The Power of Restructuring Support Agreement Chapter 11

Restructuring Support Agreement (RSA) is a powerful tool utilized in Chapter 11 bankruptcy proceedings to help companies reorganize and emerge from financial distress. It allows companies to obtain the necessary support from key stakeholders to implement a successful restructuring plan.

Why RSA Matters

When a company enters Chapter 11 bankruptcy, it often faces challenges in obtaining the support needed to move forward with a reorganization plan. Where RSA comes in. By securing the support of key creditors, equity holders, and other parties, the company can increase the likelihood of successfully restructuring its finances and operations.

Key Components RSA

An RSA typically includes provisions for the treatment of various creditor classes, the terms of a new financing arrangement, and the framework for implementing the reorganization plan. It is a critical document that outlines the consensus among the parties involved, setting the stage for a successful reorganization.

Case Study: XYZ Corporation

XYZ Corporation, a leading manufacturer in the automotive industry, found itself in financial turmoil due to declining sales and mounting debt. Faced with the prospect of liquidation, the company turned to Chapter 11 bankruptcy and initiated negotiations with its creditors to reach an RSA.

After months of discussions and revisions, XYZ Corporation successfully obtained the support of its major creditors, paving the way for a comprehensive restructuring plan. With the RSA in place, the company was able to secure new financing, renegotiate contracts, and streamline its operations, ultimately emerging from bankruptcy stronger and more competitive.

Benefits RSA

There are several benefits to utilizing an RSA in Chapter 11 bankruptcy, including:

Benefits Description
Stakeholder Alignment Bringing key stakeholders on board with the reorganization plan
Reduced Litigation Minimizing disputes and legal challenges during the bankruptcy process
Speedy Resolution Facilitating a faster and more efficient restructuring process
Improved Confidence Boosting confidence among investors, suppliers, and customers

The restructuring support agreement chapter 11 is a valuable mechanism for companies undergoing bankruptcy to secure the necessary support for a successful reorganization. By aligning stakeholders and streamlining the restructuring process, an RSA can significantly improve the chances of a company emerging from Chapter 11 in a stronger position.

Restructuring Support Agreement Chapter 11

This Restructuring Support Agreement (“Agreement”) is entered into between the parties as of [Date], in accordance with Chapter 11 of the [Applicable Law] for the purpose of facilitating the restructuring of the [Company Name] (“Debtor”).

1. Definitions
In Agreement, unless context otherwise requires, following terms shall meanings ascribed them below:

  • Debtor: Refers [Company Name], entity undergoing restructuring Chapter 11.
  • Reorganization Plan: Means plan restructuring Debtor contemplated Chapter 11.
  • Supporting Creditors: Refers creditors agreed support Reorganization Plan signatories Agreement.
2. Restructuring Support
The Supporting Creditors hereby agree to support the Debtor`s Reorganization Plan and to take all necessary steps to implement and effectuate the terms of the Plan as set forth in this Agreement. Support includes, limited voting favor Plan, taking action impede Plan, providing necessary financial support facilitate successful restructuring Debtor.
3. Voting Approval
The Supporting Creditors agree to vote in favor of the Reorganization Plan and to take all necessary actions to ensure its approval by the requisite majority of creditors and the court overseeing the Chapter 11 proceedings. Supporting Creditor further agrees take action hinder delay approval implementation Plan.
4. Termination
This Agreement shall terminate upon the successful confirmation and implementation of the Reorganization Plan, or upon the mutual agreement of the parties hereto. In the event of termination, the parties shall be released from their obligations hereunder, except for any surviving provisions as may be set forth in the Reorganization Plan.

This Agreement, collectively with the exhibits and schedules hereto, constitutes the entire agreement and understanding among the parties hereto with respect to the subject matter hereof and supersedes all prior and contemporaneous agreements and understandings, inducements, and conditions, express or implied, oral or written, of any nature whatsoever with respect to the subject matter hereof.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

[Party Name 1]


Signature: __________________________

[Party Name 2]


Signature: __________________________

Frequently Legal Questions Restructuring Support Agreement Chapter 11

Question Answer
1. What is a restructuring support agreement in a Chapter 11 bankruptcy? A restructuring support agreement (RSA) is a legally binding contract between a company and its key creditors that outlines terms for the reorganization of the company`s debt and operations during a Chapter 11 bankruptcy process.
2. What are the key components of a restructuring support agreement? An RSA typically includes provisions related to the treatment of creditors` claims, the company`s business plan post-bankruptcy, the issuance of new securities, and any requirements for creditor approval of the reorganization plan.
3. How does a restructuring support agreement differ from a regular reorganization plan? Unlike a reorganization plan, which is subject to court approval and can be contested by creditors, an RSA is a voluntary agreement between the company and its major creditors, providing a framework for the subsequent reorganization plan.
4. Can a restructuring support agreement be amended or terminated? Yes, an RSA can be amended or terminated with the consent of the parties involved, but any amendments or terminations must comply with the terms specified in the original agreement.
5. What role do creditors play in a restructuring support agreement? Under an RSA, creditors have a say in the company`s reorganization plan and are typically required to vote on the plan`s approval. The agreement may also outline the treatment of creditors` claims and the distribution of reorganized equity or debt securities.
6. Can a restructuring support agreement prevent other creditors from challenging the reorganization plan? While an RSA can provide a degree of stability and consensus among major creditors, it does not necessarily prevent other creditors from challenging the reorganization plan in court. However, a well-crafted RSA can help garner broader support for the plan.
7. Are there any legal requirements for a restructuring support agreement in Chapter 11 bankruptcy? Yes, an RSA must comply with the applicable provisions of the Bankruptcy Code and any relevant court rulings. It should also adhere to the principles of good faith, fair dealing, and equitable treatment of creditors.
8. How does a restructuring support agreement benefit a company in Chapter 11 bankruptcy? An RSA can provide the company with greater certainty and support from its major creditors, expedite the reorganization process, and enhance the prospects for a successful emergence from bankruptcy with a viable business plan in place.
9. What happens if a company fails to reach a restructuring support agreement with its creditors? If a company is unable to secure sufficient creditor support through an RSA, it may have to pursue a different reorganization strategy, such as a contested reorganization plan or a potential sale of its assets under the oversight of the bankruptcy court.
10. Can a restructuring support agreement be enforced outside of the bankruptcy process? In certain cases, the terms of an RSA may contain provisions that survive the bankruptcy process and are enforceable post-emergence. However, the enforceability of an RSA outside of bankruptcy may depend on the specific terms and applicable state law.