Tag Archives: bankruptcy
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, […]
Priorities for Companies Emerging from Chapter 11 Bankruptcy
The goal of a Chapter 11 bankruptcy is to allow a business to regain solvency and return to profitable operation. While the restructuring process allows a company to reduce its debts and reorganize its operations, the work doesn’t end once Chapter 11 is over. There are important challenges to be met in order to restore […]
Advantages of Lien Stripping in Chapter 13 Bankruptcy
A Chapter 13 bankruptcy is a procedure for steady wage earners to reorganize their heavy debt by paying off a portion of it over time. A structured repayment plan proposed by the debtor is approved by the court and managed by an appointed trustee. It provides a way to reduce debt burdens, lower monthly payments, […]
What Can Cause a Chapter 11 Case to be Dismissed?
Chapter 11 of the U.S. Bankruptcy Code is meant to help financially distressed businesses get protection from creditors and stay in operation so that they can return to solvency. However, not every case stays on track to a successful outcome. The bankruptcy court may dismiss a Chapter 11 case upon finding good cause to do […]
Do’s and Don’ts for Seeking Debtor-in-Possession (DIP) Financing
Chapter 11 bankruptcy can be a lifeline for a business in financial distress. One vital aspect of successfully using this debt relief remedy is obtaining debtor-in-possession financing. DIP financing provides a company with the liquidity needed to cover operating expenses, including payroll, rent and other overhead. However, securing this type of financing requires careful planning […]
Benefits of Asset Sales During Chapter 11
In a Chapter 11 bankruptcy, a debtor company retains control of its operations while reorganizing its debts and assets. One of the key strategies a company can employ during this process is selling assets. An asset sale can provide a way to generate immediate cash flow, which can be used to pay down debts, fund […]
Company Equity Holders’ Rights and Remedies in Chapter 11
In a Chapter 11 bankruptcy, company equity holders (shareholders) occupy a precarious position in the hierarchy of claims. They are typically last in line to receive payment due to their subordinate position in the capital structure. However, through negotiations and the infusion of new capital, they can sometimes retain a portion of their equity or […]
How Cramdowns Can Overcome Creditors’ Objections in Chapter 11
In a Chapter 11 bankruptcy, the debtor proposes a reorganization plan that outlines how it will handle its debts, restructure its operations, and emerge from bankruptcy. Creditors, who are grouped into classes based on the nature of their claims, vote on this plan. For the plan to be confirmed through the normal route, each class […]
Strategic Planning in Chapter 11 for Restoring a Company’s Viability
Filing for Chapter 11 bankruptcy is not merely a legal procedure. It’s a comprehensive business strategy aimed at restoring a company’s financial health. To successfully navigate Chapter 11 and bring the company back to viability, a thoughtful and strategic plan must be in place, encompassing thorough analysis, realistic projections, and effective decision-making. The first step […]
Using DIP Financing to Fund a Chapter 11 Reorganization
When a business struggles to generate profit and exhausts available financing options, a Chapter 11 bankruptcy might be a viable solution to continue operations while restructuring debt. Chapter 11 can also unlock new financing opportunities that are essential for the reorganization process. Under Chapter 11 bankruptcy, the debtor, whether an individual or a corporation, typically […]
