Elearning company Skillsoft provided two expedited alternatives to bankruptcy in its first-day filings in the Bankruptcy Court for the District of Delaware.

While the full extent of COVID-19’s impact on the economy remains to be seen, it will likely create significant restructuring activity for companies already experiencing financial distress and otherwise healthy companies distressed by the pandemic. We have already seen an increase in chapter 11 filings, and more will follow.

Prepackaged bankruptcies, prearranged bankruptcies, and expedited sales are available options for businesses in need of accelerated restructurings during the coronavirus (COVID-19) pandemic.

While the full extent of COVID-19’s impact on the economy remains to be seen, it will likely create significant restructuring activity for companies already experiencing financial distress and otherwise healthy companies that experience distress caused by the pandemic. We have already seen an increase in Chapter 11 filings, and more will follow.

In response to the coronavirus (COVID-19) pandemic, US bankruptcy courts have granted extraordinary equitable relief in some cases. As government orders enforcing stay-at-home measures have forced many businesses to shutter indefinitely, bankruptcy courts have implemented procedures to allow the ongoing—albeit virtual—administration of bankruptcy cases.

A Roll of the Dice: Mothballing Bankruptcy Cases Under 11 USC § 305(a)

Courts and professionals have wrestled for years with the appropriate approach to use in setting the interest rate when a debtor imposes a chapter 11 plan on a secured creditor and pays the creditor the value of its collateral through deferred payments under section 1129(b)(2)(A)(i)(II) of the Bankruptcy Code. Secured lenders gained a major victory on October 20, 2017, when the Second Circuit Court of Appeals concluded that a market rate of interest is preferred to a so-called “formula approach” in chapter 11, when an efficient market exists.

Over the years, the United States Supreme Court has had to interpret ambiguous, imprecise, and otherwise puzzling language in the Bankruptcy Code, including the phrases “claim,” “interest in property,” “ordinary course of business,” “applicable nonbankruptcy law,” “allowed secured claim,” “willful and malicious injury,” “on account of,” “value, as of the effective date of the plan,” “projected disposable income,” “defalcation,” and “retirement funds.” The interpretive principles employed by the Court in interpreting the peculiarities of the Bankruptcy Code were in full view when the Court r

The absolute priority rule of Section 1129(b) of the Bankruptcy Code is a fundamental creditor protection in a Chapter 11 bankruptcy case. In general terms, the rule provides that if a class of unsecured creditors rejects a debtor’s reorganization plan and is not paid in full, junior creditors and equity interestholders may not receive or retain any property under the plan. The rule thus implements the general state-law principle that creditors are entitled to payment before shareholders, unless creditors agree to a different result.