Here’s What You Need to Know About Chapter 11 Bankruptcy

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Here’s What You Need to Know About Chapter 11 Bankruptcy

Chapter 11 bankruptcy is for businesses to get their debts reorganized and also gain enough financial stability so as to avoid any liquidation of their business assets. Though there could be scenarios in which we encounter individuals who qualify for Chapter 11 bankruptcy, this filing mostly involves the businesses. The features of Chapter 11 bankruptcy are as below:

  • Chapter 11 bankruptcy allows the regular operation of the business that is undergoing the crisis and still works on ways towards repaying the creditors in the business
  • This type of filing can be voluntarily initiated by the debtor. In a few cases, involuntary initiation of Chapter 11 bankruptcy is done by the creditors
  • In Chapter 11 bankruptcy, the debtor under question should share all information to the court – list of assets, list of liabilities, contracts that have continuing obligations involving other parties, unexpired leases, disbursements, income and financial statements relating to the business are part of this information
  • Chapter 11 bankruptcy includes the filing charges and also administrative fees. These have to be paid as soon as the bankruptcy is filed or in installments as agreed by the court
  • Chapter 11 bankruptcy petition of a business should bear information of the Tax Identification Number of the debtor and also the details about the location of the principal assets
  • While the petition is filed, the petitioner shares a plan for restructuring the business debts. This will enable the court and the creditors to take appropriate actions according to the plan. In case the plan isn’t shared while filing, the debtor needs to indicate that a plan will be shared soon for addressing the creditors’ concerns

A debtor may be unable to file a Chapter 11 bankruptcy just like any other Chapter if:

  • There is an occurrence of bankruptcy dismissal within the previous 180 days because the debtor wasn’t available to appear in court or ignored the court orders
  • The previous filing for bankruptcy had been enjoined by lien holding creditors

There are some permitted exemptions for individuals citing emergency situations, but the debtor should submit proofs of undergoing credit counseling from an accepted source.

On the outset, the plan for the restructuring of debts is complex and will need the oversight of a bankruptcy attorney. Work with Recovery Law Group in Los Angeles or Dallas. They can be reached at 888-297-6203 – their expertise will guide businesses through the Chapter 11 filing process.