Time Frame

• As opposed to the seven-year length of normal bankruptcy, surgical bankruptcy has an almost immediate turnaround time for the company. However, the company's plan to begin this "turnaround" must be voted on by shareholders before the company files its petition for bankruptcy. Essentially, it is the stockholders' way of making sure their investment will not run dry.
  
  

Terms

• Under the plan that is agreed to by the company and the lender before the bankruptcy is filed, the company has a set period of time to market and sell its product, or to obtain refinancing for a minimum price. If no sale or refinancing has occurred by the time expires, the lender can be released from the contract without liability.
  
  

Misconceptions

• Most companies enter into a surgical bankruptcy believing that they will be able to choose their own committee to draft the proposal. In reality, they must hire a bank to sit in on the proceedings. This is known as the "indenture trustee," and they have the final say.
  
  

Benefits

• Companies choose a surgical over a "typical" bankruptcy mostly because of the statistics. According to the U.S. Securities and Exchange Commission, only 16 percent of companies who declared a surgical type of bankruptcy were unable to recover.
  
  

Famous Ties

• President Barack Obama encouraged the Chrysler Corporation to file a surgical bankruptcy. This was made public on May 1, 2009 in The New York Times.