Under the United States Bankruptcy, debtors who own a business and are financially struggling can file bankruptcy in Chapter 7 or Chapter 11. This legal process allows a company that is unable to pay its debts to either restructure its debt or be liquidated, in order to pay off creditors. In a business Chapter 7 case, the company’s assets are sold off to pay creditors and the company is then dissolved. In Chapter 11 bankruptcy, the company is able to restructure its debt and continue operating.
- Under Chapter 11 filing – the company can continue to operate while it reorganizes its debt and finances. This allows the company to focus on turning the operations around without the pressure of creditors.
- Under Chapter 11 – bankruptcy provides legal protection from creditors, including a stay on collection activities and lawsuits.
- Under Chapter 11 – a restructuring plan is created giving the business a more favorable outcome and providing a successful path.
- Under Chapter 11 – breaks down a successful write-off with unsecured debt and reaffirms new terms with its secured creditors.
How Chapter 11 Bankruptcy Cases Work:
It is required under the United States Bankruptcy Court to have legal counsel in order to file for business bankruptcy. The law is complex and requires in-depth knowledge of the process from a bankruptcy attorney. After you have retained an attorney, the following steps (but are not limited to) are completed.
- Crediting Counseling & Debtor Education Courses
- Gathering documents:
- Summary of company assets and liabilities
- List of Creditors
- Most recent balance sheet
- Most recent cash flow statement
- Most recent statement of operations
- Most recent federal Income tax return
- 60 days of earning statements/ pay stubs
After all, documents are gathered and the voluntary bankruptcy petition has been completed by your attorney. Your Chapter 11 bankruptcy case has been filed. You will be appointed within 10 days as a Bankruptcy Trustee and assigned a 341 meeting. A Chapter 11 plan has to be confirmed and quarterly fees are required to be paid to the Trustee.
Michael H. Moody Law has over 15 years of experience working with a multitude of companies filing for Chapter 11 Bankruptcy. This experience and in-depth knowledge of how Chapter 11 bankruptcy works, will give your company the best legal representation with the court Judge, trustee, and creditors to make this process smooth and successful for you.