Chapter 11 Bankruptcy
Chapter 11 Bankruptcy Described.
Chapter 11 bankruptcy is the most powerful bankruptcy chapter in the U.S. Code. When properly filed and planned out by experienced bankruptcy counsel, the Chapter 11 process has the ability to turn around failing companies which emerge as new, leaner and meaner money making machines. Lawmakers designed it to ultimately save jobs and help the economy. In a Chapter 11, the debtor company or individual files a plan to reorganize or liquidate the company. Creditors vote on the plan, and generally, for it to be approved, a majority of a class of creditors which is not paid in full must vote to accept the plan. Companies and individuals which successfully reorganize in Chapter 11 receive a discharge of the unpaid debts. A plan can also provide for liquidation of assets to pay claims. The plan repayment period can be very short, or can be 25 years or longer. With help from a bankruptcy lawyer in Los Angeles, a failing company can reemerge and find its way to success.
Chapter 11 For Creditors.
Unfortunately, bankruptcy is a fact of life that small and large businesses alike must be prepared to encounter. Companies need counsel from experienced attorneys for bankruptcy on the ready to plan a strategy to effectively react to an actual or potential bankruptcy filing. The headaches and pitfalls of a bankruptcy filing can be lessened or avoided altogether if the creditor is vigilant in looking for warning signs of a possible bankruptcy such as: slow pays, no pays, bounced checks, lack of communication, product and personnel changes. When the bankruptcy hits, the bankruptcy services needed may be as simple as filing a proof of claim, monitoring the case, and voting on the plan. It can be as complicated as filing motions for relief from the bankruptcy stay, participating on a creditors’ committee, objecting to the plan, negotiating with debtor’s counsel for more favorable treatment, financing the reorganized debtor, and participating in bankruptcy lawsuits. Whether the bankruptcy is in California, Delaware, New York or elsewhere, certified bankruptcy specialist and debt settlement lawyer in Los Angeles Michael Chekian can help explain and navigate the confusing maze of Chapter 11 issues, and explain it to you and your colleagues in plain English.
Chapter 11 For Individuals.
Chapter 11 is required for individuals who want to reorganize their debt in bankruptcy who owe more than $383,175 unsecured debt or more than $1,149,525 secured debt (dollar amounts will be adjusted slightly again on April 1, 2016). Individuals with less than these amounts in debt are also free to file Chapter 11, which is useful when they cannot afford to pay back required debt within the 5 year time constraint of Chapter 13.
Chapter 11 For Companies.
Many large companies have successfully emerged from bankruptcy and thrived. For example, many major U.S. airlines have filed Chapter 11 (some more than once). A bankruptcy lawyer in Orange County can help a business or individual file for Chapter 11 which helps some savvy creditors, particularly secured creditors, turn their non-performing assets into performing ones if they are willing to forego their old debts and invest in the new reorganized company. Chapter 11 can also be a nightmare for stockholders, who can lose all of their stock value, since they typically have no ability to get paid on their investment in the bankruptcy. Also, landlords can get their leases rejected, creditors can get paid at pennies on the dollar, and vendors whom the debtor paid within 90 days of the filing may have to return some or all of the payments. Many larger companies have pre-planned bankruptcies, where negotiations have occurred prior to filing which allow for new financing which will allow emergence of a new, post bankruptcy company which is much better positioned to make money for its new shareholders, investors, management and employees.
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