Turn your debts into a new beginning with Chapter 11 Bankruptcy
Is Chapter 11 bankruptcy the best alternative to get out of debt and save your financial future or that of your business? At S&B Legal we have experienced bankruptcy attorneys to evaluate that possibility and decide which chapter of bankruptcy law best suits your situation. Don’t leave such a crucial matter to chance!
Getting down to business: what is Chapter 11 bankruptcy law?
If debts pile up and look like an impossible mountain to climb, the solution is not to give up. Chapter 11 bankruptcy will lighten the load on this difficult path and can be taken advantage of by companies or individuals with large debts.
Forget about liquidating everything! Unlike Chapter 7, where you have to get rid of all your assets, Chapter 11 of the United States Bankruptcy Law allows you to keep your business or properties while you restructure and pay your debts. With the company running and its owners in charge, finances gradually become up to date.
Requirements for Chapter 11 bankruptcy: who can benefit?
It is a right to declare bankruptcy thanks to the United States federal laws and, as previously mentioned, it is an opportunity available to both companies and individuals.
But, given the complexity and cost of the process, this type of bankruptcy is almost always adopted by large corporations, although there are some that are not on the list, such as banks, government agencies, insurers, and non-commercial trusts.
Here are some things you should know about the requirements and steps to file for Chapter 11 bankruptcy:
- It is triggered by significant debts that cannot be paid with available income.
- Complete disclosure: requires filing detailed information about assets, debts, and income with the bankruptcy court.
- A plan to get out of the situation: you must have a reorganization plan that specifies how and when you will pay.
- Gathering forces: one or more committees will represent the interests of creditors and shareholders and work with the company to reorganize the debt.
- Approval by the judge: the court must approve this plan.
- Completing the process: it takes between 4 and 18 months to define the debt reorganization plan and up to six years to complete it.
Advantages and disadvantages of Chapter 11 bankruptcy
Each type of bankruptcy has its pros and cons. For that reason, the best recommendation will always be to have the guidance and support of Chapter 11 attorneys to chart a course that ends in a successful outcome.
Among the advantages of Chapter 11 bankruptcy, we can mention:
- The business continues to operate: income is generated, operations are maintained, and the company can continue to be listed on the stock exchange, making debt repayment more feasible.
- Preservation of assets: you do not have to immediately divest yourself of all your assets as in Chapter 7.
- Less burden: the court could reduce the amount you owe for unsecured debts.
- Legal protection: at the end of the process, future legal actions by creditors are avoided (such as the seizure of assets).
- New opportunities: the courts may authorize you to obtain new financing to relaunch the business or the finances of individuals.
Disadvantages of Chapter 11 Bankruptcy
- Complex, lengthy, and expensive process.
- Loss of at least partial control of the business if the court appoints a trustee.
- Debt discharge under Chapter 11 could result in significant tax liability.
- Difficulty in obtaining new lines of credit.
- The possibility of asset liquidation is latent if the debt reorganization fails or the liquidation plan is not approved.
Contact S&B Legal for the best advice on Chapter 11 Bankruptcy
Don’t venture to navigate the complexities of Chapter 11 bankruptcy on your own, when you can count on legal representatives with extensive experience like those at S&B Legal.
Overcome financial difficulties and restructure your future with us. We will study your case to decide if Chapter 11 bankruptcy is the best way out, or if other chapters are the best fit for your case.
Let us help you by requesting a free case evaluation or by calling 760-302-4652. Our bankruptcy attorneys in San Diego, CA, will be your crucial allies in this challenging and complex process.
