If your company is in having financial problems, facing lawsuits, IRS tax problems, back payroll taxes, trade debt, or are in need of debt relief to reorganize, contact the Texas Bankruptcy Lawyers at The Law Offices Of R.J.Atkinson for a free bankruptcy evaluation. We can explain the options available for your company reorganize under Chapter 11 Bankruptcy as well as provide non-bankruptcy options for reorganization. Whether it is a Commercial Chapter 11 Bankruptcy, a small business bankruptcy, a single asset real estate case, or a professional or individual seeking to reorganize, we may be able to help.
When you hear of Commercial Bankruptcy in the media, it is usually Chapter 11 reorganization. Many famous companies have filed Chapter 11 Bankruptcy to reorganize. Chapter 11 Bankruptcy was primarily designed for big companies and large corporate reorganizations, but Chapter 11 Bankruptcy is also geared toward small businesses and single asset real estate debtors who choose to reorganize their debt. Although Chapter 11 Bankruptcy is mainly used for business & commercial entities, it is also available to individuals, but is seldom used by them. However professionals and high net worth individuals occasionally use Chapter 11 Bankruptcy to reorganize their debt. Chapter 11 Bankruptcy is a reorganization process which can allow corporations, commercial entities, small businesses, and in some cases professionals and high net worth individuals to get a handle on their debt. They can use Chapter 11 to stop the debt clock, get some breathing room, and formulate a plan of reorganization. The Commercial Chapter 11 Bankruptcy process and procedures, as well as the associated expensive professional fees can be quite formidable to the debtor filing the Chapter 11 reorganization under The Bankruptcy Code.
Chapter 11 Commercial Bankruptcy is usually for businesses in financial trouble. When a business files for Chapter 11 Bankruptcy, it provides the opportunity for the business to stay in business and continue operations. In exchange for the opportunity to stay in business, the debtor (the entity filing bankruptcy) must disclose all of its financial affairs to the creditors and propose a plan of reorganization. The plan of reorganization outlines the what, where, how, of the repayment to creditors. In other words how much and how long the repayment to creditor will be. The basic concept of Commercial Chapter 11 Bankruptcy involves the debtor reorganizing its financial affairs and proposing a Chapter 11 plan of reorganization or liquidation. A disclosure statement containing detailed information about the plan is approved by the Court. The disclosure statement and plan is provided to all creditors. The creditors then vote to either accept or reject the plan or reorganization. Even when a plan is rejected by the majority of creditors, the Bankruptcy Court can still approve the plan and force creditors to accept it under certain circumstances.
In a Chapter 11 Bankruptcy, the debtor has an option of using a plan of reorganization as well as the option of using a liquidating plan of reorganization which can provide for the sale of certain assets that will fund the plan of repayment. In most cases, a Chapter 11 plan of reorganization is based on the amount of funds that will be needed to implement the plan.
When a Chapter 11 Bankruptcy is filed, a bankruptcy estate is formed, but unlike most of the other Bankruptcy Chapters, a Chapter 11 Bankruptcy does not automatically vest all of the debtor’s property in a trustee. Instead, the debtor is considered a Debtor-In-Possession since it has control of its assets until a trustee is appointed. If the Bankruptcy Court believes a trustee should be appointed, the bankruptcy trustee will take control of the business and property. The usually happens in cases where there may be fraud, breach of fiduciary duty, mismanagement, or when creditors convince the court to appoint a trustee. Sometimes the bankruptcy Court will appoint a creditors committee to oversee and review the plan of reorganization. A creditors committee can have their own legal counsel to protect their interests and this is at the expense of the bankruptcy estate.
Chapter 11 Bankruptcy can be an excellent way to deal with the financial problems when a company has encountered significant debts, lawsuits, liquidity problems, tax problems, temporary down turns in business or even the need to reject certain leases or contracts. Reorganization of business debt under Chapter 11 can be a much better option to both the Debtor and its Creditors as opposed to liquidation under Chapter 7 Bankruptcy.
Under Chapter 11 Bankruptcy, a debtor can do many things to help in its reorganization. Getting a plan of reorganization confirmed or in other words approved by the Bankruptcy Court is the key.
Chapter 11 Bankruptcy can allow a debtor:
- Reject and get rid of leases
- Reject and get out of contracts
- To pay unsecured creditors less than 100% of debts owed
- To extend repayment of taxes
- Reorganize finances
- Stop lawsuits
- Stay in business
- Sell assets
- Repay creditors
Chapter 11 Commercial Bankruptcy has many benefits. Depending on the facts of a particular businesses situation, Chapter 11 Bankruptcy can be an excellent option to reorganize a company. When facing imminent or irreparable financial damage due to the collection efforts of creditors, or when a company has hit some temporary economic bumps, and wants or needs to stay in business, there are alternatives to business bankruptcy. Such options include out of court workouts and settlement arrangements, assignments for the benefit of creditors, as well as receiverships and forbearance agreements.
Chapter 11 Commercial Bankruptcy can be quite complicated. If your business is considering filing a commercial bankruptcy, contact The Law Offices Of R.J.Atkinson,LLC today. With offices in Austin, San Antonio, Houston, and Dallas, we can help you decide if Commercial Chapter 11 Bankruptcy is right for your company. Contact Us for a business bankruptcy evaluation.
Contact Texas Commercial Bankruptcy Attorney R.J.Atkinson: 800-436-9056