The Complete Guide to Restructuring Support Agreements: Everything You Wanted To Know About RSAs

What is a Restructuring Support Agreement?

A Restructuring Support Agreement (RSA) is a legal contract between a debtor company and certain creditors in a Chapter 11 bankruptcy restructuring. Through this agreement, the debtor and consenting creditors establish agreed-upon terms for the treatment of creditor claims and an overall plan for reorganization for the company.

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The primary purpose of an RSA is to reduce the uncertainty, cost, and length typically associated with Chapter 11 bankruptcy cases. By binding creditors to support a restructuring plan, the debtor gains more certainty that the proposed plan will be approved. This allows for a more efficient and streamlined restructuring process.

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Some key features of Restructuring Support Agreements include:

• Treatment of Claims - The RSA spells out how different classes of claims will be treated under the reorganization plan. This gives creditors clarity on potential recoveries.
• Commitment to Vote - Creditors signing the RSA agree to vote in favor of a plan that aligns with the RSA terms. This support makes plan approval more likely.
• Milestones - The RSA usually contains deadlines for key events in the restructuring, helping keep the process on track.
• Fiduciary Outs - These allow parties to withdraw support from the RSA if a better alternative emerges that is required by their fiduciary duty.

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By getting broad creditor support through an RSA, the debtor can file bankruptcy and move through Chapter 11 with much less uncertainty, making RSAs an important tool in many major restructurings.‍

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What is a Restructuring Support Agreement?

A Restructuring Support Agreement (RSA) is a legal contract between a debtor company and certain creditors in a Chapter 11 bankruptcy restructuring. Through this agreement, the debtor and consenting creditors establish agreed-upon terms for the treatment of creditor claims and an overall plan for reorganization for the company.

‍

The primary purpose of an RSA is to reduce the uncertainty, cost, and length typically associated with Chapter 11 bankruptcy cases. By binding creditors to support a restructuring plan, the debtor gains more certainty that the proposed plan will be approved. This allows for a more efficient and streamlined restructuring process.

‍

Some key features of Restructuring Support Agreements include:

• Treatment of Claims - The RSA spells out how different classes of claims will be treated under the reorganization plan. This gives creditors clarity on potential recoveries.
• Commitment to Vote - Creditors signing the RSA agree to vote in favor of a plan that aligns with the RSA terms. This support makes plan approval more likely.
• Milestones - The RSA usually contains deadlines for key events in the restructuring, helping keep the process on track.
• Fiduciary Outs - These allow parties to withdraw support from the RSA if a better alternative emerges that is required by their fiduciary duty.

‍

By getting broad creditor support through an RSA, the debtor can file bankruptcy and move through Chapter 11 with much less uncertainty, making RSAs an important tool in many major restructurings.‍

‍

What is a Restructuring Support Agreement?

A Restructuring Support Agreement (RSA) is a legal contract between a debtor company and certain creditors in a Chapter 11 bankruptcy restructuring. Through this agreement, the debtor and consenting creditors establish agreed-upon terms for the treatment of creditor claims and an overall plan for reorganization for the company.

‍

The primary purpose of an RSA is to reduce the uncertainty, cost, and length typically associated with Chapter 11 bankruptcy cases. By binding creditors to support a restructuring plan, the debtor gains more certainty that the proposed plan will be approved. This allows for a more efficient and streamlined restructuring process.

‍

Some key features of Restructuring Support Agreements include:

• Treatment of Claims - The RSA spells out how different classes of claims will be treated under the reorganization plan. This gives creditors clarity on potential recoveries.
• Commitment to Vote - Creditors signing the RSA agree to vote in favor of a plan that aligns with the RSA terms. This support makes plan approval more likely.
• Milestones - The RSA usually contains deadlines for key events in the restructuring, helping keep the process on track.
• Fiduciary Outs - These allow parties to withdraw support from the RSA if a better alternative emerges that is required by their fiduciary duty.

‍

By getting broad creditor support through an RSA, the debtor can file bankruptcy and move through Chapter 11 with much less uncertainty, making RSAs an important tool in many major restructurings.‍

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