Liquidity Crunch May Hobble Debtors' Ch. 11 Exit

Law360, New York (February 6, 2008, 12:00 AM EST) -- After spending months getting approval for its reorganization plan, Solutia Inc. saw its underwriters withdraw their offer of a $2 billion loan last week – and experts say that, in the midst of a growing liquidity shortage, other debtors may find themselves in similar straits.

Many companies in Chapter 11 rely on large exit financing loans, which, until recently, came with relatively low interest rates. But about August of last year, the credit market began to tighten, and debtors counting on cheap loans to get out...
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