When your business continues to suffer because of unpaid loans or debts to other businesses it might be time to consider filing for Chapter 11 Bankruptcy. Under Title 11 of the U.S. Bankruptcy Code a business owner can file for debt restructuring. Unlike Chapter 7 and 13 your debts will be reorganized not liquidated. You are entitled to become a ‘debtor in possession’ leaving you in complete control of your assets. You will become the case trustee similar to Chapter 7 and 13. At Giordano Spanier & Heckele Law we will help you remain in control of your investments and plan for a brighter financial future.
The debtor in possession sells all assets and dispenses the results to creditors. Leftover assets are returned to the owners of the company. Most of the time, debtors can remain in complete control of assets and property throughout Chapter 11 bankruptcy. It also allows debtors to liquidate all of the businesses property and assets to creditors in order to eliminate any leftover debt after the reorganization plan is complete.
There are additional advantages to filing Chapter 11 as a business owner as U.S. Bankruptcy Code provides methods to debtors for restructuring business operations. This gives more control to the debtor in possession and the future of the business. Some of the options are as follows:
· Financing loans on terms arranged by lenders who require first priority on the busineses’s assets
· Debtor in possession may accept or reject contracts creditors arrange with the debtor
· Protection from outside litigation against the business through a process called automatic stay, similar to Chapter 7, allowing the debtor’s finances to remain at a stalemate to avoid further lawsuits
There are some exceptions you should be aware of before filing for Chapter 11. If your debts exceed the total worth of your assets, restructuring your finances will leave you with nothing after your assets are discharged to creditors. Creditors are responsible for constructing a plan for the business owner or debtor in possession to sell off property, and at what rate. A presiding judge will have to sign off on the proposed plan, and if the creditors agree to the plan it becomes binding and the process of liquidation or the sale of assets begins. There is a long list of criteria to which theses plans must abide by, both by the creditor and debtor in possession.