"which eliminates their ability to borrow money for several years" Not really. It's a refinancing of the firm in a new structure. That happens all the time - w

"which eliminates their ability to borrow money for several years" Not really. It's a refinancing of the firm in a new structure. That happens all the time - with huge amounts of borrowed money. Getting rid of deadweight loans and refinancing elsewhere is what administration is for, and what happens regularly. In fact freeing up collateral and sending losses abroad makes a firm more creditworthy, not less.