Chapter 11 Business Bankruptcy Restructuring
The firm’s business attorneys focus on Chapter 11 Business Bankruptcy Reorganization.
The Firm’s lawyers’ Chapter 11 business bankruptcy experience covers a broad spectrum of business industries including Construction, Oil & Gas, Securities, Hospitality (Hotels), Medical Facilities Acquisition, Acquisition/Divestitures, Real Estate, Aerospace/Aviation, Pharmaceutical Technology, Intellectual Property, International Business, And Joint Ventures/Strategic Alliances, and Mergers and Acquisitions.
The Firm’s bankruptcy attorneys have represented debtors, creditor committees, secured and unsecured creditors, trustees, equity holders, and asset purchasers.
A free consultation can help you learn how Chapter 11 business bankruptcy is the essential toolbox for lawyers to solve a multitude of problems:
- intransigent lenders unwilling to extend
- above-market interest and lease rates
- vulture fund takeover attempts
- aggressive landlord actions
- inability to gain needed consent to sell unneeded assets
- infighting among owners/management
- excessive leveraging/debt
- expensive and harassing litigation
Chapter 11 Bankruptcy Overview
The day a chapter 11 bankruptcy case is filed with a federal bankruptcy court is known as “the petition date.” This is an important date for all phases of the bankruptcy process.
The overall purpose of the chapter 11 bankruptcy is to place collection actions on hold while the company management is allowed the opportunity to reorganize its existing finances and operations through the use of federal bankruptcy law.
A chapter 11 case will allow a company to propose a settlement to pre-bankruptcy creditors through a plan of reorganization. If accepted by a majority of creditors and the bankruptcy judge, the plan will be “confirmed” under federal law, a federal court order will be issued and the company will be allowed to “exit” chapter 11 protection. As an alternative, sometimes the problems are resolved by management’s simple sale of some or all of assets of the business, allowing for the dismissal of the bankruptcy proceeding.
The chapter 11 process contains three distinct phases: pre-petition, post petition, and post confirmation during which different actions occur.
Phases of the Chapter 11 Case Overview:
Actions, debts and events occurring prior to the petition date are known as “pre-petition.” Intuitively, actions, debts and events occurring after the petition date are known as “post petition”. This distinction is important, particularly concerning debts owed by the debtor business.
With pre-petition debts, no payment can occur until after a plan of reorganization has been accepted by a majority of creditors, approved by the federal bankruptcy court and the amount of all creditor claims within a particular class have been determined.
With post petition debts, the payment must occur (post petition) to maintain the creditor relationship and pursuant to various provisions of the Bankruptcy Code. If a post petition payment is not made (other than installments on prepetition debt), the nonpayment would likely be an “administrative claim” subject to first priority payment.
The purpose of the bankruptcy case is to prohibit continued creditor collection activities with respect to the pre-petition debts, allow the company a chance to restructure operations and financial arrangements and provide a settlement plan to creditors who hold pre-petition debts.
The settlement to pre-petition creditors is drafted into the plan of reorganization and approved by a federal bankruptcy judge after the plan has been solicited and accepted by a required amount of creditors. A federal bankruptcy judge approves the plan of reorganization by court order (the confirmation order). Upon confirmation, the case begins the “post confirmation” phase.
Though each chapter 11 case has a pre-petition, post petition and post confirmation phase, each case is distinct because of creditor and operational circumstances and therefore each may require a slightly different approach to the activities which occur in each of the phases.
Chapter 11 Case Types Overview
Known as traditional, liquidating traditional, prearranged and prepackaged, chapter 11 case types are legal constructs case professionals utilize to help a company restructure during a bankruptcy case.
Each of the case types contains a pre-petition, post petition and post confirmation phase, but the activities which occur during these phases differ based on the creditor and operational circumstances of the case. The single biggest difference among the case types is when solicitation occurs.
In a traditional chapter 11, solicitation occurs well into the bankruptcy case because no agreement among institutional and large scale creditors existed prior to the filing for chapter 11.
In a liquidating chapter 11, solicitation occurs during the course of the bankruptcy case but a “plan of liquidation” is solicited to creditors for the purpose offering an orderly process to sell off all assets of the debtors estate to remit full or partial payments to pre-petition and post petition debts.
In a prearranged chapter 11, solicitation is conducted before bankruptcy, but does not occur until after the bankruptcy case is filed because institutional and large scale creditors could not reach an agreement on settlement terms for pre-bankruptcy debt and the plan of reorganization. Once the company commences a chapter 11 case and obtains court approval of a disclosure statement, solicitation can begin and the company can seek a quick confirmation.
In a prepackaged chapter 11, solicitation occurs before bankruptcy because institutional and large scale creditors were able to agree on settlement terms for pre-bankruptcy debt and the plan of reorganization. Once solicitation is complete in the pre-bankruptcy phase, the company will commence a chapter 11 case and seek a quick confirmation of the plan.
Request a presentation of our comprehensive chapter 11 case solutions to conquer your chapter 11 challenges.
