ABI Chapter 11 Reform Commission Calls for Modernization
The ABI Commission to Study the Reform of Chapter 11 released its final report containing recommendations for modernizing the Bankruptcy Code for Chapter 11 business reorganizations.
“Chapter 11 works to rehabilitate companies, preserve jobs, and provide value to creditors only if distressed companies and their stakeholders actually use the chapter 11 process to facilitate an in-court or out-of-court resolution of the company’s financial distress,” according to the Commission’s final report. “Chapter 11 in turn needs to offer tools to resolve a debtor’s financial distress in a cost-effective and efficient manner.” Some of the key proposals contained within the final report include:
- Reducing barriers to entry by providing debtors more flexibility in arranging debtor-in-possession financing.
- Clarifying lenders’ rights in a Chapter 11 case.
- Facilitating more timely and efficient diligence, investigation and resolution of disputed matters through an expanded role for examiners.
- Incorporating checks and balances on the rights and remedies of creditors.
- Creating an alternative restructuring scheme for small and medium-sized enterprises that allows the company and court to more efficiently guide the company through Chapter 11.
To download a copy of the full report, please click here: http://commission.abi.org.
Funded by ABI and the Anthony H.N. Schnelling Endowment Fund, the Commission’s final report incorporates recommendations of 13 advisory committees that examined key issues in corporate bankruptcies, and testimony presented at 17 public hearings held from 2012 to 2014.
For a related article covering the ABI’s desire to revisit the U.S. Bankruptcy Code’s revisions, click here.