In Episode 22 of The Octus Download (available on Apple Podcasts, Spotify, Amazon Music), hosts Jason Sanjana and Kevin Eckhardt interviewed the Honorable Michael B. Kaplan, U.S. Bankruptcy Judge for the District of New Jersey, who offered a candid, practitioner‑oriented discussion on how bankruptcy courts evaluate Chapter 11 cases in real time. Over the last few years, Judge Kaplan has presided over numerous high profile cases in the country including Rite Aid (as well as New Rite Aid), LTL Management, BlockFi, Invitae Corporation, and Whittaker, Clark & Daniels, Inc. The conversation, framed by current market developments and recent high‑profile restructurings, is rich with practical guidance for attorneys, advisors, debtors, creditors, and sponsors navigating today’s restructuring cycle. This post highlights some of the more notable aspects of the discussion.
1. Judicial Pragmatism at Confirmation
Judge Kaplan underscored that feasibility of a plan at confirmation under section 1129 of the Bankruptcy Code is not a guarantee or promise of success, but a forward‑looking judgment grounded in evidence and the Bankruptcy Code. Courts confirm plans that are “close calls” on feasibility when the record shows a reasonable prospect that the reorganized enterprise can meet its obligations, even when the path forward is not risk‑free. Feasibility isn’t just a mathematical exercise, it involves judgment about markets, management capability, and credible forecasts. For practitioners, the implication is clear: Build a record that ties business assumptions to concrete data—contracts, customer pipelines, cost‑out initiatives, committed financing, and achievable projections—and focus the court on why those assumptions are credible in the current market. Post‑confirmation turbulence does not retroactively violate the feasibility standard; what matters is the quality and sufficiency of evidence presented at the time of confirmation. And while courts are cautious to reject plans outright, courts will act if projections are implausible or internally inconsistent.
2. Repeat Filings and the “Chapter 22” Critique
The episode addresses the recurring critique that repeat Chapter 11 filings reflect judicial leniency or failures of the bankruptcy system, implying the first restructuring was superficial or ineffective. Judge Kaplan offered a more nuanced perspective, observing that volatile markets, evolving commodity and labor dynamics, and capital structures layered with covenant‑lite terms and non‑traditional instruments can push companies back into distress after confirmation. At confirmation, the court’s task is to apply the statute to the record before it; subsequent macro or sector shocks, which can be unpredictable at the time of confirmation, do not transform a legally adequate plan confirmation into an error.
3. Venue Selection and Predictability
Another illuminating topic was the issue of bankruptcy venue—where a case is filed. Popular Chapter 11 bankruptcy filing jurisdictions for large corporations include Delaware, the Southern District of Texas, the Southern District of New York, and Judge Kaplan’s own New Jersey, leading to debate at times over judicial expertise and “forum shopping.” Attorneys for debtors and lenders are often involved in the decision-making process of where to file a case if more than one proper venue exists. Judge Kaplan stated that there are a host of factors to consider when deciding venue which could be malpractice if lawyers do not strategically consider venues and select a jurisdiction that makes business sense for the company and its various stakeholders. Some of Judge Kaplan’s considerations are: (i) circuit law on relevant topics; (ii) bankruptcy court’s prior rulings on issues, including roll-ups, releases, gatekeeping, exculpation and fees, etc.; (iii) willingness to accommodate mediation; (iv) ability to handle emergent applications; (v) timeliness in getting matters on the docket and before the judge; and (vi) treatment of professionals.
Moreover, Judge Kaplan observed that the rise of remote hearings since COVID has also become a factor for debtors in determining where to file for bankruptcy, noting, “you cannot say for most cases that it matters where creditors are for access to the court or it matters where the witnesses are for access to the court… Most hearings now are being conducted remotely unless they’re evidentiary.”
On venue, Judge Kaplan emphasized statutory compliance and predictability. In most instances, multiple venues are often legally proper given the broad language of 28 U.S.C. § 1408, which sets forth that venue is generally proper in the federal district where the debtor has resided, been domiciled, had their principal place of business, or held their principal assets for the longest portion of the 180 days prior to filing. Where multiple venues are proper, courts are cautious about substituting their judgment for a debtor’s choice absent a clear statutory defect. For parties contemplating transfer motions, the takeaway is to craft arguments that go beyond generalized policy concerns and instead demonstrate concrete prejudice, inefficiency, or statutory noncompliance. However, as Judge Kaplan noted, “sometimes forum shopping is found more in the motion to change venue than the actual selection of the case.” For debtors, a thoughtful record on venue at the outset—business presence, assets, affiliates, and administrative efficiency—can reduce friction and preserve early‑case momentum.
4. DIP Financing in Constrained Markets
Judge Kaplan’s discussion of debtor‑in‑possession financing highlights a practical reality: DIP proposals often represent the best (and sometimes only) available market option, not an academic ideal. Judge Kaplan highlighted judicial reluctance to unwind or reject lifeline financing outright when the proposal reflects good‑faith marketing, reasonable terms under the circumstances, and statutory compliance. Moreover, courts must consider whether the outright rejection of DIP financing could force immediate liquidation. For lenders and official committees, effective advocacy targets specific statutory or evidentiary defects—roll‑ups without adequate price discovery, priming liens without a credible adequate protection package, milestones that foreclose value‑maximizing alternatives—rather than broad attacks on “aggressive” terms in the abstract. For debtors, the record should document outreach, alternatives considered, and why the chosen structure best preserves value. Ultimately, bankruptcy judges cannot substitute market realities or creditor decisions with personal preferences; they must apply legal tests such as “good faith” and “fairness.”
5. Practice Quality and the Judicial Record
Judge Kaplan’s comments included a pointed plea for substance over boilerplate and expressed his frustration with form-driven filings. The most persuasive filings explain the business problem in plain language, connect proposed relief to identifiable value inflection points, and avoid form‑driven repetition which restricts the creativity of counsel and other parties. For counsel, this is a reminder that credibility compounds: clear declarations, aligned projections, and tight evidentiary linkages tend to travel well from first‑day motions through confirmation. “I think what gets lost is, is the professionalism, the creativity, it’s dumbing down the practice.”
6. Why this Episode Matters
For professionals steering companies through Chapter 11—or contesting their path—Judge Kaplan’s perspective confirms a pragmatic judicial approach grounded in the statute and the evidentiary record. Bankruptcy judges operate as statutory interpreters, not market arbiters. Feasibility turns on credible, contemporaneous support, not hindsight. Venue fights are, for the most part, a costly distraction for the company and other stakeholders which increases the cost of administration to the detriment of creditors. Unless venue is clearly improper, attorneys should not count on aggressive transfer motions succeeding when statutory hooks support the filing forum. DIP financing lives or dies on marketing, alternatives, and protections actually available in the market, not theoretical constructs. And across all phases of the case, the quality of advocacy is measured by clarity, candor, and evidentiary coherence. Indeed, such a practical approach has made New Jersey bankruptcy courts become a go-to venue for large Chapter 11 cases due to the unified view by the court on important issues, including, approval of opt-out plan releases, exculpation provisions, gatekeeper provisions, virtual hearings, judicially supported mediation to resolve difficult issues, and bidding procedures and DIP roll-ups at First Days.
In a cycle defined by uneven demand, elevated rates, and layered capital structures, these themes are more than academic. They provide a roadmap for building records that withstand scrutiny, crafting remedies that preserve optionality, and approaching Chapter 11 as a dynamic tool rather than a rigid script. For clients and counterparties alike, aligning case strategy with these judicial and market realities can make the difference between merely surviving a restructuring and emerging Chapter 11 quickly with a platform for sustainable performance.