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James F. Kahn, P.C. is a Debt Relief Agency. We help people file for relief under the United States Bankruptcy Code.
Chapter 11 – Reorganization
Chapter 11 of the bankruptcy code is a "reorganization"
and is primarily for corporations and partnerships, OR for individuals with
large debts and assets who do not meet the strict asset/debt limitations of
Chapter 13. Chapter 11 offers greater flexibility and options than other
chapters and can be extremely useful even in lower debt cases. It is very useful
in real estate cases where you are trying to find ways to catch up on past due
payments, or buy some time for selling a piece of property that has equity, or
for dealing with delinquent taxes, or any scenario where you need time to catch
up on payments, but keep your business running. Chapter 11 of the Bankruptcy Code is
referred to as the "reorganization" Chapter and is primarily for corporations
and partnerships or for individuals with large debts and assets who do not meet
the strict asset/debt limitations of Chapter 13. Chapter 11 offers greater
flexibility and options than other chapters and can be extremely useful even in
lower debt cases. It is very useful in real estate cases where you are trying to
find ways to catch up on past due payments, or buy some time for selling a piece
of property that has equity, or for dealing with delinquent taxes, or any
scenario where you need time to catch up on payments, but keep your business
running. In a Chapter 11 Bankruptcy Case, the
Debtor remains in possession of all of its assets and its ongoing business. In
other words, the Debtor itself is the Trustee for the estate. Debtors under
this Chapter have the ability to object to their creditors' claims, avoid liens,
reject leases and contracts with no penalty, extend the time for repayment to
your existing creditors or even reduce the amount owed or paid to them. Often there is litigation associated
with any Chapter 11 case, either with the Debtor attacking the creditors, or
vice versa. Due to this, Chapter 11 cases can be quite expensive and are always
time consuming. There are constant administrative burdens which must be met.
Regular reports must be filed with the court and the U.S. Trustee's Office, and
fees must be paid quarterly. Since Chapter 11 cases can last from several months
to several years, the professional fees (attorney, accountant, C.P.A.) can grow
quite rapidly. The court filing fee is currently $839.00. The key to a successful Chapter 11
Bankruptcy case is pre-bankruptcy planning. As is the case with Chapter 13 and,
to an extent, with Chapter 7, very few Chapter 11 cases are successful when the
Debtor arrives at the attorney's office needing to file the petition
immediately. This is true with any chapter of the Bankruptcy Code, but is
particularly true in a Chapter 11. Why? Because the administrative burdens, time
constraints, financial pressures, and other problems are so great, that a
failure to plan ahead, and prepare as much documentation as possible prior to
filing, will usually spell disaster. All you will end up doing is paying your
attorney several thousand dollars for a few months' breathing room, only to end
up where you were to begin with. Chapter 11 Debtors must prepare a Plan
of Reorganization that explains both how they intend to pay their creditors and
how much they intend to pay. The Bankruptcy Code does not specify a maximum
duration for a Chapter 11 plan, but creditors get to vote to accept or reject a
Debtor’s proposed plan. Nevertheless, a Chapter 11 plan can be approved by the
Bankruptcy Court over creditors’ objections if certain statutory requirements
are met. A Chapter 11 plan, for example, must pay
creditors as much as they would receive if the Debtor filed a Chapter 7
petition. The Chapter 11 plan must also meet other tests to see whether it
treats creditors fairly. As in a Chapter 13 case, the Chapter 11 Debtor may convert its petition to a Chapter 7 petition if his plan proves unworkable. Also, the Chapter 11 Debtor can keep the property it chooses to keep, so long as it continues to make the payments required by the confirmed Plan.
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