New US bankruptcy laws that came into effect in October will alter the way companies go through restructuring and might make it harder to enter Chapter 11 bankruptcy protection. In addition the ability of companies to manage their own reorganization will be affected – giving creditors more say after a few months.
The bill also lifts a ban on banks representing entities in Chapter 11 reorganization. In the past such financial institutions were often considered open to conflicts of interest because of previous underwriting or advisory work, leaving representation in bankruptcy proceedings available solely to boutique restructuring firms.
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