Lock-Up Agreement

In the bankruptcy context, a contract whereby a party (often the debtor’s key lender or block of institutional debt holders) commits itself to support a particular restructuring plan, subject to various terms and conditions. The non-debtor party to a lock-up agreement binds itself to vote for a Chapter 11 plan as long as certain key provisions are included in the plan.

Lock-up agreements are often executed in connection with pre-negotiated Chapter 11 cases, and are usually agreed to and fully executed before the filing of the debtor’s Chapter 11 case. A lock-up agreement entered into postpetition and before distribution of a court-approved disclosure statement usually is but may not be enforced by the court.

See also Adequate Information, Disclosure Statement, Prepackaged Plan.

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