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Chapter 11 is another chapter in the Bankruptcy Code which is primarily designed to help businesses, corporations, partnerships, and high-net-worth people who have missed financial obligations to reorganize their business properties and finances.

In Chapter 11 as well, you get to keep your assets through the reorganization process. Which means that you are a debtor-in-possession. You can also continue to run your business without any interruption under the supervision of the bankruptcy court and highlighting how creditors can benefit according to a Chapter 11 plan.

Moreover, all throughout the bankruptcy process, you are required to submit different reports and documents as well as pay fees per request of the bankruptcy court.

 

Filing Chapter 11 bankruptcy petition

You start your Chapter 11 bankruptcy by filing a petition with the bankruptcy court. And there are two types of a petition in Chapter 11: voluntary petition filed by the debtor and involuntary petition filed by the creditors as per compliance with certain requirements.

Your Chapter 11 bankruptcy case officially begins after filing the petition, afterward the court will immediately release an automatic stay which refrains creditors from collecting unpaid debts from you. You can take advantage of this instance to create a reorganization plan.

Chapter 11 bankruptcy reorganization plan

If in Chapter 13 you need to develop a repayment plan, there’s also a reorganization plan in Chapter 11 which is almost the same to each other.

You should submit a Chapter 11 reorganization plan which contains details on how you, as a debtor will pay the creditors in a matter of time by stating repayment terms. It should clearly state the type of claims each priority creditor is entitled to and explain how they can benefit from those specific claims. Creditors’ claims are usually categorized as:

  • secured creditors (collateralized debt)
  • priority unsecured creditors (debt is not collateralized, will be paid before nonpriority debt holders)
  • general unsecured creditors (debt is not collateralized, will be paid after priority unsecured creditors)
  • equity security holders (creditors who hold an equity security of the debtor)

You usually have up to four months to create your reorganization plan. And if you need more time to draft it, the court can grant you up to 18 months.

Chapter 11 discharge

If your reorganization plan is in compliance with the law, done in good faith and confirmed by the creditors’ committee (a group which represents all your unsecured creditors), you can usually expect the court to approve it immediately. Furthermore, you can wipe out your existing debts abiding the agreement and payment terms indicated in the reorganization plan.

If you think you are unable to deal with some big financial issues in your business anymore and that you need an expert help you resolve it, hiring a Chapter 11 bankruptcy lawyer is your best option. Since Chapter 11 is considered as the most versatile chapter of bankruptcy, yet the most complex as well, having a lawyer to guide and help you is not at all bad.

Click here to know more about Chapter 11 Bankruptcy Brooklyn NY

Read More Contents:

Chapter 11 Bankruptcy

Filing Chapter 11

Rosenberg, Musso & Weiner, L.L.P
26 Court St # 2211
Brooklyn, NY 11242, USA
718-855-6840
http://nybankruptcy.net/
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