Chapter 11 Bankruptcy
Chapter 11 Bankruptcy is focused on businesses who have fallen into financial burden and require assistance.
The reason a business would file a Chapter 11 bankruptcy instead of a Chapter 7 or Chapter 13 is because rather than liquidating the estates to pay off the debt, Chapter 11 provides some financial relief in order for the business to maintain. This means that instead of the creditors instigating the case, it is usually a voluntary proceeding by the debtor. However, in some cases the creditors can group together to begin the process if necessary.
Once a Chapter 11 Bankruptcy case has begun, a trustee of the court is not usually required unless the business in question has given reasonable cause such as fraud, mismanagement, incompetence, or dishonesty. Most of the time though, business is run as usual with the exception of major decision making which must be court approved.
The business is given a grace period after filing, usually around four months, in order to come up with a “reorganization plan.” The grace period can be extended or shortened as the court approves, but the goal of the reorganization plan is to restructure the business financially in order to repay the creditors in reasonable time without having to shut down the business. If the reorganization plan is not finished in time or is not considered effective the creditors may contribute competing plans.
The entire process can take just six months if done smoothly, but could take up to years otherwise. If you need assistance making sure your Chapter 11 Bankruptcy claim runs smoothly, the HSSS attorneys in White Plains, New York have the experience to do so.