Chapter 11

Chapter 11 is by far the most complex type of Bankruptcy. Chapter 11 is usually for businesses in dire financial consequences but who still want to continue operating.  However, for individuals who do not qualify for either Chapter 7 or Chapter 11 Bankruptcy, Chapter 11 is the only option. Just like a Chapter 13 Bankruptcy, Chapter 11 can allow you to bring current a delinquent mortgage.

And just like in Chapter 13, the debtor (both corporations and individuals) file a proposed repayment plan.  But a Chapter 11 plan contains much more detail and often proposes changes to contractual arrangements the debtor has with the creditors.  Many times the debtor remains in control and acts in the same capacity as a Trustee.

Perhaps the most important distinction between Chapter 13 and Chapter 11 Bankruptcy is that the creditors in a Chapter 11 Bankruptcy are given an opportunity to vote on whether or not to accept the plan.  The plan needs to be accepted by a select number of the creditors.  Otherwise it will not be approved.  Many Chapter 11 cases do not succeed because the business or the individual does not generate enough profit or income to make a reasonable repayment arrangement that would be acceptable to the creditors.  One common mistake distressed businesses frequently make is waiting too long to seek competent advice.  When Chapter 11 cases succeed, it is usually because the business or the individual has sought advice about restructuring before the problems become insurmountable.  In those situations, filing a Chapter 11 Bankruptcy can give the business time to reorganize and eliminate underperforming assets and toxic contracts.

Chapter 11 Bankruptcy can be used to prevent the foreclosure of a business’s real estate long enough to either sell or develop the property.  It can also provide the time and protection from creditors that a business needs to trim its expenses and improve profitability or to reduce the company’s overall monthly operating expenses to a realistic amount that it can afford to pay.  Chapter 11 Bankruptcy can also expand the time period within which the business can pay back all or part of its outstanding obligations, including taxes, mortgages, and collateralized loans.

If you would like to speak with an attorney about Chapter 11 Bankruptcy, call Mark S. Steinberg, P.A. at (305) 671-0015 or fill out the Contact Form to schedule a FREE consultation.