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Microcap & Penny Stocks : SEXI: Mostly Fact, A Little Fiction, Not Vicious Attacks
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To: Hubert Few who wrote (7005)11/13/1996 5:07:00 AM
From: Joseph F. Hubel   of 13351
 
To all, just FYI:

The Work Of The SEC
A publication of the Office of Public Affairs, Policy Evaluation and Research
United States Securities and Exchange Commission, October 1994.
SECTION 8. CORPORATE REORGANIZATION
Reorganization proceedings in the U.S. Courts under Chapter 11 of the Bankruptcy Code are
begun by a debtor, voluntarily, or by its creditors. Federal bankruptcy law allows a debtor in
reorganization to continue operating under the court's protection while it attempts to rehabilitate its
business and work out a plan to pay its debts. If a debtor corporation has publicly issued securities
outstanding, the reorganization process may raise many issues that materially affect the rights of
public investors.
Chapter 11 of the Bankruptcy Code authorizes the SEC to appear in any reorganization case and to
present its views on any issue. Although Chapter 11 applies to all types of business reorganizations,
the Commission generally limits its participation to proceedings involving significant public investor
interest -- protecting public investors holding the debtor's securities and participating in legal and
policy issues of concern to public investors. The SEC also continues to address matters of traditional
Commission expertise and interest relating to securities. Where appropriate, it comments on the
adequacy of re-organization plan disclosure statements and participates where there is a
Commission law enforcement interest.
Under Chapter 11, the debtor, official committees, and institutional creditors negotiate the terms of a
reorganization plan. The court can confirm a reorganization plan if it is accepted by creditors for:

At least two-thirds of the amounts of allowed claims;

More than one-half the number of allowed claims; and

At least two-thirds in amount of the allowed shareholder interest.
The principal safeguard for public investors is the requirement that a disclosure statement containing
adequate information be transmitted by the debtor or plan proponent in connection with soliciting
votes on the plan. In addition, reorganization plans involving publicly held debt usually provide for
issuing new securities to creditors and shareholders which may be exempt from registration under
Section 5 of the Securities Act of 1933.
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