Capmark Chapter 11 Bankruptcy Filing
General Questions & Answers
On October 25, 2009 Capmark Financial Group Inc. and certain of its
subsidiaries filed voluntary petitions for reorganization under the U.S. Bankruptcy
Code, which is more commonly known as “Chapter 11”. That means we’ve taken
formal steps that allow us to pursue a restructuring of our debts, with the court
protecting us from having to meet payments on previously incurred debts and
liabilities, while we continue to operate our business.
What does it mean to voluntarily file for Chapter 11?
A voluntary Chapter 11 filing – such as ours – is an action taken by a U.S.
company to resolve financial challenges, such as lack of cash or excessive debt,
in order to maximize the value of the “Estate” (the company’s assets and
operations) for the benefit of all of its interest holders. During the Chapter 11
process, a company is able to continue to conduct business while reorganizing
its finances and operations in order to meet the claims of those to whom it owes
money. This is accomplished in part through a legal mechanism known as the
“automatic stay,” which stops creditors from taking action to collect money or
property they are owed.
A company in Chapter 11 continues to provide employees with salaries and
medical benefits. It is also able to continue to do business in a routine manner.
A company exits Chapter 11 after the court has approved a Chapter 11 plan and
the transactions and payments proposed in the plan have taken place.
With respect to our ongoing business relationships, bankruptcy law provides
priority status for the company’s post-petition purchases (goods and services
received after the date of the filing). We can and will pay for such post-petition
goods and services in the normal course of business.
Bankruptcy law generally prohibits payment for goods and services received
before the filing date. Payment of these prepetition invoices is prohibited until
after a plan of reorganization is accepted by our c