Chapter 11 Bankruptcy in New York City
Chapter 11 of Title 11 in the United States Code provides for a method of bankruptcy involving the “reorganization” of assets in an attempt to repay debts, as opposed to the liquidation proceedings laid out in Chapter 7. This form of bankruptcy has been proven helpful to owners of small businesses, corporate real estate owners and large corporations, as it allows business to continue to operate while the company’s debt is addressed through a court-approved repayment plan.
With several options of bankruptcy available before you, choosing the right chapter of bankruptcy is the first step to overcoming your debt and starting afresh. If you are the owner of a business overwhelmed by the weight of debt, Chapter 11 may be a beneficial option for you to repay your creditors and restructure your business. By retaining New York bankruptcy attorney Robert M. Fox as your legal counsel, you can ensure that you have made the right decision for your financial future.
Organized Repayment To Overcome Debt
Chapter 11 is favored by companies and creditors alike because it provides for greater revenue in the long run in comparison to the value of liquidated assets (as in Chapter 7). Business owners are able to propose a reorganization and repayment plan that will allow their company to continue functioning while also giving the creditors access to repayment of greater value.
When you file for bankruptcy under Chapter 11, you have the exclusive right to propose a plan of repayment for a period of 120 days. If that time elapses without a proposal, your creditors may submit proposals also. In your proposed plan, you will disclose a comprehensive list of your assets and the debts you seek protection from through your proposed reorganization plan. The plan must be approved by a bankruptcy court judge and confirmed by your creditors. If the plan is confirmed by your creditors, it will become binding and operations of business will be reorganized according to the plan for the duration of repayment.
At The Law Offices of Robert M. Fox, we can help you compose a plan or review your existing proposal to ensure that it is confirmed and carried out properly.
Is Chapter 11 Right For You?
If you qualify to file under Chapter 11, it is likely to be the most beneficial option, especially as a business owner. At this point, however, you may be wondering what the difference is between reorganized repayment under Chapter 11 and repayment planning under Chapter 13. While the principle goal is similar between the two, there are several key differences:
- A business cannot file for Chapter 13.
- Chapter 11 does not have a limit to the amount of debt eligible for bankruptcy
- Chapter 11 does not require the involvement of a court-appointed trustee
- Repayment plans under Chapter 11 are not required to treat all creditors equally
Much like Chapter 7 and Chapter 13, your creditors will be limited by an automatic stay once your case is filed, which would require them to cease all attempts to collect debts, lawsuits and foreclosures.
Filing Chapter 11 Bankruptcy with a NYC Bankruptcy Lawyer
Contrary to social stereotypes, bankruptcy is a demonstration of one’s proactive spirit in overcoming debt and starting over with a clean slate. New York bankruptcy attorney Robert M. Fox wants to be both your guide and your representative as you utilize this beneficial tool for the protection of your future and the future of your business.
If you have further questions about qualifications for or the process of Chapter 11 bankruptcy, we encourage you to contact us by calling and scheduling a free consultation today.
Referred to as “Reorganization,” Chapter 11 is normally the chapter of bankruptcy under which commercial enterprises proceed. This chapter of bankruptcy allows the business to continue its operations while repaying creditors concurrently through a court-approved plan of reorganization. Some individuals may qualify for a Chapter 11 as well.
Chapter 11 is reorganization, as opposed to liquidation. Debtors may “emerge” from a Chapter 11 bankruptcy within a few months or within several years, depending on the size and complexity of the bankruptcy. The Bankruptcy Code accomplishes this objective through the use of a bankruptcy plan. With some exceptions, the plan may be proposed by any party in interest. Interested creditors then vote for a plan. Upon its confirmation, the plan becomes binding and identifies the treatment of debts and operations of the business for the duration of the plan.
Debtors in Chapter 11 have the exclusive right to propose a plan of reorganization for a period of time (in most cases 120 days). After that time has elapsed, creditors may also propose plans. Plans must satisfy a number of criteria in order to be “confirmed” by the bankruptcy court. Among other things, creditors may vote to approve the plan of reorganization. If a plan cannot be confirmed, the court may either convert the case to a liquidation under Chapter 7, or, if in the best interests of the creditors and the estate, the case may be dismissed resulting in a return to the status quo before bankruptcy. If the case is dismissed, creditors will look for an alternative to bankruptcy law in order to satisfy their claims.
As with other forms of bankruptcy, petitions filed under Chapter 11 invoke the automatic stay of § 362. The automatic stay requires all creditors to cease collection attempts, and makes post-petition debt collection void. Under some circumstances, creditors or the United States Trustee can ask the court to appoint a trustee to manage the debtor’s business. This situation arises when there is some wrongdoing or gross mismanagement on the part of existing management.
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