United States: Financial Restructuring

When sophisticated parties to a restructuring agreement provide that a fee is triggered if a debtor “raises, or “commits to raise” alternative financing, does the word “commits” require a binding contractual obligation or something less? The First Department addressed this very question in a recent decision entitled Aurelius Capital Master Ltd. v Hertz International Limited, 2026 NY Slip Op 05369 (1st Dept Sept. 22, 2026). The 4-1 decision affirmed a post-trial judgment of approximately $15.9 million in favor of holders of unsecured notes issued by a Hertz affiliate, holding that “commits to raise” encompasses significant affirmative steps toward securing alternative financing, even absent a binding agreement.

Chapter 11 debtors have multiple pathways to exit bankruptcy, including plan confirmation, asset sales, dismissal, or conversion to Chapter 7 liquidation. Understanding how these mechanisms interact and can be sequenced is essential for practitioners developing effective exit strategies. This practice note examines the legal and practical considerations associated with each exit pathway.

Foreign companies with minimal US presence may find it easier than anticipated to access US bankruptcy courts. Recent case law reveals that courts are interpreting eligibility requirements broadly, recognizing even nominal US-based property as sufficient grounds for relief under the Bankruptcy Code.

Companies facing financial distress often miss early warning signs that could mean the difference between recovery and insolvency. From maxed-out credit lines and covenant breaches to deteriorating fundamentals and reporting red flags, recognizing these indicators early allows businesses to engage turnaround advisors who bring critical experience and perspective to navigate challenges before they become crises.

A mid-sized manufacturing company facing financial turmoil after a private equity acquisition found itself struggling with employee turnover, delayed accounting, and unreliable financial reporting. When traditional support failed to deliver the hands-on assistance needed, a specialized advisory team stepped in to restore financial clarity and guide the business from crisis to profitability.

Sheppard’s Restructure THIS! podcast explores the latest trends and controversies in Chapter 11 bankruptcy, commercial insolvency and distressed investing.

A Texas bankruptcy court has ruled that lenders who participated in Serta Simmons Bedding's 2020 uptier transaction violated the credit agreement's pro rata sharing provision...

UK restructuring plans have emerged as a powerful alternative to US Chapter 11 bankruptcy, offering unique advantages for distressed companies including preservation of stock listings, favorable voting thresholds, and the ability to implement non-consensual third-party releases. Recent cases involving US-based companies like Argo Blockchain, Fossil Group, and New Fortress Energy demonstrate how strategic forum shopping and flexible creditor treatment can achieve successful cross-border restructurings.

McDermott's Powering Through Uncertainty webinar series examines the complex legal, regulatory and commercial challenges facing today's energy sector...