Credit · Core
Chapter 11
Chapter 11 is US reorganization bankruptcy — the firm tries to stay a going concern while claims are rewritten.
Definition
The debtor (or creditors) files, the stay hits, a DIP line funds operations, and a plan classes claims. Cramdown can bind holdouts. Equity is usually extinguished or given a long-shot warrant.
Why it matters
It is the standard US corporate reset. Recoveries and timelines are the credit model, not the press release about ‘strong support.’
Case
An airline files 11, rejects leases, resets labor, and emerges with less debt and the same routes. Operating value was there; the old stack was not.
How to read it
DIP size and seniority, lease rejection, and who is the fulcrum. Time in 11 is a carry and a professional-fee tax.
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