《国际企业并购》Ch11- Bankruptcy.pptVIP

Chapter 11 Bankruptcy Two main forms of Bankruptcy in the United States: Chapter 7 – Liquidation Chapter 11 – Reorganization The chapters refer to the sections of the U.S. bankruptcy law Figure 11.3. Assets of Public Companies Filing for Bankruptcy, 1980-2006 Table 11.2. Failure by Age of Business Table 11.3. A Comparison of the Total Cash Shortfall from Asset Sales and the Additional Cash Required to Avoid Default in the Year of the First Indication of Financial Distress for the Nine Distressed Firms Table 11.4. Largest U.S. Public Bankruptcies Organization of the U.S. Bankruptcy Law Sections of U.S. Bankruptcy Law Most Relevant to Corporations Chapter 7: Liquidation For the more distressed corporations Here they sell off their assets according to the Absolute Priority Rule Chapter 11: Reorganization This has become a creative tool of corporate finance Companies that face difficult and inflexible agreement may consider this tool as a way out of them Table 11.6. Timeline of Key Events and Dates in a Chapter 11 Reorganization Table 11.7. Benefits of Chapter 11 for Debtors Benefits of Chapter 11 Tends to work better for larger companies than smaller ones The expenses of bankruptcy get spread out over a larger quantity of revenues at large companies Duration of Chapter 11 Process New Generation Research 1982 – 2004: 16.4 months Reorganization Plan Part of a larger document – Disclosure Statement It is the plan for how the company is going to be changed to become more viable in the future Reorganization Process Exclusivity Period: during this time period only the debtor in possession can file a plan This can be extended for cause Bankruptcy Abuse Prevention Consumer Protection Act of 2005 – placed a limit of 18 months on the exclusivity period If the creditors reject the plan they can do their own after the exclusivity period ends Financing during Chapter 11 The debtor in possession can get debt financing while in Chapter 11 Various distressed lenders specialize i