The Ottawa Senators are expected to file for reorganization under the Companies' Creditors Arrangement Act (CCAA) in Canada and in the United States under Chapter 11. With the help of Canadian and U.S. insolvency law experts -- Brian O'Leary of Burnet, Duckworth & Palmer LLP in Calgary and Chad Dale of Gadsby Hannah LLP in Boston -- ESPN.com explains the intricacies of the future business challenges facing the cash-strapped team.

(Note: All funds in U.S. dollars)

Q: Why are the Senators filing for reorganization?
A: The Senators' debt, not including the arena, is reportedly $160 million. Its creditors include the NHL, the Canadian Imperial Bank of Commerce (CIBC) and FleetBoston Financial. According to Bloomberg News, the Senators expected to receive $127 million in financing, but a plan that would have brought in 650 new investors to the team fell through Dec. 31 when tax write-offs could not be secured for the investors.

Q: What does filing for reorganization do?
A: Filing for reorganization protects the team from its creditors demanding debts owed and provides the team with time to come up with a restructuring plan. The Senators are filing in both Canada and the U.S because they have creditors in both countries and want to ensure they are protected against creditor claims and actions in both countries.

Q: How do the Senators file for reorganization?
A: In order to qualify for reorganization under Chapter 11, the Senators have to file papers showing their inability to pay their creditors. The CCAA required companies to file papers and appear before the court with proof of their insolvency.

Q: How long do the Senators have to come up with a reorganization plan?
A: Under the CCAA, the Senators have 30 days to submit a plan. Chapter 11 allows for 120 days. Both periods are frequently extended upon request. In both cases, the court will appoint a monitor, usually an independent accounting firm, to overlook the structuring of the new financing plan.

Q: How will the Senators continue to operate while the team reorganizes?
A: Canadian court is expected to approve Debtor in Possession (DIP) financing from CIBC and FleetBoston to maintain business-as-usual operations of the club, even though the team already owes money to both banks. According to the Globe & Mail, CIBC and FleetBoston are expected to commit up to a combined $16 million through the end of the season. DIP lenders often receive preference over other creditors after the reorganization has taken place and the club resumes paying its debts.

Q: Is it possible that the players' contracts will be restructured or voided?
A: Players were not get paid on Jan. 1, but under the NHL's Collective Bargaining Agreement, the Senators have 14 days from the day the NHL Players Association serves notice to pay off its default before contracts are torn up. Despite the fact that the players still have not been paid, the NHLPA has yet to file its complaint. The NHL, which is reportedly owed more than $9 million by the team for previous loans, is expected to assist the Senators in securing a short-term loan, which could be used to pay the players. Player contracts are not guaranteed under the CCAA, but according to O'Leary, it is highly unlikely that the reorganization would include restructuring of contracts.

Q: Is it more likely that the team will be sold once it is formally reorganized?
A: One of the options is to sell the team and the arena, the Corel Centre, in their entirety. Other options include the current investors putting up more capital or taking on new investors. Normally, the NHL's Board of Governors reserves the right to approve the new owner or investors. However, under the CCAA and Chapter 11, a judge has the power to override league bylaws, especially if a higher bid better satisfies the team's creditors.

Q: What is the next step after a reorganization plan is formulated?
A: Under both the CCAA and Chapter 11, at least 50 percent of the team's creditors representing no less than two thirds of the team's debt must approve the plan, which is then approved by a judge. A judge is likely to approve the deal if the creditors are satisfied. A typical reorganization under the CCAA usually takes between six months and a year to be completed, while Chapter 11 proceedings usually take longer. It is expected that both plans will be voted on and completed around the same time.

While the filing might seem to be a hit to the NHL's image, O'Leary said it is a necessary step in keeping the team alive.

"The purpose of this is to treat the patient, give it a blood infusion and the necessary medication to get it on its feet again," O'Leary said.

Darren Rovell, who covers sports business for ESPN.com, can be reached at Darren.rovell@espn3.com.