Emergence Plan

A A A

DEFINITION

A company’s formal strategy for exiting Chapter 11 bankruptcy in a way that leaves the company stronger than it was before declaring bankruptcy. Also called a reorganization plan, an emergence plan is a lengthy legal document filed with the bankruptcy court, which then approves or rejects the plan after a hearing. Both publicly and privately held companies may create emergence plans.

INVESTOPEDIA EXPLAINS


An emergence plan describes what lines of business the company will pursue, its strategies for attracting more customers, how it will improve operations and cut costs, and its projected revenues. In addition to stating a projected bankruptcy exit date and projected valuation at the time of exit, an emergence plan describes how the company will repay those to whom it owes money, such as suppliers, as well as who will sit on the company’s new board. The plan also projects the company’s valuation for the years immediately subsequent to its emergence from Chapter 11.
 
When Eastman Kodak filed for Chapter 11 bankruptcy, it developed an emergence plan. Kodak’s emergence plan described how the company would focus on its strongest business - commercial digital printing - and how it would sell its less-profitable business lines such as digital cameras and photo printing, as well as some of its patents to raise additional funds for its recovery.
 
A company’s emergence plan will not necessarily benefit its existing shareholders. For example, under one version of Kodak’s emergence plan, existing investors faced the prospect of having their shares canceled. However, second-lien noteholders and unsecured creditors were to be repaid in new Kodak shares, except for smaller creditors, which were to be repaid in cash. Employees who were laid off to save costs also suffered, as did suppliers with whom Kodak renegotiated its contracts to save money.


RELATED TERMS
  1. Involuntary Bankruptcy

    A legal proceeding in which a person or business is requested to go into bankruptcy ...
  2. Voluntary Bankruptcy

    A type of bankruptcy where an insolvent debtor brings the petition to a court ...
  3. Wage Earner Plan (Chapter 13 Bankruptcy)

    Also known as a Chapter 13 bankruptcy, this enables individuals with regular ...
  4. Quick-Rinse Bankruptcy

    A bankruptcy proceeding that is structured to move through legal proceedings ...
  5. Bankruptcy

    A legal proceeding involving a person or business that is unable to repay outstanding ...
  6. Bankruptcy Risk

    The possibility that a company will be unable to meet its debt obligations. ...
  7. Technical Bankruptcy

    The state of a company or person who has defaulted on a financial obligation ...
  8. Discharge In Bankruptcy

    A permanent order that releases the debtor from personal liability for certain ...
  9. Bankruptcy Financing

    Financing arranged by a company while under the chapter 11 bankruptcy process. ...
  10. Bankruptcy Trustee

    A person appointed by the United States Trustee, an officer of the Department ...
Related Articles
  1. Facing Co-Op Bankruptcy
    Options & Futures

    Facing Co-Op Bankruptcy

  2. How To Survive A Bankruptcy Filing
    Credit & Loans

    How To Survive A Bankruptcy Filing

  3. Prevent Bankruptcy With These Tips
    Credit & Loans

    Prevent Bankruptcy With These Tips

  4. 5 Lessons From The World's Biggest Bankruptcies ...
    Options & Futures

    5 Lessons From The World's Biggest Bankruptcies ...

  5. Benefit Issues When Your Employer Goes ...
    Options & Futures

    Benefit Issues When Your Employer Goes ...

  6. Boomer Bankruptcy Strains Retirement
    Retirement

    Boomer Bankruptcy Strains Retirement

  7. Declaring Bankruptcy Is No Easy Out ...
    Insurance

    Declaring Bankruptcy Is No Easy Out ...

  8. Should You File For Bankruptcy?
    Options & Futures

    Should You File For Bankruptcy?

  9. An Overview Of Corporate Bankruptcy
    Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

  10. What You Need To Know About Bankruptcy
    Retirement

    What You Need To Know About Bankruptcy

comments powered by Disqus
Hot Definitions
  1. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  2. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  3. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  4. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  5. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
  6. Balanced Investment Strategy

    A portfolio allocation and management method aimed at balancing risk and return. Such portfolios are generally divided equally between equities and fixed-income securities.
Trading Center