Tag Archives: chapter 11
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 […]
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 […]
What the Automatic Stay Can and Cannot Do in a Chapter 11
The automatic stay is an integral aspect of a Chapter 11 bankruptcy case. Taking effect immediately upon the filing of the petition, the stay temporarily halts creditors, collection agencies and government entities from pursuing actions against the debtor or the debtor’s property. It is designed to provide a breathing spell for the debtor, during which […]
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 […]
What Are the Basic Steps in a Chapter 11 Bankruptcy?
Chapter 11 is a legal remedy designed to help financially troubled businesses remain operational and protected from creditors while they work to restructure their debts under a court-approved reorganization plan. The goal is for creditors to be partially repaid and for the debtor company to emerge solvent and financially stable at the end of the […]
Using Asset Sales to Advantage in a Chapter 11 Bankruptcy
Chapter 11 bankruptcy is a legal mechanism for businesses to reorganize their debts while maintaining operations. An effective strategy within this process is the sale of assets, which can offer numerous advantages to the debtor company. However, the Bankruptcy Code places rules and restrictions on such sales, which debtors must follow carefully in order to […]
How the Absolute Priority Rule Affects Creditor Payments in Chapter 11
The absolute priority rule dictates the hierarchical order in which creditors’ claims are addressed during a debtor’s Chapter 11 reorganization. It is intended to ensure that senior creditors are paid in full before junior creditors or equity holders receive any distribution, thereby promoting fairness and predictability in the process. The absolute priority rule was established […]
