Chapter 11 Bankruptcy
Chapter 11 Bankruptcy is usually pursued by commercial enterprises. Chapter 11 Bankruptcy is quite similar to Chapter 13 bankruptcy. Chapter 11 Bankruptcy is designed for companies that want to repay their debts while staying open for business. In a Chapter 11 Bankruptcy case, the business owner submits a plan of reorganization to the court. If the court approves your plan, management then continues to run everyday operations of the business, however, the bankruptcy court must approve all significant business decisions. Under Chapter 11, after a period of consolidation, the debtor typically emerges with a reduced debt load and a reorganized business.
Contact a Bankruptcy Lawyer In Your Area
Who is Eligible Under Chapter 11 Bankruptcy?
Individuals and businesses alike may file under Chapter 11. However, Chapter 11 is primarily used for business debt. Businesses usually file for Chapter 11 bankruptcy when their debts exceed the limits of Chapter 13. In order to file a Chapter 13 bankruptcy, you must owe less than $269,250 in noncontingent, liquidated, unsecured debts, and less than $807,750 in noncontingent, liquidated, secured debts.A debtor is prohibited from filing under Chapter 11, or any other chapter, if in the previous 180 days a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with the orders of the court or the debtor voluntarily dismissed the previous case after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.
What to Expect in Chapter 11 Bankruptcy Case
The first step in your Chapter 11 bankruptcy is to file the petition for bankruptcy with the courts. Once this petition is filed, the U.S. Trustee will begin to appoint committees. These committees represent the interests of creditors and stockholders in working with your company to develop a reorganization plan aimed at getting your company out of debt. The creditors, bondholders, and stockholders must accept your plan and then the court may confirm. However, the court may still approve your plan if creditors or stockholders vote to reject it. Once the plan is confirmed, a more detailed report must be filed with the court. A bankruptcy lawyer in your area can help you file your petition and accompanying paperwork as well as representing you at the meetings of creditors and stockholders.
In creating the plan of repayment follow these steps:
- The debtor business and trustee-appointed committees develop a plan to get the company out of debt.
- The business prepares a disclosure statement and reorganization plan and files them with the court.
- The United States Securities and Exchange Commission reviews the disclosure statement.
- Creditors vote on the plan.
- The court confirms the plan.
- The business carries out the plan.
Contact a bankruptcy lawyer in your area to find out more about filing for bankruptcy.