Bankruptcy Law - Chapter Eleven
- Date: 2010-05-04 - Word Count: 581
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Chapter 11 is a choice under the Bankruptcy Code generally viewed appropriate for businesses most notably corporations, partnerships or sole proprietors because the complexity and length of the procedures and the expenses involved. Furthermore, you will notice distinctions for the procedure for these three types of debtor. As with other bankruptcy programs, individuals, or husband and wife, looking to file chapter 11 bankruptcy will have to undertake credit counseling. Corporations' personal assets are not associated with chapter 11 bankruptcy proceedings aside from the stocks from the company, but partnerships could find personal assets involved and sole proprietors can anticipate both personal and business assets being subject to rulings. Cases specified as 'small business' may proceed at a speedier pace and be subject to less official demands than other cases, but as a small business debts must be below roughly $2.2 million with no creditors' committee involvement.
Filing under chapter 11 may be at the debtor's discretion or it could be an involuntary petition filed by creditors. All debtors must produce to the court with complete disclosure statements of of every debt and asset (the extent of the disclosure statement differs depending on the type of debtor) and pay fees totally more than $1000 and a repayment or liquidation plan.
Filing a voluntary chapter 11 petition means that the debtor stays in charge of the business and is known as the 'debtor in possession'. The debtor in possession has got size able responsibilities to handle and move the case along. Tardiness can have negative consequences. A US trustee maintains a close supervisory role over the case in relation to the operation of the business requiring reports on all work related activities such as operating expenses and income. The US trustee is capable of having the case converted under the Bankruptcy code should the debtor in possession be found to negligent in proceeding with confirmation of a plan or otherwise neglect to report correctly within the activities on the business. Moreover the us Trustee is paid by the debtor in possession.
More officials could possibly be involved in complex on-going chapter 11 petitions such as a case trustee or an examiner who works with the trustee. Creditors' committees could be formed of unsecured creditors to cooperate with the debtor in possession and might also hire other experts at the courts discretion.
Chapter 11 mandates that a repayment plan must cover what types of claims are to be sorted out and how they shall be addressed. The plan with the disclosure statement have got to provide sufficient information for creditors to determine the viability of the plan. There is an option to vote by ballot for all creditors who cannot necessarily foresee full pay back within the plan. Additionally, creditors have the ability to provide alternative plans.
Soon after filing, there is the normal period where an automatic stay comes in to act pertaining to the actions of most creditors. However, some secured creditors can petition the court for the right to foreclose on property under special circumstances most notably in the case of single asset real estate debtors. This kind of action on by way of creditors and other possible motions related to stays can be forestalled by the confirmation of a plan or commencement of repayment of interest on debt to the creditor.
Complying to the requirements of a confirmed plan normally leads to discharge of debts accrued before confirmation. But, under chapter 11, only individuals are granted discharge as a result of confirmation to a liquidation plan.
Filing under chapter 11 may be at the debtor's discretion or it could be an involuntary petition filed by creditors. All debtors must produce to the court with complete disclosure statements of of every debt and asset (the extent of the disclosure statement differs depending on the type of debtor) and pay fees totally more than $1000 and a repayment or liquidation plan.
Filing a voluntary chapter 11 petition means that the debtor stays in charge of the business and is known as the 'debtor in possession'. The debtor in possession has got size able responsibilities to handle and move the case along. Tardiness can have negative consequences. A US trustee maintains a close supervisory role over the case in relation to the operation of the business requiring reports on all work related activities such as operating expenses and income. The US trustee is capable of having the case converted under the Bankruptcy code should the debtor in possession be found to negligent in proceeding with confirmation of a plan or otherwise neglect to report correctly within the activities on the business. Moreover the us Trustee is paid by the debtor in possession.
More officials could possibly be involved in complex on-going chapter 11 petitions such as a case trustee or an examiner who works with the trustee. Creditors' committees could be formed of unsecured creditors to cooperate with the debtor in possession and might also hire other experts at the courts discretion.
Chapter 11 mandates that a repayment plan must cover what types of claims are to be sorted out and how they shall be addressed. The plan with the disclosure statement have got to provide sufficient information for creditors to determine the viability of the plan. There is an option to vote by ballot for all creditors who cannot necessarily foresee full pay back within the plan. Additionally, creditors have the ability to provide alternative plans.
Soon after filing, there is the normal period where an automatic stay comes in to act pertaining to the actions of most creditors. However, some secured creditors can petition the court for the right to foreclose on property under special circumstances most notably in the case of single asset real estate debtors. This kind of action on by way of creditors and other possible motions related to stays can be forestalled by the confirmation of a plan or commencement of repayment of interest on debt to the creditor.
Complying to the requirements of a confirmed plan normally leads to discharge of debts accrued before confirmation. But, under chapter 11, only individuals are granted discharge as a result of confirmation to a liquidation plan.
Audus Zinkerman is an expert on San Antonio Bankruptcy. He has worked in the legal field for over ten years. His main focuses are on San Antonio Chapter 13, Chapter 7, Chapter 12, Chapter 11, foreclosure defense, for more info visit his site San Antonio Attorneyn
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