Tuesday, October 1, 2013

Key Aspects of Chapter 11 Bankruptcy

Companies that decide to file Chapter 11 bankruptcy because its long-term revenues will be higher than the liquidation value of the company’s assets. Creditors may receive more money back if they allow the debtor business to reorganize and work out a payment plan in a In Chapter 11.

Chapter 11 bankruptcy is similar to Chapter 13. But the major difference is that there is no limit regarding the amount of money owed by the debtor. Originally only intended for large corporations, individuals can now file Chapter 11 as well. However, only a very small percentage of individuals are likely to qualify.

Usually only celebrities and those individuals with the ability to generate large amounts of revenue long term with contracts for performances or in commercial or advertising contracts may file Chapter 11 as individuals.

Chapter 11 is only preferable for an individual when their debt exceeds the limits of Chapter 13, specifically: $360,475 of unsecured debt and $1,081,400 in secured debt.

What Happens First

The first step in a Chapter 11 bankruptcy is the drafting and approval of a disclosure statement by the bankruptcy attorney.

Unlike those filing individual Chapter 7 bankruptcies, debtors under Chapter 11 are may be able to keep homes, sometimes eliminate their second mortgages, and restructure other secured debts. 

A Chapter 11 reorganization is the most complex of all bankruptcy cases and may be the most expensive. It should be considered only after careful analysis and exploration of all other alternatives with the consultation and professional advice of a licensed, experienced bankruptcy attorney.

Winter Park, Florida, bankruptcy attorney +Eric Lanigan  has practiced Florida law since 1976. Orlando, Florida, bankruptcy attorney +Roddy Lanigan has practiced Florida law since 2007. +Lanigan & Lanigan, P.L. provides clients aggressive representation with a personal touch.

In a Chapter 11 bankruptcy,  the financial reorganization is the next step in the restructuring process. Businesses often explain that the bankruptcy will have no effect on client and customer experiences with them. It’s usually business as usual as there is a transition to new structure.

Chapter 11 bankruptcies differ from most personal bankruptcies because they involve significantly more input from creditors. 

Besides continuing the business, like a trustee, the debtor in possession can avoid certain transactions that occurred prior to the filing of the bankruptcy case.

Named after the U.S. bankruptcy code 11, Chapter 11 is a form of bankruptcy that involves a reorganization of a debtor's business affairs and assets. It is usually filed by corporations and larger businesses which require time to restructure their debts.

Chapter 11 gives the debtor a fresh start, subject to the debtor's fulfillment of its obligations under its formal plan of reorganization.

In Chapter 11, once the cases are begun, it might be impossible to stop them without creditors’ approval. Unhappy creditors can vote to sink a proposed restructuring, which could lead to a liquidation.

Chapter 11 Bankruptcies are complicated. Chapter 11 enables the debtor to continue functioning by maintaining ownership of all assets while creating a reorganization plan for paying back creditors.

After filing Chapter 11 bankruptcy, a business has 120 days to develop a reorganization and payment plan. By working with the Lanigans, your restructuring plan is created in coordination with you the business owner. The process is complex and requires extensive planning together with the client.

Schedule a consultation in either of the +Lanigan & Lanigan, P.L. locations:
Winter Park, Florida: 831 W. Morse Blvd., or Orlando, Florida: 310 E. Pine St., Ste. 250. Call 407-740-7379.

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