Hypothetical
Reorganization Timeline

This is a timeline for a hypothetical Chapter 11 case, and is presented as an illustration only. While this timeline includes generally the events that usually occur in a Chapter 11 case, actual cases may have different issues and timelines for events. Also, some of the events set forth below may be the subject of continuous and recurring negotiations or litigation or both (for example, cash collateral negotiations, reclamation claims, and reestablishment of trade credit).

The events described below are dealt with, in detail, in Chapters Two through Five.

Petition Date to 30 Days

· Filing of Petition.

· Filing of application for retention of professionals.

· Filing of "First Day" Motions (wages, cash management, essential suppliers, etc.).

· Hearing on "First Day" Motions (possible entry of Orders on negative-notice procedures).

· Filing of Schedules of Assets and Liabilities and Statement of Financial Affairs (unless bankruptcy court grants extension of time).

· Filing (and/or negotiation) of cash collateral motions (or stipulations) for debtor's use of cash collateral.

· Hearing on cash collateral motions (or stipulations), and entry of orders regarding cash collateral use (may be on an interim basis and/or subject to negative-notice procedures).

· Negotiation for, and hearing on approval of, debtor-in-possession financing (may be on an interim basis and/or subject to negative - notice procedures).

· Negotiations with utilities regarding security deposits and/or hearings on adequate assurance of payment.

· Negotiations with trade creditors regarding reclamation claims and/ or reestablishment of trade terms (this will usually be an ongoing negotiation).

Executive Guide to Corporate Bankruptcy

31 Days to 60 Days

· Beginning of business stabilization process (of course, easier said than done; an ongoing process).

· Meeting with U.S. Trustee (also called the "initial debtor interview" in some jurisdictions).

· First meeting of creditors (called the "341 Meeting" in bankruptcy parlance—Bankruptcy Code § 341 requires such meetings).

· Meetings with official Committees and their professionals (to open a dialogue—these meetings may be on a regular basis depending on the case).

· Negotiations with secured creditors regarding "adequate protection" arrangements (may also be dealt with as part of cash collateral discussions) .

· Defense of stay relief motions brought by secured creditors if negotiations are unsuccessful.

· Determination of which unexpired contracts or non-residential real property leases the debtor wishes to assume or reject, and filing of appropriate pleadings (may also include a motion for an extension of this time period).¹ 

· Continued discussions and negotiations with creditor constituencies.

· Defense of ancillary litigation that might be brought in case (such as motions for appointment of examiners or trustee).² 

· Respond to requests for information from the various creditor constituencies (these requests may be maddening but, if properly responded to, can and should lead to less ancillary litigation and a more constructive dynamic between the debtor and its creditor groups).³

¹The Bankruptcy Code imposes a sixty-day deadline for assumption or rejection of unexpired non-residential real property leases.

²If a Chapter 11 debtor is forthcoming with its creditors, generally this type of ancillary litigation can be minimized. Unfortunately, it is rarely dispensed with entirely as aggressive litigation tactics are frequently employed by certain creditors as a means to obtain concessions from debtors. If a debtor faces this type of litigation from official Committees, it is usually (but not always) a sign that either the debtor or the Committees are not engaged in open dialogues.

³If the parties are represented by experienced professionals, they should be able to agree on set reporting formats and timing matters, along with appropriate confidentiality arrangements to protect information. Also, in a well-run Chapter 11 case, financial information can and should flow directly between financial professionals.

Hypothetical Reorganization Timeline

· Negotiations or discussions with the SEC regarding potential delisting or suspension (for public debt or equity).

· Negotiations with unions regarding collective bargaining agreements (and, if consensual modifications are not forthcoming, the filing of a motion seeking bankruptcy court approval of modifications to collective bargaining agreements).

61 Days to 120 Days

· Continued discussions and negotiations with creditor constituencies.

· Negotiation and refinement of ultimate exit strategy in the case (for example, formulation of necessary financial modeling for reorganization plan and discussion of exit alternatives).⁴ 

· Identification of, and negotiation with, any financial or strategic parties that may provide necessary exit funding under the plan of reorganization.

· Evaluation and possible commencement of potential avoidance actions (preferences, fraudulent transfers, etc.).⁵ 

· Negotiating, drafting, and filing of either: (i) a plan of reorganization and Disclosure Statement; or (ii) a motion to extend the exclusivity period.

· Negotiations or discussions with state and federal governmental entities regarding potential tax or other regulatory claims (such as underfunded pension claims, environmental claims, or other non- traditional types of claims that can adversely affect the reorganization process).

· Entry of "bar date" order (requiring claims to be filed by a certain date—absent such an order, claims are due to be filed by the date

⁴ This process may (and usually does in all but the simplest cases) take longer than four months. The process should certainly be started sooner rather than later, and how it ultimately comes out is a function of: (a) how long it takes the business to stabilize; (b) the dynamics between the debtor and creditor constituencies; and (c) what consensus is reached (if any) regarding an exit strategy.

⁵Commencement of avoidance actions can (and sometimes does) occur postconfirmation, provided: (a) such potential actions are adequately disclosed in a Disclosure Statement (to avoid waiver arguments); (b) such potential actions are specifically assigned to an appropriate estate representative for pursuit; (c) the plan provides specific retention of bankruptcy court jurisdiction with respect to these actions; and (d) the actions are commenced within a two-year period after the petition is filed.

Executive Guide to Corporate Bankruptcy

of the hearing on approval of the Disclosure Statement).⁶ 

121 Days to Whenever

· Continued plan negotiations.⁷ 

· Filing of Disclosure Statement and plan.

· Hearing on adequacy of Disclosure Statement and approval of same.

· Solicitation of acceptances (the balloting process).

· Objections to claims for voting purposes (and potential motions for temporary allowance of claims for voting purposes).

· Estimation of contingent claims for feasibility purposes.

· Collection and tabulation of ballots.

· Receipt of and response to plan confirmation objections (if any).

· Plan confirmation hearings.

· Post-confirmation claims objections.⁸

· Post-confirmation performance under the plan.

· Closure of Chapter 11 case.

⁶ This hypothetical timeline assumes the filing of a plan within the first six months of the case. If this does not happen (which is not unusual in most Chapter 11 cases), the entry of bar date orders may occur later in the case.

⁷ In a Chapter 11 case, the filing of a plan (except in so-called "prepackaged" cases) does not necessarily end the discussions, but usually leads to yet more negotiations. It is not unusual for a plan to be amended and/or supplemented once it is filed but before confirmation in order to build a consensus among creditor constituencies.

⁸ As with post-confirmation pursuit of avoidance actions, potential objections to claims must be fully disclosed in the Disclosure Statement to avoid waiver arguments. In addition, claims litigation can occur preconfirmation.