Arcapita: how non-US firms can use Chapter 11

Author: Gemma Varriale | Published: 21 Nov 2013
  • The successful restructure of Bahrain-based investment company Arcapita has raised questions about how other non-US companies can take advantage of Chapter 11 of the US Bankruptcy Code;
  • There are three statutory bases for eligibility for Chapter 11, all of which are interpreted broadly by the courts;
  • Chapter 11’s automatic injunction protects a company and its assets from action by all creditors, but it’s unclear whether the stay will be respected outside the US;
  • Debtor-in possession financing allows a company to borrow additional money to finance its time in Chapter 11. What may be provided as DIP financing is extremely flexible.

The successful restructure of Bahrain-based investment company Arcapita has raised questions about how other non-US companies can take advantage of Chapter 11 of the US Bankruptcy Code.