Legal proceedings to protect the company from creditors
It can be triggered at the initiative of the company, without any condition being set, or at the request of creditors. Creditors can apply for bankruptcy proceedings if they have undisputed claims. The Court decides whether to reject the request or whether to open the procedure and it may first ask the creditors to provide a guarantee.
The procedure of Chapter 11 is a legal process where the company is under the protection of a specialized court, the Bankruptcy Court in respect of its creditors. The directors of the company will generally continue to manage the day-to-day operations of the company, but the bankruptcy court controls what goes beyond this day-to-day management. The use of cash in particular is restricted. The stay of proceedings is inherent in the proceedings. Under the control and pressure of legal proceedings, a restructuring plan will be drawn up in consultation with creditors and shareholders and in general with those concerned. Debtor in possession loansare privileged over claims prior to the initiation of the procedure.