Category Archives: Chapter 11
“First Day Motions” in Chapter 11 Bankruptcy Cases
At the onset of a Chapter 11 bankruptcy case, the debtor’s attorney will make certain motions to the court to address immediate concerns, to allow the debtor to maintain business continuity and to preserve the value of the debtor’s property for creditors. Here is an overview of the most common “first day motions” and their […]
Business Bankruptcies Rose Sharply in 2024, and Trend May Continue
The recent year saw a marked increase in new business bankruptcies in the U.S., including Chapter 11 cases. According to statistics released by the Administrative Office of the U.S. Courts, there were 6,067 total commercial chapter 11 bankruptcies filed during the first nine months of 2024, a 36 percent increase over the 4,561 filed during […]
How a Liquidation Bid Can Derail a Prepackaged Chapter 11
When a company files a prepackaged Chapter 11 bankruptcy, it has already negotiated a deal with creditors and potential buyers for the business to be sold as a going concern. This approach can streamline the process, minimize disruptions and maximize value for stakeholders. However, complications can arise if a liquidation bid emerges as a competing […]
What Are the Essential Contents of a Chapter 11 Plan?
Chapter 11 of the United States Bankruptcy Code provides a mechanism for financially distressed businesses to reorganize their debts and operations. A Chapter 11 plan serves as the roadmap for this reorganization, outlining how claims and interests will be treated. It is based on whether the business can be reorganized for a return to solvency […]
What to Know About Chapter 11 Disclosure Statements
In Chapter 11 bankruptcy, the disclosure statement is a critical document required to be completed and filed by debtors. Its purpose is to provide sufficient information for creditors to make an informed judgment about the debtor’s proposed reorganization plan. Essentially, the disclosure statement ensures transparency, giving creditors enough insight to decide whether to support or […]
The Bankruptcy Automatic Stay: How to Make it Last
The bankruptcy automatic stay is a critical protection in both Chapter 11 and Chapter 13 bankruptcy cases, pausing all collection actions against the debtor once the case is filed. In general, the automatic stay remains effective for the duration of the bankruptcy proceedings. However, the stay can be lifted in certain circumstances, such as where […]
When Can a Company Do a Repeat Chapter 11 Filing?
Chapter 11 is meant to allow businesses to reorganize and continue operating while repaying creditors and to reemerge solvent. However, some companies face issues and setbacks that prevent achieving that goal. This may be due to overly optimistic restructuring plans, an inability to cut costs effectively or unexpected changes in the market. In such circumstances, […]
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 […]
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 […]
