Chapter 11 Reorganization: A Comprehensive Guide for Debtors and Creditors

51 questions on chapter 11 reorganization, answered and cited by the UpLaw editorial team.

• Can a bankrupt company assign a contract despite an anti-assignment clause?
• Can a Chapter 11 debtor pay prepetition claims of critical vendors?
• Can a Chapter 11 plan release claims against non-debtors after Purdue Pharma?
• Can a creditors' committee sue on behalf of the estate?
• Can a senior creditor class “gift” part of its recovery to equity over a dissenting class?
• Can existing owners keep equity in a reorganized company?
• Do directors owe duties to creditors when a company approaches insolvency?
• How are claims classified in a Chapter 11 plan, and what is gerrymandering?
• How does a Section 363 sale process actually work?
• How does the Subchapter V discharge work?
• How is a landlord's rejection damages claim capped?
• Is an undersecured lender entitled to interest while a Chapter 11 case proceeds?
• What are first-day motions in a Chapter 11 case?
• What are the strategic questions that decide a Chapter 11 case?
• What deadlines apply to commercial leases in Chapter 11?
• What does Chapter 11 actually do?
• What does confirmation of a Chapter 11 plan discharge?
• What does it mean to sell assets “free and clear” under Section 363(f)?
• What does the automatic stay do when a business files Chapter 11?
• What does the feasibility requirement demand?
• What happens when a Chapter 11 debtor rejects a contract?
• What is a debtor in possession, and what duties does it owe?
• What is adequate protection?
• What is an executory contract in bankruptcy?
• What is a priming lien, and why are they rare?
• What is a roll-up in DIP financing, and what other DIP terms should be scrutinized?
• What is a Section 1111(b) election?
• What is a “sub rosa plan,” and why is it prohibited?
• What is cash collateral, and why can't a debtor simply spend it?
• What is cramdown, and how does a plan get confirmed over a dissenting class?
• What is credit bidding, and what did RadLAX decide?
• What is DIP financing, and how does Section 364 work?
• What is exclusivity in Chapter 11?
• What is in a typical cash collateral or DIP order?
• What is Subchapter V, and how does it differ from ordinary Chapter 11?
• What is the absolute priority rule?
• What is the best-interests test?
• What is the creditors' committee, and what powers does it have?
• What is the difference between a prepackaged, prearranged, and free-fall Chapter 11?
• What is the impaired accepting class requirement?
• What is the Section 365(c) hypothetical-test split?
• What kinds of releases survive after Purdue Pharma?
• What must a Chapter 11 disclosure statement contain?
• What must a debtor do to assume a contract?
• What standard governs a sale of assets under Section 363?
• When can management lose control of a Chapter 11 case?
• Where does an ordinary trade creditor sit in the Chapter 11 priority ladder?
• Who is eligible for Subchapter V?
• Who votes on a Chapter 11 plan, and what are the thresholds?
• Why do appeals from DIP financing and sale orders so rarely succeed?
• Why do so many Chapter 11 cases end in a sale rather than a reorganization plan?