Chapter 11 Bankruptcy Allows Your Business to Restructure Debt and Continue Operations, And Works for Individuals in Rare Cases Is your business struggling to repay creditors, or service your existing debt? Chapter 11 Bankruptcy provides for reorganization and debt restructure, usually for businesses, and in rare cases for private citizens. In Chapter 11 Bankruptcy, you propose a plan of reorganization to keep your business alive and pay creditors over time. You can also do an orderly liquidation to maximize your return. It’s a complex and costly process to be considered after evaluating all options outside bankruptcy. Expect it to take anywhere from a few months to up to two years to complete. How Chapter 11 Bankruptcy Works Like all chapters, a case begins with the filing of the petition and the various schedules of assets, liabilities, income, and expenses. You divulge these in a disclosure statement. Once you file your case, your business becomes a “debtor in possession.” This term refers to a debtor that keeps possession and control of its assets, while undergoing a reorganization under Chapter 11, without the appointment of a trustee. You remain a “debtor in possession” until the Plan of Reorganization is confirmed, the case is dismissed, or if it’s converted to another bankruptcy chapter. However, you may be prohibited from making certain decisions without court permission. For example, this could be the sale of certain assets, other than inventory. Courts can also impact your decision to enter certain contracts. Your Plan of Reorganization documents your claims and specifies how each creditor claim will be treated under the plan. Usually, you negotiate repayment arrangements for much less than the original amount owed. In some cases, you may have your debt discharged entirely. But at the same time, your plan must work in the best interest of your creditors. The only other option for your creditors is Chapter 7, in which you have your debts discharged entirely. This is a rough guide ranking payments to creditors: Administrative claims State and federal tax agencies Employee wages Secured creditors Unsecured creditors Stockholders Once you’ve created your reorganization plan, certain creditors have the opportunity to vote on it. 2/3 of the total number of creditors and ½ of all creditors in dollars must approve your plan. Finally, the court approves your plan, assuming you meet all legal requirements. You’ll have to provide monthly operating reports to the court to remain accountable. This happens until you complete your repayment, while your business continues operations. When Working with a Chapter 11 Bankruptcy Attorney Applies to Individuals In rare situations, Chapter 11 may be filed by individuals. This may happen when you have income greater than that allowed by the Chapter 7 means test, or debt greater than what’s allowed by Chapter 13. If you own large amounts of real property, but don’t have the liquidity to pay your debts, Chapter 11 may make sense. It’s more complex and costly than other chapters of bankruptcy. For individuals, you may be able to keep assets beyond what Chapter 7 and 13 bankruptcy allow. Is Your Business Struggling to Stay Afloat? Bill Payne, Bankruptcy Attorney in Dallas, Helps You Reorganize and Restructure Budgets. With more than 30 years of experience in Chapter 11 bankruptcies, I know how to help you navigate this complex, overwhelming process. You don’t need any more stress than you already have. I’ll walk you through every step. You’ll know exactly what’s going to happen, and I’ll make sure you get fair treatment from courts and your creditors. I serve clients in Dallas and throughout North Texas. To get your free consultation and learn whether Chapter 11 bankruptcy, or another kind, makes sense for your business, call 972-628-4905 or email my assistant of 20 years, Brandy Terry, at firstname.lastname@example.org today.