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| Chapter 11 is a reorganization proceeding. It is
generally used by businesses, or by individuals who do not qualify
for Chapter 13 because of their
substantial debts and have assets that would be surrendered in a Chapter
7 proceeding. In a Chapter 11, the debtor remains
in operation and remains in possession and control of its property.
The purpose of the Chapter 11 proceeding is to provide
the debtor with temporary relief from its pre-petition debts while
it formulates a plan to restructure those debts in accordance with
certain requirements of the Bankruptcy Code. A typical Chapter
11 debtor is an otherwise viable business that is temporarily
beset by cash flow problems. During the past ten years, numerous well
known entities have filed for Chapter 11 protection,
including several major airlines and department stores. Any person who is eligible to file a petition under Chapter 7 is also eligible to file a petition under Chapter 11, except for stockbrokers and commodities brokers. Railroads, which are ineligible to file for Chapter 7 relief, may file for relief under Chapter 11. Unlike a Chapter 7 proceeding, the Chapter 11 debtor does not surrender its pre-petition property since the Chapter 11 debtor continues with its pre-petition operations. During the course of the Chapter 11 proceeding, the Chapter 11 debtor must remain current on its post-petition obligations. During the Chapter 11 proceeding, the debtor can examine its leases and other contractual relationships and can reject or terminate certain of those relationships if it determines that they are not profitable. The restructuring of the debtor’s pre-petition obligations is embodied in a plan of reorganization. The plan classifies creditors into classes. Similarly situated creditors are classified together. For instance, secured claims are generally separately classified, wage claims are classified as “priority” claims and general unsecured claims are generally separately classified. Creditors have the right to vote to accept or reject the proposed plan and the proposed plan must be accepted by certain creditor classifies. The proposed plan must also be approved by the Bankruptcy Court. Confirmation of the Chapter 11 plan has the effect of discharging the Chapter 11 debtor from its pre-petition obligations. However, the Chapter 11 plan of reorganization is essentially a contract between the debtor and its pre-petition creditors through which the plan payment obligations are substituted for the discharged pre-petition obligations. Furr and Cohen, P.A. has represented debtors and creditors in hundreds of Chapter 11 cases involving a myriad of businesses and issues. Some of the Chapter 11 businesses with which we have recently been involved have been real estate developers, substance abuse facilities, providers of home incarceration services and gasoline service station operators. In addition, we have represented numerous individual Chapter 11 debtors. Disclaimer |
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Case
Archive |
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Robert
C. Furr |
Charles I. Cohen |
Alvin S. Goldstein |
Marc P. Barmat |
Alan R. Crane |
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