What are some of the key attributes of chapter 11?
Some key chapter 11 attributes are the following: • Chapter 11 is not a declaration of insolvency. • Companies don’t file chapter 11 to liquidate; they do so in order to continue operating and to take the necessary steps to emerge as a financially stronger business, reorganising their operations or balance sheet or in some cases by selling substantially all its assets. • Management remains in control of the business during the chapter 11 process. Trustees, administrators and monitors are typically not appointed. • Chapter 11 normally does not cause interruption to business operations. • The company is given breathing room during the process – an “automatic stay” generally prevents parties from taking legal action against the company or taking the company’s assets. • Specific benefits include that the company can: – sell its assets free of liens or encumbrances; – obtain “debtor in possession financing” to fund ongoing operations during the chapter 11 case; – “reject” unprofitable contr
