Business Bankruptcy | Chapter 11
Business Chapter 11 Bankruptcy Attorneys Serving DuPage, Kane, Kendall and Will Counties
The Chapter 11 Bankruptcy Process
When a business files for Chapter 11 bankruptcy, an automatic stay preventing collection attempts is immediately initiated. The business then has to file a reorganization plan specifying how it intends to repay its debts over time. A meeting is held with the creditors, and the creditors vote on whether to accept the reorganization plan. Finally, the court has to approve the reorganization plan. This is a long process that can take months or even years to complete. During this time, the business is under federal protection from its creditors.
Subchapter V Chapter 11 Bankruptcy Process
Congress recently passed a new section of Chapter 11 of the Bankrutpcy Code, which takes effect on February 19, 2020, which is intended to make it easier and less costsly for businesses to file for Chapter 11. The new "Subchapter V," which is optional, has most of the same benefits as a normal Chapter 11 case except that the Debtor may be able to confirm a plan without creditor votes, a third party trustee is appointed who may assist the Debtor in obtaining a consensual plan, and the debtor does not have to pay quarterly fees to the US Trustee's Office. Additionally, individuals may be able to modify a mortgage on their personal residence if the funds were used toward the Debtor's business.
Benefits of Chapter 11 Bankruptcy
The primary objectives of Chapter 11 bankruptcy are to restructure a troubled business to be more successful following bankruptcy and to allow that business to repay its debts while remaining operational. This benefits both the business and its creditors because it allows the business to use ongoing revenue to repay debts. In many cases creditors receive greater repayment under Chapter 11 bankruptcy than under Chapter 7 bankruptcy or liquidation.
At Springer Larsen Greene, we represent companies of all sizes in business bankruptcy. Our firm also includes an acting bankruptcy trustee, a former trustee and a former bankruptcy judge, who offer our attorneys added insight into bankruptcy proceedings. If your business is having trouble repaying its debts, contact us today to discuss your options. We will examine your company’s financials to determine if Chapter 7 bankruptcy, Chapter 11 bankruptcy or a bankruptcy alternative might be the solution.