BUSINESS REORGANIZATION UNDER CHAPTER 11 OF THE BANKRUPTCY CODE
Chapter 11 bankruptcy filings are, in most cases, complicated affairs. Chapter 11 is usually filed by businesses, but occasionally is utilized by individuals with significant assets or amount of debts. The goal of a Chapter 11 filing is to return a business to profitability as opposed to a Chapter 7, when businesses are often seeking to be dissolved. Business reorganization under this chapter tends to involve business restructuring and complex negotiations.
A chapter 11 case begins with the filing of a petition with the bankruptcy court. A petition may be a voluntary or involuntary. I addition to the petition and statements utilized in any bankruptcy case, the debtor in Chapter 11 case is required to file a written disclosure statement and a plan of reorganization. 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 decision 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 will be treated under the plan.
The plan is basically a contract between the debtor and creditor that defines how the business will operate and pay its financial obligations. Many plans include some downsizing to reduce expenses and sale of the assets. Once a business or individual files the plan, creditors vote whether to accept or reject it.The debtor maintains control of the day-to-day operations of the business or the individual’s estate. There is no trustee unless the judge decides that one is necessary; if a trustee is appointed, the trustee takes control of the business and/or property.
The U.S. Trustee’s office plays a major role in monitoring the progress of a Chapter 11 case and supervising its administration. It is responsible for monitoring the debtor in possession’s operation of the business and the submission of operating reports and fees.
Our firm offers professional guidance throughout the process, helping our clients obtain the best possible legal results for business or personal reorganization. If you or your business have a lot of debts and think that you may be qualified for Chapter 11 bankruptcy, begin to solve your problem today by calling Rotstein Law Office at our office number (206) 579-8823 or by completing the interactive Contact Form.