Chapter 11 Bankruptcy, while surely not the most popular of bankruptcy options, may be the only option for certain small businesses who wish to restructure and continue operating. Due to the recent economic downturn, businesses may find themselves saddled with debt. This debt can make it difficult for these businesses to pay employees and continue their normal operations. With Chapter 11 Bankruptcy, a debtor can eliminate certain debt obligations, restructure payment plans to creditors, and help their company become profitable again, while keeping its employees working, and continuing to operate. Chapter 11 Bankruptcy is appropriate for partnerships, limited liability companies, and corporations. Chapter 11 Bankruptcy is also available to individuals who may not be eligible for Chapter 13 Bankruptcy.
During Bankruptcy, companies, with Court permission, can sell some assets and pay down debt. The main difference between a Chapter 7 and 11 Bankruptcy is that a Bankruptcy allows a business to remain in operation, while a Chapter 7 Bankruptcy will require the business to stop operating. Chapter 11 Bankruptcy can allow a company to change contractual obligations to make the company profitable again, and it can also afford businesses with the opportunity to seek out more favorable loans to keep the business in operation.
In some cases, during a Chapter 11 Bankruptcy, creditors will have a say in how the bankruptcy plan is organized. This is called a Creditors’ Committee. However, in small business cases, it is possible for the court or the Office of the United States Trustee to determine that no committee be formed, especially if the businesses’ debts are under a certain monetary amount. Additionally, in some small business cases, the court permits the filing of a combined Disclosure Statement and Plan. Normally such a statement provides information about the debtor to creditors and allows the creditors to either accept or reject a repayment plan. In some cases, the court may waive this requirement. If you don’t qualify for Bankruptcy, or if you own a small business saddled with debt, Bankruptcy may be an option for you. Stuart M. Nachbar, Esq. serves the people of New Jersey and has been helping individuals and businesses restructure their financial lives. If you’re facing insurmountable debt in your business, but still want to retain control of your business, contact the firm today to learn more about your rights and obligations.
What is Required in a Disclosure Statement?
For most small businesses, a combined re-organization plan and disclosure statement will be sufficient and acceptable to the court. However, in some cases, a separate disclosure statement will be required. This statement often includes information about the debtor’s history, a review of the re-organization plan, a list of the debtor’s assets and debts, a statement of the debtor’s tax burden, and an outline of whether the plan is financially possible. Additionally, small businesses may have to provide a comparative analysis offering information about what a Chapter 7 liquidation would look like. Bankruptcy serves the public interest because in some cases, businesses are more valuable as functioning entities, rather than as liquidated based on assets alone. Additionally, Chapter 11 has the benefit of letting people keep their jobs. If your small business is facing financial difficulties, contact Stuart M. Nachbar, Esq. to learn more about how Chapter 11 can help you.
Chapter 11 Bankruptcy for Individuals
When an individual’s financial situation is complex—for instance, if the individual owns a sole proprietorship or if the person’s debts disqualify him or her from Chapter 13 Bankruptcy—a person may elect to use Chapter 11 Bankruptcy. What differs Chapter 11 from 13, is that you may be subject to a creditors’ meeting. In essence, your creditors can meet with you to ask you questions about your current financial situation and learn more about your solvency. The benefit of Chapter 11 Bankruptcy is that it allows you, as an individual, the ability to retain possession of your assets. You will have to offer a re-organization plan, detailing how you plan to pay your creditors. Both the court and your creditors will have to approve your plan. The court will determine whether your plan works within the limitations of the law, and whether your plan is likely to result in a favorable outcome for your debtors. The court will want to ensure that the plan has a likelihood of success. If the plan is approved by the court, it will secondly need to be approved by the committee of creditors as well. Once the plan is approved, your debts will be discharged. Yet, it is important to note that you must meet obligations as outlined in your Chapter 11 Bankruptcy plan. Stuart M. Nachbar, Esq. is a 11 Bankruptcy lawyer in Livingston, New Jersey who can ensure that your complex bankruptcy case is handled in a timely manner.
Helping Individuals and Businesses File for Bankruptcy
Chapter 11 Bankruptcy is one of the more complex forms of Bankruptcy available. However, it is a useful tool for businesses and for individuals who wish to retain control and operation of their businesses and assets. If you’re considering filing for Bankruptcy, you need experience you can trust. Stuart M. Nachbar, Esq. has 20 years of experience serving as a lawyer in New Jersey. When you need an experienced Chapter 11 Bankruptcy attorney, you need the firm of Stuart M. Nachbar, Esq.