Chapter 11 bankruptcy is challenging and replete with pitfalls. Debtors face very low odds of success. The process takes cooperation from lenders and creditors, plus a strong trustee to formulate a plan of reorganization, navigate that through the court, and keep the business operating. If the debtor makes it that far, the plan needs to be quickly and decisively implemented.
Contested plans lower the odds. Challenges to a plan are often time-consuming, expensive and fraught with risk for all parties.The reorganization gets bogged down in discovery, depositions and expert witness testimony. Everyone incurs significant costs preparing for and attending evidentiary hearings or trials before the court issues a ruling.
