Corporate reorganization

Exercise

Corporate reorganization (“Chapter 11” in the USA; suspensión de pagos in Spain) is a procedure of voluntary bankruptcy in which management is allowed to continue operating the company. The corporation must prepare a reorganization plan that proposes convert some debt into equity. Debtors can object. The court, however, can impose a plan that estimates the value of the company and allocates it among the different classes of creditors and even shareholders. Why, if the firm has a positive value, the creditors will not consent? Why the law allows the court to impose a plan on dissenting debtors?