Chapter 11 Business Bankruptcy – An Overview
Although a Chapter 11 bankruptcy is designed provide debt relief to businesses, individuals who owe extraordinarily high amounts of debt may also file a Chapter 11 bankruptcy.
A Chapter 11 business bankruptcy allows the business time to reorganize, become profitable and pay back creditors over time. There is a possibility that certain creditors will be getting less than what was owed by the business. A Chapter 11 business bankruptcy takes place under strict supervision by the Court. The debtor, who now becomes the debtor-in-possession maintains the daily operations of the business. However, certain financial decisions do require court approval. Should the debtor-in-possession display gross negligence, a Trustee will be appointed to take over.
The case trustee may appoint an operator to run the business in place of the business. In most instances this will cost more as the operator has to learn the specific nature of the business.
A petitioner refers person who initiates the Chapter 11 bankruptcy and can either be the debtor in the case of a voluntary bankruptcy or creditors in an involuntary bankruptcy.
Small Business Debtor
A business that does not exceed unsecured debt of $2,490,925 is considered a small business debtor and does not require a creditor’s committee. As such, the Chapter 11 bankruptcy process is much more simple.
A Chapter 11 bankruptcy is very similar to a Chapter 13 bankruptcy. Both include a payment plan that require creditors to be paid with future income. The debtor does not receive any discharge of debt before the payment plan is complete.
Chapter 11 Bankruptcy Petition
A Chapter 11 bankruptcy can be very complicated and may result in your case being dismissed if it is not done properly. It is recommended to get experienced legal counsel to see you through your Chapter 11 bankruptcy filing. Our attorneys at Shipkevich PLLC have assisted many small business owners with their Chapter 11 bankruptcy. Schedule your free initial consultation today.