Chapter 11 Bankruptcy
What is Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is a chapter of the Bankruptcy Code which allows for reorganization and restructuring of a company's original payment terms and agreement and usually involves a corporation or partnership. A chapter 11 debtor usually proposes a plan of reorganization to keep its business alive and pay creditors over time. Filing for bankruptcy Chapter 11 allows businesses and their owners the opportunity to seek financial relief.
How does Chapter 11 Bankruptcy work?
TheChapter 11 bankruptcy process begins with the filings of a bankruptcy petition with the bankruptcy court serving the area where the debtor has a residence or legal address. A petition may be a voluntary petition, which is filed by the debtor, or it may be an involuntary petition, which is filed by creditors that meet certain requirements. A voluntary petition must adhere to the format of the Official Forms prescribed by the Judicial Conference of the United States. Unless the court orders otherwise, the debtor also must file the following with the court during their bankruptcy filings:
- Schedules of assets and liabilities
- A schedule of current income and expenditures
- A schedule of executory contracts and unexpired leases
- A statement of financial affairs
If the debtor is an individual or a husband and wife, there are additional document filing requirements. These debtors must file the following:
- A certificate of credit counseling and a copy of any debt repayment plan developed through credit counseling
- Evidence of payment from employers received 60 days before filing if it exists
- A statement of monthly net income and any anticipated increase in income or expenses after filing
- A record of any interest the debtor has in federal or state qualified education or tuition accounts (student loan interest payments)
How much does it cost to file for Chapter 11 Bankruptcy?
The courts are required to charge both a filing fee and an administrative fee. The fees must be paid to the clerk of the court upon filing or may, with court permission, be paid by the debtor in installments with a payment plan. File fee installments are limited to four payments. The final installment must be paid no later than 120 days from the filing date of the petition. If the debtor is able to show cause to why they may need an extension the court may extend the time of any installment provided as long as the last installment payment is not paid later than 180 days from the date the petition was initially filed.
The administrative fee may be paid in installments as well and may be paid in the same manner the filing fee payments have been made. If there is a joint petition filed, only one filing fee and one administrative fee can be charged. Debtors should be aware that failure to pay any fees can result in their bankruptcy case being dismissed and they may have to go through the bankruptcy processes again.
Do Chapter 11 Bankruptcies Work?
A good bankruptcy attorney knows the bankruptcy laws, and can do many things for someone interested in Chapter 11 bankruptcy that they may not be able to do themselves. Without proper legal representation, the chances of an individual receiving a good ruling on their petition are very low. Anyone seeking to file for Chapter 11 bankruptcy not only needs an attorney but they also need a highly experienced attorney that specializes in bankruptcy law. If you and your business are currently in financial crisis and distress, reach out to the experienced bankruptcy attorneys at Ivey McClellan. With over 70 years of experience serving the Triad area of North Carolina, any individual in the area interested in Chapter 11 bankruptcy should contact our bankruptcy experts
100 South Elm Street Suite 500
Greensboro, NC 27401
551 Monroe Street
Eden, NC 27288
Phone: (336) 623-4600