Understanding Chapter 11 Bankruptcy
March 25th, 2009 Filed under: Bankruptcy Cost,Bankruptcy Service,Bankruptcy Tips,Online Bankruptcy — Bankruptcy AuthorChapter 11 bankruptcy is also known as “Re-organization bankruptcy.” It’s mostly utilized by bigger businesses that are in financial trouble. But it can also be utilized by individuals, corporations and partnerships.
Advantages of Chapter 11 Bankruptcy
The greatest advantage of Chapter 11 Bankruptcy is that it’s a reorganization, not liquidation. The corporation filing Chapter 11 is able to carry on it’s functioning throughout the bankruptcy legal proceedings. This grants the business organization the time it needs to reorganize with court supervision.
The Workings of a Chapter 11 Bankruptcy
Businesses mostly apply for Chapter 11 bankruptcy as a way to restructure their debt without abandoning their business concern. To do this, the business organization files a petition which includes a list of assets and liabilities. It also supplies a careful account of the financial affairs of the company. The business must then propose a plan for payment of its debts and have that plan accepted by its creditors.
The Negative Aspects of a Chapter 11 Bankruptcy
Chapter 11 bankruptcy is decidedly the most expensive corporate choice in terms of legal costs and attorneys fees. But, it’s also the most pliable of all the bankruptcy alternatives. Additionally, it’s really time intense. For these reasons, it’s usually recommended for bigger corporations instead of individuals or small businesses. Fewer than 1% of all bankruptcy filings in the United States are Chapter 11 bankruptcies.
The Special Allowances of Chapter 11 Bankruptcy
Chapter 11 bankruptcy is special for two reasons. First, it lets business enterprises to continue conducting their business operations under court supervision. Second, it allows the debtor to function as trustee. The legal term of art for this state of affairs is “debtor in possession.”
Other Bankruptcy Options
Chapter 11 Bankruptcy isn’t the sole alternative available to a business enterprises. Commercial Enterprises can also reorganize in a Chapter 13 bankruptcy. Smaller business organizations and sole proprietors often will file a Chapter 13 so they can reorganize their business concern without the cost and time commitment of a Chapter 11 bankruptcy.
Harvey L. Cox is a an attorney and certified mediator in Texas. For more information on bankruptcy issues, visit The Bankruptcy Law Info http://www.TheBankruptcyLaw.info
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