Category Archives: Chapter 11
Methods of Determining Reorganization Value in Chapter 11
The goal of a Chapter 11 bankruptcy is to allow a troubled business to stay in operation while it resolves its debts and to emerge in a solvent condition. A Chapter 11 reorganization plan must ensure that creditors will be repaid more on their debts than if the company had been closed and its assets […]
The Timeline for Completing Chapter 11: How to Avoid Delays
Chapter 11 bankruptcy offers a company the opportunity to get relief from debt, reorganize and emerge as a financially viable entity. It is a powerful remedy, but it can involve a lengthy process. A Chapter 11 can take anywhere from a few months to five years or more, depending on the size of the company […]
Meeting the Subchapter V Test of Being “Engaged in Commercial or Business Activities”
The Small Business Reorganization Act (SBRA), enacted in 2020, created a new procedure called Subchapter V, which made it easier for small businesses to file for Chapter 11 protection. Since then, Subchapter V has been used extensively to help business owners regroup, reorganize and return to solvency when they otherwise would have gone under. However, […]
Overcoming Objections to Plan Confirmation in Chapter 11
In Chapter 11, a financially struggling company uses bankruptcy protection to stay in business while restructuring certain debts and reorganizing business operations in accordance with a bankruptcy plan. One of the major challenges of a Chapter 11 bankruptcy is getting the plan approved by the bankruptcy court. A Chapter 11 plan is a highly detailed […]
Can a Chapter 11 Plan Release a Third Party from Liability to Creditors?
In a Chapter 11 bankruptcy, the debtor (usually a business organization) reorganizes its existing debts and repays obligations over a period of years in accordance with a court approved plan. Longstanding bankruptcy law permits the courts to discharge certain obligations as to the debtor. Some Chapter 11 debtors propose reorganization plans that release third parties […]
How Courts Evaluate Whether to Convert a Chapter 7 to a Chapter 11
An individual seeking Chapter 7 bankruptcy protection must demonstrate a lack of disposable income to repay debts, but that isn’t the end of proving eligibility. The bankruptcy code allows a court to convert a Chapter 7 to a Chapter 11 under certain circumstances. This is typically done at the request of creditors who show they […]
Using Cash Collateral to Pay Expenses During a Chapter 11 Case
Most Chapter 11 bankruptcies involve a number of “first day” motions, which are applications made to the court at the very start of the case to give some immediate relief to the debtor. These motions might seek approval of financing for the debtor, preference of certain creditors over others and other changes in how the […]
How DIP Financing in Chapter 11 Can Help Turn a Company Around
The goal of Chapter 11 bankruptcy is to help struggling businesses reorganize and become financially viable again. But every company — even one in Chapter 11 — needs adequate cash flow to keep operating. Debtor-in-possession (DIP) financing is a feature that can help a company get access to the cash it needs to remain operational […]
What Can Delay Completion of a Chapter 11 Bankruptcy?
Chapter 11 bankruptcy allows a financially struggling business to get back on its feet by reorganizing its debts. But there is no definitive timeline for the Chapter 11 process. Depending on numerous factors, winding up a reorganization plan can take anywhere from six months to five years or even longer. There are multiple procedural stages […]
Obtaining Credit in a Chapter 11 Bankruptcy
If your company is unable to turn a profit and has run out of lenders willing to finance it further, Chapter 11 bankruptcy could be the best way to allow the company to stay in business. A Chapter 11 also can open up other sources of credit for you. This might seem counterintuitive, because your […]
