Chapter 11 bankruptcy is usually chosen by large businesses to restructure debt.
Chapter 11 is one of the chapters of the US Bankruptcy Code that provides protection to debtors. Chapter 11 bankruptcy is almost exclusively used by businesses due to the expense and complexity of the process. Chapter 11 bankruptcy is appropriate when a business needs to restructure the debts it has and reorganize its finances so it can stay open. As an alternative to Chapter 7, which would require a business to liquidate, Chapter 11 allows a business to keep many of its assets.
A Chapter 11 bankruptcy allows a business to reorganize and refinance to be able to prevent final insolvency. Often there is no trustee, but a “debtor in possession,” and considerable time to present a plan of reorganization. The final plan often requires creditors to take only a small percentage of the debts instead of what is owed them, or to take payment over a long period of time.
As a law firm providing chapter 11 bankruptcy legal services, we are prepared to represent you in even the most difficult of legal challenges you may be facing. Our law firm knows how to apply the law to your specific legal needs and goals. When you are involved in, or contemplating filing for chapter 11 bankruptcy… we are here to help you. Call 407.344.3400 to schedule a confidential consultation to discuss your bankruptcy options.
Chapter 11 bankruptcy involves the financial reorganization of a business, which may be a complex and extensive process. As soon as a company files for Chapter 11, all collection activities must cease. This stay will remain in effect throughout the bankruptcy process.
The process of Chapter 11 begins with the creation of a plan. The debtor or debtors involved may propose the repayment and reorganization plan or, after a period of time (usually around 120 days), the creditors may propose a plan as well. The plan may allow the debtor to cancel contracts. The value of shares owned, if the stock is publicly traded may also be cancelled. Any plan that is created must be approved by the creditors, and if there are multiple plans sometimes the creditors are given the opportunity to vote on the plan that is put into place.
A trustee will be involved throughout the reorganization process. The trustee will help to ensure that priority claims are paid, that assets are managed properly, and that the reorganization proceeds as it should. If the owners are not managing the assets properly, the trustee may take more control or someone else may be put in charge of the assets.