Chapter 11

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Chapter 11

The process of the reorganization of a bankrupt company under the supervision of a court or the appropriate regulator. Chapter 11 proceedings require a reorganization plan, which is filed with the bankruptcy court or regulator and describes how an insolvent company will change structurally to help it pay its debts and stay in business. This plan is subject to court or regulator oversight to ensure enforcement. Depending upon the specific plan, a company's original owner or managers may maintain control. Other times, the company's creditors become the new owners of the business; this especially happens when one or more creditors have had their debt completely discharged. Changes also must occur structurally (perhaps in risk management or marketing or perhaps in something more fundamental) to ensure that the bankruptcy does not repeat itself.

Chapter 11

A bankruptcy option in which a trustee is appointed to reorganize the bankrupt firm. Although the existing claims of security holders are likely to be reduced or replaced with different claims, it is expected that the firm will continue operating. Both creditors and owners must vote approval of the plan before the reorganization can be confirmed by court action and become effective. See also prepackaged bankruptcy, reorganization plan.
Case Study The turn of the century produced difficult business conditions for many companies, including one of America's technical giants, Polaroid Corporation. Founded by Edwin Land and George Wheelwright in 1937, Polaroid was best known for instant photography and glare-free sunglasses. During the 1960s and early 1970s the firm's common stock was part of the "Nifty Fifty," a collection of must-own securities for many portfolio managers and individual investors. Changing consumer preferences, a technological revolution in photography, debt incurred to fend off an attempted takeover, and faulty management decisions during the next several decades sent the firm's stock into a downward spiral until the shares traded for only 28¢ just prior to filing for Chapter 11 bankruptcy protection on October 12, 2001. At the time of the filing the company listed $1.81 billion in assets and $948 million in debts, including a $360 million bank loan that was due in one month. The stock traded as high as $60 per share in 1997. Polaroid's problems stemmed in large part from the increased popularity of digital photography, which captured substantial market share from the firm's products in instant photography. Other photographers discovered the widespread availability of one-hour processing was nearly as convenient and less costly than instant photography. Polaroid had taken on substantial debt in 1988 when it successfully fought a takeover attempt by Shamrock Holdings. The combination of large debt, high costs, and deteriorating market share doomed an American icon. At the time of the bankruptcy filing many analysts expected the firm to be liquidated and its assets sold piecemeal.
References in periodicals archive ?
com) to help creditors sell their unsecured Chapter 11 bankruptcy claims at higher prices and on more favorable contract terms -- all at the expense of vulture investors.
The Blytheville bank's lawyer pointed out that Burrow was forced in the fall to borrow $13,500 from his wife to help pay for his Chapter 11 bankruptcy.
According to the airline, the new timetable anticipates the carrier's emergence from Chapter 11 bankruptcy protection in late October or November - about six weeks later than previously planned.
Carrying about $18 million in debt, the 155-bed hospital filed for Chapter 11 bankruptcy protection after its contract with a Dublin, Ohio-based financier fell apart.
The rule changes are designed to make Chapter 11 bankruptcy less hospitable for small businesses.
com/reports/c50687) has announced the addition of Video Leadership Seminars: Structuring and Negotiating Acquisitions and Sales of Companies in Chapter 11 Bankruptcy with Dennis Drebsky of Nixon Peabody LLP to their offering.
The timing of the Chapter 11 bankruptcy filing by Phoenix Realty & Development LLC of Hot Springs has raised concerns with the Office of the U.
Initial claims sorting works the same way in Chapter 7 and Chapter 11 bankruptcy cases.
filed for Chapter 11 bankruptcy on Tuesday for the second time in seven years and announced plans to close 120 stores.
Conversely, we believe a not-for-profit organization (one not owned by a government unit) would be covered by the SOP when it issues GAAP-based financial statements during a chapter 11 bankruptcy case and when it is emerging from bankruptcy.
The purchase price for Enesco's business, operations and assets included Enesco LLC's forgiveness of all amounts due under Enesco's senior secured debtor-in-possession financing facility and certain other obligations owed to Tinicum and its affiliates, the assumption of certain of Enesco's liabilities, and the establishment of a $700,000 wind-down fund for Enesco's use in its Chapter 11 bankruptcy case.
NWA asked the court to allow it to convert the funds to permanent exit financing it said will secure part of the debt financing needed to emerge eventually from Chapter 11 bankruptcy protection.