Chapter 11 Business Bankruptcy – Getting the Plan Approved
The first thing that one needs to do in order to get chapter 11 business bankruptcy plan approved is to watch HBO’s hit series Game of Thrones from beginning to end.
Sounds crazy? It may be, but one of the story lines that Game of Thrones has is lining up allies & attacking enemies. It also has several situations where army’s attacked without enough allies and got crushed. This isn’t that much different from putting together a bankruptcy plan.
Step 1. Who are the other armies?
All creditors are the other armies. They need to be divided into both secured & unsecured camps. They need to be further divided by size or balance due. Because they have the sympathy of the judges, unsecured creditors have power beyond their size.
Step 2. Line up your allies.
Unless you have the vast majority in number & size of secured creditors on your side, you’re going to need to get the unsecured creditors, assuming they’re of significant size and if they formed a committee. If they’re small, inactive & didn’t form a committee, they’re less important in getting a plan approved.
Out of the secured creditors, determine who has the best collateral position, who will fight the hardest & who will you most need in the future. Size of the balance also comes into play. The key is to line up the largest creditors by amount due & number of creditors to be on your side & in favor of the business bankruptcy plan. If you can’t achieve this, you need to either refinance some of them out or offer them incentives to join your side.
Step 3. The minority of creditors left in both size & quantity become your enemies. Your weapons of attack is treatment in the plan… Things like term of repayment, interest rate, other super priority lenders & even motions to affix fair value and lower the amount due.
Step 4. Allies sometimes double cross you & enemies sometimes become allies.
Be prepared. Leave doors open. The only thing in life that’s guaranteed is change.
If you think that getting business bankruptcy plans approved are complicated, you’re right. You need to surround yourself with your own small council of top attorneys & investment bankers like GFCIB to make sure that you’re successful.
If you have filed or are contemplating filing for chapter 11 business bankruptcy, and you owe more that 5 million dollars to 5 or more creditors, call GFCIB today at 215-947-1032 or email us at AMiller@GFCIB.com.