Restructuring Debt Through Filing Chapter 11 Bankruptcy Is A Complicated Process
The goal of filing for Chapter 11 bankruptcy is to restructure the debt in a way that is suitable for all involved. It requires a formal plan for repayment. Creditors have a significant role in the process. Because the “debtor in possession,” as you are called, has many more responsibilities, it is prudent to hire a knowledgeable bankruptcy attorney if you are considering this option.
In a Chapter 11, the debtor usually acts as their own trustee during the bankruptcy. That’s why typically, individuals often choose Chapter 7 over 11. However, businesses and partnerships have more and better options in a Chapter 11 bankruptcy. In a Chapter 11 bankruptcy, businesses typically write a detailed disclosure statement regarding the business’s financial circumstances and a carefully crafted plan for reorganizing their business according to their debt. The disclosure and plan must be filed with the bankruptcy court.
The disclosure statement must contain:
- An inventory of all assets
- A catalog of liabilities
- A summary of the business’s purpose or mission statement
- A description of the circumstances of financial hardship
The business’s reorganization plan must have enough details to so the creditors are able to make well-informed decisions about the reorganization plan.
No two cases are alike. Each Chapter 11 case requires information that is governed by judicial discretion and the circumstances of the case as well as federal bankruptcy laws. If a creditor will be paid less than the full value of their claims under the plan, they will vote on the restructuring plan by ballot. After the disclosure statement is approved and the ballots are tallied, the bankruptcy court will conduct a confirmation hearing to determine whether to confirm the plan.
Your Business Could Benefit From A Chapter 11 Bankruptcy. Contact Us.
The advantage to a business debtor in a Chapter 11 bankruptcy is they do not have to liquidate all assets. For a business, this means it does not have to go out of business, but with a well-organized plan, it can survive and perhaps even thrive in the long run. Call Brown & Associates Law & Title, P.A., in Tampa to discuss your legal options for filing for bankruptcy. Our experienced bankruptcy team can be reached by calling 813-289-8485 or by sending us an email.
Brown & Associates Law & Title, P.A., is a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.