Are you a distressed debt creditor who has been turned into a security holder?  If so, you’re not alone.  The transformation – sometimes welcomed and sometimes not – is an increasingly common fate in the distressed community.  It happens, among other ways, when a company emerging from Chapter 11 issues new securities under its plan of reorganization in whole or partial settlement of outstanding loan or bond obligations.  If you are a creditor-cum-investor at the end of a Chapter 11 process, you face an important question: “How can I monetize the new securities that I’ve received in the claim distribution?”  In a guest article, Scott C. Budlong, a Partner at Richards Kibbe & Orbe LLP, explores a statutory provision that goes a long way toward answering that question: Section 1145 of the U.S. Bankruptcy Code.  Section 1145 offers a mechanism for unhindered public resales of securities that have been issued in exchange for creditors’ claims under a Chapter 11 plan of reorganization.  Understanding the operation and scope of §1145 is therefore crucial for a post-reorganization security holder that wishes to maximize its liquidity options.  The first part of this article provides an overview of §1145, including the ways it manipulates traditional Securities Act concepts to facilitate a debtor’s issuance of new securities in satisfaction of a class of claims against the bankruptcy estate, and to allow enhanced liquidity for creditors who receive those securities.  The second part of this article examines potential impediments to a creditor’s use of §1145 to resell post-reorganization securities, and describes how a creditor can try to preserve its access to §1145 or otherwise achieve liquidity.  This article, and a related article recently published in the Hedge Fund Law Report, provide important background and context for an upcoming breakfast discussion entitled “From Creditor to Equity Holder: How to Make Your Post-Reorganization Equity Work Harder for You.”  That breakfast discussion will be presented by Richards Kibbe & Orbe LLP, Halsey Lane Holdings, LLC and CRT Capital Group LLC, in conjunction with Hedge Fund Law Report, and will be held on Wednesday, July 14, from 8:00 a.m. to 9:30 a.m. at The Yale Club at 50 Vanderbilt Avenue, New York, New York.  To read the related article, see “From Lender to Shareholder: How to Make Your Equity Work Harder for You,” Hedge Fund Law Report, Vol. 3, No. 20 (May 21, 2010).  For more on Halsey Lane, see “Video Interview with Mark Dalton, Alex Sorokin and Neil Wessan of Halsey Lane Holdings: Key Considerations for Distressed Debt Hedge Funds that become ‘Unnatural Owners’ of Equity Following a Reorganization,” Hedge Fund Law Report, Vol. 3, No. 6 (Feb. 11, 2010).