While relatively uncommon prior to the mid-2000s, as Figure 1 (below) illustrates, restructuring support agreements ("RSAs") "have become a regular fixture in Chapter 11 proceedings." RSAs typically lay out a pre-agreed reorganization plan and are usually in place prior to a formal Chapter 11 filing.
Figure 1: RSAs in Cases with Over $100M Assets
While RSAs and their rise in Chapter 11 proceedings remain the subject of sustained debate in normative and theoretical literatures, in a recent paper, Restructuring Support Agreements: An Empirical Analysis, the authors, Katherine Waldock (Columbia), Anthony Casey (Chicago) & Frederick Tung (BU), assess RSAs from an empirical lens. In their effort to "study how RSA contracts evolve over time," the authors lever PACER data archives and focus on more than 400 non-financial Chapter 11 filings that involved more than $100M in declared assets during just over the past two decades. While the analyses are entirely descriptive, key trends are identified in the abstract (below).
"Restructuring support agreements (RSAs), or contracts that commit bankruptcy parties to supporting a plan of reorganization that will conform to certain requirements, are now a common feature of Chapter 11. Parties utilize these agreements in nearly half of all large cases. While prior literature has debated the normative value of RSAs, we take an empirical approach to look at what provisions the parties include in these agreements and how those provisions have changed over time.
Our analysis looks at all RSAs associated with large bankruptcies through the end of 2020. We characterize the types of firms with RSAs, the parties involved, and the language contained within their key sections. A significant majority of RSAs are entered into on or before the petition date. Common provisions relate to the bargaining process during the case and often commit the parties in advance to certain elements of the restructuring plan. Provisions related to control such as debtor milestones have become more frequent in the last ten years of the sample."
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