Notice: Due to COVID-19, we will be conducting all consultations via Zoom and telephone. We are open and here to help people in these trying times.
Please don’t hesitate to call us if you have any questions!
Bach Is Your Financial Future.
555 Skokie Blvd Suite 250, Northbrook, IL 60062
PO Box 1285, Northbrook, IL 60062
Contact Us Today!(847) 440-5998
Chapter 11 of the United States Bankruptcy Code is a debt relief option specifically available to corporations, partnerships, and limited liability companies. It’s commonly referred to as the “reorganization bankruptcy” option because it allows businesses to restructure their debts, obligations, and assets. In rare cases, individual debtors can also file for Chapter 11 so long as they don’t qualify for Chapter 7 or 13.
There are many benefits to filing Chapter 11, including:
The primary purpose of this bankruptcy option is to help businesses become profitable again. In the past, many well-known companies have benefited from completing Chapter 11, including General Motors and United Airlines.
To initiate Chapter 11, an individual or business needs to pay the appropriate filing and administrative fees, file a petition, and propose an effective reorganization plan. This plan prioritizes which debts need to be paid first; for example, state and federal tax agencies, employees, and stockholders each have their own categories and priority levels. The court will meticulously review a debtor’s proposal to determine its feasibility before approving it. If the debtor fails to file a plan within 120 days, then the case trustee or a creditor can submit a competing plan.
A reorganization plan can involve:
Once a reorganization plan is in place, a debtor is responsible for making the scheduled payments. If the debtor fails to pay their creditors, the court may dismiss the case and convert it to Chapter 6, the “liquidation bankruptcy” option.
Chapter 11 is also available for qualifying small businesses. According to the Small Business Administration, a “small business” has less than 500 employees and accrues $7.5 million in average annual receipts. However, the court may choose to convert a small business case to Chapter 7 if the business has little chance of becoming profitable again.
To benefit from Chapter 11, small businesses are required to file:
Unlike large corporations, small business debtors have 180 days to negotiate with their creditors and file a reorganization plan. Because this can be an expensive legal process, it’s important to discuss your legal options with a qualified and experienced bankruptcy attorney before filing a petition.
A trustee isn’t appointed in most Chapter 11 cases. Instead, the debtor (as the “debtor in possession”) remains in control of all business operations under section 1108 of the United States Bankruptcy Code. However, a trustee may be appointed to oversee business operations if the court finds sufficient cause.
Trustees technically aren’t government employees, but they are managed by the United States Trustee Program, which is a division of the Department of Justice. The trustee ensures the integrity of the Chapter 11 process while also representing the interests of a debtor’s creditors.
This trustee can be responsible for:
It’s difficult to approximate the duration of a Chapter 11 case. While some cases can close within a few months, most take about 6 months to 2 years.
If you have questions about this bankruptcy option, contact the Northbrook Chapter 11 bankruptcy attorneys at Bach Law Offices, Inc. today. We can review your financial status, evaluate your bankruptcy options, and guide you through each step of this legal journey.