Understanding Chapter 11 Bankruptcy
The majority of individuals who declare bankruptcy use either Chapter 7 or Chapter 13, but businesses and corporations are also provided for under the U.S. Bankruptcy Code. In most cases, a corporate debtor will instead use Chapter 11, which is commonly referred to as “reorganization bankruptcy.” Chapter 11 is similar in many ways to Chapter 13, with the major difference that the latter does not have the same dollar limits on the amount of debt as the former does. While individuals are also able to declare bankruptcy under Chapter 11, it is, in most cases, only utilized by corporations. If you own a business that is struggling financially and drowning in debt, then this is most likely the most appropriate type of bankruptcy for you.
Chapter 11: The Most Complex Type of Bankruptcy
Chapter 11 bankruptcy generally involves a reorganization of the business' assets and affairs that includes a restructuring of debts. Provided that the business meets its obligations as set out under the reorganization plan, the bankruptcy court will order a discharge of all eligible debts. It is the most flexible type of bankruptcy. This flexibility also makes Chapter 11 perhaps the most complex and challenging type of bankruptcy. You should only attempt this course of action with a Jacksonville bankruptcy lawyer who has the skill and legal knowledge necessary to effectively guide you through the process. Come to The Law Offices of Justin McMurray, P.A., where we have more than a decade of experience.
Aspects of Chapter 11 Bankruptcy
At the beginning of the case, you will have to submit to the court a detailed schedule of the business' assets and debts, current profit and loss reports, operating expenses, contracts and leases. The goal is to secure a repayment plan that meets the requirements for satisfying the creditors' demands, while also providing the business with sufficient wherewithal to continue operating. As the business owner, you will maintain possession of the business and its assets and will be required to carry out the bankruptcy plan in the role of a fiduciary toward the creditors.
Creditors are represented in the case by an appointed committee of creditors, whose purpose is to provide oversight and to ensure that they receive the maximum amount of repayment prior to the discharge of debt. In the event that the proposed bankruptcy plan is not approved by the creditors, it may be possible to force it through using a “cram down,” which involves proving to the court that you meet certain requirements. Learn more about the process and get started on your case now by contacting our office for a free initial consultation.