Chapter 11 bankruptcy is a form of bankruptcy reorganization available to individuals, corporations and partnerships.  It has no limits as to the amount of debt, as Chapter 13 does.  It is the usual choice for large businesses seeking to restructure their debt.  It is a form of bankruptcy that involves a reorganization of a debtor's business affairs, debts and assets.  Chapter 11 is the most complex of all bankruptcy cases and generally the most expensive.

 

Chapter 11 is probably the most flexible of all the chapters.  Chapter 11 debtors can renegotiate and adjust certain interest rates, assume or reject executory contracts and unexpired leases, sell property free and clear of lien and interests and extend payment of unsecured tax debt.  Chapter 11 debtors can also cure defaulted or accelerated obligations.  Chapter 11 debtors maintain the benefits of the automatic stay under 11 U.S.C. §362 which serves as an injunction of all lawsuits, foreclosures, repossessions, bank levies, wage garnishments and other collection activities.

 

The debtor usually remains in possession of its assets, and operates the business under the supervision of the court and for the benefit of creditors. The debtor in possession is a fiduciary for the creditors.  If the debtor's management is ineffective or less than honest, a trustee may be appointed.

 

A creditors committee is usually appointed by the U.S. Trustee from among the 20 largest unsecured creditors who are not insiders.  The committee represents all of the creditors in providing oversight for the debtor's operations and a body with whom the debtor can negotiate an acceptable plan of reorganization.

 

A Chapter 11 plan is confirmed only upon the affirmative votes of the creditors, who are divided by the plan into classes based on the characteristics of their claims, and whose votes are a function of the amount of their claim against the debtor.

 

If the debtor can't get the votes to confirm a plan, the debtor can attempt to "cram down" a plan on creditors and get the plan confirmed despite creditor opposition, by meeting certain statutory tests.

 

 

The bankruptcy attorneys at the Law Offices of Anthony B. Vigil, APC are well versed and highly experienced in Chapter 11 bankruptcy filings.  Contact us today to schedule a free consultation to review your financial situation and receive a recommendation from an attorney for a solution to your financial troubles.

 

 

 

 

 

“Chapter 11 debtors can renegotiate and adjust certain interest rates, assume or reject executory contracts and unexpired leases, sell property free and clear of lien and interests and extend payment of unsecured tax debt.”