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Navigating The Chapter 11 Process

PREPARING FOR a Chapter 11 filing can be, and often is, an exhausting experience for a senior executive. Your full-time job of running a company will be supplemented with the full-time obligations of working with your bankruptcy counsel and financial advisors in the pre-filing preparations and working through the many big-picture issues that must be resolved, planned, and/or put in place in order to have the best opportunity for a successful restructuring.

Your pre-filing activities, including the seemingly endless negotiations and discussions with equity-holders, existing lenders, lienholders, and bondholders, and trying to secure debtor-in-possession financing, while at the same time trying to figure out potential exit strategies, will necessarily shift a good portion of your focus away from day-to-day operations and towards bankruptcy preparation.

his shift in focus is not a bad thing. It is critical. Your legal and financial advisors need you and your attention to these big picture items. It is a necessary part of the process. Without resolution of these major issues, your company's chance of a successful restructuring is severely limited. You will find that you are no longer just running a company, but you are also running a process on which the ultimate fate of your company, and the livelihood of your company's employees, may rest.

Enough pressure? Maybe. But there is more. Once you have these big picture items in place, and you are ready to file for Chapter 11, you will still have a company that needs to continue to operate in bankruptcy, while a good portion of your time and energy will be dedicated to the bankruptcy process. Continuing operations is the focus of this article.

All too often, there is a disruption in operations once a Chapter 11 petition is filed. A Chapter 11 bankruptcy filing can be a traumatic event for any company. Some of that trauma, and the associated anxiety, can be mitigated by some additional pre-filing preparation, and some post-filing attention.

Here are three things to remember when planning a chapter 11 filing for your company.

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