Legal Aspects of Restructuring
Expert-defined terms from the Advanced Certificate in Restructuring and Reorganization course at London School of International Marketing. Free to read, free to share, paired with a globally recognised certification pathway.
Legal Aspects of Restructuring #
Legal Aspects of Restructuring
Legal aspects of restructuring refer to the various legal considerations and imp… #
This includes addressing issues related to corporate governance, compliance with regulations, contractual obligations, and potential disputes that may arise during the restructuring process.
Bankruptcy #
Bankruptcy
Bankruptcy is a legal process that allows individuals or businesses to seek reli… #
In the context of restructuring, bankruptcy may be used as a tool to reorganize the business, renegotiate debts, and develop a plan to repay creditors over time.
Chapter 11 #
Chapter 11
Chapter 11 is a section of the U #
S. Bankruptcy Code that provides for the reorganization of a business entity under the supervision of the bankruptcy court. It allows the debtor to propose a plan to restructure its debts and operations while continuing to operate the business.
Chapter 7 #
Chapter 7
Chapter 7 is another section of the U #
S. Bankruptcy Code that involves the liquidation of a debtor's assets to repay creditors. In the context of restructuring, Chapter 7 may be used as a last resort if the business is unable to reorganize successfully under Chapter 11.
Corporate Governance #
Corporate Governance
Corporate governance refers to the system of rules, practices, and processes by… #
In the context of restructuring, corporate governance plays a crucial role in ensuring transparency, accountability, and fairness in the decision-making process.
Debtor #
in-Possession (DIP)
A debtor #
in-possession is a company that is in bankruptcy but still in control of its operations. In Chapter 11 bankruptcy, the debtor typically continues to operate the business as a DIP while developing a plan to restructure its debts and operations.
Equity Holder #
Equity Holder
An equity holder is an individual or entity that holds equity or ownership inter… #
In the context of restructuring, equity holders may be affected by the restructuring process through potential dilution or loss of their ownership stake.
Insolvency #
Insolvency
Insolvency occurs when a company is unable to meet its financial obligations as… #
In the context of restructuring, insolvency may be a triggering event that leads to the need for a formal reorganization process such as bankruptcy.
Intercreditor Agreement #
Intercreditor Agreement
An intercreditor agreement is a contract between two or more creditors that outl… #
In the context of restructuring, an intercreditor agreement may govern the treatment of different classes of debt in a bankruptcy proceeding.
Liability Management #
Liability Management
Liability management refers to the strategic management of a company's liabiliti… #
In the context of restructuring, liability management may involve renegotiating debt terms, refinancing debt, or converting debt to equity.
Plan of Reorganization #
Plan of Reorganization
A plan of reorganization is a detailed proposal submitted by a debtor in bankrup… #
The plan outlines how the debtor intends to repay creditors, modify existing contracts, and emerge from bankruptcy as a viable business entity.
Preference Payment #
Preference Payment
A preference payment is a payment made by a debtor to a creditor shortly before… #
In the context of restructuring, preference payments may be subject to clawback under bankruptcy law.
Proof of Claim #
Proof of Claim
A proof of claim is a formal document filed by a creditor in a bankruptcy procee… #
In the context of restructuring, creditors must file proofs of claim to participate in the bankruptcy process and receive distributions.
Receivership #
Receivership
Receivership is a legal process in which a court #
appointed receiver takes control of a company's assets and operations to protect the interests of creditors or other stakeholders. In the context of restructuring, receivership may be used as an alternative to bankruptcy to reorganize the business.
Turnaround Management #
Turnaround Management
Turnaround management refers to the process of reorganizing and revitalizing a d… #
In the context of restructuring, turnaround management may involve implementing cost-cutting measures, renegotiating contracts, and developing a new business strategy.
Workout Agreement #
Workout Agreement
A workout agreement is a negotiated arrangement between a debtor and its credito… #
In the context of restructuring, a workout agreement may involve modifying debt terms, extending repayment schedules, or exchanging debt for equity.