Throughout the past decade, the use of the restructuring support agreement (“RSA”) or sometimes referred to as “plan support agreement”) has emerged as a staple of large financial restructurings in the United States and abroad. Historically, a debtor commencing a Chapter 11 case in a U.S. bankruptcy court would use the bankruptcy process to develop a business plan, eventually file a plan of reorganization, and then work to garner sufficient support to achieve confirmation. The high costs and uncertainty inherent in these often-lengthy bankruptcy cases drove parties to employ RSAs to expedite and provide clear direction to the restructuring. At its core, an RSA acts as a “lockup agreement,” ensuring that the signing stakeholders — usually financial creditors, but sometimes shareholders or other stakeholders too — will support and not vote against a plan that is consistent with the terms of the agreed restructuring. In turn, the company agrees to prosecute the plan on the agreed-upon terms and timeline. When effectively used, an RSA can provide significant savings to a debtor’s estate and reduce the uncertainty for both debtors and creditors over the course of a restructuring.
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