Chapter 11 Bankruptcy
Can a Chapter 11 Reorganization Help Your Cleveland, Lorain or Akron, Ohio Business?
A Chapter 11 Bankruptcy provides for substantially more flexibility than Chapter 7 or Chapter 13. Though Chapter 11 rules for a confirmation are clear, its forward path is shaped by your attorney’s creativity and ability to work with creditors. Even the most persistent and vigorous creditor ultimately just wants to be paid. Once Bankruptcy Court protection is in place, creditors know that more money is likely from a business that’s able to go forward.
Chapter 11 is a very effective way to deal with tax debt, secured debt and unsecured debt at any stage in the collection process.
“I’ve been able to step in with a restaurant suffering a parade of debt collection process-servers appearing at the noon rush; pull investment property from foreclosure; and put a halt to charging orders.
“Working with small businesses is similar to working with individuals. The obvious reason is that small business owners are individuals. They’ve invested their egos, identities and their very souls in their businesses. I’ve been a small business owner for more than 35 years. I can totally identify.” — Attorney Susan Gray
The way to find out if a Chapter 11 Bankruptcy is a better option for you is to have a discussion about the financial facts of your case with an experienced lawyer who specializes in bankruptcies. Take advantage of a free initial consultation with Susan. Schedule a callback today.
Below are questions frequently asked about a Chapter 11 Bankruptcy.
A Chapter 11 Bankruptcy proceeding means that the debts and obligations of the business are restructured with assistance from the Bankruptcy Court. Typically the business stays open for business. The goal is to help a business avoid liquidation and financial ruin. To help a business stay in business.
Large corporations including General Motors and American Airlines have used Chapter 11, in order to recover from financial setbacks and continue operating.
A company filing for Chapter 11 protection will propose a reorganization bankruptcy plan with the Court for consideration. A plan is required whether the company is a corporation, LLC, partnership, or a sole proprietor, and it must also be in the interests of a company’s creditors. If you do not file a reorganization plan with the Court, it's possible that creditors will file a plan in their best interests.
The Chapter 11 Bankruptcy is usually the most expensive and complicated type of bankruptcy relief available for small businesses. However, it can allow your business to continue operating while the process plays out. You should explore all other possible alternatives first.
To determine the best option, we recommend an experienced and knowledgeable bankruptcy expert. Bankruptcy attorney Susan Gray can recommend the best option for you and your business so that you get better results and a fresh start.
Some do. During a Chapter 11 Bankruptcy for small business, there are some decisions that require Bankruptcy Court permission before they can be implemented. They include:
- Selling company assets that are not considered inventory
- Starting, stopping or significantly modifying a rental agreement
- Starting, stopping or expanding business operations
- Vendor contracts
- Dealing with union matters and contracts
- Payments to attorneys and certain other expenditures
- Loans that will commence after the Chapter 11 Bankruptcy.
Liquidating company assets in order to pay off creditors is also possible with this type of Chapter 11 for businesses. Whether this is your goal, or a restructure and reorganization is your desired outcome, the Bankruptcy court will accept any plan presented as long as your plan is fair to creditors and feasible. Once a plan is accepted by the Court then the process moves forward.
The Small Business Reorganization Act of 2019, and the Coronavirus Aid, Relief & Economic Security (CARES) Act, which became law on March 27. 2020, create special considerations for a Chapter 11 Bankruptcy for small businesses.
Both acts make it easier for small businesses to file for Chapter 11, but they also include new deadlines and restrictions as well.
We recommend a thorough analysis of your company's financial situation before you decide if a Chapter 11 is right for you and your business. All bankruptcy alternatives should be considered before a Chapter 11 business case is filed.
Bankruptcy attorney Susan Gray is here to help you.
Maya Dollarhide, “Chapter 11.” Investopedia.com. https://www.investopedia.com/terms/c/chapter11.asp#:~:text=Chapter%2011%20is%20a%20form,time%20to%20restructure%20their%20debts. Accessed 14 July 2020.