#Motion to dismiss chapter 11 by debtor code
#Motion to dismiss chapter 11 by debtor download

This notice can be shortened “for cause.” Likewise, the Bankruptcy Code requires 28 days’ notice to all creditors of the hearing to approve a Plan of Reorganization, as well as the time fixed to file objections to the Plan.

A Section 363 sale of all assets requires 21 days’ notice to all creditors, with an opportunity for objection and a hearing before the court. The Bankruptcy Code provides that a motion to approve DIP financing be served on the largest unsecured creditors with 14 days’ notice of a final hearing. Other creditors such as landlords and trade suppliers are not parties to the restructuring support agreement. The terms are normally set forth in a “restructuring support agreement” with the financial creditors. A creditor’s recourse is filing an objection based on rights and protections set forth in the Bankruptcy Code and under applicable law.įor example, in a “pre-packaged” Chapter 11 case, prior to the Chapter 11 filing, the debtor has negotiated a number of key terms, including DIP financing, exit financing, treatment of the lenders’ claims, treatment of other financial debt such as noteholders that are junior to the lender (often a debt for equity swap), and treatment of general unsecured claims. There is no “vote” for debtor-in-possession (DIP) financing at a First Day hearing. As “First Day” hearings occur within 24-48 hours of a Chapter 11 filing, there is virtually no due process to creditors who have not been involved in the pre-Chapter 11 negotiations. Increasingly, these transactions are being played out at “First Day” Chapter 11 hearings, not in the Plan of Reorganization that requires voting of all impaired creditor constituents. Knowing the law is not enough a creditor must also understand the dynamics of modern Chapter 11 practice and understand the key jurisdictions where significant cases are occurring.Ĭhapter 11 has proven to be a forum for a number of business transactions, including mergers and acquisitions, sales of asset, financial restructurings, and debt financings. The court orders entered on the first day almost always compromise rights of unsecured creditors. Unsecured creditors with material credit exposure should engage early to protect their interests and reduce risk of loss.īankruptcy Courts generally approve motions that are presented for “first day” hearings, especially if supported by lenders and other capital markets participants, deferring to the business judgment of management. Material Chapter 11 cases have morphed to the point that the outcome is often predetermined at the “first day” hearing.

#Motion to dismiss chapter 11 by debtor download

Download Client Alert: Chapter 11 Trends: Are First Day Hearings “Game Over” for Chapter 11 Cases?