Depending on your circumstances, you may be able to file for Chapter 11 Bankruptcy. This process will allow you to reorganize your finances under the laws of the United States. It can also allow you to extend your exclusivity period for up to 18 months.
Discharge
Whether or not you receive a discharge in Chapter 11 bankruptcy depends on several factors. The amount of debt wiped out in your previous bankruptcy case is likely to be a factor. The type of property you own will also be a factor. There are some exceptions to the rule.
Section 523 (a) of the
Bankruptcy Code lists some of the exceptions to the discharge. The list includes
non-dischargeable debts, such as fines and penalties owed to the government. The holder of a non-dischargeable debt must have an actual knowledge of the fact that it is non-dischargeable. This is not the case for unsecured creditors.
The most obvious exception is when the debtor fails to fulfill an obligation in a Chapter 11 plan. If the plan is not fulfilled, then the plan is not complete and the creditor does not receive a discharge.
Depending on the nature of the case, there are three phases to a Chapter 11 bankruptcy. The first phase is the pre-confirmation phase. This period lasts anywhere from six to twelve months. During this time, the debtor may obtain a moratorium on payment of general unsecured debts. If the debtor is in possession of property, the debtor can lease, sell or use that property, but the use of cash collateral is restricted.
The post-confirmation phase lasts from 3 to 5 years. During this period, the debtor may pay some secured and other types of creditors. However, no action may be taken without the approval of the bankruptcy court.
Automatic stay
Having an automatic stay in your Chapter 11 case can be a boon to your creditors. This pause in proceedings gives your debtor a breathing space to think about his financial situation. It also prevents your creditors from taking action to collect their debts.
There are two main types of creditors that benefit from the automatic stay. First, secured creditors. These creditors have control over when they can take possession of collateral. They can also seek an order to lift the stay.
Creditors that have not perfected their security interests may want to wait for the automatic stay to pass before they attempt to liquidate collateral. They will need to consider how much value they can expect to recover in the event of liquidation. They can also discuss this with their debtor’s counsel.
Other creditors that benefit from the automatic stay are those that are in need of the debtor’s business assets. These creditors can usually be paid during the stay. They can also negotiate with the debtor to try to resolve their financial issues. The eviction of a tenant is exempt from the automatic stay if the tenant is endangering the property.
The most important aspect of the automatic stay is that it prevents your creditors from collecting pre-petition claims. This includes foreclosures, repossessions, and collection actions. It is also worth noting that most Chapter 11 debtors receive a moratorium on payment of general unsecured debts. This allows them to continue their business operations.
Reorganization plan
Whether you are an individual or a business, you can file for bankruptcy under Chapter 11 to reorganize your debts. This allows you to keep your assets, but you must also come up with a repayment plan to pay off your debts over time. The plan must be approved by the bankruptcy court, and the creditor must agree to it.
You can only file for a bankruptcy under Chapter 11 if you have a large amount of debt. Usually, these types of cases are filed by businesses, but individuals can also take advantage of the reorganization process. The Small Business Reorganization Act of 2019 was passed in order to streamline the process for smaller Chapter 11 debtors.
The
plan of reorganization must be accepted by creditors, and must be fair to all parties. If the plan is not fair, the court may dismiss the case. If the debtor is unable to reorganize the debts under the plan, it will be converted to a liquidation case.
There are three types of plans for bankruptcy under Chapter 11. One is submitted by the creditor, one by the debtor, and the third is a negotiated plan between the debtor and the creditors. These plans are tailored to the needs of the debtor and the creditors.
The reorganization plan will be voted on by different classes of creditors. If at least half of the creditors vote in favor, the plan is deemed to be accepted by all impaired creditors.
Extending the exclusivity period up to 18 months
Taking the time to file for chapter 11 may be the single most stressful decision you make in your life, so it’s only natural to look for ways to reduce the stress and commotion. The best way to do this is by filing a reorganization plan along with a Chapter 11 bankruptcy petition. A well thought out plan can save you money and a lot of time in the process. The best thing about filing a reorganization plan is that the entire process can be done in as little as six months. The plan can also be used as a tool to get out of debt and rebuild your credit score. If you are considering filing for Chapter 11 bankruptcy, it’s not a bad idea to have a plan that will give you a better chance of reclaiming your hard earned assets. This is why filing a reorganization plan is the single most important step in the process.
Fees to be made by certain professionals
Whether you are in the throes of a bankruptcy or are considering one, you should understand the fees to be paid by certain professionals in the process. Although these fees are not typically closely monitored, the process is different in a Chapter 11 case. The most important thing to know is that these fees are not free. However, they are justified if the benefits outweigh the costs.
The
United States Trustee Program (USTP) has recently issued new guidelines governing attorney fee applications in larger chapter 11 cases. They are formally known as Appendix B – Guidelines for Reviewing Applications for Compensation in Larger Chapter 11 Cases. The guidelines are effective for all cases filed on or after November 1, 2013. They are located in the Federal Register at 78 FR 36248.
The USTP has designated a pool of trustees in most federal districts. These trustees are qualified small business individuals who act as a conduit between the debtor and the U.S. Trustee to ensure that the reorganization is on track. In addition, the U.S. Trustee has also opted out of the traditional solicitation process to form a creditors’ committee.
The USTP’s most impressive contribution to the law is its ability to provide the best advice for your particular situation. Aside from recommending the best possible solution for your specific circumstances, the USTP has also added new regulations to its Code of Federal Regulations.
Small business vs. subchapter V
Whether a small business should file a bankruptcy case under chapter 11 or subchapter V depends on the financial circumstances of the business and its goals. Both are aimed at accelerating the reorganization process and reducing costs.
In the small business case, the filing deadline is accelerated from 180 days to 90 days. The debtor must submit a plan during the first 180 days, and the court can extend that period by another 300 days. The trustee is responsible for monitoring the debtor’s financial condition and conducting investigations into its assets.
The
Small Business Reorganization Act of 2019 (SBRA) has been designed to streamline the small business bankruptcy process. The new legislation lowers costs, simplifies the filing requirements and provides more protection to creditors. It also speeds up the reorganization process, and allows businesses to continue operating.
While the SBRA makes it easier for smaller companies to reorganize, it does not guarantee faster or more efficient reorganizations. For example, it does not guarantee that the US Trustee will not object to a Subchapter V filing. In addition, the debtor is still subject to additional oversight by the U.S. Trustee, who is assigned to review the debtor’s activities and ensure that the debtor is making payments under the plan.
In a small business case, the debtor is obligated to attend meetings scheduled by the U.S. Trustee, as well as an initial debtor interview. During the initial debtor interview, the debtor’s business plan is evaluated, and the debtor’s obligations are explained. The initial meeting is also an opportunity to answer questions about the debtor’s business and the bankruptcy rules.
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