Category Archives: Chapter 11
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 […]
What to Know About Assuming a Lease or Executory Contract During Chapter 11
Existing leases or executory contracts present special issues when one of the parties files for Chapter 11 bankruptcy. Other parties to the lease or contract may wish to end it, fearing the debtor may not be able to fulfill the terms. Some leases and contracts include a clause that automatically terminates the agreement upon a […]
Options for Selling Assets in a Chapter 11 Bankruptcy
The purpose of Chapter 11 bankruptcy is to allow a troubled company to restructure its debt with the goal of restoring its financial solvency. One way to achieve that goal is the sale of some of the company’s assets. However, bankruptcy law places restrictions on such sales. Debtor companies need to carefully weigh their options […]
Powers and Duties of a Chapter 11 Debtor in Possession
A Chapter 11 bankruptcy allows a business facing insolvency to reorganize its debts so that it can have a chance to return to financial health. In most cases, the business continues to be operated by its owner, but under the supervision of the bankruptcy trustee. The owner becomes a debtor in possession. The role of […]
The Critical Role of Disclosure Statements in Chapter 11
A type of bankruptcy often used by businesses and individuals with large debt burdens is Chapter 11, in which the debtor retains control of its assets and operations while it works to return to financial solvency. The debtor must make regular payments for the benefit of creditors in accordance with a debt reorganization plan approved […]
How Subchapter V Helps Individual Debtors Get Chapter 11 Plans Confirmed
Chapter 11 is used mostly by financially stressed companies seeking protection from creditors while working to pay off debt and return to solvency. This form of bankruptcy relief is also available to qualifying individual debtors, but until recently it was too complex and costly to be feasible for them. However, the Small Business Reorganization Act […]
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 […]
