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Exit Financing in Chapter 11 Bankruptcy: Debt, Equity, and Combination Structures

Recording of a 90-minute CLE video webinar with Q&A

This program is included with the Strafford CLE Pass. Click for more information.
This program is included with the Strafford All-Access Pass. Click for more information.

Conducted on Wednesday, September 13, 2023

Recorded event now available

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This CLE webinar will examine the different forms of exit financing available to chapter 11 debtors and certain structural and procedural issues associated with each. The discussion will include considerations regarding credit facilities, securities issuances, debt and equity rights offerings, best efforts vs. committed financings, material adverse effect provisions, factors implicating the requirements of section 1129 of the Bankruptcy Code, “new money” investments and the absolute priority rule, and other matters.

Description

Exit financing is one of the keys to success for any plan of reorganization, providing liquidity for required distributions, refinancing existing indebtedness, and funding the go-forward business. Exit financing has become increasingly complex and today presents issues that may bear on numerous aspects of a company’s ability to confirm a chapter 11 plan and emerge from bankruptcy.

In addition to the negotiation of the normal aspects of a company’s financing, such as economic terms, covenants, debt priority, and the scope of a collateral package, exit financing involves additional considerations under the Bankruptcy Code. Those include (among other things) proving that a chapter 11 plan is “feasible,” that it has been proposed in good faith, and that it provides equal treatment among holders of claims within each class.

Listen as our authoritative panel discusses these and other key considerations related to debt and equity exit financing strategies. The panel will discuss the pros and cons of various types of debt and equity financing and the critical risks and considerations associated with each.

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Outline

  1. Exit financing as an integral part of a chapter 11 plan
  2. Exit financing marketing and approval process
  3. Common structures
    1. Credit facilities
    2. Bond issuances
    3. Equity and debt rights offerings
    4. Direct equity investment
  4. Feasibility
    1. Cash flow projections
    2. "Best efforts" vs. committed financing
    3. Closing conditions and execution risk
  5. Absolute priority rule
    1. The absolute priority rule in general
    2. Bank of America v. LaSalle and the “new value” corollary
    3. Implications for existing equity holders
  6. Equal treatment
    1. Section 1123(a)(4) of the Bankruptcy Code in general
    2. Rights offerings and implications for equal treatment
  7. Securities law exemptions, public vs. private companies, and other key considerations

Benefits

Participants will take away a nuanced, current understanding of key considerations for chapter 11 exit financings and the ability to analyze and evaluate exit financing strategic considerations.

Faculty

Bowling, Scott
Scott R. Bowling
Partner
Baker Botts

Mr. Bowling is a partner in Baker Botts' Financial Restructuring group. His practice covers all aspects of domestic...  |  Read More

Lawrence, Caitlin
Caitlin Lawrence
Partner
Baker Botts

Ms. Lawrence advises publicly and privately held corporate borrowers and issuers, private equity funds, credit funds,...  |  Read More

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