Chapter 11 bankruptcy is also known as a reorganization bankruptcy. Through this bankruptcy, the debts, affairs, and assets of a business entity are restructured. Because this is a business bankruptcy, it is a complicated kind of case that can incur significant legal fees. But despite the costs involved, a lot of businesses still choose to file for Chapter 11 bankruptcy to establish a restructuring plan that will be agreed upon by the court, debtor, and creditors. Through this plan, the debtor can pay a part of its debt without being burdened by it as they move forward.
With Chapter 11 bankruptcy, a debtor can continue to operate their business and get a clean slate following the restructuring period. Given the complexities of this bankruptcy, it only makes sense for a debtor to work with a Chapter 11 business bankruptcy attorney from the get-go.
How the Chapter 11 Bankruptcy Process Goes
When a debtor files for Chapter 11 bankruptcy, the court will assist them as they restructure the debts and obligations of the business. Often, the business continues to operate while the proceeding is ongoing. In general, the business can perform as usual. But if dishonesty, fraud, or gross incompetence is an issue with the business, a court-appointed trustee will take over the business throughout the bankruptcy proceeding.
Additionally, the court decides on matters such as hiring and paying attorneys as well as entering contractors with suppliers or unions. Also, during the proceeding, the business cannot arrange a loan that will start after the bankruptcy is completed.
After the bankruptcy filing, the debtor becomes the debtor-in-possession and creditors will no longer be allowed to pursue the debtor as the automatic stay takes into effect. The automatic stay may also let the debtor reach consensual agreements with their creditors who do not want to negotiate.
Who Can File for Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is often the best option for certain businesses. It can be costly, time-consuming, and has risks. So, before a debtor makes a decision, they have to consult an experienced bankruptcy lawyer who can help identify the goals and needs of the business.
Chapter 11 bankruptcy is not an option for individuals such as commodity and stock brokers because they should file for Chapter 7 bankruptcy. Also, Chapter 11 is not an option for those who are not looking to reorganize their finances. But a business does not need to be insolvent to have a Chapter 11 case.
Who Can File for Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is often the best option for certain businesses. It can be costly, time-consuming, and has risks. So, before a debtor makes a decision, they have to consult an experienced bankruptcy lawyer who can help identify the goals and needs of the business.
Chapter 11 bankruptcy is not an option for individuals such as commodity and stock brokers because they should file for Chapter 7 bankruptcy. Also, Chapter 11 is not an option for those who are not looking to reorganize their finances. But a business does not need to be insolvent to have a Chapter 11 case.
Who Can File for Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is often the best option for certain businesses. It can be costly, time-consuming, and has risks. So, before a debtor makes a decision, they have to consult an experienced bankruptcy lawyer who can help identify the goals and needs of the business.
Chapter 11 bankruptcy is not an option for individuals such as commodity and stock brokers because they should file for Chapter 7 bankruptcy. Also, Chapter 11 is not an option for those who are not looking to reorganize their finances. But a business does not need to be insolvent to have a Chapter 11 case.
