What Is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is generally reserved for businesses and individuals whose debts are over the Chapter 13 debt limits. It allows business owners to continue running their businesses with a repayment plan in place that is approved by both the court and the business’ creditors. Generally, a trustee is not assigned, which means you, as the business owner, will be allowed to maintain control of your business and property. Bankruptcy is a complicated legal matter, and Chapter 11 bankruptcy is a complex form of bankruptcy, which makes it in your best interest to work closely with an experienced Harrisburg bankruptcy lawyer from the start.
A Reorganization of Your Business’s Assets and Debts
Chapter 11 bankruptcy amounts to a reorganization of your business’s assets and affairs that involves the restructuring of your debts. If your business complies with the obligations required in the reorganization plan which is filed, the court will discharge all debts that are eligible. While Chapter 11 is considered one of the most complicated forms of bankruptcy, it’s also the most flexible, and as such, it gives many business owners a second chance.
How It Works
To begin, you will need to submit a detailed schedule of all the following to the bankruptcy court:
- All your business’s debts and assets
- The business’s operating costs
- A current profit and loss report
- All contracts and leases that are currently in effect
The goal driving all Chapter 11 bankruptcies is putting a repayment plan, which can include a sale, into effect that satisfies the demands of the business’s creditors and the Bankruptcy Code, allowing the business to continue with lower, affordable debts. It allows the business the financial ability to remain in operation. As the business owner, you’ll retain control of your business and will continue to operate it, but you’ll be responsible for faithfully carrying out the bankruptcy plan that is put in place.
In other words, you’ll have a fiduciary obligation to your business’s creditors. This means that you’ll have a responsibility to act in their best financial interests.
The Creditors’ Representation
In your Chapter 11 case, your business’ creditors may be represented by an appointed committee of creditors, and their purpose is to ensure that all involved creditors receive maximum compensation before any debt is discharged. If your creditors are not on board with the proposed reorganization plan, it can potentially be forced along by implementing what is called a cram-down. A provision of the Bankruptcy Code, Subchapter V, allows for approval of a plan even if the creditors do not approve the plan. This requires you to demonstrate to the court that your proposal meets specific legal requirements, which is a legal intricacy that is best left in the capable hands of a skilled bankruptcy attorney.
An Experienced Harrisburg Bankruptcy Lawyer Can Help
The formidable Harrisburg bankruptcy attorneys at Cunningham, Chernicoff & Warshawsky, P.C., are committed to unleashing the full force of their impressive experience and legal skill in pursuit of a Chapter 11 bankruptcy that will allow you to continue growing your business, and we’ll leave no stone unturned in our focused efforts to do so. Your case is important to your future, so please reach out and contact us online or call 717-260-3527 for more information about what we can do to help you today.