Practice Areas - Bankruptcy

A Chapter 11 bankruptcy is often referred to as “reorganization.”  This chapter of bankruptcy was given its name because it allows businesses with financial difficulty to reorganize their debts through a “plan of reorganization” under which the business pays its creditors some or all of the debt owed over a period of time (and can even be a period of several years).  A business in a Chapter 11 bankruptcy should file a plan of reorganization within one hundred twenty (120) days of filing bankruptcy.  Further, a business in Chapter 11 bankruptcy should seek to have its creditors and the U.S. Trustee approve the plan of reorganization within one hundred eighty (180) days of filing bankruptcy.  If a business in Chapter 11 bankruptcy is having difficulty formulating a plan of reorganization within the first one hundred twenty (120) days of filing bankruptcy or is having difficulty getting its creditors to approve the plan, the business in Chapter 11 can ask the Bankruptcy Court to extend this initial 120-day period to file a plan for up to eighteen (18) months and/or to extend the this 180-day period to obtain approval of its plan for up to twenty (20) months.

A Chapter 7 bankruptcy is often referred to as “liquidation” and businesses are liquidated in an orderly manner.   For more information on a Chapter 7, please click here.

The purpose of a Chapter 11 plan of reorganization is two-fold, the primary objective is to formulate a plan that will allow your business to continue to operate with as few financial burdens as possible, and the second objective is to present the plan to the creditors of the business in a fashion that convinces the creditors that your business is viable and sustainable.  At Myers Wilson we will help you formulate your plan of reorganization by analyzing your business’ operating challenges and assisting you in formulating a plan to deal with these challenges in an orderly manner.  We will assist you in characterizing the assets of your business to determine what property you will need to keep in order to continue operating your business, and what assets can be surrendered to creditors without impacting your business’ ability to perform or destroying your bottom-line.  We will assist you in understanding the duties and obligations of being a Debtor-in-Possession (DIP), including, but not limited to, the reporting obligations your business will have to the U.S. Trustee and the U.S. Bankruptcy Court.  We will review DIP financing documents and agreements in order to insure fairness in post-petition financing arrangements.

Once we formulate a plan of reorganization, we will prepare the plan of reorganization and begin the sometimes arduous work of obtaining your creditors’ approval of the plan of reorganization.  A properly prepared plan of reorganization can allow your business to “cram down” both interest rates and principal balances due under debt obligations.  It will allow your business to continue conducting business while holding creditors at bay so that your business can continue to operate without the threat of seizure, execution, garnishment, or other forms of collection efforts.  Lawsuits, collection calls, and collection efforts are all put on hold so that you can focus on rebuilding your business for the success you envisioned it would have.

If your business is viable and sustainable, but you find yourself inundated with collection calls, lawsuits, or other collection efforts; please find the time to come to our office and discuss how a Chapter 11 may be the best option for your business.

 

 

Terminology Help

Chapter 7 - Liquidation form of Bankruptcy.

Chapter 13 - Payment Plan form of Bankruptcy.

Chapter 11 - Business and Corporate Reorganization

Businesses - What Happens to My Business in Bankruptcy?

Individuals - What Can I Keep In Bankruptcy?

Other Important Bankruptcy Terms You Should Know.