CHAPTER 11 BANKRUPTCY DEBT RELIEF

Chapter 11 of the United States Bankruptcy Code, often referred to as "reorganization bankruptcy," provides an avenue for distressed businesses, including corporations, partnerships, and sole proprietorships, to restructure their debts and obligations. In rare cases, individuals with significant assets and debt can also file under Chapter 11. This chapter of the bankruptcy code permits the debtor to propose a plan of reorganization to keep the business alive and repay creditors over time.

The Legal Framework for Chapter 11 Bankruptcy

Chapter 11 is governed by the United States Bankruptcy Code, specifically Title 11. It is a complex and costly process typically reserved for corporate entities or individuals with substantial assets and liabilities. Notably, Chapter 11 allows the debtor to continue operating the business while the bankruptcy case is pending. This is a significant difference from Chapter 7, where a trustee is immediately appointed to oversee the liquidation of assets.

The debtor, also known as the "debtor in possession," typically remains in control of the business operations, though under the supervision of the court and the appointment of a trustee. Section 1107 of the Bankruptcy Code affords the debtor, as debtor in possession, many of the powers and responsibilities of a trustee. Moreover, the debtor has the right to propose a reorganization plan during an exclusivity period, which is 120 days from the date of filing for bankruptcy.

Provisions Under Chapter 11 Bankruptcy

The primary objective of Chapter 11 is the formulation and implementation of a reorganization plan that allows the business to continue operations while repaying creditors over time. The reorganization plan is essentially a contract between the debtor and the creditors about how the business will operate and repay its debts in the future.

In order for the reorganization plan to be approved, it must be confirmed by the bankruptcy court and accepted by the creditors. This requires that at least one class of impaired creditors - those whose contractual rights are modified or who will be paid less than the full value of their claims under the reorganization plan - vote to accept the plan.

Once the plan is confirmed, it binds the debtor and the creditors to its terms of repayment. The debtor then makes payments according to the plan, and the business operations continue. Debts that existed before the confirmation of the plan are discharged, providing the debtor a fresh start, albeit under the plan's obligations.

Steps Involved in Filing for Chapter 11 Bankruptcy

The process of filing for Chapter 11 bankruptcy generally involves the following steps:

1. Filing the Bankruptcy Petition: The process starts with the debtor filing a petition in bankruptcy court. Similar to other forms of bankruptcy, this includes detailed financial information such as a list of assets, debts, income, and a summary of the business operations.
2. Automatic Stay: Once the bankruptcy petition is filed, an automatic stay is triggered. This halts actions by creditors to collect debts or enforce liens against the debtor's property.
3. Meeting of Creditors: After filing, a meeting of creditors is held, where the debtor presents its case and answers questions from creditors and the trustee.
4. Filing of Reorganization Plan: The debtor has the exclusive right to propose a reorganization plan within the first 120 days after filing for bankruptcy, which can be extended or shortened by the court. This plan outlines how the debtor intends to restructure its debt and operations to regain profitability.
5. Disclosure Statement: Along with the reorganization plan, the debtor needs to file a disclosure statement providing adequate information about its assets, liabilities, and business affairs to enable creditors and shareholders to make an informed decision about the plan.
6. Confirmation Hearing and Plan Approval: The court conducts a confirmation hearing to decide whether to approve the reorganization plan. Creditors and shareholders have the right to vote on the plan. If the court finds that the plan is in the best interests of the creditors and is feasible, it may confirm the plan.
7. Plan Implementation: Once confirmed, the debtor is required to carry out the plan, restructuring its operations and making payments to creditors as outlined.
8. Debt Discharge: After the successful implementation of the reorganization plan, the debtor receives a discharge of the remaining pre-plan debts.

Chapter 11 bankruptcy allows a business or high net worth individual to restructure and reduce debts while continuing operations. The process is complex and involves significant oversight from the bankruptcy court, and as such, professional legal advice is crucial. It offers the debtor the opportunity to rebuild while fulfilling its obligations to creditors in a manageable way. However, it also involves detailed review and approval of the debtor's future plans by both the creditors and the court. As such, Chapter 11 represents a comprehensive and thorough form of debt relief and business reorganization.

Snable Stevenson & Silva Can Help You to Recover

Snable Stevenson & Silva has a proven track record in successfully representing clients in various areas of bankruptcy law, including Chapter 11 bankruptcy. Our extensive experience and depth of expertise have made us a trusted partner for small businesses and high net-worth individuals navigating the complexities of financial restructuring and debt resolution.

Expertise and Experience

One of the biggest advantages of engaging with Snable Stevenson & Silva is our exceptional team of seasoned lawyers. Our team has a deep understanding of Chapter 11 bankruptcy law, having worked on numerous complex cases through the years. Our lawyers are skilled in formulating strategies that can protect your business interests while meeting the requirements of the bankruptcy laws. By virtue of our vast experience, we can guide you effectively through every step of the Chapter 11 process.

Customized Strategies

Filing for Chapter 11 bankruptcy is a complex process, and every case comes with its unique set of challenges. Our approach starts with a thorough evaluation of your financial condition and a clear understanding of your business objectives. We leverage this knowledge to craft a personalized strategy that can help your business navigate the reorganization process effectively and maximize its chances of successful recovery.

Preparation of Reorganization Plan

A successful Chapter 11 bankruptcy case hinges on the creation of a robust and effective reorganization plan. Our attorneys are proficient in structuring reorganization plans that are not only comprehensive but also meet the criteria of being fair and equitable for all parties involved. We strive to develop plans that are most likely to get the approval of both the creditors and the court.

Negotiating with Creditors

We understand that negotiations with creditors can be crucial to the successful confirmation of a reorganization plan. Our lawyers are adept negotiators who strive to protect your interests and advocate for the best possible terms. We can represent you effectively in all interactions with creditors, helping to gain their acceptance of the reorganization plan.

Effective Communication

We believe that communication is key to any successful legal representation. Our firm is committed to providing timely updates and clear explanations at every stage of the process. Our attorneys are always available to answer questions, discuss concerns, and provide advice. We aim to ensure that you are well-informed and comfortable with every decision made in your case.

Compliance and Implementation

Once your reorganization plan is confirmed, we don't just walk away. We continue to assist you in ensuring compliance with the terms of the plan and help with the successful implementation of the restructuring efforts. Our ultimate aim is to see your business recover and regain its footing.

Commitment to Client Success

At Snable Stevenson & Silva, we measure our success by our clients' success. We take pride in helping our clients navigate through challenging financial circumstances and towards a more secure and prosperous future. We remain dedicated to serving your interests and achieving the best possible outcomes for you.

Chapter 11 bankruptcy is a complex legal procedure requiring specialized knowledge and considerable experience. At Snable Stevenson & Silva, we bring both to the table. Our team of skilled attorneys, backed by a history of successful bankruptcy representations, stands ready to help you reorganize your business, resolve your debts, and start a fresh financial chapter.

Contact our Birmingham, Alabama Bankruptcy Lawyers Today for Legal Help

Are you or your family overwhelmed with debt? Contact Snable Stevenson & Silva for immediate legal assistance and advice. You might be eligible for one or more bankruptcy options, or possibly for other forms of debt relief. Our qualified Alabama bankruptcy lawyers can help you determine the best course of legal action and help to get you on a path to financial recovery.

We offer a free case evaluation and consultation. Contact our bankruptcy law office in Birmingham, Alabama to schedule yours today. There’s often a limited amount of time to act, so give us a call to get started today.