Category Archives: Chapter 11
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 […]
What Is Involved in a Prepackaged Chapter 11?
A prepackaged Chapter 11 bankruptcy is a form of financial restructuring used by companies that need debt relief but want to avoid the usually lengthy and costly Chapter 11 process. A “pre-pack” requires working out a reorganization plan with creditors and shareholders before filing a petition in court. The plan includes details on how debts […]
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 […]
Chapter 11 Filing Requires Intensive Documentary Preparation
A Chapter 11 bankruptcy allows a business in financial distress to reorganize and restructure its debts while continuing to operate, with the goal of returning to solvency. Filing for Chapter 11 is a complex process that requires substantial documentation. The bankruptcy trustee needs to have a complete picture of the company’s finances in order to […]
Availability of Chapter 11 Relief for Individuals
Chapter 11 bankruptcy is usually associated with business entities seeking to reorganize their debts and continue operations. However, individuals can also pursue this form of relief if their financial circumstances make other forms of bankruptcy, such as Chapter 7 or Chapter 13, unsuitable. This option may be viable for individuals with significant debt levels exceeding […]
Limits on Chapter 11 Debtors’ Use of Cash Collateral
In a Chapter 11 bankruptcy, the debtor is generally allowed to remain in control of their business as a debtor-in-possession. However, this control is subject to restrictions. One of these is prohibition of use of cash collateral, which refers to cash, securities, accounts receivable, inventory and other liquid assets that may be pledged as security […]
