Category Archives: Chapter 11
What Goes Into Planning a Chapter 11 Exit Strategy?
Exiting Chapter 11 bankruptcy can be a turning point for a distressed business, offering the opportunity to reset operations, restructure debt, and regain financial stability. To maximize the chances of success, a business must develop a carefully tailored exit strategy that aligns with its unique financial situation, business model, and relationships with creditors. Chapter 11 […]
Assuming or Rejecting Leases and Executory Contracts in Chapter 11
A company in Chapter 11 needs flexibility to manage its obligations, including leases and executory contracts, in order to control costs, improve cash flow and enhance its prospects of emerging solvent after debt reorganization. As such, the U.S. Bankruptcy Code allows a debtor in possession to assume, reject or assign executory contracts and unexpired leases […]
DIP Financing in Chapter 11 Offers a Lifeline, But With Strings Attached
Debtor-in-possession (DIP) financing is a special form of loan that may be available to a company going through Chapter 11 bankruptcy. Its purpose is to enable the company to meet operational needs, payroll, supplier payments and other critical expenses and eventually emerge as a viable entity. This financing is often necessary because traditional sources of […]
Defenses to a Motion for Relief from the Chapter 11 Automatic Stay
In a Chapter 11, the automatic stay is a critical protection that halts all collection activities by creditors against the debtor, such as foreclosures, repossessions or lawsuits. It takes effect immediately upon the filing of the bankruptcy petition and remains in force until the case is closed or dismissed or until a discharge is granted […]
Reorganizing Various Classes of Debt in a Chapter 11 Plan
Chapter 11 bankruptcy, also referred to as reorganization, is primarily utilized by corporations, partnerships and LLCs to restructure and partially repay their debts while continuing their business operations. The principle behind this remedy is that a debtor company is more valuable as an operating entity than in liquidation (i.e., through a chapter 7 bankruptcy), thereby […]
When Can a Chapter 11 Case Be Converted or Dismissed for Cause?
Chapter 11 offers a debtor the opportunity to reorganize their business and attempt to become profitable again. However, a Chapter 11 plan must be in the creditors’ best interests. There are instances where a party in interest, such as creditors or the U.S. trustee, may file a motion to convert the case to Chapter 7 […]
Possible Disputes to Anticipate in a Chapter 11 Bankruptcy
Chapter 11 bankruptcy is designed to allow businesses to shield themselves from debts while they rebuild their finances and eventually emerge in solvent condition. Although it is a potent remedy, it can be fraught with complex issues that can disrupt the process. Sometimes these arise through the filing of an adversary proceeding, which is essentially […]
Weighing Assignment for the Benefit of Creditors as a Debt Remedy
Companies facing severe financial distress have more than one relief option to consider. An assignment for the benefit of creditors (ABC) is a less commonly known alternative to bankruptcy proceedings like Chapter 11. An ABC involves a transfer of the debtor company’s assets to an assignee, who assumes responsibility for liquidating the assets and distributing […]
Making Use of Rights Offerings in a Chapter 11 Bankruptcy
Rights offerings are a strategic tool that a company can use to facilitate its success in a Chapter 11 bankruptcy. It involves giving existing shareholders or creditors the opportunity to buy additional shares at a predetermined price, usually at a discount from the market price. The capital raised is primarily used to pay off secured […]
Major Changes to Chapter 11 Dollar Amounts Effective in 2025
There have been significant changes to the dollar amounts specified in the Bankruptcy Code, which affect Chapter 11 cases filed on or after April 1, 2025. These changes are part of the mandatory inflation adjustment to the Code that occurs every three years. This year’s adjustment is approximately 13.2 percent, a notable increase compared to […]
