NOTE: This is an overview of chapter 11 bankruptcy and does not constitute legal advice. If you are considering chapter 11 bankruptcy you should consult with an experienced bankruptcy attorney licensed to practice in your jurisdiction.
Chapter 11 Bankruptcy Facts:
- Designed to provide relief for businesses, single asset realty entities, non-profits organizations, and high-debt individuals.
- Temporarily stops creditor collection actions such as foreclosures, levies, lawsuits, and evictions.
- Allows debtors to propose alternative treatments for paying existing debt: interest rates are altered, payment terms lengthened, principle balances reduced.
- Tax debt is given at least five years to be paid.
- Allows a debtor to control the sale of assets.
At Sasser Law Firm:
- Competitive, flat-fee arrangements are possible
- Emergency or time-sensitive cases are welcome
- Experience representing restaurants, churches, real estate developers, and other small businesses.
How Chapter 11 Bankruptcy Works:
- A case is filed and immediate protection is granted to the debtor. The debtor remains in control of its finances and daily operations. Any activity outside the ordinary course of business must receive court approval.
- Assets, liabilities, income, expenses, and a description of certain financial events in the debtor’s recent history are all disclosed in detail.
- Pre-bankruptcy bank accounts are closed and new, Debtor-In-Possession, accounts are opened.
- Debtor and attorney meet with personnel from the Bankruptcy Administrator’s office.
- Monthly operating reports and bank statements are prepared and filed with the court each month while the bankruptcy case is pending (typically, five to twelve months).
- A Plan of Reorganization is designed and filed with the court. Creditors then vote to either accept or reject a particular plan. Under certain circumstances, the bankruptcy court may confirm a plan even over the objections of creditors.
- If confirmed, this Plan of Reorganization becomes a new, binding, contract between the debtor and its creditors.