CHAPTER 11
REORGANIZATION & RESTRUCTURING
Who can file a Chapter 11? One common misconception is that only business can file a Chapter 11 bankruptcy, but in-fact, almost anyone or any entity is eligible. This includes individuals and/or businesses.
Chapter 11 is more suitable and common amongst businesses rather than individuals because it is more costly and far more complex than a Chapter 7 bankruptcy.
Typically, the economics involved in a Chapter 11 do not lend themselves favorably for most individuals with lesser amounts of debt owed, as opposed to higher net-worth clientele with more steady income streams.
What happens to the debt owed? In a Chapter 11 bankruptcy, a plan is created to pay back certain debts by reorganizing the business operations which can be done by renegotiating the obligations, and/or restructuring the assets and liabilities of the company.
The critical difference and feature of the Chapter 11 bankruptcy is that the debtor can remain open and operational while the bankruptcy takes its course. That is why in the Chapter 11, the debtor is sometimes referred to a “debtor in possession.”
During this time, we analyze areas of opportunity in reducing your expenses, making beneficial tax changes, and strategically plan your repayment options.
Who can file a Chapter 11? One common misconception is that only business can file a Chapter 11 bankruptcy, but in-fact, almost anyone or any entity is eligible. This includes individuals and/or businesses.
Chapter 11 is more suitable and common amongst businesses rather than individuals because it is more costly and far more complex than a Chapter 7 bankruptcy.
Typically, the economics involved in a Chapter 11 do not lend themselves favorably for most individuals with lesser amounts of debt owed, as opposed to higher net-worth clientele with more steady income streams.
What happens to the debt owed? In a Chapter 11 bankruptcy, a plan is created to pay back certain debts by reorganizing the business operations which can be done by renegotiating the obligations, and/or restructuring the assets and liabilities of the company.
The critical difference and feature of the Chapter 11 bankruptcy is that the debtor can remain open and operational while the bankruptcy takes its course. That is why in the Chapter 11, the debtor is sometimes referred to a “debtor in possession.”
During this time, we analyze areas of opportunity in reducing your expenses, making beneficial tax changes, and strategically plan your repayment options.
HOW DOES CHAPTER 11 WORK?
Unlike a Chapter 7 bankruptcy, the use of a trustee, is optional, and is not typical. A private trustee can be used to help implement a repayment plan that is suitable to you, and agreeable with the creditors. However, this is not a necessary requirement.
Ultimately, the proposed plan must be submitted and approved by the Court.
The Court will approve the plan, if it meets certain criteria such as:
Chapter 11 bankruptcy can remain on your credit report for 10 years just like the Chapter 7.
It is important to consider your options, and consult a professional when it comes to determining which type of Bankruptcy is most suitable to your situation – so be sure to contact us for a free consultation to discuss your bankruptcy options.