Tag Archives: debts
How Cramdowns Can Help With a Chapter 11 Reorganization
A cramdown is a powerful tool available under the U.S. Bankruptcy Code, allowing a court to approve a business’s Chapter 11 reorganization plan even if certain creditors object. In essence, a cramdown prevents a single group of creditors from holding up a plan that would keep the business running, preserve jobs and potentially pay creditors […]
The Perils of Selling Customer Personal Data During Chapter 11
A distressed company enters into Chapter 11 bankruptcy seeking to reorganize its debts, streamline operations and satisfy creditors so as to emerge solvent. Sale of assets is one method of raising capital to succeed in this venture. Among the assets that may be evaluated for sale are digital resources, including databases containing customers’ personal information […]
When Can Chapter 11 Plans Include Nonconsensual Third-Party Releases?
Nonconsensual third-party releases are clauses in a Chapter 11 reorganization plan that discharge certain non-debtor parties — such as the debtor’s officers, directors, shareholders, insurers, sureties or affiliates — from liabilities owed to creditors. These releases are nonconsensual because they bind creditors who do not consent to them, extinguishing their claims against these third parties. […]
How Does a Small Business Meet the Subchapter V Debt Limit?
Subchapter V of Chapter 11 of the U.S. Bankruptcy Code provides a streamlined and cost-effective reorganization process tailored specifically for small businesses. Introduced by the Small Business Reorganization Act of 2019 (SBRA), this remedy is aimed at making bankruptcy more accessible for small business owners, enabling them to retain control of their operations while restructuring […]
Understanding the Absolute Priority Rule and Its Exceptions
The absolute priority rule, as set forth in Section 1129(b)(2) of the U.S. Bankruptcy Code,., is integral to a Chapter 11 reorganization plan getting confirmed by the court. The plan must adhere strictly to a hierarchical system of claim priority, which dictates the sequence in which creditors are paid. The rule is meant ensure fairness […]
Facing Adversary Proceedings That Challenge Discharge of Debts
The goal of a bankruptcy is to obtain a fresh financial start by having some or all of your debts discharged — namely, wiped out. However, there may be reasons that a creditor or the bankruptcy trustee objects to the discharge of certain debts or to all of them. This sometimes results in an adversary […]
