Business Reorganization Through Chapter 11 Bankruptcy
When a business is seeking debt relief through bankruptcy, it most often does it through Chapter 11 bankruptcy. Similar to a Chapter 13, a Chapter 11 is a debt repayment plan that is designed to help businesses, and in some cases individuals, when large assets and debts are at stake. The expense and complexity of the Chapter 11 process requires the attention of a skilled bankruptcy attorney.
At Schwartz Bankruptcy Law Center, we work tirelessly on behalf of businesses and individuals in Kentucky and Indiana. Our lawyers are resolute in our commitment to protecting clients throughout the course of addressing and resolving their Chapter 11 bankruptcy issues in bankruptcy court.
Chapter 11 bankruptcy is often an appropriate step when a business needs to restructure the debts it has and reorganize its finances so it can stay open. Chapter 11 bankruptcy involves the financial restructuring and reorganization of a business, which may be an incredibly complicated process. This type of bankruptcy enables a business to maintain many of its assets while it restructures itself to better manage its debts. This is an effective alternative to Chapter 7, which would require a business to liquidate its assets in order to pay debts.
The Chapter 11 Process
- As with other types of bankruptcy, as soon as a Chapter 11 bankruptcy is filed, an automatic stay is put in place and all collection activities must stop. This allows a business to work toward regaining financial stability without the continued harassment of creditors.
- Businesses must file a disclosure statement. This is an overall financial statement detailing what occurred with the business that resulted in the bankruptcy filing, the current financial circumstances and how the business will operate in the future throughout the Chapter 11 and after bankruptcy.
- A Chapter 11 business must file a reorganization plan. This document states how each group of creditors is going to be paid over the time period stipulated in the plan.
- Creditors are classified into groups, according to shared characteristics, with unsecured creditors being grouped together. Each group of creditors then is able to vote whether or not to accept the plan that was proposed by the business. For the plan to be accepted without the involvement of additional litigation, the plan must be accepted by the creditors first. A majority of the votes in each class of creditors must be gained, plus that majority must equal two-thirds of the total amount in claims that have voted in that class.
- Once the plan is approved, a confirmation order is entered by the court and it creates a new contractual agreement between the debtor and its creditors.
Chapter 11 For Individuals
Though it is not usually used by individuals, Chapter 11 bankruptcy protection is an option for individuals as well as businesses. Chapter 11 allows qualified individuals to reorganize and repay their debts over time. An individual may qualify if he or she has a certain amount of debt and assets. Someone who owes an amount just above the Chapter 13 debt limits may result in the filing of a Chapter 11 bankruptcy.
Contact Schwartz Bankruptcy Law Center For Assistance
To learn more about business bankruptcy or Chapter 11 bankruptcy for an individual, call our Louisville office at 502-485-9200, our New Albany office at 812-945-9200 or toll-free at 866-366-3328. You may also contact us online to set up a free initial consultation with one of our attorneys. Weekend, after-hours and in-home appointments are available upon request.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.