As courts and commentators alike have observed in recent years, sales of substantially all assets pursuant to section 363 of the Bankruptcy Code prior to confirmation of a chapter 11 plan have become common practice in large-scale corporate bankruptcy cases. Chapter 11 debtors who effectuate such sales traditionally must pursue one of three possible options for concluding the chapter 11 case: (i) confirmation of a plan of reorganization or liquidation, (ii) conversion of the case to a case under chapter 7 of the Bankruptcy Code, or (iii) entry of an order dismissing the case and returning all parties to their respective state law rights and remedies. However, when these courses of actions are not feasible or otherwise are simply not appropriate or practical under the circumstances, debtors are increasingly turning to structured dismissals as an alternative chapter 11 exit strategy. This blog post provides an overview of structured dismissals, and discusses how and when they are used. Part II of this series will discuss several examples of structured dismissals from recent chapter 11 cases. Continue reading
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