While individuals can restructure their secured and unsecured debts in Chapter 13, corporations and individuals who exceed Chapter 13 debt limits restructure their debt payments in Chapter 11. To reduce monthly cash outflow to the same level as monthly income, a corporation or sole proprietorship can file Chapter 11 to avoid closing an otherwise viable business.
If your business would benefit from restructuring its debts, you should consult with a Salt Lake City Chapter 11 bankruptcy lawyer. In addition to clarifying your options and guiding you towards the most optimal path, a qualified bankruptcy attorney will ensure that your Chapter 11 bankruptcy comprehensively addresses your financial issues.
Chapter 11 bankruptcy includes aspects from both Chapter 7 bankruptcy and Chapter 13 bankruptcy. For example, it releases the filing party from prior debt obligations and may involve a trustee during the debt repayment process. It also usually involves a comprehensive repayment plan spread out over several years.
Whereas Chapter 7 bankruptcy involves liquidation and Chapter 13 bankruptcy often prioritizes retaining as many assets as possible, Chapter 11 bankruptcy rehabilitates a struggling company’s or individual’s financial position. In exchange for selling off some assets under the supervision of a trustee, a party filing under Chapter 11 can continue other more sustainable and profitable operations. Advice from a Salt Lake City Chapter 11 bankruptcy attorney will make this process easier to navigate.
To start pursuing a Chapter 11 bankruptcy, the business or individual seeking to restructure their debts must submit several pieces of documentation detailing their financial situation, including recent balance sheets, cash-flow statements, and federal income tax returns. The filer discloses all assets, including personal assets of an individual filer, in Chapter 11. Corporations can also file for Chapter 11 bankruptcy separately from owners, corporate officers, and stockholders.
The Chapter 11 debtor files a “Plan of Reorganization,” and creditors can submit their own plan if the debtor fails to do so. Either way, the plan should address liquidating assets, which debts will be satisfied or renegotiated and to what extent, and expense reduction through shrinking or ceasing some business operations.
Generally, this plan lasts for three to five years and centers around using future earnings to pay back restructured debts. A Chapter 11 Plan is limited only by the imagination of the lawyer creating it, so retaining a skilled lawyer is crucial for successfully pursuing Chapter 11 bankruptcy in the area.
If your business is in jeopardy or your personal finances are too complicated for Chapter 7 or Chapter 13 bankruptcy, Chapter 11 bankruptcy may be your best available option. However, effectively pursuing debt relief under this chapter of the federal Bankruptcy Code often requires an immense amount of preparation, not to mention a lot of legal expertise.
The assistance of a Salt Lake City Chapter 11 bankruptcy lawyer is critical to your chances of success. Call today to set up a consultation and see what guidance a seasoned attorney could offer you.