Chapter 11

“Contact Our Law Firm to Get a Fresh Financial Start”

Memphis Chapter 11 Abogados

As the events in 2008 and 2009 clearly demonstrated, it is not just individuals who can fall upon hard times. Corporations, partnerships, and other business entities can find themselves with too many debts and liabilities and not enough assets and/or income to meet these oppressive obligations. An individual in such a position can seek the protection of the bankruptcy court by filing a Chapter 7 or Chapter 13 bankruptcy petition; for a business, it can file a Chapter 11 bankruptcy petition.

Filing for Chapter 11 bankruptcy gives debtors who are businesses or individuals with too many assets to qualify for bankruptcy under other chapters the opportunity to reorganize their debts. In exchange, the debtors turn over major decisions concerning the operation of their business affairs to the court. A Chapter 11 bankruptcy is not for every debtor, however. Douglass & Runger, Licenciados en Leyes, is a Memphis-area bankruptcy law firm that can help you determine if Chapter 11 is right for you.

How Does a Chapter 11 Bankruptcy Work?

A Chapter 11 bankruptcy begins with the filing of a bankruptcy petition by the debtor. The debtor will have several months after filing its petition to file a “reorganization plan” that informs the court and the debtor’s creditors how the debtor intends to restructure its operations so as to be able to meet its obligations going forward. If the debtor does not timely file a plan, the debtor’s creditors have an opportunity to file their own proposed plan for the debtor to follow. If the creditors are not satisfied with the plan proposed by the debtor, the creditors can also file their own plan, seek to dismiss the bankruptcy case altogether or have the Chapter 11 bankruptcy case converted into a Chapter 7 bankruptcy case.

The bankruptcy court will ultimately determine whether a proposed plan should be confirmed. Once the plan is confirmed, the debtor is obligated to follow it. A court will look at several factors in determining if a plan should be approved:

Is the plan reasonable?

The proposed plan must be constructed so as to have a reasonable likelihood of succeeding. If the plan is unreasonable – if the debtor over-promises in reporting the amount it intends to pay back, for example – the court may dismiss the case or require the debtor to come up with a new plan.

Is the plan fairly and honestly proposed?

Did the debtor make an honest effort to create a reasonable plan, or does it appear that the debtor proposed the plan for some illegal purpose?

Is the plan fairly and honestly proposed?

Does the proposed plan appear to treat the debtor’s creditors fairly by repaying them a sufficient sum over time? Or, is the debtor proposing to pay its creditors nothing while holding onto assets and equity?

What is it Like Being in Chapter 11 Bankruptcy?

In most cases, a debtor business in Chapter 11 bankruptcy will continue with its normal day-to-day operations. However, major business decisions will now require the approval of the bankruptcy court. The debtor’s creditors may have an ability to voice their opinions regarding these decisions. Major business decisions requiring court approval can include:

  • The sale of real property, personal property, or other assets except for the sale of inventory in the course of the debtor’s business;
  • Either stopping or expanding business operations; and
  • Retaining and paying fees for professionals such as attorneys and accountants.

Seek Assistance from a Seasoned Tennessee Bankruptcy Abogado

The bankruptcy laws are complex and ever-changing. At Douglass & Runger, Licenciados en Leyes, our highly skilled Memphis Chapter 11 bankruptcy lawyers stay up-to-date on changes to the law so as to provide our clients with as accurate legal counsel as possible. Contact us now at (901) 388-5805 to learn if Chapter 11 bankruptcy is right for your circumstances.