Why Troubled Banks Are Increasingly Considering Ch. 11

Law360, New York (February 3, 2014, 1:44 PM EST) -- Historically, the Chapter 11 bankruptcy process was not used as a technique to recapitalize struggling banks. An aversion to using Chapter 11 was attributable in part to concerns that regulators and depositors might perceive a bankruptcy filing as synonymous with financial meltdown and trigger a "run on the bank."

One of the key developments — and lessons — from the recent financial crisis and recovery is that the federal bankruptcy laws, when employed as part of a carefully planned and executed recapitalization strategy, can be an...
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