Bankruptcy is a better alternative

Article Abstract:

Creditors are wrong to fear that Chapter 11 bankruptcy serves them less well than collecting under state law. It is crucial to distinguish those losses that happen because of a business failure and those due to the bankruptcy system. Chapter 11 is more helpful to unsophisticated creditors and those without enough market share to price goods so as to compensate for the risk of business failure. Chapter 11 seeks to even the odds among creditors, whereas state collection law favors some kinds of creditors over others.

Management, Priorities of claims and liens

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How Chapter 11 sees dissenting classes

Article Abstract:

The Bankruptcy Reform Act of 1978 enacted Chapter 11, which emphasizes negotiation of reorganization plans. The emphasis on consensus means that the treatment of dissenting classes can be problematic. Classes of claims considered unimpaired and those holding executory contracts are excluded from the confirmation process altogether. Other dissenting individuals or classes have recourse to the best-interests test, or the plan may be confirmed with a cramdown.

Planning, Bankruptcy reorganizations, Bankruptcy reorganization

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Provision can cancel tax benefit; debtors' trap?

Article Abstract:

Corporate reorganization plans must be carefully formulated to avoid the pitfall of Bankruptcy Code section 1129(d), which denies the tax benefits of section 1146(c) if the primary purpose of a reorganization plan is deemed to be tax avoidance. The cases of Gregory v Helvering and In re Rath Packing Co have been the salient ones decided in this area.

Taxation, Laws, regulations and rules, Tax exemption, Tax exemptions

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