What are creditors’ basic rights in a Chapter 11 bankruptcy proceeding?
Creditors have the rights to be paid from the revenues of the bankruptcy estate. Creditors have a rights to be heard by a trustee during court meetings. Creditors have a right to challenge the debtor’s plan and even file a competing reorganization plan to ensure that they are adequately paid. Creditors should keep in mind that they need to follow certain procedural prerequisites to preserve their rights in Chapter 11 bankruptcy proceedings. What are the rights of investors of the publicly traded company that is going to file for a Chapter 11 bankruptcy? If a company you’ve got a stake in files for bankruptcy, chances are you’ll get back pennies to the dollar (if anything). SEC summarizes what may happen to stock- and bondholders during Chapter 11: “During Chapter 11 bankruptcy, bondholders stop receiving interest and principal payments, and stockholders stop receiving dividends. If you are a bondholder, you may receive new stock in exchange for your bonds, new bonds or a combination of
