Emergence Plan

AAA

DEFINITION of 'Emergence Plan'

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 'Emergence Plan'


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 ...
  2. Voluntary Bankruptcy

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

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

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

    A person appointed by the United States Trustee, an officer of ...
  6. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
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 ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center