesses, both large and small, to reorganize and continue their operations while relieving some of their financial difficulties. The U.S. Bankruptcy Code requires that under a Chapter 11 reorganization plan, each creditor will receive at least as much as they would have in a Chapter 7 […]

The Value of Restructuring Support Agreements in Chapter 11 Cases

When a company in financial distress seeks to reorganize via a Chapter 11 bankruptcy, one critical tool at hand is the restructuring support agreement (RSA). An RSA is a binding contract between the debtor and certain key creditors that outlines the terms and conditions of a proposed Chapter 11 plan before it is even filed […]

How Nonconsensual Third-Party Releases Can Be Useful in Chapter 11 Bankruptcy Cases

Nonconsensual third-party releases are provisions in Chapter 11 bankruptcy plans that release non-debtor parties from liability to creditors without the consent of all potential claim holders. These releases can be a useful tool for debtors in a number of situations. The common purpose of nonconsensual third-party releases is to protect directors and officers from liability […]

How the Absolute Priority Rule Affects Chapter 11 Plans

In a Chapter 11 bankruptcy, creditors are generally entitled to repayment of some of the outstanding debts and obligations. However, not all obligations are treated equally. Creditors as well as equity holders are paid in accordance with the absolute priority rule, which sets a hierarchy for the fair and equitable distribution of debt repayments. To […]

Why an Individual Debtor Might Benefit From Chapter 11

Financially distressed companies are able to utilize Chapter 11 to restructure debt and reorganize operations with the goal of regaining solvency. Although it is not commonplace, individuals can also file for bankruptcy under Chapter 11, and sometimes this is the best option. Chapter 7 and Chapter 13 are the most popular bankruptcy options for individuals […]

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