An Overview Of Chapter 11 Bankruptcy
Bankruptcy laws provide for Chapter 11 bankruptcy, which is used primarily to rehabilitate a business debtor. Chapter 11 allows a debtor to enter into an agreement with creditors under which all or part of the business continues. The debts of the business are restructured to allow the debtor to continue operations and make payments based on a plan of reorganization.
Chapter 11 bankruptcies are more complex than Chapter 12 or Chapter 13 bankruptcy, but it may provide an option for those farm operators or individuals whose debts exceed the limits imposed by Chapters 12 and 13. Its provisions are quite complicated, and any decision to seek a debt consolidation loan or file a Chapter 11 petition should be reviewed and planned out with an attorney extensively before filing.
What Can You Expect During Your Business Bankruptcy?
The objective in a Chapter 11 bankruptcy case is to adjust and reorganize a debtor’s obligations to allow the business to overcome its financial hardship and continue operating. The process is as follows:
- To initiate a Chapter 11 bankruptcy case, a voluntary petition is filed with the court. A schedule of assets and liabilities, and a statement of financial affairs must be filed.
- In most cases, the debtor – known as the “debtor in possession” once the case has begun – remains in possession of the property and continues to manage the business.
- The debtor develops a Plan of Reorganization outlining how the debts will be modified and paid within the parameters of the Bankruptcy Code. This Plan will be tailored to the specific needs and issues of the Debtor’s business.
- While the case is pending, the Debtor must provide periodic financial operating reports to allow interested parties to monitor the reorganization process.
- Generally, a trustee with authority to take control of assets is not assigned to the case unless there is evidence of fraud or mismanagement, but the Office of the United States Trustee will monitor the case and weigh in on issues of compliance with the Bankruptcy Code.
- A committee of creditors will often be appointed to oversee the business operation once the case has been initiated, and weigh in on confirmation of the Plan of Reorganization and other issues that arise during the case.
- Once the Plan of Reorganization is confirmed by the Court, the Plan’s terms are binding on the Debtor and Creditor’s, and business operations continue according to the Plan’s provisions.
Contact Our Wisconsin Chapter 11 Bankruptcy Attorneys
The success of your bankruptcy can depend on the quality of your representation. Richman & Richman LLC is a Wisconsin law firm offering quality representation for a wide variety of bankruptcy cases, including business bankruptcies.
We invite you to contact our firm to schedule a consultation with our Wisconsin bankruptcy lawyers by calling 608-630-8990.
We are a debt relief agency. We help people file for relief under the Bankruptcy Code.