What Is Bankruptcy Mothballing?
The COVID-19 virus and government shut-downs have triggered a historic wave of bankruptcies in the United States. Faced with profound economic uncertainties, companies have begun requesting and bankruptcy courts are increasingly employing a new tool in bankruptcy referred to as “mothballing.” Bankruptcy mothballing, as the name suggests, offers companies a pause in the Chapter 11 process during which certain obligations such as rent or debt payments are frozen or "mothballed." We sat down with Rachel Albanese, a bankruptcy partner at the global law firm DLA Piper, to discuss how bankruptcy courts are using this tool to offer temporary relief to companies facing uncertainty and to learn more about the mechanics and implications of bankruptcy mothballing.
