Over recent years, a prolonged period of low interest rates, together with a competitive financing market, has resulted in greater leverage and control for private companies (and their sponsors) when it comes to negotiating terms with current and potential creditors. There has also been, as a consequence of this dynamic and the general availability of capital, an expansion in debt document flexibility over the course of the last decade.

Courts are often faced with the situation in which affiliated debtors file for Chapter 11 reorganization and request to have their cases jointly administered. While joint administration does not, without more, cause substantive consolidation of the assets and liabilities of the corporate group, jointly-administered debtors may propose a single plan of reorganization that establishes the recovery for all of the debtors’ creditors.