Exclusivity

What does Exclusivity mean?

The exclusivity period allows a Chapter 11 bankruptcy debtor the ability to negotiate the settlement of their debts by proposing and soliciting support for their bankruptcy repayment plan for bankruptcy reorganization without interference from creditors who may want to offer competing plans. The exclusivity period allows the debtor time to make their plan satisfactory to all parties. After the specified time, however, anyone involved in the bankruptcy process can offer a repayment plan for the business.

The normal time frame for exclusivity in a Chapter 11 is 120 days, but a bankruptcy judge can extend the time up to 18 months. To get an extension from the court the debtor must provide evidence of cause, such as information that they are currently negotiating with creditors and progress in the plan has been made. All motions for an extension of the exclusivity period must be made within the 120 or 180 day periods, otherwise the court will typically reject the request.

If during the period of exclusivity other parties wish to submit competing Chapter 11 plans they will have to petition the court and ask to have the debtor's exclusivity period terminated.

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