How do restructuring practices make money? No snark please. Genuinely curious given the fact that most of the companies filing chapter 11 don’t have much money.

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Without getting too technical or boring you with professional admin claims under BK code, conceptually speaking, most commonly pro fees are paid by lenders who are providing new money. That’s why you see a bunch of pro fee related provisions in DIP financing (pro fee in DIP budget, carve-outs, adequate protection pro fees etc.). You will also see a portion of exit financing/new money raised in out-of-court deals being used to pay the pro fees, which again is essentially coming out of new money investors’ pocket.

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As for 7’s and 13’s, they’re placed on payment plans, and once they make full payment, representation proceeds.

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It’s very expensive to go bankrupt 😉

But seriously, companies that have actually run out of money don’t generally go through chapter 11, they just wind down under state law. To actually, effectively reorganize, the debtor will need a significant amount of cash, usually through new financing.

You can look up professional fee applications in big cases to see just how much in fees are generated and paid.

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Because of the reasons above, it can be one of the most profitable groups at a firm. The top attorneys (and even the lesser known ones) are making millions.

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Yup just look at Kirkland

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