The American Bankruptcy Institute (ABI) has just released its findings following a three-year study of Chapter 11 bankruptcy law, involving hundreds of bankruptcy professionals and academics and the study recommends (among other things) significant changes to the way smaller businesses are treated during bankruptcy proceedings, notably giving family-run businesses a way to retain control post-petition.
“The SME principles should create an equity retention structure that would appropriately align the interests of prepetition management and equity with the debtor’s reorganization and protect the interests of unsecured creditors, despite noncompliance with the traditional absolute priority rule,” says the ABI report.
Founders reluctant to cede control to their creditors
According to the ABI report, one of the clear problems with current Chapter...
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