Chapter 11 is a chapter of the United States Bankruptcy Code that permits reorganization under the bankruptcy laws of the United States. Chapter 11 bankruptcy is available to every business, whether organized as a corporation, partnership or sole proprietorship, and to individuals. When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11. When an individual needs to reorganize with debts exceeding the limits for a Chapter 13, they file for protection under Chapter 11.
It is important to meet with an attorney to discuss your situation because a chapter 11 case requires a plan to negotiate and reorganize before the filing of a petition with the bankruptcy court. The petition can be filed where the business or property is located; or where the debtor has a residence. A petition may be a voluntary petition, which is filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet certain requirements.
Individuals with investment properties are able to restructure the loans on the properties with a five-year plan for their unsecured debts and longer for the property debt. Businesses receive a second chance at success. The goal of Chapter 11 is an approved and well-negotiated written disclosure statement and a plan of reorganization that is filed with the court. The disclosure statement is a document that must contain information concerning the assets, liabilities and business affairs of the debtor sufficient to enable a creditor to make an informed judgment about the debtor’s plan of reorganization. The contents of the plan must include a classification of claims and must specify how each class of claims is treated under the plan.
As with cases under other chapters of the Bankruptcy Code, a stay of creditor actions against the chapter 11 debtor automatically goes into effect when the bankruptcy petition is filed. The automatic stay provides a period of time in which all judgments, collection activities, foreclosures, and repossessions of property are suspended and may not be pursued by the creditors on any debt or claim that arose before the filing of the bankruptcy petition. The stay provides a breathing spell for the debtor, during which negotiations can take place to try to resolve the difficulties in the debtor’s financial situation.
Chapter 11 lawyer Orange County
The debtor in Chapter 11 plays an important role with many duties and tasks. Our attorneys will guide you through this complicated important process. We are your safeguard to the proper management of your business as the debtor in possession.
While declaring bankruptcy can be a difficult decision and can seem like you’re facing a complicated resolution, our experienced orange county Chapter 11 lawyers are here to help. Call for a free consultation with our debt lawyer to discuss your situation and set a plan that is right for you.