Chapter 11 Bankruptcy
Chapter 11 Bankruptcy is most often referred to as a reorganization bankruptcy. While a Chapter 11 is typically used by businesses, it is available to individuals and married couples. Chapter 11 is one of the most complex forms of bankruptcy filings. The Bankruptcy Code sets forth specific duties and obligations that accompany a Chapter 11 filing. The pre-filing preparation for a Chapter 11 is critical.
There are many reasons to choose to file a Chapter 11 case. The follow are examples of reasons why individuals or businesses file Chapter 11:
- Need to restructure bank debt. Whether you are in default on your loan or the loan has matured, Chapter 11 provide a vehicle to restructure and repay the debt over an extended period of time.
- Repay past due tax debt. If the IRS has or is threatening to seize your assets, a Chapter 11 can stop the IRS from closing down your business.
- To stop foreclosure sales.
- To strip off liens against real property.
- To negotiate and restructure debt payments.
What is Chapter 11 Bankruptcy?
A Chapter 11 case is vehicle to restructure and repay debt. The goal of a Chapter 11 case is to work with your creditors to formulate a Plan of Reorganization.
You will be required to provide extensive financial documents and disclosures so that an evaluation of the business’ viability is possible. Chapter 11 is a very costly option and if you are not prepared to meet all of the requirements of being in a Chapter 11 case, your case may likely be dismissed or converted to a liquidation bankruptcy.
Chapter 11 Plan can be very difficult. In most instances, there has been months or years of fighting and possible litigation with creditors prior to filing a Chapter 11 case. Chapter 11 is intended to give a debtor some breathing room to evaluate its business operations and negotiate a repayment of its bills. In the event that creditors oppose the Chapter 11 Plan, provided certain requirements are met, the Bankruptcy Judge will make the final decision on whether your Chapter 11 Plan is confirmed.
Who Controls the Business During A Chapter 11?
In most cases, a business owner will become a “debtor in possession” and remain in control of their business. Subject to certain oversight by the United States Trustee and certain secured creditors, a business will remain operating during the Chapter 11 case. However, monthly operating reports are required to be filed with the Bankruptcy Court so that creditors can see the income and expenses for any given month.
It is important to remember that this is intended only to give you an overview of the Chapter 11 process. There are many specific rules and regulations that must be complied with in order to remain in a Chapter 11 case. The lawyers at Gregory K. Stern, P.C. Bankruptcy and Foreclosure Attorneys for Chicago, understand how to help clients survive a Chapter 11 bankruptcy restructuring. We have successfully confirmed Chapter 11 Plans even in the face of fierce opposition from creditors.
If you believe your business may need to petition the Courts for Chapter 11 reorganization, call us at
312- 427-1558 today.
We provide a free consultation and will answer all your questions. Our office is conveniently located at
53 West Jackson Boulevard Suite 1442 Chicago, Illinois 60604.