In many Chapter 11 cases, public attention centers on the first-day hearings, DIP financing negotiations, and the confirmation of a restructuring plan. But according to restructuring professional Arian Eghbali, that’s only half the story.
“The real recovery battle often begins after confirmation,” Eghbali says. “Plan approval may close one chapter of the case — but it opens another, far more technical one.”
Eghbali is the founder of Olympus Guardians, a firm that works with unsecured creditors, trustees, and fiduciaries in post-confirmation and liquidation trust environments. Over the past several years, he has observed a structural shift in how recovery value is determined.
From Negotiation to Execution
Historically, confirmation marked the wind-down of a bankruptcy case. Today, Eghbali argues, it marks the beginning of monetization and reconciliation.
“Increasingly complex capital structures mean that unsecured recoveries are not guaranteed at confirmation,” he explains. “They depend on how effectively the post-confirmation trust executes.”
Several forces are driving this shift:
- Heavier secured debt structures that compress unsecured recoveries
- Litigation trust carve-outs containing complex causes of action
- Unclaimed asset pools that require proactive identification
- Administrative inefficiencies resulting from deteriorated record-keeping
“In many recent cases, the diligence exercised after confirmation determines whether unsecured creditors receive a meaningful distribution — or something negligible.”
Claims Reconciliation as Strategy
Claims reconciliation, Eghbali notes, is often underestimated.
“It’s treated as administrative housekeeping. But it can materially affect distributions,” he says.
Duplicate claims, misclassified trade claims, and overstated balances dilute creditor recoveries. Conversely, a disciplined review can significantly improve payout percentages.
He points to several key execution practices:
- Early normalization of claims data
- Structured objection analysis
- Careful review of trade, tax, and intercompany claims
- Coordinated communication with legal counsel
“In a world where unsecured creditors are often told to expect ‘pennies on the dollar,’ reconciliation discipline is not optional.”
The Secondary Asset Pools
Another area gaining attention is the identification of overlooked assets.
“In distressed companies, accounting infrastructure often breaks down before filing,” Eghbali explains. “That means certain asset categories may not be fully captured in early liquidation analyses.”
These can include:
- Prepetition tax refunds
- Employment tax credits
- Avoidance action recoveries
- Escrow or insurance proceeds
- Dormant bank accounts
- State-level unclaimed property
The challenge, he says, is procedural.
“You need documentation, historical bank statements, tax compliance review — and often cooperation from parties who may no longer be responsive.”
As more cases trend toward liquidation rather than reorganization, identifying these secondary asset pools has become central to maximizing recovery.
Fiduciary Scrutiny in a Changing Landscape
With expanded post-confirmation roles comes expanded scrutiny.
Trustees and fiduciaries must evaluate:
- Litigation strategy economics
- Claim objection cost-benefit analysis
- Tax compliance during wind-down
- Conflict disclosures
- Oversight board expectations
“Governance rigor is now part of recovery execution,” Eghbali says. “It’s not just about legal strategy. It’s about a defensible process.”
Increased litigation around fiduciary duties in trust structures suggests that courts and creditors alike are paying closer attention to how trusts are administered.
The Operational Reality: Broken Books
One recurring challenge in mid-market Chapter 11 cases is the lack of complete financial documentation.
“When advisors step in post-confirmation, they frequently encounter fragmented records,” Eghbali notes.
These can include:
- Missing bank statements
- Inaccessible accounting software
- Disconnected journal entries
- Limited tax documentation
“Reconstructing books isn’t glamorous,” he says. “But without it, you can’t distribute funds compliantly.”
Where books cannot be reconciled, distributions stall. Where distributions stall, oversight tension rises.
The lesson, according to Eghbali, is straightforward: financial reconstruction is often a prerequisite to meaningful recovery.
Why the Trend Is Accelerating
Several macroeconomic conditions are intensifying post-confirmation complexity:
- Higher capital costs
- Increased scrutiny of insider transactions
- More active creditor committees
- Regulatory transparency expectations
- IRS backlogs are impacting tax recoveries
As filings continue across healthcare, retail, technology, and real estate sectors, these structural dynamics are unlikely to diminish.
What Practitioners Should Monitor
Looking ahead, Eghbali believes professionals should pay attention to:
- Governance standards in litigation trusts
- Expanded creditor scrutiny of trustee conduct
- Greater focus on tax credit recoverability
- Data reconstruction as a standard wind-down practice
- Alignment between fiduciaries and unsecured creditor expectations
While high-profile restructurings dominate headlines, the real outcome for unsecured creditors is often determined quietly — through disciplined execution after confirmation.
“Chapter 11 is no longer just about negotiating a plan,” Eghbali says. “It’s about executing it.”
And in today’s restructuring environment, execution may be where value is either preserved or lost.
Disclaimer: The content in this article is provided for general knowledge purposes only. This information is not intended to be legal, financial, or professional advice. Always seek the advice of a qualified professional for specific guidance regarding bankruptcy, restructuring, or related matters.
