In an apparent attempt to address delay and cost in the restructuring process, a provision of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) has imposed an unalterable 18-month outside limit on a debtor's plan exclusivity. The intended goals of the provision seem to be faster reorganizations, reduced administrative costs and stronger motivation for parties to achieve a swift, consensual resolution. Recent experience with competing plans of reorganization in large Chapter 11 cases, however, raises the question of whether a fixed limit on exclusivity is the best means of achieving these goals.
Damian Schaible and Eli Vonnegut of the Davis Polk Insolvency and Restructuring Group recently published an article, "The Law of Unintended Consequences: Competing Plans in the Post-BAPCPA World," in the New York Law Journal, which explores whether this significant change may have unintended consequences more harmful to the restructuring process than the perceived ills it was presumably intended to cure.
Read the article.