What is a Chapter 11 bankruptcy, do they ever happen in Brooklyn, NY, and do I need Chapter 11 bankruptcy attorneys to file a Chapter 11 case?
1. Chapter 11 bankruptcy is “reorganization,” as opposed to Chapter 7 “liquidation.” It’s frequently used by corporations that need bankruptcy protection. And it’s also often used by individuals with significant assets. A reorganization generally means that the entity will continue to remain in business, so the bankruptcy process is different from a liquidation. For example, under Chapter 11 the debtor can cure defaults, assume or reject leases, restructure obligations, pay taxes over time along with a number of other options.
As of February 2020, a new law, the Small Business Reorganization Act of 2019, makes it much easier for small business owners successfully to file for Chapter 11 bankruptcy protection.
The SBRA strikes a balance between chapter 7 and chapter 11, by allowing certain debtors to continue to control their business operations while reorganizing. These debtors will no longer be subject to the more costly requirements in chapter 11. A trustee will be appointed to every small business debtor case, in order to make sure that the reorganization stays on track.
It is also possible to use Chapter 11 bankruptcy for a liquidation. It all depends on your circumstances and strategic aims, which means it’s a good idea to consult with Chapter 11 bankruptcy lawyers.
2. Yes, Chapter 11 bankruptcies happen in Brooklyn, NY all the time. I’ve been practicing bankruptcy since 1978 and have handled a number of them. I’ve even taught a course on small business bankruptcy for the Practicing Law Institute and co-taught a course on business bankruptcy for the New York County Lawyers Association.
3. And yes, Chapter 11 bankruptcy attorneys are needed if you plan to file for Chapter 11. It’s a very different experience from Chapter 7. Filing a Chapter 11 without an experienced Chapter 11 bankruptcy lawyer would be like the Yankees putting Aaron Judge in to pitch with the game on the line. He may be great at one thing but the other is a whole different set of skills.