What happens when you file for chapter 11 bankruptcy? 8 Answers as of May 19, 2011

What happens when we file for bankruptcy for our business? Will they take anything away from us? What happens if there is still loan to be paid off for the bank will they take money from else where and how?

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The Law Office of Mark J. Markus
The Law Office of Mark J. Markus | Mark Markus
When you file a Chapter 11 case you operate as a "Debtor-in-Possession" and act as the Trustee for the estate. You are required to propose a plan of reorganization which repays your creditors. Nothing will be "taken away" from you unless you fail to act properly as a fiduciary for the estate and follow the rules or fail to confirm a plan.
Answer Applies to: California
Replied: 5/19/2011
Law Office of Harry L Styron
Law Office of Harry L Styron | Harry L Styron
A Chapter 11 bankruptcy leaves the debtor (individual, corporation) in charge as a "debtor-in-possession". When you file you will close all of your existing bank accounts and set up new accounts, so as to insulate previous operations from operations while in bankruptcy. You will be required to file monthly operating reports (basically profit and loss statements in a format required by the U.S. Trustee) and submit bank statements to substantiate the reports. You will be required to prepare a reorganization plan which shows how you will operate your business going forward, and which must be approved by some or all of your creditors, depending on the nature of your debt. I would suggest that, if you contemplate Chapter 11, you should be talking to your primary secured lenders beforehand to attempt to negotiate a restructuring of your debt that will make your operation profitable. That way it is much easier to prepare a plan that will be approved. You should be aware that the filing fee for a Chapter 11 is $1,039 and that a typical attorneys retainer is $25,000.
Answer Applies to: California
Replied: 5/18/2011
California's Largest Family of Attorneys
California's Largest Family of Attorneys | Doan Law Firm
Chapter 11 is a chapter of the United States Bankruptcy Code that protects any form of business that is unable to service its debt or pay its creditors through a process of reorganization under the bankruptcy laws. Although an individual may file under Chapter 11, it is generally used to reorganize a business. Chapter 11 allows the debtor in possession several mechanisms to restructure its business. The debtor may acquire financing and loans by giving new lenders first priority on the business' earnings. The bankruptcy court may also permit the debtor to reject and cancel contracts. Chapter 11 debtors are also protected from litigation against the business through the use of an automatic stay. While the automatic stay is in place, most litigation against the debtor is stayed, or put on hold, until it can be resolved in bankruptcy court, or resumed in its original venue. Generally speaking, it is more advantageous to reorganize than to liquidate. Reorganization often times preserves jobs and assets. An example of this on a macro scale would be General Motors. By extending and reducing their debts, and by dramatically reducing its operating costs, it has returned to viable state. Granted, the Federal Government had a hand in ensuring the success of this turn-around, but be assured, for many companies, it can be done without such assistance.
Answer Applies to: California
Replied: 5/18/2011
Mercado & Hartung, PLLC
Mercado & Hartung, PLLC | Christopher J. Mercado
Ch 11 BK provides for rehabilitation of a business and generally requires the continued operation of the business. The Debtor will remain in control of the business, a plan of rehabilitation needs to be confirmed, and discharge is eligible.
Answer Applies to: Washington
Replied: 5/18/2011
Law Offices of Michael J. Berger
Law Offices of Michael J. Berger | Michael J. Berger
Your question requires a long, detailed answer, customized to your facts. Please call me for a free consultation. I am currently counsel for the debtor in more than 30 active Chapter 11 cases.
Answer Applies to: California
Replied: 5/18/2011
    Janet A. Lawson Bankruptcy Attorney
    Janet A. Lawson Bankruptcy Attorney | Janet Lawson
    Filing Chapter 11 is major decision. It requires that you file monthly disbursement reports, quarterly reports and pay a fee to the United states Trustee based on those reports. You must also close all bank accounts and open "debtor in possession" accounts. The debts are dealt with in a plan of reorganization. You can not do this on your own. You need to seek counsel from an experienced Chapter 11 attorney. This type of bankruptcy is not cheap and the fees have to paid in advance. It can however allow you to continue to operate and restructure your debt.
    Answer Applies to: California
    Replied: 5/18/2011
    The Law Offices of Alan M. Laskin
    The Law Offices of Alan M. Laskin | Jared B. Gaynor
    I cannot stress strongly enough going to talk to a qualified bankruptcy attorney. Many attorneys don't even handle Chapter 11 cases due to their complexity, and getting answers off an internet forum will not prepare you for what must be done.
    Answer Applies to: California
    Replied: 5/18/2011
    Bankruptcy Law office of Bill Rubendall
    Bankruptcy Law office of Bill Rubendall | William M. Rubendall
    There are many things that happen when you file for chapter 11 bankruptcy. You are the trustee of your own business in chapter 11, so you maintain your possessions. All of your debts must be provided for in your chapter 11 plan. Your plan states from where payment is made and how. Chapter 11 is the most complicated type of bankruptcy. You should see the advice of an attorney who is a certified specialist in bankruptcy law. Consult the State Bar for a listing of those attorneys in your area.
    Answer Applies to: California
    Replied: 5/17/2011
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