Individuals and businesses may file for bankruptcy relief under Chapter 11. Chapter 11 of the Bankruptcy Code is mostly used by businesses attempting to reorganize their debts to remain open. Typically, individuals who file under Chapter 11 have high income and substantial assets. Chapter 11 is also available for individuals whose debt exceeds the maximum debt limits for a Chapter 13 case.
Chapter 11 is a complex chapter of bankruptcy. The debtor in a Chapter 11 bankruptcy case is referred to as a debtor-in-position because the business maintains control over the daily operations. In most cases, a trustee is not appointed to represent the bankruptcy estate. The U.S. Trustee’s Office oversees the Chapter 11 case.
The Chapter 11 bankruptcy attorney at Silverberg Law Firm LLC has extensive experience filing Chapter 11 cases. If your company is experiencing financial trouble, do not wait to seek legal advice. Contact our office for a FREE CONSULTATION to discuss your options to save your business.
A crucial step in a Chapter 11 case is the drafting of the disclosure statement. A disclosure statement provides the history of the business, in addition to facts and figures related to the income, debts, assets, and business projections for the company.
The disclosure statement should “sell” the company to creditors and convince creditors that the company should be allowed to continue to operate through the reorganization. A well-drafted disclosure statement can greatly aid in negotiating with creditors.
A Chapter 11 plan is much more complicated than a Chapter 13 plan. The Chapter 11 plan must address each category of creditors. It must provide enough information for creditors to determine whether they should vote for or against the plan. If enough creditors do not vote in favor of the Chapter 11 plan, the court will not confirm the plan. Therefore, many Chapter 11 cases involve intense negotiations with creditors to secure their approval of the plan.
A Chapter 11 debtor may propose to reject leases and contracts in addition to reducing the debt owed to certain creditors. The debtor can extend the payment term for some debts to lower the monthly debt payment. In addition, the Chapter 11 plan may call for some debts to be satisfied in full by surrendering the collateral to the creditor.
A Chapter 11 plan benefits the company by improving cash flow, protecting employees, stopping collection efforts, and allowing the owners to retain control over the company.
Even though a Chapter 11 plan may receive overwhelming approval from creditors, the confirmation of the plan rests with the bankruptcy court. The court must ensure that the Chapter 11 bankruptcy plan meets all requirements under the Bankruptcy Code for a Chapter 11 plan.
A Chapter 11 plan must be:
If the court does not believe the plan satisfies all the requirements, it will not confirm the plan. The debtor may be required to revise or amend the plan before the court confirms the plan. It is important to understand that creditors and a trustee (if one was appointed) may also file competing Chapter 11 plans once the time expires for the debtor to file a proposed plan.
In addition to the traditional Chapter 11 case, the Bankruptcy Code also provides for cases involving a Small Business Debtor or a Single Asset Real Estate Debtor. Some special rules and requirements apply in Chapter 11 cases involving these debtors.
The Chapter 11 bankruptcy process can be overwhelming. A company is already struggling to continue operations, but then it must also focus on the reorganization.
Having an experienced Chapter 11 bankruptcy attorney to guide you through the process and prepare the necessary form is essential. An experienced attorney is also skilled in negotiating with creditors and satisfying the court.
Our business bankruptcy lawyer at Silverberg Law Firm LLC has extensive experience working with companies to use Chapter 11 to restructure their debts. Before your company sinks further into debt and financial trouble, contact our office for a FREE CONSULTATION with our Chapter 11 attorney.
At Silverberg Law Firm LLC our team will analyze your case and determine that whether bankruptcy is the right option for you. If yes, then we will handle every aspect of your legal process, start to finish.
Which will help you make the right choice, and get out of debt smoothly, and fast.