The primary statute that governs restructuring and insolvency proceedings in the United States is the Bankruptcy Code, which is codified as Title 11.
Although the United States is often referred to as debtor friendly, it is on the whole fairly balanced. The fact that the debtor remains in possession in Chapter 11 cases (ie, it stays under the control of its existing board and management), and for an initial period retains the exclusive right to propose a plan of reorganisation, is a principal reason that the United States is considered debtor friendly. In addition, the Bankruptcy Code provides several tools that promote a fresh start, such as automatic stay, discharge and the ability to cram down creditors and equity interest holders. However, balancing the powers of the debtor is the protection of a creditor’s rights under the code, including through:
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