Corporate Chapter 11 Bankruptcy

The term “bankruptcy” often elicits negative connotations. Filing for bankruptcy doesn’t mean failure. It can be the fresh start you need. Chapter 11 bankruptcy is one of the most common corporate bankruptcy options.

Corporate bankruptcy Chapter 11 is also known as “reorganization bankruptcy.” Businesses and corporations often use it, but individuals can file for Chapter 11 bankruptcy. The goal is to create a plan to pay back creditors and maintain business operations. You could save your business by restructuring your assets, securing better financing, and negotiating debt settlements.

Benefits of Chapter 11 Bankruptcy

Filing Chapter 11 bankruptcy can put you on the path to saving your business. The most significant benefit of Chapter 11 bankruptcy is asset retention. By retaining assets, you can keep running your business and earn money to pay back creditors and complete the reorganization plan.

Chapter 11 Bankruptcy Process

Let’s walk through the steps of filing for Chapter 11 bankruptcy:

• File a Petition: The first step is to file a petition for Chapter 11 bankruptcy. Usually, the person or business in debt will file this petition with the court.
• Automatic Stay: As soon as you file the petition, you are granted an automatic stay, which means that creditors cannot collect debt. The goal of the automatic stay is to give you some time to develop a reorganization plan without fear of creditors.
• Debtor in Possession: After filing your petition and the automatic stay is in place, the business becomes a debtor in possession, and you can continue to operate your business. It also means the debtor in possession is responsible for all meetings regarding the bankruptcy plan.
• Meeting with Creditors: A committee of creditors is appointed, and the creditors and the debtor in possession will meet for a section 341 meeting. This meeting is an opportunity for creditors and the debtor in possession to negotiate the reorganization plan.  
• Plan Proposal: The debtor in possession has 120 days to file a reorganization with the court. This plan will outline the steps the debtor in possession will take to make monthly payments to satisfy debts.
• Confirmation of Plan: The plan is sent to the creditors, who have the chance to make modifications. Once everyone agrees on terms, the creditors vote. If two-thirds of the creditors approve, the plan is confirmed and set in motion.  
• Debts are Discharged: Once you have fulfilled the agreements of the plan, your debts are removed. You no longer owe the debt, and creditors cannot contact you to collect payments on debts. You can work towards rebuilding your financial profile. However, nondischargeable debts are not subject to this.

Common Issues in Chapter 11 Bankruptcy

There are some issues to consider when preparing to file for Chapter 11 bankruptcy. First, filing for Chapter 11 bankruptcy can be very expensive. Chapter 11 bankruptcy requires the assistance of a corporate bankruptcy attorney, and it can be costly. It can also be time-consuming. Additionally, the bankruptcy court must approve a reorganization plan before you can move forward.

How Ursulova Law Offices Can Help

Filing for Chapter 11 bankruptcy is complicated, but we can help. When you’re ready to take the next step to save your business and file for Chapter 11 bankruptcy, an attorney at Ursulova Law Offices is here to assist you. Ursulova Law Offices is one of the premier bankruptcy lawyers in Brooklyn, NY, and a Brighton Beach bankruptcy attorney. Contact us today and let’s work towards securing your future.