Non-plan Chapter 11 Issues


Non-Plan Chapter 11 Issues

In Bankruptcy and Financial Restructuring, non-plan Chapter 11 issues include:
  • Fairness Opinions: A fairness opinion may be required from an independent valuation firm to support proposed divestitures of assets.
  • Preference Litigation: As a preference defense, creditors participating in a workout may, on rare occasions, require an opinion of balance sheet solvency to diffuse an attempt to recover any payments made as a preference in a subsequently filed bankruptcy.
  • Fraudulent Conveyances: A retrospective solvency analysis may be required in a fraudulent conveyance attack where a lender in a workout situation may be in a similar position to a lender providing credit in a leverage buyout.
  • Adequate Protection: Proving secured creditors are receiving “adequate protection” in connection with a debtor’s use of encumbered property may require complex valuation analyses including the development of detailed projections.
  • Workout Proposals: To agree to an exchange offer, a compromise of claims, or similar workout, creditors will seek evidence that concessions are reasonable in light of the company’s financial condition and ability to satisfy the provisions of a workout agreement.  Valuation analyses may be required to support workout proposals.