What Constitutes Chapter 11 Bankruptcy?
Chapter 11, named after the U.S. bankruptcy Code 11, is a form of bankruptcy that involves the reorganization of a debtor’s business affairs, debts, and assets. Corporations generally file Chapter 11 if they require time to restructure their debts, and this process of bankruptcy essentially gives the debtor a fresh start.
However, the terms of the agreement are subject to the debtor’s fulfillment of its obligations under the reorganization plan. During a Chapter 11 proceeding, the court will help a business restructure its debts and obligations after evaluating all the relevant documents provided.
In most cases the firm will remain open and operating during the process. In most cases the debtor will run the business as usual. (Though in cases involving fraud, dishonesty, or gross incompetence, a court-appointed trustee steps in to run the company throughout the entire bankruptcy proceeding).
Our Chapter 11 lawyer is here to help. Give us a call (561) 220-2528 or reach out to our firm online here to learn more about how Attorney Julianne Frank can help.
How Common Is Chapter 11?
Many large U.S. companies like General Motors and United Airlines have actually filed for Chapter 11 bankruptcy and stayed active. Corporations, partnerships, and limited liability companies usually file Chapter 11, but in rare cases individuals with a lot of debt may also be eligible for Chapter 11.
Note that a business in the process of filing Chapter 11 is not able to make certain decisions without the permission of the courts, such as actions involving:
- selling assets
- starting or terminating a rental agreement
- and stopping or expanding business operations
The court also has control over decisions related to retaining and paying attorneys and entering contracts with vendors and unions. The debtor also cannot arrange a loan that will commence after the bankruptcy is complete.
However, in any case the individual or business filing Chapter 11 bankruptcy has the first chance to propose a reorganization plan that may include downsizing business operations to reduce expenses or renegotiating debts. If the chosen path is deemed feasible and fair, the courts will accept it and move the process along.
How Long Does Chapter 11 Take?
Under Florida bankruptcy laws, the timeline for a Chapter 11 business bankruptcy case can vary depending on the complexity of the case. Generally, it takes about a 3 to 5 years for a Chapter 11 bankruptcy case to be completed. However, cases involving larger corporations or more complex issues can take several years to resolve.
Subchapter V of Chapter 11 bankruptcy was designed specifically for small businesses and offers a streamlined process to restructure debt and emerge from bankruptcy more quickly. In contrast to a traditional Chapter 11 bankruptcy case, Subchapter V cases typically take less time to complete, with many cases being resolved within a few months.
If you are considering filing for Chapter 11 bankruptcy, it is important to consult with an experienced bankruptcy attorney to discuss your options and navigate the process. Our Jupiter Chapter 11 lawyers at Julianne Frank, Esq. can provide guidance and support throughout the bankruptcy process. Julianne Frank, Esq. has more than 40 years of experience representing clients in bankruptcy cases and was one of the first lawyers in the U.S. to file Subchapter V for clients. She is also board certified in business bankruptcy law by the American Board of Certification, which means she has the expertise to help you achieve the best possible outcome for your business.
Looking for a Chapter 11 attorney in Palm Beach County, Florida or a bankruptcy chapter 11 attorney near you? Contact us (561) 220-2528 to learn more about how we can help you with your Chapter 11 bankruptcy case.
Why Do Most Chapter 11 Bankruptcy Filings Fail?
Common circumstances that lead to Chapter 11 are:
- lawsuits that end badly
- economic downturn
- unanticipated competition
- excessive or unexpected debts
- infighting
- poor marketing
- loans that mature or are accelerated due to a default
- bad management
Chapter 11 can often fix the above problems, but it will require careful planning and deft hands. Most Chapter 11 cases do not succeed primarily because the lawyer who filed did not undertake enough pre-filing analysis and develop an effective game plan.
Selecting the Right Chapter 11 Bankruptcy Attorney in Jupiter
That is, the cases did not have enough of the elements necessary to succeed in the first place and should never have been filed the way the attorney did. If you are considering Chapter 11, you should first ask your lawyer about their process of evaluating the case and the potential exit strategy.
If the lawyer does not drill down and look at financials in detail and evaluate the nature of the debts, it is unlikely they can conjure an exit scenario. The lawyer you choose to take on your case should be able to fully understand how the case is likely to end before it is filed; if they do not clearly explain how your facts and figures will lead to a successful outcome, they’re probably winging it, which isn’t in your best interests.
Key Questions to Ask Your Bankruptcy Lawyer Before Filing Chapter 11
Chapter 11 proceedings are expensive cases to file, and you should think long and hard before signing up for one with a lawyer who doesn’t seem experienced.
Some good questions to ask when choosing a bankruptcy lawyer are:
- Does the lawyer understand exactly how my business works?
- Did the lawyer look at my loan documents, and lawsuit pleadings?
- Did they study my financials?
- Did the lawyer give me a spreadsheet showing the probable outcomes of my case?
- Did the lawyer explain how Chapter 11 unfolds, and what tools are available to modify debts?
- Did they explain the problems that can arise and the likelihood of overcoming those problems?
