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  • Here’s what you need to know about Chapter 11 bankruptcy

    Here’s what you need to know about Chapter 11 bankruptcy

    Chapter 11 bankruptcy is for businesses to get their debts reorganized and also gain enough financial stability so as to avoid any liquidation of their business assets. Though there could be scenarios in which we encounter individuals who qualify for Chapter 11 bankruptcy, this filing mostly involves the businesses. The features of Chapter 11 bankruptcy are as below:

    • Chapter 11 bankruptcy allows the regular operation of the business that is undergoing the crisis and still works on ways towards repaying the creditors in the business
    • This type of filing can be voluntarily initiated by the debtor. In a few cases, involuntary initiation of Chapter 11 bankruptcy is done by the creditors
    • In Chapter 11 bankruptcy, the debtor under question should share all information to the court – list of assets, list of liabilities, contracts that have continuing obligations involving other parties, unexpired leases, disbursements, income and financial statements relating to the business are part of this information
    • Chapter 11 bankruptcy includes the filing charges and also administrative fees. These have to be paid as soon as the bankruptcy is filed or in installments as agreed by the court
    • Chapter 11 bankruptcy petition of a business should bear information of the Tax Identification Number of the debtor and also the details about the location of the principal assets
    • While the petition is filed, the petitioner shares a plan for restructuring the business debts. This will enable the court and the creditors to take appropriate actions according to the plan. In case the plan isn’t shared while filing, the debtor needs to indicate that a plan will be shared soon for addressing the creditors’ concerns

    A debtor may be unable to file a Chapter 11 bankruptcy just like any other Chapter if:

    • There is an occurrence of bankruptcy dismissal within the previous 180 days because the debtor wasn’t available to appear in court or ignored the court orders
    • The previous filing for bankruptcy had been enjoined by lien holding creditors

    There are some permitted exemptions for individuals citing emergency situations, but the debtor should submit proofs of undergoing credit counseling from an accepted source.

    On the outset, the plan for the restructuring of debts is complex and will need the oversight of a bankruptcy attorney. Work with Recovery Law Group in Los Angeles or Dallas. They can be reached at 888-297-6203 – their expertise will guide businesses through the Chapter 11 filing process.


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    • Bankruptcy Trustee’s Role in Chapter 11 Filing

      Bankruptcy Trustee’s Role in Chapter 11 Filing

      Almost all bankruptcy filings get a trustee assigned to their case by the court. Chapter 11 is no different in this regard and the role of the bankruptcy trustee in the Chapter 11 scenario is as follows:

      • The U.S Trustee assigned by the court for Chapter 11 bankruptcy will oversee the entire case as it progresses and also review how the case is being administered
      • The Trustee will also be responsible for monitoring the debtor under purview, while his business continues to operate normally
      • The Trustee will be responsible for collecting the fee from the debtor. This is in line with the expectations of the court to pay a quarterly fee to the trustee until the case is dismissed or converted to another chapter (conversion from one chapter to another is carried out when there is non-compliance from the debtor’s side)
      • The Trustee will coordinate with the creditors and also organize the meeting of creditors according to the Chapter 11 bankruptcy needs. The meeting is imperative in cases where the intentions/ actions of the debtor need to be questioned under the oath

      In most of the Chapter 11 filings, the business that has filed for bankruptcy will still continue to function in order to repay the creditors. The debtor whose business is going through the current crisis need to keep the trustee informed about the operations of his business – this is accomplished through the reports that are shared to the trustee. The trustee will aid in setting down the guidelines for this reporting (reports on income & expenses in the business). Reports on specific issues involving bank accounts or payment of taxes also need to be reported to the trustee.

      Business owners can reach out to Recovery Law Group at 888-297-6203 for discussing their options on Chapter 11 bankruptcy. The team at Recovery Law Group, either from their Los Angeles or Dallas locations, will support the businesses for every question concerning the procedure in the bankruptcy filing and also guide on dealing with the bankruptcy trustees during the bankruptcy case journey.


        *Are you more than 60 days past due on your mortgage?

        *Do you own a home?

        Are you currently working?

        By clicking “Submit”, whether I do or do not purchase any products or services on this website, I hereby give my express written consent to receive calls and SMS/text messages, including calls and SMS/text messages made and sent using automated dialing equipment and/or pre-recorded or artificial voice technology and email, about offers and deals that I wish to be kept informed about from (“Partners”), at the phone number and/or email address provided on this form, including any wireless numbers provided, even if I have previously registered the provided number on any Do Not Call Registry. If I do not make a purchase on this website, it is expressly understood that the Partners retain permission to contact me as specified earlier in this paragraph. Carrier SMS/MMS and data messaging rates apply. I also agree that by clicking “Submit” that I agree to the Privacy Policy and Terms and Conditions.