Tag Archives: bankruptcy
Using Exemptions in an Individual Chapter 11 Bankruptcy
Bankruptcy exemptions are legal protections that allow debtors to keep certain property out of the reach of creditors when seeking bankruptcy relief. While exemptions are most frequently associated with Chapter 7 (liquidation) and Chapter 13 (wage earner’s reorganization) cases, they are also relevant in Chapter 11 bankruptcies when the debtor is an individual, rather than […]
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 […]
Types of Adversary Proceedings and How to Defend Against Them
In bankruptcy law, an adversary proceeding is filed to litigate a major issue that affects the debtors’ and creditors’ rights. It is typically lodged by a creditor objecting to some aspect of the debtor’s entitlement to debt discharge. The proceeding is in essence a lawsuit, commenced by the filing of a complaint and involving discovery, […]
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 […]
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 […]
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 […]
When Is a Structured Dismissal Appropriate in Chapter 11?
A structured dismissal of a Chapter 11 bankruptcy case is a court order that includes special provisions. Unlike a standard dismissal, which ends the case unconditionally, a structured dismissal resolves certain issues through agreements among the debtor, creditors and other stakeholders. It may call for distributing the debtor’s remaining funds in a manner considered fair […]
U.S. Corporate Bankruptcies Reached 14-year High in 2024
The year 2024 showed a marked increase in companies filing for bankruptcy protection, signaling a deepening crisis within the corporate sector. The first quarter of the year was particularly notable, with a total of 190 U.S. companies filing for Chapter 11 from January through March. That was higher than any first quarter since 2010, when […]
When Might a Court Remove a Subchapter V Debtor-in-Possession?
In a small business reorganization under Subchapter V of the U.S. Bankruptcy Code, the business owner is typically allowed to continue operating as a debtor-in-possession (DIP). This arrangement permits the owner to maintain control over the business under the auspices of the court-appointed trustee in order to facilitate the transition to financial solvency. However, there […]
