Chapter 11 bankruptcy allows a company to keep control of its assets, maintain day-to-day business operations, and restructure its debt. It provides protection to business owners to avoid tax levies, lawsuits, judgments or liquidation. The Company remains in possession and control of its assets and operates its business as usual. In general, chap. 11 provides a variety of tools to assist business owners in reorganizing such as: stripping off secured debt such as mortgages and liens that exceeds the value of the property securing it; rejecting expensive leases and contracts; and restructuring long term debts with extended payment schedules and possible reduced interest rates. It may also be possible to recover payments made to creditors in the 90 days before a case is filed, known as a preferential transfer. Businesses must prepare a plan that restructures company debt into reasonable installment payments. Once a Plan of reorganization proposed, creditors must review it to determine if it is acceptable to them or if they want to negotiate for other terms.
In general, a Plan that pays the creditors more than what they would receive if the company was liquidated is fair and will be more attractive to the unsecured creditors. At t Harlow, Adams & Friedman, our bankruptcy lawyers work closely with business owners to advise and handle their company’s Chap. 11 bankruptcy case. We prepare and file all of the required petitions, schedules, forms, motions , orders and plans while negotiate with the creditors to in order to achieve the best result for our clients as they negotiate the Chap. 11 bankruptcy process.
If your company is facing mounting creditor claims, tax bills and increasing creditor pressure, contact Chapter 11 bankruptcy attorneys at the law office of Harlow, Adams & Friedman today to learn how we can help you save your business that you worked hard to build.
Reorganization of Debt under Chapter 11 Bankruptcy Protection
A company in Chap. 11 continues to own, its assets and continues to run the business operations during Chapter 11. This is called a Debtor in Possession. Chapter 11 automatically imposes a stay which freezes all creditor action and allows a company time to assess and restructure its financial affairs. A company which has granted a lien to a lender may have to obtain a court order to continue using its receivables, known as a cash collateral order, early in the case, which is very typical. The valuations of a company’s assets are a critical component of every case which impacts many aspects of the reorganization process. While company is assessing its situation, it can maintain daily business operations, save jobs, restructure its debts, sale off assets free and clear of liens and reorganize debt. Assets can be sold out of the ordinary course of business, only upon approval by the court. In this way, Chapter 11 provides businesses with important protections from creditors who are trying to collect debts which may force company into liquidation or receivership. Chap. 11 is “business as usual.”
Negotiating with the Creditors in Chapter 11 Bankruptcy
The Chapter 11process is designed to encourage the parties to negotiate with and among each other. Certain groups of creditors may sometimes oppose the company in bankruptcy and other times support it. Ideally the creditors will accept the Plan for debt reorganization but sometimes the Court will “cram down” as Plan if the Court believes it is fair and reasonable and satisfies other legal requirements. The Plan must be approved before a company can exit bankruptcy. Usually creditors are willing to accept a plan if they believe they will receive a larger payment than they would if the company is liquidated. The company should obtain the advice of its accountants and other professional advisors to prepare its Plan. Plans can run for years in order to provide a manageable schedule for the company’s cash flow. The lawyers at Harlow, Adams & Friedman will work with your accountants to present the best possible Plan for you company in its efforts to reorganize.
Contact the Chapter 11 Bankruptcy Attorneys at Harlow, Adams & Friedman
If your company is experiencing financial difficulty or other creditor pressure, contact Harlow, Adams & Friedman today to schedule an appointment and see if Chapter 11 makes sense for you. Don’t wait to protect your company before creditors attempt to seize or liquidate your company’s assets.
We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.