Bankruptcy comes with a scarry notification with a package of high debts and low credit in the accounts of business organizations. Not every time you see an organization thriving with cash and profits. The poor cash flow, overleveraging, and mountain of debts need to be reorganized for a fresh start.  

According to Statista, “The United States is ranked third in terms of business insolvency cases, with 24230 in 2024.” As alarming as the data is, so should your senses if you are a business owner or a firm looking to settle long-term financial goals.  

Also, to understand it in simpler terms, what is Chapter 11 bankruptcy? You must know that The Law Office of Brian Juran has the capacity and knowledge to make you understand the complex and expensive bankruptcy process, along with the tactics to even help you file for one. 

So, in this article, you will learn about the process of bankruptcy in Chapter 11 in depth with our assured guidance! 

Overview of Chapter 11 Bankruptcy

A Chapter 11 bankruptcy, also known as a reconstruction bankruptcy, is intended for those who have enough assets and income to stay afloat and want to cooperate with creditors to return a portion of their debt.

When your firm cannot make payments on its debt or pay its creditors, the company or its creditors might file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11. In most Chapter 11 cases, the debtor retains control of its business operations as a debtor in possession, subject to the court’s inspection and jurisdiction. We offer you consultation to make the right decision.

So, if the judge approves the reorganisation plan and all creditors agree, it can be confirmed. Section 1129 of the Bankruptcy Code requires the bankruptcy court to reach certain findings before confirming or accepting the plan and making it binding on all parties in the case. Most notably that the plan is in accordance with existing law and was offered in good faith. 

The court must also determine that the reorganization plan is viable, which means that unless the plan states otherwise, it is unlikely to be followed by additional restructuring or liquidation.

Filing Chapter 11 Bankruptcy

The Chapter 11 case, like all previous bankruptcy files, starts with a petition in court. Chapter 11 bankruptcies can be voluntary (i.e., The company initiates the process or we as your representatives) or involuntarily, which means creditors force you to do so. 

  • After filing Chapter 11 and paying the fee, you will be referred to as a debtor-in-possession.
  • As the debtor in possession, you can continue to run your business and confirm the hire of us as your attorneys. You can also hire accountants, appraisers, auctioneers, and other specialists to help with the bankruptcy case, as well as file tax returns and monthly operating reports. 
  • Filing for Chapter 11 instantly stops any gathering activities, foreclosures, and judgments against you. Section 362 of the Bankruptcy Code requires this under its automatic stay provisions. The automatic stay, while providing some breathing room for a debtor, does not prevent all types of action against a debtor.
  • You need to be clear about your financial standing, which we offer to assess and evaluate.  

After Filing 

The debtor has the exclusive authority to draft and file a reorganization plan for 120 days following the filing of Chapter 11. It includes 

  • Identify debts.
  • Classify creditor claims as priority, secured, or general unsecured, and determine the quantity of each.
  • We determine which debts will be paid in full and which will be reimbursed in a percentage amount.
  • We offer suitable payment methods for debts.
  • Provide rules for the company’s operation while implementing the plan. 

We curate the plan with you and for you. As the debtor, you must file a disclosure statement with the following information: 

  • Your future.
  • The events leading to the bankruptcy petition.
  • Financial information, data, valuations, or estimates affecting creditors’ decisions to accept or reject the Chapter 11 plan.
  • The proposal establishes classes of creditors. Classifications of creditors may include unsecured debts to vendors, back wages owed to employees, and banks to which you owe loan repayments.

Why Should You File for Chapter 11 Bankruptcy? 

The most significant advantage is that the entity, typically a firm, can continue to operate while undergoing the reorganization process. It enables it to generate cash flow, which can aid in the repayment process. Most creditors are open to Chapter 11 because they stand to recuperate more, if not all, of their money over the course of the repayment plan than if the company went out of business.

Why do you Need Us?

Most of the process described earlier requires intense paperwork and in-depth knowledge of what Chapter 11 bankruptcy is and how one can easily navigate through the tough waters. With our loyal and dedicated team of 20+ years of experience in bankruptcies, The Law Office of Brian Juran offers stability to your financial goals and also helps you understand them. 

Chapter 11 bankruptcy is one of the most expensive bankruptcies that requires meticulous attention so that the verdict is in your favor. Are you a business owner confused about what bankruptcy suits you? Get in touch with us to learn more. We offer in-person and virtual assistance as per your needs! Visit now!

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