Get Answers To Common Questions About Chapter 11 Bankruptcy
At The Bankruptcy Group, we understand the worries and concerns that many people bring to the table while considering Chapter 11 bankruptcy. To discuss your questions with an experienced attorney in Roseville, Folsom or Huntington Beach, California, call 888-710-4334 or email us.
What is a Chapter 11 bankruptcy?
It is a reorganization of debts and assets that puts the debtor (a business, individual or married couple) in the position of a trustee. This “debtor in possession” will have duties and powers typical of a trustee. In the beginning, the debtor will develop a plan for repaying debts and continuing to manage assets. Creditors will vote on the plan and if they approve of it, the bankruptcy court will confirm or reject the plan.
Why do companies or individuals file for Chapter 11 bankruptcy reorganization?
Companies file when their debt load and cash flow have become overly burdensome and their owners want to continue to do business, possibly including borrowing more money, but they need a plan to manage their debts. Individuals and couples pursue Chapter 11 when their finances are complex and their debts are too high for them to qualify for Chapter 13 bankruptcy.
Who typically files for Chapter 11 bankruptcy?
Normally, a business or a high-asset individual or couple voluntarily files a petition for Chapter 11 bankruptcy after getting a plan approved by their creditors. However, it is also possible for creditors to petition for an involuntary Chapter 11 bankruptcy on behalf of a business, individual or couple.
What is a Subchapter V in bankruptcy court?
It is a streamlined version of a Chapter 11 bankruptcy that has been an option since February 2020. It allows businesses to more feasibly meet the requirements of Chapter 11 bankruptcy, with lower costs and a shorter process. It also allows businesses to act as trustee, still in control of their assets, and continue to do business until the bankruptcy process is complete.
What are examples of businesses that might want to consider a Subchapter V?
Good candidates for Subchapter V are small to medium-sized businesses that are struggling with issues that bankruptcy can fix, such as the need for a reduction of debt payments or restructuring of leases, while allowing the businesses to keep making a profit.