Chapter 11 bankruptcy and other matters create estate quandary
On behalf of Furr & Cohen, P.A. posted in Chapter 11 on Wednesday, November 25, 2015.
Chapter 11 bankruptcy is often referred to as reorganization because it is a bit different from other forms of bankruptcy. During a Chapter 11 bankruptcy, an individual or business works through the courts and the bankruptcy process to negotiate with various creditors to create more tenable debt and payment situations.
Chapter 11 bankruptcy is commonly used by businesses. It can be initiated by the company that is the debtor or by certain types of creditors. In the first instances, the petition would be seen as a voluntary petition; if creditors initiate, it is deemed an involuntary petition.
The Chapter 11 process requires that a number of documents is filed by the debtor. Schedules detailing the debtor’s liabilities, assets, expenditures and income are required. Leases and financial statements are also required where applicable, and individual debtors might be required to file other forms.
According to the U.S. Court system, the bankruptcy court is required to charge fees for Chapter 11 filings. Those fees include an administrative fee of $550 and a filing fee of $1,167. The fees are generally collected by the court when the petition is filed; individuals filing for Chapter 11 can sometimes make installment payments on these fees to the court.
In some cases, the court might appoint a trustee to oversee the reorganization of a business entity during the Chapter 11 process. In other cases, the debtor retains control during the process; this would be known as a debtor in possession.
These are just some basics about Chapter 11 bankruptcy. Even at this level, you can already see how potentially complex the process can get. Working with a professional to protect your interests through a reorganization lets you break through the complexity to the solution.
Source: United States Courts, “Chapter 11 – Bankruptcy Basics” accessed Nov. 26, 2015